New York-Waterford Lease - Waterford Industrial Development Agency and Grand LLC
LEASE AGREEMENT
THIS LEASE AGREEMENT (the "Lease Agreement"), dated as of March 20, 1998,
by and between WATERFORD INDUSTRIAL DEVELOPMENT AGENCY (the "Agency"), a public
benefit corporation of the State of New York having its office at 65 Broad
Street, Town Hall, Waterford, New York 12188 and the Grand LLC (the "Company"),
a limited liability company duly organized and existing under the laws of the
State of New York with an office at 135 Engineers Road, Hauppauge, New York
11788.
W I T N E S S E T H:
WHEREAS, Title 1 of Article 18-A of the General Municipal Law of the State
of New York (the "Enabling Act") was duly enacted into law as Chapter 1030 of
the Laws of 1969 of the State of New York, as amended from time to time; and
WHEREAS, the Enabling Act authorizes and provides for the creation of
industrial development agencies for the benefit of the several counties, cities,
villages and towns in the State of New York (the "State") and empowers such
agencies, among other things, to acquire, construct, reconstruct, lease,
improve, maintain, equip and sell land and any building or other improvement,
and all real and personal properties, including, but not limited to, machinery
and equipment deemed necessary in connection therewith, whether or not now in
existence or under construction, which shall be suitable for manufacturing,
warehousing, research, commercial or industrial facilities, including industrial
pollution control facilities, in order to advance the job opportunities, health,
general prosperity and economic welfare of the people of the State and to
improve their prosperity and standard of living; and
WHEREAS, the Enabling Act further authorizes each such agency to lease and
sell any or all of its facilities on such terms and conditions as it deems
advisable, to issue its bonds for the purpose of carrying out any of its
corporate purposes and, as security for the payment of the principal and
redemption price of, and interest on, any such bonds so issued and any
agreements made in connection therewith to pledge the revenues and receipts from
its facilities or from the sale thereof to secure the payment of such bonds and
interest thereon; and
WHEREAS, the Agency was created, pursuant to and in accordance with the
provisions of the Enabling Act, by Chapter 528 of the Laws of 1981 of the State
of New York, as amended by Chapter 184 of the Laws of 1989 of the State of New
York (collectively with the Enabling Act, the "Act") and is empowered under the
Act to
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undertake the providing of the "Facility" (as that quoted term is hereinafter
defined) in order to so promote job opportunities, health, general prosperity
and economic welfare of the people of the State and improve their standard of
living; and
WHEREAS, pursuant to and in accordance with a certain resolution of the
Agency (the "Agency Inducement Resolution") and the inducement agreement (the
"Inducement Agreement") dated as of September 3, 1996, the Agency agreed to
provide certain financial assistance for the purpose of financing the
improvement of a certain existing 608,000 square foot warehouse and
manufacturing facility (the "Project Facility") on a parcel of land located in
the Town of Waterford, Saratoga County, New York (the "Land") (the Land and the
Project Facility being collectively referred to herein as the "Facility")
consisting of:
(A) Taking possession of the Facility and leasing the Facility back
to the Company as a straight-lease transaction as defined in
Section 854(15) of the New York State General Municipal Law;
(B) An exemption from state and local sales and use taxes with
respect to the qualifying personal property portion of the
Facility;
(C) An exemption from mortgage recording tax;
(D) An exemption from general real property taxation with respect to
the Facility, which exemption shall be offset, in whole or in
part, by contractual payments in lieu of taxes by the Company for
the benefit of affected tax jurisdictions (such contemplated
financial assistance as set forth in A, B, C and D herein being
collectively hereinafter referred to as the "Financial
Assistance").
WHEREAS, the Agency has agreed to undertake the improvement of the Facility
in accordance with the terms hereof and to lease the Facility to the Company
upon the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto hereby formally covenant,
agree and bind themselves as follows (but, in the case of the Agency, as limited
by Section 12.9 hereof), to wit:
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ARTICLE I
DEFINITIONS
Section 1.1. Definitions. The following words and terms as used in this
Lease Agreement shall have the following meanings unless the context or use
indicates another or different meaning or intent;
"Act" means Title 1 of Article 18-A of the General Municipal Law of the
State, as amended from time to time, together with Chapter 528 of the Laws of
1981 of the State, as amended by Chapter 184 of the Laws of 1989 of the State of
New York.
"Agency" means (i) the Waterford Industrial Development Agency and its
successors and assigns and (ii) any public benefit corporation or political
subdivision resulting from or surviving any consolidation or merger to which the
Waterford Industrial Development Agency or its successors or assigns may be a
party.
"Agency Deed" means the deed evidencing the proposed transfer of the
Facility subject to the Mortgage and any other security agreements of the Bank
from the Agency to the Company.
"Agency Documents" means collectively, this Lease Agreement, the Agency
Deed, the PILOT Agreement and all other documents and instruments executed in
connection therewith.
"Agency Final Resolution" means the resolution dated November 17, 1997
approving the Agency Documents and authorizing the execution and delivery of the
Agency Documents.
"Agency Inducement Resolution" means the resolution of the Agency dated
September 3, 1996 authorizing the Agency's provision of Financial Assistance and
the Inducement Agreement.
"Authorized Representative" means, in the case of the Agency, its Chairman,
Vice Chairman or Secretary; in the case of the Company, its manager; and in the
case of both, such additional persons as, at the time, are designated to act on
behalf of the Agency or the Company, as the case may be, by written certificate
furnished to the Bank and the Agency or the Company, as the case may be,
containing the specimen signature of each such person and signed on behalf of
(i) the Agency by its Chairman, Vice Chairman or Secretary and (ii) the Company
by its manager.
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"Bank" means Bank United having an office at 3200 Southwest Freeway,
Houston, Texas 77027.
"Closing Date" means the date of execution and delivery of this Lease
Agreement by the Agency and the Company, being March 20, 1998.
"Company" means the Grand LLC, a limited liability company duly organized
and existing under the laws of the State of New York with an office at 135
Engineers Road, Hauppauge, New York 11788.
"Company Deed" means the deed, dated as of March 16, 1998 evidencing the
transfer of the Facility subject to the Mortgage and any other security
agreements of the Bank, from the Company to the Agency.
"Company Documents" means collectively, this Lease Agreement, the Note, the
Mortgage, the Company Deed, the PILOT Agreement and all other documents and
instruments executed in connection therewith.
"Condemnation" means the taking of title to, or the use of, Property under
the exercise of the power of eminent domain by any governmental authority.
"Enabling Act" means Title 1 of Article 18-A of the General Municipal Law
of the State.
"Event of Default" means any of those events defined as Events of Default
by Section 10.1(a) hereof. An Event of Default shall "exist" if an Event of
Default shall have occurred and be continuing.
"Facility" means the Land and the Project Facility.
"GAAP" means generally accepted accounting principles in the United States
of America applied on a consistent basis.
"Improvements" means certain equipment, machinery and other items of
tangible and personal property installed or to be installed in and around the
Project Facility.
"Independent Counsel" means an attorney or attorneys or firm or firms of
attorneys duly admitted to practice law before the highest court of the State.
"Inducement Agreement" means the agreement dated as of September 3, 1996
between the Agency and the Company.
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"Land" means the real property described in Exhibit "A" attached hereto,
which real property is the site of the Facility.
"Lease Agreement" means this Lease Agreement by and between the Agency and
the Company, as the same may be amended from time to time.
"Lease Documents" means collectively the Agency Documents and the Company
Documents.
"Lease Term" means the duration of the leasehold estate created by this
Lease Agreement, as specified in Section 5.2 hereof.
"Lien" means any interest in Property securing an obligation owed to a
Person whether such interest is based on the common law, statute or contract,
and including but not limited to the security interest arising from a mortgage,
encumbrance, pledge, conditional sale or trust receipt or a lease, consignment
or bailment for security purposes, other than liens arising in connection with
sales of goods or provision of services in the ordinary course of business to
the Facility, provided such liens are discharged within a reasonable period of
time, but in any event as soon as practicable, by payment or other release of
the underlying obligation, or the Company is otherwise contesting the obligation
in good faith through appropriate procedures while maintaining adequate reserves
to the extent required by GAAP. The term "lien" includes reservations,
exceptions, encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other similar encumbrances, including but not limited
to mechanics', materialmen's, warehousemen's and carriers' liens and other
similar encumbrances affecting real property. For the purposes of this Lease
Agreement, a Person shall be deemed to be the owner of any Property which it has
acquired or holds subject to a conditional sale agreement or other arrangement
pursuant to which title to the Property has been retained by or vested in some
other Person for security purposes.
"Mortgage" means that mortgage and security agreement dated as of October
17, 1997 between the Company and the Bank.
"Net Proceeds" means so much of the gross proceeds with respect to which
that term is used as remain after payment of all expenses, costs and taxes
(including reasonable attorneys' fees) incurred in obtaining such gross
proceeds.
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"Note" means the mortgage note in the amount of $6,500,000 dated as of
October 17, 1997 from the Company to the Bank which is secured by the Mortgage.
"Person" means an individual, partnership, corporation, trust or
unincorporated organization, and a government or agency or political subdivision
thereof.
"PILOT Agreement" means the Agreement for Payment in Lieu of Taxes dated as
of March 20, 1998, by and between the Agency and the Company.
"Protect Facility" has the same meaning as that defined in the Recital
clauses.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"State" means the State of New York.
Section 1.2. Rules of Construction. Unless the context clearly indicates to
the contrary, the following rules shall apply to the construction of this Lease
Agreement.
(a) Words importing the singular number shall include the plural number and
vice versa.
(b) All references herein to particular articles or sections are references
to articles or sections of this Lease Agreement.
(c) The use of the neuter gender shall include the masculine and feminine
genders as well.
(d) The table of contents and headings of the Sections herein are solely
for convenience of reference and shall not control, affect the meaning of, or be
taken as an interpretation of any provision of this Lease Agreement.
(e) All terms "herein", "hereof" and "hereunder" and other words of similar
import refer to this Lease Agreement as a whole and not to any particular
Article, Section or other subdivision.
(f) All accounting terms not otherwise defined herein shall have the
meanings assigned to them by, and all computations herein provided for shall be
made in accordance with, generally accepted accounting principles. All
references to "generally accepted accounting principles" refer to such
principles as they exist at the date of application thereof.
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ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1. Representations and Covenants of the Agency. The Agency makes
the following representations and covenants as the basis for the undertakings on
its part herein contained:
(a) The Agency is duly established under the provisions of the Act and has
the power to enter into this Lease Agreement and to carry out its obligations
hereunder. Based upon representations of the Company as to the utilization of
the Facility, the Facility will constitute a "project", as such quoted term is
defined in the Enabling Act. By proper official action, the Agency has been duly
authorized to execute, deliver and perform this Lease Agreement.
(b) Neither the execution and delivery of this Lease Agreement, the
consummation of the transactions contemplated hereby nor the fulfillment of or
compliance with the provisions of this Lease Agreement will conflict with or
result in a breach by the Agency of any of the terms, conditions or provisions
of the Act, the by-laws of the Agency or any restriction, agreement, instrument,
order or judgment to which the Agency is a party or by which it is bound, or
will constitute a default by the Agency under any of the foregoing.
(c) The Agency will cause the Facility to be acquired and will lease the
Facility to the Company pursuant to this Lease Agreement, all for the purpose of
promoting the industry, health, welfare, convenience and prosperity of the
inhabitants of the State and improving their standard of living. The Agency will
cooperate with the Company in good faith in the improvement of the Facility.
Section 2.2. Representations and Covenants of the Company. The Company
makes the following representations and covenants as the basis for the
undertakings on its part herein contained:
(a) The Company is a limited liability company, duly organized, validly
existing and in good standing under the laws of the State of New York and duly
authorized to do business under the Laws of the State of New York, has the power
to enter into this Lease Agreement and to carry out its obligations hereunder
and by proper action of its members has been duly authorized to execute, deliver
and perform this Lease Agreement.
(b) Neither the execution and delivery of this Lease Agreement or the other
Company Documents to which the Company is a
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party, the consummation of the transactions contemplated hereby or thereby nor
the fulfillment of or compliance with the provisions hereof or thereof will
conflict with or result in a breach of any of the terms, conditions or
provisions of the Articles of Organization and Operating Agreement of the
Company or any agreement, instrument, order or judgment to which the Company is
a party or by which it is bound, or will constitute a default under any of the
foregoing, or result in the creation or imposition of any Lien of any nature
upon any of the Property of the Company under the terms of any such instrument,
agreement, order or judgment.
(c) The acquisition and improvement of the Facility by the Agency and the
lease thereof by the Agency to the Company will not result in the removal of a
plant or facility of the Company, any Facility occupant or any proposed Facility
occupant from one area of the State to another area of the State or in the
abandonment of one or more plants or facilities of the Company, any Facility
occupant or proposed Facility occupant located in the State.
(d) The Facility is and will be located entirely within the boundaries of
the Town of Waterford and no portion of the Facility is or will be located
outside the boundaries of the Town of Waterford. The Facility will constitute a
"project" within the definition of the Act and the Company will not take any
action, or fail to take any action, which would cause the Facility not to
constitute a "project" as such quoted term is defined in the Act.
(e) The Company has the ability to improve the Facility and shall proceed
with due diligence to complete the acquisition of the Facility in accordance
with the terms hereof.
(f) The Facility is not now, and when improved shall not then be, in
violation of any applicable zoning, planning or building law or regulation of
any governmental authority having jurisdiction over the Facility. (For purposes
of the preceding sentence, the applicability of such laws and regulations is to
be determined as if the Company and not the Agency were the owner of the
Facility.)
(g) The Facility and the operation thereof will comply with all presently
applicable building, zoning, environmental, planning and subdivision laws, rules
and regulations of all governmental bodies, boards and agencies having
jurisdiction over the Facility during the Lease Term (the applicability of such
laws, rules and regulations being determined both as if the Agency were the
owner of the Facility and as if the Company and not the Agency were the owner of
the Facility).
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(h) The Facility does not constitute a project where facilities or property
that are primarily used in making retail sales of goods and/or services to
customers who personally visit such facilities or property constitute more than
one-third of the cost of the Facility.
(i) The Company, in accordance with Section 874(g) of the Act, will file
annually with the New York State Department of Taxation and Finance, a statement
in such form and in such a manner as may be prescribed by the Commissioner of
Taxation of Finance, of the value of all sales tax exemptions claimed by the
Company under the authority granted by the Agency.
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ARTICLE III
CONVEYANCE AND USE OF FACILITY
Section 3.1. Agreement to Convey to Agency. The Company will convey to the
Agency title to the Facility.
Section 3.2. Use of Facility. Subsequent to the Closing Date, the Company
shall use the Facility for any purpose so long as the proposed use does not
cause the Facility to fail to qualify as a "project" under the Act.
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ARTICLE IV
ACQUISITION OF THE FACILITY
Section 4.1. Improvement of the Facility.
(a) The Company shall, on behalf of the Agency, proceed with due diligence
to improve the Facility.
(b) The Company may revise, amend or modify the plans and specifications
for the Facility without the prior written consent of the Agency provided that
such revisions, amendments or modifications do not cause the Facility to fail to
qualify as a "project" under the Act.
(c) Title to all materials, equipment, machinery and other items of
Property intended to be incorporated or installed in and to become part of the
Facility shall vest in the Agency immediately upon payment therefor. The Company
shall execute, deliver and record or file all instruments necessary or
appropriate to so vest title in the Agency and shall take all action necessary
or appropriate to protect such title against claims of any third Persons, except
as otherwise set forth herein.
(d) The Agency shall enter into, and accept the assignment of, such
contracts as the Company may request in order to effectuate the purposes of this
Section 4.1; provided, however, that no such contract shall result in the
assumption by the Agency of any obligation to pay any cost or expense.
(e) The Agency hereby appoints the Company its true and lawful agent, and
the Company hereby accepts such agency, (i) to improve the Facility (ii) subject
to Section 4.1(d) hereof, to make, execute, acknowledge and deliver any
contracts, orders, receipts, writings and instructions with any other Persons,
and in general to do all things which may be requisite or proper, all for the
improvement of the Facility with the same powers and with the same validity as
the Agency could do if acting in its own behalf, (iii) to pay all fees, costs
and expenses incurred in the improvement of the Facility from funds made
available therefor in accordance with this Lease Agreement and (iv) to ask,
demand, sue for, levy, recover and receive all such sums of money, debts, dues
and other demands whatsoever which may be due, owing and payable to the Agency
under the terms of any contract, order, receipt, or writing in connection with
the improvement of the Facility, and to enforce the provisions of any contract,
agreement, obligation, bond or other performance security in connection with
same. The Company
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at its option may cause a parent, subsidiary or affiliate of the Company or any
partnership or corporation or limited liability company in which the Company has
an interest to perform its duties hereunder.
(f) The Company shall give, or cause to be given, all notices required by,
and comply or cause compliance with, all laws, ordinances, municipal rules and
regulations and requirements of all governmental agencies and public authorities
applying to or affecting the conduct of the operation of the Facility, and the
Company will defend and save the Agency and its officers, members, agents,
servants and employees harmless from all fines and penalties due to failure to
comply therewith. All permits and licenses necessary for the operation of the
Facility shall be procured promptly by the Company.
(g) The Company will, as agent for the Agency, (i) comply with the
requirements of Article 8 of the Labor Law of the State to the extent, if any,
applicable to the Facility and (ii) cause all persons involved in the
acquisition of the Facility to comply with Article 8 of the Labor Law of the
State to the extent, if any, applicable to the Facility.
Section 4.2. Company to Pay Facility Costs. The Company agrees, for the
benefit of the Agency, to pay all costs of improving the Facility.
Section 4.3. Certificates of Completion. The Company shall proceed to
complete the improvement of the Facility by no later than March 1, 1998.
Completion of the improvement of the Facility shall be evidenced by a
certificate signed by an Authorized Representative of the Company stating that
(A) the improvement of the Facility has been completed and (B) the payment of
all labor, services, materials and supplies used in such improvement has been
made or provided for.
Section 4.4. Remedies to be Pursued Against Contractors, Subcontractors,
Materialmen and their Sureties. In the event of a default by any contractor,
subcontractor or materialman under any contract made by it in connection with
the Facility or in the event of a breach of warranty with respect to any
materials, workmanship, or performance guaranty, the Company may proceed, either
separately or in conjunction with others, to exhaust the remedies of the Company
and the Agency against the contractor, subcontractor or materialman so in
default and against each surety for the performance of such contract. The
Company may, in its own name or, in the name of and as agent for the Agency,
prosecute or defend any such action or proceeding or take any other action
involving any
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such contractor, subcontractor, materialman or surety which the Company deems
reasonably necessary, and in such event the Agency hereby agrees, at the
Company's sole expense, to cooperate fully with the Company and to take all
action necessary to effect the substitution of the Company for the Agency in any
such action or proceeding. The Company shall notify the Agency of any actions or
proceedings taken hereunder. The Net Proceeds of any amounts recovered pursuant
to this Section 4.4 shall be payable to the Company for its own account.
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ARTICLE V
DEMISING CLAUSES AND RENTAL PROVISIONS
Section 5.1. Demise of Facility. The Agency hereby demises and leases the
Facility to the Company and the Company hereby leases and takes the Facility
from the Agency upon the terms and conditions of this Lease Agreement.
Section 5.2. Duration of Lease Term; Quiet Enjoyment.
(a) The Agency shall deliver to the Company sole and exclusive possession
of the Facility (subject to the provisions of Section 10.2 and the provisions of
Section 8.3 hereof) and the leasehold estate created hereby shall commence on
the Closing Date and the Company shall accept possession of the Facility at such
time.
(b) Except as provided in Sections 10.2 and 11.1 hereof, the leasehold
estate created hereby shall terminate upon termination of the PILOT Agreement.
(c) The Agency shall, subject to the provisions of Section 8.2 hereof,
neither take nor suffer to permit any action, other than pursuant to Article X
of this Lease Agreement, to prevent the Company during the Lease Term from
having quiet and peaceable possession and enjoyment of the Facility as
hereinabove provided.
Section 5.3. Rents and other Amounts Payable.
(a) Upon execution of this Lease Agreement, the Company shall pay or cause
to be paid as basic rent for the Facility the sum of Ten Dollars ($10.00), such
amount being computed on the basis of one dollar ($1.00) for each calendar year,
or part thereof, that is anticipated to be included within the Lease Term.
(b) In addition to the payments of rent pursuant to Section 5.3(a) hereof,
throughout the Lease Term, the Company shall pay to or upon the order of the
Agency as additional rent, within thirty (30) days of the receipt of demand
therefor, the sum of the reasonable expenses of the Agency and the members
thereof incurred (A) by reason of the Agency's ownership, financing or leasing
of the Facility, including, but not limited to any filing or recording fees
imposed upon the Agency in connection with the filing or recording of any of the
Lease Documents or any other certificates associated therewith and (B) in
connection with the carrying out of the Agency's duties and obligations under
this Lease Agreement, the
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payment of which is not otherwise provided for under this Lease Agreement (the
foregoing shall not be deemed to include any annual or continuing administrative
or management fee beyond any initial fee of the Agency). Agency shall provide
Company with copies of bills and receipts for all expenses for which Agency
seeks repayment.
(c) The Company shall also pay, as rent due hereunder, amounts due pursuant
to the PILOT Agreement at the times and in the manner prescribed therein.
(d) The Company agrees to make the above-mentioned payments without further
notice in lawful money of the United States of America as, at the time of
payment, shall be legal tender for the payment of public and private debts. In
the event the Company shall fail to timely make any payment required in this
Section 5.3, the Company shall pay the same together with interest at an
interest rate of nine percent (9%) per annum until paid.
Section 5.4. Obligations of Company Hereunder. The obligations of the
Company to make the payments required by this Lease Agreement and to perform and
observe any and all of the other covenants and agreements on its part contained
herein shall be general obligations of the Company and shall be absolute and
unconditional irrespective of any defense or any rights of setoff, recoupment or
counterclaim it may otherwise have against the Agency or the Bank. The Company
agrees it will not (i) suspend, discontinue or abate any payment required by
this Lease Agreement or (ii) fail to observe any of its other covenants or
agreements in this Lease Agreement or (iii) except as provided in Section 11.1
hereof, terminate this Lease Agreement for any cause whatsoever including,
without limiting the generality of the foregoing, failure of the Company to
lease, occupy or use part of the Facility as contemplated in this Lease
Agreement or otherwise. Nothing contained in this Section 5.4 shall be construed
to release the Agency from the performance of any of the agreements on its part
contained in this Lease Agreement, and in the event the Agency should fail to
perform any such agreement, the Company may institute such action against the
Agency as the Company may deem necessary to compel performance (subject to the
provisions of Section 12.9 herein) or recover damages for non-performance;
provided, however, that the Company shall look solely to the Agency's estate and
interest in the Facility for the satisfaction of any right or remedy of the
Company for the collection of a judgment (or other judicial process) requiring
the payment of money by the Agency in the event of any liability on the part of
the Agency, and no other property or assets of the Agency shall be subject to
levy, execution, attachment or other enforcement
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procedure for the satisfaction of the Company's remedies under or with respect
to this Lease Agreement, the relationship of the Agency and the Company
hereunder, or the Company's use and occupancy of the Facility, or any other
liability of the Agency to the Company.
Section 5.5. Additional Rent. All moneys payable by the Company under this
Lease Agreement, except those set forth in Section 5.3(a) hereof, shall be
deemed additional rent hereunder.
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ARTICLE VI
MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE
Section 6.1. Maintenance and Modifications of Facility by Company.
(a) The Company agrees that during the Lease Term it will (i) keep the
Facility in good operating condition, ordinary wear and tear excepted, and (ii)
make all necessary repairs and replacements to the Facility (whether ordinary or
extraordinary, structural or nonstructural, foreseen or unforeseen).
(b) For the remainder of the Lease Term, the Company may make any
additions, modifications or improvements to the Facility or any part thereof,
provided that:
(i) the Company shall (A) give, or cause to be given, all notices
required by, and comply or cause compliance with, all laws, ordinances,
municipal rules and regulations and requirements of all governmental
agencies and public authorities applying to or affecting the conduct of
work on such additions, modifications or improvements to the Facility or
part thereof (the applicability of such laws, ordinances, rules and
regulations to be determined both as if the Agency were the owner of the
Facility and as if the Company and not the Agency were the owner of the
Facility), (B) defend and save the Agency and its officers, members,
agents, servants and employees harmless from all fines and penalties due to
failure to comply therewith, (C) promptly procure all permits and licenses
necessary for the prosecution of any work described in this Section 6.l(b)
and (D) make all payments in lieu of taxes required by Section 6.8 hereof.
Agency shall promptly notify Company of any such claim made and Agency
shall fully cooperate in the defense of any such claim;
(ii) the Bank (if required by the Mortgage or Note) has consented to
said additions, modifications or improvements;
(iii) the additions, modifications or improvements to the Facility
shall not constitute an Event of Default; and
(iv) any such addition, modification or improvement to the Facility
shall not cause the Facility to fail to qualify as a "project" under the
Act.
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Section 6.2. Installation of Additional Equipment. The Company from time to
time may install any additional machinery, equipment and other personal property
not constituting part of the Facility on or in the Facility (which may be
attached or affixed to the Facility) as it may deem desirable. The Company from
time to time with the prior written consent of the Bank in accordance with the
Mortgage and Note, may remove or permit the removal of such machinery, equipment
and, with the prior written consent of the Bank in accordance with the Mortgage
and Note, other personal property from the Facility and may create or permit to
be created any Lien on such machinery, equipment or other personal property. The
Agency shall not be responsible for any loss or damage to any property installed
pursuant to this Section 6.2 unless such damage was caused by the negligence or
wrongful acts of the Agency, its employees, agents or contractors.
Section 6.3. Taxes, Assessments and Utility Charges.
(a) The Company agrees to pay, as the same respectively become due, (i) all
taxes and governmental charges of any kind whatsoever which may at any time be
lawfully assessed or levied against or with respect to the Facility and any
machinery, equipment or other property installed or bought by the Company
therein or thereon, (ii) all utility and other charges, including "service
charges", incurred or imposed for the operation, maintenance, use, occupancy,
upkeep and improvement of the Facility and (iii) all assessments and charges of
any kind whatsoever lawfully made by any governmental body for public
improvements, provided that, with respect to special assessments or other
governmental charges that may lawfully be paid in installments over a period of
years, the Company shall be obligated under this Lease Agreement to pay only
such installments as are required to be paid during the Lease Term.
(b) The Company may in good faith contest any such taxes, assessments and
other charges provided that the Company shall notify the Agency as soon as
practicable of such contest. In the event of any such contest, the Company may
permit the taxes, assessments and other charges so contested to remain unpaid
during the period of such contest and any appeal therefrom, unless the Agency
shall notify the Company that the Agency or its members, officers, agents or
servants may be liable for prosecution for such nonpayment in which event the
Company shall promptly take such action as shall be satisfactory to the Agency.
Agency shall cooperate with Company in any such contest of taxes.
Section 6.4. Insurance Required. At all times throughout the term of the
Lease Agreement, including without limitation
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during the Construction Period, the Company shall, at its sole expense, maintain
insurance against such risks and for such amounts as are customarily insured
against by businesses of like size and type and shall pay, as the same become
due and payable, all premiums in respect thereto, including, but not necessarily
limited to:
(a) Worker's compensation insurance, disability benefits insurance, and
each other form of insurance which the Company is required by law to provide,
covering loss resulting from injury, sickness, disability or death of employees
of the Company who are located at or assigned to the Facility.
(b) Insurance against loss or damage by fire, lightning and other
casualties customarily insured against, with a uniform standard extended
coverage endorsement, such insurance to be in an amount not less than the full
replacement value of the completed Improvements, exclusive of footings and
foundations, as determined by a recognized appraiser or insurer selected by the
Company and acceptable to the Bank, but in no event less that the principal
amount of the Note outstanding.
(c) Insurance protecting the Company against loss or losses from
liabilities imposed by law or assumed in any written contract and arising from
personal injury and death or damage to the property of others caused by any
accident or occurrence, with limits of not less than $3,000,000 per accident or
occurrence on account of personal injury, including death resulting therefrom,
and $1,000,000 per accident or occurrence on account of damage to the property
of others, excluding liability imposed upon the Company by an applicable
worker's compensation law; and a blanket excess liability policy in an amount
not less than $10,000,000, protecting the Company against any loss or liability
or damage for personal injury or property damage. All policies required by this
subsection (c) shall name the Agency as an additional insured.
(d) A policy or policies of flood insurance in an amount not less than the
principal amount of the Bonds or the maximum amount of flood insurance available
with respect to the Project Facility under the Flood Disaster Protection Act of
1973, as amended, whichever is less. This requirement will be waived upon
presentation of evidence satisfactory to the Bank that no portion of the
Improvements is located within an area identified by the U.S. Department of
Housing and Urban Development as having special flood hazards.
The Agency does not in any way represent that the insurance specified
herein, whether in scope or in limits of coverage, is
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adequate or sufficient to protect the Company's business or interests.
Section 6.5. Additional Provisions Respecting Insurance.
(a) All insurance shall be procured and maintained with financially sound
and generally recognized responsible insurance companies selected by the Company
and authorized to write such insurance in the State. Such insurance may be
written with deductible amounts comparable to those on similar policies carried
by other companies engaged in businesses similar in size, character and other
respects to those in which the Company is engaged. All policies evidencing the
insurance required by Section 6.4(b) hereof shall include the Agency as
additional named insured and shall provide for at least ten (10) days prior
written notice of the cancellation or modification thereof to the Agency and the
Bank. All policies evidencing the insurance required by Sections 6.4(b) and (d)
hereof shall contain a standard New York mortgagee clause showing the interest
of the Bank as mortgagee, shall provide for payment to the Bank of the net
proceeds of insurance resulting from any claim for loss or damage thereunder and
all policies of insurance required by Section 6.4 hereof shall provide for at
least thirty (30) days prior written notice of the restriction, cancellation or
modification thereof to the Agency and the Bank.
(b) All such policies of insurance, or a certificate or certificates of the
insurers that such insurance is in force and effect, shall be deposited with the
Agency and the Bank on or before Closing Date. The Company shall deliver to the
Agency and the Bank on or before the first day of each insured year thereafter a
certificate dated not earlier than the immediately preceding month reciting that
there is in full force and effect, with a term covering at least the next
succeeding year, insurance in the amounts and of the types required in the Lease
Agreement. Prior to the expiration of any such policy, the Company shall furnish
the Agency and the Bank with evidence that such policy has been renewed or
replaced or is no longer required by the Lease Agreement. The Company shall
provide such further information to the Agency and the Bank from time to time
with respect to insurance coverage as the Agency or the Bank in their discretion
may reasonably require.
Section 6.6. Application of Net Proceeds of Insurance. The Net Proceeds of
the insurance carried pursuant to the provisions of Section 6.4 (b) hereof shall
be applied toward extinguishment or satisfaction of the liability with respect
to which such insurance proceeds may be paid.
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Section 6.7. Right of Agency to Pay Taxes, Insurance Premiums and Other
Charges. If the Company fails (i) to pay any tax, assessment or other
governmental charge required to be paid by Section 6.3 hereof or (ii) to
maintain any insurance required to be maintained by Section 6.4 hereof, the
Agency may pay such tax, assessment or other governmental charge or for such
insurance, except in such case where the Company's failure to pay under clause
(i) above or to maintain under clause (ii) above arises out of a good faith
contest or challenge by the Company through the appropriate procedures and while
maintaining adequate reserves in accordance with GAAP. The Company shall
reimburse the Agency for any amount so paid by the Agency pursuant to this
Section 6.7 together with interest thereon from the date of payment by the
Agency to the date of reimbursement at the rate of interest equal to nine
percent (9%) per annum, or the maximum rate permitted by law, whichever is less.
Section 6.8. Payments in Lieu of Taxes. It is recognized that under the
provisions of the Act, the Agency is required to pay no taxes or assessments
(other than special assessments) upon any of the property acquired by it or
under its jurisdiction or control or supervision or upon its activities. The
Company therefore agrees to make such payments in lieu of taxes as are required
pursuant to the PILOT Agreement at the times and in the manner called for
therein.
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ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1. Damage or Destruction.
(a) If the Facility shall be damaged or destroyed (in whole or in part) at
any time during the Lease Term:
(i) the Agency shall have no obligation to replace, repair, rebuild or
restore the Facility unless such damage was caused by the negligence or
wrongful acts of the Agency, its employees, agents or contractors;
(ii) there shall be no abatement or reduction in the amounts payable
by the Company under this Lease Agreement or the PILOT Agreement (whether
or not the Facility is replaced, repaired, rebuilt or restored);
(iii) the Company shall promptly give notice thereof to the Agency;
(iv) except as otherwise provided in Section 7.1(b) hereof, the
Company may promptly replace, repair, rebuild or restore the Facility with
such changes, alterations and modifications as may be desired by the
Company provided that such changes, alterations or modifications do not so
change the nature of the Facility that it does not constitute a "project"
as such quoted term is defined in the Act; and
(v) the entire net proceeds of insurance resulting from such damage or
destruction shall be payable to the Bank and subject to the provisions of
Section 7.1(c) below, at the option of the Company, with the approval of
the Bank in accordance with the Mortgage and Note, either (i) be disbursed
by the Bank to replace, repair, rebuild, restore or relocate the Facility
or (ii) pay principal of the Note in an amount equal to such net proceeds.
If the net proceeds of the insurance is not otherwise payable to the Bank
in accordance with the Mortgage and Note, then such net proceeds shall be
payable to the Company.
(b) The Company shall not be obligated to replace, repair, rebuild or
restore the Facility, if the Company shall notify the Agency and the Bank
that, in its sole judgment, it does not deem it practical or desirable to
so replace, repair, rebuild or restore the Facility in which event the net
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proceeds of insurance will be applied by the Bank, in redirection of the
principal balance of the Note.
(c) If the Company elects to replace, repair, rebuild, restore or relocate
the Facility, said determination shall be subject to the approval of the
Bank in accordance with the Mortgage and Note and to the following
conditions: (i) the Facility shall be in substantially the same condition
as existed prior to the damage or destruction; (ii) the Facility shall be
subject to no Liens other than the Mortgage; and (iii) the Bank shall be
satisfied that between the net proceeds of any insurance and additional
sums deposited with the Bank by the Company, there will be sufficient funds
to complete the replacement repair, rebuilding, restoration or relocation
of the Facility.
Section 7.2. Condemnation.
(a) If at any time during the Lease Term the whole or any part of title to,
or the use of, the Facility shall be taken by Condemnation:
(i) the Company shall notify the Agency of such fact;
(ii) the Agency shall not be obligated to restore or replace the
Facility;
(iii) there shall be no abatement or reduction in the amounts payable
by the Company under this Lease Agreement or the PILOT Agreement (whether
or not the Facility is restored or replaced);
(iv) except as otherwise provided in Section 7.2 (b) hereof, the
Company may promptly restore or replace the Facility with such changes,
alterations or modifications as may be desired by the Company, provided
that such changes, alterations and modifications do not so change the
nature of the Facility that it does not constitute a "project" as such
quoted term is defined in the Act; and
(v) the entire net proceeds of any award in such condemnation
proceeding shall be payable to the Bank in accordance with the Mortgage and
Note.
The Company may apply so much as may be necessary of the Net Proceeds of
any award in any Condemnation proceeding to the payment of the costs of the
restoration or replacement of the Facility. In
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the event such Net Proceeds of any Condemnation award are not sufficient to pay
in full the costs of such restoration of the Facility, the Company may pay from
its own moneys that portion of the costs thereof in excess of such Net Proceeds.
(b) The Company shall not be obligated to restore or replace the Facility
if the Company shall notify the Agency and the Bank that, in its sole judgment,
it does not deem it practical or desirable to so restore or replace the Facility
in which event the Net Proceeds of any Condemnation award shall be applied by
the Bank in accordance with the Mortgage and Note in reduction of the principal
balance of the Note.
(c) The Company shall have control of any Condemnation proceeding with
respect to the Facility or any part thereof and may negotiate the settlement of
any such proceeding. The Agency shall, at the sole expense of the Company,
cooperate fully with the Company in the handling and conduct of any such
Condemnation proceeding. In no event shall the Agency voluntarily settle, or
consent to the settlement of, any such Condemnation proceeding without the
written consent of the Company.
Section 7.3. Condemnation of Company-Owned Property. Subject to the rights
of the Bank, the Company shall be entitled to the proceeds of any Condemnation
award or portion thereof made for damage to or taking of any Property which, at
the time of such damage or taking, is owned by the Company and is not part of
the Facility.
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ARTICLE VIII
SPECIAL COVENANTS
Section 8.1. No Warranty of Condition or Suitability by the Agency;
Acceptance "As Is". THE AGENCY MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS
TO THE CONDITION, TITLE, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS OF THE
FACILITY OR ANY PORTION THEREOF OR THAT THE FACILITY OR ANY PORTION THEREOF IS
OR WILL BE SUITABLE FOR THE COMPANY'S PURPOSES OR NEEDS. THE COMPANY SHALL AND
DOES ACCEPT POSSESSION TO THE FACILITY "AS IS" WITHOUT RECOURSE OF ANY NATURE
AGAINST THE AGENCY FOR ANY CONDITION NOW OR HEREAFTER EXISTING. NO WARRANTIES OF
FITNESS FOR A PARTICULAR PURPOSE OR MERCHANTABILITY ARE MADE. IN THE EVENT OF
ANY DEFECT OR DEFICIENCY OF ANY NATURE, WHETHER LATENT OR PATENT, THE AGENCY
SHALL HAVE NO RESPONSIBILITY OR LIABILITY WHATSOEVER WITH RESPECT THERETO.
Section 8.2. Hold Harmless Provisions.
(a) The Company hereby releases the Agency and its members, officers,
agents (other than the Company) and employees from, agrees that the Agency and
its members, officers, agents and employees shall not be liable for and agrees
to indemnify, defend and hold the Agency and its members, officers, agents and
employees harmless from and against any and all (i) liability for loss or damage
to Property or injury to or death of any and all Persons that may be occasioned,
directly or indirectly, by any cause whatsoever pertaining to the Facility or
arising by reason of or in connection with the occupation or the use thereof or
the presence of any Person or Property on, in or about the Facility, (ii)
liability arising from or expense incurred by the Agency's financing,
constructing, owning or selling of the Facility, including without limiting the
generality of the foregoing, all liabilities or claims arising as a result of
the Agency's obligations under the Lease Documents, (iii) all claims arising
from the exercise by the Company of the authority conferred upon it pursuant to
Section 4.1(e) of this Lease Agreement, and (iv) all causes of action and
attorneys' fees and any other expenses incurred in connection with any suits or
actions which may arise as a result of any of the foregoing, provided that any
such losses, damages, liabilities or expenses of the Agency are not incurred or
do not result from the intentional or willful wrongdoing of the Agency or any of
its members, agents (other than the Company) or employees.
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(b) In the event of any claim against the Agency or its officers, members,
employees, servants or agents (other than the Company) by any employee of the
Company or any contractor of the Company or anyone directly or indirectly
employed by any of them or anyone for whose acts any of them may be liable, the
obligations of the Company to indemnify and hold harmless the Agency, its
officers, members, employees or agents (other than the Company) under Section
8.2(a) hereof shall not be limited in any way by any limitation on the amount or
type of damages, compensation or benefits payable by or for the Company or such
contractor under worker's compensation acts, disability benefits or other
employee benefit acts; provided, however, that the parties hereto specifically
acknowledge that there are no third party beneficiaries (other than the members,
employees or agents of the Agency in their capacity as such) to this Section
8.2.
(c) The Company agrees to defend, indemnify and hold harmless the Agency
and its members, employees, agents and officers from and against any claims,
actions, demands, penalties, fines, liabilities, settlements, damages, costs or
expenses (including, without limitation, reasonable attorney and consultation
fees, investigation and laboratory fees, court costs and litigation expenses) of
whatever kind or nature, known or unknown, contingent or otherwise arising out
of or in any way related to:
(l) The disposal, release or threatened release of any hazardous or
toxic substances at, on or in the Facility;
(2) Any personal injury (including wrongful death or property damage,
real or personal) arising out of or related to such hazardous or toxic
substances;
(3) Any lawsuit brought or threatened, settlement reached or
government order given relating to such hazardous or toxic substances;
and/or
(4) Any violation of any law, order, regulation, requirement, or
government authority, or any policies or requirements of the Agency which
are based upon or in any way related to such hazardous or toxic substances.
For purposes of the Section 8.2(c), "hazardous and toxic substances"
includes, without limitation, any flammable explosives, radioactive materials,
hazardous materials, hazardous wastes, hazardous or toxic substances or related
materials defined in the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials
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Transportation Act, as amended, the Clean Air Act, the Clean Water Act, the Safe
Water Drinking Act, the Toxic Substances Control Act, the New York Environmental
Conservation Law, the Resource Conservation and Recovery Act, as amended, and in
the regulations adopted and publications promulgated pursuant to any of the
foregoing. The provisions of this Section 8.2(c) shall be in addition to any
other obligations and liabilities the Company may have to the Agency at common
law, and shall survive the transactions contemplated herein.
(d) To effectuate the provisions of this Section 8.2 hereof, the Company
agrees to provide for and insure, in the liability policies required in Section
6.4(b) hereof, its liabilities assumed pursuant to this Section 8.2, to the
extent such insurance is commercially reasonably available.
(e) Notwithstanding any other provisions of this Lease Agreement, the
obligations of the Company pursuant to this Section 8.2 shall remain in full
force and effect after the termination of this Lease Agreement until the
expiration of the period stated in the applicable statute of limitations during
which a claim, cause of action or prosecution relating to the matters herein
described may be brought and the payment in full or the satisfaction of such
claim, cause of action or prosecution and the payment of all expenses and
charges incurred by the Agency, and any of its officers, members, employees,
servants or agents, relating to the enforcement of the provisions herein
specified.
Section 8.3. Right of Access to the Facility. The Agency shall be entitled,
on reasonable notice at reasonable times, to inspect those portions of the
Facility not designated as confidential by the Company. Neither the Agency nor
any agent or assignee of the Agency shall be entitled to inspect areas of the
Facility designated as confidential by the Company or to observe the operations
of the Facility designated as confidential by the Company or to demand or
receive from the Company any information or data regarding the design or
operation of the Facility or the manufacturing process at the Facility (which
shall not be unreasonably withheld or delayed).
Section 8.4. Agreement to Provide Information. The Company agrees, whenever
requested in writing by the Agency, to provide such information as is reasonably
necessary to enable the Agency to make any reports required by law or
governmental regulation.
Section 8.5. Compliance With Orders, Ordinances, Etc.
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(a) The Company agrees that it will, throughout the Lease Term, promptly
comply with all statutes, codes, laws, acts, ordinances, orders, judgments,
decrees, injunctions, rules, regulations, permits, licenses, authorizations,
directions and requirements of all federal, state, county, municipal and other
governments, departments, agencies, commissions, boards, companies or
associations insuring the premises, courts, authorities, officials and officers,
foreseen or unforeseen, ordinary or extraordinary, which now or at any time
hereafter may be applicable to the Facility or any part thereof, or to any use,
manner of use or condition of the Facility or any part thereof (the
applicability of such laws, ordinances, rules and regulations to be determined
both as if the Agency were the owner of the Facility and as if the Company and
not the Agency were the owner of the Facility).
(b) Notwithstanding the provisions of subsection (a) of this Section 8.5,
the Company may in good faith contest the validity or the applicability of any
requirement of the nature referred to in subsection (a), provided that the
Company shall have first notified the Agency of such contest. In such event, the
Company may fail to comply with the requirement or requirements so contested
during the period of such contest and any appeal therefrom unless the Agency
shall notify the Company that by failure to comply with such requirement or
requirements the Agency or any of its members, officers, agents (other than the
Company) or servants may be liable for prosecution for failure to comply
therewith in which event the Company shall promptly take such action with
respect thereto as shall be satisfactory to the Agency.
Section 8.6. Performance by Agency of Company's Obligations. Should the
Company fail to make any payment or to do any act as herein provided for a
period of thirty (30) days after receiving written notice of such failure to pay
or act, the Agency may, but need not, without releasing the Company from any
obligation herein, make or do the same, including without limitation, appearing
in and defending any action purporting to affect the rights or powers of the
Company or the Agency, and paying all expenses, including, without limitation,
reasonable attorneys' fees; and the Company will pay immediately upon demand all
sums so expended by the Agency under the authority hereof together with interest
thereon from the date of payment by the Agency to the date of reimbursement by
the Company at a rate equal to nine percent (9%) per annum, or the maximum rate
permitted by law, whichever is less.
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ARTICLE IX
ASSIGNMENTS AND SUB-LEASING
Section 9.1. Restriction on Transfer of Facility by Agency.
(a) Except as otherwise specifically provided in Sections 5.2 and 10.2
hereof, the Agency shall not convey, sell, transfer, lease or otherwise dispose
of the Facility or any part thereof, or any of its rights under this Lease
Agreement, to any other Person, without the prior written consent of the Company
and the Bank (if required by the Mortgage, Note or other loan documents).
Further, the Agency shall not, without the prior written consent of the Company
and the Bank (if required by the Mortgage, Note or other loan documents), create
or incur or suffer or permit to be created or incurred or to exist any mortgage,
lien, charge or encumbrance on the Facility or any part thereof.
(b) No conveyance of all or any portion of the Facility or interest therein
effected under the provisions of this Section 9.1 shall entitle the Company to
any abatement or diminution or any amounts payable under this Lease Agreement.
No assignment, sale or other disposition of the Facility or any portion thereof
shall relieve the Company from primary liability for any of its obligations
hereunder.
Section 9.2. Assignment, Sub-leasing or Mortgaging by the Company.
(a) The Company may assign its interest in this Lease Agreement in whole or
in part and may sub-lease the Facility or mortgage its interest therein, as a
whole or in part provided that:
(l) With respect to any assignment to any Person other than to a
parent, subsidiary or other affiliated entity to the Company (as to which
consent is not required), the Agency (which shall not be unreasonably
withheld or delayed) and the Bank (if required by the Mortgage, Note or
other loan documents) give their prior written consent to the form and
content of such assignment of this Lease Agreement.
(2) No assignment, sub-lease or mortgage shall relieve the Company
from primary liability for any of its obligations hereunder;
(3) Any assignee shall assume the obligations of the Company hereunder
to the extent of the interest thereon;
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(4) The Company shall, within ten (10) business days after the
delivery thereof, furnish or cause to be furnished to the Agency and the
Bank a true and complete copy of each such assignment, sub-lease or
mortgage, as the case may be, and, with respect to an assignment, the
instrument of assumption;
(5) The proposed assignee's or sub-tenant's use of the Facility shall
constitute a "project" under the Act; and
(6) No Event of Default after notice and beyond applicable grace
period has occurred and is continuing under the Note or, if caused by the
Company has occurred under this Lease Agreement or any of the Company
Documents.
(b) Prior to the purported effective date of any assignment or sublease
pursuant to subsection (a) of this Section 9.2, the Company, if requested by the
Agency or the Bank, shall furnish the Agency and the Bank with an opinion of
Independent Counsel, in form and substance reasonably satisfactory to the Agency
and the Bank, to the effect that the provisions of paragraphs (2), (3) and (5)
of subsection (a) have been fulfilled.
(c) Except as provided in subsection (a) hereof, the Company shall not
assign this Lease Agreement, in whole or in part, nor sub-lease (except the
Sublease) or mortgage its interest in the Facility in whole or in part.
Section 9.3. Merger of Agency.
(a) Nothing contained in this Lease Agreement shall prevent the
consolidation of the Agency with, or merger of the Agency into, any other public
benefit corporation or political subdivision which has the legal authority to
own and lease the Facility, provided that and upon any such consolidation,
merger or transfer, the due and punctual performance and observance of all the
agreements and conditions of this Lease Agreement to be kept and performed by
the Agency shall be expressly assumed in writing by the public benefit
corporation or political subdivision resulting from such consolidation or
surviving such merger.
(b) At least thirty (30) days prior to the date of any such consolidation
or merger, the Agency shall give notice thereof in reasonable detail to the
Company. The Agency promptly shall furnish such additional information with
respect to any such transaction as the Company reasonably may request.
Section 9.4. Removal of Equipment.
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(a) In any instance where the Company determines that any item of equipment
or any part thereof has become inadequate, obsolete, worn out, unsuitable,
undesirable or unnecessary, the Company may remove the same from the Facility
and may sell, trade-in, exchange or otherwise dispose of the same, as a whole or
in part.
(b) The removal of any item of equipment from the Facility pursuant to this
Section 9.4 shall not entitle the Company to any abatement or diminution of any
amounts payable under this Lease Agreement.
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ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default Defined.
(a) The following shall be "Events of Default" under this Lease Agreement
and the terms "Event of Default" or "Default" shall mean, whenever they are used
in this Lease Agreement, any one or more of the following events:
(l) The failure of the Company to observe and perform any covenants
contained in Section 8.2 hereof;
(2) (i) Subject to clause (ii), the failure by the Company to observe
and perform any covenant, condition or agreement hereunder on its part
to be observed or performed (except obligations referred to in Section
10.l(a)(l) hereof) for a period of thirty (30) days after written
notice, specifying such failure and requesting that it be remedied, is
given to the Company by the Agency;
(ii) If the covenant, condition or agreement which the Company
has failed to observe or perform is of such a nature that it cannot
reasonably be fully cured within such thirty (30) days, and provided
the Company has obtained the prior written consent of the Agency,
which consent shall not be unreasonably withheld, the Company shall
not be in default if it commences a cure within such thirty (30) days
and thereafter diligently proceeds with all action required to
complete the cure and, in any event, it completes such cure within
sixty (60) days of such written notice from the Agency, unless the
Agency gives its written consent to a longer period.
(3) The occurrence of an "Event of Default" under the PILOT Agreement.
(4) The Company or its Authorized Representative shall have made, in
any certificate, statement, representation or warranty heretofore or
hereafter furnished to the Agency in connection with the financing of the
Facility, a material representation which proves to have been false and
misleading as of the time such statement was made, or any such certificate,
statement, representation or warranty shall omit
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to state any material fact required to be stated therein or necessary to
make the statements therein not misleading.
(b) Notwithstanding the provisions of Section 10.l(a), if by reason of
force majeure either party hereto shall be unable in whole or in part to carry
out its obligations under the Lease Agreement and if such party shall give
notice and full particulars of such force majeure in writing to the other party
and to the Bank within a reasonable time after the occurrence of the event or
cause relied upon, the obligations under this Lease Agreement of the party
giving such notice, so far as they are affected by such force majeure, shall be
suspended during the continuance of the inability, which shall include a
reasonable time for the removal of the effect thereof. The suspension of such
obligations for such period pursuant to this subsection (b) shall not be deemed
an Event of Default under this Section 10.1. Notwithstanding anything to the
contrary in this subsection (b), an event of force majeure shall not excuse,
delay or in any way diminish the obligations of the Company to make the payments
required by Sections 4.2, 5.3, 6.3, 6.7, 6.8 and 8.6 hereof, to obtain and
continue in full force and effect the insurance required by Sections 6.4 and 6.5
hereof, to provide the indemnity required by Section 8.2 hereof and to comply
with the provisions of Sections 2.2(d), 4.2, 6.7 and 8.2 hereof. The term "force
majeure" as used herein shall include, without limitation, acts of God, strikes,
lockouts or other industrial disturbances, acts of public enemies, orders of any
kind of the government of the United States of America or of the State or
municipal government or any of their departments, agencies, governmental
subdivisions, or officials, or any civil or military authority, insurrections,
riots, epidemics, landslides, lightning, earthquakes, fire, hurricanes, storms,
floods, washouts, droughts, arrests, restraint of government and people, civil
disturbances, explosions, breakage or accident to machinery, transmission pipes
or canals, partial or entire failure of utilities, or any other cause or event
not reasonably within the control of the party claiming such inability. It is
agreed that the settlement of strikes, lockouts and other industrial
disturbances shall be entirely within the discretion of the party having
difficulty, and the party having difficulty shall not be required to settle any
strike, lockout and other industrial disturbances by acceding to the demands of
the opposing party or parties.
Section 10.2. Remedies on Default.
(a) Whenever any Event of Default exists the Agency may, to the extent
permitted by law, take any one or more of the following remedial steps:
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(l) Declare, by written notice to the Company, to be immediately due
and payable, whereupon the same shall become immediately due and payable,
all unpaid installments of the rent payable pursuant to Section 5.3,
provided that the payments not yet due under Section 5.3(c) shall not be
accelerated but shall remain payable in accordance with the PILOT
Agreement;
(2) Terminate the Lease Term and all rights of the Company under this
Lease Agreement except as set forth in Section 11.3 hereof;
(3) Bring any other action at law or in equity which may appear
necessary or desirable to collect any amounts then due or thereafter to
become due hereunder and to enforce the obligations, agreements or
covenants of the Company under this Lease Agreement.
(b) No action taken pursuant to this Section 10.2 shall relieve the Company
from its obligation to make all payments required by Sections 5.3 and 8.2
hereof.
Section 10.3. Remedies Cumulative. No remedy herein conferred upon or
reserved to the Agency is intended to be exclusive of any other available
remedy, but each and every such remedy shall be cumulative and in addition to
every other remedy given under this Lease Agreement or now or hereafter existing
at law or in equity. No delay or omission to exercise any right or power
accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
the Agency to exercise any remedy reserved to it in this Article X, it shall not
be necessary to give any notice, other than such notice as may be herein
expressly required in this Lease Agreement.
Section 10.4. Agreement to Pay Attorneys' Fees and Expenses. In the event
the Company should default after notice and beyond applicable grace period under
any of the provisions of this Lease Agreement and the Agency should employ
attorneys or incur other expenses for the collection of amounts payable
hereunder or the enforcement of performance or observance of any obligations or
agreements on the part of the Company herein contained, the Company shall, on
demand therefor, pay to the Agency the reasonable fees of such attorneys and
such other expenses so incurred.
Section 10.5. No Additional Waiver Implied by One Waiver. In the event any
agreement contained herein should be breached by
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either party and thereafter such breach be waived by the other party, such
waiver shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.
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ARTICLE XI
EARLY TERMINATION OF LEASE AGREEMENT;
OPTIONS IN FAVOR OF COMPANY
Section 11.1. Early Termination of Lease Agreement. So long as no Event of
Default or any event, which with notice or a lapse of time would become an Event
of Default after notice and beyond applicable grace period, shall have occurred
and be continuing, the Company shall have an option, in its sole discretion, to
terminate the Lease Term at any time upon filing with the Agency a certificate
signed by an Authorized Representative of the Company stating the Company's
intention to do so pursuant to this Section 11.1 and upon compliance with the
requirements set forth in Sections 11.2, 11.3 and 11.4 hereof.
Section 11.2. Conditions to Early Termination of Lease Agreement. In the
event the Company exercises its option to terminate the Lease Term in accordance
with Section 11.1 hereof, and at the time of such exercise all amounts payable
to the Agency under this Lease have not been paid in full, the Company shall
comply with the requirements set forth in the following two subsections:
(a) The following payments shall be made:
(l) To the Agency: an amount certified by an Authorized Representative
of the Agency sufficient to pay all reasonable unpaid fees and expenses of
the Agency and its members, officers, agents and employees, incurred under
this Lease Agreement;
(2) To the appropriate Person: an amount sufficient to pay all other
reasonable fees, expenses or charges, if any, due and payable or to become
due and payable under this Lease Agreement and not otherwise paid or
provided for.
Agency shall provide Company with copies of bills and receipts for all
expenses for which Agency seeks repayment.
(b) The Company shall exercise its option to terminate the Lease Term in a
certificate signed by an Authorized Representative of the Company and specifying
the date upon which the payments pursuant to subdivision (a) of this Section
11.2 shall be made.
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Section 11.3. Obligation to Purchase Facility. Upon expiration of the Lease
Term in accordance with Section 5.2(b) hereof, or upon early termination of the
Lease Term, in accordance with Section 11.1 hereof, Section 10.2 hereof, or any
other section of this Lease Agreement or upon termination of the Lease Term for
any other reason or as a result of any other action or condition, the Company
shall purchase the Facility from the Agency for the purchase price of One Dollar
($1.00) and the Agency and the Company shall promptly terminate this Lease
Agreement. The closing on the purchase of the Facility shall take place not
later than sixty (60) days after the termination of the Lease Term, or such
later date as shall be mutually acceptable to the Agency and the Company.
Section 11.4. Conveyance on Purchase. At the closing of the purchase of the
Facility pursuant to Section 11.3 hereof, the Agency shall, upon receipt of the
purchase price and, if applicable, the payment of all payments set forth in
Section 11.2 (a) herein, deliver to the Company all necessary documents (a) to
convey to the Company title to the Property being purchased, as such Property
exists, subject only to the following: (i) any Liens to which title to such
Property was subject when conveyed to the Agency, (ii) any Liens created at the
request of the Company, to the creation of which the Company consented or in the
creation of which the Company acquiesced, including without limitation, the
Mortgage, (iii) any Liens resulting from the failure of the Company to perform
or observe any of the agreements on its part contained in this Lease Agreement
or arising out of an Event of Default, (b) to release and convey to the Company
all of the Agency's rights and interest in and to any rights of action or any
Net Proceeds of insurance or Condemnation awards with respect to the Facility.
Upon conveyance of title to the Company, the Company shall assume the
obligations of the Agency under the Mortgage. Upon delivery of such title by the
Agency, the Company shall deliver a release and agreement that the exculpation
provisions and the obligations of the Company in Sections 5.3(b) and 8.2 hereof,
together with the obligation to insure the same, shall survive such conveyance
on purchase of the Facility.
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court of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof.
Section 12.4. Amendments, Changes and Modifications. This Lease Agreement
may not be amended, changed, modified, altered or terminated except by an
instrument in writing executed by the parties hereto.
Section 12.5. Execution of Counterparts. This Lease Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 12.6. Applicable Law. This Lease Agreement shall be governed
exclusively by the applicable laws of the State.
Section 12.7. Survival of Obligations. The obligations of the Company to
make the payments required by Section 5.3(b) hereof and to provide the indemnity
required by Section 8.2 hereof shall survive the termination of this Lease
Agreement.
Section 12.8. Table of Contents and Section Headings Not Controlling. The
Table of Contents and the Headings of the several Sections in this Lease
Agreement have been prepared for convenience of reference only and shall not
control, affect the meaning or be taken as an interpretation of any provision of
this Lease Agreement.
Section 12.9. No Recourse; Special Obligation.
(a) All covenants, stipulations, promises, agreements and obligations
(collectively, the "Obligations") of the Agency contained in this Lease
Agreement and in the other Lease Documents shall be deemed to be the Obligations
of the Agency and not of any member, officer, servant or employee of the Agency
(collectively, the "Employee of the Agency") in his individual capacity, and no
recourse under or upon any Obligation in the Lease Documents contained or
otherwise based upon or in respect of this Lease Agreement or the other Lease
Documents, or for any claim based thereon or otherwise in respect hereof or
thereof, shall be had against any past, present or future Employee of the
Agency, as such, or of any successor public benefit corporation or political
subdivision or any person so executing any of the Lease Documents on behalf of
the Agency, either directly or through the Agency or any successor public
benefit corporation or political subdivision or any person executing any of the
Lease Documents, it being expressly understood that Lease Documents issued
thereunder are solely corporate obligations, and that no such personal liability
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whatever shall attach to, or is or shall be incurred by any such Employee of the
Agency or of any successor public benefit corporation or political subdivision
or any person so executing the Lease Documents or under or by reason of the
Obligations, contained in the Lease Documents or implied therefrom; and that any
and all such personal liability of, and any and all such rights and claims
against, every Employee of the Agency because of the creation of the
indebtedness thereby authorized by the Lease Documents, or under or by reason of
the Obligations contained in any of the Lease Documents or implied therefrom,
are, to the extent permitted by law, expressly waived and released as a
condition of, and as a consideration for, the execution of the Lease Documents.
(b) The Obligations and agreements of the Agency contained herein shall not
constitute or give rise to an obligation of the State of New York, or the Town
of Waterford, New York and neither the State of New York nor the Town of
Waterford, New York shall be liable thereon, and further such Obligations shall
not constitute or give rise to a general obligation of the Agency, but rather
shall constitute limited obligations of the Agency payable solely from the
revenues of the Agency derived and to be derived from the lease or other
disposition of the Facility.
(c) Notwithstanding any provision of this Lease Agreement to the contrary,
the Agency shall not be obligated to take any action pursuant to any provision
hereof unless (i) the Agency shall have been requested to do so in writing by
the Company and (ii) if compliance with such request is reasonably expected to
result in the incurrence by the Agency (or any member, officer, agent, servant
or employee of the Agency) of any liability, fees, expenses or other costs, the
Agency shall have received from the party making such request security or
indemnity satisfactory to the Agency for protection against all such liability
and for the reimbursement of all such fees, expenses and other costs.
Section 12.10. Recording and Filing. This Lease Agreement or a memorandum
thereof shall be recorded by the Agency in the Office of the Clerk of Saratoga
County, New York, or in such other office as may at the time be provided by law
as the proper place for the recordation or filing thereof.
Section 12.11. Subordination. This Lease Agreement and the rights of the
Company hereunder are in all respects subject and subordinate to the Mortgage.
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IN WITNESS WHEREOF, the Company and the Agency have caused this Lease
Agreement to be executed in their respective names by Authorized
Representatives, and the Agency and the Company have caused this Lease Agreement
to be dated as of March 16, 1998.
WATERFORD INDUSTRIAL
DEVELOPMENT AGENCY
By: /s/ JOHN E. LAWLER
--------------------------
John E. Lawler, Chairman
GRAND LLC
By: /s/ Nourollah Elghanayan
--------------------------
Nourollah Elghanayan
STATE OF NEW YORK )
COUNTY OF Albany ) ss.:
On this 18th day of March, 1998 before me personally came JOHN E. LAWLER,
to me known, who being by me duly sworn, did depose and say that he resides in
the Town of Waterford, New York, that he is the CHAIRMAN of WATERFORD INDUSTRIAL
DEVELOPMENT AGENCY, the public benefit corporation of the State of New York
described in and which executed the within Lease Agreement; and that he signed
his name thereto by authority of such public benefit corporation.
/s/ CHRISTOPHER M. SCARINGE
----------------------------------------
Notary Public
CHRISTOPHER M. SCARINGE
Notary Public, State of New York
No. 4976097
Qualified in Albany County
Commission Expires January 14, 1999
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STATE OF NEW YORK )
COUNTY OF Suffolk ) ss.:
On this 16th day of March, 1998, before me personally came Nourollah
Elghanayan to me known, who being by me duly sworn, did depose and say that he
resides in 135 Engineers Rd, Hauppauge, NY, that he is a member of GRAND LLC,
the business limited liability company described in and which executed the
within Lease Agreement and that he had authority to sign the foregoing
instrument on behalf of said company; and that he duly acknowledged to me that
he executed the foregoing instrument as the act and deed of said corporation.
/s/ ROBERT JOSEPH KNOPF
----------------------------------------
Notary Public
ROBERT JOSEPH KNOPF
Notary Public, State of N.Y.
No. 4627472
Qualified in Suffolk County
Commission Expires: June 30, 1998
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