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HomeMy WebLinkAbout1998-08-10 98-330 ORDERCOUNCIL ACTION Item No. W-330 Date August 10, 1998 Item/SUblect: Authorizing City Manager to Execute Lease Amendment and Related Documents for General Electric Company/Bangor Target Area Development Corporation Loan Refinancing Responsible Department: Legal Since 1992, Bangor Target Area Development Corporation and General Electric Company have borrowed some $18 million from Fleet Bank of Maine to fund leasehold improvements and equipment purchases at GE's Bangor turbine plant. Amounts borrowed have helped GB expand and retain jobs at the Bangor facility. The City, through the Airport Fund, has loaned GB an additional $3 million for these purposes. Amounts borrowed from Fleet Bank are repaid in part through a tax increment financing plan approved by previous City Councils, and by an increase in, and assignment of, rents payable (cont'd on next page) F1 PrArT/0 "Mir Associated Information: Assignment and Subordination Agreement, Consent and Agreement, Conditional Assignment of Leasee and Rentals Finance Director (� • ����il'r C4 C ity solctor Introduced For Passage First Reading Referral Page 1 of 14 Department Head Manager's Comments: F1 PrArT/0 "Mir Associated Information: Assignment and Subordination Agreement, Consent and Agreement, Conditional Assignment of Leasee and Rentals Finance Director (� • ����il'r C4 C ity solctor Introduced For Passage First Reading Referral Page 1 of 14 by GE to the City. In addition to assignments of the additional rent amounts, the City also has consented to collateral assignments of GE's lease as partial security for repayment of the Fleet loans. On July 319t, the various Target/General Electric/Fleet loan balances presently outstanding were consolidated into a single $18.2 million, 20 year obligation. The refinancing will reduce the present loan interest rate, with a corresponding financial benefit to General Electric -Bangor. The refinancing will help General Electric -Bangor retain a competitive advantage over other GE facilities in its efforts to retain work and jobs here. General Electric Company has guaranteed repayment of the refinanced loan obligation. ' The attached Order would direct the City Manager to execute amended versions of a "Assigmaent and Subordination Agreement" and a "Conditional Assignment of Leases and Rentals" to conform our previous assignments and security documents to the terms of the refinanced obligation. Since loan repayments by GE are structured as a pass-through item under the GE/City lease, the net amounts retained by the City as rent under the lease will not change. The Order also would direct the City Manager to execute a lease amendment, to conform the lease provisions to the new loan documents, plus an "Addendum to Lease", which essentially will specify the new amount of GE's pass-through monthly rental payments. The lease amendment and addendum are presently being drafted. A short summary is that the attached Order would facilitate the recent Target/General Electric/Fleet loan refinancing, without affecting net rentals received by the City, or other material provisions Of the current GE lease. The Finance Committee recommends approval 98-330 Setas to Cauneeor Crowley August 10. 1998 CITY OF BANGOR Authorizing City manager to Execute Lease Amendment (TIRE.) (PCbEr,---....... __. ......... ......... ........ and Related Documents for General Electric Company/Bangor Target Area Development _..... .....CPTpOSyLS4n.aOdn Refinancing ...-_ ....... By City Council of its C ty ofBae9ot ORDERED, TMT WHEREAS, since 1992, Bangor Target Area Development Corporation has borrowed some $18 million from Fleet Bank of Maine for the purpose of funding leasehold improvements and equipment purchases by General Electric Company's Bangor, Maine turbine production facility; and WHEREAS, for the purpose of repaying the several amounts loaned by Fleet Bank to Bangor Target, General Electric Company has previously consented to increases in the amounts paid by General Electric to the City of Bangor as rent for facilities leased by General Electric at Bangor International Airport, with the additional rental amounts assigned to Bangor Target and Fleet Bank; and WHEREAB, on July 31, 1998, Bangor Target, General Electric and Fleet Bank consolidated and refinanced the remaining balances on the previous loan transactions into a single, $18.2 million financing; and WHEREAS, the City of Bangor has been asked to amend its existing leases, assignment, and collateral assignment documents in a manner consistent with the Target/General Electric/ Fleet loan refinancing; and . WHEREAS, the net amounts to be retained by the City of Bangor as rent from General Electric under General Electric's existing lease are unaffected by the July 31st refinancing and by the documents to be executed by the city; NOW, THEREFORE, by the City Council of the City of Bangor, be it ORDERED, TMT the City Manages 1s hereby authorized and directed, on behalf of the City of Bangor, to execute the following documents in connection with the July 31st Target/General Electric/Fleet loan refinancing: IN CITY COUNCIL August 10, 1998 Motion for Passage Made and Seconded Passed e. m I CLEHR 98-330 ORDER Title, Authorizing City Manger to Execute Lease Amendment and Related Docunente for General Electric CorP- nkalibfi%Haugbi' Rab'geto 11ea Ye el!o eE't' Corporation Loan Refinancing ......�....(///... I.... (...fir. (.�........,(............. . l A" ww nc�' -(y ........... 7q�?!£.Y................ Councilmen 9&-330 ASSIGNMENT AND SUBORDINATION AGREEMENT This Agreement made this 3 I day of July, 1998, by and between the City of Bangor, a body politic end corporate, duly organized and existing under and by virtue of the laws of the Stare of Mains and being located in pewbseot County, Maine (hereinafter sometimes referred to as the Assignor); Bangor Target Area Development Corporation, a Maine corporation having a place of business in Bangor, Maine, (hereinafter sometimes related to as the Assignee); and Fleet Bank Of Maine, a banking corporation having a place of business in Bavgm, Maine (hereirafter referred re as Fleet Bank). WHEREAS, the City of Bangor, as "Lessor," and General Electric Company, as Texas, - am parties to a cermin'Amended and Restated Indenture of Lease," dated lune 30, 1993, a curtain "First Amendment to Amended and Restated Indenture of Lease," dated August 30, 1994, a certain "Second Amendment to Amended and Restabd lndeomre of Ism," dated June 23, 1995, and a certain "Third Addendum to Lease," dated May 20, 1997, (the Lease); and WHEREAS, said Lease describes certain land located iv said Bogor, including building thereon, described in Exhibit A attached hereto; used WHEREAS, said Lease has bom the subject of certain addenda dated September 29, 1995, May 17, 1996, am May 20, 1997; WHEREAS, the lease comtimtes co8amrd for a certain loan from Fleet Bank to Assignee, in the amount of $17,892,433.67, dated July 31, 1998 (the loan) NOW, THEREFORE, in consideration of the foregoing recitals, the City of Bangor, Bangor Target Ares Development Corporation, zeal Fleet Bank of Maine, effective as of the dare hereof, agree as follows: 1. Assignment. Assignor hereby assigns m the Assignee, Assignor's interest under the Lease, as amended by a "Fourth Amendment m Amended and assumed Indenture of Lease," dared July 31, 1998, together with au metals due from General Electric Company re rhe Assignor under said Lease in an amount to fully cover total debt service requirements under a low from Fleet Bank m Assignee by a minimum of 1:1. 2. Right of Further Aecigzan . Assignee shall have the idl right to fuller msign said leasehold rights and all rentals due under the Leae as they relate to said premises to Fleet Bank as security for said loan. In the event General Electric Company nabobs in performance of any of the terns and conditions of the Kase to be performed by it so that the Jesse would otherwise be temdmted, it is hereby agreed by Assignor, Out for so long as the loan obligations from Bangor Target Area Developareat Corporation to Fleet Bank to pay the loan evidenced by 98-330 the Promissory NOW rimed July 31, 1998, in the orighat principal amain of Sevemeea Million Eight Hundred Ninety -Two Thousand Far Hundred Thirty -Three and 67/100 Dollars ($17,892,433.67) remains unpaid, Fleet Bank shall have the right to lease to my party the premises under thou Iease, on such terms and conditions as it deems necessary in its sole discretion and receive all rentals therefrom to order m pay said promissory notes from the net proceeds of said rentals aper the pay neat of Fleet Bank's expenses incurred in the recoil process, in the event Fleet Bank elects to do so. 3. R +a._,� dous Material Assignor coverams to indemnify and save harmless Assignee and Fleet Bank, its successors and assigns, as assignee from Bangor Target Area Developmeat Corporation, against ary and all claims, demands or liability that may be asserted against Assignee, or Fleur Bantc, its successors and assigns, in this event haxaedas materials, as defined in the Lease, are discovered on, in or under the demised premises. 4. Ik11R. This Assigmnent and ell right; granted bereuom re Assignee, its successors and assigns, shall take effect on the date hereof and shall automatically laminate and revert to the Assignor upon the payment in fall a said loana to Fleet Bank. S. Subordinad . The City of Bangor hereby agrees to subordinate and hold its interests junior and subject to the rights of Fleet Bank under dria Assigmnert an all realms due and to become due from Geral Electric Company under said Lease. The City of Bangor hereby further agrees dnt my and all indebtedness and obligations now owing or hereinafter incurred by Bangor Target Area Developmpa Corporation m the City of Bangor, relating to the Lease or the said land described is the Lease, or any other collateral given to secure said indebtedness and obligations, are and will be suboA mte, junior and subject mint indebtedness and obligations owed by Bangor Tag& Area Development Corporation to Fleet Bank. Fleet Bank may restrict paymets on any and 0 debts from Bangor Target Area Development Corporation to the City of Bangor, as it deems necessary. 6. Assignor's Right to (l,wDefibul . Notwithstanding rise provisions of Paragraph 2 above, the City of Bangor remises the right m care or cause to be cured any default by the 6enmm Electric Compmy of its original Iease or of Bangor Target Area Development Corporation under its Note that would otherwise trigger an exemia of rights by Bangor Target Area Development Corporation or Fleet Behr or their respective successors or assigns under this Assignment and Subordination Agreemat, within thirty (30) days from fisc date of written entice to the City of Bogorof such a defah. Seasonable cure aany such dc&idi by Ne CityaBangor shall prevent any exercise of the rights granted under this Assignment and Subordination Agreement, with respect m such default, and shall prevent any acceleration of tbe promissory rwte referred to in Paragraph 2 above. Any are of a default by the City of Bangor in exercising its rights bereunder shall not be construed as a waiver of any fugue rights of Bangor Target Area Development Corporation or Fleet Bank N the event of any subsequent default. 7. Application of i.ease Payment. The parties berm agree that ramal payment amoums received under the Lease, in amounts sufficient to pay amounts due ands the loan, shall he forwarded to Fleet Bank for application to the loan. -2- S.y:cecenrrcand Agip. This Assignor ant and Subordination Agreement wpl bind and inure to the benefit of the parties hereto, and thew successors aM assigns. Wittess: City of Bangor By Edward A. Barren Its City Manager, duly authorized Bangor Target Area Development Corporation By �c ds�h Samford ¢ Its Executive Manager, duly authorized Fleet Bank of Maine By et C. Buttenhuy Its Vice Preside STATE OF MAINE Penobscot County TO, Personally appeared the above named Edward A. Barred, City Manger of the City of Bangor, and actmowledi ed the foregoing instrumem to be his free act and deed in his said capacity and the free act and deed of said body corporate. Notary Public/Ammey at Law Print or type name as signed -3- General Electric Company hereby consents to the above Assignment: and Subordination Agreement, without releasing the Assignor of theAssignor's obligations order the Lease, and hereby agrees that Generd Electric Company wHI be obligated to perform under the lease regardless of the condition of dee facility at the leased premises or the extent of General Electric Company's usage of said facility. General Electric Company / Dated: July 31, 1998 By Stephen R. Gmebert Its Plant Manager, duly authorized CA 9 a 1011i n byMy 03 Y1] :a 6-0 Erik M. Saanpfel, Esq. City Solicitor, City of Bangor eorrow=me.ero, r.,ad Am a aevvw t� seem d 98-330 CONDITIONAL ASSIGNMENT OF LEASES AND RENTALS This Agreement is made by and between Bangor Target Area Development Corporation, a Maine corporation having a place of business in Hanger, Maine, hereinafter called Assignor, and Fleet Bank of Maine, a Maine corporation having a place of business in said Bangor, hereinafter called Lender, witnesses that Assignor hereby gravis, transfers, and assigns to Leaden, lender's sarcoma and assigns, upon the terms and conditions sec fonhbelcw. all of me right, tide, and interest of Assignor in and an all nems, issues, and profit r amd from the prey ses described in Exhibit A avached hereto and made a pan hereof, and in and m the Lease by and between the City of Bangor and General Blecutic Company, dated Jure 30, 1993, as amended August 30, 1994, tore 23, 1995, May 17, 1996, May 20, 1997, and July 31, 1998, and assigned to Assignor. Thus Assignment is for the purpose of securing the payment of a Promissory Now in the original principal amowt of seventeen mikes eight hundred ninety-two thousand four hundred thirty-three and 67/100 dollars ($17,892,433.67) (hereinafter called the Note), and aro and all other sums now or at any true hereafter due Len tr; and the performance and discharge of each obligation, comment, and agreement of the Assignor contained herein in the Note seemed thereby, or the Joan Agreement dated July 31, 1998, or the Loan Commitment Teter dated July 22, 1998, the terms of which instruments; are incorporated herein as fully as if completely set forth herein. Terms and Conditions 1. This assignment shall become operative upon any default being made by the Assignor under the across of the Note, the Loan Agnexaem or said loan Commitment letter, and shall remain in full force and effect so long as any default continues w exist in me matter of malong of any of the payments or the performance of any of the obligations set forth in me Note, the Loan Agreement and the said Loan Commitment Leiter. 2. The lender agrees that upon use payment in Poll of all irdebtedra ssecured hereby, anis assignment shot automatically become and be void and of an effect witimut the need for any former recorded release or other dooament. 3. The Assigner hereby aumorizea the Leader, by the Leader's employees or ager$, at me Lender's option, after the aceunnnce of a default as aforesaid, to give notice of ilas assignment and such default to lessees, to require said lessees to remit all payments payable to de Assignor to the Lender, and to enter upon said premises and culler, in the name of the Assigner or in the Lend o's own nave, the rem accrued but unpaid and in arrears at me dam of such default, as well as the rends thereafter acmuiag and becoming payable during the period of me mrnimavice of the said default or any other default Lender shall send a copy to me Assignor of me notice m lessees. The Assignor flame[ agrees that the AsslgM[ will facilrum h1 all reasonable ways me Lender's collection of said rens. 4. The Assignor also hereby authorizes the Lender upon such entry, at the Lender's option, to take over and assume the management, operation, and numateretse of the said promises of the Assignor and to perform all acts necessary and proper and In expert such sums out of the income of rhe leased property as may be reedf d tu connection therewith, in the same mmmer and to the same extern as the Assignor fberemfose might do, including the right to effect new leases, to cancel or surrender existing leases, to alter or amend the terms of existing leases, to renew existing leases, or to make concessions to tenants. The Assignor hereby releases any and all claims against the Leader arising can of such management, operation, and mainammace, excepting the liability of the lender to account as hereinafter ser forth. 5. The Lender shall, after payment of all proper charges and expenses, including reasonable compensation to such managing agent as the lender may select add employ and after the accumulation of a reserve to most was, assessments, insurance premiums, and other charges, credit the set amount of income received by the Lender from the property by vhwe of this assignment, to any ammuus due and owing to the Lender by the Assignor under the terns of the Nae, but de mmmer of the application of such ret income and what items shall be credited shall be determined in the sole discretion of the Lender. The Lender shall not be srcoumabie for more moneys than the Leader actually receives from the property, nor shall the Lender he liable for failure rot collect rents. The Lender shall make reasonable effort an collect toms, reserving however, within the lender's own discretion, the right to determine the method of collection and the extent m which enforcement of collection of delinquent terra should be prosecuted. 6. In the event, however, that de Assignor shall reinsmre the loan completely in good standing, baying complied with all the terms, covenants, and conditions of the Note, Nen the Lender within one month after demand in writing shall redeliver possession of the property to the Assignor, who shall remain in possession unless and until another default occurs, an which rime the Leader may m the Ierdei s option again take possession of the property under authority of this assignment 7. The Assignor hereby ravenous and warrants to the Lender that neither rhe Assignor, err any previous owner, has executed any prior assignment or pledge of the rentals of the property, nor any prior assignment or pledge of the Assignor's interest in any lease of the whole or any part of the property, except for the C Witiom d Assignment of Leases mad Rentals given by tad Assignor to the lender, dated August 4, 1993, and recorded in fine Penobscot Cmmty Registry of Lleeds in Book 5395, Page 239; the Find Amendment to Conditional Assignment of Leases and Rentals given by the Assignor to the Lender, dated August 30, 1994, ami recorded in said Registry in Book 5712, Page 44; the Second Amendment to Conditional Assigmnent of Leases and parrots given by the Assignor in the Lender, dated ]ace 23, 1995, and recorded in said Registry htBook 5888, Page 005; the Third Amendment m Conditional Assignment of Leases and Rentals given by Assignor to de Lender, dated May 17, 19% and recorded in said Registry in Book 6122, Page 229; and the Conditional Assignment of Leases mrd Rentals given by me Assignor to the Lender dated May 20, 1997, and recorded in said Registry, in Book 6400, Page 56. The Assignor also hereby covenants and minas rot m collect the reeds of the said premises in advance, other than as regahed to be paid at advance by the terms of any rental agreernenn, -2- 98-330 and further agrees not do any other act which would destroy or impair the beaefits to the Lender of this assignment. 8. The City of Baoga, by virtue of its concern to lids Conditional Assignment of Lease ani Rentals, agrees dist it will out consent to any assigmnent by the lessee, General Electric Company, of its interest in the lease from the City of Bangor to General Blechic Company under the provisions of Article XVm, without sawing the prior wriana consent of the Lender, which will give its consent in accordance with dna criteria set forth in said paragraph, unless the assigrunent is to any affiliate or subsidiary of the lessee, Gmeml Elecok Company, which may be made without stub consent. 9. This aseigmnad shall remain in full forte and effect as long as the Note in Lender remain unpaid iv whole or in part. In witness whereof, the Assignor has caused this insUument to be signed and sea1M this 31st day of July, 1998. Witness: Bangor Target Area Development Corporation E;2 Sandfo d B IN Execudve Manager, duly anthoriud Fleet Back of Maine By NC.' Bui[wboys Its vice President STATE OF MAINE Penobscot Carry July 31, 1998 Personally appeared one above named Sandford Blue, Executive Manager of Bangor Target Area Development Corporation. and acknowledged before me the foregoing instnonent in be his free act and deed in his said capacity and the free act coal dad of said conporadov. CYJ � L k� Pkarry- abliclAttmneeyy a a law Print or type name as signed -3- The undersigtred hereby conaeN to Ws Coon idonal Assigmnent of Leases and Rentals. Dated: July 3l, 1998 Witness: Genual Electric Company By Stephen ]]]kkk e Its Plan[ Manager, duly authorized City of Bangor By Edward A. Barrett to City Manager, duly authorized APPROVED AS TO FORM: Erik M. StumPfel, Esq. City Solicitor, City of Bangor SCHEDULE B City of Bangor -Bldg. Nos. 273, 466, 487, 488 and 498 located in Bangor, Penobscot County, Maine, on real property more particularly described as follows: PARCEL ONE: Beginning at the itnasection a the east Bne of Florida Ave, and the north line of Johnson St.; dame N 38 1l' 26" E, by and along the east side of Florida Ave. nine hundred thirty-five (935) fen to the west line of Maine Ave; thence S 38 39' 14" E, by and along the west Jim of Maine Ave. ore hundred forty -thee (143) fen to the begusaing of a curve to the right with a mfflum of one thoassnd two hundred ninety-five (1,295) feet; thence by wall along said curve to the right one hundred twenty -flume and thi rysix hundredths (123.36) fat to the beginning of a curve to the right with a radius of three hundred ten (310) fat; theca by and along said curve to the right two hundred seventeen and su tenths a17.6) feet to a point; thence S 0101' 13" W one hundred eight and thirty-one hundredths (108.31) fat to the beginning of a curve to the right with a radius of five hundred seventy (570) feet; thence by and along said curve to the right two hundred forty-seven ant chitty -one hundredths (217.31) fat to a point; thence S 31 52' 48" W one hundred eighteen and twenty-five hurdreidw (118.25) feet to a point; thence N 51 48' 34" W two banned sixty-seven and one hundredth (267.01) feet W a point; thence S 3$ 11' 26" W two hundred niary-two and forty-three hundredths (292.43) feet to a point on the north side of Johnson Sr thence N 5l' 52' 43" W by ant along said rerdt line of Johnson St. three hundred five (305) feet to the point of beginning. The above described parcel of land is oriented to magnetic north and contains eight ant sixty-seven hundredths (8.67) acres. The above description was prepared by lames M. Greer, P.L.S. #1129, 73 Harlow St., Bangor, Maine. PARCEL TWO: A camp lm of Wed in said Bangor, being a portion of Former Dow AirFmm Baa,consistingoftwoparcelslocatednorthathe Leavydutyapronandadjacentm Gri mRoad, more fully described as follows: 6egimtng at a point on the southeasterly side of Griffin Road and the southwesterly side of a street known as Nevada Street, said poet having coordinates a north 357,590.48, east 416,837.38 in the Maine Coordinate System, east zone; thence S 45 44' 48" E on a line parallel to the southwesterly edge of Nevada Stan 602.24 fen to a point located on the northwest side of a roadway known as Polk Street; thence S 44 23' 15" W along the westerly edge of Polk Street 982.13 fat to a point on the northeast edge of the heavy duty apron; thence N 45 37' 22" W along the northeasterly edge of said heavy duty apron 452.72 feet to a point on the southeast side of Griffin Road; 041 9 330 then N 35' 43' 12" E along the southem side of aiffn Road 992.14 feet to Ne point of begiwing. The above desaibed parcel contains 11.89 attes. 0 98-330 ° "Assignment and Subordination Agreement", in the form attached to this Order. 0 'Conditional Assignment of Leases and Rentals", in the form attached to this Order. 0 "Fourth Amendment to Amended and Restated Indenture of Lease", in a form approved by the City Solicitor. ° 'Fourth Addendum to Lease in a form approved by the City Solicitor.