EXHIBIT 10.32.5
This instrument, when recorded, THE PURPOSE OF THIS INSTRUMENT IS TO
should be returned to: MAKE TECHNICAL CORRECTIONS TO THE
"FACILITY LEASE" REFERRED TO IN THE
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ SHORT FORM OF FACILITY LEASE AGREEMENT
Attorney at Law (P1), DATED DECEMBER 30, 1996, RECORDED
The Carnegie Building IN DEED BOOK ____, PAGE ____, AND THE
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ LONG FORM OF SUCH FACILITY LEASE
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ RECORDED IN DEED BOOK ____, PAGE ____,
OF THE RECORDS OF THE CLERK OF SUPERIOR
============================== COURT OF ▇▇▇▇▇ COUNTY, GEORGIA. IT IS
THE INTENTION OF THE PARTIES THAT THIS
DOCUMENT SUPERCEDE SUCH OTHER DOCU-MENTS
IN THEIR ENTIRETY.
FACILITY LEASE AGREEMENT
(P1)
Dated as of December 30, 1996
between
SUNTRUST BANK, ATLANTA,
not in its individual capacity,
except as expressly provided herein, but
solely as Co-Trustee
and
ROCKY MOUNTAIN LEASING CORPORATION
ROCKY MOUNTAIN
PUMPED STORAGE HYDROELECTRIC PROJECT
=======================================
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF SUNTRUST BANK, ATLANTA IN AND
TO THIS FACILITY LEASE AGREEMENT (P1) HAVE BEEN ASSIGNED TO AND ARE SUBJECT TO A
FIRST PRIORITY SECURITY TITLE, LIEN AND SECURITY INTEREST IN FAVOR OF
UTRECHT-AMERICA FINANCE CO., AS LENDER UNDER THE LOAN AGREEMENT AND THE DEED TO
SECURE DEBT, EACH DATED AS OF DECEMBER 30, 1996. THIS FACILITY LEASE AGREEMENT
(P1) HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE ORIGINAL COUNTERPART
CONTAINS THE RECEIPT THEREFOR EXECUTED BY THE LENDER ON THE SIGNATURE PAGE
THEREOF. SEE SECTION 24 FOR INFORMATION CONCERNING THE RIGHTS OF THE HOLDERS OF
THE VARIOUS COUNTERPARTS HEREOF.
TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS.................................................. 2
SECTION 2. LEASE OF THE UNDIVIDED INTEREST.............................. 2
SECTION 3. FACILITY LEASE TERM AND RENT................................. 2
Section 3.1 Basic Term.................................... 2
Section 3.2 Basic Rent.................................... 2
Section 3.3 Supplemental Rent............................. 2
Section 3.4 Adjustment of Basic Rent...................... 3
Section 3.5 Manner of Payments............................ 4
Section 3.6 Business Day.................................. 5
Section 3.7 Agreement with Respect to Amounts
Payable Under Payment Undertaking
Agreement .................................... 5
SECTION 4. DISCLAIMER OF WARRANTIES; RIGHT OF QUIET
ENJOYMENT.................................................... 6
Section 4.1 Disclaimer of Warranties...................... 6
Section 4.2 Quiet Enjoyment............................... 7
SECTION 5. RETURN OF UNDIVIDED INTEREST................................. 8
Section 5.1 Return........................................ 8
Section 5.2 Condition Upon Return......................... 8
Section 5.3 Environmental Reports......................... 10
Section 5.4 Expenses...................................... 10
SECTION 6. LIENS........................................................ 10
SECTION 7. MAINTENANCE; REPLACEMENTS OF COMPONENTS...................... 11
Section 7.1 Maintenance................................... 11
Section 7.2 Replacement of Components..................... 11
Section 7.3 Records....................................... 12
SECTION 8. MODIFICATIONS................................................ 12
Section 8.1 Required Modifications........................ 12
Section 8.2 Optional Modifications........................ 12
Section 8.3 Title to Modifications;
Subjection to Head Lease 12
Section 8.4 Report of Modifications....................... 13
SECTION 9. NET LEASE.................................................... 13
i
TABLE OF CONTENTS, Continued
Page
----
SECTION 10. EVENTS OF LOSS............................................... 14
Section 10.1 Occurrence of Events of Loss.................. 14
Section 10.2 Payment of Termination Value;
Termination of Basic Rent..................... 15
Section 10.3 Rebuild....................................... 16
Section 10.4 Eminent Domain................................ 18
SECTION 11. INSURANCE.................................................... 18
Section 11.1 Property Insurance............................ 18
Section 11.2 Liability Insurance........................... 19
Section 11.3 Provisions With Respect to Insurance.......... 19
Section 11.4 Reports....................................... 20
Section 11.5 Additional Insurance by Facility Lessor....... 20
SECTION 12. INSPECTION................................................... 20
SECTION 13. TERMINATION OPTION FOR BURDENSOME EVENTS..................... 21
Section 13.1 Election to Terminate......................... 21
Section 13.2 Procedure for Exercise of Termination Option.. 22
SECTION 14. TERMINATION FOR OBSOLESCENCE................................. 23
Section 14.1 Termination................................... 23
Section 14.2 Solicitation of Offers........................ 23
Section 14.3 Right of Facility Lessor to Retain
the Facility Lessor's Rocky Mountain
Interest ..................................... 23
Section 14.4 Procedure for Exercise of
Termination Option ........................... 24
SECTION 15. END OF BASIC TERM OPTIONS.................................... 25
Section 15.1 The Facility Lessee's Purchase and
Return Options ............................... 25
Section 15.2 The Facility Lessor's Replacement
Lease Option and Renewal Term Option.......... 27
Section 15.3 Procedure for Replacement Lease Option........ 27
Section 15.4 Procedure for Renewal Term Option............. 29
Section 15.5 Loan Extension................................ 31
Section 15.6 Procedure for Retention Option................ 31
SECTION 16. EVENTS OF DEFAULT............................................ 32
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TABLE OF CONTENTS, Continued
Page
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SECTION 17. REMEDIES..................................................... 34
Section 17.1 Remedies for Event of Default................. 34
Section 17.2 Cumulative Remedies........................... 37
Section 17.3 No Delay or Omission to be
Construed as Waiver .......................... 37
SECTION 18. TERMINATION OPTIONS FOR APPEAL OF FERC ORDERS................ 37
Section 18.1 Options to Terminate.......................... 37
Section 18.2 Procedure for Exercise of
Termination Options .......................... 38
SECTION 19. THE FACILITY LESSEE'S RIGHT TO SUBLEASE...................... 38
SECTION 20. FURTHER ASSURANCES........................................... 39
SECTION 21. FACILITY LESSOR'S RIGHT TO PERFORM........................... 39
SECTION 22. NOTICES...................................................... 39
SECTION 23 SECURITY INTEREST AND INVESTMENT OF SECURITY
FUNDS........................................................ 41
SECTION 24. SECURITY FOR FACILITY LESSOR'S OBLIGATION TO THE
LENDER....................................................... 42
SECTION 25. MISCELLANEOUS................................................ 42
Section 25.1 Governing Law................................. 42
Section 25.2 Severability.................................. 42
Section 25.3 Headings and Table of Contents................ 42
Section 25.4 Successors and Assigns........................ 42
Section 25.5 "True Lease".................................. 43
Section 25.6 Amendments and Waivers........................ 43
Section 25.7 Survival...................................... 43
Section 25.8 Counterparts.................................. 43
Section 25.9 Effectiveness................................. 43
Section 25.10 Limitation of Liability....................... 43
Section 25.11 Measuring Life................................ 44
iii
TABLE OF CONTENTS, Continued
Page
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ATTACHMENTS TO FACILITY LEASE:
Appendix A - Definitions............................................A-1
Exhibit A - Description of Undivided Interest......................A-1
Exhibit A-1 - Description of the Entire Rocky
Mountain Property ..........................A-1-1
Exhibit A-2 - Project Boundary Drawing of Rocky
Mountain Project............................A-2-1
Exhibit A-3 - Powertunnel and Powerhouse General
Plan and Profile of the Rocky Mountain
Project No. RM-00-CL-0013 R1................A-3-1
Exhibit A-4 - Description of Equipment......................A-4-1
Exhibit B-1 - Form of Facility Lessor's Notice of
Non-Payment of Rent...........................B-1
Exhibit B-2 - Form of Facility Lessee's Request to
Facility Lessor to Pursue Remedies
Against Payment Undertaking Issuer............B-2
Schedule 1 - Basic Rent for Basic Term and
Renewal Term ................................S1-1
Schedule 2 - Termination Values for Basic Term
and Renewal Term ............................S2-1
iv
FACILITY LEASE AGREEMENT
(P1)
This FACILITY LEASE AGREEMENT (P1), dated as of December 30, 1996 (as
amended, supplemented or otherwise modified from time to time and in accordance
with the provisions hereof, this "Facility Lease" or this "Agreement"), between
SUNTRUST BANK, ATLANTA, a state banking corporation organized under the laws of
the State of Georgia, not in its individual capacity, but solely as Co-Trustee
under the Trust Agreement, dated as of December 30, 1996 with the Owner Trustee
and the Owner Participant (together with its successors and permitted assigns,
the "Facility Lessor"), and ROCKY MOUNTAIN LEASING CORPORATION, a corporation
organized under the laws of the State of Delaware (together with its successors
and permitted assigns, the "Facility Lessee").
WHEREAS, Oglethorpe Power Corporation (An Electric Membership Generation &
Transmission Corporation), an electric membership corporation organized under
the laws of the State of Georgia ("Oglethorpe") and Georgia Power Company, a
corporation organized under the laws of the State of Georgia ("Georgia Power")
own the Rocky Mountain Site (as hereinafter defined) as tenants in common under
the laws of the State of Georgia;
WHEREAS, Oglethorpe and Georgia Power own the Facility (as hereinafter
defined) as tenants in common under the laws of the State of Georgia;
WHEREAS, pursuant to the Ground Lease (as hereinafter defined) the
Co-Trustee has acquired from Oglethorpe a leasehold interest in the Ground
Interest;
WHEREAS, pursuant to the Head Lease (as hereinafter defined) the Co-Trustee
has acquired from Oglethorpe a leasehold interest in the Undivided Interest for
a term equal to 120% of the estimated remaining useful life of the Facility,
subject to renewal as provided in the Head Lease;
WHEREAS, pursuant to the Ground Sublease (as hereinafter defined) the
Co-Trustee will lease the Ground Interest leased to it by Oglethorpe pursuant to
the Ground Lease to the Facility Lessee, as Ground Sublessee, for the term
provided therein; and
WHEREAS, pursuant to this Facility Lease, the Facility Lessor will lease
the Undivided Interest leased to it by Oglethorpe pursuant to the Head Lease to
the Facility Lessee for the term provided herein.
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS.
Capitalized terms used in this Facility Lease, including the recitals, and
not otherwise defined herein shall have the respective meanings set forth in
Appendix A hereto. The general provisions of Appendix A shall apply to the terms
used in this Facility Lease and specifically defined herein.
SECTION 2. LEASE OF THE UNDIVIDED INTEREST.
The Facility Lessor hereby leases the Undivided Interest, upon the terms
and conditions set forth herein, to the Facility Lessee for the Basic Term and
the Renewal Term, if any, and the Facility Lessee hereby leases the Undivided
Interest, upon the terms and conditions set forth herein, from the Facility
Lessor. The Facility Lessee and the Facility Lessor understand and agree that
(a) this lease of the Undivided Interest is subject to the interest of the Head
Lessee under the Head Lease and the interests identified in the definition of
Undivided Interest, (b) legal title to the Facility remains vested in the Head
Lessor and Georgia Power as tenants-in-common, (c) this lease of the Undivided
Interest is subject and subordinate to the Lien of the Oglethorpe Mortgage, and
(d) this lease is subject to those encumbrances set forth in the Title Report.
The Undivided Interest shall be subject to the terms of this Facility Lease from
the date on which this Facility Lease is executed and delivered.
SECTION 3. FACILITY LEASE TERM AND RENT
Section 3.1 Basic Term. The term of this Facility Lease shall commence on
the Closing Date and shall terminate at 11:58 p.m. (New York City time) on the
Expiration Date (the "Basic Term"), subject to earlier termination pursuant to
Section 10, 13, 14, 17 or 18 hereof and extension for a Renewal Term pursuant to
Sections 15.2 and 15.4 hereof; provided, however, that, notwithstanding anything
to the contrary set forth herein, in no event shall the Basic Term terminate so
long as the Facility Lessor's interest under this Facility Lease shall be
subject to the Lien of the Loan Agreement or the security title of the Deed to
Secure Debt.
Section 3.2 Basic Rent. The Facility Lessee hereby agrees to pay to the
Facility Lessor Basic Rent for the lease of the Undivided Interest for each Rent
Payment Period throughout the Basic Term and the Renewal Term, if applicable, in
the amounts payable in advance or in arrears or both, as the case may be, on
each Rent Payment Date as indicated on Schedule 1 hereto under the caption
"Advance Rent" in the case of Rent Payment Periods immediately following such
Rent
2
Payment Date and/or "Arrears Rent" in the case of Rent Payment Periods ending on
such Rent Payment Date. Each such payment of Basic Rent shall be in the amount
set forth opposite such Rent Payment Date on Schedule 1 hereto, in each case,
subject to Section 3.4 hereof.
Section 3.3 Supplemental Rent. The Facility Lessee also agrees to pay to
the Facility Lessor, or to any other Person entitled thereto as expressly
provided herein or in any other Operative Document, as appropriate, any and all
Supplemental Rent, promptly as the same shall become due and owing, or where no
due date is specified, promptly after demand by the Person entitled thereto, and
in the event of any failure on the part of the Facility Lessee to pay any
Supplemental Rent, the Facility Lessor shall have all rights, powers and
remedies provided for herein or by law or equity or otherwise for the failure to
pay Basic Rent. The Facility Lessee will also pay as Supplemental Rent to the
extent permitted by Applicable Law, an amount equal to interest at the
applicable Overdue Rate on any part of any payment of Basic Rent not paid when
due for any period for which the same shall be overdue and on any Supplemental
Rent not paid when due (whether on demand or otherwise) for the period from such
due date until the same shall be paid. All Supplemental Rent to be paid pursuant
to this Section 3.3 shall be payable in the manner set forth in Section 3.5. The
Facility Lessee shall promptly remit to the appropriate Person amounts of
Sublease Supplemental Rent received by the Facility Lessee which are owed to
Persons other than the Facility Lessee.
Section 3.4 Adjustment of Basic Rent. (a) The Facility Lessee and the
Facility Lessor agree that Basic Rent (including Basic Rent for the Renewal
Term, if any), Termination Values, and Equity Exposure Amounts shall be
adjusted, either upwards or downwards, to reflect the principal amount,
amortization and interest rate on any Additional Loan Certificate issued
pursuant to Section 2.10 of the Loan Agreement in connection with a refinancing
of the Loan Certificate. Any adjustments pursuant to this Section 3.4 will be
calculated to preserve the Owner Participant's Net Economic Return through the
Basic Term and through the Basic Term plus the Renewal Term, if any; provided,
however, that to the extent consistent with preserving such Net Economic Return,
all adjustments shall minimize the present value to the Facility Lessee of the
Basic Rent or, at the Facility Lessee's election, the Basic Rent and the
Purchase Option Price. Adjustments will be made using the same method of
computation and assumptions originally used (other than those that have changed
as the result of the event giving rise to the adjustment) in the calculation of
the Basic Rent and the Purchase Option Price. The adjustments contemplated by
this Section 3.4 will result in corresponding adjustments to Termination Values.
In addition, in connection with any adjustment pursuant to this Section 3.4, the
Equity Exposure Amounts shall be increased or decreased by an increase or
decrease, as the case may be, in the Equity Portion of Basic Rent or the Equity
Portion of Termination Value. All Basic Rent adjustments shall be consistent
with Rev. Procs. 75-21 and 75-28 and section 467 of the Code as in effect at the
time of the adjustment, including any final, proposed or temporary regulations
or other administrative announcements issued thereunder and in no event shall
such adjustment cause this Facility Lease to become a "disqualified leaseback or
long-term agreement" within the meaning of section 467 of the Code and any such
regulations or announcements thereunder.
3
(b) Anything herein or in any other Operative Document to the contrary
notwithstanding, each installment of Basic Rent payable hereunder, whether or
not adjusted in accordance with this Section 3.4, shall be in an amount at least
sufficient to pay in full principal and interest payable on the Loan Certificate
on each Rent Payment Date. Anything herein or in any other Operative Document to
the contrary notwithstanding, Termination Values (excluding the Equity Portion
of Termination Value) payable on any date under this Facility Lease and the
initial installment of the Purchase Option Price, whether or not adjusted in
accordance with this Section 3.4, shall, together with all other Basic Rent due
and owing on such date, exclusive of any portion thereof that is an Excepted
Payment, be in an amount at least sufficient to pay in full the principal of and
accrued interest on the Loan Certificate payable on such date.
(c) Any adjustment pursuant to this Section 3.4 shall initially be
computed by the Owner Participant. Once computed, the results of such
computation shall promptly be delivered by the Owner Participant to the Facility
Lessee, the Facility Lessor, the Lender and AMBAC. Within 20 days after the
receipt of the results of any such adjustment, the Facility Lessee may request
that an investment banking firm selected by the Facility Lessee and reasonably
satisfactory to the Owner Participant (the "Intermediary") verify, after
consultation with the Owner Participant and the Facility Lessee, the accuracy of
such adjustment in accordance with this Section 3.4, and the Owner Participant
and the Facility Lessee hereby agree to provide the Intermediary (on a
confidential basis) with all information and materials as shall be reasonably
necessary in connection therewith provided, however, that the Owner Participant
shall not be required to disclose its tax returns or other proprietary
information. If the Intermediary confirms that such adjustment is in accordance
with this Section 3.4, it shall so certify to the Facility Lessee, the Facility
Lessor, the Owner Participant and the Lender, and such certification shall be
final, binding and conclusive on the Facility Lessee, the Owner Participant and
the Facility Lessor. If the Intermediary concludes that such adjustment is not
in accordance with this Section 3.4, it shall so certify to the Facility Lessee,
the Facility Lessor, the Owner Participant and the Lender, and the Owner
Participant shall again compute the required adjustment consistent with the
advice of the Intermediary. Such re-computation shall be subject to the
provisions of this Section 3.4 and the results of such re-computation shall be
final, binding and conclusive on the Facility Lessee, the Facility Lessor and
the Owner Participant. If the Facility Lessee does not request verification of
any adjustment within the period specified above, the computation provided by
the Owner Participant shall be final, binding and conclusive on the Facility
Lessee, the Facility Lessor and the Owner Participant. The final determination
of any adjustment hereunder shall be set forth in an amendment to this Facility
Lease, executed and delivered by the Facility Lessor and the Facility Lessee and
consented to by the Owner Participant; provided, however, that any omission to
execute and deliver such amendment shall not affect the validity and
effectiveness of any such adjustment. The reasonable fees, costs and expenses of
the Intermediary in verifying an adjustment pursuant to this Section 3.4 shall
be paid by the Facility Lessee; provided, further, that, in the event that such
Intermediary determines that the present value of Basic Rent or, at the Facility
Lessee's election, Basic Rent and the Purchase Option Price payments, to be made
under this Facility Lease as calculated by the Owner Participant are greater
than the present value of the correct Basic Rent and Purchase Option Price
payments as certified by the Intermediary,
4
discounted annually at the Debt Rate, by more than 0.10% of the Undivided
Interest Cost, then such expenses of the Intermediary shall be paid by the Owner
Participant. Notwithstanding anything herein to the contrary, the sole
responsibility of the Intermediary shall be to verify the calculations hereunder
and matters of interpretation of this Facility Lease or any other Operative
Document shall not be within the scope of the Intermediary's responsibilities.
Section 3.5 Manner of Payments. (a) All Rent (whether Basic Rent or
Supplemental Rent) shall be paid by the Facility Lessee in lawful currency of
the United States of America in immediately available funds to the recipient not
later than 11:00 a.m. (New York City time) on the date due. All Rent payable to
the Facility Lessor (other than Excepted Payments) shall be paid by the Facility
Lessee to the Owner Trustee at its account at Fleet National Bank (ABA Account
No. 011-900-445) Credit - (Account No. 0067548290), or to such other place as
the Facility Lessor shall notify the Facility Lessee in writing; provided,
however, that so long as the Lien of the Loan Agreement and security title of
the Deed to Secure Debt have not been discharged, the Facility Lessor hereby
irrevocably directs (it being agreed and understood that such direction shall be
deemed to have been revoked after the Lien of the Loan Agreement and security
title of the Deed to Secure Debt shall have been fully discharged), and the
Facility Lessee agrees, that all payments of Rent (other than Excepted Payments)
payable to the Facility Lessor shall be paid by wire transfer directly to the
Lender's Account or to such other place as the Lender shall notify the Facility
Lessee in writing pursuant to the Loan Agreement. Payments constituting Excepted
Payments shall be made to the Person entitled thereto at the address for such
Person set forth in the Participation Agreement, or to such other place as such
Person shall notify the Facility Lessee in writing.
(b) Payments made to the Facility Lessor under the Payment Undertaking
Agreement and the Qualifying Equity Funding Agreement shall satisfy the Facility
Lessee's obligation to pay amounts of Basic Rent or Supplemental Rent, as the
case may be, to the extent of such payments. Amounts paid to the Facility Lessor
or the Owner Participant from the Qualifying Equity Funding Agreement in
satisfaction of the Special Equity Facility Lease Remedy shall not satisfy or be
treated as performance of any of the Facility Lessee's obligations under this
Facility Lease or any other Operative Document (other than its obligations under
Section 16.2 of the Participation Agreement) or in any way limit or offset any
amounts payable by the Facility Lessee.
Section 3.6 Business Day. Notwithstanding anything herein or in any other
Operative Document to the contrary, if the date on which any payment is to be
made pursuant to this Facility Lease or any other Operative Document is not a
Business Day, the payment otherwise payable on such date shall be payable on the
next succeeding Business Day with the same force and effect as if made on such
scheduled date and, provided such payment is made on such succeeding Business
Day, no interest shall accrue on the amount of such payment from and after such
scheduled date to the time of such payment on such next succeeding Business Day.
Section 3.7 Agreement with Respect to Amounts Payable Under Payment
Undertaking Agreement. The Facility Lessor hereby acknowledges that, pursuant to
the Payment
5
Undertaking Agreement, the Payment Undertaking Issuer has undertaken to make
Scheduled Payments to the Facility Lessor or its assignee or pledgee on each
date specified therein, and other specified amounts on the terms set forth
therein. These payments are payable when Basic Rent, Termination Value or
amounts computed by reference to Termination Value, are due and, assuming
exercise of the Purchase Option, when the first installment of Purchase Option
Price will be due under this Facility Lease, in an amount equal to that portion
of Basic Rent, Termination Value and Purchase Option Price which corresponds to
the principal and interest on the Loan Certificate due on such date (including
in respect of acceleration). The Facility Lessor hereby agrees that, upon any
failure of the Facility Lessee to pay any such amount of Basic Rent, Termination
Value, amounts defined by reference to Termination Value or the Purchase Option
Price, if any, when due, that prior to exercising any remedy pursuant to Section
17 of this Facility Lease, the Facility Lessor will give the Facility Lessee
(with a copy to the Facility Sublessee at its address set forth in Section 18.4
of the Participation Agreement) notice of such failure in the form attached
hereto as Exhibit B-1. Within four days of the Facility Lessee's receipt of such
notice of such failure, the Facility Lessee may instruct the Facility Lessor by
delivery of the notice to the Facility Lessor in the form of Exhibit B-2 hereto,
that the Facility Lessee desires that the Facility Lessor credit against amounts
owed to the Facility Lessor by the Facility Lessee, the amounts payable by the
Payment Undertaking Issuer pursuant to the Payment Undertaking Agreement, in
which case, the Facility Lessor shall, at the sole cost and expense of the
Facility Lessee, pursue due diligence to collect such amounts from the Payment
Undertaking Issuer prior to pursuing the Facility Lessee for payment of such
amounts under this Facility Lease (including the exercise of any remedy under
Section 17) or any other Operative Document. If the Payment Undertaking Issuer
has fully performed its obligations under the Payment Undertaking Agreement in
respect of such amounts of Rent, the Facility Lessor shall be conclusively
presumed to have satisfied the foregoing requirement to give notice and pursue
due diligence.
SECTION 4. DISCLAIMER OF WARRANTIES; RIGHT OF QUIET ENJOYMENT
Section 4.1 Disclaimer of Warranties. (a) WITHOUT WAIVING ANY CLAIM THE
FACILITY LESSEE MAY HAVE AGAINST ANY MANUFACTURER, VENDOR OR CONTRACTOR UNDER
THE ROCKY MOUNTAIN AGREEMENTS, THE FACILITY LESSEE ACKNOWLEDGES AND AGREES
SOLELY FOR THE BENEFIT OF THE FACILITY LESSOR AND THE OWNER PARTICIPANT THAT (i)
THE FACILITY AND EACH COMPONENT THEREOF ARE OF A SIZE, DESIGN, CAPACITY AND
MANUFACTURE ACCEPTABLE TO THE FACILITY LESSEE, (ii) THE FACILITY LESSEE IS
SATISFIED THAT THE FACILITY AND EACH COMPONENT THEREOF ARE SUITABLE FOR THEIR
RESPECTIVE PURPOSES, (iii) NEITHER THE FACILITY LESSOR NOR THE OWNER PARTICIPANT
IS A MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND, (iv) THE UNDIVIDED
INTEREST IS LEASED HEREUNDER TO THE EXTENT PROVIDED HEREBY FOR THE BASIC TERM
AND THE RENEWAL TERM, IF ANY, SPECIFIED HEREIN SUBJECT TO ALL APPLICABLE LAWS
NOW IN EFFECT OR HEREAFTER ADOPTED, INCLUDING WITHOUT LIMITATION (1) ZONING
6
REGULATIONS, (2) ENVIRONMENTAL LAWS OR (3) BUILDING RESTRICTIONS, AND IN THE
STATE AND CONDITION OF EVERY PART THEREOF WHEN THE SAME FIRST BECAME SUBJECT TO
THIS FACILITY LEASE WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND BY THE
FACILITY LESSOR OR THE OWNER PARTICIPANT AND (v) THE FACILITY LESSOR LEASES FOR
THE BASIC TERM AND THE RENEWAL TERM, IF ANY, SPECIFIED HEREIN AND THE FACILITY
LESSEE TAKES THE UNDIVIDED INTEREST UNDER THIS FACILITY LEASE "AS-IS",
"WHERE-IS" AND "WITH ALL FAULTS", AND THE FACILITY LESSEE ACKNOWLEDGES THAT
NEITHER THE FACILITY LESSOR, AS THE FACILITY LESSOR OR IN ITS INDIVIDUAL
CAPACITY, NOR THE OWNER PARTICIPANT MAKES NOR SHALL BE DEEMED TO HAVE MADE, AND
EACH EXPRESSLY DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS, WARRANTIES OR
REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, FITNESS
FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION, MERCHANTABILITY THEREOF OR AS TO
THE TITLE OF THE FACILITY, THE QUALITY OF THE MATERIAL OR WORKMANSHIP THEREOF OR
CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM FROM PATENT, COPYRIGHT OR
TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR OTHER DEFECT, WHETHER OR
NOT DISCOVERABLE, OR AS TO THE ABSENCE OF ANY OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT OR ANY OTHER EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY
WHATSOEVER WITH RESPECT THERETO, except that the Facility Lessor represents and
warrants that on the Closing Date, the Undivided Interest will be free of
Facility Lessor's Liens. It is agreed that all such risks, as between the
Facility Lessor, the Owner Participant and the Lender on the one hand and the
Facility Lessee on the other hand are to be borne by the Facility Lessee. None
of the Facility Lessor, the Owner Trustee, the Owner Participant nor the Lender
shall have any responsibility or liability to the Facility Lessee or any other
Person with respect to any of the following: (w) any liability, loss or damage
caused or alleged to be caused directly or indirectly by the Facility or any
Component or by any inadequacy thereof or deficiency or defect therein or by any
other circumstances in connection therewith; (x) the use, operation or
performance of the Facility or any Component or any risks relating thereto; (y)
any interruption of service, loss of business or anticipated profits or
consequential damages; or (z) the delivery, operation, servicing, maintenance,
repair, improvement, replacement or decommissioning of the Facility or any
Component. The provisions of this paragraph (a) of this Section 4.1 have been
negotiated, and, except to the extent otherwise expressly stated, the foregoing
provisions are intended to be a complete exclusion and negation of any
representations or warranties of the Facility Lessor, express or implied, with
respect to the Facility or any Components of either thereof or the Undivided
Interest that may arise pursuant to any Applicable Law now or hereafter in
effect, or otherwise.
(b) During the Facility Lease Term, so long as no Event of Default shall
have occurred and be continuing, the Facility Lessor hereby appoints irrevocably
and constitutes the Facility Lessee its agent and attorney-in-fact, coupled with
an interest, to assert and enforce, from time to time, in the name and for the
account of the Facility Lessor and the Facility Lessee, as their interests may
appear, but in all cases at the sole cost and expense of the Facility Lessee,
7
whatever claims and rights the Facility Lessor may have in respect of the
Undivided Interest against the manufacturers of the Facility, or vendors or
contractors under the Rocky Mountain Agreements or under any express or implied
warranties relating to the Facility or the Undivided Interest.
Section 4.2 Quiet Enjoyment. The Facility Lessor agrees that,
notwithstanding any provision of any other Operative Document, so long as no
Event of Default shall have occurred and be continuing, it shall not itself
interfere with or interrupt the quiet enjoyment of the use, operation and
possession by the Facility Lessee of the interest in the Facility or the
Undivided Interest conveyed by this Facility Lease subject to the terms of this
Facility Lease; provided that the Facility Lessor's covenant does not relate to
actions of the Lender.
SECTION 5. RETURN OF UNDIVIDED INTEREST
Section 5.1 Return. Upon the expiration of the Facility Lease Term unless
the Facility Lessee shall have purchased the Facility Lessor's interest in the
Undivided Interest pursuant to Section 15.1, or upon any early termination of
this Facility Lease other than a termination in accordance with Section 10, 13
or 18, the Facility Lessee, at its own expense, shall return the Undivided
Interest by delivering possession of the same to the Facility Lessor at the
location of the Facility on the Rocky Mountain Site near Rome, Georgia.
Section 5.2 Condition Upon Return. Except with respect to a return of the
Undivided Interest pursuant to Section 14.3, at the time of any return of the
Undivided Interest by the Facility Lessee in accordance with Section 5.1, the
following conditions shall be complied with, all at the Facility Lessee's sole
cost and expense:
(a) the right to use the Undivided Interest granted hereunder for the
benefit of the Facility Lessee shall cease and terminate;
(b) the Facility will be in at least as good condition as if it had
been maintained, repaired and operated during the Facility Lease Term in
compliance with the provisions of this Facility Lease, reasonable wear and
tear excepted, and there shall be no deferred maintenance in respect of the
Facility;
(c) the Facility Lessee shall cooperate with all reasonable requests
of the Owner Participant or the Facility Lessor, at the expense of the
Facility Lessee, for purposes of obtaining, or enabling the Owner
Participant or the Facility Lessor or their respective designees to obtain,
any and all licenses, permits, approvals and consents of any Governmental
Entities or other Persons that are or will be required to be obtained by
the Owner Participant or the Facility Lessor in connection with its use,
operation or maintenance of the Undivided Interest on or after such return
in compliance with Applicable Law and in the manner contemplated by the
Rocky Mountain Agreements;
8
(d) the Facility Lessee shall return and surrender possession of the
Undivided Interest to the Facility Lessor (or its designee) free and clear
of the Lien described in clause (i) of the definition of "Permitted Liens",
except to the extent of the interests of Oglethorpe under the Head Lease
and the Ground Lease;
(e) the Facility shall have at least the capability and functional
ability, including the existence of sufficient water flows in contributing
streams, to perform substantially at the ratings for which it was designed,
on a continuing basis in normal commercial operation, all functions for
which it was designed (ordinary wear and tear excepted);
(f) the Facility shall be in compliance with all requirements of
manufacturers required for the maintenance in full force and effect of any
material warranty then in effect with respect to the Facility;
(g) no Component shall be a temporary Component and any replacement
Component shall satisfy the standards of Section 7.2. Prior to redelivery
of the Undivided Interest under this Section 5.2, upon not less than 45
days' prior request of the Facility Lessor, the Facility Lessee shall
perform such maintenance on the Facility which is in addition to that
otherwise required to be performed by the Facility Lessee hereunder as the
Facility Lessor may reasonably specify (using its best efforts on a
time-available basis for such work). If the Facility Lessee is unable to
perform such requested maintenance, it will use its best efforts to arrange
to have such maintenance performed by another Person acceptable to the
Facility Lessor at rates comparable to those the Facility Lessee obtains
for maintenance performed on its own facilities. The Facility Lessor shall
either promptly reimburse the Facility Lessee for the Facility Lessee's
cost or pay such rates charged by any such Person acceptable to the
Facility Lessor in connection with such requested maintenance. The Facility
Lessee shall also surrender to the Facility Lessor originals or copies of
all documents, instruments, plans, maps, specifications, manuals, drawings
and other documentary materials relating to the installation, operation,
maintenance, construction, design, modification and repair of the Facility,
as shall be in the Facility Lessee's possession and shall be reasonably
appropriate or necessary for the continued operation of the Facility, and
shall use its best efforts to obtain and surrender to the Facility Lessor
originals or copies of any such documents, instruments, plans, maps,
specifications, manuals, drawings or other documentary materials as shall
be in the possession of any Affiliate of the Facility Lessee. The Facility
Lessee shall effect delivery of the Undivided Interest at its own cost and
expense by executing and delivering to the Facility Lessor an instrument or
instruments in form and substance reasonably satisfactory to the Facility
Lessor evidencing surrender by the Facility Lessee of the Facility Lessee's
rights to the Undivided Interest under this Facility Lease and to the
possession thereof. At least 60 but not more than 120 days prior to
redelivery of the Undivided Interest pursuant to this Section 5.2, the
Facility Lessee shall perform the Return Acceptance Tests and shall
promptly provide the results to the Facility Lessor. If the Facility shall
not pass such tests, the Facility Lessee shall, at its own expense, take
such actions as may be
9
necessary to enable the Facility to pass such tests and certify to the
Owner Participant such passage of such tests prior to such delivery date.
At the Facility Lessor's request, if possible and commercially reasonable,
the Facility Lessee shall provide insurance in accordance with Section 11
hereof for three months following the date of return of the Undivided
Interest at the Facility Lessor's sole cost and expense which cost and
expense shall equal Facility Lessee's actual cost and expense for such
insurance; and
(h) the FERC License shall have been renewed in favor of the Facility
Lessor for a term of not less than 17 years from the Expiration Date on
terms not materially more burdensome than those under the existing FERC
License and shall be in full force and effect.
At the time of any return of the Undivided Interest by the Facility Lessee
pursuant to Section 14.3, the conditions set forth in clauses (a), (b), (c), (d)
and (g) of this Section 5.2 shall be complied with at the Facility Lessee's sole
cost and expense.
Section 5.3 Environmental Reports. In connection with a return pursuant to
Section 5.2 and Section 14.3, the Facility Lessee shall provide the Facility
Lessor, the Owner Participant and AMBAC, not later than 270 days prior to the
Expiration Date, or in connection with a return other than on the Expiration
Date, not later than the date of return, an inspection report prepared by a
reputable environmental consulting firm (selected by the Owner Participant and
reasonably acceptable to the Facility Lessee) as to the environmental condition
of the Facility and the Rocky Mountain Site and the compliance or non-compliance
with applicable Environmental Laws, in form, scope and substance reasonably
satisfactory to the Owner Participant. The cost and expense of preparing and
providing such report shall be for the account of the Facility Lessee. The
provisions of such report shall not relieve the Facility Lessee of liability
with respect to environmental conditions, known or unknown, in respect of the
Facility and the Rocky Mountain Site and the Facility Lessee will take any and
all actions necessary to ensure that the Facility and the Rocky Mountain Site
comply with all such Environmental Laws. If such report shall indicate that
either the Facility or the Rocky Mountain Site is not in compliance with
applicable Environmental Laws, the Facility Lessee shall, within 90 days of the
Facility Lessor having received such inspection report, (a) provide the Owner
Participant with a remediation plan approved by the applicable Governmental
Entity designed to ensure that the Facility and the Rocky Mountain Site will be
brought into compliance with applicable Environmental Laws as promptly as is
reasonably practical and without materially adversely affecting the continued
operation of the Facility or the Rocky Mountain Site and (b) (i) place in escrow
funds in an amount corresponding to the Facility Lessor's Percentage of the cost
estimate of such remediation plan (as certified by the environmental consulting
firm that prepared such report or another expert reasonably satisfactory to the
Owner Participant), which escrow shall provide for the payment of the costs of
such plan as the same become due and payable or (ii) make other arrangements
that are satisfactory to the Owner Participant, as determined in its sole
discretion acting in good faith, for such purposes. The obligations of the
Facility Lessee set forth in this Section 5.3 shall survive the termination of
this Facility Lease and the expiration of the Facility Lease Term.
10
Section 5.4 Expenses. The Facility Lessee agrees to pay or reimburse, on an
After-Tax Basis, on demand, all costs and expenses incurred by the Facility
Lessor, the Trustees, the Owner Participant and the Lender in connection with
any return contemplated by this Section 5.
SECTION 6. LIENS
The Facility Lessee will not directly or indirectly create, incur, assume
or suffer to exist any Lien on or with respect to the Undivided Interest or the
Facility Lessor's Rocky Mountain Interest, or any interest therein or in, to or
on its interest in this Facility Lease or its interest in any other Operative
Document, except Permitted Liens, and the Facility Lessee shall promptly notify
the Facility Lessor of the imposition of any such Lien of which the Facility
Lessee is aware and shall promptly, at its own expense, take such action as may
be necessary to fully discharge or release any such Lien.
SECTION 7. MAINTENANCE; REPLACEMENTS OF COMPONENTS
Section 7.1 Maintenance. The Facility Lessee, at its own cost and expense,
will cause the Facility to be maintained in good condition (ordinary wear and
tear excepted), repair and working order, in accordance with Prudent Utility
Practice, and in compliance with all Applicable Laws of any Governmental Entity
having jurisdiction and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, (a) all as in the reasonable
judgment of the Facility Lessee may be necessary so that the business carried on
in connection with the Undivided Interest may be properly and advantageously
conducted by the Facility Lessee at all times and (b) in accordance with the
Rocky Mountain Agreements and the Oglethorpe Mortgage. Notwithstanding any
provision contained in this Facility Lease or in any other Operative Document,
the Facility Lessee has the right to perform any and all acts required by an
order of the FERC or its successor affecting the Facility or the Rocky Mountain
Site without the prior approval of the Facility Lessor.
Section 7.2 Replacement of Components. In the ordinary course of
maintenance, service, repair or testing, the Facility Lessee, at its own cost
and expense, may remove or cause to be removed from the Facility any Component;
provided, however, that the Facility Lessee shall cause such Component to be
replaced by a replacement Component which shall be free and clear of all Liens
(except Permitted Liens) and shall be in as good operating condition as, and
shall have a current and residual value, remaining useful life and utility at
least equal to, that of the Component replaced, assuming such replaced Component
was in at least the condition and repair required to be maintained in accordance
with the terms of this Facility Lease (each such replacement Component being
herein referred to as a "Replacement Component") as promptly as practicable. An
undivided interest equal to the Facility Lessor's Percentage in each Component
at any time removed from the Facility shall remain subject to the Head Lease and
this Facility Lease, wherever located, until such time as such Component shall
be replaced by a Replacement
11
Component which has been incorporated in the Facility and which meets the
requirements for Replacement Components specified above. Immediately upon any
Replacement Component becoming incorporated in the Facility, without further act
(and at no cost to the Facility Lessor and with no adjustment to the Undivided
Interest Cost or Basic Rent), (i) the replaced Component shall no longer be
subject to the Head Lease or this Facility Lease, (ii) title to such Replacement
Component shall vest in the Co-Owners and Oglethorpe's undivided interest
therein shall become subject to the Oglethorpe Mortgage, (iii) an undivided
interest equal to the Facility Lessor's Percentage in the Replacement Component
shall thereupon become subject to the Head Lease, and (iv) an undivided interest
equal to the Facility Lessor's Percentage in such Replacement Component shall
become subject to this Facility Lease and be deemed a part of the Facility for
all purposes hereof. Notwithstanding anything in this Section 7.2 or elsewhere
in this Facility Lease to the contrary, if the Facility Lessee or the Facility
Operator has determined that a Component is surplus or obsolete, it shall have
the right to remove such Component without replacing it; provided that no such
Component may be so removed without being replaced if such removal would
diminish the current or residual value by more than a de minimis amount or
diminish the remaining useful life or utility of the Facility or cause the
Facility to become "limited use" property within the meaning of Rev. Proc.
76-30, 1976-1, 647.
Section 7.3 Records. The Facility Lessee shall maintain logs of the
Facility's operation and keep maintenance and repair reports in sufficient
detail to indicate the nature and date of major work completed on the Facility,
including, without limitation, the cost of maintenance and repair to the extent
that such records are kept as a normal part of the Facility Lessee's operations.
Such records shall be made available upon the Facility Lessor's request during
any inspection of the Facility by the Facility Lessor or Owner Participant and
shall be deemed the property of the Facility Lessor upon the expiration or
earlier termination of the Facility Lease; provided, however, that the Facility
Lessee shall be entitled to keep copies of such records.
SECTION 8. MODIFICATIONS
Section 8.1 Required Modifications. Subject to the Rocky Mountain
Agreements, the Facility Lessee, at its own cost and expense, shall make or
cause to be made all Modifications to the Facility as it relates to the
Undivided Interest as are required by the Rocky Mountain Agreements and by
Applicable Law (each, a "Required Modification").
Section 8.2 Optional Modifications. So long as no Bankruptcy Default,
Payment Default or Event of Default exists, the Facility Lessee at any time may,
at its own cost and expense, make or cause to be made any Modification to the
Facility as the Facility Lessee considers desirable in the proper conduct of its
business (an "Optional Modification"); provided that, no Optional Modification
to the Facility shall impair the operation of the Facility or diminish the
current or residual value, remaining useful life or utility of the Facility
below the current or residual value, remaining useful life or utility thereof
immediately prior to such Optional Modification assuming the Facility was then
in the condition required to be maintained by the
12
terms of this Facility Lease, or cause the Undivided Interest to become "limited
use" property, within the meaning of Rev. Proc. 76-30, 1976-1, 647.
Section 8.3 Title to Modifications; Subjection to Head Lease. Title to all
Modifications to the Facility shall immediately vest in the Co-Owners, and
Oglethorpe's undivided interest therein shall become subject to the Lien of the
Oglethorpe Mortgage and be deemed part of the Facility for all purposes of this
Facility Lease. An undivided interest equal to the Facility Lessor's Percentage
in all Modifications shall immediately become subject to the Head Lease and this
Facility Lease (at no cost to the Facility Lessor and with no adjustment to the
Undivided Interest Cost) and be deemed a part of the Undivided Interest for all
purposes hereof, and the Facility Lessee, at its own cost and expense, shall
take such steps as the Facility Lessor may require from time to time to confirm
that the foregoing Modifications are subject to the Head Lease.
Section 8.4 Report of Modifications. On or before March 1 of each year
(commencing March 1, 1998) and on the expiration of the Facility Lease Term, the
Facility Lessee shall furnish to the Facility Lessor a report stating the total
cost of all Modifications and describing separately and in reasonable detail
each Modification having a value in excess of $5,000,000 made during the period
from the Closing Date to December 31, 1997 for the first report and annually
thereafter based on a calendar year period for subsequent reports.
SECTION 9. NET LEASE
This Facility Lease is a "net lease" and, notwithstanding anything herein
to the contrary, the Facility Lessee's obligation to pay all Rent payable
hereunder (and all amounts, including, without limitation, Termination Value, in
lieu of Rent following termination of this Facility Lease) shall be absolute and
unconditional under any and all circumstances and shall not be terminated,
extinguished, diminished, lost or otherwise impaired, nor shall the Facility
Lessee's other obligations hereunder or the Facility Lessor's rights hereunder
be terminated, extinguished, diminished, lost or otherwise impaired, by any
circumstance of any character or for any reason whatsoever, whether or not the
same involves the loss of all or any part of the leasehold estate granted by
this Facility Lease, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which the Facility Lessee may
have against the Facility Lessor, the Trustees, the Owner Participant, or the
Lender or any other Person, including, without limitation, any breach by any of
said parties of any covenant or provision under this Facility Lease or under any
Operative Document, (ii) any lack or invalidity of title or any defect in the
title, condition, design, operation, merchantability or fitness for use of the
Facility or any Component, or any foreclosure or deed in lieu of foreclosure of
the Oglethorpe Mortgage, or any termination of this Facility Lease as a result
thereof by operation of law or contract, or any eviction by paramount title or
otherwise, or any unavailability of the Facility, the Rocky Mountain Site, any
Component, any other portion of the Facility Lessee's Rocky Mountain Interest or
the interest of any other Person or any part of the foregoing for any reason
whatsoever, (iii) any loss or
13
destruction of, or damage to, the Facility or any Component or interruption or
cessation in the use or possession thereof or any part of the foregoing by the
Facility Lessee for any reason whatsoever and of whatever duration, (iv) the
condemnation, requisitioning, expropriation, seizure or other taking of title to
or use of the Facility, the Rocky Mountain Site, any Component, any other
portion of the Facility Lessee's Rocky Mountain Interest or any part of the
foregoing by any Governmental Entity or otherwise, (v) the invalidity or
unenforceability or lack of due authorization or other infirmity of this
Facility Lease or any other Operative Document, (vi) the lack of right, power or
authority of the Facility Lessor to enter into this Facility Lease or any other
Operative Document, (vii) any ineligibility of the Facility or any Component for
any particular use, whether or not due to any failure of the Facility Lessee or
the Facility Operator to comply with any Applicable Law, (viii) any event of
"force majeure" or any frustration, (ix) any legal requirement similar or
dissimilar to the foregoing, any present or future law to the contrary
notwithstanding, (x) any insolvency, bankruptcy, reorganization or similar
proceeding by or against the Facility Lessee or any other Person, (xi) any Lien
of any Person with respect to the Facility, the Rocky Mountain Site, any
Component, any other portion of the Facility Lessee's Rocky Mountain Interest or
any part of the foregoing, (xii) the existence of the Payment Undertaking
Agreement or the Qualifying Equity Funding Agreement (other than to the extent
of the Rent payments discharged from any remittance from the Payment Undertaking
Agreement or the Qualifying Equity Funding Agreement) or (xiii) any other cause,
whether similar or dissimilar to the foregoing, any present or future law
notwithstanding, except as expressly set forth herein or in any other Operative
Documents, it being the intention of the parties hereto that all Rent payable by
the Facility Lessee hereunder shall continue to be payable in all events in the
manner and at times provided for herein. Such Rent shall not be subject to any
abatement and the payments thereof shall not be subject to any setoff or
reduction for any reason whatsoever, including any present or future claims of
the Facility Lessee or any other Person against the Facility Lessor or any other
Person under this Facility Lease or otherwise. To the extent permitted by
Applicable Law, the Facility Lessee hereby waives any and all rights which it
may now have or which at any time hereafter may be conferred upon it, by statute
or otherwise, to terminate, cancel, quit or surrender this Facility Lease with
respect to the Undivided Interest, except in accordance with Sections 10, 13,
14, 15 or 18. If for any reason whatsoever this Facility Lease shall be
terminated in whole or in part by operation of law or otherwise, except as
specifically provided herein, the Facility Lessee nonetheless agrees to the
extent permitted by Applicable Law, to pay to the Facility Lessor an amount
equal to each installment of Basic Rent and all Supplemental Rent due and owing,
at the time such payment would have become due and payable in accordance with
the terms hereof had this Facility Lease not been so terminated. The provisions
of this Section 9 shall survive the termination for any reason whatsoever of the
leasehold interest created by this Facility Lease. Upon and after termination of
the leasehold hereby granted for any reason whatsoever, the Facility Lessee
shall pay to the Facility Lessor, in lieu of the Rent payable hereunder, an
amount equal to such Rent, and this obligation is expressly agreed to be a
covenant of the Facility Lessee that is independent of the existence of such
leasehold. The obligations of the Facility Lessee to pay all amounts hereunder
other than Rent are also covenants that are independent of the existence of such
leasehold and shall survive the termination thereof for any reason whatsoever.
14
SECTION 10. EVENTS OF LOSS
Section 10.1 Occurrence of Events of Loss. The Facility Lessee will notify
the Facility Lessor, the Owner Participant, the Lender and AMBAC of any damage
to the Facility which the Facility Lessee reasonably anticipates may cause an
Event of Loss described in clause (i), (ii), (iii) or (v) of the definition of
Event of Loss within 10 Business Days of such event. The Owner Participant or
the Facility Lessor will promptly notify the Facility Lessee of any event of
which it is aware that upon election of the Owner Participant would result in an
Event of Loss described in clause (iv) of the definition of Event of Loss. If an
Event of Loss described in clauses (i) or (ii) of the definition of Event of
Loss shall occur, then no later than six months following such occurrence the
Facility Lessee shall notify the Facility Lessor in writing of its election to
either (a) if no Event of Default has occurred and is continuing and subject to
the satisfaction of the conditions set forth in Section 10.3, rebuild and
restore the Facility in accordance with the provisions of the Rocky Mountain
Agreements so that the Facility shall have a fair market value (present and
residual), remaining useful life and utility at least equal to that of the
Facility prior to such rebuilding, assuming the Facility was in the condition
and repair required to be maintained by this Facility Lease or (b) terminate
this Facility Lease pursuant to Section 10.2 hereof. The Facility Lessee may
elect the option provided in clause (b) of the preceding sentence regardless of
whether the Facility is to be rebuilt. If the Facility Lessee fails to make an
election as provided above, an Event of Loss shall be deemed to occur as of the
end of the six month period referred to in the third sentence of this Section
10.1 and the Facility Lessee will be deemed to have made the election to
terminate this Facility Lease pursuant to Section 10.2.
Section 10.2 Payment of Termination Value; Termination of Basic Rent. (a)
If (x) the Facility Lessee shall elect not to rebuild the Facility pursuant to
Section 10.3 hereof following an Event of Loss described in clause (i) or (ii)
of the definition of Event of Loss or an Event of Loss shall be deemed to occur
pursuant to the last sentence of Section 10.1, or (y) an Event of Loss described
in clause (iii), (iv) or (v) of the definition of Event of Loss shall occur,
then, on the next Termination Date following the Facility Lessee's notice of its
election referred to in the third sentence of Section 10.1 or the occurrence of
a deemed Event of Loss pursuant to the last sentence of Section 10.1 in the case
of clause (x) above, or on the next Termination Date occurring at least three
months after such occurrence of such Event of Loss in the case of clause (y)
above, the Facility Lessee shall pay to the Facility Lessor (A) the Termination
Value determined as of the relevant Termination Date, plus (B) all amounts of
Supplemental Rent (including, without limitation, all costs and expenses of the
Facility Lessor, the Owner Trustee, the Owner Participant and the Lender, and
all sales, use, value added and other Taxes required to be indemnified by the
Facility Lessee pursuant to Section 12.2 of the Participation Agreement
associated with the exercise of the termination option pursuant to this Section
10.2) due and payable on or prior to such Termination Date, plus (C) any unpaid
Basic Rent due before such Termination Date and, if such Termination Date shall
be a Rent Payment Date, the Basic Rent (to the extent payable in arrears) due
and payable on such Rent Payment Date and terminate this Facility Lease.
15
(b) Concurrently with the payment of all sums required to be paid pursuant
to this Section 10.2, (1) Basic Rent for the Undivided Interest shall cease to
accrue, (2) the Facility Lessee shall cease to have any liability to the
Facility Lessor with respect to the Undivided Interest except for Supplemental
Rent and other obligations (including, without limitation, those under Sections
12.1 and 12.2 of the Participation Agreement) surviving pursuant to the express
provisions of any Operative Document, (3) the Facility Lessor will prepay the
Loan Certificate pursuant to Section 10 of the Loan Agreement, (4) the Facility
Lessor will at the Facility Lessee's cost and expense execute and deliver to the
Facility Lessee a release or termination of this Facility Lease, (5) the
Facility Lessor shall transfer the Facility Lessor's Rocky Mountain Interest to
the Facility Lessee pursuant to this Section 10.2, Section 6 of the Ground
Sublease and Section 9 of the Head Lease on an "as is", "where is" and "with all
faults" basis, without representations or warranties other than a warranty as to
the absence of Facility Lessor's Liens attributable to it accompanied by a
warranty of the Owner Participant as to the absence of Owner Participant's Liens
and (6) this Facility Lease shall terminate and the Facility Lessor shall
discharge the Lien of the Loan Agreement and the security title of the Deed to
Secure Debt and execute and deliver appropriate releases and other documents or
instruments necessary or desirable to effect the foregoing, all to be prepared,
filed and recorded (as appropriate) at the cost and expense of the Facility
Lessee.
(c) Any payments with respect to the Undivided Interest received at any
time by the Facility Lessor or the Facility Lessee from any Governmental Entity
as a result of the occurrence of an Event of Loss described in clause (iii) of
the definition of Event of Loss shall be applied as follows:
(i) so much of such payments as shall not exceed the amount required
to be paid by the Facility Lessee pursuant to clause (A) of paragraph (a)
of this Section 10.2 shall be applied in reduction of the Facility Lessee's
obligation to pay such amount if not already paid by the Facility Lessee
or, if already paid by the Facility Lessee, shall be applied to reimburse
the Facility Lessee for its payment of such amount; and
(ii) the balance, if any, of such payments remaining thereafter shall
be apportioned between the Facility Lessor and the Facility Lessee in the
proportion that the value of the Facility Lessor's Rocky Mountain Interest
bears to the value of the Facility Lessee's Rocky Mountain Interest.
Section 10.3 Rebuild. The Facility Lessee's right to rebuild the Facility
pursuant to clause (a) of Section 10.1 hereof shall be subject to the
fulfillment, at the Facility Lessee's sole cost and expense, in addition to the
conditions contained in said clause (a), of the following conditions:
(a) on the date the Facility Lessee shall notify the Facility Lessor
pursuant to Section 10.1 of its election to rebuild the Facility in accordance
with this Section 10.3, the Facility Lessee
16
shall deliver to the Owner Participant a tax opinion of counsel such counsel to
be selected by the Owner Participant and be reasonably acceptable to the
Facility Lessee, to the effect that, such rebuilding will not cause any
unindemnified adverse tax consequences to the Owner Participant or any
Affiliate. Any such indemnity must be in form and substance satisfactory to the
Owner Participant in its sole discretion exercised in good faith, including,
without limitation, in respect of security arrangements which the Owner
Participant, in its sole discretion exercised in good faith may require to
collateralize any such indemnity.
(b) on the date the Facility Lessee shall notify the Facility Lessor
pursuant to Section 10.1 of its election to rebuild the Facility in accordance
with this Section 10.3, the Facility Lessee shall deliver to the Owner
Participant a report of an independent engineer, such engineer and such report
to be reasonably satisfactory to the Owner Participant, to the effect that the
rebuilding of the Facility is technologically feasible and economically viable
and, unless the Facility Lessee shall have delivered to the Facility Lessor
notice of its election to exercise the Purchase Option pursuant to Section 15.1,
that such rebuilding can be completed by a date 18 months prior to the
Expiration Date;
(c) on the date the Facility Lessee shall notify the Facility Lessor
pursuant to Section 10.1 of its election to rebuild the Facility in accordance
with this Section 10.3, the Facility Lessee shall demonstrate to the reasonable
satisfaction of the Owner Participant adequate financial resources, from
insurance proceeds or otherwise, to complete such rebuilding, and that the
provisions of the Rocky Mountain Agreements will not impede such rebuilding of
the Facility or adversely affect the Facility Lessor's interest therein;
(d) the Facility Lessee shall cause the rebuilding of the Facility to
commence as soon as practicable after the occurrence of such Event of Loss and
in all events within 18 months of the occurrence of the event that caused such
Event of Loss and will cause work on such rebuilding to proceed diligently
thereafter. As the rebuilding of the Facility progresses, title to an undivided
interest in such rebuilt facilities shall immediately vest in Oglethorpe as a
tenant in common with Georgia Power, subject to the Lien of the Oglethorpe
Mortgage, and an undivided interest equal to the Facility Lessor's Percentage in
such rebuilt facilities shall become subject to the Head Lease and to this
Facility Lease, automatically, for all purposes hereof, without any further act
by any Person;
(e) there shall be no termination of the Facility Sublease, and the
Facility Sublease shall continue in full force and effect; and
(f) on the date of the completion of such rebuilding of the Facility (the
"Rebuilding Closing Date") the following documents shall be duly authorized,
executed and delivered and, if appropriate, filed for recordation by the
respective party or parties thereto and shall be in full force and effect, and
an executed counterpart of each thereto shall be delivered to the Facility
Lessor, the Owner Participant and the Lender; (1) supplements to the Head Lease,
this Facility Lease and the Facility Sublease subjecting an undivided interest
equal to the Facility Lessor's
17
Percentage in the rebuilt facilities to the Head Lease, this Facility Lease and
the Facility Sublease (with no change in Undivided Interest Cost, Basic Rent or
Sublease Basic Rent as a result of such replacement), (2) supplements to the
Loan Agreement, the Deed to Secure Debt and the Facility Sublease Assignment
Agreement subjecting the Facility Lessor's Rocky Mountain Interest in such
rebuilt facilities to the Lien of the Loan Agreement, the security title of the
Deed to Secure Debt and the Lien of the Facility Sublease Assignment Agreement,
(3) a supplement to the Subordinated Deed to Secure Debt and Security Agreement
subjecting the Facility Lessor's Rocky Mountain Interest in such rebuilt
facilities to the Lien of the Subordinated Deed to Secure Debt and Security
Agreement, (4) such recordings and filings as may be reasonably requested by the
Owner Participant, the Lender or AMBAC to be made or filed, (5) an opinion of
counsel of the Facility Lessee, such counsel and such opinion to be reasonably
satisfactory to the Owner Participant, the Lender and AMBAC, to the effect that
(w) the supplements to the Head Lease, this Facility Lease and the Facility
Sublease referred to in clause (1) above constitute effective instruments for
subjecting such rebuilt facilities to the Head Lease, this Facility Lease and
the Facility Sublease, (x) the supplements to the Loan Agreement, the Deed to
Secure Debt and the Facility Sublease Assignment Agreement referred to in clause
(2) above constitute effective instruments for subjecting the Facility Lessor's
Rocky Mountain Interest in such rebuilt facilities to the Lien of the Loan
Agreement, the security title of the Deed to Secure Debt and the Lien of the
Facility Sublease Assignment Agreement, (y) the supplement to the Subordinated
Deed to Secure Debt and Security Agreement referred to in clause (3) above
constitutes an effective instrument for subjecting the Facility Lessor's Rocky
Mountain Interest in such rebuilt facilities to the Lien of the Subordinated
Deed to Secure Debt and Security Agreement, and (z) all filings and other action
necessary to perfect and protect the Facility Lessor's interest in an undivided
interest equal to the Facility Lessor's Percentage in the rebuilt facilities and
to subject the Facility Lessor's Rocky Mountain Interest in such rebuilt
facilities to the Lien of the Loan Agreement, the security title of the Deed to
Secure Debt, the Lien of the Facility Sublease Assignment Agreement and the Lien
of the Subordinated Mortgage and Security Agreement have been accomplished and
(6) satisfactory evidence as to the compliance with Section 11 of this Facility
Lease with respect to the Facility, as so rebuilt.
Whether or not the transactions contemplated by this Section 10.3 are
consummated, the Facility Lessee agrees to pay or reimburse, on an After-Tax
Basis, any costs or expenses (including reasonable legal fees and expenses)
incurred by the Facility Lessor, the Owner Participant, the Lender and AMBAC in
connection with the transactions contemplated by this Section 10.3.
Section 10.4 Eminent Domain. In the event that during the Facility Lease
Term the use of all or any portion of the Undivided Interest is requisitioned or
taken by or pursuant to a request of any Governmental Entity under the power of
eminent domain or otherwise for a period which does not constitute an Event of
Loss, the Facility Lessee's obligation to pay all installments of Basic Rent
shall continue for the duration of such requisitioning or taking. The Facility
Lessee shall be entitled to receive and retain for its own account all sums
payable for any such period by such Governmental Entity as compensation for such
requisition or taking of possession. Any
18
amount referred to in this Section 10.4 which is payable to the Facility Lessee
shall not be paid to the Facility Lessee, or if it has been previously paid
directly to the Facility Lessee, shall not be retained by the Facility Lessee,
if at the time of such payment a Payment Default, Bankruptcy Default or Event of
Default shall have occurred and be continuing, but shall be paid to and held by
the Facility Lessor as security for the obligations of the Facility Lessee under
this Facility Lease, and upon the earlier of (a) 180 days after the Facility
Lessor shall have received such amount; provided the Facility Lessor has not
proceeded to exercise any remedy under Section 17 and it is not stayed or
prevented by law or otherwise from exercising such remedy and (b) such time as
there shall not be continuing any such Payment Default, Bankruptcy Default or
Event of Default, such amount shall be paid to the Facility Lessee.
SECTION 11. INSURANCE.
Section 11.1 Property Insurance.
Subject to availability on commercially reasonable terms, the Facility
Lessee will maintain (or cause to be maintained) all risk property insurance in
amounts and with deductibles not to exceed $25,000,000 per occurrence as is
customarily carried by prudent operators of hydroelectric facilities of
comparable size and risk, and against loss or damage from such causes as are
customarily insured against, which includes coverage for flood and earthquake
and includes (subject to sublimits of $50,000,000 and $100,000,000,
respectively) and boiler and machinery (subject to a sublimit of $100,000,000)
coverage to cover mechanical breakdown, and as required under, and to the extent
required by, the Oglethorpe Mortgage and the Rocky Mountain Agreements in an
amount not less than $302,000,000.
Section 11.2 Liability Insurance.
Subject to availability on commercially reasonable terms, the Facility
Lessee will maintain liability insurance, including contractual liability
coverage, insuring against claims for bodily injury (including death) and
property damage to third parties arising out of the ownership, operation,
maintenance, condition and use of the Facility and the Rocky Mountain Site, in
an amount and with deductibles customarily carried by prudent operators of
hydroelectric facilities of comparable size and risk, but not less than $35
million per occurrence. Such liability insurance may be purchased either in a
single limit or in combination with a general and an excess policy. In the event
of a material increase in the development of the property adjacent to the Rocky
Mountain Site or changes in product liability exposure or laws during the
Facility Lease Term, the Facility Lessee will periodically review the liability
insurance maintained by it or on its behalf. In connection with any such review,
the Facility Lessee will consult with the Facility Lessor, the Owner Participant
and the Lender. Following such review and consultation, if appropriate, the
Facility Lessee will increase such coverage and limits in order that the
liability insurance maintained by it or on its behalf is consistent with that
maintained by prudent operators of hydroelectric facilities of comparable size
and risk taking into account such increased
19
development, subject to the availability of such insurance in such amounts on
commercially reasonable terms.
Section 11.3 Provisions With Respect to Insurance. Subject to availability
on commercially reasonable terms, the Facility Lessee will place the insurance
maintained pursuant to this Section 11 with companies having an A.M. Best rating
of at least "A-" or, if not so rated, of comparable financial strength. All
insurance policies required to be maintained pursuant to Section 11.2 shall name
the Trustees (both in their individual capacities and as trustees), the Owner
Participant and the Lender as additional insureds, as their interest may appear.
All insurance policies required to be maintained pursuant to this Section 11
shall also provide for at least 30 days' prior written notice (10 days for
non-payment) by the insurance carrier to the Trustees, the Owner Participant and
the Lender in the event of cancellation, non-renewal, termination, expiration or
amendment. The Facility Lessee will place the insurance required by this Section
11 with insurance companies which agree to waive all claims for premiums from,
and all subrogation rights against, the Trustees, the Owner Participant and the
Lender. All the insurance maintained pursuant to this Section 11 shall be
primary without right of contribution of any other insurance carried by or on
behalf of the Trustees, the Owner Participant or the Lender with respect to
their respective interests in the Facility and the Rocky Mountain Site.
To the extent available on commercially reasonable terms, the Facility
Lessee will use its best efforts to provide that the respective interests of the
Trustees, the Owner Participant and the Lenders shall not be invalidated by any
act or neglect of the Facility Lessee, or any breach or violation by the
Facility Lessee of any warranties, declarations or conditions contained in such
policies, or by the use of the Facility and the Rocky Mountain Site for purposes
more hazardous than permitted by such policies. To the extent available on
commercially reasonable terms, the Facility Lessee will use its best efforts to
provide that such policies shall also be endorsed to: (i) provide that coverage
will not be invalidated by any foreclosure or other proceeding or notice of sale
relating to the Facility or the Rocky Mountain Site or any change in title or
ownership of the Facility or the Rocky Mountain Site, (ii) provide that,
inasmuch as the policies are written to cover more than one insured, all terms,
conditions, insuring agreements and endorsements, with the exception of limits
of liability, shall operate in the same manner as if there were a separate
policy covering each insured and (iii) to provide that the coverage afforded by
such policies shall not be affected by the performance of any work in or about
any Modification. The Facility Lessee shall, at its own expense, make all proofs
of loss and take all other steps necessary to collect the proceeds of such
insurance.
Section 11.4 Reports. On or prior to December 1 of each year commencing on
December 1, 1997, the Facility Lessee shall furnish the Trustees, the Owner
Participant and the Lender with a report signed by a Responsible Officer of the
Facility Lessee identifying all insurance coverages in place and certifying that
all premiums in respect of such policies are paid in full. Such report shall
also identify any significant change in coverage, limits or change in carriers
and will include a review of any significant changes in the development of the
property adjacent to the Rocky Mountain Site, product liability exposure and
laws. So long as the Facility
20
Sublease shall be in effect the requirement of the preceding sentence may be
satisfied by delivery by the Facility Lessee to the Facility Lessor, the Owner
Participant and the Lender of the report required by the first sentence of
Section 11.4 of the Facility Sublease. The Facility Lessee shall use its best
efforts prior to expiration and renewal, but in no event more than 5 Business
Days after expiration and renewal of any policy required by this Section 11, to
provide to the Trustees, the Owner Participant and the Lender, certificates from
insurance brokers or carriers to the effect that such policy is in effect and
indicating their status as additional insureds.
Section 11.5 Additional Insurance by Facility Lessor. At any time the
Facility Lessor (either directly or in the name of the Owner Participant) may at
its own expense and for its own account carry insurance with respect to its
interest in the Undivided Interest; provided, that such insurance does not in
any way interfere with the Facility Lessee's ability to obtain insurance with
respect to the Undivided Interest described in Section 11.1. Any insurance
payments received from policies maintained by the Facility Lessor pursuant to
the previous sentence shall be retained by the Facility Lessor without reducing
or otherwise affecting the Facility Lessee's obligations hereunder.
SECTION 12. INSPECTION
During the Facility Lease Term, each of the Owner Participant, the Facility
Lessor, the Trustees, Lender and their representatives may, at reasonable times,
on reasonable notice to the Facility Lessee and the Facility Operator and at
their own risk and expense (except, at the expense, but not risk, of the
Facility Lessee when an Event of Default, Bankruptcy Default or Payment Default
has occurred and is continuing), inspect the Facility (together with the records
of the Facility Operator with respect to the operations and maintenance thereof)
and the Rocky Mountain Site; provided, however, that any such inspection will
not interfere with the Facility Operator's or the Facility Lessee's normal
commercial operation of the Facility and will be in accordance with the Facility
Operator's safety and insurance programs. Upon request of the Owner Participant,
the Facility Lessor, or the Lender (but no more often than annually, provided no
Event of Default has occurred and is continuing), the Facility Lessee shall make
available a Responsible Officer to discuss the business, financial condition or
accounts of the Facility Lessee. In no event shall the Facility Lessor, the
Owner Participant or the Lender have any duty or obligation to make any such
inspection and such Persons shall not incur any liability or obligation by
reason of not making any such inspection.
SECTION 13. TERMINATION OPTION FOR BURDENSOME EVENTS
Section 13.1 Election to Terminate. After the occurrence and during the
continuance of any of the events specified below, the Facility Lessee shall have
the right, at its option, so long as (a) no Event of Default shall have occurred
and be continuing and (b) the Facility Lessee shall simultaneously exercise its
election to terminate each Other Facility Lease to the extent any such
21
event constitutes a burdensome event under the provisions of such Other Facility
Lease pursuant to Section 13.1 thereof, upon at least 30 days' prior written
notice to the Facility Lessor, the Trustees, the Owner Participant and the
Lender, to purchase the Facility Lessor's Rocky Mountain Interest and terminate
this Facility Lease on the Termination Date specified in such notice (which
shall be a date occurring not more than 90 days after such notice and which, in
the case of a termination in consequence of clause (c) below shall be the
Termination Date identified by the Facility Sublessee in its notice to the
Facility Lessee pursuant to Section 13.1 of the Facility Sublease) if:
(i) it shall have become illegal for the Facility Lessee to continue
this Facility Lease or for the Facility Lessee to make payments under this
Facility Lease and the transactions contemplated by the Operative Documents
cannot be restructured in a manner acceptable to the Transaction Parties;
(ii) one or more events outside the control of the Facility Lessee
shall have occurred which, will give rise to an obligation by the Facility
Lessee to pay or indemnify under Section 12.1 or 12.2 of the Participation
Agreement (other than costs and expenses resulting from a replacement of
the Payment Undertaking Agreement pursuant to Section 17.4 of the
Participation Agreement or a refinancing of the Loan Certificate pursuant
to Section 15 of the Participation Agreement); provided, however, that (a)
the indemnity obligation (and the underlying cost or Tax) can be avoided in
whole or in part by such termination and (b) the amount of such avoided
payments would exceed (on a present value basis, discounted annually at the
Debt Rate, to the date of the termination) three percent of the Undivided
Interest Cost. If the Owner Participant shall waive its right to, or shall
arrange for payment of (without reimbursement by the Facility Lessee),
amounts of indemnification payments under Section 12.1 or 12.2 of the
Participation Agreement in excess of such amount as to cause such avoided
payments, computed in accordance with the preceding sentence, not to exceed
three percent of the Undivided Interest Cost, no such termination option in
favor of the Facility Lessee shall exist; or
(iii) the Facility Sublessee shall exercise its option to terminate
the Facility Sublease pursuant to Section 13 of the Facility Sublease.
The Facility Lessee shall not consent to independent tax counsel selected
by the Facility Sublessee pursuant to paragraph (iii) of Section 13.1 of the
Facility Sublease without the consent of the Owner Participant, which consent
will not be unreasonably withheld. If the Facility Lessee does not give notice
of its exercise of the termination option under this Section 13.1 within six
months of the date the Facility Lessee receives notice or Actual Knowledge of
the event or condition described above, the Facility Lessee will lose its right
to terminate this Facility Lease pursuant to this Section 13.1 as a result of
such event or condition.
Section 13.2 Procedure for Exercise of Termination Option. If the Facility
Lessee shall have exercised its option under Section 13.1, on the Termination
Date specified in the Facility
22
Lessee's notice of such exercise, the Facility Lessee shall pay to the Facility
Lessor (a) the higher of Fair Market Sales Value of the Facility Sublessor's
Rocky Mountain Interest and Termination Value, determined as of such Termination
Date, plus (b) all amounts of Supplemental Rent (including all costs and
expenses of the Facility Lessor, the Trustees, the Owner Participant and the
Lender and all sales, use, value added and other Taxes covered by Section 12.2
of the Participation Agreement associated with the exercise of the termination
option pursuant to this Section 13) due and payable on or prior to the
Termination Date and (c) any unpaid Basic Rent due before such Termination Date
and, if such Termination Date shall be a Rent Payment Date, the Basic Rent (to
the extent payable in arrears) due and payable on such Rent Payment Date.
Concurrently with the payment of all sums specified in this Section 13.2, (1)
Basic Rent for the Undivided Interest shall cease to accrue, (2) the Facility
Lessee shall cease to have any liability to the Facility Lessor with respect to
the Undivided Interest, except for Supplemental Rent and other obligations
(including those under Sections 12.1 and 12.2 of the Participation Agreement)
surviving pursuant to the express terms of any Operative Document, (3) the
Facility Lessor shall pay all outstanding principal and accrued interest on the
Loan Certificate and all other amounts due under the Loan Agreement, (4) the
Facility Lessor will execute and deliver to the Facility Lessee, to be prepared
(and where appropriate recorded and filed), at the Facility Lessee's cost and
expense, a release or termination of this Facility Lease, (5) the Facility
Lessor will transfer, pursuant to this Section 13.2, Section 6 of the Ground
Sublease and Section 9 of the Head Lease, the Facility Lessor's Rocky Mountain
Interest to the Facility Lessee on an "as is", "where is" and "with all faults"
basis, without representations or warranties other than a warranty as to the
absence of Facility Lessor's Liens attributable to it accompanied by a warranty
of the Owner Participant as to the absence of Owner Participant's Liens and (6)
this Facility Lease shall terminate and the Facility Lessor shall cause to be
discharged the Lien of the Loan Agreement and the security title of the Deed to
Secure Debt and execute and deliver appropriate releases and other documents or
instruments necessary or desirable to effect the foregoing, all to be prepaid,
filed and recorded (if appropriate) at the cost and expense of the Facility
Lessee. It shall be a condition of the termination of this Facility Lease
pursuant to this Section 13, that the Facility Lessee shall pay all amounts it
is obligated to pay under this Section 13.2 and all other amounts due by the
Facility Lessee under this Facility Lease and the other Operative Documents.
SECTION 14. TERMINATION FOR OBSOLESCENCE
Section 14.1 Termination. Upon at least 270 days' prior written notice to
the Facility Lessor, the Owner Trustee, the Owner Participant and the Lender,
which notice shall contain the certification by the Board of Directors of the
Facility Sublessee required by Section 14.1 of the Facility Sublease to the
effect that the Undivided Interest is economically or technologically obsolete
or that the Undivided Interest is surplus to the Facility Sublessee's needs, the
Facility Lessee shall have the option, so long as no Bankruptcy Default, Payment
Default or Event of Default shall have occurred and be continuing, to terminate
this Facility Lease on any Termination Date occurring on or after the fifth
anniversary of the Closing Date (the "Obsolescence Termination Date") on the
terms and conditions set forth in this Section 14.
23
Section 14.2 Solicitation of Offers. If the Facility Lessee shall give the
Facility Lessor notice pursuant to Section 14.1 and the Facility Lessor shall
not have elected to retain the Facility Lessor's Rocky Mountain Interest
pursuant to Section 14.3 hereof, the Facility Lessee may, as non-exclusive agent
for the Facility Lessor, use its best efforts to obtain bids for the cash
purchase of the Facility Lessor's Rocky Mountain Interest. The Facility Lessor
shall also have the right to obtain bids for the cash purchase of the Facility
Lessor's Rocky Mountain Interest either directly or through agents other than
the Facility Lessee. At least 120 days prior to the Obsolescence Termination
Date the Facility Lessee shall certify to the Facility Lessor each bid or offer,
the amount and terms thereof and the name and address of the party (which shall
not be the Facility Lessee, any cooperative member of Oglethorpe or any
Affiliate of any thereof) submitting such bid or offer.
Section 14.3 Right of Facility Lessor to Retain the Facility Lessor's Rocky
Mountain Interest. The Facility Lessor may irrevocably elect to retain, rather
than sell, the Facility Lessor's Rocky Mountain Interest by giving notice to the
Facility Lessee at least 90 days prior to the Obsolescence Termination Date. If
the Facility Lessor elects to retain the Facility Lessor's Rocky Mountain
Interest pursuant to this Section 14.3, on the Obsolescence Termination Date (a)
the Facility Lessee shall pay to the Facility Lessor all Supplemental Rent
(including all costs and expenses of the Facility Lessor, the Trustees, the
Owner Participant and the Lender and all sales, use, value added and other Taxes
covered by Section 12.2 of the Participation Agreement associated with the
exercise of the termination option pursuant to this Section 14.3) due and
payable on such Obsolescence Termination Date and (b) the Facility Lessee shall
pay to the Facility Lessor any unpaid Basic Rent due before such Obsolescence
Termination Date and, if such Obsolescence Termination Date shall be a Rent
Payment Date, the Basic Rent (to the extent payable in arrears) due and payable
on such Rent Payment Date, but shall not be required to pay Termination Value.
Concurrently with the payment of all sums required to be paid pursuant to this
Section 14.3, (i) Basic Rent for the Undivided Interest shall cease to accrue,
(ii) the Facility Lessee shall cease to have any liability hereunder to the
Facility Lessor with respect to the Undivided Interest, except for Supplemental
Rent and other obligations (including, without limitation, those under Sections
12.1 and 12.2 of the Participation Agreement) surviving pursuant to the express
terms of any Operative Document, (iii) the Facility Lessor shall pay all
outstanding principal and accrued interest on the Loan Certificate and all other
amounts due under the Loan Agreement, (iv) the Facility Lessee will return the
Undivided Interest to the Facility Lessor in accordance with Section 5.1, and
(v) this Facility Lease shall terminate and the Facility Lessor shall cause to
be discharged the Lien of the Loan Agreement and the security title of the Deed
to Secure Debt and execute and deliver appropriate releases and other documents
or instruments necessary or desirable to effect the foregoing, all to be
prepaid, filed and recorded (if appropriate) at the cost and expense of the
Facility Lessee. It shall be a condition to the termination of this Facility
Lease pursuant to this Section 14.3, that the Facility Lessee shall pay all
amounts that it is obligated to pay under this Section 14.3 and all other
amounts due by the Facility Lessee under this Facility Lease and the other
Operative Documents.
24
Section 14.4 Procedure for Exercise of Termination Option. If the Facility
Lessor has not elected to retain the Undivided Interest in accordance with
Section 14.3 hereof, on the Obsolescence Termination Date the Facility Lessor
shall sell the Facility Lessor's Rocky Mountain Interest under this Section
14.4, Section 6 of the Ground Sublease and Section 9 of the Head Lease to the
bidder or bidders (which shall not be the Facility Lessee, Oglethorpe or a
cooperative member of Oglethorpe or any Affiliate of any of the foregoing), that
shall have submitted the highest cash bid or bids with respect to the Facility
Lessor's Rocky Mountain Interest, and the Facility Lessee shall certify to the
Facility Lessor and the Owner Participant that such buyer is not the Facility
Lessee, Oglethorpe or a cooperative member of Oglethorpe or any Affiliate of any
of the foregoing. On the Obsolescence Termination Date, the Facility Lessee
shall pay to the Facility Lessor (a) the excess, if any, of Termination Value
determined as of such Obsolescence Termination Date over the total sale price
for the Facility Lessor's Rocky Mountain Interest paid to or retained by the
Facility Lessor, without deduction from the sale price of the expenses, if any,
incurred by the Facility Lessee, the Facility Lessor, the Owner Participant and
the Lender in connection with such sale, plus (b) any unpaid Basic Rent due
before such Obsolescence Termination Date and, if such Obsolescence Termination
Date shall be a Rent Payment Date, any Basic Rent (to the extent payable in
arrears) due and payable on such Rent Payment Date, and (c) all amounts of
Supplemental Rent (including all costs and expenses of the Facility Lessor, the
Trustees, the Owner Participant and the Lender and all sales, use, value added
and other Taxes covered by Section 12.2 of the Participation Agreement
associated with the exercise of the termination option pursuant to this Section
14) due and payable on such Obsolescence Termination Date. Concurrently with the
payment of all sums required to be paid pursuant to this Section 14.4, (i) Basic
Rent for the Undivided Interest shall cease to accrue, (ii) the Facility Lessee
shall cease to have any liability hereunder to the Facility Lessor with respect
to the Undivided Interest, except for Supplemental Rent and other obligations
(including Sections 12.1 and 12.2 of the Participation Agreement) surviving
pursuant to the express terms of any Operative Document, (iii) the Facility
Lessor will prepay the Loan Certificate pursuant to Section 10 of the Loan
Agreement, (iv) the Facility Lessor will transfer (by an appropriate instrument
of transfer in form and substance reasonably satisfactory to the Facility Lessor
and prepared and recorded at the Facility Lessee's expense) the Facility
Lessor's Rocky Mountain Interest under this Section 14.4, Section 6 of the
Ground Sublease and Section 9 of the Head Lease to the purchaser on an "as is",
"where is" and "with all faults" basis, without representations or warranties
other than a warranty as to the absence of Facility Lessor's Liens accompanied
by a warranty by the Owner Participant as to the absence of Owner Participant's
Liens and (v) this Facility Lease shall terminate and the Facility Lessor shall
cause to be discharged the Lien of the Loan Agreement and the security title of
the Deed to Secure Debt and execute and deliver appropriate releases and other
documents or instruments necessary or desirable to effect the foregoing, all to
be prepaid, filed and recorded (if appropriate) at the cost and expense of the
Facility Lessee. Unless the Facility Lessor shall have elected to retain the
Undivided Interest pursuant to Section 14.3 or the Facility Lessor with the
consent of the Facility Lessee shall have entered into a legally binding
contract to sell the Facility Lessor's Rocky Mountain Interest, the Facility
Lessee may, at its election, revoke its notice of termination on at least 30
days' prior notice to the Facility Lessor, the Trustees, the Owner Participant
and the
25
Lender in which event this Facility Lease shall continue with respect to the
Undivided Interest; provided, however, that a notice of termination may be
revoked on not more than two occasions during the Facility Lease Term and the
Facility Lessee shall not be permitted to initiate a notice to terminate
pursuant to Section 14.1 following a second revocation in accordance with this
sentence. The Facility Lessor shall be under no duty to solicit bids, to inquire
into the efforts of the Facility Lessee to obtain bids or otherwise take any
action in arranging any such sale of the Facility Lessor's Rocky Mountain
Interest other than, if the Facility Lessor has not elected to retain the
Undivided Interest, to transfer the Facility Lessor's Rocky Mountain Interest in
accordance with clause (iv) of the second preceding sentence. It shall be a
condition of the Facility Lessor's obligation to consummate a sale of the
Facility Lessor's Rocky Mountain Interest that the Facility Lessee shall pay all
amounts it is obligated to pay under this Section 14.4. If no sale shall occur
on the Obsolescence Termination Date, the notice of termination shall be deemed
revoked and this Facility Lease shall continue as to the Undivided Interest in
full force and effect in accordance with its terms. The Facility Lessee will be
obligated to pay any expenses or damages of the Facility Lessor or the Owner
Participant resulting from the failure to consummate a sale of the Facility
Lessor's Rocky Mountain Interest for any reason other than the bad faith or
willful misconduct by the Facility Lessor or the Owner Participant.
SECTION 15. END OF BASIC TERM OPTIONS
Section 15.1 The Facility Lessee's Purchase and Return Options. Unless this
Facility Lease shall have been previously terminated pursuant to Section 10, 13,
14, 17 or 18 hereof, at any time not more than forty-eight months nor less than
eighteen months prior to the Expiration Date, the Facility Lessee shall have the
option, upon giving written notice to the Facility Lessor and the Owner
Participant, (A) to irrevocably elect to purchase the Undivided Interest on the
Expiration Date for the Purchase Option Price in accordance with this Section
15.1 (the "Purchase Option") or (B) to irrevocably elect to return the Undivided
Interest to the Facility Lessor in accordance with Section 5 (the "Return
Option"). If the Facility Lessee shall have elected the Return Option, on the
Expiration Date it shall return the Undivided Interest to the Facility Lessor in
accordance with the provisions of Section 5 of this Facility Lease. If the
Facility Lessee shall have exercised the Purchase Option, the Facility Lessee
shall become unconditionally obligated to pay (a) on the Expiration Date (i) the
initial installment of the Purchase Option Price in the amount of
$302,435,484.77 (which installment, in any event, shall be at least equal to the
outstanding principal balance of the Loan Certificate on the Expiration Date),
(ii) all amounts of Supplemental Rent (including, without limitation, all costs
and expenses of the Facility Lessor, the Trustees, the Owner Participant and the
Lender and all sales, use, value added and other Taxes covered by Section 12.2
of the Participation Agreement associated with the Purchase Option) due and
payable on the Expiration Date, and (iii) any unpaid Basic Rent due before the
Expiration Date and the Basic Rent due and payable on the Expiration Date and
(b) subsequent installments of the Purchase Option Price in the amounts and on
the dates set forth below:
26
Date Amount
---- ------
4/15/2027 $ 38,600,899.58
6/15/2027 $ 38,600,899.58
9/15/2027 $ 38,600,899.58
12/15/2027 $ 38,600,899.58
The covenant to pay the subsequent installments of the Purchase Option Price in
accordance with the preceding sentence shall survive the termination of this
Facility Lease. The Qualifying Equity Funding Agreement shall continue to secure
the Facility Lessee's obligation to pay the subsequent installments of the
Purchase Option Price and this covenant shall also survive the termination of
this Facility Lease. Concurrently with the payment of the sums specified in
clause (a) of this Section 15.1 (w) Basic Rent for the Undivided Interest shall
cease to accrue, (x) the Facility Lessee shall cease to have any liability to
the Facility Lessor with respect to the Undivided Interest, except for
Supplemental Rent and other obligations (including those under Sections 12.1 and
12.2 of the Participation Agreement and the additional installments of the
Purchase Option Price payable in accordance with the third sentence of this
Section 15.1) surviving pursuant to the express terms of any Operative Document,
(y) the Facility Lessor will, by documents and instruments in form and substance
reasonably satisfactory to the Facility Lessee, transfer the Facility Lessor's
Rocky Mountain Interest to the Facility Lessee in accordance with this Section
15.1, Section 6 of the Ground Sublease and Section 9 of the Head Lease on an "as
is", "where is" and "with all faults" basis, without representations or
warranties other than a warranty as to the absence of Facility Lessor's Liens or
Owner Participant's Liens and (z) this Facility Lease shall terminate and the
Facility Lessor shall cause to be discharged the Lien of the Loan Agreement and
the security title of the Deed to Secure Debt and execute and deliver
appropriate releases and all other documents or instruments necessary or
desirable to effect the foregoing, all to be prepared, filed and recorded (as
appropriate) at the cost and expense of the Facility Lessee. If the Facility
Lessee shall fail to exercise the Purchase Option or the Return Option by the
date eighteen months prior to the Expiration Date, it will be deemed to have
elected the Return Option on such date eighteen months prior to the Expiration
Date.
Section 15.2 The Facility Lessor's Replacement Lease Option and Renewal
Term Option. If (i) this Facility Lease shall not have been previously
terminated pursuant to Section 10, 13, 14, 17 or 18 hereof, and (ii) the
Facility Lessee shall have elected, or be deemed to have elected, the Return
Option pursuant to Section 15.1, the Facility Lessor shall elect either to
sublease the Facility Lessor's interest in the Undivided Interest to a new,
third party lessee in accordance with Section 15.3 (the "Replacement Lease
Option") or to cause the Facility Lessee to renew this Facility Lease for a
renewal term in accordance with Section 15.4 (the "Renewal Term Option") or to
cause the Facility Lessee to return the Undivided Interest to the Facility
Lessor in accordance with Section 15.6 (the "Retention Option"). If the Facility
Lessor shall fail to make
27
any election by the date 30 days prior to the Expiration Date or shall elect the
Replacement Lease Option and a Replacement Facility Lease shall not be executed
with a Replacement Facility Lessee in accordance with Section 15.3 on or prior
to the Expiration Date, the Facility Lessor will be deemed to have elected the
Renewal Term Option and the Facility Lessee will be obligated to comply with
Section 15.4 hereof.
Section 15.3 Procedure for Replacement Lease Option. (a) If the Facility
Lessor shall have elected the Replacement Lease Option pursuant to Section 15.2,
the Facility Lessor shall cause a Replacement Facility Lessee acceptable to it
to enter into a replacement lease of the Undivided Interest (a "Replacement
Facility Lease") with the Facility Lessor. The rent payable under any
Replacement Facility Lease and all terms and conditions of such Replacement
Facility Lease shall be as agreed among the Owner Participant, the Replacement
Facility Lessee and any party making a Loan Extension pursuant to Section 15.5.
(b) The obligation by the Facility Lessor and the Owner Participant to
enter into or accept, as the case may be, a Replacement Facility Lease and to
consummate the Replacement Lease Option shall be subject to the fulfillment or
waiver, on or before the Expiration Date, to the satisfaction of each such
Person of the following conditions precedent:
(i) each such Person shall have received such documents or other
evidence as it shall reasonably have requested with respect to the
prospective Replacement Facility Lessee to establish the taking of all
requisite corporate or other similar actions and proceedings in connection
therewith;
(ii) each such Person shall have received an opinion of counsel for
the Replacement Facility Lessee which counsel and opinion shall be
reasonably acceptable to each such Person, (A) to the effect that the
Replacement Facility Lease and each other agreement to which the
Replacement Facility Lessee is a party in connection with such Replacement
Facility Lease have been duly authorized, executed and delivered by the
Replacement Facility Lessee and constitute the legal, valid and binding
obligations of the Replacement Facility Lessee and (B) covering such other
matters incident to such Replacement Facility Lease arrangement as each
such Person may reasonably request;
(iii) the Owner Participant shall have received an opinion from
counsel for the Facility Lessor, which counsel and opinion shall be
reasonably acceptable to the Owner Participant, to the effect that the
Replacement Facility Lease and each other agreement to which the Facility
Lessor is a party in connection with such Replacement Facility Lease have
been duly authorized, executed and delivered by the Facility Lessor and
constitute legal, valid and binding obligations of the Facility Lessor, and
covering such other matters incident to the transactions contemplated by
such Replacement Facility Lease arrangement as the Owner Participant may
reasonably request;
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(iv) the Owner Participant shall have received the following, in each
case in form and substance reasonably satisfactory to it:
(A) an incumbency certificate of the Replacement Facility Lessee
regarding the officers of the Replacement Facility Lessee authorized
to execute and deliver the documents referred to in this Section 15.3
to which it is a party and any other documents or agreements delivered
in connection therewith;
(B) certified copies of all documents evidencing the corporate
(or similar) actions of the Replacement Facility Lessee including,
without limitation, resolutions of the board of directors of the
Replacement Facility Lessee duly authorizing the execution, delivery
and performance by the Replacement Facility Lessee of each of the
documents referred to in this Section 15.3 to which it is a party and
the transactions contemplated thereby;
(C) certified copies of the by-laws and certificate of incorpora-
tion (or comparable organizational or governing documents) of the
Replacement Facility Lessee; and
(D) such other agreements (including, if deemed necessary by the
Owner Participant, appropriate amendments to the Rocky Mountain
Agreements), documents, certifications and opinions as the Owner
Participant shall reasonably determine are necessary or appropriate in
connection with the consummation of such Replacement Facility Lease;
(v) the Replacement Facility Lease shall be duly executed and
delivered by the Replacement Facility Lessee and shall have been approved
by any relevant federal or state regulatory agency or agencies, if and to
the extent required by Applicable Law, and such other recordings, filings,
financing statements, continuation statements or other instruments shall
have been filed or made and all other actions shall have been taken as are
necessary or desirable in the opinion of the Owner Participant and the
Facility Lessor to maintain all of the Facility Lessor's right, title and
interest in and to the Facility Lessor's Rocky Mountain Interest; and
(vi) all other matters and proceedings taken in connection with such
transaction shall be reasonably satisfactory to the Owner Participant and
the Facility Lessor.
(c) The Facility Lessor agrees to pay or reimburse, or cause to be paid or
reimbursed, on an After-Tax Basis, within 30 Business Days of the date of
demand, all costs and expenses,
29
including reasonable legal fees and expenses incurred by the Facility Lessor,
the Trustees, the Lender, the Payment Undertaking Issuer, any Person making a
Loan Extension on the Expiration Date and the Facility Lessee, in connection
with the implementation of the Replacement Lease Option, whether or not any such
transactions are consummated.
(d) The Facility Lessee shall deliver the Undivided Interest to the
Replacement Facility Lessee on the Expiration Date in accordance with Section 5
and shall pay all accrued and unpaid Rent through and including the Expiration
Date.
Section 15.4 Procedure for Renewal Term Option.
(a) If the Facility Lessor shall have elected the Renewal Term Option, or
if the Renewal Term Option shall be deemed to have been elected pursuant to
Section 15.2, the term of this Facility Lease will be extended for a renewal
term that begins on the Expiration Date and extends for a period of 16 years, or
such shorter period as may be acceptable to the Owner Participant and extends
beyond the final maturity of the Loan or any Loan Extension (the "Renewal Term")
made in accordance with the provisions of Section 15.5 and the Facility Lessee
will arrange for a Loan Extension in accordance with Section 15.5. Termination
Values during the Renewal Term will be as set forth on Schedule 2 to this
Facility Lease as such amounts may be adjusted as provided in this Facility
Lease; provided, that, notwithstanding anything to the contrary set forth
herein, the amounts of such Termination Values during the Renewal Term, together
with any Basic Rent payable on any Termination Date during the Renewal Term,
shall never be less than the scheduled outstanding principal amount of, and
accrued interest scheduled to be payable on, the Loan Extension on the date on
which such Termination Values are payable.
(b) The schedule of Basic Rent for the Renewal Term set forth in Schedule
1 shall be adjusted in accordance with the same assumptions and methodology
originally employed by the Owner Participant in determining the Net Economic
Return, so as to preserve Net Economic Return as provided in Section 3.4 and, to
the extent consistent therewith, minimize the net present value of Basic Rent
for the Renewal Term:
(i) during the Basic Term in any circumstance in which Basic Rent,
Termination Values and the Purchase Option Price are adjusted pursuant to
Section 3.4 of the Facility Lease;
(ii) on or prior to the Expiration Date, to reflect an adjustment in
the interest expense (and related tax consequences) on the Loan or any Loan
Extension from the interest rate on the Loan Certificate; and
(iii) to reflect any amounts included in income by the Owner
Participant at the end of the Basic Term (and future correlative tax
benefits) resulting from any Modifications made during the Basic Term;
30
and, in the case of any such adjustment to the schedule of Basic Rent set forth
on Schedule 1, (A) the amount of Basic Rent payable on the Rent Payment Dates
set forth in Schedule 1 (as adjusted in accordance with this paragraph (b) of
this Section 15.4) shall never be less than the amounts of principal and
interest scheduled to be payable under the Loan (including the Reset Interest
Rate) or the Loan Extension on such date and (B) the schedule of Termination
Values set forth on Schedule 2 shall be appropriately adjusted in the same
manner as provided above in this paragraph (b) of this Section 15.4 in respect
of adjustments to the schedule of Basic Rent. Notwithstanding the foregoing or
any other provision of this Section 15.4, any Termination Value payable during
the Renewal Term shall in all circumstances and in all events be an amount
which, together with any Basic Rent then due, will be at least sufficient to pay
in full as of any date of determination the aggregate principal amount of the
Loan or any Loan Extension at the time scheduled to be outstanding, together
with all unpaid interest thereon scheduled to be due at such time.
(c) If the Facility Lessor elects the Renewal Term Option, the Facility
Lessee shall:
(i) provide the Owner Participant with undertakings, opinions and
certificates comparable to those delivered to it on the Closing Date and
covering other matters with respect to the Facility Lessee, the Facility,
the Rocky Mountain Site and the Operative Documents, in form and substance
satisfactory to it; and
(ii) provide the Facility Lessor collateral security for its
obligation to pay Basic Rent and Termination Value during a Renewal Term
acceptable to the Owner Participant in the Owner Participant's sole
judgment.
(d) If on the Expiration Date, the Facility Lessee is unable to arrange
for a Loan Extension in accordance with Section 15.5(a), the Facility Lessee may
exercise the Purchase Option in accordance with Section 15.1 (except that the
Facility Lessee's purchase of the Undivided Interest may be consummated on the
Business Day next following the Expiration Date so long as the Facility Lessee
shall pay interest on the initial installment of the Purchase Option Price to
(but not including) such Business Date at the Overdue Rate.
(e) The Facility Lessee shall pay or reimburse, on demand, all costs and
expenses (including reasonable legal fees and expenses) incurred by the Facility
Lessor, the Owner Participant, the Trustees, the Lender and any third party
lender in connection with the exercise of the Renewal Term Option, including,
without limitation, the costs and expenses in connection with the Loan
Extension, whether or not any of such transactions are consummated.
Section 15.5 Loan Extension.
(a) If the Facility Lessor shall have elected or shall have been deemed to
have elected the Renewal Term Option, the Facility Lessee shall (x) satisfy the
requirements of Section 15.4(c) (ii) and (y) arrange a Loan Extension from one
or more third parties. If the Facility Lessee has exercised reasonable efforts
to arrange for a Loan Extension with third party lenders and if third
31
party lenders cannot be arranged for 100% of the principal amount of the Loan
Certificate then outstanding under the Loan Agreement, the Facility Lessee at
the request of the Facility Lessor or the Owner Participant shall purchase up to
49% of the principal amount of the Loan Certificate then outstanding under the
Loan Agreement from the Lender in accordance with Section 2.11 of the Loan
Agreement. Loan Certificates purchased by the Facility Lessee pursuant to the
preceding sentence shall be secured on a pari passu basis with all other
outstanding Loan Certificates other than with respect to the granting of
consents, waivers or amendments or exercising remedies following a default under
the security documents securing the Loan Certificates.
(b) If the Facility Lessor shall have elected the Replacement Lease
Option, the Facility Lessor shall arrange for a Loan Extension, provided that if
on the last day of the Basic Term a Replacement Facility Lessee shall be
prepared to enter into a Replacement Facility Lease but the Facility Lessor has
not been able to arrange for a Loan Extension by such date, the Facility Lessee
at the request of the Facility Lessor or the Owner Participant shall purchase
the Loan Certificate from the Lender in accordance with Section 2.11 of the Loan
Agreement.
Section 15.6 Procedure for Retention Option. If the Facility Lessor shall
have elected the Retention Option:
(i) Facility Lessor shall arrange, in a manner acceptable to the
Lender in its sole discretion, for the payment or prepayment in full of the
principal amount of the Loan Certificate outstanding on the Expiration Date
plus accrued interest thereon and all other amounts due under the Loan
Agreement;
(ii) in the event the condition in clause (i) above has not been
satisfied on or before the 30th day prior to the Expiration Date, Facility
Lessor shall be deemed to have elected the Renewal Term Option; and
(iii) the Facility Lessee shall deliver the Undivided Interest to the
Facility Lessor on the Expiration Date in accordance with Section 5 and
shall pay all unpaid Rent through and including the Expiration Date and all
other amounts due and payable under the Operative Documents.
SECTION 16. EVENTS OF DEFAULT
The following events shall constitute "Event of Defaults" hereunder
(whether any such event shall be voluntary or involuntary or come about or be
effected by operation of law or pursuant to or in compliance with any judgment,
decree or order of any court or any order, rule or regulation of any
Governmental Entity):
32
(a) the Facility Lessee shall fail to make any payment of Basic Rent or
the Purchase Option Price within five Business Days after the same shall have
become due; or
(b) the Facility Lessee shall fail to make any payment of Termination
Value required by Section 10, 13 or 14 within ten Business Days after the same
shall have become due; or
(c) the Facility Lessee shall fail to make any payment of Supplemental
Rent (other than the Purchase Option Price or as described in clause (b) of this
Section 16), after the same shall have become due and such failure shall
continue unremedied for a period of 30 Business Days after receipt by the
Facility Lessee of written notice of such failure from the Facility Lessor, the
Owner Participant or the Lender; or
(d) any representation or warranty made by the Facility Lessee in the
Operative Documents or any written certificate shall be untrue, inaccurate or
misleading in any material respect and, if capable of remedy, no action to cure
has commenced within 30 days after notice or, if such action has been taken and
the Facility Lessee is diligently pursuing such cure, such action has not
succeeded within a period of 180 days after such notice; or
(e) the Facility Lessee shall have failed to perform or observe any
covenant, obligation or agreement to be performed or observed by it under any
Operative Document (other than any covenant, obligation or agreement contained
in Section 16 of the Participation Agreement or any covenants, obligations or
agreements referred to in clauses (a), (b), (c), (f), (g) and (h) of this
Section 16) in any material respect and, if capable of remedy, no action to cure
has commenced within 30 days after notice or, if such action has been taken and
the Facility Lessee is diligently pursuing such cure, such action has not
succeeded within a period of 180 days after such notice; provided, however, that
in the case of the Facility Lessee's obligation set forth in the first sentence
of Section 7.1 of this Facility Lease as it relates to compliance with
Applicable Law, if, to the extent and for so long as, a test, challenge, appeal
or proceeding for review of such compliance shall be prosecuted in good faith by
the Facility Lessee, the Facility Sublessee or the Facility Operator, the
failure by the Facility Lessee to comply with such requirement shall not
constitute an Event of Default hereunder if, but only if, such test, challenge,
appeal or proceeding shall not involve any danger of (i) the foreclosure, sale,
forfeiture or loss of, or imposition of a Lien on, any part of the Facility, the
Rocky Mountain Site or the impairment of the use, operation or maintenance of
the Facility, or the Rocky Mountain Site in any material respect or the value,
utility or useful life of the Facility or the Rocky Mountain Site, or (ii) the
loss of the security interest of the Lender in the Collateral and the Property,
or (iii) any criminal liability being incurred or any material adverse effect
on, the Facility Lessor, the Owner Trustee, the Owner Participant or the Lender
in the reasonable opinion of such Person including, without limitation,
subjecting the Facility Lessor, the Owner Participant, the Owner Trustee or the
Lender to regulation as a public utility under Applicable Law; and provided,
further, in the case of the Facility Lessee's obligation set forth in the first
sentence of Section 7.1 of this Facility Lease as it relates to compliance with
Applicable Law, if the noncompliance is not of a type that can be immediately
remedied, the failure to comply shall not be an Event of Default hereunder if
the
33
Facility Lessee is taking all reasonable action to remedy such noncompliance and
if, but only if, such noncompliance shall not involve any danger in the
reasonable opinion of such Person described in clause (i), (ii) or (iii) of the
preceding proviso; and provided, further, such noncompliance, or such test,
challenge, appeal or proceeding to review shall not, unless the Facility Lessee
has irrevocably elected the Purchase Option pursuant to Section 15.1, extend
beyond a date that is 18 months prior to the Expiration Date; or
(f) the Facility Lessee shall fail to observe or perform its obligation to
maintain the insurance required by Section 11 or its obligations under Section
5; or
(g) the Expiration Date shall occur and none of the following transactions
shall have been completed:
(i) exercise of the Purchase Option and payment by the Facility Lessee
of all amounts required by Section 15.1; or
(ii) exercise of the Renewal Term Option, arranging either a Loan
Extension or a purchase or refinancing of the Loan Certificate in
accordance with Section 15.5(a) and payment by the Facility Lessee of all
amounts it is required to pay under Section 15.4, or
(iii) exercise of the Replacement Lease Option and arranging either a
Loan Extension or a purchase or refinancing of the Loan Certificate in
accordance with Section 15.5(b) and payment by the Facility Lessee of all
amounts it is required to pay under Section 15.2; or
(iv) exercise of the Retention Option and payment by the Facility
Lessor and the Facility Lessee of all amounts required by Section 15.6; or
(h) the Facility Lessee shall have failed to observe or perform its
obligation set forth in Section 9.2, 9.3, 9.6 or 9.10 of the Participation
Agreement and the Owner Participant shall have given written notice to the
Facility Lessee and the Facility Lessor declaring an Event of Default under this
paragraph (h); or
(i) an Event of Default under the Facility Sublease shall have occurred
and be continuing; or
(j) the Facility Lessee shall (i) commence a voluntary case or other
proceeding seeking relief under Title 11 of the Bankruptcy Code or liquidation,
reorganization or other relief with respect to itself or its debts under any
bankruptcy, insolvency or other similar law now or hereafter in effect, or apply
for or consent to the appointment of a trustee, receiver, liquidator, custodian
or other similar official of it or any substantial part of its property, or (ii)
consent to, or fail to controvert in a timely manner, any such relief or the
appointment of or taking possession by any such official in any voluntary case
or other proceeding commenced against it, (iii) file an
34
answer admitting the material allegations of a petition filed against it in any
such proceeding, or (iv) fail to pay its debts generally as they become due or
admit in writing its inability to do so or take any corporate steps with respect
to the foregoing; or
(k) an involuntary case or other proceeding shall be commenced against the
Facility Lessee seeking (i) liquidation, reorganization or other relief with
respect to it or its debts under Title 11 of the Bankruptcy Code or any
bankruptcy, insolvency or other similar law now or hereafter in effect, or (ii)
the appointment of a trustee, receiver, liquidator, custodian or other similar
official with respect to it or any substantial part of its property or (iii) the
winding-up or liquidation of the Facility Lessee; and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period of 60 days;
or
(l) the Facility Lessee shall have failed to observe or perform its
obligations set forth in Section 9.8 of the Participation Agreement and the
Facility Lessee shall not cure such failure within 5 days after notice from the
Facility Lessor, the Owner Participant or the Lender; or
(m) the qualifying Equity Funding Agreement or the AIG Guaranty in the
case of the AIG Equity Funding Agreement (or the Qualifying Letter of Credit in
replacement thereof) shall cease to be the valid and enforceable obligations of
the issuer thereof; or
(n) the Facility Lessee shall fail to comply with Section 9.13 of the
Participation Agreement.
SECTION 17. REMEDIES
Section 17.1 Remedies for Event of Default. Subject to Section 3.7 with
respect to the Events of Default set forth in clauses (a) and (b) of Section 16,
upon the occurrence of any Event of Default and at any time thereafter so long
as the same shall be continuing, this Facility Lease shall automatically be
deemed to be in default without the need for giving any notice (the giving of
which is waived to the fullest extent permitted by Applicable Law); and at any
time thereafter, so long as the Facility Lessee shall not have remedied all
outstanding Events of Default, the Facility Lessor may do one or more of the
following as the Facility Lessor in its sole discretion shall elect, to the
extent permitted by, and subject to compliance with any mandatory requirements
of, Applicable Law then in effect:
(a) proceed by appropriate court action or actions, either at law or in
equity, to enforce performance by the Facility Lessee, at the Facility Lessee's
sole cost and expense, of the applicable covenants and terms of this Facility
Lease, provided, however, that the liquidated damages amount set forth in
paragraphs (e) and (f) below shall be the sole and exclusive monetary damages
remedy available to the Facility Lessor for an Event of Default;
35
(b) by notice in writing to the Facility Lessee, terminate this Facility
Lease and the Facility Lessee's Rocky Mountain Interest whereupon all right of
the Facility Lessee to the possession and use of the Undivided Interest under
this Facility Lease shall absolutely cease and terminate but the Facility Lessee
shall remain liable as hereinafter provided; and thereupon, the Facility Lessor
may demand that the Facility Lessee, and the Facility Lessee shall, upon written
demand of the Facility Lessor and at the Facility Lessee's expense, forthwith
return possession of the Undivided Interest to the Facility Lessor in the manner
and condition required by, and otherwise in accordance with all of the
provisions of Section 5, except those provisions relating to periods of notice;
and the Facility Lessor may thenceforth hold, possess and enjoy the same free
from any right of the Facility Lessee, or its successor or assigns, to use the
Undivided Interest for any purpose whatever;
(c) sell the Facility Lessor's Rocky Mountain Interest at public or
private sale, as the Facility Lessor may determine, free and clear of any rights
of the Facility Lessee under this Facility Lease and without any duty to account
to the Facility Lessee with respect to such sale or for the proceeds thereof
(except to the extent required by paragraph (f) below if the Facility Lessor
elects to exercise its rights under said paragraph and by Applicable Law), in
which event the Facility Lessee's obligation to pay Basic Rent hereunder due for
any periods subsequent to the date of such sale shall terminate (except to the
extent that Basic Rent is to be included in computations under paragraph (f)
below if the Facility Lessor elects to exercise its rights under said
paragraph); provided, however, that if the Facility Lessor shall have exercised
its rights under this paragraph (c), the Facility Lessor may not exercise any
remedy set forth in paragraph (e) of this Section 17.1;
(d) hold, keep idle or lease to others the Facility Lessor's Rocky
Mountain Interest as the Facility Lessor in its sole discretion may determine,
free and clear of any rights of the Facility Lessee under this Facility Lease
and without any duty to account to the Facility Lessee with respect to such
action or inaction or for any proceeds with respect thereto, except that the
Facility Lessee's obligation to pay Basic Rent with respect to the Undivided
Interest due for any periods subsequent to the date upon which the Facility
Lessee shall have been deprived of possession and use of the Undivided Interest
pursuant to this Section 17 shall be reduced by the net proceeds, if any,
received by the Facility Lessor from leasing the Facility Lessor's Rocky
Mountain Interest to any Person other than the Facility Lessee;
(e) whether or not the Facility Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (b) above
with respect to the Facility Lessee's Rocky Mountain Interest, the Facility
Lessor, by written notice to the Facility Lessee specifying a Termination Date
that shall be not earlier than 10 days after the date of such notice, may demand
that the Facility Lessee pay to the Facility Lessor, and the Facility Lessee
shall pay to the Facility Lessor, on the Termination Date specified in such
notice, any unpaid Basic Rent due before such Termination Date and, if such
Termination Date shall be a Rent Payment Date, any Basic Rent (to the extent
payable in arrears) due and payable on such Rent Payment Date, any Supplemental
Rent due and payable as of the payment date specified in such notice, plus as
36
liquidated damages for loss of a bargain and not as a penalty (in lieu of the
Basic Rent due after the Termination Date specified in such notice), (i) an
amount equal to the excess, if any, of the Termination Value computed as of the
Termination Date specified in such notice over the Fair Market Sales Value of
the Facility Lessor's Rocky Mountain Interest as of the Termination Date
specified in such notice; or (ii) an amount equal to the Termination Value
computed as of the Termination Date specified in such notice and, upon payment
of such Termination Value by the Facility Lessee pursuant to this clause (ii)
and all other Rent then due and payable by the Facility Lessee, the Facility
Lessor will forthwith transfer to the Facility Lessee in accordance with this
Section 17.1(e), Section 6 of the Ground Sublease and Section 9 of the Head
Lease on an "as is", "where is" and "with all faults" basis, without
representation or warranty other than a warranty as to the absence of Facility
Lessor's Liens accompanied by a warranty of the Owner Participant as to the
absence of the Owner Participant's Liens, all of its interest in the Facility
Lessor's Rocky Mountain Interest and execute, acknowledge and deliver, and
record and file (as appropriate), appropriate releases and all other documents
or instructions necessary or desirable to effect the foregoing all in form and
substance reasonably satisfactory to the Facility Lessor and at the cost and
expense of the Facility Lessee, and upon payment of such amounts under either
clauses (i) and (ii) of this paragraph (e), this Facility Lease, and the
Facility Lessee's obligation to pay Basic Rent hereunder due for any periods
subsequent to the date of such payment shall terminate;
(f) if the Facility Lessor shall have sold the Facility Lessor's Rocky
Mountain Interest pursuant to paragraph (c) above, the Facility Lessor may, if
it shall so elect, demand that the Facility Lessee pay to the Facility Lessor,
and the Facility Lessee shall pay to the Facility Lessor, as liquidated damages
for loss of a bargain and not as a penalty (in lieu of the Basic Rent due for
any periods subsequent to the date of such sale), an amount equal to (A) any
unpaid Basic Rent due before the date of such sale and, (B)(i) if that date is a
Rent Payment Date, the Basic Rent due on that date (to the extent payable in
arrears), or, (ii) if that date is not a Rent Payment Date or a Termination
Date, the daily equivalent of Basic Rent (to the extent payable in arrears) for
the period from the preceding Termination Date to the date of such sale, plus
(C) the amount, if any, by which the Termination Value computed as of the
Termination Date next preceding the date of such sale or, if such sale occurs on
a Rent Payment Date or a Termination Date then computed as of such date, exceeds
the net proceeds of such sale, and, upon payment of such amount, this Facility
Lease and the Facility Lessee's obligation to pay Basic Rent for any periods
subsequent to the date of such payment shall terminate; or
(g) the Facility Lessor may draw upon, or foreclose on, the Qualifying
Equity Funding Agreement, and realize upon any other credit support provided to
the Facility Lessor for the benefit of the Owner Participant only by the
Facility Lessee, including the Facility Sublease and the Qualifying Sublease
Surety Bond, and the payment of the proceeds of the Qualifying Equity Funding
Agreement shall reduce the Facility Lessee's obligation to pay Termination Value
to the extent of any such proceeds received by the Facility Lessor.
In addition, the Facility Lessee shall be liable, except as otherwise
provided above, for any and all unpaid Rent due hereunder before, during or
after the exercise of any of the foregoing
37
remedies (and for damages in an amount equal to such Rent which would otherwise
have accrued after eviction of the Facility Lessee or other termination of the
leasehold created hereby pursuant to or in the course of the Facility Lessor's
exercise of such remedies), and, on an After-Tax Basis, for legal fees and other
costs and expenses incurred by reason of the occurrence of any Event of Default
or the exercise of the Facility Lessor's remedies with respect thereto,
including the repayment in full of any costs and expenses necessary to be
expended in connection with the return of the Undivided Interest in accordance
with Section 5.2 hereof, including, without limitation, any costs and expenses
incurred by the Trustees, the Owner Participant or the Lender in connection with
retaking constructive possession of, or in repairing, the Undivided Interest in
order to cause it to be in compliance with all maintenance standards imposed by
this Facility Lease. The provisions of this Section 17.1 shall survive the
termination for any reason whatsoever of this Facility Lease and the termination
or cancellation for any reason whatsoever of the Facility Lessee's leasehold
estate in the Undivided Interest.
Section 17.2 Cumulative Remedies. The remedies in this Facility Lease
provided in favor of the Facility Lessor shall not be deemed exclusive, but
shall be cumulative and shall be in addition to all other remedies in its favor
existing at law or in equity; and the exercise or beginning of exercise by the
Facility Lessor of any one or more of such remedies shall not preclude the
simultaneous or later exercise by the Facility Lessor of any or all of such
other remedies, provided, however, that the liquidated damages amount set forth
in paragraphs (e) and (f) above, shall be the sole and exclusive money damages
remedy available to the Facility Lessor for an Event of Default. To the extent
permitted by Applicable Law, the Facility Lessee hereby waives any rights now or
hereafter conferred by statute or otherwise which may require the Facility
Lessor to sell, lease or otherwise use the Undivided Interest or any Component
thereof in mitigation of Facility Lessor's damages as set forth in this Section
17 or which may otherwise limit or modify any of Facility Lessor's rights and
remedies in this Section 17.
Section 17.3 No Delay or Omission to be Construed as Waiver. No delay or
omission to exercise any right, power or remedy accruing to the Facility Lessor
upon any breach or default by the Facility Lessee under this Facility Lease
shall impair any such right, power or remedy of the Facility Lessor, nor shall
any such delay or omission be construed as a waiver of any breach or default, or
of any similar breach or default hereafter occurring; nor shall any waiver of a
single breach or default be deemed a waiver of any subsequent breach or default.
SECTION 18. TERMINATION OPTIONS FOR APPEAL OF FERC ORDERS.
Section 18.1 Options to Terminate. If, on or prior to February 1, 1997, (a)
an appeal or request for rehearing shall be filed (including by post-order
intervention) of the FERC Order, the Facility Lessee shall forthwith give notice
of such appeal or request for rehearing to the Facility Lessor. If such an
appeal or request for rehearing shall be filed, the Facility Lessor and the
Facility Lessee shall each have the option to terminate this Facility Lease on
the next Termination Date occurring at least ten days following such notice on
the terms set forth in this Section 18 by giving not less than three Business
Day's prior written notice to the Facility Lessor
38
or the Facility Lessee (as the case may be), the Owner Trustee, the Owner
Participant and the Lender, such notice to be given not later than March 2,
1997. If the Facility Lessor or the Facility Lessee shall exercise its option
provided by this Section 18.1 by giving the notice contemplated by the preceding
sentence, the Facility Lessee shall acquire the Facility Lessor's Rocky Mountain
Interest for the Termination Value determined as of the Termination Date
specified in such notice and this Facility Lease shall terminate on such
Termination Date. The Facility Lessee shall be permitted to exercise the option
provided in this Section 18 only if the Facility Lessee shall simultaneously
exercise the termination option provided by Section 18 of each of the Other
Facility Leases.
Section 18.2 Procedure for Exercise of Termination Options. If the Facility
Lessor or the Facility Lessee shall have exercised its option under Section
18.1, on the Termination Date specified in the Facility Lessor's or the Facility
Lessee's notice of such exercise, the Facility Lessee shall pay to the Facility
Lessor (a) the Termination Value determined as of such Termination Date, plus
(b) all amounts of Supplemental Rent (including all costs and expenses of the
Facility Lessor, the Owner Trustee, the Owner Participant and the Lender and all
sales, use, value added and other Taxes covered by Section 12.2 of the
Participation Agreement associated with the exercise of the termination option
pursuant to this Section 18) due and payable on or prior to the Termination
Date, and (c) any unpaid Basic Rent due before such Termination Date and, if
such Termination Date shall be a Rent Payment Date, the Basic Rent (to the
extent payable in arrears) due and payable on such Rent Payment Date.
Concurrently with the payment of all sums specified in this Section 18.2, (1)
Basic Rent for the Undivided Interest shall cease to accrue, (2) the Facility
Lessor shall cease to have any liability to the Facility Lease with respect to
the Undivided Interest, except for Supplemental Rent and other obligations
(including those under Sections 12.1 and 12.2 of the Participation Agreement)
surviving pursuant to the express terms of any Operative Document, (3) the
Facility Lessor shall pay all outstanding principal and accrued interest on the
Loan Certificate and all other amounts due under the Loan Agreement, (4) the
Facility Lessor will execute and deliver to the Facility Lessee, to be prepared
(and where appropriate recorded and filed), at the Facility Lessee's cost and
expense, a release or termination of this Facility Lease, (5) the Facility
Lessor will transfer, pursuant to this Section 18.2, Section 6 of the Ground
Sublease and Section 9 of the Head Lease, the Facility Lessor's Rocky Mountain
Interest to the Facility Lessee on an "as is," "where is," and "with all faults"
basis, without representations or warranties other than a warranty as to the
absence of Facility Lessor's Liens accompanied by a warranty of the Owner
Participant as to the absence of Owner Participant's Lien and (6) this Facility
Lease shall terminate and the Facility Lessor shall discharge the Lien of the
Loan Agreement and the security title of the Deed to Secure Debt and execute and
deliver appropriate releases and other documents or instruments necessary or
desirable to effect the foregoing, all to be prepaid, filed and recorded (if
appropriate) at the sole cost and expense of the Facility Lessee.
39
SECTION 19. THE FACILITY LESSEE'S RIGHT TO SUBLEASE
Other than the sublease of the Undivided Interest to the Facility Sublessee
pursuant to the Facility Sublease and any subleases permitted by Section 19 of
the Facility Sublease, the Facility Lessee will not, without the prior written
consent of the Facility Lessor and the Lender, relinquish use, possession or
control of the Undivided Interest, or any part thereof or sublease any of its
rights or interests hereunder.
SECTION 20. FURTHER ASSURANCES
The Facility Lessee, at its own cost and expense, will duly execute and
deliver to the Facility Lessor such further documents and assurances and take
such further action as the Facility Lessor may from time to time reasonably
request in order to establish and protect the rights and remedies created in
favor of the Facility Lessor hereunder or the Facility Lessee's obligations
under any of the Operative Documents.
SECTION 21. FACILITY LESSOR'S RIGHT TO PERFORM
If the Facility Lessee fails to make any payment required to be made by it
hereunder (other than Supplemental Rent in respect of the Purchase Option Price)
or fails to perform or comply with any of its other agreements contained herein
after notice to the Facility Lessee and failure of the Facility Lessee to so
perform or comply within 10 days thereafter, the Facility Lessor or the Owner
Participant may itself make such payment or perform or comply with such
agreement in a reasonable manner, but shall not be obligated hereunder to do so,
and the amount of such payment and of the reasonable expenses of the Facility
Lessor or the Owner Participant incurred in connection with such payment or the
performance of or compliance with such agreement, as the case may be, together
with interest thereon at the Overdue Rate, to the extent permitted by Applicable
Law, shall be deemed to be Supplemental Rent, payable by the Facility Lessee to
the Facility Lessor on demand.
SECTION 22. NOTICES
Unless otherwise expressly specified or permitted by the terms hereof, all
communications and notices provided for herein to a party hereto shall be in
writing or by a telecommunications device capable of creating a written record,
and any such notice shall become effective (a) upon personal delivery thereof,
including, without limitation, by overnight mail or courier service, (b) in the
case of notice by United States mail, certified or registered, postage prepaid,
return receipt requested, upon receipt thereof, or (c) in the case of notice by
such a telecommunications device, upon transmission thereof, provided such
transmission is promptly confirmed by either of the methods set forth in clauses
(a) and (b) above, in each case addressed to such party and
40
copy party at its address set forth below or at such other address as such party
or copy party may from time to time designate by written notice to the other
party:
If to the Facility Lessor:
SunTrust Bank, Atlanta
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Department
with copies to the Owner Trustee:
Fleet National Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
to the Owner Participant:
▇▇▇▇▇▇ ▇▇▇▇▇▇ Capital Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Vice President, Leasing with a copy to
Director, Portfolio Administration
and a copy to the Lender:
41
Utrecht-America Finance Co.,
c/o Rabobank Nederland, New York Branch
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel's Office
If to the Facility Lessee:
Rocky Mountain Leasing Corporation
c/o Corporation Trust Center ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel's Office
with a copy to:
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Managing Attorney
and a copy to the Lender at the address for notices set forth above.
SECTION 23. SECURITY INTEREST AND INVESTMENT OF SECURITY FUNDS
Any moneys received by the Facility Lessor pursuant to Section 10.4 or
pursuant to the Payment Undertaking Agreement following the purchase by the
Owner Participant or its designee of the Loan Certificate pursuant to Section
4.07 of the Loan Agreement shall, until paid to the Facility Lessee as provided
in Section 10.4 (with respect to amounts received pursuant to Section 10.4) or
applied to the payment of the Facility Lessee's obligations hereunder, be held
by the Facility Lessor as security for the Facility Lessee's obligations under
this Facility Lease and invested in Permitted Investments by the Facility Lessor
(at the sole risk of the Facility Lessee) from time to time as directed in
writing by the Facility Lessee (and the Facility Lessor during the
42
continuation of a Payment Default, Bankruptcy Default or an Event of Default) if
such investments are reasonably available for purchase. Any gain (including
interest received) realized as the result of any such Permitted Investment (net
of any fees, commissions, taxes and other expenses, if any, incurred in
connection with such Permitted Investment) shall be (i) in the case of amounts
received pursuant to Section 10.4, applied or remitted to the Facility Lessee in
the same manner as the principal invested and (ii) in the case of amounts
received pursuant to the Payment Undertaking Agreement in the circumstances
described in the first sentence of this Section 23, applied to the Facility
Lessee's obligation to pay Basic Rent hereunder.
SECTION 24. SECURITY FOR FACILITY LESSOR'S OBLIGATION TO THE
LENDER.
In order to secure the Secured Indebtedness the Facility Lessor will by the
Loan Agreement assign and ▇▇▇▇▇ ▇ ▇▇▇▇, and by the Deed to Secure Debt convey
security title, to the Lender all of the Facility Lessor's right, title and
interest in, to and under this Facility Lease, the Facility Lessor's Rocky
Mountain Interest and the Undivided Interest (other than Excepted Payments and
Excepted Rights). The Facility Lessee hereby consents to such assignment and to
the creation of such Lien and security title and acknowledges receipt of copies
of the Loan Agreement and the Deed to Secure Debt, it being understood that such
consent shall not affect any requirement or the absence of any requirement for
any consent of the Facility Lessee under any other circumstances. Unless and
until the Facility Lessee shall have received written notice from the Lender
that the Lien of the Loan Agreement and the security title of the Deed to Secure
Debt have been fully terminated, the Lender shall have the right to exercise the
rights of the Facility Lessor under this Facility Lease to the extent set forth
in and subject in each case to the exceptions set forth in the Loan Agreement
and the Deed to Secure Debt. TO THE EXTENT, IF ANY, THAT THIS FACILITY LEASE
CONSTITUTES CHATTEL PAPER (AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL
CODE AS IN EFFECT IN ANY APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS
FACILITY LEASE MAY BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY
COUNTERPART HEREOF OTHER THAN THE ORIGINAL COUNTERPART, WHICH SHALL BE
IDENTIFIED AS THE COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE
LENDER ON THE SIGNATURE PAGE THEREOF.
SECTION 25. MISCELLANEOUS
Section 25.1 Governing Law. This Facility Lease shall be in all respects
governed by and construed in accordance with the laws of the State of New York
including all matters of construction, validity and performance except to the
extent the law of the State of Georgia is mandatorily applicable.
43
Section 25.2 Severability. If any provision hereof shall be invalid,
illegal or unenforceable under Applicable Law, the validity, legality and
enforceability of the remaining provisions hereof shall not be affected or
impaired thereby.
Section 25.3 Headings and Table of Contents. The headings of the sections
of this Facility Lease and the Table of Contents are inserted for purposes of
convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.
Section 25.4 Successors and Assigns. (a) This Facility Lease shall be
binding upon and shall inure to the benefit of, and shall be enforceable by, the
parties hereto and their respective successors and assigns as permitted by and
in accordance with the terms hereof.
(b) Except as expressly provided herein or in the other Operative
Documents, neither party hereto may assign its interests or transfer its
obligations herein without the consent of the other party hereto.
(c) This Facility Lease conveys a leasehold estate and not a usufruct.
Section 25.5 "True Lease". It is the intent of the parties to this Facility
Lease that it be, and this Facility Lease shall be, a "true lease," and that,
notwithstanding the fact that legal title to the Undivided Interest is vested in
the Co-Owners, as tenants-in-common, the interest of the Facility Lessor under
the Head Lease shall cause the Facility Lessor to be the owner of the Undivided
Interest for all United States income tax purposes and that this Facility Lease
convey to the Facility Lessee no right, title or interest in the Undivided
Interest except as "sublessee" of the Undivided Interest.
Section 25.6 Amendments and Waivers. No term, covenant, agreement or
condition of this Facility Lease may be terminated, amended or compliance
therewith waived (either generally or in a particular instance, retroactively or
prospectively) except by an instrument or instruments in writing executed by
each party hereto.
Section 25.7 Survival. Except for the provisions of Sections 3.3, 3.5, 3.6,
3.7, 5, 9, 15.1 and 17 which shall survive, the warranties and covenants made by
each party hereto shall not survive the expiration or termination of this
Facility Lease.
Section 25.8 Counterparts. This Facility Lease may be executed by the
parties hereto in separate counterparts, each of which, subject to Section 24,
when so executed and delivered shall be an original, but all such counterparts
shall together constitute but one and the same instrument.
Section 25.9 Effectiveness. This Facility Lease has been dated as of the
date first above written for convenience only. This Facility Lease shall be
effective on the date of execution and delivery by the Facility Lessee and the
Facility Lessor.
44
Section 25.10 Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by SunTrust Bank, Atlanta, not individually or personally but solely as owner
trustee under the Trust Agreement, in the exercise of the powers and authority
conferred and vested in it, (b) each of the representations, undertakings and
agreements herein made on the part of the Co-Trustee is made and intended not as
personal representations, undertakings and agreements by SunTrust Bank, Atlanta
but is made and intended for the purpose for binding only the Co-Trustee, (c)
nothing herein contained shall be construed as creating any liability on
SunTrust Bank, Atlanta, individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereto or by any Person claiming by, through or
under the parties hereto and (d) under no circumstances shall SunTrust Bank,
Atlanta be personally liable for the payment of any indebtedness or expenses of
the Co-Trustee or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Co-Trustee under
this Agreement. In addition, each of the parties hereto acknowledges and agrees
that the Co-Trustee has been appointed by the Owner Participant and Owner
Trustee for the purpose of exercising those trust powers in the State of Georgia
which may not be exercised by the Owner Trustee under Applicable Law, and that,
except as otherwise required by Applicable Law, the Co-Trustee shall not be
obligated to take any action hereunder unless expressly directed in writing by
the Owner Trustee or the Owner Participant in accordance with the terms of the
Trust Agreement.
Section 25.11 Measuring Life. If and to the extent that any of the rights
and privileges granted under this Facility Lease, would, in the absence of the
limitation imposed by this sentence, be invalid or unenforceable as being in
violation of the rule against perpetuities or any other rule or law relating to
the vesting of interests in property or the suspension of the power of
alienation or property, then it is agreed that notwithstanding any other
provision of this Facility Lease, such options, rights and privileges, subject
to the respective conditions hereof governing the exercise of such options,
rights and privileges, will be exercisable only during (a) the longer of (i) a
period which will end twenty-one (21) years after the death of the last survivor
of the descendants living on the date of the execution of this Facility Lease of
the following Presidents of the United States: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.▇. ▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ or (ii) the period provided under the Uniform Statutory Rule
Against Perpetuities or (b) the specific applicable period of time expressed in
this Facility Lease, whichever of (a) and (b) is shorter.
45
IN WITNESS WHEREOF, the Facility Lessor and the Facility Lessee have caused
this Facility Lease to be duly executed and delivered by their respective
officers thereunto duly authorized.
SUNTRUST BANK, ATLANTA,
not in its individual capacity,
but solely as Co-Trustee under the Trust Agreement
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Date: 12/30/96
Signed and delivered
in the presence of:
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Unofficial Witness
/s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Notary Public
My Commission Expires:June 2, 1998
[Notary Seal]
ROCKY MOUNTAIN LEASING
CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Vice President
Date: 12/30/96
Signed and delivered
in the presence of:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------------
Unofficial Witness
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-------------------------------------
Notary Public
My Commission Expires:January 19, 1998
[Notary Seal]
46
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF THE FACILITY LESSOR IN AND TO
THIS FACILITY LEASE HAVE BEEN ASSIGNED TO AND ARE SUBJECT TO A FIRST PRIORITY
SECURITY INTEREST IN FAVOR OF THE UNDERSIGNED, AS LENDER, UNDER THE LOAN
AGREEMENT AND THE DEED TO SECURE DEBT DATED AS OF JANUARY 3, 1997. THIS
AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE ORIGINAL
COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY THE UNDERSIGNED, ON THE
SIGNATURE PAGES THEREOF. SEE SECTION 24 HEREOF FOR INFORMATION CONCERNING THE
RIGHTS OF THE HOLDERS OF THE VARIOUS COUNTERPARTS HEREOF.
Receipt of this original counterpart of this Facility Lease is hereby
acknowledged on this ___ day of _____, 1997.
UTRECHT-AMERICA FINANCE CO.
By: ____________________________________
Name:
Title:
Date:
By: ____________________________________
Name:
Title:
Date:
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF THE FACILITY LESSOR IN AND TO
THIS FACILITY LEASE HAVE BEEN ASSIGNED TO AND ARE SUBJECT TO A FIRST PRIORITY
SECURITY INTEREST IN FAVOR OF THE UNDERSIGNED, AS LENDER, UNDER THE LOAN
AGREEMENT AND THE DEED TO SECURE DEBT DATED AS OF DECEMBER 30, 1996. THIS
AGREEMENT HAS BEEN EXECUTED IN SEVERAL COUNTERPARTS. ONLY THE ORIGINAL
COUNTERPART CONTAINS THE RECEIPT THEREFOR EXECUTED BY THE UNDERSIGNED, ON THE
SIGNATURE PAGES THEREOF. SEE SECTION 24 HEREOF FOR INFORMATION CONCERNING THE
RIGHTS OF THE HOLDERS OF THE VARIOUS COUNTERPARTS HEREOF.
Receipt of this original counterpart of this Facility Lease is hereby
acknowledged on this 30th day of December, 1996.
UTRECHT-AMERICA FINANCE CO.
By: ____________________________________
Name:
Title:
Date:
By: ____________________________________
Name:
Title:
Date:
SCHEDULE TO EXHIBIT 10.32.5
FACILITY LEASE AGREEMENT (P1)
The following table indicates for each transaction the name of the
corresponding Owner Participant:
Agreement Date Owner Participant
--------- ---- -----------------
P1 December 30, 1996 ▇▇▇▇▇▇ ▇▇▇▇▇▇ Capital Corporation
P2 January 3, 1997 ▇▇▇▇▇▇ ▇▇▇▇▇▇ Capital Corporation
F3 December 30, 1996 First Chicago Leasing Corporation
F4 December 30, 1996 First Chicago Leasing Corporation
N5 December 30, 1996 NationsBanc Leasing & R.E. Corporation
N6 January 3, 1997 NationsBanc Leasing & R.E. Corporation
Other than Appendix A, the Exhibits and Schedules to the Facility Lease
Agreement (P1) are not filed herewith; however, the registrant hereby agrees
that such Exhibits and Schedules will be provided to the Commission upon
request.
APPENDIX A
to
Facility Lease
DEFINITIONS
Refer to Appendix A to Exhibit 10.32.1 of the Form 10-K.