MEMBERSHIP INTEREST AND STOCK PURCHASE AGREEMENT BETWEEN KEYSPAN CORPORATION, TRANSCANADA FACILITY USA, INC. AND KEYSPAN ENERGY CORPORATION (Solely for the purposes of Sections 2.1, 4.5, 5.1, 5.2, 5.3, 5.6, 7.1, 7.8, 7.13 and 7.17 and Article XI...

 

 

 

 

 

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(F)  any situation requiring the Lessee to make any payment of Supplemental Lease Rent pursuant to the Operative Documents, such notice to set forth the reason for and amount of such payment;

 

 

(iii)  promptly, copies of all material correspondence sent to or received from any Financing Party, which shall include, without limitation, copies of any and all proposed amendments to any Designated Operative Document.

 

 

Section 2.3  Representations and Warranties

 

 

(a)  Representations and Warranties of the Sublessor. The Sublessor represents and warrants to the Sublessee that, as of the date hereof:

 

 

(i)  Organization; Power and Authority. The Sublessor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of New York.  The Sublessor has the requisite corporate power and authority to execute and deliver and perform its obligations under this Facility Sublease and other Facility Sublease Documents.

 

 

(ii)  Authorization, etc. The execution, delivery and performance by the Sublessor of this Facility Sublease and the other Facility Sublease Documents have been duly authorized by all necessary corporate action on the part of the Sublessor, and, when executed and delivered, this Facility Sublease and each other Facility Sublease Document will constitute the legal, valid and binding obligation of the Sublessor enforceable against the Sublessor in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, arrangement, moratorium or other laws relating to or affecting the rights of creditors generally and (b) general principles of equity.

 

 

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(iii)  Non-Contravention. The execution, delivery and performance of this Facility Sublease and other Facility Sublease Documents do not and will not (A) contravene any Applicable Law binding on the Sublessor or its property, (B) require any action, consent or approval by any trustee or holder of indebtedness of the Sublessor (other than those obtained prior to the date hereof) or (C) constitute a violation of or a default under any indenture, mortgage or other material contract to which the Sublessor is a party or by which any of its property is bound, which in any case, individually or in the aggregate, is reasonably likely to result in a Material Adverse Effect.

 

 

(iv)  Governmental Approvals. All Governmental Approvals (if any) which are required as of the date hereof for the execution, delivery or performance by the Sublessor of its obligations under this Facility Sublease and each other Facility Sublease Document have been obtained or made, are not the subject of any pending request for rehearing or appeal, and are in full force and effect (other than any Governmental Approvals, the failure to obtain which is not likely to cause a Material Adverse Effect).

 

 

(v)  Investment Company Act. The Sublessor is not an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

 

 

(vi)  No Amendments to Designated Operative Documents. The Sublessor has delivered to the Sublessee copies of each Designated Operative Document to which it is a party and has not (i) entered into any supplements, amendments, modifications or clarifications to any such Designated Operative Document or (ii) requested or obtained any waiver other than supplements, amendments, modifications clarifications or waivers delivered to the Sublessee prior to the date hereof.

 

 

(vii)  Ventures, Subsidiaries and Affiliates; Outstanding Equity Interests and Indebtedness. The Sublessor has no Subsidiaries and is not engaged in any joint venture or partnership with any other Person.  As of the date hereof, all of the issued and outstanding Equity Interests of the Sublessor are owned by the Members.  There are no outstanding rights to purchase, options, warrants or similar rights or agreements pursuant to which the Sublessor may be required to issue, sell, repurchase or redeem any of its Equity Interests.  As of the date hereof, the Sublessor has no indebtedness (except for the obligations under the Operative Documents and the Facility Sublease Documents).

 

 

(viii)  Nature of Business; No Material Contracts.  The Sublessor is not and has not engaged in any business other than as relates to the Facility Lease, the Site Sublease and the transactions contemplated hereby and

 

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activities related thereto, has no material liabilities other than pursuant to or as permitted by the Operative Documents, and is not a party to or bound by any material contract other than the Facility Sublease Documents and the Operative Documents to which it is a party.

 

 

(ix)  No Lease Default or Lease Event of Default. No Lease Default or Lease Event of Default has occurred or will occur upon execution of the Facility Sublease Documents.  To the Sublessor’s Actual Knowledge no Event of Loss or Burdensome Termination Event has occurred or will occur upon the execution and delivery of the Facility Sublease Documents.

 

 

(b)  Representations and Warranties of the Sublessee. The Sublessee represents and warrants to the Sublessor that, as of the date hereof:

 

 

(i)  Organization; Power and Authority. The Sublessee is a limited liability company duly organized, validly existing and in good standing under the laws of the State of New York.  The Sublessee has the requisite corporate power and authority to execute and deliver and perform its obligations under this Facility Sublease and other Facility Sublease Documents.

 

 

(ii)  Authorization, etc. The execution, delivery and performance by the Sublessee of this Facility Sublease and each other Facility Sublease Documents have been duly authorized by all necessary corporate action on the part of the Sublessee, and, when executed and delivered, this Facility Sublease will constitute the legal, valid and binding obligation of the Sublessee enforceable against the Sublessee in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, arrangement, moratorium or other laws relating to or affecting the rights of creditors generally and (b) general principles of equity.

 

 

(iii)  Non-Contravention. The execution, delivery and performance of this Facility Sublease and other Facility Sublease Documents do not and will not (A) contravene any Applicable Law binding on the Sublessee or its property, (B) require any action, consent or approval by any trustee or holder of indebtedness of the Sublessee (other than those obtained prior to the date hereof) or (C) constitute a violation of or a default under any indenture, mortgage or other material contract to which the Sublessee is a party or by which any of its property is bound, which in any case, individually or in the aggregate, is reasonably likely to result in a Material Adverse Effect.

 

 

(iv)  Governmental Approvals. All Governmental Approvals (if any) which are required as of the date hereof for the execution,

 

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delivery or performance by the Sublessee of its obligations under this Facility Sublease each other Facility Sublease Document have been obtained or made, are not the subject of any pending request for rehearing or appeal, and are in full force and effect (other than any Governmental Approvals, the failure to obtain which is not likely to cause a Material Adverse Effect).

 

 

(v)  Investment Company Act. The Sublessee is not an “investment company” as defined in, or subject to regulation under, the Investment Company Act of 1940.

 

 

(vi)   Reliance of Corporate Separateness. The Sublessee is entering into the transactions contemplated by the Facility Sublease Documents in reliance on the Sublessor's identity as a separate and distinct legal entity from the Guarantor or any of its Affiliates or any other Person.

 

 

Section 3.

FACILITY SUBLEASE TERM AND RENT

 

Section 3.1  Basic Sublease Term.  The basic term of this Facility Sublease (the “Basic Sublease Term”) shall commence on the Sublease Closing Date and shall terminate at 11:59 p.m. (New York City time) on May 25, 2040 (the “Sublease Expiration Date”), subject to earlier termination pursuant to Section 10 or Section 17 hereof.

 

Section 3.2  Rent.

 

 

(a)   Payment of Sublease Base Rent.  The Sublessee hereby agrees to pay to the Sublessor on each Basic Sublease Rent Payment Date during the Basic Sublease Term, unless this Facility Sublease is earlier terminated in accordance with the express provisions hereof, the amount set forth opposite such Basic Sublease Rent Payment Date on Schedule A-1 hereto (“Sublease Base Rent”).

 

 

(b)  Prepayment of Sublease Base Rent upon Change of Control.  Upon occurrence of the Change of Control of the Sublessee, the Sublessee shall prepay the net present value of all Sublease Base Rent as determined using the Discount Rate and as set forth on Schedule A-2 hereto (the "NPV of Sublease Base Rent").  Such prepayment of the Sublease Base Rent shall constitute compensation to the Sublessor for the sublease of the Facility to the Sublessee under this Facility Sublease and shall fully satisfy the obligation of the Sublessee to pay Sublease Base Rent under this Facility Sublease.

 

 

(c)  Allocation of Rent Upon Change of Control.

 

 

(i)  Initial Allocations.  The Sublease Base Rent will be allocated in the amounts and to the periods as set forth in Schedule A-3, column

 

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“b”, hereto (the “Allocated Rent”).  Within each full or partial calendar year during the Basic Sublease Term (each, a “Rental Period”), Sublease Base Rent shall be allocated on a level basis by month and on a level daily basis within each month.  It is the intention of the Sublessor and the Sublessee that the allocation of Sublease Base Rent to each Rental Period as provided in this Section 3.2(c)(i) constitutes a specific allocation of fixed rent within the meaning of Treasury Regulation section 1.467-1(c)(2)(ii).

 

 

(ii)  Proportional Rent Amounts.  Because the amount prepaid by the Sublessee pursuant to Section 3.2(b) as the net present value of all Sublease Base Rent  exceeds the sum of the present values of the Allocated Rent set forth on Schedule A-3, column “b”, hereto (as determined using the Applicable Federal Rate of 4.65%, compounded annually, as the discount rate), the fixed rent for each rental period is the “proportional rental amount” as required by Treasury Regulation section 1.467-2(a).  Such “proportional rental amount”, calculated in accordance with Treasury Regulation section 1.467-2(c)(1), equals, in each Rental Period, the Allocated Rent for such period multiplied by a fraction, the numerator of which equals the amount shown as the “Rent Payment” on July 15, 2008, on Schedule A-3, column “a”, hereto and the denominator of which equals the sum of the present values of the Allocated Rent shown on Schedule A-3, column “b”, hereto calculated as described in the first sentence of this paragraph (ii).

 

 

(iii)  Prepaid Rent Amounts and Interest on Prepaid Rent.  Because, as of the close of each Rental Period, the prepaid rent shown as the “Rent Payment” on Schedule A-3, column “a”, hereto reduced by the absolute value of cumulative 467 Interest as shown on Schedule A-3, column “j”, hereto exceeds the cumulative amount of 467 Proportional Rental Accruals as shown on Schedule A-3, column “g”, hereto it is the intention of the Sublessor and the Sublessee that such excess constitutes prepaid rent within the meaning of Treasury Regulation section 1.467-1(c)(3)(ii) and interest shall accrue thereon at the annual discount rate shown on Schedule A-3 hereto (and equal to 110% of the annual long-term Applicable Federal Rate on the Sublease Closing Date).  The Sublessor and the Sublessee on any Federal income tax returns filed by them (or on any Federal income tax returns on which their income is included), shall accrue as interest expense and interest income, respectively, the amount (and only such amount, unless required to do otherwise by the Internal Revenue Service) shown under the heading “467 Interest” (the “Interest on Prepaid Rent”) set forth opposite such Rental Period in column “i” of Schedule A-3 hereto and shall accrue as rental income and rental expense, respectively, the amount (and only such amount, unless required to do otherwise by the Internal Revenue Service) shown as 467 Proportional Rent Accrual set forth opposite such Rental Period in column “g” of Schedule A-3 hereto.

 

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(d)  Payment and Allocation of Sublease Renewal Rent.  Sublease Renewal Rent, if any, shall be paid as set forth in Section 15 and shall be allocated on a level daily basis over such Renewal Sublease Term.

 

Section 3.3  Supplemental Sublease Rent.  The Sublessee also agrees to pay to the Sublessor any and all Supplemental Sublease Rent, promptly as the same shall become due and owing, or where no due date is specified, promptly after demand by the Sublessor, and in the event of any failure on the part of the Sublessee to pay any Supplemental Sublease Rent, the Sublessor shall have all the same rights, powers and remedies as are provided for herein or by law or equity or otherwise for the failure to pay Sublease Base Rent or Sublease Renewal Rent.  The Sublessee will also pay as Supplemental Sublease Rent, to the extent permitted by Applicable Law, an amount equal to interest at the Overdue Rate on any Supplemental Sublease Rent not paid when due (whether on demand or otherwise) for the period from such due date until the same shall be paid.  All Supplemental Sublease Rent to be paid pursuant to this Section 3.3 shall be payable in the manner set forth in Section 3.4.

 

Section 3.4  Manner of Payments.  All Sublease Rent shall be paid by the Sublessee in lawful currency of the United States of America in immediately available funds to the recipient not later than 10:00 a.m. (New York City time) on the due date therefor. All Supplemental Sublease Rent due on account of Supplemental Lease Rent shall be paid as provided in Section 3.5 of the Facility Lease. All other Sublease Rent shall be paid by the Sublessee to the Sublessor by payment to the Sublessor’s Account or to such other place as the Sublessor shall notify the Sublessee in writing reasonably in advance of such payment.  The Sublessee agrees that, except pursuant to Section 10.2 (b) and Section 10.3 and any provision of this Facility Sublease which expressly provides for the same, the Sublease Rent is non-refundable and that the Sublessee will not have any right of abatement, reduction, set-off, counterclaim, rescission, refund, defense or deduction with respect thereto.

 

 

Section 4.

DISCLAIMER OF WARRANTIES; RIGHT OF QUIET ENJOYMENT

 

Section 4.1  Disclaimer of Warranties

 

 

(a)  Without waiving any claim the Sublessee may have against any manufacturer, vendor or contractor, or any claims that the Sublessee or any of its Affiliates may have pursuant to the MISPA, THE SUBLESSEE ACKNOWLEDGES AND AGREES SOLELY FOR THE BENEFIT OF THE SUBLESSOR THAT (i) THE FACILITY AND EACH COMPONENT THEREOF IS OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE ACCEPTABLE TO THE SUBLESSEE, (ii) THE SUBLESSEE IS SATISFIED THAT THE FACILITY AND EACH COMPONENT THEREOF IS SUITABLE FOR THEIR RESPECTIVE PURPOSES, (iii) THE SUBLESSOR IS NOT A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND, (iv) THE FACILITY IS SUBLEASED HEREUNDER TO THE EXTENT PROVIDED HEREBY FOR THE BASIC SUBLEASE TERM AND THE RENEWAL SUBLEASE TERMS, IF ANY, SPECIFIED HEREIN SUBJECT TO ALL APPLICABLE LAWS NOW IN EFFECT OR HEREAFTER ADOPTED, INCLUDING (1) ZONING REGULATIONS, (2) ENVIRONMENTAL LAWS OR (3) BUILDING

 

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RESTRICTIONS, AND IN THE STATE AND CONDITION OF EVERY PART THEREOF WHEN THE SAME FIRST BECAME SUBJECT TO THIS FACILITY SUBLEASE WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND BY THE SUBLESSOR AND (v) THE SUBLESSOR SUBLEASES FOR THE BASIC SUBLEASE TERM AND THE RENEWAL SUBLEASE TERMS, IF ANY, SPECIFIED HEREIN AND THE SUBLESSEE TAKES THE FACILITY UNDER THIS FACILITY SUBLEASE “AS-IS”, “WHERE-IS” AND “WITH ALL FAULTS”, AND THE SUBLESSEE ACKNOWLEDGES THAT THE SUBLESSOR NEITHER MAKES NOR SHALL BE DEEMED TO HAVE MADE, AND EXPRESSLY DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS, WARRANTIES OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION, MERCHANTABILITY THEREOF OR AS TO THE TITLE OF THE FACILITY, THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREOF OR CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM FROM PATENT, COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER WITH RESPECT THERETO.  It is agreed that all such risks, as between the Sublessor on the one hand and the Sublessee on the other hand are to be borne by the Sublessee with respect to acts, occurrences or omissions during the Facility Sublease Term.  The Sublessor shall not have any responsibility or liability to the Sublessee or any other Person with respect to any of the following occurring during the Facility Sublease Term:  (x) any liability, loss or damage caused or alleged to be caused directly or indirectly by the Facility or any Component or by any inadequacy thereof or deficiency or defect therein or by any other circumstances in connection therewith; (y) the use, operation or performance of the Facility or any Component thereof or any risks relating thereto; or (z) the delivery, operation, servicing, maintenance, repair, improvement, replacement or decommissioning of the Facility or any Component thereof.  The provisions of this paragraph (a) of this Section 4.1 have been negotiated, and, except for the representations and warranties set forth in Section 2.3(a) hereof and the MISPA, the foregoing provisions are intended to be a complete exclusion and negation of any representations or warranties of the Sublessor, express or implied, with respect to the Facility or any Component thereof that may arise pursuant to any Applicable Law now or hereafter in effect, or otherwise.

 

 

(b)  During the Facility Sublease Term, so long as no Sublease Event of Default shall have occurred and be continuing, the Sublessor hereby appoints irrevocably and constitutes the Sublessee its agent and attorney-in-fact, coupled with an interest, to assert and enforce, from time to time, in the name and for the account of the Sublessor, at the sole cost and expense of the Sublessee, whatever claims and rights the Sublessor may have in respect of the Facility or any Component thereof against any manufacturer, vendor or contractor, or under any express or implied warranties relating to the Facility or any Component thereof.

 

Section 4.2  Quiet Enjoyment.

 

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(a)  The Sublessor acknowledges notice of the Site Sub-Sublease and expressly agrees that, so long as no Sublease Event of Default has occurred and is continuing, neither the Sublessor nor any party acting by, through or under the Sublessor shall take or cause to be taken any action contrary to the Sublessee’s rights under this Facility Sublease and the Site Sub-sublease, including the right to possession, use and quiet enjoyment of the Facility, the Facility Site and the Easements.  So long as no Sublease Event of Default has occurred and is continuing, in the event of a bankruptcy of the Owner Lessor, without the prior written consent of the Sublessee, the Sublessor shall not exercise, or refrain from exercising, any rights that it might have or obtain pursuant to section 365(h) of title 11, United States Code.

 

 

(b)  The Sublessee and the Sublessor agree that at any time prior to the Transfer Date if any Seller Event of Default results in a termination of the Facility Lease and loss by the Sublessee of its right of possession, use and quiet enjoyment of the Facility, the Sublessor shall pay to the Sublessee the Unamortized Portion of the Purchase Price (in which case provisions of Section 10.3 shall not apply) as of the applicable Sublease Termination Date, and such payment will be the sole and exclusive remedy of the Sublessee on account of any termination of this Facility Sublease and the Facility Lease due to a Sublessor Event of Default. The Sublessee hereby expressly waives and relinquishes any and all other remedies at law or in equity it may have against the Sublessor or any of its Affiliates on account of such event. The Sublessor shall have the right to apply amounts owed to the Sublessee pursuant to this Section 4.2(b) against any and all amounts owed to the Sublessor by the Sublessee on such Sublease Termination Date (including any amounts which may be owed pursuant to Section 17.1).

 

 

Section 5.

RETURN OF FACILITY

 

Section 5.1  Return. Upon expiration or early termination of this Facility Sublease, the Sublessee, at its own expense, shall return the Facility (together with any Modifications to the Facility title to which shall have vested in the Owner Lessor pursuant to Section 8.3) to the Sublessor or any transferee or assignee of the Sublessor by surrendering the Facility into the possession of the Sublessor or such transferee or assignee at the Facility Site.  In connection with such return, the Sublessee shall:

 

 

(i)  assign, to the extent permitted by Applicable Law, and shall cooperate with all reasonable requests of the Sublessor or any transferee or assignee of the Sublessor for purposes of obtaining, or enabling the Sublessor or such transferees or assignees to obtain, any and all Governmental Approvals and licenses, permits, approvals and consents of any other Persons that are or will be required to be obtained by the Sublessor or such transferee or assignee in connection with the use, operation or maintenance of the Facility on or after such return in compliance with Applicable Law; provided that if any such Governmental Approval or other license, permit, approval or consent also relates to any other facilities, the Sublessee and the Sublessor shall enter into mutually satisfactory arrangements so that the Facility and such other facilities may each be owned, operated and maintained in a commercially reasonable manner;

 

 

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(ii)  provide the Sublessor or a transferee or assignee of the Sublessor copies of all documents (including equipment inspection reports and maintenance records and all Governmental Approvals and related materials), instruments, plans, maps, specifications, manuals, drawings and other documentary materials relating to the installation, maintenance, operation, construction, design, modification and repair of the Facility as shall be in the Sublessee’s possession and shall be reasonably appropriate or necessary for the continued operation of the Facility.  Upon such return, the right to use the Facility granted hereunder for the benefit of the Sublessee shall cease and terminate;

 

 

(iii)  assign any long-term service contracts specifically applicable only to the Facility to the extent such assignment is permitted under such contract without the consent of the counterparty thereto;

 

 

(iv)  enter into any reasonably requested support arrangements contemplated by Section 5.6 of the Participation Agreement; and

 

 

(v)  take, execute, acknowledge and deliver such acts, documents and assurances as may be required pursuant to Section 5.7 of the Participation Agreement.

 

Section 5.2  Condition Upon Return.  At the time of the return of the Facility by the Sublessee to the Sublessor or any transferee or assignee of the Sublessor pursuant to Section 5.1, the following conditions shall be complied with, all at the Sublessee’s sole cost and expense; provided that this Section 5.2 shall not apply to any return pursuant to Section 10:

 

 

(a)  the Facility shall be free and clear of all Liens (other than Permitted Liens of the type specified in (b) (other than Indenture Trustee’s Liens), (h), (i), (j), (k), (1) or (m) of the definition thereof and the interests of the Owner Participant and the Owner Lessor under any of the Operative Documents);

 

 

(b)  the Facility shall be in at least as good a condition as if it had been maintained and operated during the Facility Sublease Term in compliance with the provisions of this Facility Sublease, ordinary wear and tear excepted; and

 

 

(c)  at the request of the Sublessor and to the extent permitted by the Facility Lease, remove all Sublessee’s Severable Modifications and otherwise restore the Facility Site to the condition required by the Facility Lease.  Any Sublessee’s Severable Modifications not removed by the Sublessee within thirty (30) days of the expiration or the early termination of this Facility Sublease will, at the Sublessor’s option, be deemed abandoned by the Sublessee and title to such Severable Modifications will automatically, without further action, vest in the Sublessor or its designee.

 

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Section 5.3  Environmental Reports; Clean-up.

 

 

(a)  In connection with the return of the Facility to the Sublessor at the Sublease Expiration Date or the expiration of the last Renewal Lease Term elected by the Sublessee or pursuant to Section 17, the Sublessee shall, at its own expense, provide the Sublessor (a) not later than nine (9) months prior to the later of the Sublease Expiration Date or the expiration date of the last Renewal Lease Term elected by the Sublessee, or (b) in connection with any return pursuant to Section 17 of this Facility Sublease, as promptly as possible prior to such return, a Phase I Survey (as defined below) as to the environmental conditions or circumstances of the Facility and the Facility Site and the presence or absence of any Environmental Conditions that reasonably could give rise to a liability or a potential liability.  Such survey shall be conducted in conformance with American Society for Testing and Materials (“ASTM”) standards for a Phase I environmental site assessment and shall include a review of the compliance or non-compliance of the Facility and Facility Site at the time of the return of the Facility with any applicable Environmental Laws, as then currently in effect (together, a “Phase I Survey”) performed not more than 90 days prior to the date such report is provided to the Sublessor, by a reputable environmental consulting firm (selected by the Sublessee and reasonably acceptable to the Sublessor).  The Phase I Survey will only be expanded to a Phase II environmental site assessment conducted in conformance with the ASTM standards (a “Phase II Survey”) if, as a result of the Phase I Survey, facts are revealed that would reasonably necessitate a Phase II Survey; provided however, that such facts were not otherwise previously identified in the scope of work, site investigation results, contaminant fate and transport, conclusions and recommendations sections of the environmental reports listed as items 13, 14 and 21 in Schedule 4(w) to the Participation Agreement.  The provisions of such Phase I Survey or Phase II Survey shall not relieve the Sublessee of any indemnification obligation or liability with respect to Environmental Conditions or any non-compliance with Environmental Laws existing at the time of such return, whether known or unknown, in respect of the Facility or the Facility Site.

 

 

(b)  If the Phase I Survey or Phase II Survey delivered pursuant to Section 5.3(a) indicates that, or at the time of any return of the Facility pursuant to Section 5.1 (other than pursuant to Section 10) the Sublessee has received written notice or otherwise has Actual Knowledge that, any action (including

 

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clean-up, investigation, abatement, correction, removal or remediation) is then required under any then applicable Environmental Laws as then currently in effect (whether indicated in the Phase I Survey or Phase II Survey or otherwise and including any action then required under applicable Environmental Laws (as then currently in effect) for the Facility to be then in compliance with such Environmental Laws), the Sublessee shall, at its own expense, within 90 days of the Sublessor having received such Phase I Survey or Phase II Survey, provide the Sublessor with a remediation plan reasonably satisfactory to the Sublessor designed to effect compliance with then applicable Environmental Laws (as then currently in effect) and the return conditions set forth in this Section 5 as promptly as is reasonably practical (and in any event prior to the expiration of the Facility Sublease Term) and without materially adversely affecting the continued operation of the Facility.  To the extent that any action (including clean-up, investigation, abatement, correction, removal or remediation) required to be taken under this Section 5.3(b) cannot reasonably be completed prior to expiration or termination of this Facility Sublease, the Sublessee shall complete such action (including clean-up, investigation, abatement, correction, removal or remediation) as promptly thereafter as is reasonably practical, and in addition the Sublessee shall provide to the Sublessor adequate financial assurance during such period following the end of the Facility Sublease Term with respect to the ability of the Sublessee (or any other Person responsible therefor) to satisfy such obligation.  The obligations of the Sublessee set forth in Section 5.3(a) and (b) hereof shall survive the termination of this Facility Sublease and the expiration of the Facility Sublease Term. 

 

 

(c)  Nothing contained in Section 5.3(a) and (b) above shall be construed to waive any right or claim or modify any obligation which any party hereto or any of their respective Affiliates may have pursuant to the MISPA.

 

Section 5.4  Return upon termination of the Facility Lease. Notwithstanding anything to the contrary in the foregoing Sections 5.1 through and including 5.3, upon the expiration or early termination of this Facility Sublease concurrently with or as a result of the termination of the Facility Lease (whether in accordance with its terms or as a result of any exercise of remedies by the Owner Lessor or any of its successors or assigns), all obligations of the Lessee set forth in Section 5 of the Facility Lease and Section 5.6 and 5.7 of the Participation Agreement (in each case except for the Sublessor Retained Obligations thereunder) shall constitute obligations of the Sublessee hereunder mutatis mutandis and performance by the Sublessee of all such obligations for the benefit of the Owner Participant, the Owner Trustee, the Owner Lessor or any transferees or assignee of any of such parties resulting in full and unconditional satisfaction of the Sublessor’s obligations to such parties shall constitute performance by the Sublessee of its obligations hereunder and shall fully discharge such obligations.

 

Section 6.

LIENS

 

 

(a)  The Sublessee will not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to the Facility (or any Component thereof), the Ground Interest, the Operative Documents or the Facility Sublease Documents or the Sublessor’s interest therein, except Permitted Liens, other than of the type specified in clause (c) of the definition thereof. The Sublessee shall promptly notify the Sublessor of the imposition of any such Lien of which the Sublessee has Actual Knowledge and shall promptly at its own expense take such action as may be necessary to fully discharge and release such Lien.  If the Sublessee fails to cause any Lien (except Permitted Liens, other than of the type specified in clause (c) of the definition thereof) to be discharged within the permitted time, the Sublessor may cause it to be discharged and may pay (but shall be under no obligation to do so) the amount necessary to discharge such Lien.  If the Sublessor makes any such payment, all amounts paid by the Sublessor will be payable by the Sublessee to the Sublessor as Supplemental Sublease Rent within ten (10) days of demand.

 

 

(b)  Other than the Facility Sublease and the Site Sub-sublease, the Sublessor will not directly or indirectly create, incur, assume or suffer to exist any Lien on or with respect to the Facility (or any Component thereof), the Ground Interest, the Operative Documents or the Facility Sublease Documents or the Sublessee’s interest therein, except

 

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Permitted Liens, other than of the type specified in clause (c) of the definition thereof.  The Sublessor shall promptly notify the Sublessee of the imposition of any such Lien of which the Sublessor has Actual Knowledge and shall promptly at its own expense take such action as may be necessary to fully discharge and release such Lien.  If the Sublessor fails to cause any Lien (except Permitted Liens, other than of the type specified in clause (c) of the definition thereof) to be discharged within the permitted time, the Sublessee may cause it to be discharged and may pay (but shall be under no obligation to do so) the amount necessary to discharge such Lien. If the Sublessee makes any such payment, all amounts paid by the Sublessee will be payable by the Sublessor to the Sublessee within ten (10) days of demand.

 

 

Section 7.

MAINTENANCE; REPLACEMENTS OF COMPONENTS

 

Section 7.1  Maintenance.  The Sublessee, at its own cost and expense, will (a) cause the Facility to be maintained in good condition, repair and working order, ordinary wear and tear excepted, and in any event in all material respects (i) in accordance with Prudent Industry Practice without discrimination by reason of the subleased status of the Facility as compared to other comparable property owned, leased or subleased by the Sublessee or its Affiliates; (ii) in compliance with all Applicable Laws of any Governmental Entity unless such non-compliance could not reasonably be expected to result in a material adverse effect on (x) the ability of the Sublessee to perform its material obligations under any of the Facility Sublease Documents or (y) the validity or enforceability of any of the Facility Sublease Documents or any Operative Document; provided however, that the Sublessee may, in good faith and by appropriate proceedings, diligently contest the validity or application of any Applicable Law in any reasonable manner that (A) does not involve any risk of foreclosure, sale or forfeiture or loss of the Facility or any substantial part thereof or the Facility Site (in each case, unless such risk is not material) or the impairment of the use, operation or maintenance of the Facility in any material respect, and (B) could not result in any criminal liability being incurred by, or could not reasonably be expected to have any material adverse effect on the interests of the Sublessor, any Financing Party or any of their Affiliates, including subjecting any of the above parties (other than the Sublessor or its Affiliates to the extent already subject to regulation as a public utility, in which case such regulation shall not become materially more burdensome as a result of such contest), to regulation as a public utility under Applicable Law; and (iii) in accordance with the terms of all insurance policies required to be maintained with respect to the Facility pursuant to Section 11; and (b) cause to be made, at its own cost and expense, all repairs, renewals, replacements and improvements thereof, all as in the judgment of the Sublessee may be necessary so that the Facility may be operated in accordance with its intended purpose.

 

Section 7.2  Replacement of Components.  The Sublessee shall have all rights and perform all obligations of the Lessee under Section 7.2 of the Facility Lease.  The Sublessor hereby designates the Sublessee to take title to any replaced Component pursuant to Section 7.2 of the Facility Lease. The Sublessee acknowledges and agrees that if any Component to the Facility that is subject to the Facility Lease and this Facility Sublease is removed from the Facility, such Component shall remain subject to the Facility Lease and the other Operative Documents and this Facility Sublease, wherever located, until such time as such Component is replaced by a Replacement Component which has been incorporated into the Facility and which

 

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meets the requirements for the Replacement Component specified in Section 7.2 of the Facility Lease.

 

 

Section 8.

MODIFICATIONS

 

Section 8.1  Required Modifications.  The Sublessee, at its sole cost and expense, shall make or cause to be made all Modifications to the Facility as are required (a) by Applicable Law or (b) to maintain in effect any insurance policy required to be maintained with respect to the Facility pursuant to Section 11 hereof (each, a “Required Modification”); providedhowever, that the Sublessee may, in good faith and by appropriate proceedings, diligently contest the validity or application of any Applicable Law in any reasonable manner that (i) does not involve any danger of foreclosure, sale or forfeiture or loss of any part of the Facility or any substantial part thereof or the Facility Site (in each case unless such risk is not material) or impair the use, operation or maintenance of the Facility in any material respect, and (ii) could not result in any criminal liability being incurred by, or could not reasonably be expected to have any material adverse effect on the interests of the Sublessor, any Financing Party or any of their Affiliates, including subjecting any of the above parties (other than the Sublessor or its Affiliates to the extent already subject to regulation as a public utility, in which case such regulation shall not become materially more burdensome as a result of such contest), to regulation as a public utility under Applicable Law.

 

Section 8.2  Optional Modifications.  The Sublessee at any time may, at its sole cost and expense, make or cause or permit to be made any Modification to the Facility as the Sublessee considers desirable in the proper conduct of its business (any such Modification that is not a Required Modification being referred to as an “Optional Modification”); provided that the Sublessee shall not make and shall prevent from being made any Optional Modification to the Facility that would (i) materially diminish the current or residual value, utility (other than with respect to Optional Modifications for pollution control equipment) or remaining useful life of the Facility as a whole, below the current or residual value, utility (other than with respect to Optional Modifications for pollution control equipment) or remaining useful life of the Facility as a whole immediately prior to such Optional Modification (assuming the Facility was then in the condition required to be maintained by the terms of this Facility Sublease, but without regard to any Severable Modifications previously made that were not Required Modifications) or (ii) cause the Facility or any substantial portion thereof to become “limited use” property, within the meaning of Revenue Procedure 2001-28, 2001-19 I.R.B. 1156 or Revenue Procedure 2001-29, 2001-19 I.R.B. 1160.

 

Section 8.3  Title to Modifications.  The Sublessee acknowledges Section 8.3 of the Facility Lease and agrees that title to all Required Modifications and all Nonseverable Modifications shall (at no cost to the Sublessor or the Owner Lessor) vest in the Owner Lessor pursuant to such Section 8.3.  In addition, the Sublessee acknowledges the right of the Owner Lessor to purchase any Removable Modification and agrees to be bound by all obligations of the Lessee under Section 8.3 of the Facility Lease and exercise all rights of the Lessee in connection therewith pursuant to and in accordance with Section 2.2 hereof.

 

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Section 9.

NET SUBLEASE

 

 

This Facility Sublease is a “net sublease” and the Sublessee’s obligation to pay all Sublease Rent payable hereunder (and all amounts, including Sublease Termination Value (or amounts computed by reference thereto), in lieu of Sublease Rent following termination of this Facility Sublease in whole or in part) shall be absolute and unconditional under any and all circumstances and shall not be terminated, extinguished, diminished, lost or otherwise impaired by any circumstance of any character, including by:

 

 

(i)           any setoff, counterclaim, recoupment, defense or other right which the Sublessee may have against the Sublessor or any other Person, including any claim as a result of any breach by any of said parties of any covenant or provision in any Facility Sublease Document or any Operative Document,

 

 

(ii)           any lack or invalidity of title or any defect in the title, condition, design, operation, merchantability or fitness for use of the Facility or any Component or any portion of either thereof, or any eviction by paramount title or otherwise, or any unavailability of the Facility, the Facility Site, any Component or any portion of either thereof, any other portion of the Facility, or any part thereof,

 

 

(iii)           any loss, theft or destruction of, or damage to, the Facility or any Component or any portion of either thereof or interruption or cessation in the use or possession thereof or any part thereof by the Sublessee for any reason whatsoever and of whatever duration,

 

 

(iv)           the condemnation, requisitioning, expropriation, seizure or other taking of title to or use of the Facility Site, the Facility, any Component or any portion of either thereof by any Governmental Entity or otherwise,

 

 

(v)           the invalidity or unenforceability (or allegation of invalidity or unenforceability) or lack of due authorization or other infirmity of any Facility Sublease Document or any Operative Document,

 

 

(vi)           the lack of right, power or authority of the Sublessor or Owner Lessor to enter into any Facility Sublease Document or any Operative Document,

 

 

(vii)           any ineligibility of the Facility or any Component or any portion of either thereof for any particular use, whether or not due to any failure of the Lessee to comply with any Applicable Law,

 

 

(viii)           any event of “force majeure” or any frustration,

 

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(ix)           any legal requirement similar or dissimilar to the foregoing, any present or future law to the contrary notwithstanding,

 

 

(x)           any insolvency, bankruptcy, reorganization or similar proceeding by or against the Sublessee or any other Person,

 

 

(xi)           any Lien of any Person with respect to the Facility Site, the Facility, any Component or any portion of either thereof or any part thereof,

 

 

(xii)           any prohibition, limitation or restriction of Sublessee’s use of all or any part of the Facility, the Facility Site or the Ground Interest or any portion thereof or any interest therein or the interference with such use by any Person,

 

 

(xiii)            the termination or loss of the Facility, the Facility Site or the Ground Interest or any portion thereof, any other lease, sublease, right-of-way, easement or other interest in personal or real property upon or to which any portion of the Facility is located, attached or appurtenant or in connection with which any portion of the Facility is used or otherwise affects or may affect the Facility or any right thereto,

 

 

(xiv)            any breach, default or misrepresentation by the Sublessor or the Owner Lessor or any other Person under any Facility Sublease Document or any Operative Document,

 

 

(xv)            any failure, omission or delay on the part of any Person to exercise any right, power or remedy under any Facility Sublease Document or any Operative Document,

 

 

(xvi)           the taking or omission of any of the actions referred to in any Facility Sublease Document or any Operative Document or

 

 

(xvii)          any other cause, whether similar or dissimilar to the foregoing, any present or future law notwithstanding, except as expressly set forth herein or in any Facility Sublease Document or any Operative Document.

 

 

It is the intention of the parties hereto that all Sublease Rent (and all amounts, including Sublease Termination Value, in lieu of Sublease Rent following termination of this Facility Sublease in whole or in part) payable by the Sublessee hereunder shall continue to be payable in all events in the manner and at times provided for herein.  Except as otherwise expressly provided in Section 10.2(b) and Section 10.3, such Sublease Rent, and all amounts (including Sublease Termination Value (or amounts computed by reference thereto), in lieu of Sublease Rent following termination of this Facility Sublease in whole or in part) shall not be subject to any abatement and the payments thereof shall not be subject to any setoff or reduction

 

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for any reason whatsoever, including any present or future claims of the Sublessee or any other Person against the Sublessor or any other Person under this Facility Sublease or otherwise.  To the extent permitted by Applicable Law, the Sublessee hereby waives any and all rights which it may now have or which at any time hereafter may be conferred upon it, by statute or otherwise, to terminate, cancel, quit or surrender this Facility Sublease with respect to the Facility except in accordance with Section 10.  If for any reason whatsoever this Facility Sublease shall be terminated in whole or in part by operation of law or otherwise (other than a termination solely as a result of the Seller Event of Default), except as specifically provided herein, the Sublessee nonetheless agrees, to the extent permitted by Applicable Law, to pay to the Sublessor an amount equal to, if in connection with a termination of a Renewal Sublease Term, Sublease Renewal Rent, and all Supplemental Sublease Rent and any other amounts due and owing, at the time such payment would have become due and payable in accordance with the terms hereof had this Facility Sublease not been so terminated.  Nothing contained herein shall be construed to waive any claim which the Sublessee might have under any Facility Sublease Document or otherwise or to limit the right of the Sublessee to make any claim it might have against the Sublessor or any other Person or to pursue such claim in such manner as the Sublessee shall deem appropriate.

 

 

Section 10.

EVENTS OF LOSS; OTHER TERMINATION EVENTS AND RIGHTS OF FIRST OFFER AND FIRST REFUSAL

 

Section 10.1  Occurrence of Events of Loss.

 

 

(a)  If an Event of Loss described in clauses (a), (b) or (c) of the definition of Event of Loss shall occur, the Sublessee shall have the right, at its own cost and expense, to rebuild or replace the Facility in accordance with the terms of Sections 10.1 and 10.3 of the Facility Lease and subject to all conditions to such rebuilding or replacement set forth in such Sections 10.1 and 10.3.  The Sublessee shall have the right, at its own cost and expense, to negotiate with the Financing Parties on behalf of and for the benefit of the Sublessor in connection with such rebuilding or replacement and the Sublessor, if requested by the Sublessee, will exercise commercially reasonable efforts to assist the Sublessee in satisfying the conditions to rebuilding or replacement set forth in Section 10.3 of the Facility Lease; provided however, that the Sublessor shall not be obligated to take any action until it shall have received from each Buyer Sublease Guarantor a re-affirmation of its obligation under the Buyer Sublease Guaranty.

 

 

(b)  If an Event of Loss described in clauses (a) or (b) of the definition of Event of Loss shall have occurred and the Sublessee shall have elected (or shall be deemed to have elected) not to rebuild or replace the Facility, and the Owner Lessor has delivered a written notice of its election to retain the Owner Lessor’s interest in accordance with Section 10.1(b)(ii) of the Facility Lease, Section 10.3 hereof shall apply and this Facility Sublease shall automatically terminate on date the Facility Lease terminates pursuant to Section 10.1(b)(ii) thereof.  The Sublessee shall pay to the Sublessor all Supplemental Sublease Rent accrued and unpaid on such termination date.  The Sublessee’s obligation to pay accrued Supplemental Sublease Rent shall survive the termination of the Facility Sublease pursuant to this Section 10.1(b).

 

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(c)  If an Event of Loss described in clauses (a), (b) or (c) of the definition of Event of Loss shall have occurred and the Sublessee shall have elected (or shall be deemed to have elected) not to rebuild or replace the Facility, and the Owner Lessor does not elect to retain its interest in accordance with Section 10.1(b)(ii) of the Facility Lease, then on the date specified for the payment by the Lessee in Section 10.1(b)(iv)(A) or (B) of the Facility Lease, the Sublessee shall, subject to Sections 10.2(b) and 10.3,  pay to the Sublessor (i) the amount which the Sublessor is required to pay to the Owner Lessor pursuant to such Section 10.1(b)(iv)(A) or (B), as applicable, plus (ii) all other Supplemental Sublease Rent accrued and unpaid on such termination date (including all reasonable documented out-of-pocket costs and expenses of the Sublessor and each Financing Party).  This Facility Sublease shall automatically terminate without any further action by or notice from the Sublessor as of the date of the termination of the Facility Lease following such Event of Loss; provided however, that the parties’ respective payment obligations hereunder shall survive such termination of this Facility Sublease.

 

 

(d)  If an Event of Loss described in clause (d) of the definition of Event of Loss shall occur, provisions of Section 10.1(c) of the Facility Lease shall apply.  If the Owner Lessor’s Interest is sold within the timeframe specified by such Section 10.1(c), the Sublessee shall, subject to Sections 10.2(b) and 10.3, pay to the Sublessor the sum of (i) the amount which the Sublessor is required to pay to the Owner Lessor under Section 10.1(c)(ii) of the Facility Lease and (ii) any accrued Supplemental Sublease Rent.  If the Owner Lessor’s Interest is not sold within the timeframe specified by such Section 10.1(c), the Sublessee shall, subject of Sections 10.2(b) and 10.3, pay to the Sublessor the Sublease Termination Value plus all other accrued Supplemental Sublease Rent.  The Sublessor hereby irrevocably designates the Sublessee to receive any and all net cash proceeds of the sale of the Owner Lessor’s Interest which may be payable to it as the Lessee pursuant to Section 10.1(c)(iii) of the Facility Lease.

 

 

(e)  the Sublessee and the Sublessor agree to cooperate in connection with any disposition of the Owner Lessor’s Interest pursuant to Section 10.1(b) and (c) of the Facility Lease.

 

Section 10.2  Sublease Termination Value.

 

 

(a)  Sublease Termination Value shall be calculated monthly, for the same day of the month as the stated Basic Lease Rent and Renewal Lease Rent, if any, are payable under the Facility Lease (each, a “TV Payment Date”). Sublease Termination Values during the Basic Sublease Term are set forth in Schedule B.

 

 

(b)  The Sublessee shall have the right to apply Sublease Termination Value amounts owed to the Sublessor under this Facility Sublease against any and all amounts owed to the Sublessee by the Sublessor on date of such termination or transfer pursuant to Section 4.2(b) and Section 10.3 hereof.

 

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Section 10.3  Payment of Unamortized Rent.  If (i) this Facility Sublease terminates for any reason, other than pursuant to Section 17 hereof, and the Sublessor has not entered into a New Sublease pursuant to Section 22.1, or (ii) the Sublessee acquires the Owner Lessor’s Interest pursuant to and in accordance with the provisions of Section 14.1, the Sublessor shall pay to the Sublessee on the next Sublease Termination Date an amount equal to Unamortized Rent as of such Sublease Termination Date and the Sublessee hereby expressly waives and relinquishes any and all other claims remedies at law or in equity it may have against the Sublessor or any of its Affiliates on account of such early termination of this Facility Sublease.

 

 

The Sublessor shall have the right to apply amounts owed to the Sublessee pursuant to this Section 10.3 against any and all amounts owed to the Sublessor by the Sublessee on the applicable Sublease Termination Date (including the Sublessee’s obligation to pay any Sublease Termination Value).

 

Section 10.4  Event of Loss Proceeds.

 

      Any payments solely with respect to the Facility received at any time by the Sublessee or the Sublessor from any Governmental Entity as a result of the occurrence of an Event of Loss described in clause (c) of the definition of an Event of Loss or from insurance proceeds as a result of the occurrence of an Event of Loss described in clause (a), (b) or (d) of the definition of an Event of Loss shall be applied in accordance with Section 10.2(b) of the Facility Lease subject in the case of the Sublessor to the next succeeding paragraph.  Each of the Sublessee and the Sublessor hereby agrees to pay any and all such amounts received by it at any time promptly to the parties entitled to receive such payment pursuant to Section 10.2(b) of the Facility Lease.

 

The Sublessor and the Sublessee agree that (i) the Sublessee shall be entitled to any and all proceeds received by, or which are required to be paid to, the Lessee pursuant to and in accordance with such Section 10.2 (“Event of Loss Proceeds”), (ii) the Sublessee will be entitled to use the Event of Loss Proceeds to pay for the costs of rebuilding or replacing the Facility in accordance with the terms of this Facility Sublease and the Operative Documents and (iii) if the Sublessee has not elected to rebuild or replace the Facility pursuant to Section 10.1 above, all Event of Loss Proceeds shall be applied in reduction of the Sublessee’s obligation to pay the amounts required to be paid by it pursuant to Section 10.1 above or, if already paid by the Sublessee, shall be applied to reimburse the Sublessee for its payment of such amounts.

 

Section 10.5  Burdensome Buyout and Obsolescence Events.

 

  Unless requested in writing by the Sublessee, subject to all applicable provisions of the Facility Lease, the Sublessor hereby agrees not to exercise any termination right it may have as the Lessee pursuant to Section 13 or Section 14 of the Facility Lease.  The Sublessee shall have the right to request the Sublessor to exercise its rights under Section 13 or Section 14 of the Facility Lease and the Sublessor agrees, if requested by the Sublessee, to assist the Sublessee in exercising such rights; provided however, that the Sublessor shall not be obligated to take any action until it shall have received such indemnity, security or undertaking for costs from the Sublessee as it may reasonably require for all costs, claims, losses and expenses and liabilities to the Financing

 

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Parties or any other Person which it will or may reasonably be expected to expend or incur in connection with such exercise of right of first offer or right of first refusal.

 

 

        Section 10.6  Right of First Offer and First Refusal. The Sublessee shall have the right to request the Sublessor to exercise its right of first offer or right of first refusal on the terms and conditions set forth in Section 13.1 and 13.2 of the Participation Agreement and the Sublessor agrees, if requested by the Sublessee, to take all commercially reasonable efforts to assist the Sublessee in exercising such rights; provided however, that the Sublessor shall not be obligated to take any action until it shall have received such indemnity, security or undertaking for costs from the Sublessee as it may reasonably require for all costs, claims, losses and expenses and liabilities to the Financing Parties or any other Person which it will or may reasonably be expected to expend or incur in connection with such exercise of the right of first offer or right of first refusal.

 

Section 10.7  Supplemental Financing; Optional Refinancing. Unless requested in writing by the Sublessee, subject to all applicable provisions of the Participation Agreement, the Sublessor hereby agrees not to exercise any right (a) to issue Additional Lessor Notes pursuant to Section 11.1 of the Participation Agreement or (b) to refund or refinance any Note pursuant to Section 11.2 of the Participation Agreement. The Sublessee shall have the right to request the Sublessor to exercise its rights under Section 11.1 or Section 11.2 of the Participation Agreement and the Sublessor agrees, if requested by the Sublessee, to take all commercially reasonable efforts to assist the Sublessee in exercising such rights; provided, however, that the Sublessor shall not be obligated to take any action until it shall have received such indemnity, security or undertaking for costs from the Sublessee as it may reasonably require for all costs, claims, losses and expenses and liabilities to the Financing Parties or any other Person which it will or may reasonably be expected to expend or incur in connection with such exercise of the rights to issue Additional Lessor Notes or refund or refinance any Note.

 

 

Section 11.

INSURANCE

 

 

The Sublessee will maintain (or cause to be maintained) the insurance required to be maintained by the Lessee pursuant to Schedule D to the Facility Lease. In addition, all policies of insurance required to be maintained by the Sublessee hereunder which, pursuant to the provisions of the Facility Lease, require the Owner Lessor to be named as an additional insured, shall name the Sublessor and the Guarantor as additional insureds.

 

 

Section 12.

INSPECTION

 

 

During the Facility Sublease Term, the Sublessee will provide to the Sublessor and each Financing Party access for inspection in accordance with the provisions of the Facility Lease.

 

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Section 13.

COVENANTS

 

Section 13.1  Covenants of the Sublessor.

 

 

(a)  Waivers, Modifications and Amendments.  The Sublessor agrees not to, directly or indirectly amend, modify, terminate or supplement any Designated Operative Document in any material respect without prior written consent of the Sublessee, such consent not to be unreasonably withheld or delayed.  The Sublessor shall promptly provide to the Sublessee a notice of any such amendment, modification or supplement together with a copy of all relevant documentation.

 

 

(b)  Special Purpose Entity.  So long as the Facility Sublease is outstanding, the Sublessor shall independently make decisions with respect to its business and daily operations, respect and appropriately document the separate and independent natures of its activities, as compared with those of any other Person, take all reasonable steps to continue its identity as a separate legal entity, and make it apparent to third persons that the Sublessor is a Person with assets and liabilities distinct from those of any other Person.  Without limiting the foregoing, the Sublessor shall:

 

 

(i)  not amend, modify or otherwise change this Facility Sublease or the Sublessor’s certificate of formation, in any material term or manner, or in a manner which adversely affects the Sublessor’s existence as a single purpose entity;

 

 

(ii)  not liquidate or dissolve (or suffer any liquidation or dissolution), or enter into any transaction of merger or consolidation, or acquire or permit the acquisition by purchase or otherwise all or substantially all the business or assets of, or any stock or other evidence of beneficial ownership of any Person;

 

 

(iii)  not guarantee or pledge its assets for the benefit of, or otherwise become liable on or in connection with, any obligation of any other Person;

 

 

(iv)  not own any asset other than the Facility Site and incidental property necessary for the operation of the Facility and not transfer or further encumber the Facility Site or the Facility, except as otherwise permitted by the Operative Documents or the Facility Sublease Documents;

 

 

(v)  not engage, either directly or indirectly, in any business other than the ownership of the Facility Site and activities contemplated by the Operative Documents and the Facility Sublease Documents;

 

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(vi)  not enter into any contract or agreement with any affiliate of any principal or Member of the Sublessor, except upon terms and conditions that are substantially similar to those that would be available on an arms length basis with third parties other than an affiliate;

 

 

(vii)  not incur any debt, secured or unsecured, direct or contingent (including guaranteeing any obligation), other than (i) the existing indebtedness and obligations that the Sublessor has in respect of the Facility Sublease Documents and the Operative Documents;

 

 

(viii)  not make any loans or advances to any third party which, for avoidance of doubt, shall not include the Intercompany Note;

 

 

(ix)  be solvent and pay its debts from its assets as the same shall become due;

 

 

(x)  do all things necessary to preserve its existence, and will observe all formalities applicable to it;

 

 

(xi)  conduct and operate its business in its own name;

 

 

(xii)  at all times hold itself out to the public as, a legal entity separate and distinct from any other entity (including, without limitation, any affiliate or Member of the Sublessor, as applicable);

 

 

(xiii)  file its own tax returns (to the extent the Sublessor shall be unable to file a consolidated tax return with its Members);

 

 

(xiv)  maintain adequate capital for the normal obligations reasonably foreseeable in a business of its size and character and in light of its contemplated business operations;

 

 

(xv)  allocate fairly and reasonably any overhead and expense for shared office space;

 

 

(xvi)  not commingle the funds and other assets of the Sublessor with those of, or pledge its assets for the benefit of, any of any other Person;

 

 

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(xvii)  maintain its assets in such a manner that it is not costly or difficult to segregate, ascertain or identify its individual assets from those of any Affiliate or any other Person;

 

 

(xviii)  not hold itself out to creditors (including through issuances of financial statements or otherwise) as being available to satisfy, or otherwise hold itself out to be responsible for the debts, liabilities or obligations of any other Person or entity;

 

 

(xix)  pay any liabilities out of its own funds, including salaries of its employees, not funds of any Affiliate;

 

 

(xx)  not use stationary, invoices, or checks of any other Person or entity, including its Affiliates; and

 

 

(xxi)  not hold title to the Sublessor’s assets other than in Sublessor’s name.

 

 

(c)  The Sublessor covenants and agrees that during the term of this Facility Sublease it shall not revoke a notice designating the Sublessee as a “copy party” under the Operative Documents.

 

Section 13.2  Covenants of the Sublessee.

 

 

(a)  Taxes. The Sublessee shall, prior to the time penalties shall attach thereto, (i) file, or cause to be filed, all material tax and information returns that are required to be, or are required to have been, filed by it in any jurisdiction, and (ii) pay or cause to be paid all material Taxes shown to be, or to have been, due and payable on such returns and all other material Taxes lawfully imposed and payable by it, to the extent the same shall have become due and payable, except to the extent there is a good faith contest thereof by the Sublessee.

 

 

(b)  No disposition of Units 10 through 30.  Without the prior written consent of the Sublessor, the Sublessee shall not (i) lease, assign, transfer or otherwise dispose of the ▇▇▇▇ ▇▇ Facility, the Unit 20 Facility or the Unit 30 Facility (as each such term is defined in the MISPA) or (ii) merge or consolidate with or into any Person, liquidate or dissolve unless, in each case, the transferee or the entity resulting from such consolidation or succeeding to such properties or assets (A) is organized under the laws of the United States, any state thereof or the District of Columbia and (B) shall expressly assume, pursuant to an agreement reasonably acceptable to the Sublessor, all of the Sublessee’s obligations under the Facility Sublease Documents or provide other indemnification, security or undertaking reasonably acceptable to the Sublessor.

 

 

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Section 13.3  Cooperation

 

. Upon either Party’s request, the other Party shall use all commercially reasonable efforts to assist the other Party in discharging such other Party’s obligations under Section 5.7 of the Participation Agreement.

 

 

Section 14.

SPECIAL SUBLEASE TRANSFERS

 

Section 14.1  Special Sublease Transfers.The Sublessor agrees that if it exercises the right to purchase the Facility or the Owner Lessor’s Interest at the direction of the Sublessee pursuant to Section 10.6, the Sublessor shall designate the Sublessee as its designee in respect of such transfer and the Sublessee shall purchase from the Sublessor such interest at a price equal to the Sublessor’s out-of-pocket costs and expenses (which shall include the purchase price paid by the Sublessor to the Owner Lessor) incurred in connection with such purchase (a “Special Sublease Transfer”), net of any amounts which may be owed by the Sublessor to the Sublessee pursuant to Section 10.3 hereof. Upon payment of such sums this Facility Sublease shall automatically terminate and the Sublessee shall cease to have any liability to the Sublessor with respect to this Facility Sublease and other Facility Sublease Documents except for obligations surviving pursuant to the express terms of this Facility Sublease or any Facility Sublease Document or which have otherwise accrued but not been paid as of such date.  The Sublessor shall transfer (by an appropriate instrument of transfer) such interest acquired from the Owner Lessor on “as is”, “where is” and “with all faults basis, without any representation or warranty other than a warranty as to the absence of any Lien in favor of the Sublessor.

 

 

Section 15.

FACILITY SUBLEASE RENEWAL

 

Section 15.1  Facility Sublease Renewal Term.  With respect to any negotiations with the Financing Parties of the terms of a renewal or extension of the Facility Lease, the Sublessee will, at Sublessee’s sole cost and expense, use commercially reasonable efforts to negotiate and obtain an extension or renewal of the Facility Lease on behalf of and for the benefit of the Sublessor, and the Sublessor, if requested by the Sublessee, will make commercially reasonable efforts to assist the Sublessee in obtaining such extension or renewal; provided however, that such renewal or extension does not impose any additional liability or obligation on the Sublessor or any of its Affiliates for which the Sublessee is not responsible (or subsequently agrees to be responsible) under the terms of this Facility Sublease. In connection with any such negotiation, the Sublessee will use commercially reasonable efforts to obtain from the Owner Lessor a release of the Guarantor from its obligations under the Guaranty. If, at the conclusion of any such negotiations by the Sublessee, the Sublessee has obtained a proposal from the Owner Lessor for the renewal or extension of the Facility Lease which does not impose any other conditions or responsibilities on the Lessee thereunder materially more onerous than prior to the renewal of the Facility Lease, the Sublessor agrees to accept such proposal and use commercially reasonable efforts to cause such renewal or extension to be entered into. Upon renewal of the Facility Lease and the payment by the Sublessee to the Sublessor of all amounts required under Section 15.2 this Facility Sublease shall automatically be extended for a term contemporaneous with the term of the Facility Lease (the “Renewal Sublease Term”).

 

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Section 15.2  Sublease Renewal Rent for the Renewal Sublease Terms

 

.  Renewal rent for any Renewal Sublease Term selected will be in the amount due under the Facility Lease, excluding any Supplemental Lease Rent (the “Sublease Renewal Rent”).

 

 

Section 16.

EVENTS OF DEFAULT

 

 

The following events shall constitute a “Sublease Event of Default” hereunder (whether any such event shall be voluntary or involuntary or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court or any order, rule or regulation of any Governmental Entity):

 

 

(a)  failure by the Sublessee to pay Sublease Rent when due pursuant to Section 3.2(b) or 15.2;

 

 

(b)  failure by the Sublessee to perform any obligations under the Facility Lease assumed by it hereunder as provided in Section 2.2, and such failure continues for a period of time in excess of the cure period, if any, applicable to such event pursuant to the Facility Lease;

 

 

(c)  failure by the Sublessee to make payment when due of any Sublease Rent (other than payments covered by clause (a) above) and such failure continues for more than the later of ten (10) days after written notice from the Sublessor and the last day of a cure period for corresponding payment, if any, under the Facility Lease;

 

 

(d)  failure by the Sublessee to perform or observe any covenant, obligation or agreement to be performed or observed by it under this Facility Sublease or any other Facility Sublease Document (other than any obligation or agreement referred to in Section 16(a), (b) or (c) above) in any material respect, and such failure shall continue unremedied for thirty (30) days after the earlier of (i) written notice thereof from the Sublessor or (ii) the date on which the Sublessee obtains Actual Knowledge thereof provided however, that if (i) such failure is capable of being remedied but not within such 30-day period, and (ii) such party is diligently proceeding to cure such failure, and such failure is reasonably capable of being remedied within such extended period, then the period for cure shall be extended for an additional 90 days;

 

 

(e)  (i) the Sublessee or any Buyer Sublease Guarantor commences any case or other proceeding (A) under any existing or future law of any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an order for relief entered with respect to it, or seeking to adjudicate it a bankrupt or insolvent, or seeking reorganization, arrangement, adjustment, winding-up, liquidation, dissolution, composition or other relief with respect to it or its debts, or (B) seeking appointment of a receiver, trustee, custodian or other similar official for it or for all or any substantial part of its assets, or

 

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the Sublessee or any Buyer Sublease Guarantor shall make a general assignment for the benefit of its creditors; or (ii) there shall be commenced against the Sublessee or any Buyer Sublease Guarantor any case or other proceeding of a nature referred to in clause (i) above which (A) results in the entry of an order for relief or any such adjudication or appointment or (B) remains undismissed, undischarged or unbonded for a period of sixty (60) days; or (iii) there shall be commenced against the Sublessee or any Buyer Sublease Guarantor any case or other proceeding seeking issuance of a warrant of attachment, execution or similar process against all or any substantial part of its assets which results in the entry of an order for any such relief which shall not have been vacated, discharged, or stayed or bonded pending appeal within sixty (60) days from the entry thereof; or (iv) the Sublessee or any Buyer Sublease Guarantor shall take any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any of the acts set forth in clause (i), (ii) or (iii) above; or (v) the Sublessee shall generally not, or shall be unable to, or shall admit in writing its inability to, pay its debts as they become due;

 

 

(f)  any Facility Sublease Document to which the Sublessee is a party is terminated or ceases to constitute a valid and binding obligation of the Sublessee;

 

 

(g)  any Buyer Sublease Guarantor shall fail to perform any of its obligations set forth in the Buyer Sublease Guaranty and such failure shall continue unremedied until the later of (i) the cure period, if any, applicable to the underlying Sublease Default pursuant to clauses (a) through (f) above or (ii)  30 days after receipt by such Buyer Sublease Guarantor of written notice thereof from the Sublessor; and

 

 

(h)  the Buyer Sublease Guaranty ceases to be a valid and binding obligation of either Buyer Sublease Guarantor.

 

 

Section 17.

REMEDIES

 

Section 17.1  Remedies for Sublease Event of Default.  Upon the occurrence of any Sublease Event of Default and at any time thereafter so long as the same shall be continuing, the Sublessor may, at its option, declare this Facility Sublease to be in default by written notice to the Sublessee; provided that upon the occurrence of a Sublease Event of Default described in paragraph (e) of Section 16, this Facility Sublease shall automatically be deemed to be in default without the need for giving any notice; and at any time thereafter, so long as the Sublessee shall not have remedied all outstanding Sublease Events of Default, the Sublessor may do one or more of the following as the Sublessor in its sole discretion shall elect, if (i) the applicable Sublease Event of Default is (x) also a Lease Event of Default and has been declared or notified as such by the Owner Lessor or (y) a Sublease Event of Default under Section 16(e) or (h) above, elect to proceed under clause (a), (b) or (c) below and (ii) in any other case, proceed under clause (a) below only (and, for the avoidance of doubt, the provisions of clause (iii) of the paragraph immediately succeeding clause (c) shall not be applicable) to the extent permitted by, and subject to compliance with any mandatory requirements of, Applicable Law then in effect:

 

 

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(a)  proceed by appropriate court action or actions, either at law or in equity, to enforce performance by the Sublessee, at the Sublessee’s sole cost and expense, of the applicable covenants and terms of this Facility Sublease or to recover damages for breach thereof;

 

 

(b)  by notice in writing to the Sublessee, terminate this Facility Sublease whereupon all right of the Sublessee to the possession and use under this Facility Sublease of the Facility shall absolutely cease and terminate but the Sublessee shall remain liable as hereinafter provided; and thereupon, the Sublessor may demand that the Sublessee, and the Sublessee shall upon written demand of the Sublessor and at the Sublessee’s expense, forthwith return possession of the Facility to the Sublessor in the manner and condition required by, and otherwise in accordance with all of the provisions of this Facility Sublease; and the Sublessor may thenceforth hold, possess and enjoy the same free from any right of the Sublessee, or its successor or assigns, to use the Facility for any purpose whatever;

 

 

(c)  hold, keep idle or lease to others the Sublessor’s interest as the Sublessor in its sole discretion may determine, free and clear of any rights of the Sublessee under this Facility Sublease and without any duty to account to the Sublessee with respect to such action or inaction or for any proceeds with respect thereto, except that the Sublessee’s obligation to pay Sublease Rent due for any periods subsequent to the date upon which the Sublessee shall have been deprived of possession and use of the Facility pursuant to this Section 17 shall be reduced by the net proceeds, if any, received by the Sublessor from leasing the Facility to any Person other than the Sublessee.

 

 

In addition, the Sublessee shall be liable, except as otherwise provided in clause (c) above, (i) for any and all unpaid Sublease Rent due hereunder before or during the exercise of any of the foregoing remedies, (ii) on an After-Tax Basis, for reasonable legal fees and other reasonable, documented out-of-pocket costs and expenses incurred by reason of the occurrence of any Sublease Event of Default or the exercise of the Sublessor’s remedies with respect thereto,  and (iii) where applicable, the repayment in full of any costs and expenses necessary to be expended in connection with the return of the Facility in accordance with this Facility Sublease, including any costs and expenses incurred by Sublessor in connection with retaking constructive possession of, or in repairing, the Facility in order to cause it to be in compliance with all maintenance standards imposed by this Facility Sublease.

 

Section 17.2  Cumulative Remedies.  The remedies in this Facility Sublease provided in favor of the Sublessor shall not be deemed exclusive, but shall be cumulative and shall be in addition to all other remedies in its favor existing at law or in equity; and the exercise or beginning of exercise by the Sublessor of any one or more of such remedies shall not, except as specifically provided in this Section 17, preclude the simultaneous or later exercise by the Sublessor of any or all of such other remedies.  To the extent permitted by Applicable Law, the Sublessee hereby waives any rights now or hereafter conferred by statute or otherwise which may require the Sublessor to sell, lease or otherwise use the Facility or any Component thereof in mitigation of the Sublessor’s damages as set forth in this Section 17 or which may otherwise limit or modify any of the Sublessor’s rights and remedies in this Section 17.

 

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Section 17.3  No Delay or Omission to be Construed as Waiver.  No delay or omission to exercise any right, power or remedy accruing to the Sublessor upon any breach or default by the Sublessee under this Facility Sublease shall impair any such right, power or remedy of the Sublessor, nor shall any such delay or omission be construed as a waiver of any breach or default, or of any similar breach or default hereafter occurring; nor shall any waiver of a single breach or default be deemed a waiver of any subsequent breach or default.

 

 

Section 18.

NO ASSIGNMENTS, SUBLETTING

 

The Sublessee may not assign, sell, convey, transfer sublease or otherwise dispose of this Facility Sublease or any of its right hereunder in whole or in part, or sublease or grant concessions, or licenses or other rights for the occupancy or use of all or any portion of the Facility or the Facility Site.  The Sublessee hereby agrees that any assignment of its interest in this Facility Sublease shall constitute an event of default hereunder and shall be null and void ab initio.

 

 

Section 19.

SUBLESSOR’S RIGHT TO PERFORM

 

 

If the Sublessee fails to make any payment required to be made by it hereunder or under any Facility Sublease Document or fails to perform or comply with any of its other agreements contained herein or obligations under the Facility Lease assumed by it pursuant to Section 2.2 after notice to the Sublessee and failure of the Sublessee to so perform or comply within ten (10) days thereafter in the case of a failure to make any payment or thirty (30) days thereafter in all other cases, the Sublessor may itself make such payment or perform or comply with such agreement in a reasonable manner, but shall not be obligated hereunder to do so, and the amount of such payment and of the reasonable expenses of the Sublessor incurred in connection with such payment or the performance of or compliance with such agreement, as the case may be, together with interest thereon at the Overdue Rate, to the extent permitted by Applicable Law, shall be deemed payable by the Sublessee to the Sublessor on demand.

 

 

Section 20.

GENERAL INDEMNITY

 

Section 20.1  Claims Indemnified.

 

  Subject to the exclusions stated in Section 20.2, the Sublessee will, on an after-tax basis, indemnify the Sublessor and its respective members, partners, agents, employees, servants and affiliates (each, a “Sublessor Indemnitee”) for, hold each Sublessor Indemnitee harmless from, and defend each Sublessor Indemnitee against, all liabilities, obligations, losses, damages, penalties, environmental claims, actions, suits, costs, expenses, judgments and claims of any nature (each, a “Claim,” and collectively, the “Claims”) that may be imposed on or asserted against such Sublessor Indemnitee arising out of, in connection with, or relating to any of the following:

 

 

(a)  the construction, financing, refinancing, acquisition, operation, warranty, ownership, possession, maintenance, repair, lease, condition, alteration, modification,

 

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restoration, refurbishing, return, purchase, sale or other disposition, insuring, sublease, or other use or non-use of the Facility, the Facility Site or any portion or component thereof or interest therein;

 

 

(b)  the conduct of the business or affairs of the Sublessee at the Facility and the Facility Site or in connection therewith;

 

 

(c)  the manufacture, design, purchase, acceptance, rejection, delivery or condition of, or improvement to, the Facility, the Facility Site or any portion or component thereof or interest therein;

 

 

(d)  any Facility Sublease Document, the execution, delivery, performance or enforcement thereof or any amendment, supplement or modification to, or any waiver, thereof or thereto;

 

 

(e)  the Environmental Condition of, or any Release of Hazardous Materials from the Facility, the Facility Site or any portion or component thereof;

 

 

(f)  the reasonable documented costs and expenses of each Sublessor Indemnitee incurred in connection with any modification, amendment, supplement to, or any waiver to the Facility Sublease documents or any Operative Document (whether or not entered into);

 

 

(g)  the imposition of any lien other than, with respect to a particular Sublessor Indemnitee, a lien arising by or through such Sublessor Indemnitee (or its agents, employees, servants or affiliates) that is prohibited under the terms of the Facility Lease documents;

 

 

(h)  any violation by, or liability relating to, the Sublessee of, or under, any applicable law, whether now or hereafter in effect (including those relating to the environment), or any action of any governmental body or other person taken with respect to the Facility, the Facility Site, any Facility Sublease Document or the interests of any Sublessor Indemnitee under the Facility Sublease Documents, or the presence, release, generation, management, recycling, use, storage, transportation, treatment or manufacture of any Hazardous Materials in, at, under or from the Facility, the Facility Site or any portion or component thereof;

 

 

(i)  failure to obtain the KeySpan Release (as such term is defined in the MISPA) of the guaranty issued by the Guarantor to the New York Department of Public Service on August 5, 2005 in connection with the decommissioning of the Facility, or the failure by the Sublessee or its relevant Affiliate to maintain or comply with the terms of any

 

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replacement guaranty, letter of credit or other form of security posted by the Sublessee or such Affiliate in connection with the KeySpan Release of such guaranty;

 

 

(j)  the nonperformance or breach by the Sublessee of any obligation contained in any Facility Sublease Document;

 

 

(k)  the continuing fees (if any) and expenses of any Financing Party acting as a trustee or agent (including the reasonable, documented out of pocket fees and expenses of its counsel, accountants and other professional persons) arising out of discharge of its duties under or in connection with the Operative Documents; and

 

 

(l)  in any other way relating to the Facility Lease or the Facility Sublease, or the transaction contemplated by the Facility Sublease Documents.

 

Section 20.2  Claims Excluded. Any Claim to the extent (A) arising out of or attributable to, (B) in connection with or (C) relating to, any of the following, is excluded from the Sublessee’s agreement to indemnify any Sublessor Indemnitee under this Section 20:

 

 

(a)  acts, omissions or events (including violation of law or any change in the Environmental Condition of the Facility or the Facility Site or any portion or Component thereof, or the use, storage, transportation, treatment or manufacture of any Hazardous Material in, at, under or from the Facility or the Facility Site)  occurring after expiration or other termination of the Facility Sublease and, where required by the Facility Sublease, return of the Facility to the Sublessor or its designee in compliance with the provisions of the Facility Sublease. Nothing in this Section 20.2 shall be construed to waive any right or claim which either party hereto (or any of their respective Affiliates) may have pursuant to the MISPA;

 

 

(b)  any offer, sale, assignment, transfer or other disposition (voluntary or involuntary) by or on behalf of the Sublessor of all or any of its interests in the Facility Lease or the Facility Site, unless such transfer is required by the terms of the Facility Sublease Documents or occurs in connection with the exercise of remedies during continuance of a Sublease Event of Default;

 

 

(c)  the gross negligence or willful misconduct of the Sublessor Indemnitee seeking indemnification or of a Related Party of such Sublessor Indemnitee;

 

 

(d)  noncompliance with the terms of any Facility Sublease Document by, or the breach of any agreement, covenant, representation or warranty under the Operative Documents, including Sublessor Retained Obligations, of the Sublessor Indemnitee seeking indemnification or a Related Party of such Sublessor Indemnitee, unless attributable to a breach by the Sublessee of any of its obligations under the Facility Sublease Documents;

 

 

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(e)  any obligation or liability expressly assumed in any Facility Sublease Document by the Sublessor Indemnitee seeking indemnification or by a Related Party of such Sublessor Indemnitee;

 

 

(f)  with respect to the Sublessor Indemnitee seeking indemnification, any claim constituting or arising from a Lien (other than a Permitted Lien) attributable to such Sublessor Indemnitee or to a Related Party of such Sublessor Indemnitee;

 

 

(g)  any Claim that is a tax, or is a cost of contesting a tax, whether or not the Lessee is required to indemnify therefor; and

 

 

(h)  any Claim relating to the costs and expenses of any Sublessor Indemnitee in connection with any amendments, supplements, modification or waiver to the Facility Sublease Documents or the Facility Lease Documents requested by such Sublessor Indemnitee or a Related Party if such amendment or supplement is not required by the Facility Lease Documents or requested by the Sublessee.

 

Section 20.3  Insured Claims.  Subject to the provisions of Section 20.5, in the case of any Claim indemnified by the Sublessee hereunder which is covered by a policy of insurance maintained by the Sublessee, each Sublessor Indemnitee agrees, unless it and each other Sublessor Indemnitee shall waive its rights to indemnification (for itself and each Related Party thereto) in a manner reasonably acceptable to the Sublessee, to cooperate, at the sole cost and expense of the Sublessee, with insurers in exercise of their rights to investigate, defend or compromise such Claim.

Section 20.4  Claims Procedure. Each Sublessor Indemnitee shall promptly after such Sublessor Indemnitee shall have Actual Knowledge thereof notify the Sublessee of any Claim as to which indemnification is sought; provided, that the failure so to notify the Lessee shall not reduce or affect the Sublessee’s liability which it may have to such Sublessor Indemnitee under this Section 20, unless such failure materially increases the Sublessee’s liability under such Claim from that which would have existed if the failure to give notice had not occurred or materially prejudices the Sublessee’s ability to defend such claim; and provided, further, that no payment hereunder by the Sublessee to an Sublessor Indemnitee shall be deemed to constitute a waiver or release of any right or remedy that the Sublessee may have against any such Sublessor Indemnitee for actual damages resulting directly from such failure or delay of such Sublessor Indemnitee to give the Sublessee such notice. Any amount payable to any Sublessor Indemnitee pursuant to this Section 20 shall be paid within thirty (30) days after receipt of such written demand therefor from such Sublessor Indemnitee (or, if this Facility Sublease is terminated pursuant to Section 10 or 17 hereof prior to the expiration of the 30-day period, by such date of termination), accompanied by a certificate of such Sublessor Indemnitee stating in reasonable detail the basis for the indemnification thereby sought and (if such Sublessor Indemnitee is not a party hereto) an agreement to be bound by the terms hereof as if such Sublessor Indemnitee were such a party. The foregoing shall not, however, constitute an obligation to disclose confidential information of any kind without the execution of an

 

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appropriate confidentiality agreement. Promptly after the Sublessee receives notification of such Claim accompanied by a written statement describing in reasonable detail the Claims which are the subject of and basis for such indemnity and the computation of the amount so payable, the Sublessee shall, without affecting its obligations hereunder, notify such Sublessor Indemnitee whether it intends to pay, object to, compromise or defend any matter involving the asserted liability of such Sublessor Indemnitee. The Sublessee shall have the right to investigate and, so long as no Sublease Event of Default shall have occurred and be continuing, the Sublessee shall have the right, in its sole discretion, to defend or compromise such Claim for which indemnification under this Section 20 is sought (which defense or compromise shall be deemed an acknowledgment of liability by the Sublessee in respect of such Claim); provided that no such defense or compromise (i) is reasonably likely to involve any danger of foreclosure, sale, forfeiture or loss of, or imposition of a Lien on any part of the Facility, the Ground Interest, the Lessor Estate or the other Indenture Estate or the impairment of the Facility in any material respect or (ii) could result in any criminal liability being incurred by, or could reasonably be expected to have any material adverse effect on, such Sublessor Indemnitee, provided further, that no Claim shall be compromised by the Sublessee on a basis that admits any criminal violation or gross negligence or willful misconduct on the part of such Sublessor Indemnitee without the express written consent of such Sublessor Indemnitee; and provided, further, that to the extent that other Claims unrelated to the  transactions contemplated by the Facility Sublease Documents are part of the same proceeding involving such Claim, the Sublessee may assume responsibility for the contest or compromise of such Claim only if the same may be and is severed from such other Claims (and each Sublessor Indemnitee agrees to use reasonable efforts to obtain such a severance). If the Sublessee elects, subject to the foregoing, to compromise or defend any such asserted liability, it may do so at its own expense and by counsel selected by it and reasonably satisfactory to such Sublessor Indemnitee. Upon the Sublessee’s election to compromise or defend such asserted liability and notification to such Sublessor Indemnitee of its intent to do so, such Sublessor Indemnitee shall cooperate at the Sublessee’s expense with all reasonable requests of the Sublessee in connection therewith and will provide the Sublessee with all information not within the control of the Sublessee as is reasonably available to such Sublessor Indemnitee which the Sublessee may reasonably request; provided however, that such Sublessor Indemnitee shall not, unless otherwise required by Applicable Law, be obligated to disclose to the Sublessee or any other Person, or permit the Sublessee or any other Person to examine (i) any income tax returns of the Sublessor, the Owner Participant, the Owner Lessor or the Equity Investor or (ii) any confidential information or pricing information not generally accessible by the public possessed by the Sublessor, the Owner Participant, the Owner Lessor or the Equity Investor (and, in the event that any such information is made available, the Sublessee shall treat such information as confidential and shall take all actions reasonably requested by such Sublessor Indemnitee for purposes of obtaining a stipulation from all parties to the related proceeding providing for the confidential treatment of such information from all such parties). Where the Sublessee, or the insurers under a policy of insurance maintained by the Sublessee, undertake the defense of such Sublessor Indemnitee with respect to a Claim (with counsel reasonably satisfactory to such Sublessor Indemnitee in the case of the Sublessee or its Affiliates and without reservation of rights against such Sublessor Indemnitee), no additional legal fees or expenses of such Sublessor Indemnitee in connection with the defense of such Claim shall be indemnified hereunder unless such fees or expenses were incurred at the request of the Sublessee or such insurers. Notwithstanding the foregoing, a Sublessor Indemnitee may participate at its

 

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own expense in any judicial proceeding controlled by the Sublessee pursuant to the preceding provisions, but only to the extent that such party’s participation does not in the reasonable opinion of counsel to the Sublessee interfere with such control; provided however, that such party’s participation does not constitute a waiver of the indemnification provided in this Section 20; provided, further, that if and to the extent that (i) such Sublessor Indemnitee is advised by counsel that an actual or potential conflict of interest exists where it is advisable for such Sublessor Indemnitee to be represented by separate counsel or (ii) there is a risk that such Sublessor Indemnitee may be indicted or otherwise charged in a criminal complaint and such Sublessor Indemnitee informs the Sublessee that such Sublessor Indemnitee desires to be represented by separate counsel, such Sublessor Indemnitee shall have the right to control its own defense of such Claim and the reasonable fees and expenses of such defense (including the reasonable fees and expenses of such separate counsel) shall be borne by the Sublessee. So long as no Sublease Event of Default shall have occurred and be continuing, no Sublessor Indemnitee shall enter into any settlement or other compromise with respect to any Claim without the prior written consent of the Sublessee unless (i) the Sublessor Indemnitee waives its rights to indemnification hereunder or (ii) the Sublessee has not acknowledged its indemnity obligation with respect thereto and there is a significant risk that a default judgment will be entered against such Sublessor Indemnitee. Nothing contained in this Section 20.4 shall be deemed to require any Sublessor Indemnitee to contest any Claim or to assume responsibility for or control of any judicial proceeding with respect thereto.

Section 20.5  Subrogation. To the extent that a Claim indemnified by the Sublessee under this Section 20 is in fact paid in full by the Sublessee or an insurer under an insurance policy maintained by the Sublessee, the Sublessee (so long as no Sublease Event of Default shall have occurred and be continuing) or such insurer shall be subrogated to the rights and remedies of the Sublessor Indemnitee on whose behalf such Claim was paid to the extent of such payment (other than rights of such Sublessor Indemnitee under insurance policies maintained at its own expense or rights of the Owner Trustee under the Trust Agreement) with respect to the transaction or event giving rise to such Claim. Should a Sublessor Indemnitee receive any refund, in whole or in part, with respect to any Claim paid by the Sublessee hereunder, it shall promptly pay over to the Sublessee the lesser of (i) the amount refunded reduced by the amount of any Tax incurred by reason of the receipt or accrual of such refund and increased by the amount of any Tax (but not in excess of the amount of such reduction) saved as a result of such payment or (ii) the amount the Sublessee or any of its insurers has paid in respect of such Claim; provided that, so long as a Sublease Event of Default shall have occurred and is continuing, such amount may be held by the Sublessor as security for the Sublessee’s obligations under the Facility Sublease Documents.

Section 20.6  Minimize Claims. The Sublessor and any other Sublessor Indemnitee will, to the extent within their control, use their respective reasonable efforts to minimize Claims relating to them, respectively, indemnifiable by the Sublessee under this Section 20, including by complying with reasonable requests by the Sublessee to do or to refrain from doing any act if such compliance is of a purely ministerial nature or, in the good faith opinion of the Sublessor, otherwise has no adverse impact on the Sublessor or any Affiliate of any thereof or on the business or operations of any of the foregoing.

 

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Section 21.

GENERAL TAX INDEMNITY

 

Section 21.1  General Tax Indemnity.

 

 

(a)  Indemnity.  Except as provided in Section 21.1(b), the Sublessee agrees (but, in all events, without duplication of indemnities) to indemnify on an After-Tax Basis the Sublessor and its respective Affiliates, agents, employees, servants, directors, members, and shareholders (the “Tax Indemnitee”), and to hold the Tax Indemnitee harmless from and to defend the Tax Indemnitee against (i) any amounts owed by the Tax Indemnitee to the Head Lease Tax Indemnitees under the Operative Documents and (ii) all Taxes that are imposed upon (A) the Tax Indemnitee as the result of (x) acts or omissions of the Sublessee (other than permitted acts excluded under Section 3(b), and events excluded under Section 4, of the Sublease Tax Indemnity Agreement) or (y) any breach of a Tax Representation (within the meaning of the Sublease Tax Indemnity Agreement) or (B) the Facility, the Facility Site, the Ground Interest or any Component or portion thereof or any interest therein, the Indenture Estate, the Collateral or upon any Operative Document or interest therein, or otherwise arising out of, in connection with or relating to, any of the following:

 

 

(i)  the construction, financing, refinancing, acquisition, operation, use, non-use, warranty, ownership, possession, repossession, maintenance, repair, lease, condition, alteration, modification, substitution, restoration, refurbishing, rebuild, replacement, return, purchase, sale, transfer or other disposition, insuring, sublease, or other use or non-use of the Facility, the Facility Site, the Ground Interest or any Component or portion of any thereof or interest therein;

 

 

(ii)  the conduct of the business or affairs of the Sublessee, any of its Affiliates, or any other operator at or in connection with the Facility, the Ground Interest, or the Facility Site;

 

 

(iii)  the manufacture, design, installation, preparation, purchase, acceptance, rejection, delivery, redelivery, exchange, transport, assembly, dismantling, abandonment, storage, shutdown or condition of, or improvement to, the Facility, the Facility Site, the Ground Interest, or any Component or portion thereof or any interest therein;

 

 

(iv)  the Facility Sublease, the Site Sub-sublease or any other Facility Sublease Document, the execution or delivery thereof, or the performance or enforcement of any terms thereof or any amendment or supplement thereto;

 

 

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(v)  any indebtedness with respect to the Facility or the Facility Sublease or the transfer, issuance, acquisition, modification, reoptimization or refinancing thereof, or the payment of any amounts thereon or with respect thereto;

 

 

(vi)  any actual or constructive payment of principal, interest or any other amount in respect of any prepaid rent;

 

 

(vii)  the payment of Sublease Base Rent, Sublease Renewal Rent, Supplemental Sublease Rent or any other payment under the Facility Sublease; or

 

 

(viii)  otherwise in connection with the transactions contemplated by the Operative Documents or any document or instrument in connection with the Facility or related to any Operative Document, including the exercise of rights or remedies under any Operative Document or the enforcement of any Operative Document.

 

 

(b)  Excluded Taxes.  The indemnity provided for in Section 21.1(a) above shall not extend to any Tax that is attributable to or arises as a result of any of the following (the “Excluded Taxes”):

 

 

(i)  (A) U.S. federal income taxes (including Taxes in the nature of capital gain, accumulated earnings, personal holding company, excess profits, minimum, alternative minimum and other similar taxes), (B) Taxes imposed under Article 9-A of the New York State Tax Law or Title 11, Chapters 5 (Unincorporated Business Tax) or 6, Subchapter 2 (General Corporation Tax) of the Administrative Code of the City of New York (“New York Taxes”) or any Taxes imposed in lieu thereof to the extent such Taxes imposed in lieu thereof are not in excess of the New York Taxes assumed to be owed by the Owner Participant on an annual basis with respect to the transactions contemplated by the Operative Documents and set forth on Schedule 9.2(b)(i) to the Participation Agreement, and (C) Taxes other than (x) U.S. federal income taxes and (y) Taxes imposed by the State of New York or any governmental or taxing authority thereof or therein, provided that this clause (C) shall not apply to any Taxes that would not have been imposed but for (w) the location of the Facility or any portion thereof (including any Component) in the jurisdiction imposing such Taxes, (x) the execution and delivery of the Operative Documents or the Facility Sublease in such jurisdiction, (y) the identity, organization, incorporation or presence in such jurisdiction of the Sublessee and/or (z) the making of any payment under the Operative Documents or under the Facility Sublease by or on behalf of the Sublessee from within such jurisdiction;

 

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(ii)  (A) Taxes attributable to any period after expiration or other termination of the Facility Lease or the Facility Sublease and surrender of the Facility to the Sublessor, the Lessor or the successors of either and, as to Taxes in respect of the payment of Sublease Rent, after the payment of all Sublease Rent, (B) Taxes attributable to any period ending prior to the Sublease Closing Date, and (C) with respect to any Straddle Period, Taxes allocated to the portion of the Straddle Period deemed to end on or before the Sublease Closing Date on the basis of an interim closing of the books, except that Taxes (such as real property Taxes) imposed on a periodic basis shall be allocated on a daily basis;

 

 

(iii)  Taxes imposed on the Tax Indemnitee attributable to the fraud, gross negligence or willful misconduct of the Tax Indemnitee or any Affiliate thereof (other than fraud, gross negligence or willful misconduct imputed to the Tax Indemnitee or any Affiliate thereof by reason of its participation in the transactions contemplated by the Operative Documents or the Facility Sublease);

 

 

(iv)  Taxes in the nature of succession, inheritance, estate and other similar taxes;

 

 

(v)  Taxes imposed on the Tax Indemnitee attributable to (A) any act or omission of such Tax Indemnitee (or any Related Party thereto) that is expressly prohibited (or, in the case of a failure to act, required to be performed) by the Operative Documents, any document or instrument in connection with the Facility and related to any Operative Document to which the Tax Indemnitee is a party or the Facility Sublease or (B) a breach by the Tax Indemnitee (or any Related Party thereto) or the inaccuracy of any of its representations, warranties or covenants under any Operative Document or under the Facility Sublease, unless attributable to the breach by the Sublessee of any of its obligations or representations under any Operative Document or under the Facility Sublease;

 

 

(vi)  Taxes imposed on any assignee or successor-in-interest to the Tax Indemnitee (including any transfer by merger, consolidation, liquidation, reorganization or otherwise by operation of law) to the extent any such Taxes exceed the Taxes that would have been imposed had no assignment or transfer taken place determined under the law as in effect on the date of the transfer; provided that this exclusion shall not apply for purposes of determining gross-up amounts and payments required to be made on an After-Tax Basis;

 

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(vii)  Taxes imposed on the Tax Indemnitee attributable to the Tax Indemnitee’s or any Related Party to such Tax Indemnitee’s being treated as other than a United States Person.

 

 

(viii)  Taxes attributable to the failure of the Tax Indemnitee or any Related Party thereto to comply on a timely basis with certification, information, documentation, reporting or other similar requirements; provided that this exclusion shall only apply if such Tax Indemnitee or Related Party is eligible to comply with such requirement and shall have been given timely written notice of such requirement by the Sublessee;

 

 

(ix)  Taxes imposed on the Tax Indemnitee to the extent that such Tax Indemnitee’s breach of its contest obligations under Section 21.1(g) effectively precludes the Sublessee’s ability to contest the Taxes;

 

 

(x)  Taxes imposed on the Tax Indemnitee resulting from an amendment, modification, supplement or waiver to any Operative Document which was not requested by the Sublessee unless such amendment, modification, supplement or waiver (A) was required by Applicable Law or the Operative Documents, (B) is necessary or appropriate to conform with any amendment, modification, supplement or waiver to any Operative Document requested by the Sublessee in writing, or (C) is made while a Sublease Event of Default shall have occurred and be continuing;

 

 

(xi)  Taxes relating to Section 4975 of the Code, Title I of ERISA or any Similar Law to the extent attributable to a breach by the Tax Indemnitee of its representations and/or covenants in Section 3.4(g) or 7.8 of the Participation Agreement, Section 6.8 or 7.2 of the OP Guaranty, Section 4.3 of the Certificate Purchase Agreement or the Certificates (including in respect of any beneficial interest therein), as applicable;

 

 

(xii)  Taxes imposed or collected under Section 1441 through 1446 of the Code;

 

 

(xiii)  Penalties, additions to tax or interest imposed on the Tax Indemnitee attributable to the Tax Indemnitee’s or a Related Party’s failure (A) to comply with the requirements imposed on it under Section 6011, 6111, or 6112 of the Code or the Treasury Regulations promulgated thereunder or (B) to timely file returns as required by a taxing authority unless such failure to timely file returns is attributable to the Sublessee’s not providing information that it is expressly required to provide under the Facility Sublease or otherwise breaching any of its obligations under the Facility Sublease;

 

 

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(xiv)  Taxes imposed on the Sublessor or any Related Party thereto as a result of the Sublessor’s being treated as other than a disregarded entity or pass through entity for tax purposes;

 

 

(xv)  Taxes imposed on the Tax Indemnitee with respect to the employees of the Tax Indemnitee in the nature of a payroll tax;

 

 

(xvi)  Taxes imposed on the Tax Indemnitee as a result of the transfer, delivery or recordation of the Operative Documents or the Facility Sublease occurring on the Sublease Closing Date;

 

 

(xvii)  New York State and New York City sales Taxes, the payment of which has been contractually allocated to the Sublessor pursuant to Section 23.12 hereof; and

 

 

(xviii)  Taxes arising out of, or caused by, any voluntary assignment, sale, transfer or other disposition (direct or indirect) or any involuntary assignment, sale, transfer or other disposition (direct or indirect) resulting from a bankruptcy or similar proceeding for relief of debtors in which the Tax Indemnitee or a Related Party thereto is a debtor or a foreclosure by a creditor of such Tax Indemnitee or Related Party by the Sublessor of all or any of its interest in the Facility, the Facility Site, or any Component or portion thereof or interest therein.

 

provided, however, that no Tax that is being contested in good faith in an appropriate proceeding shall be payable (except as may be required to be paid pursuant to Section 21.1(c) below) while such proceeding is pending or subject to any appeal pending a final judgment.

 

 

(c)  Payment.  Each payment required to be made by the Sublessee to the Tax Indemnitee pursuant to this Section 21.1 shall be paid either (i) when due directly to the applicable taxing authority, by the Sublessee if it is permitted to do so, or (ii) where direct payment is not permitted and with respect to gross-up amounts, in immediately available funds to the Tax Indemnitee by the later of (A) 30 days following the Sublessee’s receipt of the Tax Indemnitee’s written demand for the payment (which demand shall be accompanied by a statement of the Tax Indemnitee describing in reasonable detail the Taxes for which the Tax Indemnitee is demanding indemnity and the computation of such Taxes), (B) subject to Section 21.1(g) below, in the case of amounts which are being contested pursuant to such Section 21.1(g), at the time and in accordance with a final determination of such contest or (c) in the case of any indemnity demand for which the Sublessee has requested review and determination pursuant to Section 21.1(d) below, the completion of such review and determination; provided, however, that in no event shall such payment (or, at the Sublessee’s option pursuant to Section 21.1(g)(iii)(E), payment by the Sublessee of a Tax Advance) be made later than the date which is five Business Days prior to the date on which such Taxes are required to be paid to the applicable taxing

 

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authority.  Any amount payable to the Sublessee pursuant to Section 21.1(e) or Section 21.1(f) below shall be paid promptly (but in all events within 30 days) after the Tax Indemnitee realizes a Tax or Indemnity Benefit giving rise to a payment under Section 21.1(e) or receives a refund or credit giving rise to a payment under Section 21.1(f) or receives a payment from a Head Lease Tax Indemnitee under Section 9.2(e) or (f) of the Participation Agreement, as the case may be, and shall be accompanied by a statement of the Tax Indemnitee computing in reasonable detail the amount of such payment.  Any amount that would be payable to the Sublessee pursuant to Section 21.1(e) or Section 21.1(f) below but for the fact that such amount would be in excess of the amount of indemnity(ies) previously paid to the Tax Indemnitee by the Sublessee may be used as an offset against any future general tax indemnity payments owed by the Sublessee to the Tax Indemnitee.  Upon the final determination of any contest pursuant to Section 21.1(g) below in respect of any Taxes for which the Sublessee has made a Tax Advance, the amount of the Sublessee’s obligation under Section 21.1(a) above shall be determined as if such Tax Advance had not been made.  Any obligation of the Sublessee under this Section 21.1 and the Tax Indemnitee’s obligation to repay the Tax Advance will be satisfied first by set-off against each other, and any difference owing by either party will be paid within 10 days of such final determination.

 

 

(d)  Independent Examination.  With respect to the exercise of rights by the Tax Indemnitee under Section 9.2(d) of the Participation Agreement, the Tax Indemnitee shall, to the extent permitted under Section 9.2(d) of the Participation Agreement, grant the Sublessee a power of attorney to act on behalf of the Tax Indemnitee, provided that no Sublease Event of Default shall have occurred and be occurring.  Within 30 days after the Sublessee receives any computation from the Tax Indemnitee pursuant to Section 21.1(c)(ii)(A) above, the Sublessee may request in writing that an independent public accounting firm jointly selected by the Tax Indemnitee and the Sublessee review and determine on a confidential basis the amount of any indemnity payment payable by the Sublessee to the Tax Indemnitee pursuant to this Section 21.1 or any payment by the Tax Indemnitee to the Sublessee pursuant to Section 21.1(e) or Section 21.1(f) below.  The Tax Indemnitee shall cooperate with such accounting firm and supply it with all information reasonably necessary for the accounting firm to conduct such review and determination; provided that such accounting firm shall agree in writing in a manner reasonably satisfactory to the Tax Indemnitee to maintain the confidentiality of such information; and provided, further, that the Tax Indemnitee shall not be required to provide income tax returns.  The parties hereto agree that the Tax Indemnitee shall have sole control over the positions taken with respect to its own tax returns and filings.  The parties hereto further agree that the independent public accounting firm’s sole responsibility shall be to verify the computation of any payment pursuant to this Section 21.1 and that matters of interpretation of this Facility Sublease or any other Operative Document are not within the scope of the independent accountant’s responsibility.  The fees and disbursements of such accounting firm will be paid by the Sublessee; provided that such fees and disbursements will be paid by the Tax Indemnitee if the verification results in an adjustment in the Sublessee’s favor of five percent or more of the indemnity payment or payments computed by the Tax Indemnitee (determined using a discount rate of six percent).  In the event such accounting firm determines that such computations are incorrect, then such firm shall determine what it believes to be the correct computations.  The computations of the accounting firm shall be final, binding and conclusive

 

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upon the Sublessee and the Tax Indemnitee (absent manifest error).  Such accounting firm shall be requested to makes its determination within 30 days.

 

 

(e)  Tax or Indemnity Benefit.  If, as the result of any Taxes paid or indemnified against by the Sublessee under this Section 21.1, (i) the aggregate Taxes actually paid by the Tax Indemnitee for any taxable year are less (whether by reason of a deduction, credit, allocation or apportionment of income or otherwise) than the amount of such Taxes that otherwise would have been payable by the Tax Indemnitee, or (ii) the Tax Indemnitee actually receives a payment pursuant to Section 9.2(e) of the Participation Agreement (each a “Tax or Indemnity Benefit”), then to the extent such Tax or Indemnity Benefit was not taken into account in determining the amount of indemnification payable under Section 21.1(a) above and provided no Sublease Event of Default shall have occurred and be continuing (in which event the payment provided under this Section 21.1(e) shall be deferred until the Sublease Event of Default has been cured), the Tax Indemnitee shall pay to the Sublessee the lesser of (A) (y) the amount of such Tax or Indemnity Benefit, plus (z) an amount equal to any United States federal, state or local income tax benefit realized by the Tax Indemnitee as a result of the payment under clause (y) above and this clause (z) and (B) the amount of the indemnity(ies) paid pursuant to this Section 21.1 giving rise to such Tax or Indemnity Benefit.  If it is subsequently determined that the Tax Indemnitee was not entitled to such Tax or Indemnity Benefit, the portion of such Tax or Indemnity Benefit that was repaid to the Sublessee will be treated as Taxes for which the Sublessee must indemnify the Tax Indemnitee pursuant to this Section 21.1 without regard to Section 21.1(b) (other than Section 21.1(b)(iii)).

 

 

(f)  Refund.  If the Tax Indemnitee obtains a refund or credit of all or part of any Taxes paid, reimbursed or advanced by the Sublessee pursuant to this Section 21.1 or a payment from a Head Lease Tax Indemnitee under Section 9.2(f) of the Participation Agreement with respect to a refund or credit of any Taxes indemnified by the Sublessee, the Tax Indemnitee promptly shall pay to the Sublessee (x) the amount of such refund or credit (net of any Tax payable by the Tax Indemnitee or a Head Lease Tax Indemnitee as a result of the receipt or accrual of such refund or credit if the payment of such refund or credit by the Tax Indemnitee to the Sublessee or a Head Lease Tax Indemnitee to the Sublessor is not deductible against such Tax) plus (y) an amount equal to any United States federal, state or local income tax benefit realized by (i) such Tax Indemnitee as a result of the payments under clause (x) above and this clause (y) or (ii) the Head Lease Tax Indemnitee as a result of, and to the extent reflected in the calculation thereof, the payment by the Head Lease Tax Indemnitee under Section 9.2(f) of the Participation Agreement; provided that (A) if at the time such payment is due to the Sublessee a Sublease Event of Default shall have occurred and be continuing, such amount shall not be payable until such Sublease Event of Default has been cured, and (B) the amount payable to the Sublessee pursuant to this sentence shall not exceed the amount of the indemnity(ies) paid pursuant to Section 21.1 in respect of such refunded or credited Taxes.  If it is subsequently determined that the Tax Indemnitee or a Head Lease Tax Indemnitee was not entitled to such refund or credit, the portion of such refund or credit that was repaid to the Sublessee will be treated as Taxes for which the Sublessee must indemnify the Tax Indemnitee pursuant to this Section 21.1 without regard to Section 21.1(b) (other than Section 21.1(b)(iii)).  If, in connection with a refund or credit of all or party of any Taxes paid, reimbursed or advanced by the

 

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 Sublessee pursuant to this Section 21.1, the Tax Indemnitee receives an amount representing interest on such refund or credit, the Tax Indemnitee promptly shall pay to the Sublessee (1) the amount of such interest that shall be fairly attributable to such Taxes paid, reimbursed or advanced by the Sublessee prior to the receipt of such refund or credit (net of Taxes payable in respect of the receipt or accrual of such interest if the payment of such interest by the Head Lease Tax Indemnitee to the Tax Indemnitee or the Tax Indemnitee to the Sublessee is not deductible against such Tax) and (2) any Tax savings realized by the Head Lease Tax Indemnitee or Tax Indemnitee as a result of the payments made by the Head Lease Tax Indemnitee or Tax Indemnitee as described under (1) and (2).

 

 

(g)  Contest.  With respect to the exercise of rights by the Tax Indemnitee under Section 9.2(g) of the Participation Agreement, the Tax Indemnitee shall, to the extent permitted under Section 9.2(g) of the Participation Agreement, grant the Sublessee a power of attorney to act on behalf of the Tax Indemnitee, provided that no Sublease Event of Default shall have occurred and be occurring.

 

 

(i)  Notice of Contest.  If a written claim for payment is made by any taxing authority against the Tax Indemnitee or a Head Lease Tax Indemnitee for any Taxes with respect to which the Sublessee is liable for indemnity hereunder (a “Tax Claim”), the Tax Indemnitee shall give the Sublessee written notice of such Tax Claim promptly after its receipt (and in all events within 30 days of such receipt), and shall furnish the Sublessee with copies of such Tax Claim and all other writings received from the taxing authority to the extent relating to such Taxes; provided that failure so to notify the Sublessee shall not relieve the Sublessee of any obligation to indemnify the Tax Indemnitee hereunder except as provided in clause (xii) of Section 21.1(b).  The Tax Indemnitee shall not pay, or permit a Head Lease Tax Indemnitee to pay, such Tax Claim or take any other action with respect to such Tax Claim without the written consent of the Sublessee until at least 30 days after providing the Sublessee with such written notice; provided, however, that if action shall be required by Applicable Law to be taken prior to the end of such 30-day period, the Tax Indemnitee shall, in its notice to the Sublessee, so inform the Sublessee, and the Tax Indemnitee shall not take, or permit a Head Lease Tax Indemnitee to take, any action with respect to such Tax Claim without the written consent of the Sublessee before such time as action shall be required by Applicable Law to be taken.

 

 

(ii)  Control of Contest.  Subject to Section 21.1(g)(iii) below, the Sublessee will be entitled to contest (acting through counsel selected by the Sublessee and reasonably satisfactory to the Tax Indemnitee), and control the contest of, any Tax Claim if (i) the contest of the Tax Claim can be pursued in the name of the Sublessee; (ii) the contest of such Tax Claim must be pursued in the name of the Tax Indemnitee but may in the reasonable judgment of the Tax Indemnitee be segregated procedurally from tax claims for which the Sublessee is

 

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not obligated to indemnify the Tax Indemnitee (with the Tax Indemnitee agreeing or agreeing to use reasonable efforts to ensure that the Head Lease Tax Indemnitee will agree to use reasonable efforts to segregate the contest of any indemnified Tax from the contest of any unindemnified Tax, so that the Sublessee can control the contest of the indemnified Tax) or (iii) the Head Lease Tax Indemnitee or the Tax Indemnitee requests that the Sublessee control such contest.  In the case of all other Tax Claims, subject to Section 21.1(g)(iii) below, the Tax Indemnitee will, or will use reasonable efforts to ensure that the Head Lease Tax Indemnitee will, in good faith diligently contest the Tax Claim (including seeking judicial review of any adverse administrative determination and appealing any adverse judicial determination, except that no appeal shall be required to the United States Supreme Court) if the Sublessee shall request that the Tax be contested, and the following rules shall apply with respect to such contest:

 

 

(A)  the Tax Indemnitee will, or will use reasonable efforts to ensure that the Head Lease Tax Indemnitee will, control the contest of such Tax Claim in good faith (acting through counsel selected by the Tax Indemnitee and reasonably satisfactory to the Sublessee),

 

 

(B)  at the Sublessee’s written request, if payment is made to the applicable taxing authority, the Tax Indemnitee shall, or shall use reasonable efforts to ensure that the Head Lease Tax Indemnitee shall, use all reasonable efforts to obtain a refund thereof in appropriate administrative or judicial proceedings, and

 

 

(C)  the Tax Indemnitee shall, or shall use reasonable efforts to ensure that the Head Lease Tax Indemnitee shall, not otherwise settle, compromise or abandon such contest without the Sublessee’s prior written consent except as provided in Section 21.1(g)(iv).

 

In any case, the party conducting such contest shall consult in good faith with and keep reasonably informed the other party or parties and its designated counsel (and shall provide the other party or parties with copies of any documents, reports or claims issued by or sent to the relevant auditing agent or taxing authority as well as redacted portions of tax returns) with respect to such Tax Claim; provided, however¸ that the decisions regarding any actions to be taken shall be made by the party controlling the contest in its sole judgment.

 

 

(iii)  Conditions of Contest.  Not withstanding the foregoing, in no event shall the Sublessee be permitted to contest or continue to contest (or shall the Tax Indemnitee be required to contest or continue to contest) any Tax Claim pursuant to this Section 21.1, unless:

 

 

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(A)  within 30 days after notice by the Tax Indemnitee to the Sublessee of such Tax Claim (or such shorter period as is reasonably specified by the Tax Indemnitee if any contest of such Tax Claim must be commence prior to the expiration of such 30-day period), the Sublessee shall request in writing to the Tax Indemnitee that such Tax Claim be contested,

 

 

(B)  no Sublease Event of Default has occurred and is occurring,

 

 

(C)  there is no material risk of sale, forfeiture or loss of, or the creation of a material Lien on the Facility or any Component or portion thereof as a result of the contest of such Tax Claim (other than a Permitted Lien); provided that this clause (3) shall not apply if the Sublessee posts a bond or other security (which may include cash reserves) reasonably satisfactory to the Tax Indemnitee or the Taxes are fully paid in either manner specified in clause (5) below,

 

 

(D)  there is no material risk of imposition of any criminal liability to the Tax Indemnitee as a result of the contest of such Tax Claim,

 

 

(E)  if such contest involves payment of such Taxes, the Sublessee either advances to the Tax Indemnitee (on an interest-free basis and an After-Tax Basis) the amount of such payment (a “Tax Advance”) or pays the Tax Indemnitee (on an After-Tax Basis) the amount payable by the Sublessee pursuant to Section 21.1(a) above with respect to such Taxes,

 

 

(F)  the Sublessee agrees to pay and shall pay on demand and on an After-Tax Basis all reasonable out-of-pocket costs and expenses that the Tax Indemnitee may incur in connection with the contest of such Tax Claim (including all reasonable legal, accounting and investigatory fees and disbursements),

 

 

(G)  the amount of the Taxes in controversy, taking into account the amount of all similar and logically related Taxes with respect to the transactions contemplated by the Operative Documents and the Facility Sublease Documents that could be raised in any other year (including any future year) not barred by the statute of limitations, exceeds $25,000, and

 

 

(H)  the Tax Indemnitee has been provided with an opinion of independent tax counsel selected by the Sublessee and reasonably

 

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acceptable to the Tax Indemnitee to the effect that there is a Reasonable Basis for contesting such Tax Claim.

 

 

(iv)  Waiver of Indemnification.  Notwithstanding anything to the contrary contained in this Section 21.1, the Tax Indemnitee at any time may elect to decline to take any action or any further action with respect to a Tax Claim and may in its sole discretion settle or compromise any contest with respect to such Tax Claim without the Sublessee’s consent (and the Tax Indemnitee must so act to the extent that the Head Lease Tax Indemnitee has so acted) if the Tax Indemnitee:

 

 

(A)  waives its right to any indemnity payment by the Sublessee in respect of such Tax Claim (and any other claim for Taxes with respect to any other taxable year the contest of which is effectively precluded by the Tax Indemnitee’s declining to take action with respect to the Tax Claim), and

 

 

(B)  promptly pays to the Sublessee an amount which, after addition or subtraction of any further net decrease or increase, respectively, of Taxes realized by the Tax Indemnitee as a result of (i) such payment or (ii) the receipt by the Tax Indemnitee of any payment from a Head Lease Tax Indemnitee under the comparable provision of Section 9.2(g) of the Participation Agreement and the payment thereof by the Tax Indemnitee to the Sublessee, shall be equal to the amount of any Tax Advance and any payments made to the Tax Indemnitee under Section 21.1(a) above in respect of such Tax Claim, provided, however, that the amount of such repayment shall not include the amount of any costs or expenses with respect to any such contest.

 

Except as provided in the preceding sentence, any such waiver shall be without prejudice to the rights of the Tax Indemnitee with respect to any other Tax Claim.

 

 

(h)  Reports.

 

 

(i)  If any report, statement or return is required to be filed by the Tax Indemnitee or a Head Lease Tax Indemnitee with respect to any Tax that is subject to indemnification under this Section 21.1, the Sublessee shall (1) notify the Tax Indemnitee in writing of such requirement not later than 30

 

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days prior to the date such report, statement or return is required to be filed (determined without regard to extensions) or (2) either (y) if permitted by Applicable Law and not otherwise directed by the Tax Indemnitee, prepare such report, statement or return with the Tax Indemnitee and timely file such report, statement or return with the appropriate taxing authority or (z) if the Sublessee is not permitted by law to file such report, statement or return, or if so directed by the Tax Indemnitee, prepare and furnish to the Tax Indemnitee not later than 30 days prior to the date such report, statement or return is required to be filed (determined without regard to extensions) a proposed form of such report, statement or return for filing, or delivery to the Head Lease Tax Indemnitee, by the Tax Indemnitee; provided, however, that if such report, statement or return requires information within the control of the Tax Indemnitee and its Affiliates or a Head Lease Tax Indemnitee, and not available to the Sublessee or its Affiliates, that is not provided to the Sublessee within a reasonable amount of time of the Sublessee’s request, the Sublessee shall instead prepare (and furnish to the Tax Indemnitee within the time frame discussed above) a draft of such report, statement or return by completing those portions of such report, statement or return which can be completed based upon the information then available to the Sublessee.

 

 

(ii)  The Tax Indemnitee and the Sublessee will timely provide the other, at the Sublessee’s expense, with all information in its possession that the other party may reasonably require and request to satisfy its obligations under this Section 21.1(h).  The Sublessee shall indemnify and hold the Tax Indemnitee harmless on an After-Tax Basis from and against all liabilities, costs and expenses (including the attorneys’, accountants’ and other professional fees for tax related filings or reviews) of the Tax Indemnitee arising out of any insufficiency or inaccuracy of any report, statement or return if such insufficiency or inaccuracy results from the insufficiency or inaccuracy of any information to be supplied by the Sublessee pursuant to this Section 21.1(h) in preparing and filing such report, statement or return.

 

 

Section 22.

SUBLESSEE LENDER PROTECTIONS.

 

Section 22.1  Replacement Sublease. In the event of the termination of this Facility Sublease prior to the expiration of the Basic Sublease Term (other than due to an Event of Loss or any Special Sublease Transfer or due to termination of the Facility Lease), including pursuant to Section 365 of the federal bankruptcy code, as amended from time to time and including any successor legislation thereto, the Sublessor shall serve upon a Sublessee Lender written notice that this Facility Sublease has been terminated, together with a statement of any and all sums due under this Facility Sublease and of all breaches and events of default, if any, under this Facility Sublease and any other Facility Sublease Document then known to the Sublessor (“Termination Notice”).  Sublessee Lender thereupon shall have the option, which option must be exercised by the Sublessee Lender delivering notice to the Sublessor within ten (10) Business Days from receipt of the Termination Notice (the “Option Period”), to cure any such Sublessee’s breaches or Sublessee events of default and the right to enter into a new sublease (the “New Sublease”) and related Facility Sublease Documents, subject to the satisfaction of the requirements of the Section 19 of the Facility Lease and at such Sublessee Lender’s sole cost and expense (i) effective as of the date of termination of this Facility Sublease, (ii) for the remainder of what otherwise would have been the Basic Sublease Term and (iii) at and upon all the agreements, terms, covenants and conditions of this Facility Sublease and other applicable Facility Sublease Documents; provided that if the Sublessee’s noncompliance is not a

 

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type which can be immediately remedied and if, but only if, extending the Option Period will not involve increased risk of termination of the Facility Lease, such Option Period shall be further extended for an additional period of 60 days, which period shall be further extended to up to 180 days from receipt of the Termination Notice so long as the Sublessee’s Lender or it’s designee has commenced and is diligently pursuing appropriate action to cure such default.

 

Section 22.2  Default Notices.  The Sublessor, upon serving the Sublessee with any notice of default under the provisions of, or with respect to, this Facility Sublease and all other Facility Sublease Documents shall also serve a copy of such notice upon the Sublessee Lender (in the same manner as required hereby for notices to the Sublessee) at the address specified herein, or at such other address as a Sublessee Lender shall designated in writing to the Sublessor.

 

 

Section 23.

MISCELLANEOUS

 

Section 23.1  Amendments and Waivers.  No term, covenant, agreement or condition of this Facility Sublease may be terminated, amended or compliance therewith waived (either generally or in a particular instance, retroactively or prospectively) except by an instrument or instruments in writing executed by each party hereto.

 

Section 23.2  Notices.  Unless otherwise expressly specified or permitted by the terms hereof, all communications and notices provided for herein to a party hereto shall be in writing or by a telecommunications device capable of creating a written record, and any such notice shall become effective (a) upon personal delivery thereof, including by overnight mail or courier service, (b) in the case of notice by United States mail, certified or registered, postage prepaid, return receipt requested, upon receipt thereof, or (c) in the case of notice by such a telecommunications device, upon transmission thereof, provided such transmission is promptly confirmed by either of the methods set forth in clause (a) or (b) above, in each case addressed to such party and copy party at its address set forth below or at such other address as such party or copy party may from time to time designate by written notice to the other party:

 

 

If to the Sublessor:

KeySpan Corporation

▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇

▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇

Attention:  General Counsel

Telecopier: [REDACTED]

Telephone: [REDACTED]

 

If to the Sublessee:

KeySpan Ravenswood, LLC

C/O TransCanada Facility USA, Inc

TransCanada Pipelines Tower

       ▇▇▇ – ▇^▇▇ ▇▇▇▇▇▇, ▇▇

▇▇▇▇▇▇▇, ▇▇  ▇▇▇ ▇▇▇

     

 

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Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇

     Executive Vice-President,

     Law and General Counsel

Facsimile:  [REDACTED]

With copies to:

▇▇▇▇▇ ▇▇▇▇▇ LLP

▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇

▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇

Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇

     D. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇

Facsimile: [REDACTED]

 

Section 23.3  Survival.  Except for any provisions of Section 3.3, 3.4, 5, 9 and 17 hereof (and any other provisions hereof which expressly contemplate that they shall so survive), the warranties and covenants made by each party hereto shall not survive the expiration or termination of this Facility Sublease in accordance with its terms.

 

Section 23.4  Successors and Assigns.  This Facility Sublease shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the parties hereto and their respective successors and assigns as permitted by and in accordance with the terms hereof.  Except as expressly provided herein or in the other Facility Sublease Documents, neither party hereto may assign its interests or transfer its obligations herein without the consent of the other party hereto.

 

Section 23.5  Governing Law.  This Facility Sublease has been delivered in the State of New York and shall be in all respects governed by and construed in accordance with the laws of the State of New York, including all matters of construction, validity and performance.

 

Section 23.6  Severability.  Any provision of this Facility Sublease that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

Section 23.7  Counterparts.  This Facility Sublease may be executed by the parties hereto on any number of separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute but one and the same instrument.

 

Section 23.8  Headings and Table of Contents.  The headings of the sections of this Facility Sublease and the Table of Contents are inserted for purposes of convenience only and shall not be construed to affect the meaning or construction of any of the provisions hereof.

 

Section 23.9  Further Assurances.  Each party hereto will promptly and duly execute and deliver such further documents to make such further assurances for and take such

 

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further action reasonably requested by the other party, all as may be reasonably necessary to carry out more effectively the intent and purpose of this Facility Sublease.  The Sublessee shall be responsible for any costs and expenses incurred in connection therewith.

 

Section 23.10  Measuring Life.  If and to the extent that any of the rights and privileges granted under this Facility Sublease, would, in the absence of the limitation imposed by this sentence, be invalid or unenforceable as being in violation of the rule against perpetuities or any other rule or law relating to the vesting of interests in property or the suspension of the power of alienation of property, then it is agreed that notwithstanding any other provision of this Facility Sublease, such options, rights and privileges, subject to the respective conditions hereof governing the exercise of such options, rights and privileges, will be exercisable only during (a) the longer of (i) a period which will end twenty-one (21) years after the death of the last survivor of the descendants living on the date of the execution of this Facility Sublease of the following Presidents of the United States:  ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇ or (ii) the period provided under the Uniform Statutory Rule Against Perpetuities or (b) the specific applicable period of time expressed in this Facility Sublease, whichever of (a) and (b) is shorter.

 

Section 23.11  No Third Party Beneficiaries. The terms and provisions of this Facility Sublease shall be binding upon and inure to the benefit of the parties hereto, and their respective successors and assigns in accordance with the terms hereof, and is made solely and specifically for their benefit. Except as expressly provided under Section 22 hereof, no other Person shall have any rights, interest or claims hereunder or be entitled to any benefits under or on account of this Facility Sublease as a third-party beneficiary or otherwise.

 

Section 23.12  New York Sales Taxes. For New York State and New York City sales tax purposes, the parties to this Facility Sublease intend that 5.98% of each payment of Sublease Base Rent and Sublease Renewal Rent, if any, shall be attributable to transmission equipment and other tangible personal property the rental of which is subject to sales tax under Articles 28 and 29 of the New York Tax Law. The Sublessor shall, to the extent permitted by law, pay all taxes due with respect to the Sublease Base Rent directly to New York State, provided however that in the event that the payment of such tax by the Sublessor will result in any increase of the amount of tax due under Articles 28 and 29 of the New York Tax Law, the Sublessor will pay such amount to the Sublessee and then the Sublessee will pay such tax directly to New York State. The Sublessor shall indemnify the Sublessee, on an After-Tax Basis, for any payments of New York State and New York City sales tax with respect to Sublease Base Rent made in accordance with this Section 23.12. The Sublessee shall pay all taxes due with respect to Sublease Renewal Rent directly to New York State.

 

Section 23.13  Consent to Jurisdiction; Waiver of Trial by Jury.

 

 

(a)  Each of the parties hereto (i) hereby irrevocably submits to the nonexclusive jurisdiction of the Supreme Court of the State of New York, New York County (without prejudice to the right of any party to remove to the United States District Court for the Southern District of New York) and to the nonexclusive jurisdiction of the United States District

 

59

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Court for the Southern District of New York for the purposes of any suit, action or other proceeding arising out of this Facility Sublease or any other Facility Sublease Document or the subject matter hereof or thereof or any of the transactions contemplated hereby or thereby brought by any of the parties hereto or any of their successors or permitted assigns; (ii) hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in such New York State court, or in such federal court; and (iii) to the extent permitted by Applicable Law, hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that such party is not personally subject to the jurisdiction of the above-named courts, that the suit, action or proceeding is brought in an inconvenient forum, that the venue of the suit, action or proceeding is improper or that this Facility Sublease or any other Facility Sublease Document or the subject matter hereof or thereof may not be enforced in or by such court.

 

 

(b)  TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES THE RIGHT TO DEMAND A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF THIS FACILITY SUBLEASE OR ANY OTHER FACILITY SUBLEASE DOCUMENT OR THE SUBJECT MATTER HEREOF OR THEREOF BROUGHT BY ANY OF THE PARTIES HERETO OR THEIR SUCCESSORS OR PERMITTED ASSIGNS.

 

 

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IN WITNESS WHEREOF, the Sublessor and the Sublessee have caused this Facility Sublease to be duly executed and delivered by their respective officers thereunto duly authorized.

 

 

[UNIT 40 SUBLESSOR], as Sublessor

 

 

By:  ___________________________________

Name:

Title:

 

By:  ___________________________________

Name:

Title:

 

                                      KEYSPAN-RAVENSWOOD, LLC, as Sublessee

 

By:  ___________________________________

Name:

Title:

 

By:  ___________________________________

Name:

Title:

 

 

 

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SCHEDULE A-1

 

 

[REDACTED: Basic rent payment dates and amounts from the Facility Lease.]

 

 

SCHEDULE A-2

 

 

[REDACTED: Amount which represents the NPV of all Basic Rent payments under the Facility Lease as of the Closing Date.]

 

 

SCHEDULE A-3

 

 

[REDACTED: Tax allocation of Sublease Base Rent.]

 

 

SCHEDULE B

 

 

[REDACTED: Dates and amounts mirror those in the Facility Lease.]

 

 

SCHEDULE C

 

 

Unamortized Rent

 

 

[REDACTED: The sum of all remaining Facility Lease Basic Lease Rent discounted at the Discount Rate.]

 

 

SCHEDULE D

 

 

Unamortized Purchase Price

 

 

[REDACTED: The amounts will be determined for each Sublease Termination Date as sum of (i) the NPV of all remaining Basic Lease Rent as of such date discounted at the Discount Rate and (ii) the unamortized portion of the Purchase Price allocable to the Facility Sublease Agreement (based upon a straight-line amortization of such allocated portion of the Purchase Price over the Basic Sublease Term).]

 

      

        M      

    

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EXHIBIT A

to

Site Sub-sublease

 

 

DESCRIPTION OF FACILITY SITE

 

All that certain piece or parcel of land, situate, lying, and being at Ravenswood Cogeneration Facility in Long Island City, the Borough and County of Queens, City and State of New York, bounded and described as follows:

Beginning at the point of a newly constructed building within Parcel “A” having coordinates of N277358.47 and E607681.66 in the New York State Plane Coordinate System of 1927, which beginning point is distant the following three courses from an angle point on the westerly side of ▇▇▇▇▇▇ Boulevard (75 feet wide), which angle point is located at the intersection of 38^th Avenue (75 feet wide), as said Boulevard and Avenue are shown on map #4297, titled “the Elimination of ▇▇^▇▇ ▇▇▇▇▇▇ and 38^th Avenue between ▇▇▇▇▇▇ Boulevard and the East River, along with the layout of Sewer Easements”, dated November 28, 1962 and adopted by the Board of Estimate of the City of New York on July 25^th, 1963 (Map #4297) which map was filed at Topographical Bureau, Borough of Queens, City of New York on August 9, 1963 thence;

A.	North 25o02’04” East a distance of 476.77 feet in the right of way of ▇▇▇▇▇▇ Boulevard to a point, thence;

B.	North 64o57’56” West a distance of 214.15 feet at right angle from the previous course to a point being the original point of beginning of the Con Edison Lease area, thence;

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C.	South 23o48’54” West a distance of 9.07 feet to the point of beginning of the Facility Site, running thence;

1.	South 59o11’27” East a distance of 43.51 feet along the perimeter of the said Facility Site area to a point, thence;

2.	North 32o20’17” East a distance of 4.31 feet along the same to a point, thence;

3.	South 59o20’48” East a distance of 22.03 feet along the same to a point, thence;

4.	North 30o48’33” East a distance of 0.55 feet along the same to a point, thence;

5.	South 59o11’27” East a distance of 30.24 feet along the same to a point, thence;

6.	South 30o48’33” West a distance of 30.23 feet along the same to a point, thence;

7.	South 59o11’27” East a distance of 30.52 feet along the same to a point, thence;

8.	South 30o48’33” West a distance of 13.79 feet along the same to a point, thence;

9.	South 59o11’27” East a distance of 9.74 feet along the same to a point, thence;

10.	South 30o48’33” West a distance of 107.85 feet along the same to a point, thence;

11.	North 59o11’27” West a distance of 20.80 feet along the same to a point, thence;

12.	South 30o48’33” West a distance of 85.62 feet along the same to a point, thence;

13.	South 59o11’27” East a distance of 28.29 feet along the same to a point, thence;

14.	South 30o48’33” West a distance of 82.39 feet along the same to a point, thence;

15.	North 59o11’27” West a distance of 57.01 feet along the same to a point, thence;

16.	North 30o48’33” East a distance of 13.49 feet along the same to a point, thence;

17.	North 59o11’27” West a distance of 51.01 feet along the same to a point, thence;

18.	North 30o48’33” East a distance of 16.72 feet along the same to a point, thence;

19.	North 59o11’27” West a distance of 41.34 feet along the same to a point, thence;

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20.	North 30o48’33” East a distance of 18.65 feet along the same to a point, thence;

21.	North 59o11’27” West a distance of 123.57 feet along the same to a point, thence;

22.	North 30o48’33” East a distance of 163.89 feet to a point, thence;

23.	South 64o14’53” East a distance of 6.58 feet to a point, thence;

24.	South 60o36’23” East a distance of 10.27 feet along facility site area to a point, thence;

25.	South 59o11’27” East a distance of 117.09 feet along said facility site area to a point, thence;

26.	North 30o48’33” East a distance of 76.07 feet along the same to a point, thence;

27.	North 59o11’27” West a distance of 4.63 feet along the same to a point, thence;

28.	North 30o48’33” East a distance of 25.31 feet along the same to the Point and Place of Beginning.

Containing: 1.380 Acres (60,095 Square Feet), more or less.

Being known as the Facility Site, on map entitled “Facility Site Within Parcel “A”, Long Island City, Queens, New York”, prepared by GEOD Corporation, dated April 22, 2004, as last revised May 24, 2004.

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EXHIBIT B

to

Site Sub-sublease Agreement

 

 

DESCRIPTION OF EASEMENTS

 

A.  The easements originally granted to the Ground Lessor pursuant to that certain Supplemental (Ravenswood) Easement Agreement ("SREA"), dated as of February 4, 2003, by and among Consolidated Edison Company of New York, Inc., Steam House Leasing, LLC and the Ground Lessor (the "SREA Easements"), as follows:

1.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a concrete "stack" and the concrete foundation on which it is constructed.

2.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a building to house the Continuous Emission Monitoring System "CEMS".

3.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of an "Aqueous Ammonia Tank in Dike," as well as an area appurtenant thereto for the installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of an oil water separator.

4.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of (A) a building to house a gas

 

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compressor and (B) lubricating oil containment and storage tanks and systems, a hot gas scrubber, coalescing filter, recycling cooler, fuel gas heater, related piping and electrical conduits.

5.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of (A) an underground kerosene fuel line and (B) electric lines located in an underground trench.

6.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of' a 12 foot wide underground common utility trench.

7.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of an above grade export steam line.

8.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a " 138 KV underground cable line".

9.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a "Sanitary Sewer Line".

10.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a " 12" Fire Protection Loop".

11.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a "31G04 Feeder Breaker G4E," and appurtenant equipment (including, but not limited to, appurtenant generator breakers, motor operated disconnect switches, ground switches, voltage regulators, transformers, manually operated disconnect switches, circuit breakers).

 

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12.   Installation, erection, construction, reconstruction, maintenance, repair, rebuilding, modification, renovation, inspection, testing and operation of a "Natural Gas Feeder Line".

B.             The easements originally granted to the Ground Lessor as described in Schedule 2.02(a)(5), Schedule 2.02(a)(8) and Schedule 2.03(3) of that certain Amended and Restated Ravenswood Declaration of Easements Agreement ("DOE"), dated June 18, 1999, by and among Consolidated Edison Company of New York, Inc., Steam House Leasing, LLC and the Ground Lessor (the "DOE Easements," and collectively with the SREA Easements, the "Easements"), recorded in the Queens County Register's Office on June 30, 1999 in Reel 5294, Page 2470, as follows:

1.   An Easement over a portion of ▇▇▇▇▇▇ Substation for the maintenance, repair, operation, inspection and replacement of electrical feeders ▇▇▇, ▇▇▇, ▇▇▇, ▇▇▇, ▇▇▇, and C2A.

2.   An Easement over a portion of ▇▇▇▇▇▇ Substation for the maintenance, repair, operation and inspection of the Discharge Tunnel.

3.   An Easement for the operation, inspection, testing, repair, replacement and maintenance of all steam piping downstream of the 2 6" revenue meters.

The Easements are depicted on the attached Survey prepared by GEOD Corporation, dated April 22, 2004, as last revised May 24, 2004 (provided, however, that any conflict between the description on the Survey and the actual location of the Easement shall be resolved in favor of the actual location of the Easement).

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EXHIBIT C

 

 

GUARANTY