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Exhibit (10)(yy)
LEASE AGREEMENT
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Dated November 1, 1997
By and between
THE INDUSTRIAL DEVELOPMENT BOARD OF THE TOWN OF ADDISON
and
CAVALIER HOMES OF ALABAMA, a division of
Cavalier Manufacturing, Inc. a Delaware corporation
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The interest of The Industrial Development Board of the Town of Addison
in any rents, revenues and receipts derived by it under this Lease Agreement has
been assigned to First Commercial Bank, as Trustee under the Trust Indenture
dated as of November 1, 1997.
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This Lease Agreement was prepared by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ of Walston, Wells,
▇▇▇▇▇▇▇▇ & Bains, LLP, Financial Center, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
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STATE OF ALABAMA
WINSTON COUNTY
LEASE AGREEMENT
---------------
LEASE AGREEMENT dated as of November 1, 1997, between THE INDUSTRIAL
DEVELOPMENT BOARD OF THE TOWN OF ADDISON, a public corporation and
instrumentality under the laws of the State of Alabama (the "Issuer"), and
CAVALIER HOMES OF ALABAMA, a division of Cavalier Manufacturing, Inc., a
Delaware corporation (the "User").
Recitals
Pursuant to and for the purposes expressed in Division 1 of Article 4
of Chapter 54 of Title 11 of the Code of Alabama 1975, the Issuer and the User
have executed and delivered this Lease Agreement simultaneously with the
issuance and sale by the Issuer of its $2,000,000 Industrial Development Revenue
Bonds (Cavalier Homes of Alabama Project), dated November 1, 1997, under and
pursuant to that certain Trust Indenture dated as of November 1, 1997 from the
Issuer to First Commercial Bank, as trustee, to finance the acquisition,
construction and installation of a "project" within the meaning of the Enabling
Law, as more particularly described in said Trust Indenture.
NOW, THEREFORE, for and in consideration of the premises, and the
mutual covenants and agreements herein contained, the Issuer and the User hereby
covenant, agree and bind themselves as follows:
ARTICLE 1
---------
Definitions
-----------
For all purposes of this Lease Agreement:
(a) Capitalized terms used herein without definition shall have
the respective meanings assigned thereto in the Indenture.
(b) The following general rules of construction shall apply:
(1) The terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular.
1
(2) All accounting terms not otherwise defined herein have
the meanings assigned to them, and all computations herein provided for
shall be made, in accordance with generally accepted accounting
principles. All references herein to "generally accepted accounting
principles" refer to such principles as they exist at the date of
application thereof.
(3) All references in this instrument to designated
"Articles", "Sections" and other subdivisions are to the designated
Articles, Sections and subdivisions of this instrument as originally
executed.
(4) The terms "herein", "hereof" and "hereunder" and other
words of similar import refer to this Lease Agreement as a whole and
not to any particular Article, Section or other subdivision.
(c) The following terms shall have the following meanings:
Abatement Agreement means that certain Abatement Agreement dated
January 28, 1997 among the User and the Issuer with respect to the abatement of
certain taxes with respect to the Project.
Additional Rental Payments shall mean the payments to be made pursuant
to Section 5.03.
Basic Rental Payments shall mean the Payments payable pursuant to
Section 5.02.
Bond Fund shall mean the fund established pursuant to Section 8.01 of
the Indenture.
Bond Guaranty shall mean that certain Bond Guaranty and Continuing
Disclosure Agreement dated November 1, 1997, executed by User in favor of the
Trustee.
Bond Payment Date shall mean each date on which any principal of,
premium (if any) or interest on the Bonds is due and payable (whether on the
maturity or due dates thereof, by call for optional or mandatory or
extraordinary redemption, or by acceleration).
Construction Fund shall mean the fund established pursuant to Section
7.02 of the Indenture.
Credit Documents shall mean collectively that certain Credit Agreement
dated November 1, 1997 between the Credit Obligor and the User and all
agreements, documents, guaranties, instruments, notes, notices, and other
writings executed and delivered by the User or any other person or persons which
evidence or provide security for the obligations of the User with respect to the
Letter of Credit, including any amendments or supplements to any thereof from
time to time entered into pursuant to the applicable provisions thereof, until a
Substitute Letter of Credit shall have been accepted by the Trustee, and
thereafter "Credit Documents" shall mean collectively all agreements, documents,
2
instruments, notes, notices, and other writings which evidence or provide
security for the obligations of the User with respect to such Substitute Letter
of Credit.
Credit Obligor Mortgage shall mean that certain Mortgage, Assignment of
Leases and Security Agreement dated as of November 1, 1997 by the Issuer and the
User to the Credit Obligor as security for the obligations of the User to the
Credit Obligor under the Credit Documents.
Enabling Law shall mean Division 1 of Article 4 Chapter 54 of Title 11
of the Code of Alabama 1975.
Environmental Law shall mean and include all laws, rules, regulations,
ordinances, judgments, decrees, codes, orders, injunctions, notices and demand
letters of any Governmental Authority applicable to the User or the Project Site
(including the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Sections 9601, et seq.) relating to pollution
or protection of human health or the environment, including any relating to
Hazardous Substances.
Equipment shall have the meaning assigned in Demising Clause III of
Article 3.
Financing Documents shall mean the Indenture, the Lease Agreement, the
Bond Guaranty, the Credit Documents, and the Letter of Credit.
Governmental Authority shall mean any federal, state, county,
municipal, or other government, domestic or foreign, and any agency, authority,
department, commission, bureau, board, court or other instrumentality thereof.
Hazardous Substances shall mean and include all pollutants,
contaminants, toxic or hazardous wastes and other substances (including
asbestos, urea formaldehyde, foam insulation and materials containing either
petroleum or any of the substances referenced in Section 101(14) of CERCLA), the
removal of which is required or the manufacture, use, maintenance and handling
of which is regulated, restricted, prohibited or penalized by an Environmental
Law, or, even though not so regulated, restricted, prohibited or penalized,
might pose a hazard to the health and safety of the public or the occupants of
the property on which it is located or the occupants of the property adjacent
thereto.
Improvements shall have the meaning assigned in Demising Clause II of
Article 3.
Indenture shall mean that certain Trust Indenture dated as of November
1, 1997 between the Issuer and the Trustee as originally executed or as it may
from time to time be supplemented, modified or amended by one or more indentures
or other instruments supplemental hereto entered into pursuant to the applicable
provisions thereof.
3
Indenture Indebtedness shall mean all indebtedness of the Issuer at the
time secured by the Indenture, including without limitation (i) all principal
of, premium (if any) and interest on the Bonds and (ii) all reasonable and
proper fees, charges and disbursements of the Trustee and Paying Agent for
services performed and disbursements made under the Indenture.
Internal Revenue Code shall mean whichever of the following shall be
applicable in the context: the Internal Revenue Code of 1954, as amended; the
Internal Revenue Code of 1986, as amended; and the transition rules of related
legislation.
Issuer shall mean The Industrial Development Board of the Town of
Addison, a public corporation under the laws of the State of Alabama, until a
successor shall have become such pursuant to the applicable provisions of the
Indenture and this Lease Agreement, and thereafter "Issuer" shall mean such
successor corporation.
Lease Agreement shall mean this instrument including any amendments or
supplements to such instrument from time to time entered into pursuant to the
applicable provisions thereof.
Lease Default shall have the meaning stated in Article 10 of this Lease
Agreement. A Lease Default shall "exist" if a Lease Default shall have occurred
and be continuing.
Lease Term means the duration of the leasehold estate granted in
Section 5.01 of this Lease Agreement.
Net Proceeds, when used with respect to any insurance or condemnation
award, means the gross proceeds from the insurance or condemnation award with
respect to which that term is used remaining after payment of all reasonable
expenses (including reasonable attorneys' fees and any extraordinary fee of the
Trustee) incurred in the collection of such gross proceeds.
Permitted Encumbrances means, as of any particular time, (i) the
Financing Documents, (ii) liens for taxes, assessments or other governmental
charges or levies not due and payable or which are currently being contested in
good faith by appropriate proceedings, (iii) utility, access and other easements
and rights of way, party walls, restrictions and exceptions that may be granted
or are permitted under this Lease Agreement, (iv) any mechanic's, laborer's,
materialman's, supplier's or vendor's lien or right or purchase money security
interest if payment is not yet due and payable under the contract in question,
(v) such minor defects, irregularities, encumbrances, easements, rights of way
and clouds on title as do not, in the opinion of an independent Counsel,
materially impair the Project for the purpose for which it was acquired or is
held by the Issuer, and (vi) such encumbrances, mortgages, and other matters
which appear of public record prior to the date of recording of this Lease
Agreement.
Project shall mean the Project Site, the Improvements and the
Equipment, as the same may at any time exist, and all other property and rights
referred to or intended so to be in Demising Clauses I through III, inclusive,
hereof.
4
Project Costs shall mean all costs of acquiring, constructing,
equipping and improving the Project, including without limitation:
(1) the purchase price and related costs for the
acquisition of real property or any interest therein,
(2) the cost of labor, materials and supplies furnished or
used in the acquisition, construction and installation of the
Improvements and the costs of acquiring and installing the Equipment,
(3) acquisition, transportation and installation costs for
personal property and fixtures,
(4) fees for architectural, engineering and supervisory
services,
(5) expenses incurred in the enforcement of any remedy
against any contractor, subcontractor, materialmen, vendor, supplier or
surety,
(6) interest accruing on the Bonds until the Project is
placed in service,
(7) expenses incurred by the Issuer and the User in
connection with the financing of the Project including legal,
consulting and accounting fees,
(8) reimbursement to the User for any of the foregoing
costs, fees and expenses set forth in (1) through (7) above, paid by it
with its own funds.
Project Site shall mean the real property described in Demising Clause
I of Article 3.
Rental Payments shall mean collectively the Basic Rental Payments and
the Additional Rental Payments.
State shall mean the State of Alabama.
Trustee shall mean First Commercial Bank, until a successor Trustee
shall have become such pursuant to the applicable provisions of the Indenture,
and thereafter "Trustee" shall mean such successor.
Unimproved when used with reference to the Project Site shall mean any
part of the Project Site upon which no part of a building or other structure
rests.
User shall mean Cavalier Homes of Alabama, a division of Cavalier
Manufacturing, Inc., and its successors and assigns, and thereafter "User" shall
mean such persons.
5
ARTICLE 2
---------
Representations
---------------
SECTION 2.01 Representations by the Issuer
-----------------------------
The Issuer makes the following representations
(a) The Issuer is duly incorporated under the provisions of the
Enabling Law and has the power to enter into the transactions contemplated by
this Lease Agreement and to carry out its obligations hereunder. The Issuer is
not in default under any of the provisions contained in its certificate of
incorporation, its by-laws, or in the laws of the State. By proper corporate
action the Issuer has duly authorized the execution and delivery of this Lease
Agreement, the Indenture, and the Bonds.
(b) The Issuer has determined that the issuance of the Bonds, the
acquisition, construction and equipping of the Project and the leasing of the
Project to the User will promote industry, develop trade and further the use of
the agricultural products and natural and human resources of the State and the
development and preservation of said resources.
(c) The Bonds will be issued and delivered contemporaneously with the
delivery of this Lease Agreement.
SECTION 2.02 Representations by the User
---------------------------
The User makes the following representations:
(a) The User is duly organized and validly existing as a corporation
under the laws of the State of Delaware, is duly qualified to do business in the
State of Alabama, is not in violation of any provisions of its documents of
organization or the laws of the State of Delaware or Alabama, has power to enter
into this Lease Agreement, and by proper action has duly authorized the
execution and delivery of this Lease Agreement.
(b) The User has the corporate power and authority to own its
properties, carry on the business in which it is presently engaged, and
consummate the transactions contemplated by the Financing Documents to which it
is a party.
(c) By proper corporate action the User has duly authorized the
execution, delivery and performance of the Financing Documents to which it is a
party and the consummation of the transactions contemplated therein.
6
(d) The User has obtained all consents, approvals, authorizations and
orders of, and made all filings with, each Governmental Authority that are
required to be obtained or made by it as a condition to the execution and
delivery of the Financing Documents to which it is a party.
(e) The execution and delivery by the User of the Financing Documents
to which it is a party and the consummation by it of the transactions
contemplated therein will not conflict with, be in violation of, or result in a
default under, its articles of incorporation or bylaws, or any agreement,
contract, instrument, order, writ, decree or judgment to which the User is a
party or is subject.
(f) The Financing Documents to which the User is a party constitute
legal, valid and binding obligations of the User and are enforceable against the
User in accordance with the terms of such instruments, except as enforcement
thereof may be limited by (i) the exercise of judicial discretion and (ii)
bankruptcy, insolvency, or other similar laws affecting the enforcement of
creditors' rights, to the extent constitutionally applicable.
(g) There is no action, suit, proceeding, inquiry or investigation
pending before any Governmental Authority, or threatened against or affecting
the User or its properties, that (a) involves (i) the consummation of the
transactions contemplated by, or the validity or enforceability of, the
Financing Documents, (ii) its organization, (iii) the election or qualification
of its directors or officers, (iv) its powers, or (b) could have a materially
adverse effect upon the financial condition or operations of the User.
(h) The User is not an "investment company" or a company "controlled"
by an "investment company", as such terms are defined in the Investment Company
Act of 1940, as amended.
(i) The financing of the Project through the issuance of the Bonds
and the leasing of the Project to the User has induced the User to enlarge,
expand and improve existing operations in the State as provided in the Enabling
Law.
(j) The User intends to operate the Project for manufacturing,
production, assembling, processing, storing and distribution of such
agricultural, manufactured or mineral products as the User shall determine and
in such a manner that it will constitute a "project" within the meaning of the
Enabling Law.
(k) This Lease Agreement is necessary to promote and further the
financial and economic interests of the User and the assumption by the User of
its obligations hereunder will result in direct financial benefits to the User.
ARTICLE 3
---------
7
Demising Clauses
----------------
The Issuer, for and in consideration of the rents, covenants and
agreements hereinafter reserved, mentioned and contained on the part of the User
to be paid, kept and performed, does hereby demise and lease to the User, and
the User does hereby lease, take and hire from the Issuer, the following
property:
I.
The real property described on Exhibit A hereto and all other
real property, or interests therein, acquired by the Issuer with
proceeds of the Bonds or with funds advanced or paid pursuant to this
Lease Agreement (the "Project Site"), together with all easements,
permits, licenses, rights-of-way, contracts, leases, tenements,
hereditaments, appurtenances, rights, privileges and immunities
pertaining or applicable to said real property.
II.
All buildings, structures and other improvements now or
hereafter constructed or situated on the Project Site, including
without limitation all buildings, structures and other improvements
constructed on the Project Site with proceeds of the Bonds or with
funds advanced or paid by the User pursuant to this Lease Agreement
(the "Improvements").
III.
The machinery, equipment, personal property and fixtures
described on Exhibit B attached hereto and all other machinery,
equipment, personal property and fixtures acquired with the proceeds of
the Bonds or with funds advanced or paid by the User pursuant to this
Lease Agreement, together with all personal property and fixtures
acquired in substitution therefor or as a renewal or replacement
thereof (the "Equipment").
SUBJECT, HOWEVER, to Permitted Encumbrances.
ARTICLE 4
---------
Acquisition of the Project
--------------------------
SECTION 4.01 Agreement to Acquire
--------------------
(a) Simultaneously with the delivery of this Lease Agreement the
Issuer shall cause the Bond proceeds to be deposited in the Construction Fund.
The Issuer shall cause the Bond proceeds to be advanced to the User by
withdrawal from the Construction Fund, in accordance with the requirements of
8
the Indenture, for the payment of Project Costs at such times and in such
amounts as shall be directed by the User. The Bond proceeds shall be used
solely for the payment of Project Costs as provided in the Indenture.
(b) The User will acquire and construct the Project with all
reasonable dispatch and due diligence and will cause the Project to be placed in
service as promptly as practicable. The Issuer will not execute any contract or
purchase orders for the Project without the prior written consent of the User.
(c) Compliance with laws and regulations necessary to realize any
sales and use tax exemption with respect to the acquisition, construction and
equipping of the Project shall be the sole responsibility of the User and the
Issuer does not assume any responsibility or give any assurance with respect to
any possible exemption from sales and use taxes.
(d) The User may, with the prior written consent of the Credit
Obligor except as provided below, cause changes or amendments to be made in the
plans and specifications for such acquisition and construction of the Project,
provided (1) such changes or amendments will not change the nature of the
Project to the extent that it would not constitute a "project" as authorized by
the Enabling Law, and (2) such changes or amendments will not materially affect
the utility of the Project for its intended use. The User may, without the
consent of the Credit Obligor, make changes to the plans and specifications for
the Project which do not increase the total cost of the Project by more than
$100,000 in the aggregate for all such changes. The Issuer will make only such
changes or amendments in the plans and specifications for the acquisition and
construction of the Project as may be requested in writing by the User.
(e) The Issuer and the User shall from time to time each appoint by
written instrument an agent or agents authorized to act for each respectively in
any or all matters relating to the acquisition and construction of the Project
and payments to be made out of the Construction Fund. One of the agents
appointed by the User shall be designated its Project Supervisor. Either the
Issuer or the User may from time to time revoke, amend or otherwise limit the
authorization of any agent appointed by such party to act on such party's behalf
or designate another agent or agents to act on such party's behalf, provided
that there shall be at all times at least one agent authorized to act on behalf
of the Issuer, and at least one agent (who shall be the Project Supervisor)
authorized to act on behalf of the User, with reference to all the foregoing
matters. The Project Supervisor at any time designated by the User is hereby
irrevocably appointed as agent for the Issuer to issue and execute, for and in
the name and behalf of the Issuer and without any further approval of the board
of directors or any officer, employee or other agent thereof, a payment request
or requisition on the Construction Fund.
(f) In the event the proceeds derived from the sale of the Bonds are
insufficient to pay in full all Project Costs, the User shall be obligated to
complete the acquisition and construction of the Project at its own expense and
the User shall pay any such deficiency and shall save the Issuer whole and
harmless from any obligation to pay such deficiency. The User shall not by
9
reason of the payment of such deficiency from its own funds be entitled to any
diminution in Rental Payments.
SECTION 4.02 No Warranty of Suitability of Issuer
------------------------------------
THE USER RECOGNIZES THAT SINCE THE PLANS AND SPECIFICATIONS FOR
ACQUIRING AND CONSTRUCTING THE PROJECT ARE FURNISHED BY IT, THE ISSUER MAKES NO
WARRANTY, EITHER EXPRESS OR IMPLIED, NOR OFFERS ANY ASSURANCES THAT THE PROJECT
WILL BE SUITABLE FOR THE USER'S PURPOSES OR NEEDS OR THAT THE PROCEEDS DERIVED
FROM THE SALE OF THE BONDS WILL BE SUFFICIENT TO PAY IN FULL ALL PROJECT COSTS.
SECTION 4.03 Pursuit of Remedies Against Vendors, Contractors and
----------------------------------------------------
Subcontractors and Their Sureties
---------------------------------
The User may, in its own name or in the name of the Issuer, prosecute
or defend any action or proceeding or take any other action involving any
vendor, contractor, subcontractor or surety under any contract or purchase order
for acquisition and construction of the Project which the User deems reasonably
necessary, and the Issuer hereby irrevocably appoints the User as its agent with
respect to any such action or proceeding and agrees that it will cooperate fully
with the User and will take all action requested by the User in any such action
or proceeding. Any amounts recovered by way of damages, refunds, adjustments or
otherwise in connection with the foregoing shall be paid into the Construction
Fund and applied as provided for funds on deposit therein. The User will pay all
costs, fees and expenses incurred which are not paid from the Construction Fund.
SECTION 4.04 Completion of the Project
-------------------------
(a) The completion of the Project shall be evidenced to the Trustee
by a certificate signed by the Project Supervisor on behalf of the User stating
that (1) construction of the Improvements has been completed in accordance with
the plans and specifications approved by the User, (2) the Equipment has been
acquired and installed in accordance with the User's instructions, (3) all
Project Costs have been paid, and (4) all facilities and improvements necessary
in connection with the Project have been acquired and installed and all costs
and expenses incurred in connection therewith have been paid. Notwithstanding
the foregoing, such certificate shall state that it is given without prejudice
to any rights against any vendor, contractor, subcontractor or other person not
a party to this Lease Agreement which exist at the date of such certificate or
which may subsequently come into being. The Issuer and the User will cooperate
in causing such certificate to be furnished to the Trustee.
10
(b) After the delivery of the aforesaid certificate to the Trustee,
any moneys then remaining in the Construction Fund shall be transferred to the
Bond Fund and applied as provided therein.
ARTICLE 5
---------
Duration of Lease Term
and Rental Provisions
---------------------
SECTION 5.01 Duration of Term
----------------
The term of this Lease Agreement and of the lease herein made shall
begin on the date of the delivery of this Lease Agreement and, subject to the
provisions of this Lease Agreement, shall continue until midnight of November 1,
2007. The Issuer will deliver to the User possession of the Project on the
commencement date of the Lease Term, subject to the inspection and other rights
reserved in this Lease Agreement, and the User will accept possession thereof at
such time; provided, however, the Issuer will be permitted such possession of
the Project as shall be necessary and convenient for it to construct or install
any additions or improvements and to make any repairs or restorations required
or permitted to be constructed, installed or made by the Issuer pursuant to the
provisions hereof.
SECTION 5.02 Basic Rental Payments; Draws Under Letter of Credit
---------------------------------------------------
(a) On or before 10:00 a.m. (Birmingham, Alabama time) on each Bond
Payment Date, the User shall pay to the Trustee, for the account of the Issuer,
as Basic Rent for the use an occupancy of the Project, an amount equal to the
principal of, premium (if any) and interest on the Bonds due and payable on such
Bond Payment Date; provided, however, that (i) any amount already on deposit in
the Bond Fund on the due date of such Basic Rental Payment and available for the
payment of the principal of, premium (if any) and interest on the Bonds on such
Bond Payment Date shall be credited against the amount of such Basic Rental
Payment, and (ii) any amount drawn by the Trustee pursuant to the Letter of
Credit for the payment of the principal of, premium (if any) and interest on the
Bonds on such Bond Payment Date shall be credited against such Basic Rental
Payment.
(b) On each Bond Payment Date prior to 10:00 a.m. (Birmingham,
Alabama time) the Trustee shall, without making any prior claim or demand on the
User for the payment of Basic Rental Payments with respect to Bonds make a draw
on the Letter of Credit in an amount equal to the amount of principal of,
premium (if any) and interest on the Bonds due and payable on such Bond Payment
Date. The User shall receive a credit against Basic Rental Payments for the
amount so drawn.
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(c) The User hereby authorizes and directs the Trustee to draw moneys
under the Letter of Credit in accordance with the provisions of the Indenture
and this Lease Agreement to the extent necessary to pay the principal of,
premium (if any) and interest on the Bonds when due and payable pursuant to the
Indenture and the Letter of Credit.
(d) All Basic Rental Payments shall be made in funds immediately
available to the Trustee at its Principal Office on or before the related Bond
Payment Date.
(e) If any Basic Rental Payment is due on a day which is not a
Business Day, such payment may be made on the first succeeding day which is a
Business Day with the same effect as if made on the day such payment was due.
(f) The User acknowledges, covenants, and agrees that until the
Indenture Indebtedness is paid in full the User shall make Basic Rent Payments
in such amounts and at such times as shall be necessary to enable the Trustee to
pay in full in accordance with the Indenture the principal of, premium (if any)
and interest on the Bonds when and as the same becomes due and payable.
SECTION 5.03 Additional Rental Payments
--------------------------
(a) The User shall make Additional Rental Payments as follows:
(1) the acceptance fee of the Trustee and the annual (or other
regular) fees, charges and expenses of the Trustee and the Paying
Agent.
(2) any amount to which the Trustee may be entitled under
Section 13.07 of the Indenture; and
(3) the reasonable expenses of the Issuer incurred at the
request of the User, or in the performance of its duties under any of
the Financing Documents, or in connection with any litigation which may
at any time be instituted involving the Project, the Financing
Documents, or in the pursuit of any remedies under the Financing
Documents.
(b) All Additional Rental Payments shall be due and payable within 10
days after receipt by the User of an invoice therefor.
SECTION 5.04 Advances by Issuer or Trustee
-----------------------------
If the User shall fail to perform any of its covenants in this Lease
Agreement, the Issuer or the Trustee may, at any time and from time to time,
after written notice to the User if no Lease Default exists, make advances to
effect performance of any such covenant on behalf of the User. Any money so
advanced by the Issuer or the Trustee, together with interest at the base or
prime rate of the Trustee plus 2%, shall be paid upon demand.
12
SECTION 5.05 Indemnity of Issuer, Trustee and Paying Agent
---------------------------------------------
(a) The User covenants and agrees to pay and to indemnify and hold
the Issuer and the Trustee (and each officer, director, employee, member and
agent of each thereof) harmless against, any and all liabilities, losses,
damages, claims or actions (including all reasonable attorneys' fees and
expenses of the Issuer and Trustee), of any nature whatsoever incurred by the
Issuer and the Trustee without gross negligence or willful misconduct on their
part arising from or in connection with their performance or observance of any
covenant or condition on their part to be observed or performed under any of the
Financing Documents, including without limitation, (i) any injury to, or the
death of, any person or any damage to property at the Project, or in any manner
growing out of or connected with the use, nonuse, condition or occupation of the
Project or any part thereof, (ii) any damage, injury, loss or destruction of the
Project, (iii) any other act or event occurring upon, or affecting, any part of
the Project, (iv) violation by the User of any contract, agreement or
restriction affecting the Project or the use thereof of which the User has
notice and which shall have existed at the commencement of the Lease Term hereof
or shall have been approved by the User, or of any law, ordinance or regulation
affecting the Project or any part thereof or the ownership, occupancy or use
thereof, (v) any violation of, or non-compliance of the Project Site with,
Environmental Laws, or the presence of Hazardous Substances now or hereafter on
or under or included in the Project Site and any investigation, clean up or
removal of, or other remedial action or response costs with respect to, any
Hazardous Substances now or hereafter located on or under or included in the
Project Site, or any part thereof, that may be required by any Environmental Law
or Governmental Authority (specifically including without limitation any and all
liabilities, damages, fines, penalties, response costs, investigatory or other
costs pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et seq.) and
including without limitation claims alleging non-compliance with Environmental
Laws which seek relief under or are based on state or common law theories such
as trespass or nuisance, and (vi) liabilities, losses, damages, claims or
actions arising out of the offer and sale of the Bonds or a subsequent sale or
distribution of any of the Bonds, unless the same resulted from a representation
or warranty of the Issuer or the Trustee in any of the Financing Documents or
any certificate delivered by the Issuer or the Trustee pursuant thereto being
false or misleading in a material respect and such representation or warranty
was not based upon a similar representation or warranty of the User furnished to
the Issuer or the Trustee in connection therewith.
(b) The User hereby agrees that the Issuer and the Trustee shall not
incur any liability to the User, and shall be indemnified against all
liabilities, in exercising or refraining from asserting, maintaining or
exercising any right, privilege or power of the Issuer or the Trustee under any
of the Financing Documents if the Issuer or the Trustee as the case may be is
acting in good faith and without willful misconduct or in reliance upon a
written request by the User.
(c) If any indemnifiable party (whether the Issuer or the Trustee)
shall be obligated to pay any claim, liability or loss, and if in accordance
with all applicable provisions of this Section the User shall be obligated to
indemnify and hold such indemnifiable party harmless against such
13
claim, liability or loss, then, in such case, the User shall have a primary
obligation to pay such claim, liability or loss on behalf of such indemnifiable
party and may not defer discharge of its indemnity obligation hereunder until
such indemnifiable party shall have first paid such claim, liability or loss and
thereby incurred actual loss.
(d) The covenants of indemnity by the User contained in this Section
shall survive the termination of this Lease Agreement with respect to events or
occurrences happening prior to or upon the termination of this Lease Agreement
and shall remain in full force and effect until the commencement of an action
with respect to any such event or occurrence shall be prohibited by law.
SECTION 5.06 Obligations of User Unconditional
---------------------------------
The obligation of the User to make all Rental Payments and all other
payments provided for herein and to perform and observe the other agreements and
covenants on its part herein contained shall be absolute and unconditional,
irrespective of any rights of set-off, recoupment or counterclaim it might
otherwise have against the Issuer. The User will not suspend or discontinue any
such payment or fail to perform and observe any of its other agreements and
covenants contained herein or terminate any of the Financing Documents, for any
cause whatsoever, including, without limiting the generality of the foregoing,
any acts or circumstances that may constitute an eviction or constructive
eviction, failure of consideration or commercial frustration of purpose, the
invalidity or unenforceability of the Bonds or any of the Financing Documents or
any provision thereof, the invalidity or unconstitutionality of the Enabling Law
or any provision thereof, any damage to or destruction of the Project or any
part thereof, the taking by eminent domain of title to or the right to temporary
use of all or any part of the Project, any failure of the Credit Obligor to make
a payment pursuant to the Letter of Credit or to reinstate the appropriate
amount thereof, any change in the tax or other laws or administrative rulings,
actions or regulations of the United States of America or of the State or any
political or taxing subdivision of either thereof, or any failure of the Issuer
to perform and observe any agreement or covenant, whether express or implied,
any duty, liability or obligation arising out of or in connection with this
Lease Agreement. Notwithstanding the foregoing, the User may, at its own cost
and expense and in its own name or in the name of the Issuer, prosecute or
defend any action or proceeding, or take any other action involving third
persons which the User deems reasonably necessary in order to secure or protect
its rights of use and occupancy and the other rights hereunder. The provisions
of the first and second sentences of this Section shall apply only so long as
any of the Bonds remains Outstanding.
SECTION 5.07 This Lease a Net Lease
----------------------
The User recognizes, understands and acknowledges that it is the
intention hereof that this Lease Agreement be a net lease and that as long as
any of the Bonds are Outstanding all Basic Rent be available for payment of the
principal of, premium (if any) and interest on the Bonds and
14
that all Additional Rent shall be available for the purposes specified therefor.
This Lease Agreement shall be construed to effectuate such intent.
ARTICLE 6
Maintenance, Alterations, Replacements,
Taxes and Insurance
---------------------------------------
SECTION 6.01 Maintenance and Repairs, Alterations and Improvements,
------------------------------------------------------
Party Walls; and Liens; Utility Charges
---------------------------------------
(a) The User shall, at its own expense, (1) keep the Project in as
reasonably safe condition as its operations permit, (2) from time to time make
all necessary and proper repairs, renewals and replacements thereto, including
external and structural repairs, renewals and replacements, and (3) pay all gas,
electric, water, sewer and other charges for the operation, maintenance, use and
upkeep of the Project.
(b) The User may, at its own expense, make structural changes,
additions, improvements, alterations or replacements to the Improvements that it
may deem desirable, provided such structural changes, additions, improvements,
alterations or replacements do not change the character of the Project as a
"project" under the Enabling Law, and that such additions, improvements,
alterations or replacements will not adversely affect the utility of the Project
or substantially reduce its value. All such changes, additions, improvements,
alterations and replacements whether made by the User or the Issuer shall become
a part of the Project and shall be covered by this Lease Agreement.
(c) The User may connect or "tie-in" walls of the Improvements and
utility and other facilities located on the Project Site to other structures and
facilities owned or leased by it on real property adjacent to the Project Site.
The User may use as a party wall any wall of the Improvements which is on or
contiguous to the boundary line of real property owned or leased by it, and in
the event of such use, each party hereto hereby grants to the other a ten-foot
easement adjacent to any such party wall for the purpose of inspection,
maintenance, repair and replacement thereof and the tying in of new
construction. If the User utilizes any wall of the Improvements as a party wall
for the purpose of tying in new construction that will be utilized under common
control with the Project, the User may also remove any non-loadbearing wall
panel in the party wall; provided however, if the adjacent property ceases to be
operated under common control with the Project, the User shall, at its own
expense, install wall panels similar in quality to those that have been removed.
Prior to the exercise of any one or more of the rights granted by this
subsection (c), the User shall demonstrate to the reasonable satisfaction of the
Issuer and Trustee that the operation of the Project will not be adversely
affected by the exercise of such rights.
15
(d) The Issuer shall also, upon request of the User, grant such
utility and other similar easements over, across or under the Project Site as
shall be necessary or convenient for the furnishing of utility and other similar
services to the Project or to real property adjacent to or near the Project Site
and owned or leased by the User; provided that such easements shall not
adversely affect the operation of the facilities forming a part of the Project.
SECTION 6.02 Removal of, Substitution and Replacement for Equipment
------------------------------------------------------
If the User in its sole discretion determines that any item of
Equipment has become inadequate, obsolete, worn-out, unsuitable, undesirable or
unnecessary in the operation of the Project, the User may remove such Equipment
from the Improvements or the Project Site and (on behalf of the Issuer) sell,
trade in, exchange or otherwise dispose of it without any responsibility or
accountability to the Issuer or the Trustee therefor, provided that the User
shall either:
(a) substitute and install in or on the Project Site other
personal property or fixtures which shall (1) have equal or greater
utility (but not necessarily the same value or function) in the
operation of the Project, (2) be free of all liens and encumbrances
except for purchase money liens or encumbrances reasonably acceptable
to the Trustee, (3) be the sole property of the Issuer, subject to the
demise hereof, (4) be held by the User on the same terms and conditions
as the items originally comprising the Equipment, and (5) not impair
the Project or change the nature of the Project as a "project" under
the Enabling Law; or
(b) forthwith upon such sale apply the price or amount
obtained upon the sale of such Equipment to the redemption of the
principal of the Bonds in accordance with the terms thereof.
SECTION 6.03 Installation of Machinery and Equipment Owned or Leased
-------------------------------------------------------
by the User or Subject to a Security Interest in Third Parties
--------------------------------------------------------------
(a) The User, may, at its own expense, or permit any sublessee of the
Project to, at its own expense, install at the Project any machinery, equipment
or other personal property which will facilitate the operation of the Project.
Any such property which is installed and does not constitute a part of the
Project under the terms of this Lease Agreement shall be and remain the property
of the User or such sublessee and may be removed thereby at any time while no
Event of Default exists under this Lease Agreement; provided, that any damage to
the Project occasioned by such removal shall be repaired by such party at its
own expense.
(b) If (i) any machinery, equipment or other personal property is
leased by the User or the User shall have granted a security interest in any
such property in connection with the acquisition thereof by the User, (ii) such
property is installed or is located on the Project Site, and (iii) such property
does not constitute a part of the Project under the terms of this Lease
Agreement, then the lessor of such property or the party holding a security
interest therein, as the case may be, may remove such property from the Project
16
Site even though an Event of Default may then exist hereunder or this Lease
Agreement may have been terminated following an Event of Default hereunder,
provided, that the foregoing permission to remove shall be subject to the
agreement by such lessor or secured party to repair at its own expense an
damage to the Project occasioned by such removal.
SECTION 6.04 Insurance
---------
(a) The User will take out and continuously maintain in effect the
following insurance with respect to the Project, paying as the same become due
all premiums with respect thereto:
(1) Insurance to the extent of the full insurable value of the
Project against loss or damage by fire, tornado, windstorm, flood and
other hazards and casualties, with uniform standard extended coverage
endorsement limited only as may be provided in the standard form of
extended coverage endorsement at the time in use in the State.
(2) Insurance against liability for bodily injury to or death
of persons and for damage to or loss of property occurring on or about
the Project or in any way related to the condition or operation of the
Project, in the minimum amounts of $1,000,000 for death of or bodily
injury to any one person, $3,000,000 for all death and bodily injury
claims resulting from any one accident, and $500,000 for property
damage.
(3) Flood insurance under the national flood insurance program
established by the Flood Disaster Protection Act of 1973, as at any
time amended, only during such times while the Project is eligible
under such program, in an amount at least equal to the principal amount
of the Bonds Outstanding or to the maximum limit of coverage made
available with respect to the Project under said Act, whichever is
less.
(4) Title insurance in an amount equal to the initial stated
amount of the Letter of Credit, insuring the mortgage on the Project
created by the Financing Documents subject to no liens and encumbrances
other than such encumbrances as shall be approved by the Trustee and
the Credit Obligor. Any proceeds of such title insurance shall be
applied, at the direction of the Credit Obligor, to cure the title
defect in respect of which such proceeds are made available or shall be
deposited with the Trustee and applied to the redemption of the Bonds
in accordance with the terms thereof.
(5) Use and occupancy insurance (or business interruption or
risk insurance) covering suspension or interruption of the User's
operations at the Project in whole or in part, with such exemptions as
are customarily imposed by insurers, covering a period of suspension or
interruption of at least six months with a minimum limit in an amount
equal to 100% of the maximum amount to be paid as Rental Payments and
other payments under Article 5 hereof during the then current or any
subsequent year.
17
(6) During the period of acquisition and construction of any
part of the Project builders' risk insurance in the amount of the full
replacement value of the Project against all losses which are normally
covered by such builders' risk insurance. The User may satisfy its
obligations with respect to the builder's risk insurance by causing
such insurance to be carried by a construction contractor for any part
of the Project.
(b) All policies evidencing the insurance required by the terms of
the preceding paragraph shall be taken out and maintained in generally
recognized responsible insurance companies, qualified under the laws of the
State to assume the respective risks undertaken. All such insurance policies
shall name as either loss payee or additional insureds the Credit Obligor, the
Issuer and the Trustee (as their respective interests shall appear) and shall
contain, where appropriate, standard mortgage clauses providing for all losses
thereunder in excess of $50,000 to be paid to the Trustee; provided that all
losses (including those in excess of $50,000) may be adjusted by the User,
subject, in the case of any single loss in excess of $50,000, to the approval of
the Trustee. The User may insure under a blanket policy or policies.
(c) Each insurance policy required to be carried by this Section
shall contain, to the extent obtainable, an agreement by the insurer that (1)
the User may not, without the consent of the Credit Obligor, the Issuer and
Trustee, cancel such insurance or sell, assign or dispose of any interest in
such insurance, policy or any proceeds thereof, (2) such insurer shall notify
the Credit Obligor, the Issuer and the Trustee if any premium is not paid when
due or if any such policy is not renewed prior to the expiration thereof, and
(3) such insurer shall not materially amend or cancel any such policy except on
30 days' prior written notice to the Credit Obligor, the Issuer and the Trustee.
(d) The User shall deposit with the Trustee a certificate or
certificates of the respective insurers attesting the fact that all policies
evidencing the insurance required to be carried by this Section are in force and
effect. Upon the expiration of any such policy, the User shall furnish to the
Trustee evidence reasonably satisfactory to the Trustee that such policy has
been renewed or replaced by another policy or that there is no necessity
therefor under this Lease Agreement.
ARTICLE 7
---------
Provisions Respecting Damage,
Destruction and Condemnation
----------------------------
SECTION 7.01 Damage and Destruction
----------------------
(a) If no Lease Default shall have occurred and be continuing and the
Letter of Credit is in effect and the Credit Obligor has not dishonored any
draws thereunder and there has not been instituted insolvency proceedings with
respect to the Credit Obligor, then all Net Proceeds of insurance resulting from
18
claims for losses in respect of damage to or destruction of the Project (in
whole or in part) shall be applied as provided in the Credit Obligor Mortgage.
(b) If no Lease Default shall have occurred and be continuing and the
Letter of Credit is not in effect, or if the Credit Obligor has dishonored any
draw thereunder or if there has been instituted insolvency proceedings with
respect to the Credit Obligor, then the following provisions shall apply in
event of damage to or destruction of the Project (in whole or in part):
(1) If the Project is destroyed (in whole or in part) or is
damaged the User shall continue to make Rental Payments and will
promptly give written notice of such damage and destruction to the
Trustee and the Issuer. All Net Proceeds of insurance resulting from
claims for such losses shall be paid to the Trustee and deposited in
the Construction Fund, whereupon (i) the User, or the Issuer at the
User's direction, shall proceed promptly to repair, rebuild or restore
the property damaged or destroyed to substantially the same condition
in which it existed prior to the event causing such damage or
destruction, with such changes, alterations and modifications
(including the substitution and addition of other property) as may be
desired by the User and as will not impair the operating unity or
productive capacity of the Project or its character as a "project"
under the Enabling Law, and (2) the Issuer shall cause withdrawals to
be made from the Construction Fund to pay the costs of such repair,
rebuilding or restoration, either on completion thereof or as the work
progresses. The balance (if any) of Net Proceeds remaining after the
payment of all of the costs of such repair, rebuilding or restoration
shall be applied to the redemption of Bonds in accordance with the
provisions thereof and of the Indenture, or, if none of the Bonds are
then Outstanding, shall be paid to the User.
(2) In the event the Net Proceeds are not sufficient to pay
in full the costs of repairing, rebuilding and restoring the Project as
provided in this Section, the User shall nonetheless complete the work
thereof and shall pay that portion of the costs thereof in excess of
the amount of said proceeds or shall pay to the Trustee for the account
of the Issuer the moneys necessary to complete said work. The User
shall not by reason of the payment of such excess costs (whether by
direct payment thereof or payment to the Trustee therefor) be entitled
to any reimbursement from the Issuer or any abatement or diminution of
the Rental Payments hereunder.
(3) Anything in this Section to the contrary
notwithstanding, if, as a result of such damage or destruction the User
is entitled to exercise an option to purchase the Project and duly does
so in accordance with the applicable provisions of Section 11.03
hereof, then neither the User nor the Issuer shall be required to
repair, rebuild or restore the property damaged or destroyed, and so
much (which may be all) of any Net Proceeds referable to such damage or
destruction as shall be necessary to provide for full payment of the
Indenture Indebtedness shall be paid to the Trustee and the excess
thereafter remaining (if any) shall be paid to the User.
19
(c) If a Lease Default has occurred and is continuing, and the Letter
of Credit is not in effect or the Credit Obligor has dishonored any draw
thereunder or there has been instituted insolvency proceedings with respect to
the Credit Obligor, then all Net Proceeds of insurance resulting from claims for
losses in respect to damage to or destruction of the Project (in whole or in
part) shall be applied to the redemption of the Bonds in accordance with the
terms thereof.
SECTION 7.02 Condemnation
------------
(a) If no Lease Default shall have occurred and be continuing and the
Letter of Credit is in effect and the Credit Obligor has not dishonored any
draws thereunder and there has not been instituted insolvency proceedings with
respect to the Credit Obligor, then all Net Proceeds resulting from any taking
by eminent domain of the Project (in whole or in part) shall be applied as
provided in the Credit Obligor Mortgage.
(b) If no Lease Default shall have occurred and be continuing and the
Letter of Credit is not in effect, or if the Credit Obligor has dishonored any
draw thereunder or if there has been instituted insolvency proceedings with
respect to the Credit Obligor, then the following provisions shall apply in
event of any taking by eminent domain of the Project (in whole or in part):
(1) In the event that title to, or the temporary use of, the
Project or any part thereof shall be taken under the exercise of the
power of eminent domain and as a result thereof the User is entitled to
exercise an option to purchase the Project and duly does so in
accordance with the applicable provisions of Section 11.03 hereof, so
much (which may be all) of the Net Proceeds referable to such taking,
including the amounts awarded to the Issuer and the Trustee and the
amount awarded to the User for the taking of all or any part of the
leasehold estate of the User in the Project created by this Lease
Agreement, as shall be necessary to provide for full payment of the
Indenture Indebtedness shall be paid to the Trustee and the excess of
such Net Proceeds remaining (if any) shall be paid to the User.
(2) If as a result of such taking, the User is not entitled
to exercise an option to purchase the Project under Section 11.03
hereof, or, having such option, fails to exercise the same in
accordance with the terms thereof or notifies the Issuer and the
Trustee in writing that it does not propose to exercise such option,
the User shall be obligated to continue to make the Rental Payments and
the entire Net Proceeds hereinabove referred to shall, be paid to the
Trustee and applied in one or more of the following ways as shall be
directed in writing by the User:
(i) To the restoration of the remaining improvements
located on the Project Site to substantially the same
condition in which they existed prior to the exercise of the
power of eminent domain;
(ii) To the acquisition, by construction or
otherwise, by the Issuer of other lands or improvements
suitable for the User's operations at the Project, which land
20
or improvements shall be deemed a part of the Project and
available for use and occupancy by the User without the
payment of any Rental Payments other than that herein provided
to the same extent as if such land or other improvements were
specifically described herein and demised hereby, and which
land or improvements shall be acquired by the Issuer subject
to no liens or encumbrances.
(3) Any balance of such Net Proceeds remaining after the
application thereof as provided in subsection (b) of this Section shall
be applied to the redemption of the Bonds in accordance with the terms
thereof, or, if the Indenture Indebtedness is paid in full, shall be
paid to the User.
(4) The Issuer shall cooperate fully with the User in the
handling and conduct of any prospective or pending condemnation
proceeding with respect to the Project or any part thereof and shall,
to the extent it may lawfully do so, permit the User to litigate in any
such proceeding in the name and behalf of the Issuer. In no event shall
the Issuer settle, or consent to the settlement of, any prospective or
pending condemnation proceeding without the prior written consent of
the User.
(5) The User shall be entitled to the Net Proceeds of any
award or portion thereof made for damage to or taking of its own
property not included in the Project, provided that any Net Proceeds
resulting from the taking of all or any part of the leasehold estate of
the User in the Project created by this Lease Agreement shall be paid
and applied in the manner provided in this Section 7.02.
(c) If a Lease Default has occurred and is continuing, and the Letter
of Credit is not in effect or the Credit Obligor has dishonored any draw
thereunder or there has been instituted insolvency proceedings with respect to
the Credit Obligor, then all Net Proceeds of condemnation awards resulting from
condemnation of the Project (in whole or in part) shall be applied to the
redemption of the Bonds in accordance with the terms thereof.
ARTICLE 8
---------
Assignment, Subleasing, Mortgaging and the Bonds
------------------------------------------------
SECTION 8.01 Provisions Relating to Assignment and Subleasing
------------------------------------------------
With the consent of the Trustee and the Credit Obligor, except as
provided below, the User may assign this Lease Agreement and the leasehold
interest created hereby and may sublet the Project or any part thereof, subject,
however, to the following conditions:
21
(1) No such assignment or subleasing and no dealings or
transactions between the Issuer or the Trustee and any assignee or
sublessee shall in any way relieve the User from primary liability for
any of its obligations hereunder. In the event of any such assignment
or subleasing the User shall continue to remain primarily liable for
the payment of all Rental Payments herein provided to be paid by it and
for the performance and observance of the other agreements and
covenants on its part herein provided to be performed and observed by
it.
(2) The User will not assign the leasehold interest created
hereby nor sublease the Project to any person unless the operations of
such assignee or sublessee are consistent with, and in furtherance of,
the purpose of the Enabling Law. The User shall, prior to any such
assignment or sublease, demonstrate to the reasonable satisfaction of
the Trustee that the operations of such assignee or sublessee will
preserve the character of the Project as a "project" under the Enabling
Law, if applicable, and deliver to the Trustee an Opinion of Bond
Counsel acceptable to the Trustee to the effect that such assignment or
sublease will not cause the interest on the Bonds to be Taxable.
(3) The User shall, within 30 days after the delivery
thereof, furnish to the Issuer and the Trustee a true and complete copy
of each such assignment or sublease.
SECTION 8.02 Assignment of Lease Agreement and Rents by the Issuer
-----------------------------------------------------
The Issuer has, simultaneously with the delivery of this Lease
Agreement, assigned its interest in and pledged any money receivable under this
Lease Agreement (other than certain rights to indemnification and reimbursement)
to the Trustee as security for payment of the Bonds, and the User hereby
consents to such assignment and pledge. The Issuer has in the Indenture
obligated itself to follow the instructions of the Trustee or the Owners or a
certain percentage thereof in the election or pursuit of any remedies herein
vested in it. The Trustee shall have all rights and remedies herein accorded to
the Issuer and any reference herein to the Issuer shall be deemed, with the
necessary changes in detail, to include the Trustee, and the Trustee and the
registered owners of the Bonds are deemed to be third party beneficiaries of the
covenants, agreements and representations of the User herein contained. Neither
the Issuer nor the User will unreasonably withhold any consent herein or in the
Indenture required of either of them. The User shall not be deemed to be a party
to the Indenture or the Bonds and reference in this Lease Agreement to the
Indenture and the Bonds shall not impose any liability or obligation upon the
User other than its specific obligations and liabilities undertaken in this
Lease Agreement.
SECTION 8.03 Transfer or Encumbrance Created by Issuer; Corporate
----------------------------------------------------
Existence of Issuer
-------------------
(a) Without the prior written consent of the Trustee, the Credit
Obligor, and the User, the Issuer (1) will not sell, transfer or convey the
Project or any part thereof, except as provided
22
in this Lease Agreement, and (2) will not create or incur or suffer or permit to
be created or incurred or to exist any mortgage, lien, charge or encumbrance on
the Project or any part thereof.
(b) The Issuer shall not consolidate with or merge into any other
corporation or transfer its property substantially as an entirety, except as
provided in the Indenture.
SECTION 8.04 Redemption of Bonds
-------------------
(a) The Issuer will redeem any or all of the Bonds upon the
occurrence of any event or contingency requiring the mandatory redemption of
Bonds, all in accordance with the applicable provisions of the Bonds and the
Indenture.
(b) If no Lease Default exists, the Issuer will exercise any right of
optional redemption with respect to the Bonds only upon the written request of
the User.
ARTICLE 9
---------
Covenants of the User
---------------------
Until the Indenture Indebtedness is paid in full:
(a) The User shall not do or permit anything to be done at the
Project that will affect, impair or contravene any policies of insurance that
may be carried on the Project. The User will, in the use of the Project and the
public ways abutting the same comply with all lawful requirements, the violation
of which would have a material adverse effect on the Project, of all
governmental bodies; provided, however, the User may, at its own expense in good
faith contest the validity or applicability of any such requirement.
(b) The User shall permit the Issuer, the Trustee, the Credit Obligor
and their duly authorized agents at all reasonable times to enter upon, examine
and inspect the Project.
(c) The User will maintain proper books of record and account, in
which full and correct entries will be made, in accordance with generally
accepted accounting principles, of all its business and affairs. The User shall
furnish to the Trustee with reasonable promptness such financial information of
the User as the Trustee shall reasonably request.
(d) The User will duly pay and discharge all taxes, assessments and
other governmental charges and liens lawfully imposed on the User and upon the
properties of the User, and the Project; provided, however, the User will not be
required to pay any taxes, assessments or other governmental charges so long as
in good faith it shall contest the validity thereof by appropriate legal
proceedings, the User has given notice of such contest to the Trustee, the User
has established adequate reserves therefor, and no part of the Project shall, in
23
the opinion of the Trustee, be subject to loss or forfeiture.
(e) The User will comply with all valid laws, ordinances, regulations
and requirements applicable to it or to its property and the Project.
(f) Except as otherwise permitted in the Credit Documents, the User
will maintain and preserve its existence as a corporation under the laws of the
State of Delaware and will not voluntarily dissolve without first discharging
its obligations under this Agreement and will not in any manner transfer or
convey any substantial portion of its properties, assets or licenses without
receipt of present and adequate consideration therefor.
(g) The User will do, execute, acknowledge and deliver such further
acts, conveyances, mortgages, financing statements and assurances as the Issuer
or the Trustee shall require for accomplishing the purposes of the Financing
Documents. The User will cause this Lease Agreement, any amendments to this
Lease Agreement and other instruments of further assurance, including financing
statements and continuation statements, to be promptly recorded, registered and
filed, and at all times to be kept recorded, registered and filed in such places
as may be required by law fully to preserve and protect the rights of the Issuer
and the Trustee to all property comprising the Project.
ARTICLE 10
----------
Events of Default and Remedies
------------------------------
SECTION 10.01 Events of Default
-----------------
Any one or more of the following shall constitute an event of default
(a "Lease Default") under this Lease Agreement (whatever the reason for such
event and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(1) default in the payment of any Basic Rental Payment when
such Basic Rental Payment becomes due and payable; or
(2) default in the performance, or breach, of any covenant
or warranty of the User in this Lease Agreement (other than a covenant
or warranty, a default in the performance or breach of which is
elsewhere in this Section specifically described), and the continuance
of such default or breach for a period of 30 days after there has been
given, by registered or certified mail, to the User and the Credit
Obligor by the Issuer or by the Trustee a written notice specifying
such default or breach and requiring it to be remedied and stating that
such notice is a "notice of default" hereunder, provided that if such
24
default is of a kind which cannot reasonably be cured within such
thirty-day period, the User shall have a reasonable period of time
within which to cure such default, provided that it begins to cure the
default promptly after its receipt of such written notice and proceeds
in good faith, and with due diligence, to cure such default; or
(3) The dissolution or liquidation of the User or the filing
by the User of a voluntary petition in bankruptcy, or failure by the
User promptly to lift any execution, garnishment or attachment of such
consequence as will impair its ability to carry on its operations at
the Project, or the User's seeking of or consenting to or acquiescing
in the appointment of a receiver of all or substantially all its
property or of the Project, or the adjudication of the User as a
bankrupt, or any assignment by the User for the benefit of its
creditors, or the entry by the User into an agreement of composition
with its creditors, or if a petition or answer is filed by the User
proposing the adjudication of the User as a bankrupt or its
reorganization, arrangement or debt readjustment under any present or
future federal bankruptcy code or any similar federal or state law in
any court, or if any such petition or answer is filed by any other
person and such petition or answer shall not be stayed or dismissed
within 60 days.
(4) The occurrence of an event of default under any of the
other Financing Documents; or
(5) Receipt by the Trustee of written notice from the Credit
Obligor that an event of default has occurred and is continuing under
the Credit Documents or any other related documents to which the User
and the Credit Obligor are parties signatory thereto.
SECTION 10.02 Remedies on Default
-------------------
Whenever any such Lease Default shall have happened and be continuing,
the Issuer or the Trustee may, with the consent of the Credit Obligor, take any
of the following remedial steps:
(1) Declare all installments of Basic Rental Payments for
the remainder of the Lease Term to be immediately due and payable,
whereupon the same shall become immediately due and payable;
(2) Reenter the Project, without terminating this Lease
Agreement, and, upon ten days' prior written notice to the User and
Credit Obligor, relet the Project or any part thereof for the account
of the User, for such term (including a term extending beyond the Lease
Term) and at such rentals and upon such other terms and conditions,
including the right to make alterations to the Project or any part
thereof, as the Issuer may, with the approval of the Trustee and Credit
Obligor, deem advisable, and such reentry and reletting of the Project
shall not be construed as an election to terminate this Lease Agreement
nor relieve the User of its obligations to pay Basic Rent and
Additional Rent or to perform any of its other obligations under this
Lease Agreement, all of which shall survive such reentry and reletting,
25
and the User shall continue to pay Basic Rent and all Additional Rent
provided for in this Lease Agreement until the end of the Lease Term,
less the net proceeds, if any, of any reletting of the Project after
deducting all of the Issuer's and Trustee's expenses in connection with
such reletting, including, without limitation, all repossession costs,
brokers' commissions, attorneys' fees, alteration costs and expenses of
preparation for reletting;
(3) Terminate this Lease Agreement, exclude the User from
possession of the Project and, if the Issuer or Trustee elects so to
do, lease the same for the account of the Issuer, holding the User
liable for all rent due up to the date such lease is made for the
account of the Issuer; or
(4) Take whatever legal proceedings may appear necessary or
desirable to collect the Rental Payments then due, whether by
declaration or otherwise, or to enforce any obligation or covenant or
agreement of the User under this Lease Agreement or by law.
SECTION 10.03 Availability of Remedies
------------------------
(a) No remedy herein conferred upon or reserved to the Issuer or the
Trustee is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Lease Agreement or now or hereafter existing
at law or in equity or by statute. No delay or omission to exercise any right or
power accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof but any such right or power may be exercised
from time to time and as often as may be deemed expedient.
(b) In the event any agreement contained in this Lease Agreement
should be breached by either party and thereafter waived by the other party
such waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.
(c) All rights, remedies and powers provided by this Article may be
exercised only to the extent the exercise thereof does not violate any
applicable provision of law in the premises, and all the provisions of this
Article are intended to be subject to all applicable mandatory provisions of law
which may be controlling in the premises and to be limited to the extent
necessary so that they will not render this Lease Agreement invalid or
unenforceable.
SECTION 10.04 Agreement to Pay Attorneys' Fees and Expenses
---------------------------------------------
In the event the User should default under any of the provisions of
this Lease Agreement and the Issuer or the Trustee (in its own name or in the
name and on behalf of the Issuer) should employ attorneys or incur other
expenses for the collection of rent or the enforcement of performance or
observance of any obligation or agreement on the part of the User herein
26
contained, the User will on demand therefor pay to the Issuer or the Trustee (as
the case may be) the reasonable fee of such attorneys and such other reasonable
expenses so incurred.
ARTICLE 11
----------
OPTIONS
-------
SECTION 11.01 Options to Terminate
--------------------
The User shall have, if it is not in default hereunder, the option to
cancel or terminate the term of this Lease Agreement at any time after full
payment of the Indenture Indebtedness and termination of the Letter of Credit by
giving the Issuer notice in writing of such termination and such termination
shall forthwith become effective. This Lease Agreement may not be terminated
prior to payment in full of the Indenture Indebtedness even if all amounts due
hereunder have been paid in full.
SECTION 11.02 Option to Renew
---------------
There shall be no option to renew the term of this Lease Agreement.
SECTION 11.03 Option to Purchase Prior to Payment of the Bonds
------------------------------------------------
(a) The User, if not in default hereunder, shall have the option to
purchase the Project at any time prior to the full payment of the Indenture
Indebtedness if any of the following shall have occurred:
(i) The Project or any part thereof shall have been damaged
or destroyed (A) to such extent that, in the opinion of the User, it
cannot be reasonably restored within a period of four consecutive
months substantially to the condition thereof immediately preceding
such damage or destruction, or (B) to such extent that, in the opinion
of the User, the User is thereby prevented from carrying on its normal
operations at the Project for a period of four consecutive months, or
(C) to such extent that the cost of restoration thereof would exceed by
more than $50,000 the Net Proceeds of insurance carried thereon
pursuant to the requirements of this Lease Agreement; or
(ii) Title to the Project or any part thereof or the
leasehold estate of the User in the Project created by this Lease
Agreement or any part thereof shall have been taken under the exercise
of the power of eminent domain by any governmental authority or person,
firm or corporation acting under governmental authority, which taking
may result, in the opinion of the User, in the User being thereby
prevented from carrying on its normal operations at the Project for a
period of four consecutive months; or
27
(iii) As a result of any changes in the Constitution of the
State or the Constitution of the United States of America or of
legislative or administrative action (whether state or Federal), or by
final decree, judgment or order of any court or administrative body
(whether state or Federal) entered after the contest thereof by the
User in good faith, this Lease Agreement shall have become void or
unenforceable or impossible of performance in accordance with the
intent and purpose of the parties as expressed herein, or unreasonable
burdens or excessive liabilities shall have been imposed on the Issuer
or the User, including without limitation, the imposition of taxes of
any kind on the Project or the income or profits of the Issuer
therefrom, or upon the interest of the User therein, which taxes were
not being imposed on the date of this Lease Agreement;
(b) To exercise such option, the User shall, within 30 days following
the event authorizing the exercise of such option, give written notice to the
Issuer and to the Trustee and shall specify therein the date of closing such
purchase, which date shall be not less than 30 days from the date such notice is
mailed, and shall make arrangements satisfactory to the Trustee for the giving
of the required notice for the redemption of the Bonds. The purchase price
payable by the User in the event of its exercise of the option granted in this
Section shall be that amount required to pay in full all Indenture Indebtedness
and shall be paid to the Trustee.
(c) Upon the exercise of the option granted in this Section and the
payment of the option price, any Net Proceeds of insurance or condemnation award
then on hand or thereafter received shall be paid to the User.
SECTION 11.04 Option to Purchase Project After Payment of the
-----------------------------------------------
Indenture Indebtedness
----------------------
(a) The User shall have the option to purchase the Project at any
time following full payment of the Indenture Indebtedness for a purchase price
of $10.00. To exercise the option granted in this Section, the User shall
notify the Issuer of its intention so to exercise such option prior to the
proposed date of purchase and shall on the date of purchase pay such purchase
price to the Issuer. The User may not purchase the Project prior to payment in
full of all Indenture Indebtedness even if all amounts due hereunder shall have
been paid in full.
(b) In the event the option granted in this Section 11.04 has not
been exercised prior to the end of the Lease Term, then said option shall
automatically be considered to be exercised upon the end of the Lease Term
unless the User gives written notice prior thereto that it does not elect to
exercise such option.
SECTION 11.05 Option to Purchase Portions of Project Site
-------------------------------------------
(a) The User, if not in default hereunder, shall have the option to
purchase any Unimproved portion of the Project Site at any time and from time to
time with the prior written consent of the Trustee and for a purchase price
equal to the pro-rata cost of such portion of the Project Site to be so
28
purchased, provided that the User furnish the Issuer and the Trustee with the
following:
(1) A notice in writing containing (i) an adequate legal
description of that portion of the Project Site with respect to which
such option is to be exercised, which portion may include rights
granted in party walls, the right to "tie-into" existing utilities, the
right to connect and join any building, structure or improvement with
existing structures, facilities and improvements on the Project Site,
and the right of ingress or egress to and from the public highway which
shall not interfere with the use and occupancy of existing structures,
improvements and buildings, and (ii) a statement that the User intends
to exercise such option to purchase such portion of the Project Site on
a date stated.
(2) A certificate of an Independent Engineer or of an
Independent Architect made and dated not more than 90 days prior to the
date of the purchase and stating that, in the opinion of the person
signing such certificate, (i) the portion of the Project Site with
respect to which the option is exercised is not needed for the
operation of the then existing Project and (ii) the severance of such
portion of the Project Site and the location or construction thereon of
buildings, structures and improvements, if any, will not impair the
usefulness of the then existing Project or the means of ingress and
egress to and from the remaining portions of the Project or impair or
deny highway access, rail access or utility services to such remaining
portions of the Project.
(3) An amount of money equal to the purchase price computed
as provided in this Section, which amount shall be paid to the Trustee
and applied to the redemption of the Bonds in accordance with the terms
thereof.
(b) Upon receipt of the notice and certificate required in this
Section to be furnished by the User and the payment by the User to the Trustee
of the purchase price, the Issuer will promptly deliver to the User the
documents referred to in Section 11.06.
(c) If such option relates to portions of the Project Site on which
transportation or utility facilities are located, the Issuer shall retain an
easement to use such transportation or utility facilities to the extent
necessary for the efficient operation of the Project.
(d) No purchase effected under the provisions of this Section shall
affect the obligation of the User for the payment of Rent and other payments in
the amounts and at the times provided in this Lease Agreement or the performance
of any other agreement, covenant or provision hereof, and there shall be no
abatement or adjustment in Rent by reason of the release of any such portion
29
of the Project Site and the obligations of the User shall continue in all
respects as provided in this Lease Agreement, excluding, however, any portion of
the Project Site so purchased.
SECTION 11.06 Conveyance of Exercise of Option to Purchase
--------------------------------------------
At the closing of the purchase pursuant to the exercise of any option
to purchase granted herein, the Issuer shall upon receipt of the purchase price
deliver to the User documents conveying to the User the property with respect to
which such option was exercised, as such property then exists, subject to the
following: (a) all easements or other rights, if any, required to be reserved by
the Issuer under the terms and provisions of the option being exercised by the
User; (b) those liens and encumbrances, if any, to which title to said property
was subject when conveyed to the Issuer; (c) those liens and encumbrances
created by the User or to the creation or suffering of which the User consented;
and (d) those liens and encumbrances resulting from the failure of the User to
perform or observe any of the agreements on its part contained in this Lease
Agreement.
ARTICLE 12
----------
Internal Revenue Code
---------------------
SECTION 12.01 Covenants Regarding Section 103 and Sections 141-150
----------------------------------------------------
of the Code
-----------
(a) The Issuer and the User do each hereby covenant and agree for the
benefit of the Owners that neither the Issuer nor the User will take any action,
omit to take any action, permit any action to be taken or fail to require any
action to be taken, which would cause the interest on the Bonds to be or become
includable in gross income for federal income taxation. Without limiting the
generality of the foregoing, the User covenants and agrees that (a) the proceeds
of the Bonds shall not be used or applied in such manner as to cause any Bond to
be or become an "arbitrage bond" as that term is defined in Section 148 of the
Code, (b) ninety-five percent (95%) or more of the net proceeds will be used for
the acquisition, construction, reconstruction, or improvement of land or
property of a character subject to the allowance for depreciation, within the
meaning of Section 144(a) of the Code, (c) the proceeds will be used solely for
the acquisition and construction of the Project, which shall constitute
facilities solely for the manufacturing, including processing, of tangible
personal property, or for issuance expenses, or shall be rebated to the United
States of America as provided in this Lease Agreement and the Indenture, and no
part of the proceeds will be used by the User, directly or indirectly, for
working capital or to finance inventory, or to acquire any facility or asset
which may not be financed, in whole or in part, with the proceeds of obligations
the interest on which is excludable from gross income for federal income
taxation, (d) the net proceeds shall not be used for the acquisition,
construction, reconstruction or improvement of any property which would cause
the average maturity of the Bonds to exceed one hundred twenty percent (120%) of
the average reasonably expected economic life of the facilities financed with
the net proceeds of the Bonds, within the meaning of Section 147(b) of the Code,
30
(e) none of the net proceeds shall be used to acquire (directly or indirectly)
any land (or any interest therein) to be used for farming purposes; (f) less
than twenty-five percent (25%) of the net proceeds shall be used to acquire
(directly or indirectly) the Project Site or any other land (or any interest
therein), (g) none of the net proceeds shall be used to acquire any property or
any interest therein (including, without limitation, buildings, structures,
facilities, improvements, equipment, machinery or other personal property) the
first use of which property was not pursuant to such acquisition with the
proceeds, (h) neither the Bonds nor any proceeds therefrom shall ever be
federally guaranteed, as such term is defined in Section 149(b) of the Code,
except as expressly permitted by said Section 149(b), (i) neither the User nor
any related person shall ever have allocated to it and outstanding tax-exempt
facility-related bonds (as such term is used in Section 144(a) (10) of the Code)
in an aggregate principal amount exceeding $40,000,000, (j) no party shall
ever be allowed to use or otherwise occupy or derive any benefit whatsoever from
the Project, or any part thereof, if the effect of the foregoing shall result in
a test period beneficiary (as defined in Section 144(a) (10) of the Code) having
allocated to it and outstanding in excess of $40,000,000 in aggregate principal
amount of tax-exempt facility related bonds, (k) no more than two percent of the
face amount of the Bonds shall be used to pay issuance costs.
(b) The Issuer has elected and does hereby elect to have the
provisions relating to the $10,000,000 limit in Section 144(a)(4) of the Code
apply to the Bonds.
(c) The Issuer and the User will each cooperate to assure compliance
with the provisions of Section 12.03 of this Lease Agreement and Article XVI of
the Indenture.
SECTION 12.02 User's Obligation Upon Determination of Taxability
--------------------------------------------------
(a) Upon the occurrence of a Determination of Taxability, the Trustee
shall notify the User in writing that all Outstanding Bonds shall be subject to
mandatory redemption on the date specified by the Trustee in accordance with the
Indenture irrespective of whether the User has violated any covenant or
representation in this Lease Agreement. Within seven days after the receipt of
such notice the User shall purchase the Project from the Issuer for the price
specified in subsection (b) of this Section, which purchase price shall be paid
to the Trustee.
(b) The price payable by the User for the project in the event of a
Determination of Taxability shall be equal to the amount required to redeem the
Bonds in accordance with the terms thereof and to pay in full all Indenture
Indebtedness. There shall be credited against such payment otherwise required by
this paragraph all amounts which have been paid to the Trustee pursuant to the
Letter of Credit with respect to such payment of the Bonds then Outstanding.
(c) Any other options of the User to purchase the Project shall be
superseded by its mandatory obligation to purchase the Project pursuant to this
section 12.02.
SECTION 12.03 Federal Rebate Payments
-----------------------
31
The provisions of Article XVI of the Indenture are incorporated herein
by reference, and the User shall comply with said provisions and shall perform
and discharge all obligations, duties and responsibilities imposed upon the User
under said Article, including without limitation the payment of all required
rebates to the United States of America.
ARTICLE 13
----------
Provisions of General Application
---------------------------------
SECTION 13.01 Covenant of Quiet Enjoyment
---------------------------
So long as the User performs and observes all the covenants and
agreements on its part herein contained, it shall peaceably and quietly have,
hold and enjoy the Project during the Lease Term subject to all the terms and
provisions hereof.
SECTION 13.02 Investment of Funds
-------------------
The Issuer shall cause any money held as a part of the Special Funds
which may by the terms of the Indenture be invested to be so invested or
reinvested by the Trustee solely at the request of, and solely as directed by,
the User and as provided in the Indenture.
SECTION 13.03 Issuer's Liabilities Limited
----------------------------
(a) The covenants and agreements contained in this Lease Agreement
shall never constitute or give rise to a personal or pecuniary liability or
charge against the general credit of the Issuer, and in the event of a breach of
any such covenant or agreement, no personal or pecuniary liability or charge
payable directly or indirectly from the general assets or revenues of the Issuer
shall arise therefrom. Nothing contained in this Section, however, shall relieve
the Issuer from the observance and performance of the covenants and agreements
on its part contained herein.
(b) No recourse under or upon any covenant or agreement of this Lease
Agreement shall be had against any past, present or future officer or member of
the governing body of the Issuer, or of any successor either directly or through
the Issuer, whether by virtue of any constitution, statute or rule of law, or by
the enforcement of any assessment or penalty or otherwise; it being expressly
understood that this Lease Agreement is solely a corporate obligation, and that
no personal liability whatever shall attach to, or is or shall be incurred by,
any officer or member of the governing body of the Issuer or any successor
corporation, or any of them, under or by reason of the covenants or agreements
contained in this Lease Agreement.
SECTION 13.04 Prior Agreements
----------------
32
Excepting the Abatement Agreement and any deed, ▇▇▇▇ of sale, or other
instrument by which the Project, any part thereof, or any interest therein has
been transferred and conveyed by the User to the Issuer, this Lease Agreement
shall completely and fully supersede all prior agreements, both written and
oral, between the Issuer and the User relating to the acquisition of the Project
Site, the construction of the Improvements, the acquisition and installation of
the Equipment, the leasing of the Project and any options to purchase. Neither
the Issuer nor the User shall hereafter have any rights under such prior
agreements, except as otherwise herein provided, but shall look solely to this
Lease Agreement for definition and determination of all of their respective
rights, liabilities and responsibilities relating to the Project.
SECTION 13.05 Execution Counterparts
----------------------
This Lease Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the
same instrument.
SECTION 13.06 Binding Effect; Governing Law
-----------------------------
This Lease Agreement shall inure to the benefit of, and shall be
binding upon, the Issuer, the User and their respective successors and assigns.
This Lease Agreement shall be governed exclusively by the applicable laws of the
State.
SECTION 13.07 Enforceability
--------------
In the event any provision of this Lease Agreement shall be held
invalid or unenforceable by any court of competent jurisdiction, such holding
shall not invalidate or render unenforceable any other provision hereof.
SECTION 13.08 Article and Section Captions
----------------------------
The Article and Section headings and captions contained herein are
included for convenience only and shall not be considered a part hereof or
affect in any manner the construction or interpretation hereof.
SECTION 13.09 Notices
-------
(a) Any request, demand, authorization, direction, notice, consent,
or other document provided or permitted by this Lease Agreement to be made upon,
given or furnished to, or filed with, the Issuer, the User, the Trustee or the
Credit Obligor shall be sufficient for every purpose hereunder if in writing and
(except as otherwise provided in this Lease Agreement) either (i) delivered
personally to the party or, if such party is not an individual, to an officer,
or other legal representative of the party to whom the same is directed
(provided that any document delivered personally to the Trustee must be
delivered to a corporate trust officer at its Principal Office during normal
business hours) at the hand delivery address specified in Section 1.10 of the
33
Indenture or (ii) mailed by first-class, registered or certified mail, postage
prepaid, addressed as specified in Section 1.10 of the Indenture. Any of such
parties may change the address for receiving any such notice or other document
by giving notice of the change to the other parties as provided in this Section.
(b) Any such notice or other document shall be deemed delivered when
actually received by the party to whom directed (or, if such party is not an
individual, to an officer, or other legal representative of the party) at the
address specified pursuant to this Section, or, if sent by mail, three days
after such notice or document is deposited in the United States mail, proper
postage prepaid, addressed as provided above.
SECTION 13.10 Amendment of Indenture and this Lease Agreement
-----------------------------------------------
(a) The Issuer will not cause or permit the amendment of the
Indenture or the execution of any amendment or supplement to the Indenture
without the prior written consent of the User and the Credit Obligor. The
Issuer and the User shall have no power to modify, alter, amend or terminate
this Lease Agreement without the prior written consent of the Credit Obligor.
Prior to the payment in full of the Indenture Indebtedness, the Issuer and the
User shall have no power to modify, alter, amend or terminate this Lease
Agreement without the prior written consent of the Trustee and then only as
provided in the Indenture.
(b) This Lease Agreement may not be amended unless there has first
been delivered to the Trustee and the User an opinion of Bond Counsel that such
action will not, whether solely or in conjunction with any other fact or
circumstance, cause the interest on the Bonds to be or to become Taxable.
34
IN WITNESS WHEREOF, the Issuer and the User have each caused this Lease
Agreement to be executed in its name, under seal, and the same attested, by an
officer thereof duly authorized thereunto, and the parties hereto have caused
this Lease Agreement to be dated as of November 1, 1997.
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE TOWN OF ADDISON, ALABAMA
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
Chairman
S E A L
Attest: /s/ ▇▇▇▇ ▇▇▇▇▇
----------------------------
Its Secretary
CAVALIER HOMES OF ALABAMA,
a division of Cavalier
Manufacturing, Inc.
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------
Its President
35
STATE OF ALABAMA )
WINSTON COUNTY )
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ whose name as Chairman of The
Industrial Development Board of the Town of Addison, a public corporation, is
signed to the foregoing Lease Agreement and who is known to me, acknowledged
before me on this day that, being informed of the contents of said Lease
Agreement, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said public corporation.
Given under my hand and seal this the 13th day of November, 1997.
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Notary Public
NOTARIAL SEAL
My commission expires: 12/05/00
--------
36
STATE OF ALABAMA )
WINSTON COUNTY )
I, the undersigned, a Notary Public in and for said County in said
State, hereby certify that ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, name as President of Cavalier
Homes of Alabama, a division of Cavalier Manufacturing, Inc., a Delaware
corporation, is signed to the foregoing Lease Agreement, and who is known to me,
acknowledged before me on this day that, being informed of the contents of said
Lease Agreement, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and seal this the 12th day of November, 1997.
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
------------------------------------
Notary Public
NOTARIAL SEAL
My commission expires: June 19, 2000
_______________
37
EXHIBIT A
COMMENCE AT THE NORTH EAST CORNER OF SECTION ▇▇, ▇▇▇▇▇▇▇▇ ▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇:
THENCE NORTH 89 DEGREES 49 MINUTES 00 SECONDS WEST 89.34 FEET TO AN
IRON PIN SET:
THENCE NORTH 89 DEGREES 49 MINUTES 00 SECONDS WEST 1000.00 FEET TO AN
IRON PIN SET:
THENCE NORTH 89 DEGREES 49 MINUTES 00 SECONDS WEST 931.60 FEET TO AN
IRON PIN SET:
THENCE SOUTH 1 DEGREES 54 MINUTES 00 SECONDS WEST 982.57 FEET TO AN
IRON PIN SET THE POINT OF BEGINNING FOR THE PROPERTY HEREIN DESCRIBED:
THENCE SOUTH 36 DEGREES 27 MINUTES 40 SECONDS EAST 625.27 FEET TO AN
IRON PIN SET ON THE WEST MARGIN OF A COUNTY ROAD:
THENCE ALONG SAID MARGIN SOUTH 5 DEGREES 50 MINUTES 59 SECONDS EAST
83.74 FEET TO A POINT:
THENCE ALONG SAID MARGIN SOUTH 1 DEGREES 40 MINUTES 03 SECONDS EAST
427.95 FEET TO AN IRON PIN SET:
THENCE AROUND A CURVE TO THE LEFT WITH A RADIOS OF 195.96 FEET AND A
LENGTH OF 195.34 FEET AND A CHORD OF SOUTH 29 DEGREES 08 MINUTES 23 SECONDS EAST
187.35 FEET TO AN IRON PIN SET:
THENCE LEAVING SAID ROAD NORTH 89 DEGREES 32 MINUTES 54 SECONDS WEST
760.46 FEET TO AN IRON PIN FOUND:
THENCE NORTH 1 DEGREES 54 MINUTES 02 SECONDS EAST 712.67 FEET TO THE
POINT OF BEGINNING AND CONTAINING 10.50 ACRES MORE OR LESS:
EXHIBIT B
TO
LEASE AGREEMENT
DATED AS OF NOVEMBER 1, 1997
BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD OF THE TOWN OF ADDISON
AND
CAVALIER HOMES OF ALABAMA, a division of Cavalier
Manufacturing, Inc.
EQUIPMENT LIST
--------------
Description of Personal Property and Fixtures
---------------------------------------------
Heating and air conditioning and ventilating equipment, electrical
equipment, plumbing fixtures and furnishings, fire detection, suppression and
extinguishment apparatus, equipment and fixtures, and building materials and
supplies to be incorporated in the Project.
LEASE AGREEMENT
TABLE OF CONTENTS
RECITALS.......................................................................1
ARTICLE 1
---------
Definitions.............................. 1
-----------
ARTICLE 2
---------
Representations
---------------
SECTION 2.01 Representations by the Issuer......................... 6
SECTION 2.02 Representations by the User........................... 7
ARTICLE 3
---------
Demising Clauses......................... 8
----------------
ARTICLE 4
---------
Acquisition of the Project
--------------------------
SECTION 4.01 Agreement to Acquire.................................. 9
SECTION 4.02 No Warranty of Suitability of Issuer.................. 10
SECTION 4.03 Pursuit of Remedies Against Vendors, Contractors and
Subcontractors and Their Sureties.......................... 10
SECTION 4.04 Completion of the Project............................. 10
ARTICLE 5
Duration of Lease Term
and Rental Provisions
---------------------
SECTION 5.01 Duration of Term...................................... 11
SECTION 5.02 Basic Rental Payments; Draws Under Letter of Credit... 11
SECTION 5.03 Additional Rental Payments............................ 12
SECTION 5.04 Advances by Issuer or Trustee......................... 12
SECTION 5.05 Indemnity of Issuer, Trustee and Paying Agent......... 13
SECTION 5.06 Obligations of User Unconditional..................... 14
SECTION 5.07 This Lease a Net Lease................................ 14
ARTICLE 6
---------
Maintenance, Alterations, Replacements,
Taxes and Insurance
----------------------------------------
SECTION 6.01 Maintenance and Repairs, Alterations and Improvements,
Party Walls; and Liens; Utility Charges.. 15
SECTION 6.02 Removal of, Substitution and Replacement for
Equipment................................ 16
SECTION 6.03 Installation of Machinery and Equipment Owned or
Leased by the User or Subject to a
Security Interest in Third Parties....... 16
SECTION 6.04 Insurance............................................. 17
ARTICLE 7
---------
Provisions Respecting Damage,
Destruction and Condemnation
-----------------------------
SECTION 7.01 Damage and Destruction................................ 18
SECTION 7.02 Condemnation.......................................... 20
ARTICLE 8
---------
Assignment, Subleasing, Mortgaging and the Bonds
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SECTION 8.01 Provisions Relating to Assignment and
Subleasing............................... 21
SECTION 8.02 Assignment of Lease Agreement and Rents
by the Issuer............................ 22
SECTION 8.03 Transfer or Encumbrance Created by Issuer;
Corporate Existence of Issuer............ 22
SECTION 8.04 Redemption of Bonds................................... 23
ARTICLE 9
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Covenants of the User.................... 23
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ARTICLE 10
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Events of Default and Remedies
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SECTION 10.01 Events of Default.................................... 24
SECTION 10.02 Remedies on Default.................................. 25
SECTION 10.03 Availability of Remedies............................. 26
SECTION 10.04 Agreement to Pay Attorneys' Fees and Expenses........ 26
ARTICLE 11
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OPTIONS
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SECTION 11.01 Options to Terminate................................. 27
SECTION 11.02 Option to Renew...................................... 27
SECTION 11.03 Option to Purchase Prior to Payment of the Bonds..... 27
SECTION 11.04 Option to Purchase Project After Payment of the
Indenture Indebtedness................... 28
SECTION 11.05 Option to Purchase Portions of Project Site.......... 28
SECTION 11.06 Conveyance of Exercise of Option to Purchase......... 29
ARTICLE 12
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Internal Revenue Code
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SECTION 12.01 Covenants Regarding Section 103 and Sections
141-150 of the Code...................... 30
SECTION 12.02 User's Obligation Upon Determination of Taxability... 31
SECTION 12.03 Federal Rebate Payments.............................. 31
ARTICLE 13
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Provisions of General Application
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SECTION 13.01 Covenant of Quiet Enjoyment.......................... 32
SECTION 13.02 Investment of Funds.................................. 32
SECTION 13.03 Issuer's Liabilities Limited......................... 32
SECTION 13.04 Prior Agreements..................................... 32
SECTION 13.05 Execution Counterparts............................... 33
SECTION 13.06 Binding Effect; Governing Law........................ 33
SECTION 13.07 Enforceability....................................... 33
SECTION 13.08 Article and Section Captions......................... 33
SECTION 13.09 Notices.............................................. 33
SECTION 13.10 Amendment of Indenture and this Lease Agreement...... 34
TESTIMONIAL...................................................................35
SIGNATURES....................................................................35
ACKNOWLEDGMENTS............................................................36-37
EXHIBIT A
EXHIBIT B