<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C.
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended September 30, 1995 Commission File Number 1-584
FERRO CORPORATION
An Ohio Corporation IRS Number 34-0217820
1000 LAKESIDE AVENUE
CLEVELAND, OHIO 44114-1183
216/641-8580
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
---- ----
At October 31, 1995, there were 27,302,366 shares of Ferro common stock, par
value $1.00, outstanding.
<PAGE> 2
PART I FINANCIAL INFORMATION
Item 1 Financial Statements
The consolidated Balance Sheets as of September 30, 1995 (unaudited) and
December 31, 1994, and the Consolidated Statements of Income and Consolidated
Statements of Cash Flows for the three and nine months ended September 30, 1995
and 1994 (unaudited) of Ferro Corporation and Subsidiaries are set forth in
Exhibit 20 hereof which is incorporated by reference herein.
Those financial statements, which are subject to year-end audit adjustments,
should be read in conjunction with financial statements and notes thereto
included in the Company's annual report for the fiscal year ended December 31,
1994.
Cash dividends were paid at the rate of $0.135 per common share in the third
quarter of 1995 and 1994. Cash dividends on preferred shares were paid at the
rate of $0.81 per preferred share in the third quarter of 1995 and 1994.
Net sales and net income for the three months ended September 30, 1995 were
$310.8 million and $9.8 million ($0.31 fully diluted earnings per common share)
as compared with net sales and net income of $296.8 million and $11.6 million
($0.36 fully diluted earnings per common share) for the corresponding 1994
period. The foregoing figures are unaudited, but in the opinion of the
Management of the Company, all adjustments (consisting of normal recurring
accruals) necessary for a fair presentation thereof have been made.
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Comparison Between Three Months Ended September 30, 1995 and 1994
- -----------------------------------------------------------------
Net Sales. Third quarter 1995 sales of $310.8 million were 4.7% greater than
the $296.8 million of the comparable 1994 period.
Sales increased for all business segments, except for plastics, and all
geographic regions, except for Latin America. Sales for Coatings, Colors and
Ceramics and for Chemicals increased 4.5% and 18.8% respectively, while
Plastics sales decreased by 6.1%.
The variety of products sold by the Company makes it difficult to determine
with certainty the increases or decreases in sales resulting from changes in
physical volume of products sold and selling prices. However, Management's
best estimate is that the 4.7% increase
<PAGE> 3
in sales comprises: volume, 1.0%; exchange, 1.9%; price/mix, 3.1%; and
divestitures, (1.3)%.
Cost of Sales. Gross profit as a percent of sales was 22.5% as compared with
24.8% for the comparable 1994 period. Much of this is due to a large volume
drop in Latin America, as well as volume decline in domestic automotive and
major appliance segments.
Selling, administrative and general expenses. Such expenses as a percent of
sales declined from 17.8% in 1994 to 16.5% in 1995. They also declined in
dollar terms in response to continued cost control efforts.
Interest expense. The increase in interest expense is primarily attributable
to interest on the $50.0 million, 8% debentures discussed further in LIQUIDITY
AND CAPITAL RESOURCES.
Net foreign currency gain or loss. The change is primarily attributable to
transaction gains in European operations.
Other income/expense. Net other income was $1.3 million, compared with the
comparable 1994 period expense of $0.6 million, comprised of numerous income
and expense items.
Income taxes. Income taxes decreased slightly, primarily due to a lower level
of income.
Geographic discussion. European sales increased by double digits for each of
the core businesses and European operating profits improved as the recovery in
Europe continued. Sales were up marginally in the United States and Canada,
while operating income declined slightly due largely to weakness in durables,
mainly automotive and major appliances. Sales and operating profit in Latin
America declined for the second consecutive quarter due to overall
macroeconomic conditions in the region. Asia-Pacific sales were nominally
improved, but operating income declined somewhat due to margin pressures in
several of the markets served in the region.
Comparison Between Nine Months Ended September 30, 1995 and 1994
- ----------------------------------------------------------------
Net sales. Consolidated sales for the nine months ended September 30, 1995
were $988.0 million or 12.2% greater than those for the comparable 1994 period.
Management's best estimate is that the increase in sales comprises: volume,
5.6%; exchange, 3.2%; price/mix, 3.7%; acquisitions, 1.2%; and divestitures,
(1.5)%.
Cost of Sales. Gross profit as a percent of sales declined, from 25.1% to
24.2%, primarily due to the volume declines previously discussed for the 1995
third quarter.
Selling, administrative and general expenses. These expenses increased 7.4% in
dollar terms, due to the $5.6 million severance charge taken in the first
quarter 1995 and the higher level of sales and the incremental expenses
associated with the 1994 acquisitions.
<PAGE> 4
Interest expense. The increase in interest expense is primarily attributable
to interest on the $50.0 million, 8% debentures discussed further in LIQUIDITY
AND CAPITAL RESOURCES.
Net foreign currency gain or loss. Net loss for the 1995 period was $0.1
million as compared with the 1994 period loss of $0.8 million.
Other income/expense. Net other income increased by $1.3 million, comprised of
numerous income and expense items.
Income taxes. Income taxes increased $3.1 million, primarily reflecting the
higher level of income.
Geographic discussion. To date, European sales increased in all core
businesses, as did operating profit. Sales in the United States and Canada
also increased in all businesses. Operating profit in the United States and
Canada increased, largely due to continued improvements in the chemicals
business. Latin American sales and operating profit were down, as significant
declines in the second and third quarters due to economic conditions in the
region offset the gains made in the first quarter 1995.
Liquidity and Capital Resources
- -------------------------------
Working capital. Working capital was $64.7 million greater at September 30,
1995 than at year-end 1994, primarily due to the increase in cash and
marketable securities resulting from the issuance of 8% debentures in the
amount of $50.0 million which are further discussed in Financing requirements
and resources below.
Cash flow. Net cash provided from operating activities for the nine months
ended September 30, 1995 was $73.0 million. The increase in Net Cash Provided
by Financing Activities is due to the issuance of the 8% debentures discussed
above and further in Financing requirements and resources below.
Financing requirements and resources. The long-term debt to equity ratio was
33.6% at September 30, 1995, excluding the loan guarantee of the Employee Stock
Ownership Plan adopted in April 1989. This compares with 21.2% at December 31,
1994. The ratio increase is due to the issuance of 8% debentures in the amount
of $50.0 million due 2025. The debentures were issued on June 20, 1995 under
the Company's Shelf Registration previously filed with the Securities and
Exchange Commission. The proceeds of the 8% debentures will be used for
general purposes, including redemption of the $50.0 million 11 3/4% debentures,
redeemable at par, in October, 1995. The Company expects to be able to meet the
financial requirements of its existing businesses from existing cash and cash
equivalents and future cash flow. The Company has available to it a $150.0
million five-year revolving credit facility with four domestic banks. There
were no borrowings under this facility as of the end of the quarter. The
Company also had up to $25.0 million of
<PAGE> 5
additional debt or equity available under its Shelf Registration. (See Other
Significant Developments for related subsequent developments.) Additionally,
the international subsidiaries have credit facilities available.
Other Significant Developments
- ------------------------------
Subsequent to the end of the quarter, the Company:
Completed the acquisition of certain businesses of Synthetic Products
Company (Synpro) from Cookson Group plc., of London, England.
Completion of this acquisition establishes Ferro as one of the largest
producers of polymer additives in the world;
Redeemed at par the $50.0 million, 11 3/4% debentures;
Issued, on November 7, 1995 7 3/8% debentures in the amount of $25.0
million. This issuance exhausts the Company's Shelf Registration
filed in 1992 in the original amount of $100.0 million.
Filed a $300.0 million Universal Shelf Registration with the
Securities and Exchange Commission. Securities issued under this
shelf registration will be used for general corporate purposes,
including capital expenditures, acquisitions and repayment of
indebtedness.
PART II OTHER INFORMATION
Item 1 Legal Proceedings.
An agreement in principle has been reached to settle the suit filed in August
1993 by the United States Environmental Protection Agency alleging violation of
the Clean Water Act and the River and Harbors Act by the Company and several
other defendants. Subject to the negotiation of an acceptable consent decree,
the Company will agree to pay a civil penalty of $0.4 million and to pay $1.4
million into a fund to be established to help clean up sediment in the West
Branch of the Grand Calumet River. Terms of the consent decree are still
being negotiated.
Item 2 Change in Securities. No change.
Item 3 Default Upon Senior Securities. No change.
Item 4 Submission of Matters to a Vote of Security Holders. None.
Item 5 Other information. None.
Item 6 Exhibits and Reports on Form 8-K.
<PAGE> 6
The Company has not filed any reports on Form 8-K for the
quarter ended September 30, 1995.
Exhibit 10 - Material Contracts
(a) Various agreements relating to an Asset
Defeasance Financing including a Participation
Agreement dated as of October 31, 1995 among Ferro
Corporation, State Street Bank and Trust Company
(not in its individual capacity but solely as Trustee),
the financial institutions named as Purchasers, and
Citibank N.A, as Agent, and a Lease dated October 31,
1995 between State Street Bank and Trust Company (not
in its individual capacity but solely as Trustee),
as Lessor and Ferro Corporation as Lessee. The
additional agreements are available upon request.
(b) Amended and restated Executive Employment Agreement dated
July 28, 1995.
Exhibit 11 - Statement Regarding Computation of Earnings Per Share.
Exhibit 12 - Ratio of Earnings to Fixed Charges.
Exhibit 20- The Consolidated Balance Sheets as of September
30, 1995 (Unaudited) and December 31, 1994, and the
Consolidated Statements of Income and Consolidated Statements
of Cash Flows for the three months and nine months ended
September 30, 1995 and 1994 (Unaudited) of Ferro Corporation
and Subsidiaries.
Exhibit 4(b)(4) - Amendment Number 7, dated October 25, 1995
to the Revolving Credit Agreement by and between Ferro
Corporation and four commercial banks dated August 22, 1990.
A copy of such amendment is attached hereto as Exhibit 4(b)(4).
Exhibit 27 - Financial Data Schedule
<PAGE> 7
S I G N A T U R E S
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FERRO CORPORATION
(Registrant)
Date: November 14, 1995
/s/Hector R. Ortino
-----------------------------
Hector R. Ortino
Executive Vice President and
Chief Financial-Administrative Officer
Date: November 14, 1995
/s/ Gary H. Ritondaro
-----------------------------
Gary H. Ritondaro
Vice President, Finance
<PAGE> 1
EXHIBIT 4(b)(4)
SEVENTH AMENDMENT TO CREDIT AGREEMENT
This Seventh Amendment to Credit Agreement (this "AMENDMENT") is made as of
October 25, 1995 by and between Ferro Corporation (the "BORROWER") the four
banks (collectively the "BANKS" and each a "BANK") executing and delivering
this Amendment and National City Bank as the agent (in that capacity the
"AGENT") of the Banks for purposes of the Credit Agreement referred to below,
as that Credit Agreement may be amended from time to time:
WHEREAS:
I. The Borrower, the Banks and the Agent are parties to a Credit
Agreement dated as of August 22, 1990, as amended by an Amendment Agreement
made as of May 31, 1991, as further amended by a Second Amendment to Credit
Agreement made as of July 30, 1991, as further amended by a Third Amendment to
Credit Agreement made as of December 31, 1991, as further amended by a Fourth
Amendment to Credit Agreement made as of July 21, 1992, as further amended by a
Fifth Amendment to Credit Agreement made as of August 20, 1993, and as further
amended by a Sixth Amendment to Credit Agreement made as of June 22, 1995 (that
Credit Agreement as so amended the "EXISTING CREDIT AGREEMENT") providing for,
among other things, Commitments pursuant to which Advances in the aggregate
unpaid principal sum of not more that one hundred fifth million dollars
($150,000,000) are available to the Borrower upon certain terms and conditions
until the Termination Date;
II. The Borrower has requested the Banks and the Agent to agree to
amend Section 5.01(d) (captioned "Tangible Net Worth Ratio") of the Existing
Credit Agreement; and
III. The Banks and the Agent are willing to so agree, subject to the
terms and conditions of this Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and (in the case of the Banks and the Agent), in reliance
upon the representations and warranties of the Borrower herein contained, the
Borrower, the Banks and the Agent hereby agree as follows:
A. Each term used in this Amendment that is defined in the Existing Credit
Agreement shall have the meaning in this Amendment that is ascribed to that
term in the Existing Credit Agreement.
B. Section 5.01(d) (captioned "Tangible Net Worth Ratio") of the Existing
Credit Agreement is hereby amended and restated as follows:
"(d) TANGIBLE NET WORTH RATIO." Maintain a ratio (expressed as a
decimal fraction) of
(i) consolidated total liabilities (including Guaranties but
excluding the Transition Obligation) to
(ii) the sum of consolidated tangible net worth plus an
amount (in no case greater than fifty-five million dollars
($55,000,000)) equal to the goodwill acquired by Borrower from
Synthetic Products Company
<PAGE> 2
("SYNPRO"), a Delaware corporation, as a part of Borrower's
acquisition of all or substantially all of the assets of
Synpro,
of not more than 1.85."
C. The Borrower hereby represents and warrants to each Bank and the Agent that
no event, condition or other thing has occurred and is continuing, or will
occur after giving effect to this Amendment, which constitutes, or which with
the giving of notice or the lapse of any grace period or both would constitute,
an Event of Default. The representation and warranty made pursuant to this
paragraph C shall survive the execution and delivery of this Amendment.
D. The Borrower, the Banks and the Agent do hereby ratify and confirm all of
the terms and conditions of the Existing Credit Agreement not specifically
amended by this Amendment and all such terms and conditions remain in full
force and effect.
E. This Amendment may be executed in one or more counterparts, each
counterpart to be executed by the Borrower, by the Agent and by one or more or
all of the Banks. Any party to the Existing Credit Agreement may deliver an
executed signature page to this Amendment by telecopy to the Agent at the
telecopier number set forth below the Agent's signature, and that party shall
be deemed to have executed and delivered that signature page with the intent to
be bound by this Amendment, PROVIDED, that each party to this Amendment shall,
on the Agent's request, deliver to the Agent such number of counterparts
bearing the original signature of that party as the Agent may request in order
that each party may ultimately have a counterpart bearing the original
signature of each party to this Amendment. Each party to this Amendment hereby
assents to the foregoing procedure for executing and delivering this Amendment
and agrees that all such counterparts taken together shall constitute but one
agreement, which agreement constitutes the entire agreement between the parties
to this Amendment in respect of its subject matter.
Ferro Corporation Citibank, N.A.
By: ____________________________ By: _______________________________
National City Bank, Agent The First National Bank of Boston
/s/ Timothy J. Lathe
By: ____________________________ By: _______________________________
Telecopier: (216) 575-9396
National City Bank Society National Bank
/s/ Timothy J. Lathe
By: ____________________________ By: _______________________________
-2-
<PAGE> 1
EXHIBIT 10 - MATERIAL CONTRACTS
(a) Lease Agreement between State Street Bank and Trust
Company and Ferro
Participation Agreement dated October 31, 1995
Appendix A to the Participation Agreement
(b) Amended and Restated Executive Employment Agreement
<PAGE> 2
LEASE
dated as of October 31, 1995,
between
STATE STREET BANK AND TRUST COMPANY,
not in its individual capacity
except as expressly stated herein, but solely
as Trustee,
-------
Lessor,
------
and
FERRO CORPORATION,
Lessee
------
THIS LEASE HAS BEEN MANUALLY EXECUTED IN COUNTERPARTS NUMBERED CONSECUTIVELY
FROM 1 TO 13. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER
(AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED
THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OF THIS LEASE OTHER THAN
COUNTERPART NO. 1.
This is Counterpart No. __
<PAGE> 3
<TABLE>
TABLE OF CONTENTS
(Not a part of the Lease)
<CAPTION>
Paragraph Page
- --------- ----
<S> <C> <C>
1. Lease of Property; Title and Condition . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Use; Quiet Enjoyment; Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . 2
2A. Construction; Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3. Term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4. Rent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
5. Net Lease; Non-Terminability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
6. Taxes and Assessments; Compliance with Law; Certain Agreements . . . . . . . . . . . . . . 7
7. Matters of Title; Assignability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
8. [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
9. Maintenance, Repair and Property Relocation . . . . . . . . . . . . . . . . . . . . . . . 9
10. Additional Improvements; Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
11. Lessee's Right to Contest Real Property Taxes . . . . . . . . . . . . . . . . . . . . . . 12
12. Condemnation and Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13. Environmental Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
14. Offer to Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
14A. Partial Lease Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15. Procedure Upon Purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
17. Subletting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
18. Permitted Contests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
18A. Unwind Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
19. Default Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
20. Additional Rights; Mortgage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
i
<PAGE> 4
<TABLE>
<CAPTION>
Paragraph Page
- --------- ----
<S> <C> <C>
21. Notices, Demands and Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . 32
22. No Default Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
23. Surrender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
24. Separability; Binding Effect; Governing Law; Non-Recourse . . . . . . . . . . . . . . . . 35
25. Headings and Table of Contents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
26. Lessor's Right to Cure Lessee's Default . . . . . . . . . . . . . . . . . . . . . . . . . 36
27. Lessee's Options Upon Expiration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
28. Limitations on Amounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
29. Waiver of Trial by Jury . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
30. No Merger of Title . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
31. Payments to the Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Schedule A - Description of the Parcel
Schedule B - Fixed Rent and Additional Rent Schedule
Schedule C - Termination Value
</TABLE>
ii
<PAGE> 5
LEASE dated as of October 31, 1995 (this "LEASE") between STATE STREET
BANK AND TRUST COMPANY, not in its individual capacity except as expressly
stated herein, but solely as TRUSTEE, (the "LESSOR"), having an address at 2
International Place, Boston, Massachusetts 02110 and FERRO CORPORATION, an Ohio
corporation (the "LESSEE"), having an address at 1000 Lakeside Avenue,
Cleveland, Ohio. Schedules A, B and C referred to in this Lease are hereby
incorporated by reference herein. Capitalized terms used but not defined herein
shall have the respective meanings set forth in the Participation Agreement
dated as of the date hereof by and among the Lessee, the Lessor, the financial
institutions and Persons named therein and Citibank, N.A. as Agent (as the same
may be amended, modified or supplemented from time to time, the "PARTICIPATION
AGREEMENT").
Preliminary Statement
---------------------
Lessor has acquired (i) fee title to the Fee Parcels described on
Schedule A hereto, (ii) easement interests in the Easement Parcels described in
Schedule A hereto, (iii) a license in the License Parcel described in Schedule A
hereto and (iv) title to the Initial Improvements. Lessor wishes to lease (or
grant license interests in) the Property to Lessee and Lessee wishes to lease
(or receive license interests in) the same from Lessor.
NOW, THEREFORE, the parties do hereby agree as follows:
1. LEASE OF PROPERTY; TITLE AND CONDITION. (a) In consideration of the
rents and covenants herein stipulated to be paid and performed by the Lessee and
upon the terms and conditions herein specified, (i) the Lessor hereby leases (or
licenses) to Lessee the Property, and (ii) the Lessee hereby leases (or
licenses) from the Lessor the Property; it being intended that Lessee shall take
a lease of the Fee Parcels and the portions of the Improvements located thereon,
and shall take a license with respect to the balance of the Property. The
Property is leased (or licensed, as the case may be) to the Lessee subject to
(x) all applicable Legal Requirements and all of the insurance requirements set
forth in paragraphs 16(a) through (c) hereof (collectively, the "INSURANCE
REQUIREMENTS") now or hereafter in effect; (y) all Permitted Encumbrances; and
(z) the terms, covenants and provisions of this Lease. The Lessee has examined
the Property and title thereto and has found the same satisfactory for all
purposes of this Lease.
(b) THE LESSOR MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED,
WITH RESPECT TO THE PROPERTY OR ANY
<PAGE> 6
FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, OR THE LOCATION, USE,
DESCRIPTION, DESIGN, MERCHANTABILITY, SUITABILITY, FITNESS FOR USE FOR ANY
PARTICULAR PURPOSE, CONDITION OR DURABILITY THEREOF OR AS TO THE QUALITY OF THE
MATERIAL OR WORKMANSHIP THEREIN, OR AS TO THE LESSOR'S TITLE THERETO OR
OWNERSHIP THEREOF OR OTHERWISE, IT BEING AGREED THAT ALL RISKS INCIDENT THERETO
ARE TO BE BORNE BY THE LESSEE. IN THE EVENT OF ANY DEFECT OR DEFICIENCY OF ANY
NATURE IN THE PROPERTY OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION
THEREOF, WHETHER PATENT OR LATENT, THE LESSOR SHALL HAVE NO RESPONSIBILITY OR
LIABILITY WITH RESPECT THERETO. THE PROVISIONS OF THIS PARAGRAPH 1(b) HAVE BEEN
NEGOTIATED AND ARE INTENDED TO BE A COMPLETE EXCLUSION AND NEGATION OF ANY AND
ALL WARRANTIES, EXPRESS OR IMPLIED, BY THE LESSOR WITH RESPECT TO THE PROPERTY
OR ANY FIXTURE OR OTHER ITEM CONSTITUTING A PORTION THEREOF, WHETHER ARISING
PURSUANT TO THE UCC OR ANY OTHER LAW, NOW OR HEREAFTER IN EFFECT.
2. USE; QUIET ENJOYMENT; HAZARDOUS MATERIALS. (a) The Lessee shall use
the Property primarily as stearic acid, stearates, lubricants and stabilizers
production facilities, storage facilities and related business offices, in a
first class and reputable manner. The Lessee covenants that it will cause the
Improvements at all times to be located on one or both of the Fee Parcels, the
Easement Parcels or at the Bedford Plant.
(b) During the Term, the Lessor covenants that, unless an Event of
Default, Unwind Event or Environmental Trigger has occurred and is continuing,
it will not, and will not permit any party claiming by or under the Lessor to,
interfere with the peaceful and quiet possession and enjoyment of the Property
by the Lessee; PROVIDED, HOWEVER, that the Lessor, the Agent, the Independent
Engineer, the Environmental Consultant, the Appraiser and their respective
successors, assigns, representatives and agents (the "LESSOR GROUP"), at
Lessor's sole cost and expense, may, upon advance written notice to the Lessee
(unless the Lessor in its sole discretion has reason to believe that a Default
or an Event of Default has occurred or other exigent or emergency conditions
exist, in which case, such entrance and examination shall be at Lessee's sole
cost and expense and no such notice shall be necessary), enter upon and examine
the Property or any part thereof at reasonable times in compliance with and
subject to Lessee's standard safety and security procedures, in effect from time
to time; PROVIDED, FURTHER, that if an Event of Default, Unwind Event or
Environmental Trigger has occurred or if the Lessee has exercised its option to
terminate this Lease pursuant to clause (i) or (ii) of paragraph 27(a), then
Lessee shall give the Lessor Group such additional access to the Property and to
Lessee's books and records relating to the operation, use, maintenance,
construction or occupancy of the
2
<PAGE> 7
Property as it may require for any purpose, including, without limitation, for
marketing, selling, operating or otherwise disposing of the Property.
(c) Lessor, at Lessee's sole cost and expense, shall cooperate or
assist with Lessee's efforts to, file tax returns relating to the Property and
to obtain all services, Permits and contracts necessary and useful for the
construction of the Improvements and the acquisition, operation and maintenance
of the Property for the intended purposes thereof, and the Lessor may, and to
the extent required in paragraph 7(c) shall, execute such documents or papers as
may be reasonably necessary for such purposes. Lessee further covenants that it
shall at its own cost and expense on behalf of and in the name of the Lessor,
apply for, obtain and maintain all Permits required in order to permit the
lawful ownership of the Property by the Lessor during the Term.
(d) Any failure by the Lessor or such other Person to comply with the
foregoing provisions of this paragraph 2 or any other provisions of this Lease
shall not give the Lessee any right to cancel or terminate this Lease, or to
abate, reduce or make deduction from or offset against any Fixed Rent,
Additional Rent or other sum payable under this Lease, or to fail to perform or
observe any other covenant, agreement or obligation hereunder.
(e) The Lessee shall, and it shall require and ensure that any and all
sublessees, employees,contractors, subcontractors, agents, representatives,
affiliates, consultants, occupants and any and all other Persons, (i) comply in
all material respects with all applicable Environmental Laws, and (ii) use,
employ, process, emit, generate, store, handle, transport, dispose of and/or
arrange for the disposal of any and all Hazardous Materials in, on or, directly
or indirectly, related to or in connection with the Property or any part thereof
in a manner consistent with prudent industry practice and in material compliance
with all applicable Environmental Laws, and in a manner which does not then pose
a significant recognized risk to human health, safety (including occupational
health and safety) or the environment.
2A. CONSTRUCTION; FINANCING. (a) The Lessee has entered into the
Agency Agreement with the Lessor pursuant to which the Lessee as Construction
Agent has agreed to complete the construction of the Improvements. The
Improvements shall, as the construction of same is completed upon the Fee
Parcels, or the Easement Parcels, as the case may be, become a part of the
Improvements, and title thereto shall remain in the Lessor.
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(b) In order to finance the acquisition by the Lessor of its interest
in the Parcels and the Initial Improvements and to finance the cost of
construction of the Improvements, the Note Purchasers, as contemplated by the
Participation Agreement, will advance to the Trustee the Actual Project Costs up
to their respective Note Commitments and the Certificate Purchasers will make
Investments in the 1995 Ferro Plant Trust equal to its Certificate Commitment,
and in consideration therefor, the Trustee will issue the Interim Notes, Series
1 A- Notes and Series 1 B-Notes to the Note Purchasers and the Certificates to
the Certificate Purchasers pursuant to the Declaration.
(c) On the Interim Note Maturity Date, the Interim Notes will, as
provided in the Participation Agreement, be refinanced through the issuance of a
specified proportion of Series 2 A-Notes and Series 2 B-Notes to be issued under
the Declaration in an aggregate principal amount equal to the aggregate
principal amount of, and accrued but unpaid interest on, the Interim Notes. The
Lessee agrees to execute and deliver such supplements, amendments, certificates
and other documents which shall reasonably be necessary to effect the issuance
of the Series 2 A-Notes and Series 2 B-Notes.
3. TERM. The Property is leased (or licensed, as the case may be) for
(a) a period of construction (the "CONSTRUCTION PERIOD") which shall commence as
of the date hereof and shall end on the Interim Note Maturity Date; and (b)
thereafter, a primary term (the "PRIMARY TERM" and, collectively with the
Construction Period, the "TERM") ending on October 31, 2000 (the "EXPIRATION
DATE"), or such earlier date as this Lease shall be terminated pursuant to any
provision hereof.
4. RENT. (a) During the Term, Lessee shall pay to the Lessor, Fixed
Rent on each Payment Date in the amounts determined in accordance with Schedule
B hereto.
(b) All amounts that the Lessee is required to pay to the Lessor
pursuant to this Lease (other than Fixed Rent), including, but not limited to,
(i) unpaid Charges and all amounts set forth in paragraph 4(e)(ii) hereof, (ii)
all sums, costs and expenses pursuant to paragraphs 23 and 26 hereof, (iii) all
costs and expenses relating to the Property or the Lessee's use or the Lessor's
ownership thereof, (iv) any and all amounts payable upon transfer or purchase of
(or otherwise relating to) the Property, together with every fine, penalty,
interest and cost that may be added for non-payment or late payment thereof and
(v) Additional Costs, shall constitute "ADDITIONAL RENT". The Lessor shall give
Lessee notice of any Additional Rent due hereunder promptly after it has
knowledge
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<PAGE> 9
of such Additional Rent, and shall use reasonable efforts to notify Lessee in
advance of the due date and amount of such Additional Rent; provided that
failure to give such prompt notice shall not relieve the Lessee of its
obligation to pay such Additional Rent, subject to, as applicable, the
Lessee's rights, if any, under paragraph 18 hereof.
(c) The Lessee shall pay to the Lessor, within 5 Business Days of
demand therefor, interest at the Default Rate on all amounts payable by it to
the Lessor hereunder from the due date thereof until paid in full.
(d) All amounts payable by the Lessee hereunder shall be paid in lawful
money of the United States of America and in immediately available funds by
11:00 a.m. (New York City time) on the applicable Payment Date or on the date
when due, unless any such due date is not a Business Day in which case payment
shall be due and payable on the next succeeding Business Day with the same force
and effect as if paid on the date otherwise due, at the Lessor's address as set
forth in the Participation Agreement, or at such other address or to such other
person in the United States of America or in such other manner as the Lessor
from time to time may designate to the Lessee by written instructions.
(e) The Lessee shall perform all of its obligations under this Lease at
its sole cost and expense and shall pay, when due and without notice or demand
(except as otherwise provided in this Lease), all amounts due hereunder. The
Lessee agrees to pay within 5 Business Days of demand therefor (i) all Charges
(subject to Lessee's rights pursuant to paragraphs 11 and 18) and (ii) all
indemnity obligations and all charges, reasonable fees, expenses and
out-of-pocket costs of the Lessor, the Purchasers, and the Agent, including,
without limitation, the reasonable fees and expenses of the Lessor's Counsel,
the Special Counsel, the Certificate Purchasers' Counsel, the Appraiser, the
Environmental Consultant, the Independent Engineer and the Special Environmental
Counsel (and in the case of (iii) below, attorneys' fees and expenses of other
counsel to the Purchasers), in connection with or arising out of:
(i) the preparation, execution, delivery,
administration, performance, modification and amendment of this
Lease and the other Operative Documents and any other documents
to be delivered in connection herewith or therewith (other than
any Assignment and Acceptance other than the initial assignment
of the particular percentage interest covered by that Assignment
and Acceptance) or delivered to any person who is a party to the
Operative Documents in connection with the Certificate
Purchasers' Investment (solely to the extent such expenses are
caused
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by the preparation, execution, delivery, administration,
performance, modification or amendment of this Lease and the
other Operative Documents); and
(ii) any refinancing or refunding of the transactions
contemplated by the Operative Documents, with respect to
advising any of them as to their respective rights and
responsibilities hereunder or thereunder.
In addition, the Lessee agrees to pay within five (5) Business Days of
demand therefor all indemnity obligations and all charges, fees, expenses, and
out-of-pocket costs of the Lessor, the Purchasers, and the Agent, including
without limitation, the fees and expenses of the Lessor's Counsel, the Special
Counsel, the Certificate Purchasers' Counsel, the Appraiser, the Environmental
Consultant, the Independent Engineer, the Special Counsel and other counsel to
the Purchaser, in connection with or arising out of, the enforcement (whether
through negotiations, legal proceedings or otherwise) of the Operative Documents
and such other documents.
5. NET LEASE; NON-TERMINABILITY. (a) This Lease is a net lease and,
except as otherwise expressly provided in this Lease, any present or future Law
to the contrary notwithstanding, shall not terminate, nor shall the Lessee be
entitled to any abatement, reduction, set-off, counterclaim, defense or
deduction with respect to any Fixed Rent, Additional Rent or other sum payable
hereunder. Except as otherwise expressly provided in this Lease, the
obligations of the Lessee shall not be affected by reason of: (i) any damage to
or destruction of the Parcels or the Property or any part thereof by any cause
whatsoever (including, without limitation, by fire, Casualty or act of God or
enemy or any other force majeure event); (ii) any Condemnation, including,
without limitation, a temporary Condemnation of the Parcels or the Property or
any part thereof; (iii) any prohibition, limitation, restriction or prevention
of the Lessee's use, occupancy or enjoyment of the Parcels or the Property or
any part thereof by any Person; (iv) any matter affecting title to the Parcel or
the Property or any part thereof; (v) any eviction of the Lessee from, or loss
of possession by the Lessee of, the Parcel or the Property or any part thereof,
by reason of title paramount or otherwise; (vi) any default by the Lessor
hereunder or under any other agreement; (vii) the invalidity or unenforceability
of any provision hereof or the impossibility or illegality of performance by the
Lessor or the Lessee or both; (viii) any action of any Federal, state or local
governmental authority; or (ix) any other cause or occurrence whatsoever,
whether similar or dissimilar to the foregoing. The parties intend that the
obligations of the
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Lessee hereunder shall continue unaffected unless such obligations shall have
been modified or terminated pursuant to an express provision of this Lease.
(b) The Lessee shall remain obliged under this Lease in accordance with
its terms and shall not take any action to terminate, rescind or avoid this
Lease, notwithstanding any bankruptcy, insolvency, reorganization, liquidation,
dissolution or other proceeding affecting the Lessor or any action with respect
to this Lease which may be taken by any trustee, receiver or liquidator or by
any court. Except as expressly permitted in this Lease, the Lessee waives all
rights to terminate or surrender this Lease, or to any abatement or deferment of
Fixed Rent, Additional Rent or other sums payable hereunder. The Lessee shall
remain obliged under this Lease in accordance with its terms, and the Lessee
hereby waives any and all rights now or hereafter conferred by Law or otherwise
to modify or to avoid strict compliance with its obligations under this Lease.
All payments made to the Lessor hereunder as required hereby shall be final, and
the Lessee shall not seek to recover any such payment or any part thereof for
any reason whatsoever, absent manifest error.
6. TAXES AND ASSESSMENTS; COMPLIANCE WITH LAW; CERTAIN AGREEMENTS. (a)
The Lessee shall pay or cause to be paid, subject to paragraph 18, all Charges
before any fine, penalty, interest or cost may be added or any default may be
claimed or any termination or foreclosure or forfeiture procedures for
nonpayment may be commenced. If any Property Charge may legally be paid in
installments, such Property Charge may be so paid in installments provided that,
if the Lessee has not paid the Offer Purchase Price and purchased the Property
pursuant to the terms hereof, the Lessee shall pay all such installments that
may be due from time to time (whether before or after the Expiration Date) on or
before the Expiration Date or earlier termination of this Lease.
(b) The Lessee shall comply, and cause the Property to comply, in all
material respects, with all Legal Requirements. "LEGAL REQUIREMENTS" means (i)
all Laws, foreseen or unforeseen, ordinary or extraordinary, or arising from
any restriction of record or otherwise, which now or at any time hereafter may
be applicable to the Lessor, as owner of the Improvements, the Parcels, the
Property or any part thereof, or any of the adjoining sidewalks, or the
ownership, construction, operation, mortgaging, occupancy, possessing, use,
non-use or condition of the Parcels, the Property or any part thereof and any
other governmental rules, orders and determinations now or hereafter enacted,
made or issued, and applicable to the Lessor, as owner of the Improvements, the
Parcels, the Property or any part thereof or the ownership, construction,
operation, mortgaging, occupancy, possession,
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use, non-use or condition thereof whether or not presently contemplated; and
(ii) all agreements (including, without limitation, all Facility Agreements),
Permits, covenants, and restrictions applicable to the Parcels, the Property or
any part thereof or the ownership, construction, operation, mortgaging,
occupancy, possession, use, non-use or conditions thereof.
(c) The Lessee shall, and (unless a Default, Environmental Trigger,
Unwind Event or Event of Default has occurred and is continuing and Lessor has
revoked such authority) is hereby authorized by Lessor to, fully and promptly
keep, observe, perform and satisfy, on behalf of Lessor, any and all
obligations, conditions, covenants and restrictions of or on the Lessor under
any and all Facility Agreements so that there will be no default thereunder and
so that the other parties thereunder shall be and remain at all times obliged
to perform their obligations thereunder, and the Lessee, to the extent within
its control, shall not permit to exist any condition, event or fact that could
allow or serve as a basis or justification for any such Person to avoid such
performance.
7. MATTERS OF TITLE; ASSIGNABILITY. (a) The Lessee shall not create
or permit to be created or exist, and shall promptly remove and discharge, any
Lien upon this Lease, the Parcels or the Property or any part thereof or
interest therein, or upon any Fixed Rent, Additional Rent or other sum paid
hereunder, which Lien arises for any reason, including, without limitation, any
and all Liens which arise out of the ownership, use, condition, occupancy,
construction, possession, repair or rebuilding of the Property or any part
thereof (including, without limitation, by reason of construction and start-up
of the Improvements) or by reason of labor or materials furnished or claimed to
have been furnished to the Lessee or for the Property or any part thereof, but
excluding Permitted Encumbrances. Lessee's obligation to remove any of the
above-described Liens arising prior to the termination of this Lease (or
arising due to circumstances occurring prior to the termination of this Lease)
shall survive the termination of this Lease. Nothing contained in this Lease
shall be considered as constituting the consent or request of the Lessor,
express or implied, to or for the performance by any contractor, laborer,
materialman, or vendor of any labor or services or for the furnishing of any
materials for any construction, alteration, addition, repair or demolition of
or to the Property or any part thereof. NOTICE IS HEREBY GIVEN THAT THE LESSOR
IS NOT AND SHALL NOT BE LIABLE FOR ANY LABOR, SERVICES OR MATERIALS FURNISHED
OR TO BE FURNISHED TO THE LESSEE, OR TO ANYONE HOLDING OR POSSESSING THE
PROPERTY OR ANY PART THEREOF THROUGH OR UNDER THE LESSEE, AND THAT NO
MECHANIC'S OR OTHER SIMILAR STATUTORY LIENS FOR
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ANY LABOR, SERVICES OR MATERIALS SHALL ATTACH TO OR AFFECT THE LESSOR'S
INTEREST OR ESTATE IN THE PROPERTY OR ANY PART THEREOF.
(b) The Lessor shall not create any Lien upon this Lease, the Parcels
or the Property or any part thereof except Permitted Encumbrances.
(c) Lessor agrees that Lessee during the Term shall have the exclusive
right (so long as no Environmental Trigger, Unwind Event or Event of Default
has occurred and is continuing and no Termination Notice has been delivered or
has been deemed to have been delivered) to secure subdivision approvals, site
plan approvals, annexation or de-annexation approvals, zoning variances and
Permits necessary or desirable for the development, use, operation, maintenance
or condition of the Property or any part thereof; PROVIDED that the fair market
value or use of the Property is not materially lessened by such action taken as
a whole with the actions referred to in paragraphs 9(a), 10(a) and 10(b)
hereof. Lessor agrees to execute such documents and take all other actions as
shall be reasonably necessary, and otherwise cooperate with Lessee, in
connection with the matters described above; PROVIDED, HOWEVER, that all costs
and expenses incurred by the Lessor in connection therewith shall be borne by
Lessee and that Lessor shall not be required to execute any documents which
would, in the reasonable opinion of the Agent, adversely affect the value or
use of the Property or otherwise adversely affect the transactions contemplated
by the Operative Documents or the interests of the Lessor or the Holders from
time to time of the Instruments.
8. [Intentionally Omitted].
9. MAINTENANCE, REPAIR AND PROPERTY RELOCATION. (a) The Lessee, at its
own cost and expense, will manage and maintain the Property in good mechanical
condition and repair, in accordance with prudent industry practice and in a
manner consistent with that of other similar properties owned or operated by it
or its Affiliates, and will take all action, and will make all changes and
repairs, structural and nonstructural, foreseen and unforeseen, ordinary and
extraordinary, which may be required to maintain the Property in good
mechanical condition and repair, in accordance with prudent industry practice,
or which may be required pursuant to any Legal Requirement or Insurance
Requirement at any time in effect. Lessee shall, in accordance with prudent
industry practice, repair or replace each item constituting the Improvements
that shall have become worn out, damaged, inoperative or obsolete in whole or
in part; PROVIDED, HOWEVER, that (i) the fair market value or use of the
Property shall not be materially lessened by such replacements and
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repairs taken as a whole with the actions referred to in paragraphs 7(c), 10(a)
and 10(b) hereof, and (ii) such replacements shall be of a type suitable for
use in the industry for the same purpose and having a useful life at least as
long as that of the Improvements (or any part thereof) repaired or replaced
(prior to obsolescence, loss or damage and the like). All repairs,
replacements and rebuilding by the Lessee hereunder, to the extent permitted by
Law, shall immediately become and shall remain part of the Property of the
Lessor, subject to this Lease. The Lessor shall not be required to, and Lessee
hereby waives any right to require the Lessor to, manage, maintain, replace,
repair or rebuild the Property or any part thereof and the Lessee waives any
and all rights it may now or hereafter have to make any repairs at the cost and
expense of the Lessor pursuant to any Legal Requirement, Insurance Requirement,
or otherwise, at any time in effect.
(b) Except for Permitted Encumbrances, in the event that all or any
part of the Improvements shall encroach upon any property or right-of-way
adjoining or adjacent to either of the Parcels or any part thereof, or shall
violate any agreements or conditions affecting the Parcels or the Property or
any part thereof, or shall obstruct any easement or right-of-way to which the
Parcels or the Property or any part thereof may be subject, then the Lessee
shall, at its sole cost and expense, either (i) contest such matter pursuant to
paragraph 18 hereof, (ii) obtain valid and effective Permits for or consents to
such encroachments and/or violations (without any liability to Lessor, the
Agent or the Holders of the Instruments for which such parties are not
indemnified by the Lessee) or waivers or settlements of all claims, liabilities
and damages resulting therefrom, or (iii) make such changes, including
alteration or removal, to the Improvements and take such other action as shall
be reasonably necessary to rectify such encroachments, violations, hindrances,
obstructions or impairments, subject to the Lessor's consent if and to the
extent required by paragraph 10(a) hereof.
(c) The Lessee shall give the Lessor and the Agent prompt notice of
any scheduled maintenance or reconditioning or any other activity which
requires shutdown of operations of the Lessee's stearates, lubricants and
stabilizers production facilities (i) to be located on the Parcels or (ii)
which comprise any of the Improvements for a period of time in excess of an
aggregate of ten (10) Business Days in any thirty-day period and shall state
the specific reasons for such shutdown.
10. ADDITIONAL IMPROVEMENTS; REMOVAL. (a) At any time, so long as no
Default, Unwind Event, Environmental
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Trigger or Event of Default shall have occurred and be continuing and no
Termination Notice has been delivered or has been deemed to have been
delivered, the Lessee may, at its own cost and expense, make Additional
Improvements to the Property or any part thereof; PROVIDED, HOWEVER, that (i)
the fair market value of the Property shall not be materially lessened by such
Additional Improvements taken as a whole; (ii) such Additional Improvements
taken as a whole with the actions referred to in paragraphs 7(c), 9(a) and
10(b) hereof shall not materially diminish the capacity, efficiency or useful
life of the Improvements; and (iii) such work shall be completed in a good and
workmanlike manner free and clear of any Liens for labor, services or materials
(other than Permitted Encumbrances) and in compliance with all applicable Legal
Requirements and Insurance Requirements. "ADDITIONAL IMPROVEMENTS" means
additions to, alterations of or replacements for the Improvements or any part
thereof (other than in connection with the completion of construction of the
Improvements contemplated by the Construction Plans as of the date hereof) made
by or for the Lessee, excluding any replacements installed as part of scheduled
maintenance procedures.
(b) The Lessee shall be permitted at any time during, or upon the
expiration or termination of, the Term, and at its sole cost and expense, to
remove or demolish any portion or part of the Additional Improvements in
accordance with prudent industry practices; PROVIDED, HOWEVER, that, such
removal taken as a whole with the actions referred to in paragraphs 7(c), 9(a)
and 10(a) hereof shall not (i) materially impair the intended use or reduce the
fair market value of the Property or either Plant below its fair market value
at the commencement of the Primary Term; (ii) materially diminish the capacity,
efficiency or useful life of the Improvements or either Plant below the
capacity, efficiency or useful life as of the commencement of the Primary Term;
or (iii) cause a violation of any Legal Requirement or Insurance Requirement or
significantly increase any risk of liability under any Environmental Law or any
risk to human health or the environment. Any damage to the Property or any
part thereof caused by such removal shall promptly be repaired by the Lessee
and the Property or any part thereof shall be restored to its condition (or the
reasonable equivalent thereof) as it existed immediately prior to the
construction of such removed Additional Improvements, at the Lessee's sole cost
and expense. The Lessee may place upon the Property or any part thereof any
inventory, fixtures, machinery, equipment or other property belonging to the
Lessee or third parties and remove the same at any time during the Term and
Lessee may, and at the request of the Lessor shall, remove the same at the
expiration or termination hereof unless the Lessee shall have paid the Offer
Purchase Price and
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purchased the Property pursuant to the terms of this Lease; PROVIDED that any
damage to the Property or any part thereof caused by such removal shall
promptly be repaired by the Lessee, and the Property or such part thereof
restored to its condition (or the reasonable equivalent thereof) as it existed
immediately prior to the placement of any such property upon the Parcels,
all at the Lessee's sole cost and expense.
(c) The Lessee shall notify the Lessor of any Additional Improvements,
the cost of which is anticipated to exceed in the aggregate $1 million in any
calendar year with respect to the Property, which notice shall include a
reasonably detailed description of the work that will be done. All Additional
Improvements shall become and remain Property of the Lessor and shall be
subject to this Lease, unless and until removed by the Lessee in accordance
with subparagraph 10(b).
11. LESSEE'S RIGHT TO CONTEST REAL PROPERTY TAXES. The Lessee, at its
own cost and expense and in compliance with paragraph 18, shall have the sole
right, at any time, to seek, in good faith, a reduction in the assessed
valuation of the Property or any part thereof or to contest, in good faith, any
real or personal property taxes for the Property or the Additional
Improvements, or any part thereof. Lessor shall not be required to join in any
proceeding or contest brought by Lessee unless the provisions of any Legal
Requirement require that the proceeding or contest be brought by or in the name
of the owner of the Property. In that case Lessor shall join in the proceeding
or contest or permit it to be brought in Lessor's name as long as Lessee
reimburses the Lessor for any and all costs and expenses incurred by Lessor in
connection therewith. Lessee, on a final non-appealable determination of the
proceeding or contest, shall immediately pay, discharge and satisfy any
decision or judgment rendered, together with all costs, interest and penalties
incidental to the decision or judgment.
12. CONDEMNATION AND CASUALTY. (a) GENERAL. The Lessee hereby
irrevocably assigns to the Trustee, on behalf of the Lessor, any award or
compensation or insurance payment or other proceeds to which the Lessee may
become entitled by reason of its interest in the Property or any part thereof
if (i) either of the Parcels, the Improvements or the Property or any part
thereof is damaged or destroyed by fire or other casualty for which the amount
of loss exceeds $25,000 (each, a "CASUALTY") or (ii) the use, occupancy or
title of the Parcels or the Improvements or any part thereof is taken or
requisitioned or sold in, or on account of any actual or threatened
condemnation or eminent domain proceedings, or other action by any Person
having the power of eminent domain (each, a "CONDEMNATION").
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The Lessee shall promptly notify the Lessor in writing of any such
Casualty or Condemnation and shall appear in any proceeding or action to
defend, negotiate, prosecute or adjust any claim for any award or compensation
or insurance payment on account of any Casualty or Condemnation and shall take
all appropriate action in connection with any Casualty or Condemnation,
including the employment of counsel reasonably satisfactory to the Lessor. The
Lessor shall have the right to appear and participate and to employ counsel in
any such proceeding or action, and the fees and expenses of such counsel shall
be paid by the Lessee. If the Lessee shall elect not to appear or shall fail
to prosecute diligently, the Lessor may assume the prosecution thereof and the
Lessee shall pay all of the costs and expenses of the Lessor (including, but
not limited to, fees and expenses of Lessor's counsel) and the fees and
expenses of the Special Counsel. No settlement of any such proceeding or
action shall be made by the Lessee or the Lessor without the written consent of
the other party hereto, which consent shall not unreasonably be withheld or
delayed.
Any and all amounts representing proceeds paid in connection with any
such Condemnation or Casualty, as the case may be (collectively, the
"PROCEEDS"), shall be paid over to the Proceeds Trustee (as defined below) to
be held in trust by such Proceeds Trustee and distributed pursuant to this
paragraph 12 and paragraph 15 hereof or pursuant to the Declaration of Trust,
as appropriate (all such Proceeds, less the costs and expenses incurred by the
Lessor and the Lessee in collecting such amounts, but including any
reimbursement by the Lessee for costs and expenses in connection therewith to
which the Lessor, the Trustee and the Purchasers are entitled pursuant to this
Lease, are the "NET PROCEEDS"). Any and all Proceeds received by the Lessee in
connection with any such proceeding or action shall be received by the Trustee
and held in trust for the benefit of the Trustee, shall be segregated from
other funds of the Trustee and shall be forthwith paid over to the Proceeds
Trustee. The Lessee agrees that this Lease shall control the rights of the
Lessor and the Lessee in any such Proceeds, and any present or future Law to
the contrary is hereby waived. Any and all reasonable charges, fees and
expenses of the Proceeds Trustee shall be paid from the Net Proceeds. "PROCEEDS
TRUSTEE" shall mean SSBTC or such title company or other independent bank or
trust company as may be designated by the Lessor.
(b) CONDEMNATION OR CASUALTY WITH TERMINATION.
(i) If a Casualty or a Condemnation shall in the
good faith opinion of an Officer of Lessee affect the Property
in such manner as to render it unsuitable for restoration or for
continued use, in whole, or in part
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and occupancy by the Lessee for the intended purposes thereof,
then the Lessee may deliver to the Lessor, not later than thirty
(30) days after such occurrence a written notice (herein called
a "TERMINATION NOTICE") describing the event giving rise to such
termination and describing the status of any proceeding or
action and the amount of any Proceeds received or expected to be
received in connection therewith, together with the date,
or estimated date, of such receipt.
(ii) If a Casualty or Condemnation occurs during the
Primary Term and the Lessor has received an opinion, which
shall be at the Lessee's sole cost and expense, of the
Independent Engineer to the effect that the restoration of the
Property could not be expected to restore and rebuild the
Property to its previous capacity, efficiency and useful life or
such restoration and rebuilding could not be expected to be
completed in full prior to the Expiration Date (or completed in
full prior to the Interim Note Maturity Date, in the case of a
Casualty or Condemnation during the Construction Period) or that
the cost of such restoration or rebuilding would exceed 25% of
the fair market value of the Property immediately prior to such
Casualty or Condemnation, then the Lessor may, in its sole
discretion, deliver a notice ("LESSOR TERMINATION NOTICE")
declaring Lessor's intention to terminate this Lease and the
Lessee shall be deemed to have delivered a Termination Notice
with respect to the Property to the Lessor as of the date of the
Lessor Termination Notice.
(iii) Simultaneous with the delivery of a Termination
Notice pursuant to (i) above (or a deemed delivery of a
Termination Notice pursuant to (ii) above), the Lessee shall
deliver (or shall be deemed to have delivered in the case of
(ii) above) to the Lessor an Offer to Purchase in accordance
with paragraphs 14 and 15.
(c) CONDEMNATION OR CASUALTY WITHOUT TERMINATION.
If, after a Casualty or Condemnation, the Lessee has not given a Termination
Notice and the Lessor has not given a Lessor Termination Notice in accordance
with subparagraph 12(b), then this Lease shall continue in full force and
effect, and the Lessee shall, at its sole cost and expense, promptly commence
and diligently pursue to completion the rebuilding, replacement or repair of
any damage to the Property caused by such event in conformity with the
requirements of paragraph 9 or 10, as applicable, in order to restore the
Property (in the case of a Condemnation, as nearly as practicable) to the value
and operating condition thereof immediately prior to such event. In connection
with such restoration the Lessee shall, before beginning such restoration,
submit plans and
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specifications for such restoration, together with an estimate of the cost
thereof, and all necessary construction contracts therefor for the Lessor's and
the Independent Engineer's approval, which will not be unreasonably withheld;
PROVIDED that (i) the capacity, efficiency and useful life of the Improvements,
shall not, after all such restoration taken as a whole, be materially less than
the capacity, efficiency and useful life prior to such Casualty or
Condemnation; (ii) the fair market value of the Property shall not, after all
such restoration taken as a whole, be materially less than its fair market
value prior to such Casualty or Condemnation; and (iii) if the estimated cost
to complete such restoration exceeds the amount of Net Proceeds, the Lessor is,
in its sole judgment, satisfied that the Lessee shall have sufficient funds
(the "EXCESS FUNDS") available to pay such excess, which Excess Funds if in
excess of $25,000, shall be deposited by the Lessee with the Proceeds Trustee
and distributed to the Lessee as hereinafter provided. Such work shall be
completed in a good and workmanlike manner free and clear of all Liens for
labor, services or materials and in compliance with all applicable Legal
Requirements and Insurance Requirements. All fees and expenses of the
Independent Engineer in connection with any rebuilding and restoration shall be
at the Lessee's sole cost and expense.
The Lessee shall be entitled to receive payment from the Net Proceeds
or the Excess Funds, as the case may be, from time to time as such work of
rebuilding, replacement or repair progresses, but only after presentation of
certificates of the Independent Engineer, delivered by the Lessee to the
Proceeds Trustee (with a copy to the Lessor) from time to time as such work of
rebuilding, replacement or repair progresses. Each such certificate of the
Independent Engineer shall describe the work for which the Lessee is requesting
permission to pay or requesting payment and the cost incurred by the Lessee in
connection therewith and shall state that such work has been properly completed
and that the Lessee has not theretofore received payment for such work, and
shall be accompanied by (i) an Officer's Certificate of the Lessee certifying
that no Default, Environmental Trigger, Unwind Event or Event of Default has
occurred and is continuing and that the Net Proceeds and Excess Funds held by
the Proceeds Trustee are adequate to complete such rebuilding, replacement or
repair in accordance with this paragraph 12(c), and (ii) duly executed Lien
waivers executed by each materialman or mechanic furnishing materials or labor
for which the Lessee is requesting permission to pay. The Proceeds Trustee
shall deliver, or cause to be delivered, payment within ten (10) days after its
receipt of the certificates required above. In connection with such payments,
the Proceeds Trustee shall first apply the Excess Funds to the cost of such
restoration prior to the disbursement of any Net Proceeds by the Proceeds
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Trustee for such purpose. Upon receipt by the Proceeds Trustee (with a copy to
the Lessor) of an Officer's Certificate from the Lessee, to the effect that
final payment has been made for any such work and stating that the rebuilding,
replacement or repair has been completed in compliance with the terms and
conditions of this Lease, the remaining amount of such Net Proceeds shall be
paid to the Lessee. The Lessee shall be responsible for the cost of any such
repair, rebuilding or restoration in excess of such Net Proceeds and Excess
Funds, for which cost the Lessee shall make adequate provision acceptable
to the Lessor.
(d) TEMPORARY CONDEMNATION OR LEASE TERMINATION. Notwithstanding any
provision to the contrary contained in this paragraph 12, in the event of any
temporary Condemnation this Lease shall remain in full force and effect, and
provided no Default or Event of Default, Unwind Event or Environmental Trigger
has occurred and is continuing, the Lessee shall be entitled to receive the Net
Proceeds allocable to such temporary Condemnation, except that if this Lease
shall expire or terminate during such temporary Condemnation, then Lessee shall
be entitled to the Net Proceeds allocable to the period after the termination
or expiration of this Lease only if it has paid the Offer Purchase Price for
the Property.
13. ENVIRONMENTAL EVENT. (a) Except for the matters referenced in
the Disclosed Information, the Lessee shall promptly, but in any case within
five (5) Business Days, notify the Lessor, the Agent and the Purchasers if (i)
any environmental event has occurred or any environmental condition is
discovered in, on, beneath, from or involving the Property or any part thereof
(including, but not limited to, the presence, emission or release of Hazardous
Materials or the violation of any applicable Environmental Law) that could
reasonably be anticipated to result in penalties or other liabilities in excess
of $125,000, or (ii) the Lessee has received notification that it, the Property
or any part thereof is the subject of an Environmental Action that could
reasonably be expected to result in any ordered remediation or corrective
action or other liability related to an environmental event or condition the
cost of which liability is reasonably expected to exceed $125,000 (each of (i)
and (ii) an "ENVIRONMENTAL EVENT").
(b) Following the receipt of a notice pursuant to (a) above, the
Lessor, the Agent, the Holders of the B-Notes and the Certificate Holders,
shall discuss with Lessee the Lessee's anticipated response to such
Environmental Event and, in each case in their sole discretion, may require the
Lessee to conduct, or cause to be conducted, an environmental audit of the
Property, the scope of which audit shall be limited to confirming the magnitude
and anticipated cost of the liability
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resulting in the Environmental Event and to provide a copy of the Environmental
Consultant's report on its audit to the Lessor, the Agent, the Trustee and the
Purchasers. Notwithstanding the foregoing, if a pattern, in the opinion of the
Lessor and the Holders of the B-Notes and Certificates, of such Environmental
Events exists, the Lessor may conduct a more comprehensive environmental audit
of the Property to determine the scope and nature of such pattern and its
effect on the Property. If it is the opinion of the Agent and the
Environmental Consultant that an Environmental Event has occurred or exists and
a Permitted Remediation is not available or the Environmental Event cannot be
cured through a Permitted Remediation or the Environmental Event will result in
the cessation of operation of the Improvements for 90 days or more (each an
"ENVIRONMENTAL TRIGGER"), the Lessor, the Agent and the Purchasers shall have
the option, each in its sole discretion, to require the Lessee to purchase the
Property for the Offer Purchase Price in the manner provided in paragraphs 14
and 15 hereof. A "PERMITTED REMEDIATION" means any remediation of an
Environmental Event (a) the cost of which remediation is not anticipated, in
the sole opinion of the Agent and the Environmental Consultant (the cost and
expense of which Environmental Consultant shall be borne by the Lessee), to
exceed $750,000, (b) during and after which such Environmental Event could not
be expected to result in any additional environmental liability incurred by
Lessor for which Lessor, the Agent and the Purchasers have not received
additional indemnification in an amount and from a Person satisfactory to the
Lessor, the Agent and the Holders of the B-Notes and the Certificates in their
sole and absolute discretion and (c) permitted and effected in compliance with
all applicable Environmental Laws.
(c) Irrespective of whether an Environmental Trigger has occurred,
Lessee shall immediately initiate, at its sole cost and expense, such actions
as may be necessary to comply in all material respects with all applicable
Environmental Laws. Once Lessee commences such actions, Lessee shall
thereafter diligently and expeditiously proceed to comply materially and in a
timely manner with all Environmental Laws and shall, at the request of the
Lessor or the Agent during the Term, give periodic progress reports on its
compliance efforts and actions.
14. OFFER TO PURCHASE. (a) At any time during the Term but prior to
exercising its options pursuant to paragraph 27(a) hereof, Lessee may (unless
otherwise required to do so, in which case it shall) deliver to Lessor and the
Agent a written offer to purchase the Property in its entirety (an "OFFER TO
PURCHASE") upon and subject to the applicable terms of this Lease.
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<PAGE> 22
(b) Any Offer to Purchase delivered or deemed to be delivered by the
Lessee hereunder shall, notwithstanding anything to the contrary set forth
therein, be irrevocable and unconditional and shall set forth the Termination
Value to be paid by Lessee.
(c) The Lessor shall be deemed to have accepted such Offer to Purchase
the Property on the date Lessor receives the same. The procedure for the
purchase of the Property and the purchase price therefor shall be governed by
paragraph 15 hereof.
(d) In addition, within five (5) days after the occurrence of an
Unwind Event, Lessee may cause an Offer to Purchase to be delivered by Lessee's
designee to Lessor and Agent.
14A. PARTIAL LEASE TERMINATION. (a) At any time during the
Construction Period but prior to exercising its options pursuant to paragraph
27(a) hereof, Lessee may deliver to Lessor and the Agent a written offer to
purchase a portion of the Assets as to which the Lessee has made a good faith
determination that such portion of the Assets are no longer used or useful in
the business of the Lessee conducted at the Property and a certification that
the Lessee will abandon such portion of the Assets or sell the same to a third
party (a "PARTIAL LEASE TERMINATION") upon and subject to the applicable terms
of this Lease.
(b) Any Partial Lease Termination delivered or deemed to be delivered
by the Lessee hereunder shall, notwithstanding anything to the contrary set
forth therein, be irrevocable and unconditional and shall set forth the pro
rata portion of the Termination Value (the "ALLOCATED TERMINATION VALUE") to be
paid by Lessee. If the portion of the Assets which are the subject of a
Partial Lease Termination (the "ALLOCATED ASSETS") are within a category of
equipment which has not been separately valued, a new appraisal will be
obtained by the Lessee at Lessee's sole expense to determine the Allocated
Termination Value.
(c) The Lessor shall be deemed to have accepted such Partial Lease
Termination on the date Lessor receives the same. Notwithstanding any
provisions of this paragraph to the contrary, no Partial Lease Termination
shall be permitted if, taking into account all previous Partial Lease
Terminations, the aggregate amount of all Allocated Termination Value payments
made or due to be made exceeds 25% of the Total Commitment or (ii) the Partial
Lease Termination would result in a material reduction in the value of the
remaining Property or prevent the Lessee from complying with the conditions set
forth in Section 7.05(b) of the Participation Agreement.
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<PAGE> 23
(d) The date of the closing of any purchase by the Lessee of the
Allocated Assets (the "PARTIAL LEASE TERMINATION CLOSING DATE") shall be on the
next scheduled Payment Date following the date of Lessor's acceptance or deemed
acceptance of any Partial Lease Termination. On the Partial Lease Termination
Closing Date, upon receipt by the Lessor of the Allocated Termination Value,
the Lessor shall convey, or cause to be conveyed, the Allocated Assets to the
Lessee or its designee by an appropriate bill of sale containing no
representation or warranty (expressed or implied) except that the Allocated
Assets are free and clear of any conveyance, mortgage, lease or Lien or other
adverse interest of any kind created or caused by the Lessor or any person
claiming by, through or under the Lessor (except Permitted Encumbrances other
than those described in clause (v) of the definition thereof) and as consented
to or created or caused by the Lessee.
(e) On the Partial Lease Termination Closing Date, the Lessee shall
pay, or cause to be paid, to the Lessor for deposit to the Reinvestment Account
established pursuant to the Declaration, the Allocated Termination Value, as
specified in the Partial Lease Termination related thereto, and all Fixed Rent,
Additional Rent and other sums then due and payable hereunder up to and
including such Partial Lease Termination Closing Date (such amounts, plus all
Closing Costs, are herein referred to as the "PARTIAL LEASE TERMINATION
PRICE"), and the Lessor shall simultaneously (i) deliver to the Lessee or its
designee the instruments referred to in paragraph 14(d) above with respect to
the Allocated Assets and any other instruments reasonably necessary to assign
and convey to the Lessee or its designee the Allocated Assets and any other
related property then required to be assigned pursuant hereto.
15. PROCEDURE UPON PURCHASE. (a) The date of the closing of the
Lessee's purchase of the Property (the "CLOSING DATE") shall be (i) on the
Expiration Date pursuant to paragraph 27 hereof or (ii) if the Lessee shall
deliver (or shall be deemed to have delivered) an Offer to Purchase pursuant to
paragraph 14(a) hereof, on the next scheduled Payment Date following the date
of Lessor's acceptance or deemed acceptance of such Offer to Purchase, (iii) if
the Lessee shall deliver (or be deemed to have delivered) an Offer to Purchase
pursuant to paragraphs 12(b), 13(b) or 18A hereof, on the fifteenth day
following the date of Lessor's acceptance or deemed acceptance of such Offer to
Purchase, or (iv) if the Lessee shall deliver (or be deemed to have delivered)
an Offer to Purchase pursuant to paragraphs 14(d) or 19(h), on the fifth
Business Day following the date of Lessor's acceptance or deemed acceptance of
such Offer to Purchase. On the Closing Date, upon receipt by the Lessor of the
Offer Purchase
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Price, the Lessor shall convey, or cause to be conveyed, the Property (or, in
the case of Casualty or Condemnation, the remaining portion thereof) to the
Lessee or its designee by an appropriate recordable deed and bill of sale to
the Property and Improvements, in each case containing no representation or
warranty (expressed or implied) except that the Property is free and clear of
any conveyance, mortgage, lease or Lien or other adverse interest of any kind
created or caused by the Lessor or any person claiming by, through or under the
Lessor (except Permitted Encumbrances and as consented to or created or caused
by the Lessee and except as to any interest created by the Lessor upon the
exercise of any right hereunder upon any Event of Default).
(b) On the Closing Date, the Lessee shall pay, or cause to be paid, to
the Lessor the Termination Value for the Property, as specified in the Offer to
Purchase related thereto, and all Fixed Rent, Additional Rent and other sums
then due and payable hereunder relating to the Property up to and including
such Closing Date (such amounts, plus all Closing Costs, are herein referred to
as the "OFFER PURCHASE PRICE"), and the Lessor shall simultaneously (i) deliver
to the Lessee or its designee the instruments referred to in paragraph 15(a)
above with respect to the Property and any other instruments reasonably
necessary to assign and convey to the Lessee or its designee the Property and
assign all Facility Agreements related to the Property (other than any rights
of the Lessor to any indemnities thereunder) and any other related property
then required to be assigned pursuant hereto, and (ii) convey, or cause to be
conveyed, to the Lessee or its designee any Net Proceeds related to the
Property and/or the right to receive the same.
(c) Upon the completion of any purchase of the Property in its
entirety pursuant to this paragraph 15, but not prior thereto, this Lease shall
terminate except with respect to obligations and liabilities of the Lessee
actual or contingent which have arisen with respect to the Property on or prior
to such date of purchase, and except as elsewhere expressly provided herein.
16. INSURANCE. (a) The Lessee will purchase and maintain, or cause
to be purchased and maintained, insurance with respect to the Property of the
following types and in the following amounts (or in such greater amounts as may
become necessary from time to time to prevent the Lessor, the Lessee, the Agent
and the Holders from time to time of the Instruments from becoming co-insurers
of any loss), and in no event in amounts less than those maintained by the
Lessee or its Affiliates for other similar facilities or property owned and/or
operated by them:
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(i) PROPERTY INSURANCE: Insurance against physical
damage to the Property (with sublimits and deductibles as are
acceptable to Lessor and with a maximum self-insured retention
allowable of $100,000) caused by perils now or hereafter
embraced by or defined in a manuscript "all risks" insurance
policy, including flood, earth movement, earthquake, subsidence
and collapse, business interruption/extra expense and boiler and
machinery coverage;
(ii) BUILDER'S RISK INSURANCE: During the
Construction Period and during the construction of any
Additional Improvements, builder's "all risks" and "general
risks" insurance (with sublimits and deductibles as are
acceptable to Lessor), including flood, earth movement,
earthquake, subsidence and collapse, business interruption/extra
expense and boiler and machinery coverage with respect to the
Property and any on-site and off-site work and materials related
thereto protecting the Lessee, the Lessor and all contractors
and subcontractors, in an amount not less than the full
replacement cost of the Property and such on-site and off-site
work;
(iii) GENERAL LIABILITY INSURANCE: Comprehensive
general liability (including contractual, completed operations
and product liability) insurance against claims for bodily
injury (including death), personal injury and property damage
occurring on, in or in respect of the Property or resulting from
activities on or related to the Property, in the minimum
combined single limit amount of $25,000,000 in the annual
aggregate and $25,000,000, for each occurrence for bodily injury
(or death) and/or property damage with a maximum self-insured
retention allowable of $250,000;
(iv) WORKERS' COMPENSATION INSURANCE: Workers'
compensation insurance at statutory levels and employers'
liability insurance, with a limit of $1,000,000, in the
aggregate; and
(v) OTHER INSURANCE: Such other insurance,
including automobile liability, in such amounts and against such
risks, as is either (x) customarily carried by companies owning,
operating or leasing property or conducting businesses
similar and/or similarly situated to the Property and/or the
Lessee, or (y) reasonably requested from time to time by Lessor.
Such insurance shall be written by companies that are nationally
recognized (including Lloyd's of London or other recognized international
insurers with an ISI rating of
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not less than BBB); primary insurance shall be written by companies rated at
least AXI in the most recent edition of Best's Key Rating Guide, or as
otherwise agreed to by the Agent, the Lessor, the Note Holders and the
Certificate Holders, selected by the Lessee and, other than the insurance
specified in paragraph 16(a)(i), (ii) and (iv), shall name Lessor, SSBTC (in
its individual capacity and as Trustee) and the Agent, on its own behalf and on
behalf of the Holders from time to time of the Instruments and their assignees,
as additional insureds, as their interests may appear. Notwithstanding the
foregoing, insurance coverage shall continue to be based on market conditions,
capacity and costs and in no event will the Lessee be required to maintain
coverage in amounts in excess of those maintained for businesses similar in
size, nature and creditworthiness to the Lessee under prevailing market
conditions.
(b) The insurance referred to in paragraph 16(a)(i) and (ii) for the
Property may be a blanket policy and shall (i) at all times be in an amount at
least equal to the greater of (x) one hundred percent (100%) of the full
replacement cost value (without depreciation) of the Property and the Lessee's
leasehold improvements and (y) Termination Value; (ii) include a lenders' loss
payable endorsement in favor of the Lessor and any loss or damage under such
insurance policies shall be payable solely to the Trustee on behalf of the
Lessor, as Lessor's interest may appear, to be held and applied pursuant to the
terms of this Lease; (iii) provide that the interests of the Lessor, the
Trustee, the Agent and the Holders from time to time of the Instruments shall
be insured regardless of any breach or violation by the Lessee of any
warranties, declarations or conditions contained in such insurance; (iv)
provide that such insurance shall not be invalidated by any act, omission or
negligence of the Lessee, the Lessor, the Trustee, the Agent or the Holders
from time to time of the Instruments, nor by any foreclosure or other
proceedings or notices thereof relating to the Property or any part thereof,
nor by legal title to, or ownership of the Property or any part thereof
becoming vested in or by Lessor or its agents, nor by occupancy or use of the
Property or any part thereof for purposes more hazardous than permitted by
such policy; and (v) provide that all insurance claims pertaining to the
Property or any part thereof shall be adjusted by the insurers thereunder with
the Lessee but that the Lessor must consent to any such adjusted claim.
All policies of insurance required to be maintained pursuant to
paragraph 16(a)(iii) which cover liability for bodily injury or property damage
shall provide that all provisions of such insurance, except the limits of
liability (which shall be applicable to all insureds as a group) and liability
premiums (which shall be solely a liability of the
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Lessee), shall operate in the same manner as if there were a separate policy
covering each such insured and/or additional insured, without right of
contribution from any other insurance which may be carried by an insured
and/or additional insured.
Every policy required under paragraph 16(a) shall (i) expressly provide
that it will not be canceled or terminated except upon 60 days' written notice
to the Lessor and the Lessee, except in the case of cancellation or termination
due to a lapse for non-payment, in which case only 30 days' written notice
shall be required; (ii) include a waiver of all rights of subrogation against
the Lessor, the Trustee, the Agent and the Holders from time to time of the
Instruments and any recourse against the Lessor, the Trustee, the Agent or the
Holders from time to time of the Instruments for payment of any premiums or
assessments under any policy; and (iii) not contain a provision relieving the
insurer thereunder of liability for any loss by reason of the existence of
other policies of insurance covering the Property or any part thereof against
the peril involved, whether collectible or not, if such other policies do not
name the Lessor, the Trustee, the Agent and the Holders from time to time of
the Instruments as additional insureds with loss payable as provided in the
Lease. The Lessee shall advise the Lessor promptly of any policy cancellation
or any change adversely affecting the coverage provided thereby.
(c) The Lessee shall deliver to the Lessor the certificates of
insurance and any other documentation required by the Lessor evidencing the
existence of all insurance which is required to be maintained by the Lessee
hereunder including descriptions of the previously mentioned Insurance
Requirements, such delivery to be made (i) as provided in Section 2.01(k) of
the Participation Agreement, (ii) within twenty-one (21) days of the issuance
of any additional policies or amendments or supplements to any of such
insurance, and (iii) at least twenty-one (21) days prior to the expiration date
of any such insurance. The Lessee shall notify Lessor and Agent of any
nonrenewal of any policy required hereunder and shall cause each insurer under
each policy required hereunder to give the Lessor notice of any lapse under any
such policy. The Lessee shall not obtain or carry separate insurance
concurrent in form, or contributing in the event of loss, with that required by
this paragraph 16 unless the Lessor, the Trustee, the Agent and the Holders
from time to time of the Instruments are named as additional insureds therein,
with loss payable as provided in this Lease. The Lessee shall immediately
notify the Lessor, the Trustee, the Agent and the Holders from time to time of
the Instruments whenever any such separate insurance is obtained and shall
deliver to the Lessor the certificates of insurance and any
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<PAGE> 28
other documentation (other than blanket policies) required by Lessor evidencing
the same as is required hereunder.
(d) The requirements of subparagraphs (a) through (c) of this
paragraph 16 shall not be construed to negate or modify the Lessee's
obligations under Section 9.15 of the Participation Agreement.
17. SUBLETTING. (a) The Lessee shall not sublet the Property or any
part thereof, unless (i) at the time of any such sublease, no Default,
Environmental Event, Unwind Event or Event of Default shall have occurred and
be continuing and no Termination Notice has been delivered or has been deemed
to have been delivered; (ii) any such sublease shall by its terms be expressly
made subject and subordinate to the terms of this Lease and shall expire on or
before the last day of the Lease Term; (iii) the Lessee shall provide the
Lessor sixty (60) days prior to the effective date of such sublease with notice
of such sublease; (iv) the Lessee shall provide the Lessor ten (10) Business
Days prior to the effective date of such sublease with a conformed copy of the
instrument creating such sublease; (v) the Lessor has consented to such
sublease such consent not to be unreasonably withheld; and (vi) the Final
Completion Date shall have occurred.
(b) No sublease pursuant to this paragraph 17 shall modify or limit
any right or power of the Lessor hereunder or affect or reduce any obligation
of the Lessee hereunder, and all such obligations of the Lessee shall continue
in full force and effect as obligations of a principal and not of a guarantor
or surety, as though no subletting had been made or occupancy permitted.
(c) If the Lessee shall request, in connection with any sublease, that
the Lessor execute an attornment and non-disturbance agreement with respect to
such sublease, the Lessor shall consider each such sublease on a case-by-case
basis and may give its consent to its execution and delivery of an attornment
and non-disturbance agreement. The Lessee shall not mortgage, pledge or
otherwise encumber its interest in and to this Lease or in and to any sublease
or the rentals payable thereunder without the prior written consent of the
Lessor. Any sublease made, and any mortgage, pledge or assignment of the
Lessee's interest hereunder or under any such sublease granted, otherwise than
as expressly permitted by this paragraph 17, shall be null and void and of no
force or effect.
18. PERMITTED CONTESTS. (a) So long as (w) no Unwind Event,
Environmental Trigger or Event of Default has occurred, (x) no Termination
Notice has been delivered or been
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deemed to have been delivered, (y) the Lessee shall not have notified the
Lessor pursuant to paragraph 27(a)(ii) that it is terminating this Lease and
abandoning the Property or (z) the Lessee shall not have otherwise surrendered
or be required to surrender the Property to the Lessor for any reason
(including, without limitation, pursuant to paragraph 23(a)), the Lessee shall
not be required, nor shall the Lessor have the right, to pay, discharge or
remove any Charges or to comply or cause the Property or any part thereof to
comply with any applicable Legal Requirement or to pay any materialman's,
laborer's or undischarged or unremoved Lien, as long as the Lessee shall at its
sole cost and expense contest, or cause to be contested, diligently and in good
faith, the existence, amount or validity thereof by appropriate proceedings,
which shall (i) in the case of an unpaid Property Charge or undischarged or
unremoved Lien, prevent the collection thereof from the Lessor or against the
Property or any part thereof, (ii) prevent the sale, forfeiture or loss of the
Property or any part thereof, and (iii) in the case of a Legal Requirement, not
subject the Lessor, the Agent, the Trustee or the Holders from time to time of
the Instruments to the risk of (x) any criminal liability or (y) any civil
liability which in the judgment of the Agent is not adequately indemnified for
failure to comply therewith. The Lessee shall give such assurances as may be
reasonably demanded by the Lessor to insure ultimate payment of such Charges or
the discharge or removal of any such materialman's, laborer's or mechanic's
Lien or to insure compliance with such Legal Requirement and to prevent any
sale or forfeiture of the Property or any part thereof, or any interference
with or deductions from any Fixed Rent, Additional Rent or any other sum
required to be paid by the Lessee hereunder by reason of such non-payment,
non-discharge, non-removal or non-compliance.
(b) The Lessor shall cooperate with the Lessee in any contest and
shall allow the Lessee to conduct such contest (in the name of the Lessor, if
necessary) at the Lessee's sole cost and expense. The Lessee shall notify the
Lessor of each such proceeding at least ten days prior to the commencement
thereof, which notice shall describe such proceeding in reasonable detail.
(c) The Lessee shall, promptly after the final determination
(including appeals) of any contest brought by it pursuant to this paragraph 18,
pay and discharge all amounts which shall be determined to be payable therein
and shall be entitled to receive and retain for its own account all amounts
refunded and/or rebated as a result of any such contest and if the Lessor
receives any amount as a result of such contest to which it is not otherwise
entitled pursuant to this Lease, it shall promptly return such amount to the
Lessee.
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(d) Except as otherwise specifically provided in this Lease, this
paragraph 18 shall not apply in the case of Charges upon, or in respect of, any
Person other than the Lessor or in respect of the property or income of any
such Person.
18A. UNWIND FEE. Upon payment by the Lessee of the Unwind Fee and the
surrender of the Property to the Lessor pursuant to the conditions set forth in
Section 7.05 of the Participation Agreement, this Lease shall terminate.
19. DEFAULT PROVISIONS. (a) Any of the following occurrences or acts
shall constitute an event of default (each, an "EVENT OF DEFAULT") under this
Lease:
(i) if the Lessee shall fail to pay (a) any Fixed
Rent within five days or Additional Rent within ten days after
the date on which payment is due or (b) any other sum required
to be paid hereunder on the date on which such payment is due;
(ii) subject to the terms of paragraphs 11 and 18
relating to permitted contests, if the Lessee shall fail to pay
any Charges when such payment shall become due or within any
grace period provided for payment of such Charges;
(iii) if the Lessee shall fail to comply with any
Insurance Requirement;
(iv) if the Lessee shall fail to comply with the
requirements of paragraph 27(b) within the time periods
provided therein;
(v) if the Lessee shall grant, suffer to exist or
create any Lien (other than Permitted Encumbrances) upon either
Parcel, this Lease, or the Property or any part thereof or
interest therein or upon any Fixed Rent, Additional Rent or
other sum paid hereunder;
(vi) if the Lessee shall fail to observe or perform
any other covenant, condition or other provision hereof and such
failure shall continue for fifteen (15) days after the earlier
of (i) the date on which the Lessee becomes aware of such
failure or (ii) notice by the Lessor, the Agent or the Trustee
to the Lessee of such failure; PROVIDED, HOWEVER, that if such
failure is of such nature that it cannot be corrected by the
payment of money or otherwise within such 15-day period, such
failure shall not constitute an Event of Default so long as (x)
curative action reasonably satisfactory to the Lessor is
instituted within such period and diligently
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pursued to completion thereafter and (y) periodic progress
reports thereon are delivered to the Lessor;
(vii) if an "Event of Default" (as defined in any such
other Operative Document, but excluding any Unwind Event) under
the Participation Agreement or any other Operative Document
shall have occurred;
(viii) if the Lessee has elected not to purchase the
Lessor's interest in the Property pursuant to paragraph
27(a)(ii), and if, ten (10) Business Days before the Expiration
Date, either (a) the Lessee is then rebuilding or restoring, or
would be required by the terms hereof to rebuild or restore, the
Property pursuant to paragraph 12(c) hereof or (b) a temporary
Condemnation has occurred and is scheduled to continue after the
Expiration Date;
(ix) if any Operative Document shall for any reason
no longer be in full force and effect (except if such is the
result of a purchase of the Property by the Lessee pursuant to
this Lease);
(x) if the Lessee shall have abandoned the Property
or the Improvements or if the Property or the Improvements
become vacant for a period of thirty (30) consecutive days;
(xi) if the Lessee shall lose any real property
interests, licenses or rights to access it currently holds with
respect to any sites on which any portion of the Improvements
are from time to time located and such loss would prevent the
Lessee from using such Improvements as contemplated by the
Operative Documents or hinder the enforcement of the Trustee's
remedies under the Services Agreement.
(b) The Lessor may take all steps to protect and enforce the rights of
the Lessor or obligations of the Lessee hereunder, whether by action, suit or
proceeding at law or in equity (for the specific performance of any covenant,
condition or agreement contained in this Lease, or in aid of the execution of
any power herein granted or for any foreclosure, or for the enforcement of any
other appropriate legal or equitable remedy) or otherwise as the Lessor shall
deem necessary or advisable.
(c)(i) If an Event of Default shall have occurred and be continuing,
including an Event of Default arising from the breach of a covenant, condition
or other provision hereof, then upon five (5) Business Days' prior written
notice by the Lessor to the Lessee, in addition to all other rights, remedies
or recourses available, the Lessor may either (A)
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terminate this Lease or (B) terminate the Lessee's right to possession of the
Property or any part thereof. If Lessor should elect to terminate this Lease
as provided in subparagraph (c)(i)(A) above, then this Lease and the estate
hereby granted shall expire and terminate at midnight on the fifth (5th)
Business Day (or such later date as may be specified therein) after the date of
such notice, as fully and completely and with the same effect as if such date
was the date herein fixed for the expiration of the Term and all rights of the
Lessee shall terminate, but the Lessee shall remain liable as hereinafter
provided.
(ii) Should the Lessor elect not to terminate this Lease, this Lease
shall continue in effect and Lessor may enforce all Lessor's rights and
remedies under this Lease including the right to recover the Fixed and
Additional Rent as each becomes due under this Lease. For the purposes hereof,
the following do not constitute a termination of this Lease:
(A) Acts of maintenance or preservation of the Property
or any part thereof or efforts to relet the Property or any
part thereof, including, without limitation, termination of any
sublease of the Property to a third party and removal of such
subtenant from the Property; and/or
(B) The appointment of a receiver upon initiative of the
Lessor to protect the Lessor's interest under this Lease.
(d) If an Event of Default shall have occurred and be continuing, and
the Lessor has elected to terminate this Lease or terminate the Lessee's right
to possession of the Property or part thereof, upon five (5) Business Days'
notice, Lessor shall have (i) the right, whether or not this Lease shall have
been terminated pursuant to paragraph 19(c) hereof, to re-enter and repossess
the Property or any part thereof, as the Lessor may elect, by summary
proceedings, ejectment, any other legal action or in any other lawful manner
the Lessor determines to be necessary or desirable and (ii) the right to remove
all Persons and property therefrom. The Lessor shall be under no liability by
reason of any such re-entry, repossession or removal. No such re-entry or
repossession of the Property or any part thereof shall be construed as an
election by the Lessor to terminate this Lease unless a notice of such
termination is given to the Lessee pursuant to paragraph 19(c) hereof, or
unless such termination is decreed by a court or other governmental tribunal of
competent jurisdiction. Should the Lessor elect to re-enter the Property as
herein provided or should the Lessor take possession pursuant to legal
proceedings or pursuant to any
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notice provided for by Law or upon termination of this Lease of the Lessee's
right to possession of the Property or any part thereof pursuant to paragraph
19(c) hereof or otherwise as permitted by Law, the Lessee shall peaceably quit
and surrender the Property or any part thereof to the Lessor. In any such
event, neither the Lessee nor any Person claiming through or under the Lessee,
by virtue of any Law, shall be entitled to possession or to remain in
possession of the Property or any such part thereof, but shall forthwith
quit and surrender the Property to the Lessor.
(e) At any time or from time to time after the re-entry or
repossession of the Property or any part thereof pursuant to paragraph 19(d)
hereof, whether or not this Lease shall have been terminated pursuant to
paragraph 19(c) hereof, the Lessor may (but shall be under no obligation to)
relet the Property or any part thereof, for the account of the Lessee, without
notice to the Lessee, for such term or terms and on such conditions and for
such uses as the Lessor, in its sole and absolute discretion, may determine.
The Lessor may collect and receive any rents payable by reason of such
reletting. The Lessor shall not be liable for any failure to relet the
Property or any part thereof or for any failure to collect any rent due upon
any such reletting.
(f) No termination of this Lease or of the Lessee's right to
possession of the Property or any part thereof pursuant to paragraph 19(c)
hereof, or by operation of Law, and no re-entry or repossession of the Property
or any part thereof, pursuant to paragraph 19(d) hereof, and no reletting of
the Property or any part thereof pursuant to paragraph 19(e) hereof, shall
relieve the Lessee of its liabilities and obligations hereunder, all of which
shall survive such termination, re-entry, repossession or reletting.
(g) In the event of any termination of this Lease or of the Lessee's
right to possession of the Property or any part thereof by reason of the
occurrence of any Event of Default, the Lessee shall pay to the Lessor all
Fixed Rent, Additional Rent and other sums required to be paid to and including
the date of such termination of this Lease or of the Lessee's right to
possession; and thereafter, until the end of the Term, whether or not the
Property or any part thereof shall have been relet, the Lessee to the extent
permitted by applicable Law shall be liable to the Lessor for, and shall pay to
the Lessor, on the days on which such amounts would be payable under this Lease
in the absence of such termination, re-entry or repossession, as agreed current
damages and not as a penalty: all Fixed Rent, Additional Rent and other sums
which would be payable under this Lease by the Lessee, in the absence of such
termination, re-entry or repossession, and all costs (including attorneys' fees
and expenses incurred by the
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Lessor hereunder (payable on demand)) and all costs of any environmental
remediation required by Environmental Law. To the extent permitted by Law, at
such time after the termination or expiration of this Lease as the Lessee shall
have paid all amounts required to be paid by it under this Lease and the Lessor
shall have discharged any and all obligations to the Holders from time to time
of the Instruments, then the Lessor shall pay to the Lessee, when received, the
net proceeds, if any, of any reletting effected for the account of the Lessee
pursuant to paragraph 19(e), after deducting from such proceeds all of the
Lessor's expenses in connection with such reletting (including, but not limited
to, all repossession costs, brokerage commissions, attorneys' fees and
expenses, employees' expenses, alteration costs and expenses of preparation for
such reletting and all costs at any environmental remediation required by
Environmental Law).
(h) Notwithstanding the foregoing, if an Event of Default shall have
occurred, the Lessee may within five (5) Business Days of the earliest of the
Lessor's, Agent's or Trustee's notice of such occurrence thereafter pay to the
Lessor an amount equal to the Offer Purchase Price in which event the Lessor
shall be obliged to convey the Property to Lessee in compliance with paragraph
15.
(i) At any time after such termination of the Term of this Lease or
re-entry or repossession of the Property by reason of the occurrence of an
Event of Default, the Lessor shall be entitled to recover from the Lessee, and
the Lessee will pay to the Lessor on demand, in lieu of all liquidated damages
in respect of Fixed Rent beyond the date of such demand (but in addition to any
claim for current damages in respect of Fixed Rent prior to the date of such
demand), an amount equal to the Termination Value.
20. ADDITIONAL RIGHTS; MORTGAGE. (a) No right or
remedy hereunder shall be exclusive of any other right or remedy, but shall be
cumulative and in addition to any other right or remedy hereunder or now or
hereafter existing by Law or in equity and the exercise by the Lessor of any
one or more of such rights, powers or remedies shall not preclude the
simultaneous exercise of any or all of such other rights, powers or remedies.
Failure to insist upon the strict performance of any provision hereof or to
exercise any option, right, power or remedy contained herein shall not
constitute a waiver or relinquishment thereof for the future. Receipt by the
Lessor (or by the Trustee on behalf of the Lessor) of any Fixed Rent,
Additional Rent or other sum payable hereunder with knowledge of the breach by
Lessee of any provision hereof shall not constitute waiver of such breach, and
no waiver by the Lessor or the Trustee of any provision hereof shall be
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deemed to have been made unless made in writing. The Lessor and the Trustee
shall be entitled to injunctive relief in case of the violation or attempted or
threatened violation of any of the provisions hereof, a decree compelling
performance of any of the provisions hereof or any other remedy allowed to the
Lessor by Law or in equity.
(b) The Lessee hereby waives and surrenders for itself and all those
claiming under it, including creditors of all kinds, (i) any right and
privilege which they may have to redeem the Property or any part thereof or to
have a continuance of this Lease after termination of the Lessee's right of
occupancy by Law or by any legal process or writ, or under the terms of this
Lease, or after the termination of the term of this Lease as herein provided
and (ii) the benefits of any Law which exempts property from liability for debt
or for distress for rent.
(c) If an Event of Default exists hereunder, the Lessee shall pay to
the Trustee, on behalf of the Lessor, all fees and out-of-pocket expenses
incurred by the Lessor or the Trustee in enforcing its rights under this Lease,
including attorneys' fees and expenses.
(d) Lessor and Lessee intend that the Lessee shall treat this Lease,
for accounting purposes, as an operating lease. If a court of competent
jurisdiction determines that the transaction represented by this Lease and the
other Operative Documents will be treated as a financing transaction, then in
such event it is the intention of the parties hereto (i) that this Lease be
treated as a deed of trust and security agreement, mortgage and security
agreement, or other similar instrument with a power of sale (the "MORTGAGE")
from Lessee, as mortgagor, to the Trustee for the benefit of Lessor, as
mortgagees, encumbering the Property, and that the Lessee, as mortgagor, hereby
(A) grants, bargains, conveys, mortgages, sells and sets over in trust, with
power of sale to the Trustee for the benefit of the Lessor and the Trustee, as
mortgagee, or any successor thereto, for the use and benefit of the Holders of
the Applicable Percentage of the Interim Notes, the Holders of the B-Notes and
the Holders of the Certificates, as beneficiaries, a first and paramount Lien
on the Property (subject to Permitted Encumbrances), and (B) grants a security
interest to the Lessor and the Trustee in the Property, (ii) that Lessor and
the Trustee shall have, as a result of such determination, all of the rights,
powers and remedies of a mortgagee and/or secured party available under
applicable Law to take possession of and sell (whether by foreclosure, power of
sale or otherwise) the Property, (iii) that the effective date of the Mortgage
shall be the effective date of this Lease, (iv) that the recording of an
instrument referencing this provision
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shall be deemed to be the recording of the Mortgage and (v) that the Mortgage
shall secure the Secured Obligations.
(e) If this Lease shall hereafter be treated as the Mortgage as
provided in subparagraph 20(d) above, then the following provisions shall apply
in respect of the Lessor's and Trustee's enforcement of their rights under such
Mortgage: (i) upon request by the Lessor or the Trustee, the Trustee shall
proceed (under Chapter 9 of the Texas Business and Commerce Code with respect
to the Property located in Texas) to sell the Property and any and every part
thereof, at public venue, to the highest bidder, at the customary time and
place in the county where the Property is located, and at the time, place, and
under the terms designated in said notice of sale for cash, first giving the
public notice and notice to the Lessee required by law of the time, terms and
place of sale, and of the property to be sold; and upon such sale shall execute
and deliver a deed of conveyance of the Property sold to the purchaser or
purchasers thereof, and any statement or recital of fact in such deed in
relation to the nonpayment of money hereby secured to be paid, existence of the
indebtedness so secured, notice of advertisement, sale, receipt of money, and
the happening of any of the events whereby any successor Trustee became
successor as herein provided, shall be prima facie evidence of the truth of
such statement or recital; and the Trustee shall receive the proceeds of such
sale, out of which the Trustee shall pay, first the cost and expenses of
executing this trust, including attorneys' fees and compensation to the Trustee
for its services, and next to the Lessor or its endorsees or assignees, upon
the usual vouchers therefor, all monies paid pursuant to or under any
provisions set forth herein or in the Operative Documents; and next all monies
due and owing as to the Secured Obligations then due and unpaid (with interest
and Distributions at the Default Rate on any overdue amounts) up to the time of
such payment, and if not enough therefor, then apply what remains; and next to
all other unpaid sums secured hereby in such order as the Lessor may elect; and
the balance of such proceeds, if any, shall be paid to the person or persons
legally entitled thereto; and the Trustee covenants faithfully to perform the
trust herein created; (ii) until a sale shall be held hereunder, the Trustee
hereby lets the Property to the Lessee, upon the following terms and
conditions, to-wit: the Lessee, and every and all persons claiming or
possessing the Property, and any part thereof, by, through, or under it, shall
or will pay rent therefor during said term at the rate of one cent per month,
payable monthly upon demand, and shall and will surrender peaceable possession
of the Property, and any and every part thereof, to the Trustee, its
successors, assignees, or purchasers thereof, without notice or demand
therefor, upon the occurrence of said sale; (iii) upon any sale or sales made
hereunder, whether made under the power of sale herein granted
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or under or by virtue of judicial proceedings or of a judgment or decree of
foreclosure and sale, the Lessor or the Trustee may bid for and acquire the
Property or any part thereof and, in lieu of paying cash therefor, may make
settlement for the purchase price by crediting upon the Secured Obligations the
net sales price after deducting therefrom the expenses of sale and the cost of
the action and any other sums which the Lessor is authorized to deduct under
this Lease, and, in such event, this Lease and the Operative Documents
evidencing the Secured Obligations may be presented to the persons or person
conducting the sale in order that the amount so used or applied may be credited
upon the Secured Obligations as having been paid; (iv) the Lessor and the
Trustee shall have the option to proceed with foreclosure in satisfaction of
any part of the Secured Obligations without declaring the whole of the Secured
Obligations as immediately due and payable, and such foreclosure may be made
subject to the part of the Secured Obligations not due and payable, and it is
agreed that such foreclosure, if so made, shall not in any manner affect the
part of the Secured Obligations, but as to such part this Lease, as treated as
the Mortgage, as well as the other Operative Documents, shall remain in full
force and effect just as though no foreclosure had been made. Several
foreclosures may be made without exhausting the right of foreclosure for any
part of the Secured Obligations not due and payable, it being the purpose to
provide for a foreclosure and sale of the security for any due and payable
portion of the Secured Obligations without exhausting the power of foreclosure
and power to sell the Property for any other part of the Secured Obligations;
and (v) the Lessor and the Trustee may, from time to time, substitute another
trustee in place of the Trustee herein named. Upon such appointment, and
without conveyance to the successor trustee, the latter shall be vested with
all the titles, estates, rights, powers and trusts conferred upon the Trustee
herein named. Such appointment shall be made by written instrument executed by
the Lessor and the Trustee which shall be recorded among the public records in
the county where the Property is located, and shall be conclusive proof of the
proper appointment of the successor trustee.
(f) In the exercise of any of the Lessor's and the Trustee's rights
under this paragraph 20, the Lessor and the Trustee shall comply with all
applicable requirements of Section 51.002 of the Texas Property Code, as the
same may be amended from time to time.
21. NOTICES, DEMANDS, AND OTHER INSTRUMENTS. All notices, offers,
consents and other instruments given pursuant to this Lease shall be sent to
the parties hereto at the addresses set forth on Schedule I to the
Participation Agreement and shall be given in the manner and shall be
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effective at the times and under the terms set forth in Section 9.02 of the
Participation Agreement; PROVIDED that each of the Lessor and the Lessee may
from time to time specify, by giving not less than 15 days' prior written
notice thereof to the other party (i) any other address in the United States as
its address for purposes of this Lease and (ii) any other Person that is to
receive copies of notices, offers, consents and other instruments hereunder;
and PROVIDED that neither party shall be entitled to designate more than two
other Persons to receive copies of notices hereunder. The Lessee shall send to
the Trustee and Agent copies of all notices, offers, consents, advices and
other instruments hereunder sent to the Lessor. Notwithstanding anything to
the contrary herein or in the Operative Documents, all notices, consents and
other instruments required to be given by the Lessor hereunder may
alternatively be given by the Trustee on the Lessor's behalf.
22. NO DEFAULT CERTIFICATE. Each party hereto shall, at the
reasonable request of the other party hereto, deliver to such other party a
certificate stating whether such first party has knowledge of, or has received
notice from any person of, any Casualty, Condemnation, Default, Environmental
Trigger, Unwind Event or Event of Default.
23. SURRENDER. If upon the expiration or termination of the Term or
the termination of Lessee's possession of the Property, Lessee or its designee
has not purchased the Property as provided hereunder, (a) the Lessee shall
surrender (i) the Property to the Lessor in the condition in which the Property
was upon the commencement of the Term hereof (subject to subparagraph (c) below
and further subject to Improvements and other alterations and maintenance made
in accordance herewith) together with such additional easements, rights of way
or other rights as Lessor may require to assure unrestricted access to the
Property and (ii) the Improvements in the operating condition, efficiency and
with the useful life, they were or had upon the commencement of the Primary
Term, except as repaired, rebuilt, altered, added to or built as permitted or
required hereby and except for ordinary wear and tear. To the extent that the
Property is not in compliance with the above upon such expiration or
termination (except as a consequence of a Casualty or Condemnation, as to which
paragraph 12 applies), the Lessee shall pay to the Lessor such additional
amounts as are required to place it in compliance therewith.
(b) The Lessee shall also surrender the Property to the Lessor free
and clear of all Liens, easements, consents and restrictive covenants and
agreements affecting the Property which the Lessee is obliged hereunder to
remove.
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(c) The Lessee shall also surrender the Property in a condition such
that the Property is in compliance with all applicable Environmental Laws at
surrender (irrespective of whether the deadline for such compliance would
otherwise expire before the end of the Term). Nothing contained in this
paragraph 23 shall relieve or discharge or in any way affect the obligation of
the Lessee to cure promptly pursuant to this Lease any violations of Legal
Requirements referred to in this Lease, or to pay and discharge any Liens and
Impositions against the Property, subject, however, to the right of the Lessee
to contest the same pursuant to the provisions of paragraphs 11 and 18. Lessee
shall cooperate, to the fullest extent, with the Lessor, its subsequent
lessees, operators or purchasers to effect the transfer of all of Lessee's
Applicable Permits for the Property to such Persons.
(d) The Lessee, at its sole cost and expense, shall remove from the
Property on or prior to such expiration or termination all property situated
thereon which is not owned by the Lessor and shall repair any damage caused by
such removal and shall restore the Property to the condition and working order
(or reasonable equivalent thereof) in which they existed immediately prior to
the installation of such property, except for ordinary wear and tear. Lessee
shall indemnify and hold harmless the Lessor, its successors and assigns
against any loss, liability or claim arising out of the Lessee's removal of
such property from the Property including, without limitation, any
environmental liability arising therefrom. Any such property of the Lessee not
so removed shall become the property of the Lessor, and the Lessor may cause
such property to be removed from the Property and disposed of, and the cost of
any such removal and disposition of the Lessee's property and of repairing any
damage caused by such removal and of the restoration of the Property to the
condition and working order (or reasonable equivalent thereof) in which it
existed immediately prior to the installation of such property, ordinary wear
and tear excepted, shall be borne by the Lessee.
(e) The Lessee shall comply with the conditions set forth in Section
7.05(b) of the Participation Agreement in addition to those set forth in this
paragraph 23.
(f) The obligations of the Lessee under this paragraph 23 shall
survive the expiration or any termination of this Lease (whether by operation
of Law or otherwise) for all matters described in this paragraph 23 which occur
or arise prior to such expiration or termination or arise out of or result from
facts, events, claims, liabilities, actions or conditions occurring, arising or
existing on or before such expiration or termination.
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24. SEPARABILITY; BINDING EFFECT; GOVERNING LAW; NON-RECOURSE. (a)
Except as expressly provided otherwise in this Lease, each provision hereof
shall be separate and independent and the breach of any such provision by the
Lessor shall not discharge or relieve the Lessee from its obligations to
perform each and every covenant to be performed by the Lessee hereunder. If
any provision hereof or the application thereof to any Person or circumstance
shall be invalid or unenforceable, the remaining provisions hereof, or the
application of such provision to persons or circumstances other than those as
to which it is invalid or unenforceable, shall not be affected thereby, and
each provision hereof shall be valid and shall be enforceable to the extent
permitted by Law.
(b) All provisions contained in this Lease shall be binding upon,
inure to the benefit of, and be enforceable by, the respective permitted
successors and assigns of the Lessor and the Lessee to the same extent as if
each successor and assignee were named as a party hereto. Except for subleases
permitted or created in accordance with paragraph 17 hereof, the Lessee may not
assign its rights hereunder or any interest herein without the prior written
consent of the Lessor. Subject to the provisions of the other Operative
Documents, the Lessor may assign all or any part of the Property and/or its
rights under this Lease. This Lease may not be changed, modified or discharged
except by a writing signed by the Lessor and the Lessee. Any change,
modification or discharge made otherwise than as expressly permitted by this
paragraph 24 shall be null and void.
(c) THIS LEASE SHALL BE INTERPRETED, CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO EXCEPT FOR ISSUES WHICH ARE
MANDATORILY SUBJECT TO THE LAWS OF THE STATE OF TEXAS, WHICH ISSUES SHALL BE
INTERPRETED, CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS.
(d) This Lease, when delivered, shall constitute an original, fully
enforceable counterpart for all purposes except that only the counterpart
stamped or marked "COUNTERPART NUMBER ONE" or "COUNTERPART NUMBER 1" shall
constitute, to the extent applicable, "chattel paper" or other "collateral"
within the meaning of the Uniform Commercial Code in effect in any
jurisdiction.
(e) No recourse shall be had against the Lessor, SSBTC, the Agent or
any Holder of any Instrument or their respective successors, assigns,
directors, officers, employees, agents or shareholders, for any claim based on
any failure by the Lessor in the performance or observance of any of the
agreements, covenants or provisions contained in this
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Lease and in the event of any such failure, recourse shall be had solely
against the Property; PROVIDED, HOWEVER, that nothing contained in this Lease
shall be taken to prevent enforcement of any claim against the Lessor or
any other Person arising out of or in connection with this Lease based on
fraud, gross negligence or willful misconduct of the Lessor and nothing shall
prevent enforcement against any other Person to which any part thereof shall
have been transferred, or obligations undertaken or assumed in writing by such
Person.
25. HEADINGS AND TABLE OF CONTENTS. The table of contents and the
headings of the various paragraphs and schedules of this Lease are for
convenience only and shall not affect the meaning of the terms and conditions
of this Lease.
26. LESSOR'S RIGHT TO CURE LESSEE'S DEFAULT. If the Lessee shall fail
to make any payment or perform any act required to be made or performed under
this Lease, the Lessor, without waiving any default or releasing Lessee from
any obligation, may (but shall be under no obligation to) make such payment or
perform such act for the account and at the cost and expense of the Lessee, and
may enter upon the Property for such purpose and take all such action thereon
as, at the Lessor's sole discretion, may be necessary or appropriate therefor.
No such entry shall be deemed an eviction of the Lessee or a breach of the
Lessor's covenant for quiet possession pursuant to paragraph 2(b). All sums so
paid by the Lessor and all costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses so incurred, together with interest
thereon to the extent permitted by Law) shall be paid by the Lessee to the
Lessor on demand as Additional Rent.
27. LESSEE'S OPTIONS UPON EXPIRATION. (a) In addition to its rights
under paragraphs 12 and 14 hereof, Lessee shall, by notice given not less than
twelve (12) months prior to the Expiration Date, elect either to (i) deliver an
Offer to Purchase the Property in its entirety and purchase the Property on the
Expiration Date upon payment of an amount equal to the Offer Purchase Price, in
which case the transfer of the Property shall be governed by the terms of
paragraphs 14 and 15 (and in which case, this Lease (with the exception of
paragraph 24(e) or any other provision hereof under which the Lessee
indemnifies the Lessor or others from liability in connection with this Lease)
shall terminate on the Closing Date); or (ii) subject to the satisfaction of
the conditions set forth in paragraph 27(b) hereof, terminate this Lease,
abandon the Property as of the Expiration Date and pay to the Trustee, on
behalf of the Lessor on the Expiration Date, in addition to any Fixed Rent,
Additional Rent and any other amounts then due and payable to the Lessor
hereunder, the Residual Guaranty.
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(b) Upon the election of the Lessee to terminate this Lease pursuant
to paragraph 27(a)(ii) hereof, Lessee shall provide, or cause to be provided or
accomplished, at the sole cost and expense of the Lessee, to or for the benefit
of the Lessor and the holders of the Instruments, at least thirty (30) days but
not more than sixty (60) days prior to the Expiration Date each of the items
set forth in Section 7.05 of the Participation Agreement.
(c) Upon the Lessee's election to terminate this Lease pursuant to and
in compliance with paragraph 27(a)(ii) hereof, the Lessor shall have the sole
and exclusive right to sell or dispose of the Property and, as of the
Expiration Date, the Lessee shall have no further claim thereto. The proceeds
of any sale or disposition of the Property pursuant to this paragraph 27
(herein called a "QUALIFIED SALE") shall be applied by the Trustee on the
Lessor's behalf as follows: FIRST, to pay all Closing Costs in connection with
the Qualified Sale; and SECOND, as provided in the Declaration.
(d) If Lessee is unable to satisfy one or more of the conditions set
forth in paragraph 27(b) hereof, or fails to elect either (i) or (ii) under
paragraph 27(a) hereof, the Lessee shall be deemed to have elected to proceed
under paragraph 27(a)(i) hereof, in which case Lessee shall purchase the
Property pursuant to and in accordance with said paragraph 27(a)(i).
28. LIMITATIONS ON AMOUNTS PAYABLE. Notwithstanding anything to the
contrary contained in this Lease or any of the other Operative Documents, the
amounts which the Lessee is obliged to pay pursuant to this Lease and the other
Operative Documents, and the amounts which Lessor, the Agent and the Note and
Certificate Purchasers are entitled to receive pursuant to this Lease and other
Operative Documents, are subject to limitations pursuant to Section 9.18 of the
Participation Agreement.
29. WAIVER OF TRIAL BY JURY. IN ANY ACTION OR PROCEEDING UNDER OR
RELATED TO THIS AGREEMENT, THE OPERATIVE DOCUMENTS OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION WITH THE FOREGOING, THE LESSOR AND THE LESSEE HEREBY
AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT
BEFORE A JURY, IRRESPECTIVE OF WHICH PARTY COMMENCES SUCH ACTION OR PROCEEDING.
30. NO MERGER OF TITLE. There shall be no merger of this Lease nor of
the leasehold estate created by this Lease with the fee ownership of either of
the Parcels by reason of the fact that the same Person may acquire, own or
hold, directly or indirectly, this Lease or the leasehold
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estate created by this Lease or any interest in this Lease or interest in the
fee or leasehold ownership of either of the Parcels, and no such merger shall
occur unless and until all Persons having any interest in (x) the leasehold
estate created by this Lease and (y) the ownership of the Parcels or any part
thereof shall join in a written instrument effecting such merger and shall
duly record the same.
31. PAYMENTS TO THE TRUSTEE. The Lessee hereby acknowledges, and the
Lessor hereby directs, that all payments of Fixed Rent, Additional Rent and
other sums due to the Lessor hereunder shall be made to the Lessor, to the
account specified for the Trustee in Schedule I to the Participation Agreement.
39
<PAGE> 44
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly
executed by their respective Officers thereunto duly authorized as of the date
hereof.
LESSOR:
------
STATE STREET BANK AND TRUST
COMPANY, not in its individual
capacity but solely as Trustee
By: /s/ Ruth A. Smith
---------------------------
Name: Ruth A. Smith
[Seal]: Title: Assistant Vice President
LESSEE:
------
[Seal]:
FERRO CORPORATION
By: /s/ D. T. George
---------------------------
Name: D. Thomas George
Title: Treasurer
[Seal]:
[Seal]:
40
<PAGE> 45
SCHEDULE A
----------
Description of the Parcels
--------------------------
(see attached)
A-1
<PAGE> 46
SCHEDULE A
(Description of Ohio Parcels)
PARCEL NO. 1:
Situated in the City of Cleveland, County of Cuyahoga and State of Ohio and
known as being part of Original Euclid Township Lot No. 9, Tract 10, and more
particularly bounded and described as follows:
Beginning in the Southeasterly line of the Norfolk & Western Railroad Company's
Right-of-Way, 66 feet wide, formerly the New York, Chicago and St. Louis
Railroad Company, at its intersection with the centerline of Wayside Road,
N.E., 60 feet wide, said point of intersection bears North 33 degrees 30' 7"
West, measured along said centerline of Wayside Road, N.E., a
distance of 60.92 feet from a stone monument marking an angle in said
centerline.
Thence South 36 degrees 56' 30" West along said Southeasterly line of the
Norfolk & Western Railroad Company's Right-of-Way, a distance of 31.84 feet to
the Southwesterly line of Wayside Road, N.E., and the principal place of
beginning of the land herein described.
Course No. 1 - Thence South 36 degrees 56' 30" West, continuing along said
Southeasterly Right-of-Way line, a distance of 420.44 feet observed (420.25
feet deed) to the most Westerly corner of Parcel No. 1, conveyed to Synthetic
Products Company, by deed recorded in Volume 88-3864, Page 7 of Cuyahoga County
Official Records.
Course No. 2 - Thence South 53 degrees 03' 30" East, at right angles to said
Southeasterly Right-of-Way line, a distance of 161.24 feet observed (160.83
feet deed) to the most Southerly corner of said Parcel No. 1.
Course No. 3 - Thence North 50 degrees 01' 50" East, along a Southeasterly line
of said Parcel No. 1, a distance of 383.53 feet observed (383.51 feet deed) to
the Southwesterly line of Wayside Road, N.E.
Course No. 4 - Thence North 44 degrees 42' 20" West, along said Southwesterly
line, a distance of 200.08 feet observed (199.87 feet deed) to an angle
therein.
<PAGE> 47
Course No. 5 - Thence North 33 degrees 30 feet, 07 inches West,
continuing along said Southwesterly line of Wayside Road, N.E., a distance of
53.20 feet observed (52.97 feet deed) to the principal place of beginning, and
containing 1.865 Acres of land, according to a survey made by Bauer Surveys
Company dated October 5, 1995, per A. Thomas Powers, Registered Professional
Land Surveyor No. 4432.
PARCEL NO. 2:
Appurtenant Easement created in the Deed from Anchor Rubber Products, Inc. to
Synthetic Products Company, an Ohio Partnership, filed for record September 17,
1951 at 1:10 P.M., and recorded in Volume 7299, Page 337 of Cuyahoga County
Records, and amended in Volume 91-0620, Page 25 of Cuyahoga County Records,
over the following described premises:
Situated in the City of Cleveland, County of Cuyahoga and State of Ohio and
known as being part of Original Euclid Township Lot Nos. 9, Tract 10, and more
particularly bounded and described as follows:
Beginning in the Northeasterly line of London Road, N.E., 60 feet wide, at a
point distant South 39 degrees 57' 30" East, measured along said Northeasterly
line of London Road N.E., a distance of 33.00 feet from its intersection with
the Southeasterly line of The Norfolk & Western Railroad Company (formerly The
New York, Chicago and St. Louis Railroad Company) right-of-way, 66 feet wide.
Course No. 1: Thence North 51 degrees 34' 00" East along said Southeasterly
right-of-way line, a distance of 175.55 feet to a point.
Course No. 2: Thence South 66 degrees 26' 00" East, a distance of 85.31 feet to
its intersection with the Southeasterly prolongation of the Southeasterly line
of land conveyed to Synthetic Products Company by deed recorded in Volume 7299
of Deeds. Page 337 of Cuyahoga County Records.
Course No. 3: Thence North 50 degrees 01' 50" East along said prolongation and
along said Southeasterly line, a distance of 391.35 feet to the Southwesterly
line of Wayside Road.
Course No. 4: Thence South 44 degrees 42' 20" East along said Southwesterly
line of Wayside Road, a distance of 20.07 feet to a point.
Course No. 5: Thence South 50 degrees 01' 50" West along a line which is
parallel with and distant Southeasterly 20 feet by rectangular measurement
from Course No. 3, a distance of
2
<PAGE> 48
405.39 feet to a point.
Course No. 6: Thence North 66 degrees 26' 00" West along a line which is
parallel with and distant Southwesterly 20 feet by rectangular measurement
from Course No. 2, a distance of 85.68 feet to a point.
Course No. 7: Thence South 51 degrees 34' 00" West along a line which is
parallel with and distant Southeasterly 20 feet by rectangular measurement from
Course No. 1, a distance of 163.00 feet to the Northeasterly line of London
Road N.E.
Course No. 8: Thence North 39 degrees 57' 30" West along said Northeasterly
line of London Road, a distance of 20.01 feet to the place of beginning and
containing 13,063 Square Feet of land according to a survey made by Bauer
Surveys Company dated September 21, 1988; revised September 28, 1988 and
October 15, 1988 and supplemented on March 31, 1989, per A. Thomas Powers,
Registered Professional Land Surveyor No. 4432.
PARCEL NO. 3:
Situated in the City of Cleveland, County of Cuyahoga and State of Ohio and
known as being part of Sublots Nos. 170, 178 and 194, all of Sublots Nos. 171
to 177, both inclusive, all of Sublots 195 to 202, both inclusive, and part of
Mandalay Avenue, N.E., now vacated, in the Crawford Realty Company's London
Road-Wayside Subdivision of part of Original Euclid Township Lot Nos. 9 and 42,
as shown by the recorded plat in Volume 54 of Maps, Page 30 of Cuyahoga County
Records, and part of Original Euclid Township Lot No. 9, Tract 10, and together
forming a parcel of land bounded and described as follows:
Beginning on the Southwesterly line of Wayside Road, N.E., 60 feet wide, at the
most Easterly corner of the fourteenth parcel of land conveyed to Albert U.
Pucciani by deed dated May 21, 1943 and recorded in Volume 5605, Page 506 of
Cuyahoga County Records;
Course No. 1 - Thence South 33 degrees 30' 07" East, along said Southwesterly
line of Wayside Road, N.E., a distance of 550.92 feet observed (550.86 feet
deed), to a point which is distant North 33 degrees 30', 07" West 26.53 feet,
measured along said Southwesterly line, from its intersection with the
Northwesterly line of the Norfolk & Western Railroad Company's Right-of-Way, 66
feet wide, formerly the New York, Chicago and St. Louis Railroad Company.
Course No. 2 - Thence South 36 degrees 56' 30" West, and parallel with the
Northwesterly line of said Right-of-Way, a distance of 271.58 feet deed and
observed, to the most Southerly corner of Parcel No. 4 conveyed to
Synthetic Products
3
<PAGE> 49
Company, by deed recorded in Volume 86-3864, Page 7 of Cuyahoga County Official
Records.
Course No. 3 - Thence North 39 degrees 58' 30" West, along the Southwesterly
line of said Parcel No. 4, a distance of 608.92 feet observed (608.89 feet
deed) to the Northwesterly line of said Sublot No. 178.
Course No. 4 - Thence North 50 degrees 01' 54" East, along the Northwesterly
line of Sublots Nos. 178 to 173, both inclusive, and along the Southeasterly
line of the fourteenth parcel of land conveyed to Albert U. Pucciani by deed,
as aforesaid, a distance of 326.64 feet observed (326.58 feet deed) to the
place of beginning, and containing 3.901 Acres of land, according to a survey
made by Bauer Surveys Company dated October 5, 1995, per A. Thomas Powers,
Registered Professional Land Surveyor No. 4432.
4
<PAGE> 50
(Description of Texas Parcels)
Tract 1
Lot 1, Block 2 FERROCHEMICALS ADDITION to the City of Fort Worth, Tarrant
County, Texas, according to plot recorded in Volume 388-206, Page 26, Deed
Records of Tarrant County, Texas.
Tract 4
Lot 1, H. 3, WILSON SUBDIVISION OF NORTH FORT WORTH ADDITION, and part of the
E. LITTLE SURVEY adjoining said Lot on the North, said property being further
described by notes and bounds as follows:
BEGINNING 13.20 feet North of the Northwest corner of the F. C. Killiken
Survey, being the Northeast corner of the J. Baugh Survey; same being the most
Northerly Northeast corner of said Lot 1 in the Southeasterly line of Central
Avenue;
THENCE North 50 degrees 36 minutes 13 seconds east with the Southeast line of
Central Avenue if extended Northeast 36.88 feet to a 1 inch iron pin found in
the West right-of-way line of the Burlington Northern Railroad;
THENCE South 06 degrees 27 minutes 13 seconds West along said West right-of-way
line 135.45 feet to a point in the West line of said Lot 1:
THENCE North 30 degrees 05 minutes 17 seconds West along the West line of said
Lot 1, 95.39 feet to a 1 inch iron pin found in the Southeasterly line of
Central Avenue, and the Northerly line of said Lot 1:
THENCE North 50 degrees 19 minutes 45 seconds East along the Southeasterly line
of Central Avenue 44.88 feet to the POINT OF BEGINNING.
5
<PAGE> 51
(Description of Burdened Property-Easement Agreement).
TRACT NO. 1:
From the northeast corner of lot 12, Block 180, M. G. Ellis Addition,
measure east along the south line of 21st Street extended a distance of 106
feet, more or less, to the point of beginning, said point being 22 feet west of
the centerline of Lessor's main tract, measured perpendicularly thereto;
Thence continue east along the south line of 21st Street extended a
distance of 211 feet, more or less, to a corner in Lessor's property lines;
Thence South along Lessor's property line 400 feet to a point;
Thence South 18 degrees, 25' W. a distance of 48 feet, more or
less, to a point, said point being 9 feet easterly from the centerline of
Lessor's main track, measured perpendicularly thereto;
Thence, is a northeasterly direction 3 feet from and parallel to
Lessor's main track, a distance of 275 feet to a point;
Thence northeasterly, on a course perpendicular to Lessor's main
track, a distance of 13 feet to a point;
Thence northeasterly, on a course parallel to and 22 feet from
Lessor's main track, a distance of 200 feet, more or less, to the point of
beginning.
Containing 1.1 acres more or less.
TRACT NO. 2:
From the northeast corner of lot 12, Block 185, M. G. Ellis Addition,
measure south along the east line of lot 12 a distance of 7.5 feet to a point,
thence South 21 degrees, 48' a distance of 7.7 feet, more or less, to
the point of beginning, said point being 15 feet southerly from and at right
angles to the centerline of Lessor's 21st Street main track;
Thence South 21 degrees, 48' E. a distance of 415 feet, more or
less, to the southern corner of Lot 4, Block 180, said Addition;
Thence South 173.5 feet to a point in Lessor's southerly property
line;
Thence East along said southerly property line 102.2 feet to a point
in Lessor's easterly property line;
Thence North 18 degrees, 25' E. along said easterly property line a
distance of 96 feet, more or less, to a point, said point being 15 feet
westerly from and parallel to the centerline of Lessor's main track;
Thence, in a northeasterly direction, 15 feet westerly from and
parallel to the centerline of Lessor's main track, a distance of 415 feet, more
or less, to a point opposite the point of switch of Lessor's 21st Street main
track;
Thence, in a northeasterly direction, 15 feet from and concentric with
the centerline of said main track, a distance of 150 feet, more or less, to the
point of beginning.
Containing 1.3 acres, more or less.
6
<PAGE> 52
(Description of Burdened Property
Second Easement Agreement)
Tract 3 as shown on that certain plat entitled "Plat Showing an
ALTA/ACSM Land Title Survey of Tract 1, (Lot 1, Block 2, Petrochemicals
Addition). Tract 3, (a portion of Block 18, Forth Worth Stockyards Properties).
Tract 4, (Lot 1, H. J. Wilson Subdivision & a portion of E. Little Survey) and
Tract 5 (Lots 21 & 22, Block 179, M. G. Ellis Addition). To the City of Forth
Worth, Tarrant County, Texas September 12, 1995, as amended October 12, 1995",
of Area Surveying, Inc.,
AND
Tract 5 as shown on that certain plat entitled "Plat Showing an
ALTA/ACSM Land Title Survey of Tract 1, (Lot 1, Block 2, Petrochemicals
Addition). Tract 3, (a portion of Block 18, Forth Worth Stockyards Properties).
Tract 4, (Lot 1, H. J. Wilson Subdivision & a portion of E. Little Survey) and
Tract 5 (Lots 21 & 22, Block 179, M. G. Ellis Addition). To the City of Forth
Worth, Tarrant County, Texas September 12, 1995, as amended October 12, 1995",
of Area Surveying, Inc.
7
<PAGE> 53
(Description of license agreement property)
MAP
8
<PAGE> 54
SCHEDULE B
----------
Fixed Rent and Additional Rent Schedule
---------------------------------------
Capitalized terms used herein and not defined herein shall have the
meanings assigned to them in the Lease (including terms defined by reference in
the Lease to the other Operative Documents).
I. Fixed Rent
----------
A. Fixed Rent
----------
1. The "ORIGINAL CAPITALIZED COST" of the Property is equal to the sum
of the aggregate principal amounts outstanding of the A-Notes and the
B-Notes plus the aggregate stated amount of the Certificates.
The "SERIES A PORTION" of the Original Capitalized Cost is equal to
the aggregate outstanding principal amount of the A-Notes.
The "SERIES 1-A PORTION" of the Original Certificate Cost is equal to
the aggregate outstanding principal amount of the Series 1
A-Notes.
The "SERIES B PORTION" of the Original Capitalized Cost is equal to
the aggregate outstanding principal amount of the B-Notes.
The "SERIES 1-B PORTION" of the Original Capitalized Cost is equal to
the aggregate outstanding principal amount of the Series 1 B-Notes.
The "SERIES C PORTION" of the Original Capitalized Cost is equal to
the aggregate outstanding stated amount of the Certificates.
The "SERIES 1-C PORTION" of the Original capitalized Cost is equal to
the aggregate outstanding stated amount of the Series 1
Certificates.
B-1
<PAGE> 55
FIXED RENT shall be due and payable in arrears on each Payment Date
in the amounts set forth below.
(a) Construction Period:
For the portion of the Construction Period during which interest
on the Interim Notes can be paid from Advances under the
Participation Agreement, "FIXED RENT" for each Payment Date
shall equal the sum of (A) an amount equal to the product of the
Series 1-A Portion of the Original Capitalized Cost of the
Property times the Applicable Rate, (B) an amount equal to the
product of the Series 1-B Portion of the Original Capitalized
Cost of the Property times the Applicable Rate, and (C) an
amount equal to the product of the Series 1-C Portion of the
Original Capitalized Cost of the Property times the Applicable
Rate, in each case calculated on the basis of a 360-day year and
prorated for the actual number of days of such period.
For the balance of the Construction Period, Fixed Rent shall
include, in addition to the amount set forth above, an amount
equal to the product of the aggregate principal amount of the
Interim Notes times the Applicable Rate, all calculated on the
basis of a 360-day year and prorated for the actual number of
days of such period.
If the Interim Notes are refinanced on a day which is not a
regular Payment Date, Fixed Rent shall be proportionately
adjusted to such date of exchange, and any additional costs
incurred by the Lessor in connection with such refinancing shall
also be payable on such date as Additional Rent under this
Lease, a certificate as to the amount of such costs submitted to
the Lessee by the Lessor shall be conclusive and binding for
all purposes, absent manifest error.
B-2
<PAGE> 56
(b) Primary Term:
"FIXED RENT" for each Payment Date during the Primary Term shall
equal the sum of (A) an amount equal to the product of the
Series A Portion of the Original Capitalized Cost of the
Property times the Applicable Rate, calculated on the basis of a
360-day year and prorated for the actual number of days of such
period, (B) an amount equal to the product of the Series B
Portion of the Original Capitalized Cost of the Property times
the Applicable Rate, calculated on the basis of a 360-day year
and prorated for the actual number of days of such period, and
(C) an amount equal to the product of the Series C Portion of
the Original Capitalized Cost of the Property times the
Applicable Rate, calculated on the basis of a 360-day year and
prorated for the actual number of days of such period since
the last Payment Date.
II. ADDITIONAL RENT
In addition to such Additional Rent as may otherwise be payable under the
Lease, Lessee shall pay within thirty (30) days of a demand therefor but
subject in all cases to Lessee's rights under the Operative Documents, as
Additional Rent, without duplication, all Break Costs, Funding Costs,
Reserve Costs, Increased Costs and Illegality Costs (collectively,
"ADDITIONAL COSTS").
Promptly after Lessor receives notice from any holder of Instruments of
any Additional Costs to be payable as Additional Rent Lessor shall supply
(i) a copy of the same to the Lessee; PROVIDED, HOWEVER, that the failure
to provide such notice of any Additional Costs shall not affect the
Lessor's right to recover Additional Rent for the same but shall merely
affect the timing of such recovery; and (ii) a certificate in reasonable
detail setting forth the basis for and the amount of such Additional Costs
submitted by the Lessor (on behalf of a holder) to the Lessee which notice
shall be conclusive and binding for all purposes, absent manifest error.
B-3
<PAGE> 57
SCHEDULE C
----------
Termination Value
-----------------
A. Termination Value.
-----------------
The "TERMINATION VALUE" of the Property as of any date shall be an
amount equal to the Adjusted Capitalized Cost of the Property and any Closing
Costs incurred in connection with the payment of such Adjusted Capitalized Cost
and/or the sale of the Property.
B. Adjusted Capitalized Cost:
-------------------------
The "ADJUSTED CAPITALIZED COST" of the Property, at any time, as a
whole is (i) after the consummation of the refinancing of the Interim Notes
contemplated by Article III of the Participation Agreement, the sum of the
Series A Portion, Series B Portion and Certificate Portion of the Adjusted
Capitalized Cost; and (ii) prior to the consummation of such refinancing of the
Interim Notes, the sum of the then outstanding aggregate principal amount of
the Interim Notes and the Series 1 Notes, together with interest accrued and
unpaid and all other amounts due thereon or with respect thereto, and the
Certificate Portion of the Adjusted Capitalized Cost.
The "SERIES A PORTION" of the Adjusted Capitalized Cost at any time
shall be equal to the then outstanding aggregate principal amount of the
A-Notes together with interest accrued and unpaid and all other amounts due
thereon or with respect thereto;
The "SERIES B PORTION" of the Adjusted Capitalized Cost at any time
shall be equal to the then outstanding aggregate principal amount of the
B-Notes, together with interest accrued and unpaid and all other amounts due
thereon or with respect thereto; and
The "CERTIFICATE PORTION" of the Adjusted Capitalized Cost at any time
shall be equal to the then outstanding aggregate stated amount of the
Certificates together with Distributions and all other amounts due thereon or
with respect thereto.
Capitalized terms used herein and not defined herein shall have the
meanings ascribed to them in the Lease (and the other Schedules thereto) to
which this Schedule C is attached, including terms defined by reference in the
Lease to the other Operative Documents.
C-1
<PAGE> 58
_____________________________________________________________
PARTICIPATION AGREEMENT
dated as of October 31, 1995
among
FERRO CORPORATION,
STATE STREET BANK AND TRUST COMPANY
not in its individual capacity except as
expressly stated herein, but solely as Trustee,
THE FINANCIAL INSTITUTIONS NAMED HEREIN,
as Purchasers
----------
and
CITIBANK, N.A.,
as Agent
-----
__________________________________________________________________
<PAGE> 59
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
<S> <C> <C>
Preliminary Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ARTICLE I. FINANCING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.01. Agreement to Issue and Purchase . . . . . . . . . . . . . .
SECTION 1.02. Financing Closing Date . . . . . . . . . . . . . . . . . .
SECTION 1.03. Simultaneous Financing Closing
Transactions
SECTION 1.04. Procedures for Fundings
Requisitions . . . . . . . . . . . . . . . . . . . . . .
SECTION 1.05. Commitment Reduction . . . . . . . . . . . . . . . . . . .
SECTION 1.06. Equipment Sale Options . . . . . . . . . . . . . . . . . .
ARTICLE II. CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 2.01. Conditions Precedent to the
Financing Closing . . . . . . . . . . . . . . . . . . . .
SECTION 2.02. Conditions Precedent to Funding
Subsequent to the Financing
Closing . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 2.03. Obligations Subsequent . . . . . . . . . . . . . . . . . .
ARTICLE III. REFINANCING OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 3.01. Refinancing of Interim Notes . . . . . . . . . . . . . . .
SECTION 3.02. Conditions Precedent to Final
Completion Date
ARTICLE IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.01. Company Representations and
Warranties . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 4.02. SSBTC Representations and
Warranties
ARTICLE V. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 5.01. Company's Covenants . . . . . . . . . . . . . . . . . . . .
ARTICLE VI. THE NOTES AND THE CERTIFICATES . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.01. Determination of Rates . . . . . . . . . . . . . . . . . .
SECTION 6.02. Assignments and Participations . . . . . . . . . . . . . .
</TABLE>
ii
<PAGE> 60
<TABLE>
<S> <C> <C>
SECTION 6.03. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 6.04. Substitution of Purchaser . . . . . . . . . . . . . . . .
SECTION 6.05. Sharing of Payments, Etc. . . . . . . . . . . . . . . . .
SECTION 6.06. Tax Treatment . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VII. EVENTS OF DEFAULT AND UNWIND EVENTS . . . . . . . . . . . . . . .
SECTION 7.01. Events of Default . . . . . . . . . . . . . . . . . . . .
SECTION 7.02. Remedies upon an Event of Default . . . . . . . . . . . .
SECTION 7.03. Unwind Events . . . . . . . . . . . . . . . . . . . . . .
SECTION 7.04. Remedies upon an Unwind Event . . . . . . . . . . . . . .
SECTION 7.05. Residual Guaranty and Return
Conditions . . . . . . . . . . . . . . . . . . . . . .
ARTICLE VIII. THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 8.01. Authorization and Action . . . . . . . . . . . . . . . .
SECTION 8.02. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . .
SECTION 8.03. Citicorp and Affiliates . . . . . . . . . . . . . . . . .
SECTION 8.04. Purchaser Credit Decision . . . . . . . . . . . . . . . .
SECTION 8.05. Indemnification . . . . . . . . . . . . . . . . . . . . .
SECTION 8.06. Successor Agent . . . . . . . . . . . . . . . . . . . . .
ARTICLE IX. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.01. Survival . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.03. Severability . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.04. Amendments, Etc. . . . . . . . . . . . . . . . . . . . .
SECTION 9.05. Headings . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.06. Compliance Responsibility . . . . . . . . . . . . . . . .
SECTION 9.07. Definitions . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.08. Benefit . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.09. Place of Payment . . . . . . . . . . . . . . . . . . . .
SECTION 9.10. Counterparts . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.11. Governing Law and Jurisdiction . . . . . . . . . . . . .
SECTION 9.12. Time; Business Day . . . . . . . . . . . . . . . . . . .
SECTION 9.13. The Trustee . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.14. Transaction Costs; Facility Fees;
Upfront Fees . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.15. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . .
SECTION 9.16. Operative Documents; Further
Assurances . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.17. Confidentiality . . . . . . . . . . . . . . . . . . . . .
SECTION 9.18. Interest . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.19. Waiver of Trial by Jury . . . . . . . . . . . . . . . . .
SECTION 9.20. Options . . . . . . . . . . . . . . . . . . . . . . . . .
SECTION 9.21. Financial Advisor . . . . . . . . . . . . . . . . . . . .
</TABLE>
iii
<PAGE> 61
<TABLE>
<S> <C>
SECTION 9.22. Securities Representation . . . . . . . . . . . . . . . . .
SECTION 9.23. UNENFORCEABILITY OF ORAL AGREEMENTS;
(TEXAS STATUTORY LANGUAGE) . . . . . . . . . . . . .
</TABLE>
Schedule I - Manner of Payment and Communications to
Parties
Schedule II - Pricing Grid
Schedule 4.01(l) - Existing Encumbrances
Appendix A - Definitions
Exhibit A - Form of Lease
Exhibit B - Form of Agency Agreement
Exhibit C - Form of Declaration of Trust
Exhibit D - Form of Instrument Guaranty
Exhibit E - Form of Services Agreement
Exhibit F - Form of Requisition
Exhibit G - Form of Final Completion Certificate
Exhibit H - Form of Independent Engineer's Certificate
Exhibit I - Form of Commitment Reduction Notice
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Execution Copy
PARTICIPATION AGREEMENT dated as of October 31, 1995 (as it may be
amended from time to time, this "Agreement"), by and among Ferro Corporation,
an Ohio corporation (the "COMPANY"); State Street Bank and Trust Company, a
Massachusetts trust company ("SSBTC"), not in its individual capacity except as
expressly stated herein, but solely as Trustee under the Declaration (herein,
together with any successor trustee under the Declaration, the "TRUSTEE"); the
financial institutions named as purchasers on Schedule I hereto, and/or any
assignee thereof who may, from time to time, become a party to this Agreement
pursuant to the terms hereof (collectively, the "PURCHASERS"); and Citibank,
N.A. ("CITIBANK"), in its capacity as agent for the Purchasers hereunder.
Capitalized terms used but not otherwise defined in this Agreement shall have
the meanings set forth in Appendix A hereto.
Preliminary Statement
---------------------
A. Synthetic Products Company, a Delaware corporation ("SYNPRO"),
is the owner of (i) certain parcels of land described on Schedule A to the Ohio
Deed and located in Cleveland, Ohio (the "OHIO FEE PARCELS"), (ii) an easement
interest in a certain parcel of land described on Schedule A to the Ohio Deed
and located in Cleveland, Ohio (the "OHIO EASEMENT PARCEL" and together with
the Ohio Fee Parcels, the "OHIO PARCELS") (iii) a license interest with respect
to a parcel of land in Cleveland, Ohio as described on Schedule A to the
License Agreement (the "LICENSE PARCEL"), (iv) two parcels of land described on
Schedule A to the Texas Deed and located in Fort Worth, Texas (the "TEXAS FEE
PARCELS", and together with the Ohio Fee Parcels, collectively, the "FEE
PARCELS"), (v) certain parcels of land described in the Easements and Option to
Purchase between Synpro and the Company dated as of October 31, 1995 and
located in Fort Worth, Texas (the "TEXAS EASEMENT PARCELS"), (vi) a leasehold
interest in certain parcels of land described in the Easement and located in
Fort Worth, Texas (the "TEXAS LEASEHOLD PARCELS" and together with the Ohio
Easement Parcel and Texas Easement Parcels, collectively, the "EASEMENT
PARCELS"), (vii) a plant for the manufacture of stearates, lubricants and
stabilizers and related facilities located on the Ohio Fee Parcels (the "OHIO
PLANT"), (viii) a plant for the manufacture of stearates, lubricants and
stabilizers located on the Texas Fee Parcels (the "Texas Plant" and together
with
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the Ohio Plant, collectively, the "PLANTS"), (ix) certain improvements located
on the Texas Leasehold Parcel and used in connection with the operation of the
Texas Plant (the "TEXAS LEASEHOLD IMPROVEMENTS"), (x) certain improvements
located on the Texas Easement Parcel and used in connection with the Texas
Plant (the "TEXAS EASEMENT IMPROVEMENTS"), (xi) certain fixtures, equipment and
other personal property used in connection with the Plants and presently
located on (a) the Ohio Fee Parcels (the "INITIAL OHIO FEE IMPROVEMENTS"), (b)
on the Texas Fee Parcels (the "INITIAL TEXAS FEE IMPROVEMENTS") and (c) on the
License Parcel (the "INITIAL LICENSE IMPROVEMENTS") (collectively, the "ASSETS"
and together with the Plants, the "INITIAL IMPROVEMENTS") as described on
Schedule A to the Bill of Sale.
B. On the Financing Closing Date, the Trustee will
acquire from Synpro fee title to the Ohio Fee Parcels and the Texas Fee
Parcels, an easement interest in the Ohio Easement Parcel, a license to the
License Parcel and title to a portion of the Initial Improvements pursuant to
an Asset Purchase Agreement dated as of October 25, 1995 among Synpro, Cookson
Group, plc, Cookson America, Inc. and the Company (as the same may be amended
from time to time, the "PURCHASE AGREEMENT"). In addition, on the Financing
Closing Date, (a) the Company will acquire from Synpro (i) the leasehold estate
to the Texas Leasehold Parcel pursuant to the Purchase Agreement, and (ii)
easements over the Texas Easement Parcel pursuant to the Purchase Agreement,
and (b) the Trustee will acquire from the Company (i) easements over the Texas
Leasehold Parcel and to the Texas Easement Improvements pursuant to the
Easement, and (ii) the easements over the Texas Easement Parcels pursuant to
the Second Easement. Thereafter, certain improvements to the Initial
Improvements (the "FINANCED IMPROVEMENTS") will be constructed, as more fully
described in Exhibit A to the Agency Agreement referred to below. The Initial
Improvements and the Financed Improvements, together with all future
structures, buildings, fixtures and other immovable improvements now or
hereafter on the Fee Parcels, the Easement Parcels and the License Parcel and
all integral equipment to be located thereon or therein are collectively
defined as the "IMPROVEMENTS". The Company shall have a one-time option to
exclude from the Financed Improvements certain equipment and other personal
property (other than Improvements with respect to the installation at the Ohio
Plant of certain
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components of the Connecticut Equipment) (the "EXCLUDED ASSETS"), by submission
to the Agent and the Trustee of a Commitment Reduction Notice in accordance
with Section 1.05 below. The Trustee's fee interest in the Fee Parcels,
easement interests in the Easement Parcels, license to the License Parcel and
interest in the Improvements are sometimes referred to herein as the
"PROPERTY". After acquiring the Property as described above, the Trustee will
lease (or grant a license to portions of) the Property to the Company pursuant
to a lease dated as of the date hereof substantially in the form of Exhibit A
hereto (as the same may be amended from time to time, the "LEASE").
C. The Company, acting as the Trustee's Construction
Agent under an agency agreement dated as of the date hereof substantially in
the form of Exhibit B hereto (as the same may be amended from time to time, the
"AGENCY AGREEMENT"), will complete the construction of the Financed
Improvements.
D. To finance the Trustee's acquisition of the Parcels
and the Initial Improvements, the Trustee, on the Financing Closing Date, will
issue to the Certificate Purchaser the Series 1 Certificates and will issue to
the Note Purchasers Series 1 A-Notes and Series 1 B-Notes pursuant to a
declaration of trust dated as of the date hereof substantially in the form of
Exhibit C hereto (as the same may be amended from time to time, the
"DECLARATION" or "DECLARATION OF TRUST"). To finance the construction of the
Financed Improvements, the Trustee will issue on the Financing Closing Date,
Interim Notes to the Note Purchasers and Series 2 Certificates to the
Certificate Purchasers pursuant to the Declaration.
E. Subject to the terms and conditions hereof and
pursuant to Requisitions, the Note Purchasers shall make Advances on the
Financing Closing Date and from time to time thereafter, and each Certificate
Purchaser shall make Investments for all amounts paid or payable as costs for
the acquisition of the Parcels and the Improvements and the design,
engineering, construction, operation, testing and licensing of the
Improvements, as well as interest, distributions, fees and expenses paid or
payable on or with respect to the Interim Notes and Series 2 Certificates on or
prior to the Interim Note Maturity Date, the Operative Documents or otherwise
related to the transactions contemplated hereby
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(collectively, the "ACTUAL PROJECT COSTS"). Upon the Interim Note Maturity
Date, the Trustee shall refinance the Interim Notes through the issuance of a
specified proportion of Series 2 A-Notes and Series 2 B-Notes, to be issued
pursuant to the Declaration in the same aggregate principal amount as the
Interim Notes. The Instruments will be issued, dated and mature and be payable
as provided in the Declaration. The Instruments shall be entitled to the
benefit of the Trust Estate held pursuant to the Declaration.
F. The Company shall also enter into a guaranty
agreement dated as of the date hereof substantially in the form of Exhibit D
hereto (as the same may be amended from time to time, the "INSTRUMENT
GUARANTY") pursuant to which the Company will guaranty repayment by the Trustee
of the Instruments to the extent provided therein.
G. In addition, the Company will enter into a services
agreement dated as of the date hereof, substantially in the form of Exhibit E
hereto (as the same may be amended from time to time, the "SERVICES AGREEMENT")
pursuant to which it will be obligated to provide certain services to the
Trustee and with respect to the Property in the event the Company does not
purchase the Property at the expiration or other termination of the Lease.
NOW, THEREFORE, in consideration of the agreements herein and
in the other Operative Documents and in reliance upon the representations and
warranties set forth herein and therein, the parties agree as follows:
ARTICLE I.
FINANCING
---------
SECTION 1.01. AGREEMENT TO ISSUE AND PURCHASE. (a) Subject to the
terms and conditions of this Article I and of Article II hereof, each of
the Note Purchasers hereby agrees to advance (which obligation to advance is
several and not joint and several) to the Agent in the manner provided in
Section 1.04 below, from time to time, its Percentage of Actual Project Costs,
up to in the aggregate, and in no case exceeding, its Note Commitment, and the
Trustee shall issue to each of the Note
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Purchasers on the Financing Closing Date, in consideration therefor, Interim
Notes in an aggregate principal amount equal to the Interim Note Commitment of
such Note Purchaser and Series 1 A-Notes and Series 1 B-Notes in an aggregate
amount equal to the Series 1 Note Commitment of such Note Purchaser; and
(b) Subject to the terms and conditions of this Article I
and of Article II hereof, each Certificate Purchaser hereby agrees to make
investments (the "INVESTMENT") in the 1995 Ferro Plant Trust by paying to the
Trustee (i) an amount, up to in the aggregate, and in no case exceeding, its
Series 1 Certificate Commitment (the proceeds of which will be used to pay a
portion of the Actual Project Costs relating to the acquisition of the Parcels
and the Initial Improvements and the transaction costs payable pursuant to
Section 9.14) plus (ii) at the time of the Advance made with respect to the
first Requisition submitted by the Company and from time to time thereafter, an
amount, up to in the aggregate but in no case exceeding, its Series 2
Certificate Commitment (the proceeds of which will be used to pay a portion of
the Actual Project Costs incurred in connection with the Financed Improvements
as well as to fund Distributions on the Series 2 Certificates prior to the
Interim Note Maturity Date), and the Trustee shall issue to each Certificate
Purchaser, in consideration therefor, a Series 1 Certificate in an aggregate
stated amount equal to the Series 1 Certificate Commitment of such Certificate
Purchaser and a Series 2 Certificate in an aggregate stated amount equal to the
Series 2 Certificate Commitment of such Certificate Purchaser.
SECTION 1.02. FINANCING CLOSING DATE. The closing of the
transactions specified in Section 1.03 of this Agreement (the "FINANCING
CLOSING") shall take place on October 31, 1995 (or such earlier or later date
to which the Company and the Agent may agree, at such place as the parties
hereto shall agree (the "FINANCING CLOSING DATE").
SECTION 1.03. SIMULTANEOUS FINANCING CLOSING TRANSACTIONS.
On the Financing Closing Date, subject to the satisfaction of the conditions
set forth in Section 2.01 of this Agreement, the following transactions shall
be consummated simultaneously:
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(a) This Agreement, the Agency Agreement, the
Declaration, the Lease, the Series 1 Certificates, the Series 2 Certificates,
the Interim Notes, the Series 1 A-Notes, the Series 1 B-Notes, the Instrument
Guaranty, the Bill of Sale, the Deeds, the Easement, the Second Easement and
the Services Agreement, shall be duly executed and delivered by the parties
thereto.
(b) Each of the Note Purchasers shall make an initial
advance (each, an "INITIAL ADVANCE") equal to the sum of (i) its Percentage of
the Series 1 Note Commitment and each Certificate Purchaser shall make an
Investment in the amount of its Series 1 Certificate Commitment in accordance
with the applicable provisions of Section 1.04.
(c) The Agent, on behalf of the Trustee, shall pay or
disburse, or cause to be paid or disbursed, the aggregate sum of the
Investments and the Advances made on the Financing Closing Date as follows:
first to Synpro, the amount of the acquisition price of the Parcels and the
Initial Improvements by transfer of immediately available funds in accordance
with the disbursement instructions agreed upon by Lessor, the Company, Synpro
and the Agent, and the balance to the Company, or as otherwise directed by the
Construction Agent in accordance with such disbursement instructions.
SECTION 1.04. PROCEDURES FOR FUNDINGS; REQUISITIONS.
(a) ADVANCES AND RELATED MATTERS. (i) Subject to the
satisfaction of the conditions set forth in Section 2.01, with respect to the
Financing Closing, or Section 2.02, with respect to each Funding subsequent to
the Financing Closing (except in the case of Fundings made from time to time
pursuant to Section 1.04(c) hereof), (A) each Interim Note Purchaser agrees to
make an advance (each, an "ADVANCE"), from time to time but not more frequently
than once per calendar month, in an amount equal to its Percentage of Actual
Project Costs specified in any Requisition, up to an aggregate principal amount
equal to its Interim Note Commitment; (B) each Series 1 Note Purchaser agrees
to make an Advance on the Financing Closing Date equal to its Series 1
Note Commitment; (C) each Series 1 Certificate Purchaser agrees to make its
Investment on the Financing Closing Date in an amount equal to its Series 1
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Certificate Commitment; and (D) each Series 2 Certificate Purchaser agrees to
make an Investment on the date of the Funding of the first Requisition in the
amount of such Purchaser's Certificate Percentage of the amount requested in
the first Requisition not to exceed such Purchaser's Certificate Percentage of
$766,621.52 and from time to time thereafter, but not more frequently than once
per calendar month, up to an aggregate amount equal to its Series 2 Certificate
Commitment. Each Purchaser shall record the Advances or Investment, as the
case may be, made by it on the payment schedule attached to its Interim Note or
Certificate.
(ii) On the date specified by the Company for any Funding,
each Note Purchaser and each Certificate Purchaser, shall, before 10:00 A.M.
(New York City time) make available, or cause to be made available, to the
Agent, on behalf of the Trustee, an amount equal to the Advance or Investment,
as the case may be, to be made by it, at the Agent's address referred to in
Schedule I hereto, in immediately available funds. Upon the Agent's receipt of
funds from the Note and Certificate Purchasers for such Funding and upon
fulfillment of the applicable conditions set forth in Article II, the Agent
will make payments of interest and Distributions due hereunder on the Interim
Notes and Series 2 Certificates and will make the remaining funds representing
such Funding available for credit to and upon the instructions of the
Construction Agent (or the Company, in the case of the Financing Closing) in
immediately available funds in accordance with the Requisition for such
Funding.
(iii) No Note Purchaser shall have any obligation to make any
Advance for any amount in excess of the lesser of (A) its aggregate Note
Commitment and (B) its Percentage of the difference between (1) the aggregate
of the Actual Project Costs (less the amount of the Investment then being made
or theretofore made by the Certificate Purchasers) set forth in the Approved
Construction Budget as such Actual Project Costs may have been reduced pursuant
to Section 1.05 and (2) the aggregate of all prior Advances made by the Note
Purchasers. No Certificate Purchaser shall have any obligation to make an
Investment in excess of its Certificate Commitment.
(iv) The Company acknowledges that if it, as the Construction
Agent, does not provide to the Agent all
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necessary documentation required hereunder on a timely basis, delays may result
in the making of the Advances and the Investment. The Agent shall have no duty
to verify the authenticity of any signature appearing on any Requisition other
than to compare it with incumbency certificates provided by the Company listing
Officers of the Company authorized to execute Requisitions.
(v) Unless the Agent shall have received notice from a Note
Purchaser prior to the date of any Advance that such Note Purchaser will not
make available to the Agent its Advance, the Agent may assume that such Note
Purchaser has made its funds available to the Agent on such date in accordance
with this Section 1.04(a) and the Agent may, in reliance upon such assumption,
make available to the Construction Agent on such date a corresponding amount.
If and to the extent that such Note Purchaser shall not have so made such
Advance available to the Agent on such date, such Note Purchaser agrees to
repay the Agent forthwith on demand by the Agent such corresponding amount,
together with interest thereon, for each day from the date such amount is made
available to the Construction Agent, until the date such amount is repaid to
the Agent, at the Federal Funds Rate. If such Note Purchaser shall repay to
the Agent such corresponding amount, such amount so repaid shall constitute
such Note Purchaser's funding of its Advance for purposes of this Agreement.
(vi) The failure of any Purchaser to make the Advance or
Investment, as the case may be, to be made by it shall not relieve any other
Purchaser of its obligation, if any, hereunder to make its Advance or
Investment, but no Purchaser shall be responsible for the failure of any other
Purchaser to make the Advance or Investment to be made by such other Purchaser
on the date of any Funding.
(b) REQUISITIONS. Not less than five (5) Business Days
prior to the day on which a Funding is desired, with respect to the financing
of the Financed Improvements, the Construction Agent must submit to the Agent,
with a copy to the Trustee, a requisition (each, a "REQUISITION") substantially
in the form attached as Exhibit F hereto. The Agent will give notice of such
Requisition to the Note Purchasers, the Certificate Purchasers and the Trustee
not less than five (5) Business Days prior to the date of the Funding requested
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therein. Such notice by the Agent shall specify the amount of the Advance or
Investment, as the case may be, to be made by each Purchaser with respect to
the financing of the Financed Improvements. Each Requisition (i) shall be
irrevocable, (ii) must request a Funding of at least $250,000 or such lesser
amount as shall be equal to the total aggregate principal and stated amount of
the unused Total Commitment available at such time, and (iii) shall request
that the Purchasers make Advances and/or the Investment, as the case may be,
for Actual Project Costs incurred with respect to the financing of the Financed
Improvements as specified in the Requisition. Each Requisition shall
constitute a representation and warranty by the Company that all the conditions
precedent to such Funding have been satisfied. No Requisition may be delivered
prior to the earlier of (x) the last date upon which a Commitment Reduction
Notice may be given pursuant to Section 1.05 hereof, and (y) if a Commitment
Reduction Notice is timely delivered pursuant to Section 1.05 hereof, the date
on which the Commitment Reduction becomes effective in accordance with Section
1.05 hereof.
(c) CERTAIN ADVANCES AND INVESTMENTS. It is intended
that all interest on the Interim Notes, Facility Fees on the Interim Notes,
Upfront Fees and other fees and expenses of the Note Purchasers due hereunder
prior to the Interim Note Maturity Date shall be paid from Advances and that
all Distributions, Facility Fees and other fees and expenses of the Series 2
Certificate Purchasers due hereunder prior to the Interim Note Maturity Date
shall be paid from Investments. No Requisition shall be necessary to permit
the Agent to request the Note Purchasers to make Advances for the account of
any or all Note Purchasers, to pay amounts for interest on the Interim Notes or
Facility Fees due to such Note Purchasers hereunder on or prior to the Interim
Note Maturity Date or to request the Series 2 Certificate Purchasers to make
Investments to pay Distributions on the Series 2 Certificates prior to the
Interim Note Maturity Date, PROVIDED, HOWEVER, that the Purchasers shall make
such Advances or Investments, as the case may be, only (i) after the Agent has
notified the Purchasers and the Company of the date and the Applicable Rate set
for such Funding and the amounts thereof due and owing and unpaid to be made by
each such Purchaser and (ii) on a Payment Date. Notwithstanding anything to
the contrary contained in this Agreement, Advances and Investments
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shall be limited in the aggregate to the Actual Project Costs, up to each Note
Purchaser's Note Commitment plus each Certificate Purchaser's Certificate
Commitment.
SECTION 1.05. COMMITMENT REDUCTION.
(a) COMMITMENT REDUCTION NOTICE. On or before April 30,
1996, the Company shall deliver to the Agent, the Trustee and the Purchasers
either (i) a notice of its intent to eliminate, from the Financed Improvements,
the Excluded Assets and to reduce correspondingly the Series 2 Note Commitment
and the Series 2 Certificate Commitment (the "COMMITMENT REDUCTION") to reflect
the decrease in the cost of the construction and installation of the Financed
Improvements resulting from such elimination (the "COMMITMENT REDUCTION
NOTICE") in the form of Exhibit I hereto or (ii) its written confirmation that
it will not deliver a Commitment Reduction Notice.
(b) EFFECTIVENESS OF THE COMMITMENT REDUCTION. If in the
reasonable judgment of the Trustee, the Agent and the Majority Purchasers, the
fair market value of the remaining Property would be equal to or greater than
the Adjusted Capitalized Cost of the Property after such Commitment Reduction,
the Agent shall give prompt notice thereof to the Company by countersigning the
Commitment Reduction Notice where indicated, and delivering a copy thereof to
the Company within five Business Days and upon delivery of such notice the
Commitment Reduction specified in the Commitment Reduction Notice shall be
effective. Upon the reasonable request of the Trustee, the Agent and the
Purchasers, the Company shall cause a new Appraisal to be prepared by the
Appraiser to verify that such Commitment Reduction would not have an adverse
effect on the fair market value of the remaining Property.
SECTION 1.06. EQUIPMENT SALE OPTIONS. On or before April 30,
1996, after the satisfaction of the Company's obligations set forth in Section
2.03, the Company may deliver to the Agent, the Trustee and the Purchasers, on
the same date or on different dates, a written offer to sell to the Trustee
certain equipment and other personal property purchased from Synpro and located
in Philadelphia, Pennsylvania (the "PENNSYLVANIA ASSETS") and/or a written
offer to sell certain equipment and other personal property purchased from
Synpro and located in Stratford, Connecticut (the "CONNECTICUT
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ASSETS") (each such written offer, an "EQUIPMENT SALE OFFER") for a purchase
price equal to the fair market value of such assets. If such assets were not
separately valued in the Appraisal, the Company will cause a new appraisal to
be prepared at its cost and expense. The Trustee shall accept the Equipment
Sale Offer within five (5) Business Days of receipt of such Equipment Sale
Offer or, if such new appraisal has been ordered, within ten (10) Business Days
after receipt of such appraisal unless the appraisal indicates, in the
reasonable judgment of the Agent, the Trustee and the Purchasers, that
acceptance would have an adverse effect on the fair market value of the
Property. If an Equipment Sale Offer is accepted, (i) the Trustee and the
Company shall execute all documents and instruments necessary, in Special
Counsel's determination, to consummate such sale and (ii) the Company shall
cause the Pennsylvania Assets or the Connecticut Assets or both of the
Pennsylvania Assets and the Connecticut Assets, as the case may be, to be moved
to, and installed on, one of the Fee Parcels or Easement Parcels or at the
Bedford Plant. Any sale of the Connecticut Assets shall take place out of the
State of Connecticut. Upon such sale, the Pennsylvania Assets or the
Connecticut Assets, or both of the Pennsylvania Assets and the Connecticut
Assets, as the case may be, will constitute part of the Property and shall be
subject to the Lease.
ARTICLE II.
CONDITIONS PRECEDENT
--------------------
SECTION 2.01. CONDITIONS PRECEDENT TO THE FINANCING CLOSING.
The obligations set forth in Article I shall be subject to the fulfillment, to
the satisfaction of the Agent, on or before the Financing Closing Date, of the
following conditions precedent:
(a) DUE AUTHORIZATION, EXECUTION AND DELIVERY. The
Operative Documents shall have been duly authorized, executed and delivered by
all parties thereto and shall be in full force and effect. No condition or
event shall exist or have occurred which would constitute a Default or Event of
Default under any of the Operative Documents by any party thereto and the
Trustee and the Company shall each have delivered an Officer's Certificate as
to the Company's or the Trustee's respective compliance dated the Financing
Closing Date.
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(b) REPRESENTATIONS. The representations and warranties
of each of the Company and SSBTC, respectively, set forth in the Operative
Documents shall be true and correct on and as of the Financing Closing Date,
and the Company and SSBTC shall each have delivered an Officer's Certificate
dated the Financing Closing Date to such effect as to their respective
representations and warranties.
(c) OPINIONS. The following opinions, dated the
Financing Closing Date and addressed to the parties indicated below, shall have
been delivered:
(i) [Intentionally Omitted]
(ii) an opinion of Squire, Sanders &
Dempsey, special counsel to the Company, addressed to the
Agent, the Purchasers and the Trustee, and in form and
substance satisfactory to the Agent and Special Counsel,
(iii) an opinion of Bracewell & Patterson,
special counsel to the Agent and the Purchasers, addressed to
the Agent, the Purchasers and the Trustee, as to matters of
Texas law, and in form and substance satisfactory to the Agent
and Special Counsel;
(iv) an opinion of Bingham, Dana & Gould,
special counsel to the Trustee ("TRUSTEE'S COUNSEL"),
addressed to the Agent, the Purchasers and the Company, and in
form and substance reasonably satisfactory to the Agent and
Special Counsel;
(v) opinions of Special Environmental
Counsel to the Agent and the Purchasers, addressed to the
Agent, the Purchasers and the Trustee, and in form and
substance satisfactory to the Agent with respect to
Environmental Laws; and
(vi) such other opinions of counsel as the
Agent and the Special Counsel may reasonably request,
addressed to the Agent, the Purchasers and the Trustee, and in
form and substance reasonably satisfactory to the Agent and
Special Counsel, and directions from the Company regarding the
opinions referred to in clause (ii) above.
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(d) PROCEEDINGS SATISFACTORY AND OTHER
EVIDENCE. All corporate and other proceedings taken or to be taken in
connection with the transactions contemplated by the Operative Documents and
all documents, papers and authorizations relating thereto shall be satisfactory
to the Agent, the Company and their respective counsel. The Agent and the
Company, and their respective counsel shall receive copies of such documents
and papers as they have requested, in form and substance satisfactory to them,
including but not limited to the Operative Documents.
(e) LEGALITY. The execution, delivery and
issuance of the Notes and the Certificates by the Trustee and the purchase
thereof by the Note and Certificate Purchasers shall not be subject to the
registration requirements of the Act or any state securities or blue sky Laws,
and shall not be prohibited by any applicable Law (including, without
limitation, Regulation G, Regulation T, Regulation U or Regulation X and any
applicable usury Laws) and shall not subject any Note or Certificate Purchaser
to any Tax (other than Excluded Charges or a Tax paid by the Company pursuant
to Sections 6.03 and 9.14), penalty, liability or other onerous condition under
or pursuant to any applicable Law and the Agent and the Note and Certificate
Purchasers shall receive such evidence as the Agent and the Note and
Certificate Purchasers (through the Agent) may reasonably request to establish
compliance with this condition.
(f) CLOSING FEES. The Trustee shall have paid, or caused to
be paid, from the proceeds of the purchase price to be paid for the
Instruments on the Financing Closing Date (i) to Special Counsel,
Special Environmental Counsel and the Trustee's Counsel, the reasonable fees
and expenses of such counsel that are set forth in invoices submitted by such
counsel to the Company at least two days prior to the Financing Closing Date,
(ii) to CSI, the advisory fee referred to in the engagement letter dated as of
October 16, 1995 (the "ADVISORY FEE"), and (iii) such other amounts as the
Company may be required to pay on or before the Financing Closing Date in
accordance with the terms of the Operative Documents.
(g) TITLE AND SURVEY. (i) Synpro shall
have conveyed to the Trustee good and marketable title to (aa) an indefeasible
fee estate in each of the Texas Fee
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Parcels and the Ohio Fee Parcels and to the Initial Texas Fee Improvements and
the Initial Ohio Fee Improvements, (bb) an easement interest in the Ohio
Easement Parcel, and (cc) a license interest in the License Parcel and the
Initial License Improvements in each case free and clear of all Liens except
Permitted Encumbrances. The Company shall deliver, or cause to be delivered,
to the Agent, the Trustee, the Purchasers and Special Counsel (I) a Texas
Standard Form T-1 form of extended coverage policy of owner's title insurance
for the Texas Fee Parcels and the Initial Texas Fee Improvements with the Texas
Standard Owner Policy Endorsement and naming the Trustee as the insured (the
"TEXAS TITLE POLICY") in the aggregate amount of $4,656,000, issued by the
Title Company and showing and insuring the record title of the Trustee in the
Texas Fee Parcels, and (II) an ALTA 1970 (amended 10-17-70 and 10-17-84) form
of extended coverage policy of owner's title insurance for the Ohio Fee Parcels
and the Ohio Fee Improvements (the "OHIO TITLE POLICY"), and naming the Trustee
as the insured, in the aggregate amount of $3,104,000 issued by the Title
Company, showing the Trustee as the record owner of the Ohio Fee Parcels and
Ohio Fee Improvements and the holder an easement interest in the Ohio Easement
Parcel and the Ohio Easement Improvements (the Texas Title Policy and the Ohio
Title Policy are collectively referred to herein as the "TITLE POLICY"). The
Title Policy shall be issued subject only to Permitted Encumbrances and
containing such affirmative insurance as Agent or Special Counsel shall
require.
(ii) The Agent and the Trustee shall have received a current,
accurate survey of each of the Parcels showing the location of all
improvements, easements, encroachments and other survey matters, dated a recent
date, in form and substance satisfactory to the Agent, the Trustee and the
Title Company, prepared by licensed surveyors acceptable to the Agent, which
survey is certified to the Company, the Trustee, the Agent and the Note and
Certificate Purchasers.
(h) COMPLIANCE WITH LAW. The Parcels, the Improvements and the
construction thereof, if applicable, and the Construction Agent shall be in
material compliance with all Laws, including, without limitation, all building,
construction and zoning Laws and Environmental Laws applicable to the Property.
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(i) PERMITS AND CERTAIN PROPERTY MATTERS. (i) All
Permits that are or will become Applicable Permits shall have been obtained,
except Applicable Permits relating to the Financed Improvements customarily
obtained or which are permitted by Law to be obtained after the Financing
Closing Date (in which case the Company, having completed all appropriate
diligence in connection therewith, shall have no reason to believe that such
Permits will not be granted in the usual course of business prior to the date
that such Permits are required by Law). All such obtained Permits shall be in
proper form, shall be in full force and effect and not subject to any further
appeal, consent or further contest or to any unsatisfied condition that may
allow modification or revocation; and
(ii) The Property shall not have suffered a Condemnation or a
Casualty, or any other damage or destruction which renders the Property
unusable in whole or in material part and, under applicable Law, the Property
may be used for the purposes contemplated by the Company in accordance with the
Lease.
(j) DOCUMENTS RELATING TO THE PROPERTY. The Company
shall deliver, or cause to be delivered, to the Trustee, the Agent and the
Purchasers documentation with respect to the condition of the Property or any
part thereof, the real estate Taxes applicable to the Parcels and the Property
and such other documents and agreements (including but not limited to a copy of
the Construction Contracts and any other necessary Facility Agreements to the
extent available, or assignments thereof) relating to the operation of the
Property or any part thereof as the Agent or the Purchasers may reasonably
request, in form and substance reasonably acceptable to the Agent and the
Purchasers.
(k) INSURANCE. The Company shall (i) maintain, and cause
each of its Subsidiaries to maintain, insurance in accordance with the
provisions of Section 5.01(c); and (ii) be in compliance with all Insurance
Requirements. The Company shall deliver, or cause to be delivered, to the
Trustee and the Agent: (i) certificates of insurance, applicable reinsurance
cover notes or other satisfactory assurances, evidencing the coverage of such
policies in compliance with the Insurance Requirements; and (ii) copies of the
exceptions to coverage of such policies.
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(l) TAXES. All Taxes (other than Excluded Charges), fees
and other charges which have become due and payable in connection with the
execution and delivery of the Operative Documents shall have been paid by the
Company.
(m) ENVIRONMENTAL MATTERS. The Phase II environmental
audit of each of the Parcels and the Plants by the Environmental Consultant
shall have been conducted, at the sole cost and expense of the Company, and the
Agent, the Trustee and the Purchasers shall have received a copy of the
Environmental Consultant's Phase II report, which shall be in form and
substance satisfactory to the Trustee, the Agent and the Purchasers. Except as
may be referenced in the Disclosed Information, no environmental hazard with
respect to the Property shall have arisen, or come to the attention of the
Company, since the date of the Phase II.
(n) [Intentionally Omitted]
(o) APPRAISAL. The Company shall cause an appraisal of
the Property (the "APPRAISAL"), satisfactory in form and substance to the Agent
and the Purchasers, to be delivered to the Agent and the Purchasers. Such
Appraisal shall be prepared by the Appraiser and shall be at the expense of the
Company.
(p) NO MATERIAL ADVERSE EVENT. There shall exist no
action, suit, investigation, litigation or proceeding affecting the Company or
any of its Subsidiaries pending or, to the Company's knowledge, threatened
before any court, governmental agency or arbitrator that could be reasonably
likely to have a Material Adverse Effect.
(q) NOTICE OF FINANCING CLOSING DATE. The Company shall
have delivered or caused to be delivered to the Agent and the Purchasers
sufficient advance notice before the anticipated Financing Closing Date, which
notice shall request that each Purchaser make all necessary arrangements to
fund the Series 1 Note Commitment and the Investment in respect of the Series 1
Certificate Commitment.
(r) RECORDING AND FILING. Each of the Deeds, the Lease (or a
memorandum thereof), the Bill of Sale, the Easement, the Second Easement and
all financing
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statements under the UCC shall have been duly recorded, published, registered
and filed by the Company (or arrangements for such recording, publishing,
registering and filing shall have been made), in such manner and in such places
as the Company, the Company's counsel, the Agent and Special Counsel shall
determine to be necessary or appropriate to publish notice thereof and protect
the validity and effectiveness thereof and to establish, create, perfect,
preserve and protect the rights of the parties thereto and their respective
successors and signs, and all Taxes, fees and other charges in connection with
such recording, publishing, registration and filing of the Operative Documents
or any memoranda thereof and any financing statements shall have been paid, or
caused to be paid, by the Company.
(s) PURCHASE AGREEMENT, ETC. The Agent, the Trustee and
each Purchaser shall have received copies, certified by an Officer of the
Company as true, correct and complete, of the Purchase Agreement, which shall
be in full force and effect and shall not have been amended or restated in any
material respect without the prior written consent of the Agent. All of the
conditions precedent set forth in Section 9 of the Purchase Agreement shall
have been satisfied and the Agent shall have received an Officer's Certificate
of the Company certifying satisfaction of all such conditions precedent. The
Sellers, the Trustee, the Agent and the Purchasers shall have delivered the
Release Agreement.
(t) SATISFACTION WITH CONTEMPLATED TRANSACTIONS. The Agent,
the Trustee and each Purchaser shall be satisfied, each in its sole discretion,
with their review of the Property and all material matters in connection with
the acquisition thereof by the Trustee, including without limitation, the
Purchase Agreement and the Facility Agreements, to the extent available, and
each other contract that is material to the ownership, leasing and operation of
the Property.
(u) ADDITIONAL DOCUMENTS. The Agent shall have received
such other approvals, certificates or documents as the Agent may reasonably
request to evidence satisfaction of the conditions set forth in this Section
2.01.
(v) ASSET VALUE ALLOCATION. The Agent shall have
received a schedule of all the equipment and other
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personal property constituting the Initial Improvements which schedule shall
allocate, individually or by specified lots, the acquisition price among the
scheduled items of property.
SECTION 2.02. CONDITIONS PRECEDENT TO FUNDING SUBSEQUENT TO
THE FINANCING CLOSING. The several (and not joint and several) obligations of
each of the Note Purchasers to make Advances subsequent to the Financing
Closing as set forth in Article I shall be subject to the fulfillment, to the
satisfaction of the Agent, by, on or as of the date of such Funding, of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company set forth in the Operative Documents shall be
true and correct as if made on and as of the date of such Funding or, as
applicable, on and as of the date specified in such representation or warranty.
(b) COMPLIANCE; NO DEFAULT, ETC. The Company shall be in
compliance with its obligations under the Operative Documents on such date and
there shall exist no Default, Event of Default, Unwind Event or Environmental
Trigger under the Operative Documents and no Termination Notice shall have been
delivered or been deemed to have been delivered.
(c) REQUISITION; USE OF INVESTMENT PROCEEDS. Except with
respect to Advances made by the Purchasers pursuant to Section 1.04(c), the
Agent shall have received a timely and complete Requisition pursuant to and in
compliance with Section 1.04(b) hereof. All proceeds of the Fundings expended
by or on behalf of the Company shall have been applied solely to Actual Project
Costs, and the Company, in its individual capacity and not as Construction
Agent, shall certify the same in each Requisition and provide such other
evidence with respect to the use of such proceeds as may be reasonably
requested by the Agent.
(d) COMPLIANCE WITH LAW. The Parcels, the Improvements
and the construction thereof and the Construction Agent shall be in material
compliance with all Laws, including, without limitation, all building,
construction and zoning Laws and Environmental Laws applicable to the Property.
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<PAGE> 80
(e) NO MATERIAL ADVERSE EVENT. There shall exist no
action, suit, investigation, litigation or proceeding affecting the Company or
any of its Subsidiaries pending or, to the Company's knowledge, threatened
before any court, governmental agency or arbitrator that (i) could be
reasonably likely to have a Material Adverse Effect or (ii) purports to affect
the legality, validity or enforceability of this Agreement or any Note or the
consummation of the transactions contemplated hereby, and the Company, in its
individual capacity and not as Construction Agent, shall certify the same in
each Requisition.
(f) LEGALITY. The making of any Advance, and maintenance
thereof, by any Note Purchaser shall not be prohibited by any applicable Law
(including, without limitation, Regulation G, Regulation T, Regulation U or
Regulation X and any applicable usury Laws) and shall not subject any Note
Purchaser to any Tax (other than Excluded Charges and any Tax paid by the
Company pursuant to Sections 6.03 and 9.14), penalty, liability or other
onerous condition under or pursuant to any applicable Law.
(g) PERMITS. All Permits that are or will become
Applicable Permits shall have been obtained, except Applicable Permits
customarily obtained or which are permitted by Law to be obtained after the
date of the requested Advance (in which case the Company, having completed all
appropriate diligence in connection therewith, shall have no reason to believe
that such Permits will not be granted in the usual course of business prior to
the date that such Permits are required by Law). All such obtained Permits
shall be in proper form, in full force and effect and not subject to any
appeal, consent or further contest or to any unsatisfied condition that may
allow modification or revocation.
(h) FINANCING CLOSING. The Financing Closing shall have
been consummated and all conditions precedent thereto shall have been satisfied
or waived in accordance with the terms of this Agreement.
(i) TAXES. All Taxes (other than Excluded Charges)
payable by the Company shall have been paid by the Company, subject to the
Company's rights of contest pursuant to the Lease.
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(j) ADDITIONAL DOCUMENTS. The Agent shall have received
such other approvals, certificates or documents (including without limitation
an updated title report) as the Agent may reasonably request to evidence
satisfaction of the conditions set forth in this Section 2.02.
SECTION 2.03. OBLIGATIONS SUBSEQUENT. On or before April 30,
1996, the Company shall have delivered a copy of the Construction Budget,
Construction Schedule and, to the extent available, all other Facility
Agreements.
ARTICLE III.
REFINANCING OF NOTES
--------------------
SECTION 3.01. REFINANCING OF INTERIM NOTES. Subject to
Section 3.02, on the Interim Note Maturity Date the remaining unused Interim
Note Commitments of the Note Purchasers, if any, will automatically be canceled
and the Interim Notes will be refinanced through the issuance by the Trustee of
Series 2 A-Notes and Series 2 B-Notes. Each of the Holders of the Interim
Notes on the Interim Note Maturity Date shall receive as payment in full of the
aggregate principal amount thereof Series 2 A-Notes and Series 2 B-Notes in
aggregate principal amounts determined pursuant to the Interim Note Maturity
Formula.
SECTION 3.02. CONDITIONS PRECEDENT TO FINAL COMPLETION DATE.
The following conditions shall be fulfilled to the reasonable satisfaction of
each of the Purchasers on or as of the Final Completion Date:
(a) LIEN RELEASES AND WAIVERS. The Construction Agent
shall have secured final lien releases or waivers by all contractors and all
subcontractors and by materialmen and other parties who have supplied labor,
materials or services for the design and construction, testing, start-up or
operation of the Financed Improvements, or who otherwise might be entitled to
claim a contractual or statutory lien against the Property or any part thereof.
(b) CERTIFICATE OF FINAL COMPLETION; LEGAL COMPLIANCE.
The Company shall deliver to the Agent and the Trustee an Officer's Certificate
of Final Completion,
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<PAGE> 82
approved by the Independent Engineer in the form of Exhibit G hereto, to the
effect that final completion of the Financed Improvements, as described
therein, has occurred and further certifying to the effect that:
(i) The Property and the construction
and operation of the Improvements are in compliance in all
material respects with all applicable Laws (including, without
limitation, Environmental Laws); and
(ii) All Permits (including without
limitation a permanent certificate of occupancy) that are or
will become Applicable Permits have been obtained, except
Applicable Permits customarily obtained or which are permitted
by Law to be obtained after the Final Completion Date (in
which case the Company, having completed all appropriate
diligence, shall have no reason to believe that such Permits
will not be granted in the usual course of business prior to
the date that such Permits are required by Law and the Company
shall have applied for such Permits and satisfied all legal
requirements necessary to authorize continued operation while
the Permit application is pending). All such obtained Permits
shall be in proper form, in full force and effect and not
subject to any appeal or contest or to any unsatisfied
conditions (other than conditions relating to completion in
the future) that may allow modification or revocation.
(c) INDEPENDENT ENGINEER'S CERTIFICATION. The Company
shall deliver a Certificate in the form of Exhibit H hereto executed by the
Independent Engineer (the "INDEPENDENT ENGINEER'S CERTIFICATE") certifying that
(i) each Plant installation has been mechanically completed and electrically
checked, and piping and equipment have been flushed and pressure tested and
(ii) each Plant (A) has demonstrated production capability during a continuous
72 hour period of at least 90% of nameplate capacity of stearic acid,
stearates, stabilizers and lubricants, as applicable to each such Plant,
meeting product design specifications for such products during such test period
and (B) with respect to the environmental improvements, has demonstrated at
least 90% of the design recovery, in each case at levels of efficiency
acceptable to the Agent, the Trustee and the Majority Purchasers. In making
such certification, the
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<PAGE> 83
Independent Engineer, in his sole discretion, either may rely on production
records provided by the Company or require a performance test.
(d) INSURANCE. The Company shall be in compliance with
all Insurance Requirements and all insurance policies required thereunder shall
be in full force and effect. To the extent not previously delivered pursuant
hereto, the Company shall deliver, or cause to be delivered, to the Trustee and
the Agent certificates of insurance or applicable reinsurance cover notes
evidencing the coverage of such policies.
(e) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company as set forth in the Operative Documents shall be
true and correct as if made on and as of the Final Completion Date or, as
applicable, on and as of the date specified in such representation or warranty.
(f) ENVIRONMENTAL REMEDIATION. All material remedial
obligations of the Sellers under the Purchase Agreement shall have been
completed under the terms of the Purchase Agreement. The Company shall have
(i) caused the Environmental Consultant to conduct an updated environmental
audit of the Parcels and the Plants and (ii) provided to the Agent, the
Purchasers and the Trustee a copy of the Environmental Consultant's report on
such audit, which report shall evidence such remediation and conclude that no
environmental hazards exist on the Property that are likely, in the reasonable
judgment of the Trustee, the Agent and the Purchasers, to result in a Material
Adverse Effect.
(g) ADDITIONAL DOCUMENTS. The Agent shall have received
such other approvals, certificates or documents (including, without limitation,
an updated, as-built title report and endorsement to the Title Policy) as the
Agent may reasonably request to evidence satisfaction of the conditions set
forth in this Section 3.02.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
------------------------------
SECTION 4.01. COMPANY REPRESENTATIONS AND WARRANTIES. The
Company hereby represents and warrants
22
<PAGE> 84
to the Trustee, the Agent and the Purchasers that the following shall be true
and correct on and as of the Financing Closing Date:
(a) CORPORATE EXISTENCE. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Ohio and is duly qualified and authorized to do business in the State
of Texas and, if required, in the State of Connecticut and the Commonwealth of
Pennsylvania.
(b) CORPORATE AND GOVERNMENTAL AUTHORIZATION; NO
CONTRAVENTION. The execution, delivery and performance by the Company of this
Agreement and the other Operative Documents to which it is a party are within
the Company's corporate powers, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
governmental body, agency or official and do not contravene, or constitute a
default under, any provision of applicable Law or of the articles of
incorporation or code of regulations of the Company or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Company or result in the creation or imposition of any lien on any asset of the
Company (except as contemplated by the Operative Documents) or its
Subsidiaries, except where such contravention, default or lien would not result
in a Material Adverse Effect.
(c) BINDING EFFECT. This Agreement and the other
Operative Documents to which the Company is a party are legal, valid and
binding obligations of the Company enforceable against the Company in
accordance with their respective terms.
(d) FINANCIAL INFORMATION. (i) The consolidated balance
sheet of the Company and its Consolidated Subsidiaries as of December 31, 1994,
and the related consolidated statements of income and cash flows for the fiscal
year then ended, reported on by KPMG Peat Marwick LLP and set forth in the
Company's annual report for the fiscal year ended December 31, 1994 as filed
with the Securities and Exchange Commission (the "COMMISSION") on Form 10-K and
the consolidated balance sheet of the Company and its Consolidated Subsidiaries
as at June 30, 1995 and the related consolidated statements of income and cash
flows of the Company and its
23
<PAGE> 85
Consolidated Subsidiaries for the three months then ended, duly certified by a
financial officer of the Company, copies of which have been delivered to each
of the Note and Certificate Purchasers, fairly present, in conformity with
GAAP, the consolidated financial position of the Company and its Consolidated
Subsidiaries as of such dates and their consolidated results of operations and
changes in financial position for such periods.
(ii) Since December 31, 1994, there has been no Material Adverse Change.
(e) LITIGATION. There is no pending or threatened
action, suit, investigation, litigation or proceeding, including, without
limitation, any Environmental Action, affecting the Company or any of its
Subsidiaries before any court, governmental agency or arbitrator that (i) could
be reasonably likely to have a Material Adverse Effect or (ii) purports to
affect the legality, validity or enforceability of this Agreement or any of the
Operative Documents or the consummation of the transactions contemplated
hereby.
(f) COMPLIANCE WITH ERISA, ETC.
(i) No ERISA Event has occurred or is
reasonably expected to occur with respect to any Plan.
(ii) Neither the Company nor any ERISA
Affiliate has incurred or is reasonably expected to incur any
Withdrawal Liability to any Multiemployer Plan.
(iii) Neither the Company nor any ERISA
Affiliate has been notified by the sponsor of a Multiemployer
Plan that such Multiemployer Plan is in reorganization or has
been terminated, within the meaning of Title IV of ERISA, and
no such Multiemployer Plan is reasonably expected to be in
reorganization or to be terminated, within the meaning of
Title IV of ERISA.
(iv) Except as set forth in the financial
statements referred to in Section 4.01(d), the Company and its
Subsidiaries have no material liability with respect to
"expected post retirement benefit obligations" within the
meaning of Statement of Financial Accounting Standards No.
106.
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(g) SUBSIDIARIES. Each of the Company's Subsidiaries is
a corporation duly incorporated, validly existing and in good standing, in each
case under the laws of its jurisdiction of incorporation, except where failure
to do so would not constitute a Material Adverse Effect.
(h) STATUS. The Company is not an "investment company"
within the meaning of the Investment Company Act of 1940, as amended, nor is it
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act or the Interstate Commerce Act, or under any other state or
Federal Law limiting its ability to execute and deliver any Operative Document
or perform its obligations thereunder.
(i) COMPLIANCE WITH MARGIN REGULATIONS. No proceeds of
any Advance or Investment have been used in violation of any applicable Law
(including, without limitation, Regulation G, Regulation T, Regulation U and
Regulation X).
(j) NO DEFAULT. No event has occurred and no condition
exists which constitutes a Default or an Event of Default.
(k) CONSENTS. The execution and delivery by the Company
of each Operative Document to which it is a party and any other agreement which
it has entered into in connection with the transactions contemplated thereby,
the consummation of the transactions contemplated thereby and its compliance
with the terms thereof does not require the consent or the approval or
authorization of, or filing, registration or qualification with, any Federal,
state or local government on the part of the Company as a condition to such
execution, delivery and compliance.
(l) TITLE TO THE PARCELS.
(i) As of the Financing Closing Date, the Trustee
will have good and marketable title to an indefeasible fee estate in each of
the Fee Parcels, subject to no Liens other than Permitted Encumbrances and
those set forth on Schedule 4.01(l) attached hereto.
(ii) Also as of the Financing Closing Date, the
Trustee will have good and marketable title to
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<PAGE> 87
the easement interests in each of the Ohio Easement Parcel, the Texas Leasehold
Parcel and the Texas Easement Parcels subject to no Liens other than Permitted
Encumbrances.
(ii) Neither the Fee Parcels, the Easement Parcels
nor the Property contain any defect or feature making them unsuitable for the
proper operation of the Improvements.
(m) COMPLIANCE WITH LAW. The Company and, prior to the
Financing Closing Date, Synpro is in material compliance with all Laws
(including all Environmental Laws) with respect to the Parcels or the Property
or with respect to its leasing and operation of the Property, the construction
of the Improvements or the conduct of its business on the Property. Except for
those items referenced in the Disclosed Information, neither the Company nor,
to the knowledge of the Company (and prior to the Financing Closing Date),
Synpro has received any notice of, or citation for, any violation of any Law or
any Environmental Action which has not been resolved or which the Company
reasonably believes can not be resolved in the ordinary course of business,
which notice or citation or Environmental Action relates to the ownership or
operation of the Parcels or the Property.
(n) RECORDATION. The Deeds, the Bill of Sale, the Lease
(or a memorandum thereof), the Easement, the Second Easement, and all financing
statements under the UCC, to be recorded or filed pursuant to Section 2.01(r)
hereof, are in a form sufficient to create or publish notice of, as the case
may be, the interests in the Fee Parcels, Easement Parcels, the Property and
the Improvements purported to be created thereby. Upon the recordation of the
Deeds, the Bill of Sale, the Easement, the Second Easement, and the Lease (or a
memorandum thereof), and the filing of such financing statements, each to be
recorded or filed pursuant to Section 2.01(r) hereof in such places as the
Company shall notify the Trustee prior to the Financing Closing Date, such
documents will have been recorded or filed in each place in which recording or
filing is required to publish notice, under Texas and Ohio Law, of the
interests created thereby and to protect the validity and effectiveness
thereof, and all Taxes, fees and other public charges payable in connection
with the publishing and filing of the Deeds, the Bill of Sale, the Easement,
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<PAGE> 88
the Second Easement, and the Lease (or a memorandum thereof), shall be
contemporaneously paid in full by the Company.
(o) [Intentionally omitted]
(p) RIGHTS TO PROPERTY; ETC. (i) The Conveyance
Documents conveyed to the Trustee all rights-of-way, easements and real
property licenses, environmental allowances, rights in real property
(including, without limitation, fixtures and appurtenances), utilities and
other services necessary for the day-to-day operation of the Property and (A)
such rights-of-way, easements, licenses, environmental allowances, utilities
and other services are valid and in full force and effect in accordance with
their terms, (B) there is presently no material default with respect to any
such rights-of-way, easements, licenses, utilities and other services, and (C)
all utility services necessary for the construction of the Improvements and
operation of the Property for its intended purposes are or will be available at
the boundaries of the Parcel.
(ii) None of the Permitted Encumbrances will interfere with
the use or possession of the Property or any other material asset used in
connection therewith or the use of or the exercise by the Trustee of its rights
either under any Operative Document or to the Property.
(iii) The Company has given any and all notices required to
be given in connection with the construction of the Improvements pursuant to
any easements, rights-of-way, licenses or other agreements affecting the Parcel
or the Property, or any part thereof.
(iv) The Plants are situated wholly within the boundary lines
of the Texas Fee Parcels, the Texas Easement Parcels or the Ohio Fee Parcels,
as the case may be, and do not encroach upon any contiguous or adjoining
property; neither Parcel is considered part of a larger zoning or tax lot; the
Improvements do not encroach on any easements or rights-of-way affecting the
Property (except as specifically described in one of the Title Policies), or
violate any rights granted thereunder or any covenants or restrictions
affecting the Property, or any part thereof, and any future violation will not
result in a reversion or forfeiture of title, right of
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<PAGE> 89
re-entry or power of termination; and the easements, rights-of-way, covenants
and restrictions affecting the Property will not interfere with the use or
occupancy of the Property or any part thereof, or any asset owned or used in
connection therewith, nor will the exercise of rights or remedies thereunder
result in any damage to the Improvements or diminution of value of the
Property, or any part thereof.
(q) TRADE SECRETS AND PATENTS. (i) The ownership of the
Property by the Trustee and the leasing and operation of the Property by the
Company, including the construction and proposed operation of the Improvements,
do not and will not conflict with, infringe on, or otherwise violate any
copyright, trade secret or patent rights of any other Person.
(ii) The Company has all rights to all patents, patent
applications, proprietary computer software, "know-how" and copyrights used or
to be used in the ordinary course of the construction and operation of the
Improvements (the "INTELLECTUAL PROPERTY RIGHTS") that are necessary for the
operation thereof, including the right to assign the Intellectual Property
Rights. There is no judicial proceeding pending (or, to the knowledge of the
Company, threatened) involving any claim of any infringement, misuse or
misappropriation by the Company or any Affiliate thereof of any patent,
copyright, license or similar intellectual property right owned by any third
party related to the Intellectual Property Rights.
(r) ENVIRONMENTAL COMPLIANCE. (i) Except as referenced
in the Disclosed Information and where non-compliance would not have a Material
Adverse Effect, the operations and properties of the Company (other than the
Property) and each of its Subsidiaries comply in all material respects with all
Environmental Laws, all necessary Environmental Permits have been obtained and
are in effect for the operations and properties of the Company and its
Subsidiaries, the Company and its Subsidiaries are in compliance in all
material respects with all such Environmental Permits, and no circumstances
exist that could be reasonably likely to (A) form the basis of an Environmental
Action against the Company or any of its Subsidiaries or any of their
properties that could have a Material Adverse Effect or (B) cause any such
property to be subject to any restrictions on
28
<PAGE> 90
ownership, occupancy, use or transferability under any Environmental Law that
could have a Material Adverse Effect. Except as referenced in the Disclosed
Information, the Property complies in all material respects with all
Environmental Laws; all necessary Environmental Permits have been obtained and
are in effect for the Property and no circumstances exist that could be
reasonably likely to (A) form the basis of an Environmental Action against the
Property or (B) cause the Property to be subject to any restrictions on
ownership, occupancy, use or transferability under any Environmental Law.
(ii) Except as referenced in the Disclosed Information, none
of the properties currently or formerly owned or operated by the Company (other
than the Property) or any of its Subsidiaries is listed or proposed for listing
on the National Priorities List under the CERCLA ("NPL") or on CERCLIS or any
analogous state list of sites requiring investigation or cleanup, the listing,
or proposed listing of which would be reasonably likely to have a Material
Adverse Effect. The Property is not listed or proposed for listing on the NPL
or on CERCLIS or any analogous state list of sites requiring investigation or
cleanup.
(iii) Except as referenced in the Disclosed Information,
except where noncompliance would not individually or in the aggregate have a
Material Adverse Effect, (A) neither the Company nor any of its Subsidiaries
has transported or arranged for the transportation of any Hazardous Materials
to any location that is listed or proposed for listing on the NPL or on the
CERCLIS or any analogous state list, and (B) all Hazardous Materials generated,
used, treated, handled or stored at or transported to or from any property
currently or formerly owned or operated by the Company or any of its
Subsidiaries have been disposed of in compliance with all Environmental Laws
and Environmental Permits. Except as referenced in the Disclosed Information,
all Hazardous Materials generated, used, treated, handled or stored at or
transported to or from the Property have been disposed of in compliance with
all Environmental Permits.
(s) NO CONDEMNATION OR CASUALTY. The Property has not
suffered a Condemnation or a Casualty or any other damage or destruction which
renders the Property
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unusable in whole or in material part, and, under applicable Law, the Property
may be used for the purposes contemplated by the Company in accordance with the
Lease.
(t) PERMITS. Except as otherwise referenced in the
Disclosed Information, all Permits (including Environmental Permits) that are
or will become Applicable Permits have been obtained, except Applicable Permits
relating to the Financed Improvements customarily obtained or which are
permitted by Law to be obtained after the Financing Closing Date (in which case
the Company, having completed all appropriate diligence in connection
therewith, has no reason to believe that such Permits will not be granted in
the usual course of business prior to the date that such Permits are required
by Law). Except as otherwise referenced in the Disclosed Information, all such
obtained Permits are listed in Schedule 5.17 of the Purchase Agreement and are
in proper form, in full force and effect and not subject to any further appeal
or further contest or to any unsatisfied condition (other than conditions
relating to completion in the future) that may allow modification or
revocation.
(u) INSURANCE. The Company is in compliance with all
Insurance Requirements, and all insurance policies required by paragraph 16 of
the Lease are in full force and effect.
(v) TAXES. All Taxes (other than Excluded Charges), fees
and other charges which have become due and payable in connection with the
execution and delivery of the Operative Documents or any memorandum thereof
have been paid.
(w) COMPLIANCE. Except as referenced in the Disclosed
Information, the Property is in material compliance with all existing
applicable Laws.
(x) NO MATERIAL ADVERSE EVENT. No applicable Law
prohibits, and no litigation, governmental investigation or other proceeding is
pending or, to the Company's knowledge, threatened in which there is a
reasonable possibility of an unfavorable judgment, decree, order or other
determination which could prevent or make unlawful, or impose any material
adverse condition upon, the Property or the acquisition, construction, use,
ownership, operation or leasing thereof, or the Trustee's ownership thereof.
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(y) FULL DISCLOSURE. The statements and materials
furnished by or on behalf of the Company to the Agent, any Note and/or
Certificate Purchaser, the Trustee or Special Counsel, in connection with any
Operative Document or any transaction contemplated thereby do not contain any
untrue statement of a material fact or omit a material fact necessary to make
the statements contained therein or herein not misleading in light of the
circumstances in which such statements or materials were furnished.
SECTION 4.02. SSBTC REPRESENTATIONS AND WARRANTIES. SSBTC,
in its individual capacity and not as Trustee, represents and warrants (with
the exception of subsection (g), which representation and warranty is made by
SSBTC solely in its trust capacity) to the Company and the Purchasers that the
following statements are and shall be true and correct as of the Financing
Closing Date:
(a) ORGANIZATION AND AUTHORITY. (i) SSBTC is a
Massachusetts trust company duly organized, validly existing and in good
standing under the laws of the Commonwealth of Massachusetts.
(ii) SSBTC has all requisite power and authority to execute
and deliver each Operative Document to which it is a party and to comply with
the terms thereof and perform its obligations thereunder.
(b) PENDING LITIGATION. There are no actions, suits or
Proceedings pending or threatened against or affecting SSBTC in any court or
before any governmental body or arbitration tribunal which, if adversely
determined, would adversely affect the Trustee's ownership of the Property or
the business, condition (financial or otherwise), performance, properties,
prospects or results of operation of SSBTC or the Trustee's ability to perform
its obligations as Trustee under any Operative Document to which it is a party
or any other agreement which it has entered into in connection with any
transaction contemplated by any Operative Document.
(c) AUTHORIZATION; NO CONFLICT. The execution and
delivery by SSBTC of, and compliance by SSBTC with all of the provisions of,
each Operative Document to which it is a party and any other agreement entered
into
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in connection with any transaction contemplated by the Operative Documents are
within the powers of SSBTC and are authorized by SSBTC and will not conflict
with, result in any breach of any of the provisions of, or constitute a default
under, SSBTC's articles of association or by-laws or any agreement, judgment,
injunction, order, decree or other instrument to which SSBTC is a party or by
which SSBTC may be bound or which is applicable to any of SSBTC's property or
result in a violation of any applicable Massachusetts or Federal Law or in the
creation of any lien on any asset of SSBTC (except as contemplated by the
Operative Documents).
(d) ENFORCEABILITY. Each of the Operative Documents to
which SSBTC is a party, and any other agreement entered into by SSBTC in
connection with any transaction contemplated by any Operative Document, has
been duly authorized by all necessary action on the part of SSBTC, and is the
legal, valid and binding obligation of SSBTC enforceable against SSBTC in
accordance with its terms, except as enforceability thereof may be limited by
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally and by general principles
of equity.
(e) NO DEFAULT. No event has occurred and no condition
exists which, upon consummation of the transactions contemplated by any
Operative Document, would constitute a default by SSBTC. SSBTC is not in
violation in any respect of any agreement or any other instrument, nor is SSBTC
in violation of its articles of association or any other instrument to which it
is a party or by which it or any of its property may be bound or affected which
would have a material adverse effect on either the business, financial position
or results of operations of SSBTC or SSBTC's ability to perform its obligations
as Trustee under the Operative Documents.
(f) CONSENTS. The nature of SSBTC, its execution and
delivery of each Operative Document to which it is a party, its consummation of
the transactions contemplated thereby, its compliance with the terms thereof or
any circumstance in connection with the transactions contemplated thereby does
not require the consent of any Person or the approval or authorization of, or
filing, registration or qualification with, any Massachusetts or Federal
governmental authority governing
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the banking or trust powers of SSBTC on the part of SSBTC (other than such as
have been obtained) as a condition to such execution, delivery and compliance.
(g) ENFORCEABILITY AGAINST TRUSTEE. As of the Financing
Closing Date the Instruments have been duly authorized by all necessary
corporate action on the part of the Trustee and the Instruments (other than the
Series 2 A-Notes and Series 2 B-Notes) constitute, and (upon issuance) the
Series 2 A-Notes and Series 2 B-Notes will constitute, the legal, valid and
binding obligations of the Trustee (acting solely as Trustee under the
Declaration, and not in its individual capacity) and are, or (as applicable)
will be, enforceable against the Trustee in accordance with their terms and the
terms of the Declaration.
ARTICLE V.
COVENANTS
SECTION 5.01. COMPANY'S COVENANTS.
(a) INFORMATION. The Company will deliver to the Agent
for distribution to the Note and Certificate Purchasers:
(i) as soon as available and in any event
within 45 days after the end of each of the first three
quarters of each fiscal year of the Company, consolidated
balance sheets of the Company and its Subsidiaries as of the
end of such quarter and consolidated statements of income and
retained earnings and cash flows of the Company and its
Subsidiaries for the period commencing at the end of the
previous fiscal year and ending with the end of such quarter,
certified by the chief financial officer of the Company;
(ii) as soon as available and in any event
within 90 days after the end of each fiscal year of the
Company, a copy of the annual report for such year for the
Company and its Subsidiaries, containing consolidated
financial statements for such year certified in a manner
acceptable to the Majority Purchasers by KPMG Peat Marwick or
other independent public accountants acceptable to the
Majority Purchasers, together with a certificate of
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such accountants stating that during the course of their
examination no Default or Event of Default existing at the end
of such fiscal year came to their attention or, if any did
come to their attention, briefly describing the same;
(iii) together with each delivery pursuant to
clause (i) or (ii) above, a certificate of an appropriate
financial officer of the Company setting forth the
computations showing compliance or non-compliance, as the case
may be, with the covenants in Sections 5.01(h), 5.01(i),
5.01(j) and 5.01(n) which certificate shall be in form and
detail reasonably satisfactory to the Purchasers and shall
include such officer's certification that he knows of no
Default or Event of Default then existing or, if any does
exist, a brief description thereof and of the Company's
intentions in respect thereof;
(iv) as soon as possible and in any event
within five days after the occurrence of each Default and
Event of Default continuing on the date of such statement, a
statement of the chief financial officer of the Company
setting forth details of such Default or Event of Default and
the action which the Company has taken and proposes to take
with respect thereto;
(v) promptly after the sending or filing
thereof, copies of (A) each Form 10-K, Form 10-Q, Form 8-K or
similar document filed by the Company with the Securities and
Exchange Commission, (B) each effective registration statement
or generally distributed preliminary prospectus filed by the
Company with the Securities and Exchange Commission, but not
including any relating solely to employee benefit plans, and
(C) each proxy statement, annual or quarterly report or other
document sent by the Company to holders of its common stock;
(vi) promptly and in any event within five
days after the receipt thereof by the Company or any of its
Subsidiaries, a copy of each notice, citation or other
communication from the United States Environmental Protection
Agency, any state environmental protection agency, any court
or any other governmental Person, and of each consent
agreement, consent decree, judgment or other
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document with any such Person, in each case asserting an
actual or potential violation, fine, penalty, enforcement
action or liability of the Company or any Subsidiary under any
law or regulation relating to environmental protection,
hazardous or toxic substances or contaminated materials, the
effect or adverse determination of which would have a Material
Adverse Effect;
(vii) promptly after the commencement thereof,
notice of the commencement and nature of all actions and
proceedings before any court, governmental agency or
arbitrator affecting the Company or any of its Subsidiaries of
the type described in Section 4.01(e);
(viii) promptly and in any event within 10 days
after the Company or any of its ERISA Affiliates knows or has
reason to know that any ERISA Event has occurred, a statement
of an officer of the Company having knowledge of or
responsibility for such matters describing such ERISA Event
and the action, if any, that the Company or such ERISA
Affiliate has taken and proposes to take with respect thereto;
(ix) promptly and in any event within seven
Business Days after receipt thereof by the Company or any of
its ERISA Affiliates, copies of each notice from the PBGC
stating its intention to terminate any Plan or to have a
trustee appointed to administer any such Plan;
(x) promptly and in any event within 30 days
after the receipt thereof by the Company or any of its ERISA
Affiliates, a copy of the latest annual actuarial report for
each Plan if the ratio of the fair market value of the assets
of such Plan to its current liability (as defined in Section
412 of the Code) is less than 60%;
(xi) promptly and in any event within five
Business Days after receipt thereof by the Company or any of
its ERISA Affiliates from the sponsor of a Multiemployer Plan,
copies of each notice concerning (A) the imposition of
Withdrawal Liability by any such Multiemployer Plan, (B) the
reorganization or termination, within the meaning of Title IV
of
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ERISA, of any such Multiemployer Plan or (C) the amount of
liability incurred, or that may be incurred, by the Company or
any of its ERISA Affiliates in connection with any event
described in clause (A) or (B); and
(xii) such other information respecting the
condition or operations, financial or otherwise, of the
Company or any of its Subsidiaries as any Purchaser or the
Trustee through the Agent may from time to time reasonably
request.
(b) COMPLIANCE WITH ENVIRONMENTAL LAWS. The
Company will comply, and cause other Persons operating or occupying its
properties to comply, in all material respects, with all applicable
Environmental Laws now existing or hereinafter enacted and Environmental
Permits with respect to the Property; obtain and renew all Environmental
Permits necessary for ownership and operation of the Property; and conduct any
investigation, study, sampling and testing, and undertake any cleanup, removal,
remedial or other action necessary to remove and clean up all Hazardous
Materials from any of the Property pursuant to the lawful order of any
regulatory authority and generally in accordance with the requirements of all
Environmental Laws.
(c) MAINTENANCE OF PROPERTY; INSURANCE;
AS-BUILT SURVEY. (i) The Company will keep, and will cause each of its
Subsidiaries to keep, all property used or useful in its business in good
working order and condition, ordinary wear and tear excepted, except where the
failure to do so would not have a Material Adverse Effect.
(ii) The Company will, and will cause each
of its Subsidiaries to, maintain (either in the name of the Company or in such
Subsidiary's own name) with insurance companies with a Best's rating of A or
better, insurance on all of its properties in at least such amounts and against
at least such risks (and with such risk retention) as the Company in good faith
determines is necessary or appropriate for the prudent management of its
business; and will furnish to the Purchasers, upon request from the Agent,
information presented in reasonable detail as to the insurance so carried.
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(iii) The Company will deliver to the Agent promptly
after the occurrence of the Final Completion Date, the final as- built plans
and specifications of the Improvements (which in any event shall be provided to
Agent within ninety (90) days after the Final Completion Date).
(d) CONDUCT OF BUSINESS AND MAINTENANCE OF
EXISTENCE. (i) The Company will continue to engage in business of the same
general type as now conducted by the Company and its Subsidiaries, and will
preserve, renew and keep in full force and effect its rights, privileges and
franchises necessary or desirable in the normal conduct of its business to the
extent permitted by Law.
(ii) The Company will preserve and keep in full force
and effect its corporate existence.
(e) COMPLIANCE WITH LAWS. The Company will
comply, and cause each of its Subsidiaries to comply, in all material respects
with all applicable Laws, if non-compliance would have a Material Adverse
Effect; such compliance shall include, without limitation, paying before the
same become delinquent all taxes, assessments and governmental charges imposed
upon it or upon its property; PROVIDED, HOWEVER, that in the event of any
alleged non-compliance, no such Person shall be in violation of this
subsection: (i) if within thirty (30) days after such non-compliance becomes
apparent or is alleged, appropriate corrective measures are commenced and such
measures are diligently pursued to the satisfaction of the applicable court,
agency or governmental authority; or (ii) if and as long as such alleged
non-compliance is being contested in good faith by timely and appropriate
proceedings.
(f) BOOKS AND RECORDS. The Company will keep,
and cause each of its domestic Subsidiaries to keep, proper books of record and
account in which entries in conformity with GAAP shall be made of all financial
transactions and the assets and business of the Company and each such domestic
Subsidiary.
(g) USE OF PROCEEDS; APPLICATION OF PROCEEDS TO
ACTUAL PROJECT COSTS. The Company, as the Construction Agent, will use
proceeds of the Advances received by it solely to pay Actual Project Costs, and
none of such proceeds will be used in violation of any
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applicable Law, including, without limitation, Regulation G, Regulation T,
Regulation U and Regulation X. The Company shall apply the proceeds of all
Advances solely to Actual Project Costs.
(h) NEGATIVE PLEDGE. (i) The Company will not create, or
suffer to exist, and will not permit any Subsidiary organized in the United
States of America to create or suffer to exist, any Lien upon or with respect
to any of its properties, whether owned at the Financing Closing Date or
thereafter acquired, other than Permitted Liens.
(i) FINANCIAL COVENANTS.
(i) WORKING CAPITAL. Maintain
an excess of consolidated current assets over consolidated
current liabilities of the Company and its Subsidiaries of not
less than $125,000,000. Consolidated current liabilities
shall not include the current portion of the indebtedness
evidenced by the Notes issued under the Revolving Credit
Agreement.
(ii) TANGIBLE NET WORTH.
Maintain an excess of consolidated total tangible assets over
consolidated total liabilities (including Guaranties) of the
Company and its Subsidiaries of not less than the Required Net
Worth. The "Required Net Worth" shall initially be
$208,991,000 and shall increase as of December 31 of each
year, commencing December 31, 1995, by an amount equal to 25%
of the consolidated net income (if any) of the Company and its
Subsidiaries for the fiscal year ending on such December 31.
(iii) TANGIBLE NET WORTH RATIO.
Maintain a ratio of consolidated total liabilities (including
Guaranties but excluding the Transition Obligation) to the sum
of (i) consolidated tangible net worth of the Company and its
Subsidiaries plus (ii) an amount (in no case greater than
fifty-five million dollars ($55,000,000)) equal to the
goodwill acquired by the Company from Synpro, as part of the
Company's acquisition of all or substantially all of the
assets of Synpro of not more than 1.85 to 1.00.
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(iv) INTEREST COVERAGE RATIO.
Maintain, for each period of four consecutive fiscal quarters,
beginning with the four fiscal quarters ending December 31,
1995, a ratio of consolidated net income (before interest
income, interest expense and income taxes) of the Company and
its Subsidiaries for such period to consolidated interest
expense (net of interest income) for such period of not less
than 2.5 to 1.0.
(j) MERGERS, ASSETS SALES, ETC. The
Company shall not (i) merge or consolidate with or into, or (ii) sell, assign,
lease or otherwise dispose of (whether in one transaction or in a series of
transactions and including, without limitation, by sale of capital stock of the
Person owning such assets), in any period of twelve (12) consecutive calendar
months, assets having an aggregate book value (net of liabilities assumed) on
the consolidated balance sheet of the Company and its Subsidiaries in excess of
$100,000,000 for the Company and its Subsidiaries taken as a whole, except for
sales in the ordinary course of business), or permit any of its Subsidiaries to
do so, except that (i) any Subsidiary of the Company may merge or consolidate
with or into, or dispose of assets to, any other Subsidiary of the Company, and
(ii) any Subsidiary of the Company may merge into or dispose of assets to the
Company and the Company may merge with any other Person so long as the Company
is the surviving corporation, PROVIDED, in each case, that no Default or Event
of Default shall have occurred and be continuing at the time of such proposed
transaction or would result therefrom.
(k) ACCOUNTING CHANGES. The Company shall not
make or permit, or permit any of its Subsidiaries to make or permit, any change
in accounting policies or reporting practices, except as required or permitted
by GAAP.
(l) PERFORMANCE. The Company shall observe and
perform all provisions to be observed or performed by it contained in each
Operative Document to which it is a party, in accordance with the terms thereof
and within the times permitted thereby (including any grace or cure periods
provided thereby) so as to prevent the occurrence of an Event of Default, and
will maintain, or cause to be maintained, the validity and effectiveness as to
the Company of each such Operative Document to which it is a party.
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(m) INTELLECTUAL PROPERTY RIGHTS. The Company shall
preserve, protect and maintain its rights in and to the Intellectual Property
Rights in accordance with prudent industry practice.
(n) DIVIDENDS. The Company shall not declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any shares of any class of capital
stock of the Company, now or hereafter outstanding, except that the Company may
(i) declare and make any dividend payment or other distribution payable in
common shares of the Company and (ii) declare or pay cash dividends to its
shareholders in an aggregate amount not in excess of the sum of $55,000,000
plus 50% of consolidated net income of the Company and its subsidiaries arising
after December 31, 1989 and computed on a cumulative consolidated basis (with
losses, if any, taken into account), PROVIDED that, immediately after giving
effect to such proposed action, no Default or Event of Default would exist.
(o) APPROVED CONSTRUCTION BUDGET AND RELATED MATTERS.
The Approved Construction Budget shall be prepared in good faith on the basis
of reasonable assumptions and shall accurately include all Actual Project Costs
anticipated to be incurred or estimated to be incurred and all reserves
expected to be established and maintained in connection with achieving
completion of the Improvements by the Final Completion Date. The Construction
Schedule shall accurately describe estimated dates of completion of the stages
of construction of the Improvements.
ARTICLE VI.
THE NOTES AND THE CERTIFICATES
------------------------------
SECTION 6.01. DETERMINATION OF RATES.
(a) All computations of interest and of any fee payable
hereunder or under any other Operative Document (other than computations made
for purposes of determining the Maximum Rate) shall be made by the Agent on the
basis of a year of 360 days (365 days in the case of the computation of
interest if the Applicable Rate is determined by reference to the Base Rate),
for the actual number of days (including the first day but excluding the
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<PAGE> 102
last day) occurring in the period for which such interest or fee is payable.
Each determination by the Agent of an interest rate hereunder or under any
other Operative Document shall be conclusive and binding for all purposes,
absent manifest error, but no such interest rate shall ever exceed the Maximum
Rate.
(b) The Company shall notify the Agent two Business Days
before each Interest Setting Date as to the Interest Period or Periods selected
by the Company subject to the limitations set forth in the definition of
Interest Period. On each Interest Setting Date, the Agent shall calculate the
LIBO Rate. Upon determination of the LIBO Rate on the Interest Setting Date,
the Agent shall promptly notify the Purchasers and the Trustee of the LIBO Rate
for the applicable Interest Period.
(c) In the event, and on each occasion, that on the
Interest Setting Date the Agent shall have received notice from any Note
Purchaser of such Purchaser's determination (which determination shall be
conclusive and binding upon the Trustees and the Company absent manifest error)
(i) that United States dollar deposits in the amount of the principal of and
for the relevant Interest Period for such Purchaser's Notes are not generally
available in the London interbank market or (ii) that the rate at which such
dollar deposits are being offered would not adequately and fairly reflect the
cost to such Purchaser of making or maintaining the principal of such Notes
during the relevant Interest Period if the Applicable Rate were to be
determined by reference to the LIBO Rate, then the Agent shall, as soon as
practicable thereafter, give written, telex or facsimile notice of such
determination to the Company, the Trustee and the other Purchasers and in the
case of a determination pursuant to clause (ii) above only, such Purchaser
shall deliver a certificate to the Agent and the Company describing in
reasonable detail the calculations of such Purchaser pursuant to which it made
such determination and stating that such Purchaser is making such determination
on a basis consistent with its treatment of other similar situations, and
thereafter the Applicable Rate on the Notes held only by such Purchaser shall
be determined by reference to an appropriate substitute rate to be negotiated
in good faith by the Company, the Agent and such Purchaser as promptly as
practicable or, failing agreement on an appropriate substitute rate, the Base
Rate, but in no event to exceed
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the Maximum Rate, until the circumstances giving rise to such notice no longer
exist.
(d) In the event, and on each occasion, that on the
Interest Setting Date the Agent shall have determined (which determination
shall be conclusive and binding upon the Company absent manifest error) that
reasonable means do not exist for ascertaining the LIBO Rate for purposes of
determining the Applicable Rate, then the Agent shall, as soon as practicable
thereafter, give written, telex or facsimile notice of such determination to
the Company, the Purchasers and the Trustee, and thereafter the Applicable Rate
on the Instruments shall be determined by reference to an appropriate
substitute rate to be negotiated in good faith by the Company, the Agent and
the Purchasers (the "SUBSTITUTE RATE") as promptly as practicable or, failing
agreement on the Substitute Rate, the Base Rate, but in no event to exceed the
Maximum Rate, until the circumstances giving rise to such notice no longer
exist.
(e) In the event that, subsequent to the Financing
Closing Date, the introduction of or any change in any United States or foreign
Law, or the interpretation or application thereof, makes it unlawful, or any
central bank or other governmental authority having jurisdiction asserts that
it is unlawful, for any Purchaser (including any branch, subsidiary or
Affiliate office of such Purchaser from which the Instruments are actually
funded or at which the Instruments are actually maintained or held) to fund or
maintain and/or to continue to hold the Instruments if the Applicable Rate
thereon is determined with respect to the LIBO Rate, then the Applicable Rate
on such Instruments shall be converted automatically to the Base Rate plus the
Applicable Margin (but in no event to exceed the Maximum Rate) on and after the
last day of the applicable Interest Period or on and after such earlier date as
may be required by such Law. As soon as practicable thereafter, the Company,
the Agent and the Purchasers shall negotiate a Substitute Rate.
(f) Upon the occurrence and during the continuance of an
Event of Default arising from the nonpayment of the Company's obligations
hereunder, the Applicable Rate on the Instruments shall automatically be
converted to the Base Rate.
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SECTION 6.02. ASSIGNMENTS AND PARTICIPATIONS. (a)
The Company may not assign its rights or delegate its obligations under this
Agreement without the prior written consent of the Agent and all of the
Purchasers. Upon an assignment to and assumption by a Person of the rights and
obligations of the Company under and in compliance with this Agreement, the
representations, warranties and covenants of the Company and the conditions
applicable to the Company hereunder shall thereafter apply to such Person and
not to the Company.
(b) In addition to the assignments permitted under
Section 6.02(h), each Note Purchaser and each Certificate Purchaser may assign
to one or more Eligible Assignees all or a portion of the Instruments then held
by it and its rights and obligations thereunder and under this Agreement
(including, without limitation, all or a portion of its Interim Note Commitment
and Certificate Commitment and/or the Advances under its Interim Notes and/or
its Investment under its Certificates) and the other Operative Documents;
PROVIDED, HOWEVER, that (i) each assignment shall be of a constant, and not a
varying, percentage of all such rights and obligations; (ii) each such
assignment of Notes shall be of a pro rata share of each series of Notes then
held by such Note Purchaser; (iii) the aggregate principal amount of the Notes
being assigned pursuant to each such assignment (determined as of the date of
the Assignment and Acceptance with respect to such assignment) shall in no
event be less than $5 million in original principal amount and in integral
multiples of $1 million in excess thereof; (iv) no such assignment shall be
made if as a result thereof any Purchaser's aggregate Interim Note Commitment,
after giving effect to such assignment, are less than $5 million (determined as
of the date of the Assignment and Acceptance with respect to such assignment);
PROVIDED, HOWEVER, that this Section 6.02(b)(iii)-(iv) shall not prohibit an
assignment of the entire outstanding principal amount of the Notes then held by
a Purchaser; and (v) the parties to each such assignment shall execute and
deliver to each of the Agent, with (if requested by the Agent) an
administrative fee to be paid by the Assignor (as defined below) of $3,000, and
the Trustee for its acceptance and recording in the Record or the Register as
the case may be, an Assignment and Acceptance; PROVIDED, HOWEVER, the
requirements of Sections 6.02(b)(i)-(iv) shall not apply with respect to
assignments to such Purchaser's
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Affiliates or to any financial institutions to which the Note Purchaser is
assigning Notes as collateral security pursuant to Regulation A of the Federal
Reserve Board and any operating circular issued by the Federal Reserve System
and/or the Federal Reserve Bank or otherwise. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance (which effective date shall be at least five Business
Days after the execution of such Assignment and Acceptance, or with respect to
an Assignment and Acceptance for Certificates, such earlier date as the
Assignor and Assignee shall agree), (x) the assignee thereunder (the
"ASSIGNEE") shall be a party hereto and to the other Operative Documents to
which the Purchasers are parties and, to the extent that rights and obligations
hereunder have been assigned to and assumed by it, have the rights and
obligations of a Purchaser hereunder and a Holder of Instruments under the
Operative Documents (including the obligation of confidentiality set forth in
Section 9.17) and (y) the assignor thereunder (the "ASSIGNOR") shall, to the
extent that rights and obligations hereunder have been assigned by it,
relinquish its rights (other than any rights to indemnification it may have
hereunder or under the Operative Documents) and be released from its
obligations under this Agreement (other than the confidentiality
obligations set forth in Section 9.17) and the other Operative Documents with
respect to all or such portion, as the case may be, of its Interim Note and/or
Certificate Commitments (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of Assignor's rights and obligations
under the Agreement and the other Operative Documents, such Assignor shall,
except as set forth above, cease to be a party hereto). To the extent that the
Certificate Purchaser is an Assignor, the term "CERTIFICATE PURCHASER," as used
in the Operative Documents, shall refer to each Holder of the Certificates and
the obligations of each Certificate Purchaser hereunder shall be several and
not joint and several.
(c) By executing and delivering an Assignment and
Acceptance, the Assignor thereunder and the Assignee thereunder confirm to and
agree with each other and the other parties hereto as follows: (i) other than
as provided in such Assignment and Acceptance, such Assignor makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties
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or representations made in or in connection with this Agreement and the other
Operative Documents or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, the other Operative
Documents or any other instrument or document furnished pursuant hereto; (ii)
such Assignor makes no representation or warranty and assumes no responsibility
with respect to the financial condition of the Company or the Construction
Agent or the performance or observance by the Company or the Construction Agent
of any of their respective obligations under this Agreement or any other
Operative Document, or any other instrument or document furnished pursuant
hereto; (iii) such Assignee confirms that it has received a copy of this
Agreement, together with copies of the financial statements referred to in
Section 4.01(d) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision with respect to
entering into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent, the Company, the Trustee,
such Assignor or any other Note or Certificate Purchaser and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such Assignee confirms that it is an Eligible Assignee; (vi)
such Assignee appoints and authorizes the Agent to take such action as agent on
its behalf and to exercise such powers under this Agreement and the other
Operative Documents as are delegated to the Agent by the terms hereof and
thereof, together with such powers as are reasonably incidental thereto; and
(vii) such Assignee agrees that it will perform in accordance with their terms
all of the obligations which by the terms of this Agreement are required to be
performed by it as a Note and/or Certificate Purchaser.
(d) The Agent shall maintain at its address listed on
Schedule I hereto a copy of each Assignment and Acceptance delivered to and
accepted by it and a register for the recordation of the names and addresses of
the Note and Certificate Purchasers and the Commitment of, and principal amount
of the Advances and stated amount of the Investment owing to, each Note and
Certificate Purchaser from time to time (the "RECORD"). The entries in the
Record shall be conclusive and binding for all purposes, absent manifest error,
and the Company, the Agent, the Trustee and the Note and Certificate
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Purchasers may treat each Person whose name is recorded in the Record as a Note
and/or Certificate Purchaser hereunder for all purposes of this Agreement. The
Record shall be available for inspection by the Company or any Note or
Certificate Purchaser at any reasonable time and from time to time upon
reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance
executed by an Assignor and an Assignee representing that it is an Eligible
Assignee, the Agent shall, if such Assignment and Acceptance has been completed
give prompt oral or written notice to the Company and the Trustee and (i)
accept such Assignment and Acceptance, and (ii) record the information
contained therein in the Record. The Agent shall provide the Company with a
current list of all Purchasers no less frequently than quarterly.
(f) Each Note and Certificate Purchaser may sell
participations to one or more banks or other entities in or to all or a portion
of the Instruments then held by it and its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitment
and the Instrument or Instruments held by it) and the other Operative
Documents; PROVIDED, HOWEVER, that (i) such Purchaser's obligations under this
Agreement and the other Operative Documents (including without limitation all
or a portion of its Interim Note Commitment to make Advances)
shall remain unchanged; (ii) such Note or Certificate Purchaser shall remain
the Holder of any such Instrument for all purposes under this Agreement and the
other Operative Documents and the Company, the Agent, the Trustee, and the
other Note and Certificate Purchasers shall continue to deal solely and
directly with such Purchaser in connection with such Purchaser's rights and
obligations under this Agreement; (iii) no such participant shall be entitled
to receive any greater payment than such Purchaser would have been entitled to
receive with respect to the rights participated (including, without limitation,
payments for Taxes, Other Charges or Increased Costs) except as a result of
circumstances arising after the date of such participation to the extent that
such circumstances affect other Note or Certificate Purchasers and participants
generally; and (iv) no Note or Certificate Purchaser shall assign or grant a
participation that conveys to the participant the right to vote or consent
under this Agreement, other than
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the right to vote upon or consent to any reduction of the principal or stated
amount of or the interest or Distributions to be paid on such Purchaser's
Instrument(s) or any postponement of any date for the payment of any amount
payable in respect of such Purchaser's Instruments.
(g) Any Note or Certificate Purchaser may, in connection
with any assignment or participation or proposed assignment or participation
pursuant to this Section 6.02, disclose to the assignee or participant or
proposed assignee or participant, any information relating to the Company
furnished to such Note or Certificate Purchaser by or on behalf of the Company;
PROVIDED, that prior to any such disclosure, the assignee or participant or
proposed assignee or participant shall agree in writing with the Company and
the Agent to preserve the confidentiality of any confidential information
relating to the Company or the transactions contemplated by this Agreement
(including, without limitation, the general structure of this transaction)
received by it from such Note or Certificate Purchaser in a manner consistent
with that set forth in Section 9.17 hereof.
(h) Anything in this Section 6.02 to the contrary
notwithstanding (except that at all times the requirements of Section 6.02(g)
shall be satisfied), any Note Purchaser may assign and pledge, as collateral or
otherwise, and without notice to or consent of the Company, all or any of the
Notes held by it and any of its rights (including, without limitation, rights
to payment of the principal of and interest on the Notes) under this Agreement
to (i) any of its Affiliates and (ii) any Federal Reserve Bank, the United
States Treasury or to any other financial institution as collateral security
pursuant to Regulation A of the Federal Reserve Board and any operating
circular issued by the Federal Reserve System and/or the Federal Reserve Bank
or otherwise; PROVIDED, that any payment made by the Company to the Trustee for
the benefit of such assigning and/or pledging Purchaser in accordance with the
terms of the Operative Documents shall satisfy the Company's obligations under
the Operative Documents in respect thereof to the extent of such payment. No
such assignment and/or pledge set forth in (ii) above shall release the
assigning and/or pledging Note Purchaser from its obligations hereunder.
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SECTION 6.03. TAXES. (a) Any and all payments by the
Company, the Trustee or the Agent hereunder or under any of the other Operative
Documents (including, without limitation, payments of Fixed Rent, Additional
Rent, interest, Distributions, fees and principal and stated amounts of the
Instruments) shall be made free and clear of and without deduction for any and
all present or future Impositions and all liabilities with respect thereto,
excluding, in the case of payments made to each Purchaser, the Agent or the
Trustee, as the case may be, Excluded Charges. Deduction may be made, if
required to be made by Law, in the case of payments made to each Purchaser, the
Agent or the Trustee, as the case may be, for each of the Excluded Charges.
If the Company, the Agent or the Trustee shall be required by
Law to deduct any Charges from or in respect of any sum payable hereunder or
under any of the Operative Documents to the Trustee, the Agent or any
Purchaser, (i) the sum payable by such deducting party shall be increased as
may be necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section 6.03) the
Trustee, the Agent or such Purchaser, as the case may be, receives an amount
equal to the sum it would have received had no such deductions been made, (ii)
the Company, the Agent or the Trustee, as the case may be, shall make such
deductions, and (iii) the Company, the Agent or the Trustee as the case may be,
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable Law. The Company will indemnify the
Agent and the Trustee for the full amount of any sums paid by the Agent and the
Trustee pursuant to the preceding sentence.
(b) Notwithstanding anything to the contrary contained in
this Agreement, each of the Company, the Agent and the Trustee shall be
entitled, to the extent it is required to do so by Law, to deduct or withhold
income or other similar Taxes imposed by the United States of America or any
other jurisdiction on Fixed Rent, Additional Rent, interest, Distributions,
fees, principal and stated amounts of the Instruments or other amounts payable
hereunder or under the other Operative Documents for the account of the
Trustee, the Agent or any Purchaser (without the payment of increased amounts
to such Purchaser, the Agent or the Trustee pursuant to clause (a) of this
Section 6.03 in the case of Excluded
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Charges) unless the Trustee (or any successor thereto) or a Purchaser, as the
case may be, has timely filed with the Agent (who shall then promptly forward
the same to the Company and the Trustee) the Prescribed Forms for the
applicable year to the extent deduction or withholding of such Taxes is not
required or reduced as a result of the filing of such Prescribed Forms. If the
Agent or the Trustee shall so deduct or withhold any such Taxes, it shall
provide a statement to such Purchaser, and if the Company shall so deduct or
withhold any such Taxes, it shall provide a statement to the Trustee, in each
case setting forth the amount of such Taxes so deducted or withheld, the
applicable rate and any other information or documentation which such Purchaser
or the Trustee may reasonably request for assisting such Purchaser or the
Trustee to obtain any allowable credits or deductions for the Taxes so deducted
or withheld in the jurisdiction or jurisdictions in which such Purchaser is
subject to Taxes.
(c) In addition, the Company agrees to pay and/or
reimburse any present or future stamp or documentary Taxes or any other excise
or property Taxes payable by or on behalf of the Agent, the Trustee or any
Purchaser, including any transfer Taxes with respect to the Trustee's
acquisition of the Property or other property transfer, transfer gains or
mortgage recording Taxes, charges or similar levies which arise from the
acquisition, ownership, operation, occupancy, possession, use, non-use,
financing, leasing or disposition or condition of the Property or any part
thereof by the Trustee or from any payment made to the Agent, the Trustee or
any Purchaser hereunder or under the other Operative Documents or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement or any of the other Operative Documents and arising directly or
indirectly out of the transactions contemplated by this Agreement or any of the
Operative Documents (hereinafter referred to as "OTHER TAXES").
(d) The Company will indemnify the Trustee, the Agent and
each Note and Certificate Purchaser for the full amount of any Charges
(including, without limitation, any Other Taxes imposed by any jurisdiction on
amounts payable under this Section 6.03) paid by the Trustee, the Agent or such
Purchaser as the case may be, and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto,
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whether or not such Charges were correctly or legally asserted (it being the
intent to indemnify the Trustee, the Agent and the Purchasers with respect to
Charges resulting from such Person's own negligence). Payments under this
indemnification shall be made within 30 days from the date such Purchaser, the
Agent or the Trustee, as the case may be, makes written demand therefor, which
demand shall include a receipt or a reasonably detailed statement of such
Charges. In no event shall the Company, in connection with this indemnity or
for any other purpose whatsoever under any Operative Document, have any right
to examine any tax return or related books and records of the Trustee, the
Agent or of any Note or Certificate Purchaser.
(e) As soon as practicable but in any event within 15
days after the date of the payment of Charges by the Company, the Company will
furnish to the Trustee the original or a certified copy of a receipt or other
similar instrument (if available) evidencing payment thereof. Should any
Purchaser, the Agent or the Trustee receive any refund, credit or deduction
from any taxing authority (whether before or after payment in full of the
principal and stated amount of, and interest on and Distributions with respect
to, the Instruments) to which such Purchaser, the Agent or the Trustee, as the
case may be, would not be entitled but for the payment by the Company of
Charges as required by this Section 6.03 (it being understood that the decision
whether to make a claim, and if claimed, as to the amount of any such refund,
credit or deduction shall be made by such Purchaser, the Agent or the Trustee
in its sole discretion; such Purchaser, the Agent or the Trustee, as the case
may be, thereupon shall repay, together with any interest paid or allowed by
the refunding, crediting or deducting taxing authority in connection with such
refund, credit or deduction, to the Company an amount with respect to such
refund, credit or reduction equal to any net reduction in Taxes actually
obtained by such Purchaser, the Agent or the Trustee, as the case may be, and
determined by such Purchaser, the Agent or the Trustee, as the case may be, in
its sole discretion to be attributable to such refund, credit or deduction.
(f) Each Note Purchaser organized under the laws of a
jurisdiction outside the United States, on or prior to the date of its
execution and delivery of this Agreement in the case of each initial Note
Purchaser and
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on the date of the Assignment and Acceptance pursuant to which it becomes a
Note Purchaser in the case of each other Note Purchaser, and from time to time
thereafter if requested in writing by the Company (but only so long as such
Note Purchaser remains lawfully able to do so), shall provide the Company with
Internal Revenue Service form 1001 or 4224, as appropriate, or any successor or
other form prescribed by the Internal Revenue Service, certifying that such
Note Purchaser is exempt from or entitled to a reduced rate of United States
withholding tax on payments of interest pursuant to this Agreement or the
Notes. If the form provided by a Note Purchaser at the time such Note
Purchaser first becomes a party to this Agreement indicates a United States
interest withholding tax rate in excess of zero, withholding tax at such rate
shall be considered excluded from Taxes. If any form or document referred to
in this subsection (e) requires the disclosure of information, other than
information necessary to compute the tax payable and information required on
the date hereof by Internal Revenue Service form 1001 or 4224, that the Note
Purchaser reasonably considers to be confidential, the Note Purchaser shall
give notice thereof to the Company and shall not be obligated to include in
such form or document such confidential information to the extent permitted by
law.
(g) Without prejudice to the survival of any other
agreement of the Company, the Trustee, the Agent or the Purchasers hereunder,
the agreements and obligations of the Company, the Trustee, the Agent and the
Purchasers contained in this Section 6.03 shall survive the payment in full of
both the principal of and interest on the Notes and the Certificate Liquidation
Amount of the Certificates.
SECTION 6.04. SUBSTITUTION OF PURCHASER. If (i) any Note
Purchaser shall have converted the basis for determining the Applicable Rate on
its Instruments from the LIBO Rate to Base Rate pursuant to Section 6.01(c) or
(e) or shall have required the payment of Reserve Costs or Increased Costs, or
(ii) any Note or Certificate Purchaser shall have required the payment of
Charges or Other Taxes, the Company shall have the right, after consultation
and discussion with the Agent, to seek a substitute purchaser or purchasers
satisfactory to the Company (which may be one or more of the Note or
Certificate Purchasers) to assume the Note and/or
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Certificate Commitments of such Purchaser and to purchase the Instruments held
by such Purchaser (without recourse to or warranty by such Purchaser and
subject to all amounts owing to such Purchaser under this Agreement having been
paid in full).
SECTION 6.05. SHARING OF PAYMENTS, ETC. If any Note or
Certificate Purchaser shall obtain any payment (whether voluntary or
involuntary), on account of the Instruments held by it (other than on account
of Reserve Costs, Funding Costs, Break Costs, Illegality Costs or Increased
Costs and other than pursuant to Section 6.03 or any indemnification provision
of the Operative Documents) in excess of its ratable share of payments on
account of the Instruments obtained by all the Note and Certificate Purchasers,
such Purchaser shall forthwith purchase from the other Note and Certificate
Purchasers such participations in the Instruments held by them as shall be
necessary to cause such purchasing Purchaser to share the excess payment
ratably with each of them; PROVIDED, HOWEVER, that if all or any portion of
such excess payment is thereafter recovered from such purchasing Purchaser,
such purchase from each Note and Certificate Purchaser shall be rescinded and
each Note and Certificate Purchaser shall repay to the purchasing Purchaser the
purchase price to the extent of such Purchaser's ratable share (according to
the proportion of (i) the amount of the participation purchased from such
Purchaser as a result of such excess payment to (ii) the total amount of the
participations purchased in respect of such excess payment) of such recovery
together with an amount equal to such Purchaser's ratable share (according to
the proportion of (i) the amount of such Purchaser's required repayment to (ii)
the total amount so recovered from the purchasing Purchaser) of any interest or
other amounts paid or payable by the purchasing Purchaser in respect of the
total amount so recovered. Notwithstanding that the Purchaser shall have
purchased a participation in such Instruments, the purchasing Purchaser shall
be deemed to have acquired the voting rights under such Instruments to the
extent of, and for the duration of, such participation, as if such Purchaser
shall have been an Assignee thereof.
SECTION 6.06. TAX TREATMENT. (a) The parties hereto agree
that it is the Company's intention that for Federal, state and local income Tax
purposes (i) the Lease be treated as the repayment and security provisions
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of a loan by the Trustee to the Company, (ii) the Lessee be treated as the
legal and beneficial owner entitled to any and all benefits of ownership of the
Property or any part thereof and (iii) all payments of Fixed Rent during the
Term be treated as payments of interest and principal, as the case may be.
(b) The Company agrees that neither it nor any member of
any affiliated group of which it is or may become a member (whether or not
consolidated or combined returns are filed for such affiliated group for
Federal, state or local income Tax purposes) will at any time take any action,
directly or indirectly, or file any return or other document inconsistent with
the intended income Tax treatment set forth in Section 6.06(a) hereof, and the
Company agrees that the Company and any such Affiliates will file such returns,
maintain such records, take such actions and execute such documents as may be
appropriate to facilitate the realization of such intended income Tax
treatment.
(c) Each of the Trustee, the Agent and the Note and
Certificate Purchasers agrees that neither it nor any member of any affiliated
group of which it is or may become a member (whether or not consolidated or
combined returns are filed for such affiliated group for Federal, state or
local income Tax purposes) will at any time take any action, directly or
indirectly, or file any return or other document claiming, or asserting that it
is entitled to the income Tax benefits, deductions and/or credits which,
pursuant to the intended income Tax treatment set forth in Section 6.06(a)
hereof, would otherwise be claimed or claimable by the Company, and that it and
any such Affiliates will file such returns, maintain such records, take such
actions, and execute such documents (as reasonably requested by the Company
from time to time) as may be appropriate to facilitate the realization of, and
as shall be consistent with, such intended income Tax treatment, other than
engaging in any contest of such treatment with any taxing authority, and if any
such filing, maintenance, action or execution requested by the Company would
result in any additional income Tax liability payable by it or any Affiliate,
or could reasonably be expected to result in liability payable by it or any
Affiliate, other than any liability related to or arising as a result of the
intended income Tax treatment set forth in Section 6.06(a) hereof, then the
Company will provide an indemnity against such
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unrelated income Tax liability or other liability satisfactory to the Trustee,
the Agent or the Note and Certificate Purchaser, as the case may be, in its
sole opinion.
ARTICLE VII.
EVENTS OF DEFAULT AND UNWIND EVENTS
SECTION 7.01. EVENTS OF DEFAULT. If any of the following
events shall occur and be continuing, it shall constitute an "EVENT OF DEFAULT"
hereunder:
(a) The Company shall (i) fail to observe or perform any
covenant contained in Sections 5.01(a)(iii), 5.01(d)(ii), 5.01(h), 5.01(i),
5.01(j) or 5.01(n) hereof, (ii) not comply with any of its payment obligations
under Section 9.15(c) hereof within five Business Days after its receipt of a
written demand by an Indemnified Party, (iii) not comply with any of its other
obligations under Section 9.15 hereof in a timely manner or (iv) shall fail to
satisfy any obligation subsequent contained in Section 2.03 within the time
periods therein provided.
(b) Other than as is set forth in Section 7.01(a) hereof,
the Company shall fail to observe or perform any covenant or agreement
contained in this Agreement and such failure shall continue unremedied for 10
days after written notice thereof has been given to the Company by the Trustee
or the Agent of such failure.
(c) The Company or any of its Subsidiaries shall fail to
pay any principal of or premium or interest on any Debt that is outstanding in
a principal or notional amount of at least $25,000,000 in the aggregate (but
excluding Debt outstanding hereunder) of the Company or such Subsidiary (as the
case may be), when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue after the applicable grace period, if any, specified in
the agreement or instrument relating to such Debt; or any other event shall
occur or condition shall exist under any agreement or instrument relating to
any such Debt and shall continue after the applicable grace period, if any,
specified in such agreement or instrument, if the effect of such event or
condition is to accelerate, or to permit the acceleration of, the maturity of
such Debt; or any
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such Debt shall be declared to be due and payable, or required to be prepaid or
redeemed (other than by a regularly scheduled required prepayment or
redemption), purchased or defeased, or an offer to prepay, redeem, purchase or
defease such Debt shall be required to be made, in each case prior to the
stated maturity thereof; or
(d) The Company or any of its Subsidiaries shall
generally not pay its debts as such debts become due, or shall admit in writing
its inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against the Company or any of its Subsidiaries seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief of
debtors, or seeking the entry of an order for relief or the appointment of a
receiver, trustee, custodian or other similar official for it or for any
substantial part of its property and, in the case of any such proceeding
instituted against it (but not instituted by it), either such proceeding shall
remain undismissed or unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including, without limitation, the entry of an order
for relief against, or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial part of its property)
shall occur; or the Company or any of its Subsidiaries shall take any corporate
action to authorize any of the actions set forth above in this subsection (d);
PROVIDED, HOWEVER, that none of the foregoing acts or occurrences in this
subsection (d) with respect to a subsidiary of the Company shall constitute an
Event of Default unless the effect thereof shall be significant in relation to
the Company and its subsidiaries, taken as a whole; or
(e) Any unsatisfied judgment or order for the payment of
money in excess of $5,000,000 shall be rendered against the Company or any of
its Subsidiaries and there shall be any period of 10 consecutive days during
which a stay of enforcement of such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; or
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(f) Any non-monetary judgment or order shall be rendered
against the Company or any of its Subsidiaries that could be reasonably
expected to have a Material Adverse Effect, and there shall be any period of 30
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or
(g) Any ERISA Event shall have occurred and the sum
(determined as of the date of occurrence of such ERISA Event) of the liability
arising from such ERISA Event, together with the sum of the liabilities under
or attributable to any Employee Benefit Plans has, or is reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect; or (2) the
Company or any ERISA Affiliate fails to make full payment when due of all
amounts which, under the provisions of any Pension Plan or Section 412 of the
Code, the Company or any ERISA Affiliate is required to pay as contributions
thereto and such failure results or is likely to result in a Material Adverse
Effect; (3) an accumulated funding deficiency occurs or exists, whether or not
waived, with respect to any Pension Plan; (4) with respect to any Pension Plan
covered by Title IV of ERISA, the filing of a notice to voluntarily terminate
any such plan in a distress termination; (5) the Company or any ERISA Affiliate
withdraws from any Multiemployer Plan and receives a notice of liability in
such amount as would have a Material Adverse Effect; or (6) the Company or any
ERISA Affiliate terminates a Pension Plan which results in liability that would
have a Material Adverse Effect.
(h) Any certification or any representation or warranty
of the Company set forth herein or in any Operative Document or certificate,
notice, demand, request or other document delivered by or on behalf of the
Company to the Trustee, the Note and/or Certificate Purchasers or the Agent
hereunder or under any Operative Document shall prove to be inaccurate in any
material respect when the same shall have been made.
(i) An "Event of Default" (as defined in any such other
Operative Document but excluding an Unwind Event) under any such other
Operative Document shall have occurred.
(j) (i) Any Operative Document or any obligation of
the Company thereunder shall be revoked or
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repudiated or attempted to be revoked or repudiated by the Company, or (ii) any
Operative Document or any material obligation of the Company thereunder shall
cease to be in full force and effect, by operation of law or by any other
means.
(k) (i) Any Person or group of Persons ((within the
meaning of Section 13 or 14 of the Securities Exchange Act of 1934, as
amended), other than the Ferro Corporation Employee Stock Ownership Trust),
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under said Act) of shares representing
30% or more of the outstanding common shares of the Company, or (ii) during any
period of up to 24 consecutive calendar months, commencing after the date of
this Agreement, individuals who were directors of the Company on the first day
of such period, or who were elected to the board of directors of the Company
with the approval of a majority of such directors, shall together cease to
constitute a majority of the Board of Directors of the Company.
SECTION 7.02. REMEDIES UPON AN EVENT OF DEFAULT. (a) If an
Event of Default has occurred and is continuing, the Trustee may exercise any
of the rights or remedies granted to the Trustee under the Lease or any of the
other Operative Documents, in addition to any rights or remedies of such
parties set forth in this Participation Agreement.
(b) If an Event of Default has occurred and is
continuing, then each of the Trustee, the Agent and the Purchasers may take all
steps necessary or advisable to protect and enforce its rights hereunder,
whether by action, suit or proceeding at law or in equity, for the specific
performance of any covenant, condition or agreement contained herein, or in aid
of the execution of any power herein granted, or for the enforcement of any
other appropriate legal or equitable remedy or otherwise as such party shall
deem necessary or advisable.
(c) No right or remedy hereunder shall be exclusive of
any other right, power or remedy, but shall be cumulative and in addition to
any other right or remedy hereunder or now or hereafter existing by law or in
equity, and the exercise by a party hereto of any one or more of such rights,
power or remedies shall not
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preclude the simultaneous exercise of any or all of such other rights, powers
or remedies. Any failure to insist upon the strict performance of any provision
hereof or to exercise any option, right, power or remedy contained herein shall
not constitute a waiver or relinquishment thereof for the future. The Trustee
and the Holders from time to time of the Instruments shall be entitled to
injunctive relief in case of the violation or attempted or threatened violation
of any of the provisions hereof by any other party hereto, a decree compelling
performance of any of the provisions hereof or any other remedy allowed by Law
or in equity.
SECTION 7.03. Unwind Events. Any Event of Default (as
defined in the Agency Agreement) arising from the failure of the Construction
Agent to comply with the provisions of Sections 3(a), 3(b) or 3(c) of the
Agency Agreement shall not be deemed an Event of Default hereunder but shall
constitute an "Unwind Event".
SECTION 7.04. Remedies upon an Unwind Event. If an Unwind
Event shall have occurred, the Company either shall (i)(A) if requested by the
Trustee, arrange to sell the Property on behalf of the Trustee to one or more
third parties in arms length transactions, such sale to close on or before 90
days after the occurrence of such Unwind Event, and pay to the Trustee within
five (5) days of the occurrence of such sale an amount (the "Unwind Fee") equal
to the excess of (1) the Termination Value, over (2) the net proceeds realized
by the Trustee from the sale of the Property (and if such sale do not occur
within such 90-day period such sales shall nevertheless be deemed to have
occurred on such 90th day and such net proceeds shall be deemed to be $1.00),
such payment not to exceed 89.9% of Termination Value, and shall also pay all
Fixed Rent, Additional Rent and all costs and expenses incidental to the
unwinding of the transactions, including, without limitation, reasonable fees
of Special Counsel and Trustee's counsel and (B) satisfy each of the Return
Conditions other than the condition set forth in Section 7.05(b)(ii) or (ii)
deliver, or cause to be delivered, an Offer to Purchase the Property and
purchase or cause the Company's designee to purchase, the Property upon payment
of the Offer Purchase Price pursuant to paragraphs 14 and 15 of the Lease.
Upon satisfaction of the conditions set forth in (i) or (ii) above, this
Agreement shall terminate as set forth in Section 9.01.
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SECTION 7.05. Residual Guaranty and Return Conditions. (a)
Upon the expiration of the Lease, if the Company does not purchase the Property
pursuant to the Lease, the Company shall pay to the Trustee on the Expiration
Date an advance residual guaranty payment equal to the Series A Portion of the
Original Capitalized Cost of the Property (the "Residual Guaranty").
(b) Upon the election of the Company to surrender the
Property to the Trustee pursuant to paragraph 27(a)(ii) of the Lease or Section
7.04(i) hereof, the Company shall provide, or cause to be provided or
accomplished, at the sole cost and expense of the Company, to or for the
benefit of the Trustee and the holders of the Instruments, at least thirty (30)
days but not more than sixty (60) days prior to the Expiration Date or date of
such other termination of the Lease each of the following (collectively, the
"Return Conditions"):
(i) an environmental audit of the Property, together with a
copy of the Environmental Consultant's report on its audit,
satisfactory, in form and substance, to the Agent, the Trustee and the
B-Note and Certificate Purchasers, each in their sole discretion to
the effect that (A) the Property is in compliance with all
Environmental Laws then enacted or then proposed, as determined by the
Environmental Consultant and special counsel selected by the Agent;
(B) no environmental condition exists on the Property on the date the
Property is surrendered that could pose any significant risk to human
health or the environment and (C) there is no pending or overtly
threatened litigation, investigation or other legal proceeding of any
kind that could result in any liability to any Purchaser, the Agent or
the Trustee or in the imposition of any Lien on the Property;
(ii) a report of the Appraiser and/or the Independent
Engineer, satisfactory in form and substance to the Trustee, the Agent
and the B-Note and Certificate Purchasers, to the effect that (A) the
Property has been maintained in accordance with the terms and
conditions of the Lease and that (based on inspection) the Property
(x) meets or exceeds the design specifications as of the Final
Completion Date (taking into account normal wear and tear) and (y) is
capable of operating as lubricant,
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stearate and stabilizer manufacturing facilities at design capacity,
and at an efficiency and reliability typical of then-current market
standards for similar plants located in the United States and with the
useful life contemplated by and in accordance with the Construction
Plans and applicable Laws, and (z) is capable of meeting the terms of
any material existing contracts involving the Property; and (B) all
Assets and Improvements that have been stored in inventory have been
maintained at, or restored to, operating specifications;
(iii) evidence satisfactory to the Agent, the Trustee and the
Purchasers of the B-Notes and Certificates that the Company is, and
(as of the Expiration Date or date of such other termination of the
Lease) will be, in full compliance with the Services Agreement and has
made arrangements satisfactory to the Agent for the provision of
services required thereunder for the term thereof;
(iv) the Company shall have arranged for (A) a Texas
Standard Form T-1 form of extended coverage owner's title insurance
policy, or a commitment therefor, issued by the Title Company, marked
"premium paid" in an aggregate amount equal to the lesser of (i) the
maximum insurable amount or (ii) the Original Capitalized Cost of the
Property and in form and substance satisfactory to the Purchasers and
Special Counsel, to be delivered to the Purchasers and Special
Counsel, together with copies of all documents relating to title
exceptions referred to therein, showing record title of the Trustee in
the Texas Fee Parcels and the Texas Fee Improvements located thereon
and (B) an ALTA 1970 (amended 10-17-70 and 10-17-84) form of extended
coverage owner's title insurance policy, or a commitment therefor,
issued by the Title Company, marked "premium paid" in an aggregate
amount equal to the lesser of (i) the maximum insurable amount or (ii)
the Original Capitalized Cost of the Property and in form and
substance satisfactory to the Purchasers and Special Counsel, to be
delivered to the Purchasers and Special Counsel, together with copies
of all documents relating to title exceptions referred to therein,
showing record title of the
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Trustee in the Ohio Fee Parcels and the Ohio Fee Improvements located
thereon;
(v) the Company may and, if directed to do so by the
Trustee, the Company shall remove, or cause the removal of, at the
Company's sole expense, any inventory, fixtures, machinery, equipment
or other property belonging to the Company or third parties in
compliance with paragraph 10(b) of the Lease; and
(vi) if directed to do so by the Trustee, the Company shall
cause all, or any portion of the Improvements not located on one of
the Fee Parcels or one of the Easement Parcels, to be installed in
operating order on such of the Fee Parcels or on such of the Easement
Parcels as the Trustee shall direct; and
(vii) if directed to do so by the Trustee, the Company shall
execute and deliver any and all further instruments, agreements and
documents as may, in the reasonable opinion of the Trustee, be
necessary to confirm the termination and expiration of the Lease and
to acknowledge that the Company, from the date of termination and
expiration, ceases to have any interest in the Property under the
Lease.
ARTICLE VIII.
THE AGENT
SECTION 8.01. Authorization and Action. Each Purchaser
hereby appoints and authorizes the Agent to take such action as the Agent on
such Purchaser's behalf and to exercise such powers under this Agreement and
the other Operative Documents as are delegated to the Agent by the terms hereof
and thereof, together with such powers as are reasonably incidental thereto.
The Trustee hereby appoints and authorizes the Agent to collect, disburse,
invest and otherwise administer on the Trustee's behalf all funds paid or
payable to the Trustee hereunder or under any of the Operative Documents, in
each case in accordance with the terms thereof and the Trustee, in its
individual capacity, shall not be liable for the actions or inactions of the
Agent in connection with the Agent's collection, disbursement, investment and
administration of such funds. As to any matters not
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expressly provided for by this Agreement or the other Operative Documents, the
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Majority Purchasers, and such instructions shall be binding upon all
Purchasers; provided, however, that the Agent shall not be required to take any
action which exposes the Agent to personal liability or which is contrary to
this Agreement or applicable Law. The Agent agrees to give to each Note and
Certificate Purchaser prompt notice of each notice given to it by the Company
and the Trustee pursuant to the terms of the Operative Documents.
SECTION 8.02. Agent's Reliance, Etc. NEITHER THE AGENT NOR
ANY OF ITS DIRECTORS, OFFICERS, AGENTS OR EMPLOYEES SHALL BE LIABLE FOR ANY
ACTION TAKEN OR OMITTED TO BE TAKEN BY IT OR THEM UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR THE OTHER OPERATIVE DOCUMENTS, EXCEPT FOR ITS OR THEIR OWN
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, IT BEING THE INTENT THAT SUCH PERSONS
SHALL NOT BE LIABLE FOR ANY SUCH ACTION OR INACTION THAT CONSTITUTES ORDINARY
NEGLIGENCE. Without limiting the generality of the foregoing, the Agent: (i)
may consult with legal counsel, independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (ii) makes no warranty or representation to any Note or
Certificate Purchaser and shall not be responsible to any Note or Certificate
Purchaser for any statements, warranties or representations made in or in
connection with this Agreement or the other Operative Documents; (iii) shall
not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or
the other Operative Documents on the part of the Company or to inspect the
property (including the books and records) of the Company; (iv) shall not be
responsible to any Note or Certificate Purchaser for the due execution,
legality, validity, enforceability, genuineness, sufficiency or value of this
Agreement or the other Operative Documents or any other instrument or document
furnished pursuant hereto; and (v) shall incur no liability under or in respect
of this Agreement or the other Operative Documents by acting upon any notice,
consent, certificate
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or other instrument or writing in accordance with the terms hereof believed by
it to be genuine and signed or sent by the proper party or parties.
SECTION 8.03. Citicorp and Affiliates. With respect to the
Fundings made by it and the Instruments issued to it, Citicorp, USA, Inc..
shall have the same rights and powers under any Instrument and this Agreement
as any other Purchaser and may exercise the same as though Citibank were not
the Agent; and the terms (x) "Purchaser" or "Purchasers" and (y) "Note
Purchaser" or "Note Purchasers" shall, unless otherwise expressly indicated,
include Citicorp, USA, Inc.. in its individual capacity, and Citicorp and its
Affiliates may accept deposits from, lend money to, act as trustee under
indentures of, and generally engage in any kind of business with, the Company
and any Subsidiary and any Person who may do business with or own securities of
the Company, or any Subsidiary, all as if Citibank were not the Agent and
without any duty to account therefor to the Purchasers.
SECTION 8.04. Purchaser Credit Decision. Each Purchaser
acknowledges that it has, independently and without reliance upon the Agent,
the Trustee or any other Purchaser and based on the financial statements
referred to in Section 4.01(d) and such other documents and information as it
has deemed appropriate, made its own credit analysis and decision to enter into
this Agreement. Each Purchaser also acknowledges that it will, independently
and without reliance upon the Agent, the Trustee or any other Note or
Certificate Purchaser or Holder from time to time of the Instruments and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions with respect to this Agreement or any
of the other Operative Documents.
SECTION 8.05. Indemnification. The Note and Certificate
Purchasers agree to indemnify the Agent, ratably according to the respective
aggregate principal and stated amounts of the Instruments then held by each of
them (or if the Instruments have been fully repaid and retired or if any
Instruments are held by Persons which are not Note or Certificate Purchasers,
ratably according to either (i) the respective aggregate amounts of their Note
and Certificate Commitments, or (ii) if all such Commitments have terminated,
the respective amounts of
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the Note and Certificate Commitments immediately prior to the time the Note and
Certificate Commitments were terminated), from and against any and all Losses
which may be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of this Agreement or any other Operative Document or
any action taken or omitted by the Agent under this Agreement or any other
Operative Document; provided, that no Note or Certificate Purchaser shall be
liable to the Agent for any portion of such Losses resulting from the Agent's
gross negligence or willful misconduct. Without limitation of the foregoing,
each Note or Certificate Purchaser agrees to reimburse the Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including
reasonable counsel fees) incurred by the Agent in connection with the
preparation, execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or otherwise) of,
or legal advice in respect of rights or responsibilities under, this Agreement
or any other Operative Document to the extent that the Agent is not reimbursed
for such expenses by the Company.
SECTION 8.06. Successor Agent. The Agent may resign at any
time as Agent under this Agreement by giving written notice thereof to the Note
and Certificate Purchasers, the Trustee and the Company and may be removed at
any time with or without cause by the Majority Purchasers. Upon any such
resignation or removal, the Majority Purchasers, subject to the consent of the
Company (which consent shall not be unreasonably withheld), shall have the
right to appoint a successor Agent which shall be a commercial bank or trust
company organized or licensed to conduct banking business under the Laws of the
United States or any state thereof. If no successor Agent shall have been so
appointed by the Majority Purchasers, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation or
the Majority Purchasers' removal of the retiring Agent, then the retiring Agent
may, on behalf of the Note and Certificate Purchasers, appoint a successor
Agent, which shall be a Note or Certificate Purchaser which is a commercial
bank organized under the laws of the United States of America or of any state
thereof and having a combined capital and surplus of at least $500 million.
Upon the acceptance of any appointment as Agent under this Agreement by a
successor Agent, such successor Agent shall thereupon
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succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent and shall function as the Agent under this Agreement, and
the retiring Agent shall be discharged from its duties and obligations as Agent
under this Agreement. After any retiring Agent's resignation or removal
hereunder as Agent, the provisions of this Article VIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was Agent
under this Agreement, irrespective of any amendments hereto subsequent to such
resignation or removal.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01. Survival. Except as otherwise expressly
provided, the parties' obligations under this Agreement and in any certificate
or other instrument delivered by any party or on such party's behalf pursuant
to this Agreement shall terminate upon the payment in full of all amounts then
and thereafter due on the Notes and the Certificates and under any of the
Operative Documents. The confidentiality provisions contained in this
Agreement and the provisions of Sections 6.03, 6.06, 9.14, 9.15, 9.17 and 9.20
hereof shall each survive the payment in full of all amounts then and
thereafter due on the Instruments and due under any of the Operative Documents.
Such rights and obligations shall survive the execution and delivery of any
Operative Document, any issuance or disposition of any of the Instruments, any
disposition of any interest in the Property or the termination of any Operative
Document and shall continue in effect regardless of any investigation made by
or on behalf of any party hereto and notwithstanding that any party may waive
compliance with any other provision of any Operative Document.
SECTION 9.02. Notices. Unless otherwise specifically
provided in any Operative Document, all notices, consents, directions,
approvals, instructions, requests and other communications given to any party
hereto under any Operative Document shall be in writing to such party at the
address set forth in Schedule I hereto or at such other address as such party
shall designate by notice to each of the other parties hereto and may be
personally delivered (including delivery by private courier services) or by
telecopy (with a copy of
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such notice sent by private courier service for overnight delivery or by
registered or certified mail), to the party entitled thereto, and shall be
deemed to be duly given or made when delivered by hand unless such day is not a
Business Day, in which case such delivery shall be deemed to be made as of the
next succeeding Business Day or in the case of telecopy (with a copy of such
notice sent by private courier service for overnight delivery or by registered
or certified mail), when sent, so long as it was received during normal
business hours of the receiving party on a Business Day and otherwise such
delivery shall be deemed to be made as of the next succeeding Business Day.
SECTION 9.03. Severability. If any provision hereof or the
application thereof to any Person or circumstance shall be invalid, illegal or
unenforceable, the remaining provisions or the application of such provision to
Persons or circumstances other than those as to which it is invalid or
enforceable, shall continue to be valid and enforceable.
SECTION 9.04. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall be in writing
and signed by the Majority Purchasers (unless the Agent is authorized hereunder
or under any Operative Document to act without joinder of the Majority
Purchasers, in which case the Agent may take such action), the Company and the
Trustee, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given; provided,
however, that, in addition to the requirements above, no amendment, waiver or
consent shall, unless in writing and signed by all of the Note and Certificate
Purchasers, do any of the following: (a) increase the Commitments of the
Purchasers or subject the Note or Certificate Purchasers to any additional
obligations, (b) reduce the Applicable Rate or any fees or other amounts
payable hereunder or under any other Operative Document, (c) take action which
requires the signing of all the Note and Certificate Purchasers pursuant to the
terms of this Agreement, (d) postpone any date fixed for any payment of
principal or stated amount of, or interest or Distributions on the Instruments
or any fees or other amounts payable under the Declaration or (e) amend this
Section 9.04; provided, further, that, in addition to the
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requirements above, no amendment, waiver or consent shall, unless in writing
and signed by the Agent in addition to the Purchasers required above to take
such action, affect the rights or duties of the Agent under this Agreement or
any of the Operative Documents. Notwithstanding the foregoing, a waiver of any
or all of the conditions set forth in Section 3.02 hereof shall be effective if
in writing and signed by the Agent, the Majority Purchasers and the Trustee.
SECTION 9.05. Headings. The table of contents and headings
of the Articles, Sections and subsections of this Agreement are for convenience
only and shall not affect the meaning of this Agreement.
SECTION 9.06. Compliance Responsibility. None of the Trustee
(notwithstanding the representations and warranties of SSBTC in Section 4.02
hereof), the Agent or any Purchaser shall have any responsibility for
compliance by the Property or by the Company with any Law, architectural or
engineering standards or practices or other matters. The Company expressly
assumes such responsibilities and shall indemnify and hold harmless the
Trustee, the Agent and the Note and Certificate Purchasers with respect thereto
in the manner provided in the Lease.
SECTION 9.07. Definitions. Except as otherwise expressly
provided herein, capitalized terms used in this Agreement and all schedules and
exhibits hereto shall have the respective meanings given in Appendix A hereto.
SECTION 9.08. Benefit. The parties hereto and their
permitted successors and assigns, but no others, shall be bound hereby and
entitled to the benefit hereof.
SECTION 9.09. Place of Payment. So long as a Purchaser or an
Affiliate of a Purchaser or a bank or institutional investor is the owner of
any beneficial interest in the Instruments, the Trustee will cause all amounts
to be paid by the Trustee which become due and payable or owing on such
beneficial interest in the Instruments to be paid by bank wire transfer of
immediately available funds or, at the option of such Purchaser, such
Affiliate, bank or institutional investor, by check of the Trustee, duly
mailed, delivered or made at the address or account referenced in
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Schedule I hereto or provided in writing by such Person to the Trustee, in all
cases without presentation of the underlying Instrument, provided, that upon
receipt of payment in full the underlying Instruments shall be returned by the
respective Holders thereof to the Trustee marked "cancelled."
SECTION 9.10. Counterparts. The parties may sign this
Agreement in any number of counterparts and on separate counterparts, each of
which shall be an original but all of which together shall constitute one and
the same instrument.
SECTION 9.11. Governing Law and Jurisdiction. (a) THIS
AGREEMENT SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW (OR ANY SIMILAR SUCCESSOR PROVISION THERETO) BUT EXCLUDING ALL
OTHER CONFLICT-OF-LAWS RULES.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or federal court of the United States
of America sitting in New York City, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or any
other Operative Document, or for recognition or enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in any such New York State court or, to the extent permitted by law,
in such federal court. Each of the parties hereto agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in
other jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that any party may
otherwise have to bring any action or proceeding relating to this Agreement or
the Notes in the courts of any jurisdiction.
(c) Each of the parties hereto irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection that it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Operative Document in any New York
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State or federal court. Each of the parties hereto hereby irrevocably waives,
to the fullest extent permitted by law, the defense of an inconvenient forum to
the maintenance of such action or proceeding in any such court.
SECTION 9.12. Time; Business Day. (a) TIME IS OF THE
ESSENCE IN THIS AGREEMENT, AND THE TERMS HEREIN SHALL BE SO CONSTRUED.
(b) If the date scheduled for any payment or action under
any Operative Document shall not be a Business Day, then (unless such Operative
Document provides otherwise) such payment shall be made or such action shall be
taken on the next succeeding Business Day.
SECTION 9.13. The Trustee. Except for SSBTC's liability for
SSBTC's representations and warranties in Section 4.02, and for its own gross
negligence and willful misconduct and as otherwise provided in the Operative
Documents, it is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by SSBTC, not in its individual
capacity but solely as Trustee, under the Declaration, in the exercise of the
powers and authority conferred and vested in it as the Trustee, (b) each of the
undertakings and agreements herein made on the part of the Trustee is made and
intended not as a personal representation, undertaking and agreement by SSBTC
but is made and intended for the purpose for binding only the Trust Estate
created by the Declaration, (c) nothing herein contained shall be construed as
creating any liability on SSBTC, individually or personally, to perform any
obligation of the Trustee either expressed or implied contained herein or in
the Operative Documents, all such liability, if any, being expressly waived by
the parties to this Agreement and by any Person claiming by, through or under
the parties to this Agreement and (d) under no circumstances shall SSBTC be
personally liable for the payment of any indebtedness or expenses of the
Trustee or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Trustee under
this Agreement or the other Operative Documents.
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SECTION 9.14. Transaction Costs; Facility Fees; Upfront
Fees.
(a) Transaction Costs. Whether or not the transactions
contemplated by this Agreement are consummated, the Company shall pay and hold
the Trustee, the Agent and the Note and Certificate Purchasers harmless against
any liability for the payment of all reasonable fees, expenses, disbursements
and out-of-pocket costs incurred before, on or after the date hereof in
connection with the preparation, execution and delivery of any Operative
Document, or any other agreement, arrangement, document or paper relating to
the transactions contemplated hereby or any amendment or supplement thereto or
any waivers or enforcement thereof, including, but not limited to:
(i) the reasonable fees, expenses and disbursements
of each of the Agent, the Trustee, Trustee's Counsel, Certificate
Purchaser's Counsel, Special Counsel and Special Environmental Counsel
for services rendered to such parties in connection with such
transactions;
(ii) the out-of-pocket expenses of each of the Trustee
and the Agent incurred in connection with such transactions;
(iii) all fees and expenses in connection with any
appraisal, environmental report, engineering study, survey or
inspection of the Property, or any printing and other document
reproduction and distribution expenses, stamp or other similar Taxes,
fees or excises, including interest and penalties, and all filing fees
and Taxes in connection with the recording or filing of instruments
and financing statements in connection with the transactions described
in this Agreement;
(iv) the out-of-pocket expenses of the Trustee and the
Agent in connection with the placement of the Instruments as
contemplated hereby; and
(v) the fees, expenses and disbursements of the
Agent, the Trustee and the Purchasers, including the fees, expenses
and disbursements of their respective counsel, in connection with the
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enforcement of any rights of the Purchasers under any of the Operative
Documents.
(b) Facility Fees. From and after the Financing Closing
Date, to and including the Interim Note Maturity Date, the Company shall pay to
the Agent for the account of each Purchaser, on the last day of each March,
June, September and December in each year and on the Interim Note Maturity
Date, a facility fee at the applicable rate per annum set forth on the pricing
grid attached hereto as Schedule II on the unused portion of its respective
Note Commitment or Certificate Commitment, as the case may be ("Facility Fee").
The Facility Fee shall be computed on the basis of the actual number of days
elapsed over a year of 360 days.
(c) Upfront Fees. On the Financing Closing Date, the
Company shall pay to the Agent for the account of each Note Purchaser an
upfront fee at the rate of 0.15% on its respective Note Commitment as of the
Financing Closing Date ("Upfront Fee").
SECTION 9.15. INDEMNIFICATION. (A) THE COMPANY SHALL PAY,
PROTECT, INDEMNIFY AND HOLD HARMLESS EACH INDEMNIFIED PARTY FROM AND AGAINST,
AND SHALL DEFEND ALL ACTIONS AGAINST ANY INDEMNIFIED PARTY WITH RESPECT TO, ANY
AND ALL LIABILITIES (INCLUDING BUT NOT LIMITED TO LIABILITY FOR PATENT OR
TRADEMARK INFRINGEMENT OR MISUSE OR MISAPPROPRIATION OF ANY INTELLECTUAL
PROPERTY RIGHTS, LIABILITY IN TORT (STRICT OR OTHERWISE)), LOSSES, DAMAGES,
COSTS, EXPENSES (INCLUDING BUT NOT LIMITED TO REASONABLE ATTORNEY'S FEES AND
EXPENSES OF COUNSEL), CAUSES OF ACTION, SUITS, CLAIMS, DEMANDS OR JUDGMENTS OF
ANY NATURE WHATSOEVER (COLLECTIVELY, "LOSSES") ARISING FROM (I) ANY INJURY TO,
OR DEATH OF, ANY NATURAL PERSON, OR DAMAGE TO OR LOSS OF PROPERTY, OR ANY
MATTERS OCCURRING ON OR RESULTING FROM ACTIVITIES ON THE PROPERTY OR ANY PART
THEREOF; (II) THE OWNERSHIP, CONSTRUCTION, LEASING (INCLUDING, WITHOUT
LIMITATION, THE FAILURE OF THE TRUSTEE TO HAVE A MORTGAGE ON THE PROPERTY, THE
IMPROVEMENTS OR THE PROPERTY UNDER THE CIRCUMSTANCES SET FORTH IN PARAGRAPH
20(D) OF THE LEASE), SUBLEASING, OPERATION, OCCUPANCY, POSSESSION, USE, NON-USE
OR CONDITION OF THE PROPERTY OR ANY PART THEREOF; (III) ANY VIOLATION BY THE
COMPANY OF ANY OF THE TERMS OR CONDITIONS OF THIS AGREEMENT, THE LEASE OR ANY
OF THE OTHER OPERATIVE DOCUMENTS; (IV) ANY EXERCISE OF RIGHTS OR REMEDIES UPON
THE OCCURRENCE OF ANY DEFAULT OR EVENT OF
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DEFAULT; (V) ANY ACT OR OMISSION OF THE COMPANY OR ANY OF ITS AGENTS,
CONTRACTORS, LICENSEES, SUBLESSEES, INVITEES, REPRESENTATIVES OR ANY PERSON FOR
WHOSE CONDUCT THE COMPANY IS LEGALLY RESPONSIBLE ON OR RELATING TO OR IN
CONNECTION WITH THE OWNERSHIP, CONSTRUCTION, LEASING, SUBLEASING, OPERATION,
MANAGEMENT, MAINTENANCE, OCCUPANCY, POSSESSION, USE, NON-USE OR CONDITION OF
THE PARCEL, THE IMPROVEMENTS OR THE PROPERTY OR ANY PART THEREOF; (VI) ANY
LIENS (INCLUDING, WITHOUT LIMITATION, ANY PERMITTED ENCUMBRANCES) ON OR WITH
RESPECT OF AND TO THE PARCEL OR THE PROPERTY OR ANY PART THEREOF; (VII) ANY
PERMITTED CONTEST REFERRED TO IN PARAGRAPH 11 OR 18 OF THE LEASE; (VIII) ANY
VIOLATION BY THE COMPANY OF ANY FACILITY AGREEMENT OR ANY CONTRACT OR AGREEMENT
RELATING TO THE PROPERTY OR THE TRANSACTIONS TO BE CONSUMMATED PURSUANT TO THE
OPERATIVE DOCUMENTS TO WHICH THE COMPANY IS A PARTY OR OF ANY LEGAL REQUIREMENT
OR INSURANCE REQUIREMENT; (IX) ANY TERMINATION OR INVALIDITY OF THE BILL OF
SALE OR THE DEEDS OR THE TRUSTEE'S INTEREST IN THE PROPERTY OR THE IMPROVEMENTS
(OTHER THAN AS A RESULT OF THE PURCHASE OF THE PROPERTY BY THE COMPANY) IN EACH
CASE AFFECTING ANY INDEMNIFIED PARTY, THE PARCEL OR THE PROPERTY OR ANY PART
THEREOF OR THE OWNERSHIP, OPERATION, OCCUPANCY, POSSESSION, USE, NON-USE OR
CONDITION THEREOF AND IN EACH CASE REGARDLESS OF THE ACTS, OMISSIONS OR
NEGLIGENCE OF ANY INDEMNIFIED PARTY (IT BEING THE INTENT TO INDEMNIFY EACH
INDEMNIFIED PARTY FROM SUCH INDEMNIFIED PARTY'S OWN NEGLIGENCE EXCEPT AS
OTHERWISE SET FORTH IN THE FOLLOWING PROVISO); PROVIDED, HOWEVER, THAT THE
COMPANY SHALL NOT BE REQUIRED TO INDEMNIFY OR HOLD HARMLESS ANY INDEMNIFIED
PARTY HEREUNDER AGAINST ANY SUCH LOSSES TO THE EXTENT RESULTING FROM FRAUD,
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH INDEMNIFIED PARTY. FOR PURPOSES
OF THIS SECTION 9.15, "INDEMNIFIED PARTY" MEANS EACH OF THE TRUSTEE (IN BOTH
ITS INDIVIDUAL AND FIDUCIARY CAPACITIES), THE AGENT AND THE HOLDERS FROM TIME
TO TIME OF THE INSTRUMENTS, THEIR AFFILIATES, SUCCESSORS AND ASSIGNS AND ANY
OFFICER, DIRECTOR, EMPLOYEE OR AGENT OF ANY OF THE ABOVE.
(b) THE OBLIGATIONS OF THE COMPANY UNDER THIS SECTION
9.15 SHALL SURVIVE THE EXPIRATION OR ANY TERMINATION OF THE LEASE (WHETHER BY
OPERATION OF LAW OR OTHERWISE) FOR ALL MATTERS DESCRIBED IN THIS SECTION 9.15
WHICH OCCUR OR ARISE PRIOR TO SUCH EXPIRATION OR TERMINATION OR ARISE OUT OF OR
RESULT FROM FACTS, EVENTS, CLAIMS, LIABILITIES, ACTIONS OR CONDITIONS
OCCURRING, ARISING OR EXISTING ON OR BEFORE SUCH EXPIRATION OR
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TERMINATION. IN CASE ANY ACTION SHALL BE BROUGHT AGAINST ANY INDEMNIFIED PARTY
IN RESPECT OF WHICH INDEMNITY MAY BE SOUGHT AGAINST THE COMPANY, SUCH
INDEMNIFIED PARTY SHALL PROMPTLY NOTIFY THE COMPANY IN WRITING, BUT FAILURE TO
GIVE SUCH PROMPT NOTICE SHALL NOT RELIEVE THE COMPANY FROM ANY LIABILITY
HEREUNDER, UNLESS THE COMPANY IS PREJUDICED BY THE FAILURE TO RECEIVE SUCH
NOTICE. IF NO DEFAULT OR EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING
HEREUNDER, THE COMPANY, AT ITS OWN EXPENSE, MAY ELECT TO ASSUME THE DEFENSE OF
ANY ACTION BROUGHT AGAINST AN INDEMNIFIED PARTY, INCLUDING THE EMPLOYMENT OF
COUNSEL REASONABLY SATISFACTORY TO SUCH INDEMNIFIED PARTY AND THE PAYMENT BY
THE COMPANY OF ALL EXPENSES THEREOF. ANY INDEMNIFIED PARTY SHALL HAVE THE
RIGHT TO EMPLOY SEPARATE COUNSEL AT ITS EXPENSE IN ANY SUCH ACTION AND TO
CONSULT WITH THE COMPANY REGARDING THE DEFENSE THEREOF; PROVIDED, HOWEVER,
THAT, EXCEPT AS OTHERWISE PROVIDED BELOW, THE COMPANY SHALL AT ALL TIMES
CONTROL SUCH DEFENSE. IF THE COMPANY SHALL HAVE FAILED TO EMPLOY COUNSEL
REASONABLY SATISFACTORY TO THE INDEMNIFIED PARTIES, THE FEES AND EXPENSES OF
THE COUNSEL TO THE INDEMNIFIED PARTIES AS A GROUP SHALL BE PAID BY THE COMPANY.
IF THE COMPANY SHALL ELECT IN WRITING NOT TO ASSUME THE DEFENSE OR SHALL FAIL
TO PROSECUTE DILIGENTLY SUCH DEFENSE THEREOF, AN INDEMNIFIED PARTY MAY, AFTER
WRITTEN NOTICE TO THE COMPANY AND THE COMPANY'S FAILURE TO REMEDY PROMPTLY THE
SAME, ASSUME THE DEFENSE THEREOF, INCLUDING THE EMPLOYMENT OF COUNSEL, IN WHICH
CASE THE COMPANY SHALL PAY ALL OF THE LOSSES OF SUCH INDEMNIFIED PARTY INCURRED
IN RESPECT OF SUCH DEFENSE. IF ANY INDEMNIFIED PARTY SHALL HAVE BEEN ADVISED
BY COUNSEL CHOSEN BY IT THAT THERE MAY BE ONE OR MORE LEGAL DEFENSES AVAILABLE
TO SUCH INDEMNIFIED PARTY THAT ARE DIFFERENT FROM OR ADDITIONAL TO THOSE
AVAILABLE TO THE COMPANY OR THE OTHER INDEMNIFIED PARTIES OR IT WOULD BE
INAPPROPRIATE FOR SUCH COUNSEL TO CONTINUE TO REPRESENT IN RESPECT OF A
PARTICULAR LEGAL OR FACTUAL ISSUE OR OTHERWISE, EACH OF THE INDEMNIFIED PARTY
AND THE COMPANY MAY RETAIN ADDITIONAL AND SEPARATE COUNSEL TO REPRESENT IT OR,
AT ITS OPTION, ASSUME THE DEFENSE OF SUCH ACTION AND THE COMPANY WILL REIMBURSE
SUCH INDEMNIFIED PARTY FOR THE REASONABLE FEES AND EXPENSES OF ANY COUNSEL
RETAINED BY THE INDEMNIFIED PARTY. THE COMPANY SHALL NOT BE LIABLE FOR ANY
SETTLEMENT OF ANY ACTION WITHOUT ITS WRITTEN CONSENT. NO SETTLEMENT OF ANY
SUCH ACTION MAY BE MADE BY THE COMPANY WITHOUT THE INDEMNIFIED PARTY'S WRITTEN
CONSENT; PROVIDED, HOWEVER, SUCH CONSENT SHALL NOT BE NECESSARY IF THE
SETTLEMENT RESULTS IN AN
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<PAGE> 135
UNCONDITIONAL RELEASE OF THE INDEMNIFIED PARTY WITHOUT (1) THE ADMISSION BY THE
INDEMNIFIED PARTY OF GUILT, COMPLICITY OR CULPABILITY OR (2) THE INCURRENCE OF
ANY PAYMENT OBLIGATION ON THE PART OF SUCH INDEMNIFIED PARTY WHICH IS NOT PAID
AT THE TIME OF SUCH SETTLEMENT BY THE COMPANY HEREUNDER.
(c) UPON DEMAND FOR PAYMENT BY ANY INDEMNIFIED PARTY OF
ANY LOSSES INCURRED BY IT FOR WHICH INDEMNIFICATION IS SOUGHT, ALONG WITH A
BRIEF DESCRIPTION IN REASONABLE DETAIL OF THE NATURE AND EXTENT OF THE LOSSES
AS WELL AS THE CIRCUMSTANCES UNDER WHICH INDEMNIFICATION IS SOUGHT, THE COMPANY
SHALL PAY WHEN DUE AND PAYABLE THE FULL AMOUNT OF SUCH LOSSES TO THE
APPROPRIATE PARTY, UNLESS AND SO LONG AS (I) THE COMPANY SHALL HAVE ASSUMED THE
DEFENSE OF SUCH ACTION OR IS CONTESTING SUCH LIABILITY, LOSS, DAMAGE, COST,
EXPENSE, CAUSE OF ACTION, SUIT, CLAIM, DEMAND OR JUDGMENT FOR WHICH INDEMNITY
IS SOUGHT HEREUNDER AND (II) IS DILIGENTLY PROSECUTING THE SAME AND THE COMPANY
HAS TAKEN ALL ACTION AS MAY BE NECESSARY TO PREVENT (A) THE COLLECTION OF SUCH
LOSSES FROM THE INDEMNIFIED PARTY; (B) THE SALE, FORFEITURE OR LOSS OF THE
PROPERTY OR ANY PART THEREOF DURING SUCH DEFENSE OF THE SAME ACTION; AND (C)
THE IMPOSITION OF ANY CIVIL OR CRIMINAL LIABILITY FOR FAILURE TO PAY SUCH
LOSSES WHEN DUE AND PAYABLE.
(d) THE COMPANY ACKNOWLEDGES AND AGREES THAT (I) ITS
OBLIGATIONS UNDER THIS SECTION 9.15 ARE INTENDED TO INCLUDE AND EXTEND TO ANY
AND ALL LIABILITIES, SUMS PAID IN SETTLEMENT OF CLAIMS, OBLIGATIONS, CHARGES,
ACTIONS, CLAIMS, LIENS, TAXES AND DAMAGES (INCLUDING, WITHOUT LIMITATION,
PUNITIVE DAMAGES, PENALTIES, FINES, COURT COSTS, ADMINISTRATIVE SERVICE FEES,
RESPONSE AND REMEDIATION COSTS, STABILIZATION COSTS, ENCAPSULATION COSTS,
TREATMENT, STORAGE OR DISPOSAL COSTS AND LEGAL FEES INCURRED IN NEGOTIATING
WITH GOVERNMENTAL AGENCIES AND OTHER POTENTIALLY RESPONSIBLE PARTIES AND IN
ENFORCING INDEMNITIES) IMPOSED UPON OR INCURRED BY OR ASSERTED AT ANY TIME
AGAINST ANY INDEMNIFIED PARTY (WHETHER OR NOT INDEMNIFIED AGAINST BY ANY OTHER
PARTY) ARISING DIRECTLY OR INDIRECTLY OUT OF: (A) THE TREATMENT, STORAGE,
DISPOSAL, GENERATION, USE, TRANSPORT, MOVEMENT, PRESENCE, RELEASE, THREATENED
RELEASE, SPILL, INSTALLATION, SALE, EMISSION, INJECTION, LEACHING, DUMPING,
ESCAPING OR SEEPING OF ANY HAZARDOUS MATERIALS OR MATERIAL CONTAINING OR
ALLEGED TO CONTAIN HAZARDOUS MATERIALS AT, ON, UNDER, ONTO, THROUGH OR FROM THE
PARCEL
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<PAGE> 136
OR THE PROPERTY OR ANY PART THEREOF; (B) THE VIOLATION OR ALLEGED VIOLATION OF
ANY ENVIRONMENTAL LAWS RELATING TO OR IN CONNECTION WITH THE PARCEL OR THE
PROPERTY OR ANY PART THEREOF OR ANY ACTS OR OMISSIONS THEREON OR RELATING
THERETO; (C) ALL OTHER FEDERAL, STATE AND LOCAL LAWS DESIGNED TO PROTECT THE
ENVIRONMENT OR PERSONS OR PROPERTY THEREIN, WHETHER NOW EXISTING OR HEREINAFTER
ENACTED, PROMULGATED OR ISSUED BY ANY FEDERAL, STATE, COUNTY, MUNICIPAL OR
OTHER GOVERNMENTAL AUTHORITY; AND (D) THE COMPANY'S FAILURE TO COMPLY WITH ITS
OBLIGATIONS UNDER PARAGRAPH 2(E) OF THE LEASE AND (II) THE INDEMNIFICATION
PROVIDED FOR UNDER THIS SECTION 9.15(D) SHALL BE GOVERNED BY THE PROCEDURES SET
FORTH IN SECTIONS 9.15(B)-(C) HEREOF.
SECTION 9.16. Operative Documents; Further Assurances. Each
of the parties hereto does hereby covenant and agree to perform and be governed
and restricted by the Operative Documents to which it is a party and, subject
to the terms and conditions thereof, to take or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable in
connection therewith. Each of the parties hereto shall have the rights and
obligations set forth in the Declaration with respect to such party
notwithstanding that not all of such parties are signatories thereto. The
Company, the Trustee, the Agent and the Note and Certificate Purchasers will,
at the expense of the Company, execute and deliver such further instruments and
do such further acts as may be necessary or proper to carry out more
effectively the purposes of the Operative Documents and the transactions
contemplated thereby. The Company, the Trustee, the Agent and the Note and
Certificate Purchasers may at any time, subject to the conditions and
restrictions contained in the Operative Documents, enter into supplements which
shall form a part hereof, when required or permitted by any of the provisions
of the Operative Documents or to cure any ambiguity, or to cure, correct or
supplement any defective or inconsistent provision contained herein or in any
other Operative Document.
SECTION 9.17. Confidentiality. (a) Each of the parties
hereto, other than Citibank and, as applicable, its Affiliates, agrees that,
subject to Section 6.02, it will maintain the confidentiality of the general
structure of this transaction.
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<PAGE> 137
(b) Each of the parties hereto agrees that unless
otherwise required by Law or by any governmental authority or body or consented
to by the Company and Citibank, it will maintain the confidentiality of all
non-public information (i) regarding the financial terms of this transaction or
(ii) regarding the Company or the Property which shall be furnished to it by or
on behalf of the Company in connection with the transactions contemplated by
the Operative Documents, including, without limitation, the as-built plans and
specifications delivered pursuant to Section 5.01(b), in accordance with the
procedures it generally applies to confidential material for a period of three
years after all of the Instruments have been repaid in full, but in no event
less than seven years from the date hereof; provided, however, that if the
Lease has been terminated and the Company has not purchased the Property, then
none of the Purchasers, the Agent nor the Trustee shall be bound by the
confidentiality provisions of this Section 9.17(b).
(c) The parties hereto agree not to publish tombstones or
other public announcements in connection with the transactions contemplated
hereby without the consent of the Company, the Agent and the Purchasers.
SECTION 9.18. Interest. It is the intention of the parties
hereto to conform strictly to all usury Laws that are applicable to each such
party, Purchaser, Note or Certificate or to the transactions contemplated by
the Operative Documents (collectively, the "Transactions"). Accordingly,
notwithstanding anything to the contrary in the Instruments, this Agreement or
any other Operative Document or agreement entered into in connection with the
Transactions (collectively, the "Transaction Documents"), it is agreed as
follows: (i) the aggregate of all consideration which constitutes interest
under Applicable Law (hereinafter defined) that is contracted for, taken,
reserved, charged or received by any party under the Transaction Documents or
otherwise in connection with the Transactions shall under no circumstances
exceed the maximum amount of interest that could lawfully be charged by such
party under Applicable Law, (ii) in the event that the maturity of any
indebtedness evidenced by or payable pursuant to the Transaction Documents is
accelerated for any reason, or in the event of any required or permitted
payment or prepayment of all or any part of such indebtedness (including,
without limitation and if applicable, any
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<PAGE> 138
required or permitted purchase of the Property, or any required or permitted
payment of the Offer Purchase Price, the Residual Guaranty or Termination
Value), then such consideration that constitutes interest as to any such
indebtedness under Applicable Law may never include more than the maximum
amount allowed by such Applicable Law, and (iii) if under any circumstances the
aggregate amounts paid on any Instruments prior to or incident to the final
payment thereof include any amounts which by Applicable Law would be deemed
interest in excess of the maximum amount of interest permitted by Applicable
Law, such excess amounts, if theretofore paid, shall be credited by the
recipient on the principal or stated amount of the affected indebtedness (or,
to the extent that the principal or stated amount of such indebtedness shall
have been or would thereby be paid in full, refunded by such recipient to the
party entitled thereto). If at any time the rate of interest (denominated as
such) or Distributions, as applicable, contractually called for in any
Transaction Document (as the same may vary from time to time pursuant to the
terms of such Transaction Document, the "Stated Rate"), exceeds the maximum
non-usurious rate of interest permitted by Applicable Law (the "Maximum Rate")
in respect of the indebtedness evidenced by such Transaction Document, taking
into account all other amounts paid or payable pursuant to the Transaction
Documents which constitute interest with respect to such indebtedness under
Applicable Law regardless of whether denominated as interest or Distributions
(collectively, the "Other Charges"), then the rate of interest to accrue or
Distributions owing on such indebtedness shall be limited to such Maximum Rate
(taking into account the Other Charges), but any subsequent reduction in the
Stated Rate applicable to such indebtedness shall not reduce the rate of
interest or Distributions to accrue on such indebtedness below such Maximum
Rate (taking into account the Other Charges) until such time as the total
amount of interest or Distributions on such indebtedness equals the amount of
interest or Distributions which would have accrued if the Stated Rate
applicable to such indebtedness had at all times been in effect. If at the
maturity or final payment of any indebtedness the total amount of interest or
Distributions paid or accrued on such indebtedness under the preceding sentence
is less than the total amount of interest or Distributions which would have
accrued if the Stated Rate applicable to such indebtedness had at all times
been in effect, then to the
77
<PAGE> 139
fullest extent permitted by Applicable Law there shall be due and payable or
owing with respect to such indebtedness an amount equal to the excess, if any,
of (a) the lesser of (i) the amount of interest or Distributions (as
applicable) which would have accrued on such indebtedness if such Maximum Rate
in respect of such indebtedness had at all times been in effect and been chosen
as the rate of interest or Distributions to be applicable throughout the term
of such indebtedness (taking into account the Other Charges) and (ii) the
amount of interest or Distributions (as applicable) which would have accrued on
such indebtedness if the Stated Rate applicable to such indebtedness had at all
times been in effect, above (b) the amount of interest or Distributions (as
applicable) accrued in accordance with the provisions of the Transaction
Document evidencing such indebtedness after giving effect to the preceding
sentence. All amounts paid or agreed to be paid for the use, forbearance or
detention of sums pursuant to or in connection with the Transaction Documents
shall, to the extent permitted by Applicable Law, be amortized, prorated,
allocated and spread throughout the full term thereof so that the rate or
amount of interest paid or payable with respect to any amount of indebtedness
evidenced by or payable pursuant to the Transaction Documents does not exceed
the applicable usury ceiling, if any. As used herein, the term "Applicable
Law" means that law, if any, that is applicable to any particular Transaction
and that limits the maximum non-usurious rate of interest that may be taken,
contracted for, charged, reserved or received with respect to such Transaction,
including the law of the State of New York, the law of the State of Texas, the
law of any other jurisdiction that may be mandatorily applicable to such
Transaction notwithstanding other provisions of this Agreement and the other
Transaction Documents, and the Federal law of the United States of America. As
used herein, the term "interest" means interest as determined under Applicable
Law, regardless of whether denominated as interest in the Transaction Documents
(except to the extent that this Section 9.18 specifically refers to interest
denominated as interest). The right to accelerate maturity of any indebtedness
evidenced by any Instrument or other Transaction Document, and the right to
demand payment of the Offer Purchase Price, the Residual Guaranty or
Termination Value does not include the right to accelerate any interest, or to
receive any other amounts, which would cause the Transactions to be usurious
under
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<PAGE> 140
Applicable Law. All computations of the maximum amount allowed under
Applicable Law, as well as all computations of interest at the Maximum Rate,
will be made on the basis of the actual number of days elapsed over a 365 or
366 day year, whichever is applicable pursuant to such Applicable Law. The
provisions of this Section 9.18 shall prevail over any contrary provisions in
this Agreement, the Instruments or any of the other Transaction Documents.
SECTION 9.19. WAIVER OF TRIAL BY JURY. IN ANY ACTION OR
PROCEEDING UNDER OR RELATED TO THIS AGREEMENT, THE OPERATIVE DOCUMENTS OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION WITH THE FOREGOING, THE COMPANY, THE AGENT,
THE TRUSTEE AND EACH NOTE AND CERTIFICATE PURCHASER HEREBY AGREE THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY,
IRRESPECTIVE OF WHICH PARTY COMMENCES SUCH ACTION OR PROCEEDING.
SECTION 9.20. Option. At any time prior to the expiration or
termination of the Lease, upon the occurrence of an Environmental Event and at
the direction of the Majority Holders of the B-Notes and Certificates, (i) the
Trustee shall have the right, upon five Business Days' written notice, to
require the Company to purchase all of its right, title and interest in and to
the Property from the Trustee for a purchase price of $1 in which case the
Trustee will convey its right, title and interest in and to the Property to the
Company free and clear of any Lien or other adverse interest of any kind
created by the Trustee or any person claiming by, through or under the Trustee
(except as consented to by the Company and except as to any interest created
upon the exercise of any right under any Operative Document upon any Event of
Default). The exercise by the Trustee of its rights under this Section 9.20
shall not limit the Trustee's other rights under any Operative Document.
SECTION 9.21. Financial Advisor. The parties hereto
acknowledge and agree that neither CSI, the Company's exclusive financial
advisor for the transactions contemplated by the Operative Documents, nor any
of Citicorp's Affiliates, is making any representation or warranty, or is
required to make any disclosure, now or in the future, with respect to the
parties' tax or accounting treatment of the transactions
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<PAGE> 141
contemplated by the Operative Documents. Each of the parties hereto further
acknowledges and agrees that neither Citicorp nor any of its Affiliates is
responsible, or will be responsible in the future, for tax and accounting
advice with respect to the transactions contemplated by the Operative
Documents, and that it (i) has, independently and without reliance on Citicorp
or its Affiliates, made its own analysis and decisions with respect to such
matters and has had the benefit of the advice of its own independent tax and
accounting advisers with respect to such matters to the extent it has deemed
appropriate and (ii) will, independently and without reliance on Citicorp or
its Affiliates, continue to make its own analyses and decisions with respect to
such matters based on such information and advice as it deems appropriate for
such purposes.
SECTION 9.22. Securities Representation. Each Purchaser
hereby represents that it is acquiring its Instruments for investment for its
own account, and not with a view to or for sale in connection with a
distribution of any Instrument, except in compliance with all applicable
securities laws; provided, however, that, subject to Section 6.02 hereof, the
disposition of any Instrument held by that Purchaser shall at all times be
within its exclusive control.
SECTION 9.23. UNENFORCEABILITY OF ORAL AGREEMENTS; (TEXAS
STATUTORY LANGUAGE). THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THE PARTIES
AGREE THAT THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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<PAGE> 142
IN WITNESS WHEREOF the parties have caused this Participation
Agreement to be duly executed by their officers thereunto duly authorized as of
the day and year first above written.
FERRO CORPORATION
By:/s/ D. Thomas George
--------------------------------------
Name: D. Thomas George
Title: Treasurer
STATE STREET BANK AND TRUST COMPANY, not
in its individual capacity, except as
expressly stated herein, but solely as
Trustee
By:/s/ Ruth A. Smith
--------------------------------------
Name: Ruth A. Smith
Title: Assistant Vice President
CITIBANK, N.A., as Agent
By:/s/ Mark J. Lyons
--------------------------------------
Name:
Title:
<PAGE> 143
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
CITICORP, USA, Inc., as Note
Purchaser
By:/s/ Mark J. Lyons
--------------------------------------
Name:
Title:
<PAGE> 144
SIGNATURE PAGE FOR PARTICIPATION AGREEMENT
CITICORP, USA, Inc., as Certificate
Purchaser
By:/s/ Mark J. Lyons
--------------------------------------
Name:
Title:
<PAGE> 145
SCHEDULE I
MANNER OF PAYMENT
AND COMMUNICATIONS TO PARTIES
This Schedule I shows the names and addresses of the parties
to the foregoing Participation Agreement and the respective principal and
stated amounts of the Instruments to be purchased by each Note and Certificate
Purchaser.
Company and Construction Agent:
Address for all notices:
Ferro Corporation
1000 Lakeside Avenue
Cleveland, Ohio 44114
Attention: Treasurer and Director - Legal Affairs
Facsimile: (216) 696-5638
Trustee:
(l) Address for all notices:
State Street Bank and Trust Company
Two International Place
Boston, Massachusetts 02110-2804
Attention: Corporate Trust Department
Facsimile: (617) 664-5371
(2) All payments to the Trustee with respect to the Operative Documents
shall be made by wire transfer of immediately available funds to
Account No. 4068 42224 at Citibank, N.A., ABA# 021000089, Attention:
Stephanie James, with a reference to "1995 Ferro Plant Trust" and with
sufficient information to identify the source and application of such
funds.
3
<PAGE> 146
Agent:
(1) Address for all notices:
Citibank, N.A., as Agent
Bank Loan Syndications
One Court Square
7th Floor
Long Island City, NY 11120
Attention: Sandra Safra
Phone: (718) 248-4505
Facsimile: (718) 248-4844
(2) All payments and transfers of funds to the Agent with respect to the
Operative Documents shall be made by wire transfer of immediately
available funds to Account No. 36852248 at Citibank, N.A., New York,
ABA# 021000089, with a reference to "Ferro Corporation" and with
sufficient information to identify the source and application of such
funds.
4
<PAGE> 147
Purchasers:
CITICORP, USA, INC.
Interim Note Commitment
$24,787,428.98
Note Commitment
Total: $ 47,045,000
Series 1 A-Note: $ 19,274,597.58
Series 1 B-Note: $2,982,973.44
(1) All payments with respect to the Operative Documents shall be made by
wire transfer of immediately available funds to Credit Account No.
40548046 (Account Name: Loan Paydown Account) at Citibank, N.A., ABA#
021000089, New York, New York, with a reference to "1995 Ferro Plant
Trust" and with sufficient information to identify the source and
application of such funds.
(2) Address for all notices in respect of payment:
Citibank, N.A.
1 Court Square 7/1
Long Island City, NY 11120
Attention: Stephanie T. James, SSO
Facsimile: (718) 248-4535
(3) Address for all other communications:
Citibank, N.A.
399 Park Avenue 8/9
New York, NY 10043
Attention: Judith Goldkrand
Facsimile: (212) 793-3053
Telex: NYNIC
5
<PAGE> 148
CITICORP, USA
Certificate Commitment
$1,600,000
Series 1 Certificate Commitment
$688,378.48
Series 2 Certificate Commitment
$911,621.52
(1) Address for all notices in respect of payment:
Citibank, N.A.
1 Court Square 7/1
Long Island City, NY 11120
Attention: Stephanie T. James, SSO
Facsimile: (718) 248-4535
(2) Address for all other communications:
Citibank, N.A.
399 Park Avenue 8/9
New York, NY 10043
Attention: Judith Goldkrand
Facsimile: (212) 793-3053
Telex: NYNIC
(3) All payments with respect to the Operative Documents shall be made in
accordance with such instructions as the Certificate Purchaser may give from
time to time.
6
<PAGE> 149
SCHEDULE II
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Basis for Pricing Company's long term Company's long
senior unsecured term senior
debt is rated at unsecured debt is
least BBB-/Baa3 rated less than
BBB-/Baa3
- --------------------------------------------------------------------------------
<S> <C> <C>
FACILITY FEE
- --------------------------------------------------------------------------------
Facility Fee on 0.1875% 0.25%
unused portion of
Note Commitment
- --------------------------------------------------------------------------------
Facility Fee on 0.1875% 0.25%
unused portion of
Certificate
Commitment
- --------------------------------------------------------------------------------
APPLICABLE MARGIN
- --------------------------------------------------------------------------------
Interim Notes 0.513402% 0.638402%
- --------------------------------------------------------------------------------
A-Notes 0.50% 0.625%
- --------------------------------------------------------------------------------
B-Notes 0.60% 0.725%
- --------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 150
Schedule 4.01(l)
Existing Encumbrances
The information on this Schedule 4.01(l) may identify encumbrances
which would constitute Permitted Encumbrances.
8
<PAGE> 151
Annex 5.7.a
Easement rights of public utilities if any, located in Mandalay Avenue, N.E.,
vacated street, within the premises under examination.
Affects Parcel 3.
The premises are subject to an easement for Water Meter Vault, from Dart
Industries Inc., to City of Cleveland, a municipal corporation of State of
Ohio, filed for record May 19, 1978 at 12:56 A.M., established by instrument
recorded in Volume 14801, Page 449 of Cuyahoga County Records.
Affects Parcel 1.
The premises are subject to an easement for Electric Transmission Line from
Javcob, Inc., to The Cleveland Electric Illuminating Company, an Ohio
Corporation, filed for record September 23, 1969 at 3:27 P.M., established by
instrument recorded in Volume 12557, Page 899 of Cuyahoga County Records.
Affects Parcel 3.
<PAGE> 152
ANNEX 5.7.b.
Tract 1:
The following easements as shown by plat recorded in Volume 388-206, Page 26,
Deed Records of Tarrant County, Texas, and as shown on survey plat dated
September 13, 1995, amended October 12, 1995, prepared by Clarence W. Hart,
Registered Public Surveyor No. 1600:
1. Twenty foot by twenty foot (20' x 20') public open space easement across
the Northwest, South and most Southerly Southeast corners;
2. A fifty-six and one-half foot (56.5') fire lane and utility easement and a
utility easement extending across the property in an East to West direction;
3. A twenty-six foot (26') fire lane and utility easement extending across a
portion of the property in a North to South direction; and
4. A twenty-five foot (25') public utility easement along a portion of the
Easterly part of the property.
Fifteen foot (15') storm drain easement crossing Northerly part of property in
an East to West direction, as shown by City of Fort Worth files, and
encroachment of concrete block building, concrete, Forth Worth Belt Railway Co.
Spur track, and one-story metal building into said easement, all as shown on
survey dated September 13, 1995, amended October 12, 1995, prepared by Clarence
W. Hart, Registered Public Surveyor No. 1600.
The following as shown by survey dated September 13, 1995, amended October 12,
1995, prepared by Clarence W. Hart, Registered Public Surveyor No. 1600:
1. Horizontal tank and portion of one story metal building encroaching into 26
foot fire lane and utility easement;
2. Electrical lines and power pole outside 26 foot utility easement;
3. Transformer with related underground electric lines located Northeast of
intersection of 26 foot fire lane and utility easement and 56.5 foot fire lane
and utility easement;
4. Rights of the Forth Worth Belt Railway Co. in and to the spur track
extending across the West part of property on the North side;
5. Electric line and power pole extending into Northwest part of property on
the West side;
6. Encroachment of hot well onto property from the Easterly side;
7. Protrusion of fat trap and metal and concrete block building on Easterly
side;
8. Elevated building and tank protruding over the most easterly property line;
9. Fence extending across 26 foot fire lane and utility easement on North side;
10. Telephone line, sprinkler system, water meter, water valve and pipes in the
Southwest corner.
<PAGE> 153
The premises are subject to an easement for Railroad Siding and Switch Tract
between Anchor Rubber Products, Inc. and The Euclon Corporation, and The Parker
Appliance Company, established by instrument recorded in Volume 6082, Page 291
and in Volume 6212, Page 345 of Cuyahoga County Records.
Affects Parcel 1.
In the deed from Stuart S. Reader and Michael A. Reader, Co-Trustees to
Synthetic Products Company, a Delaware Corporation, filed for record February
5, 1991 at 3:31 P.M. and recorded in Volume 91-0619, Page 44 of Cuyahoga County
Records, conveying premises under examination, the following appears:
"The Grantors, however, SAVE, EXCEPT and RESERVE unto themselves, a future
non-exclusive right of access, at their own risk and under terms and conditions
hereinafter set forth, along any operable railroad sidetrack which may be
installed upon the real property being conveyed hereunder (the "Property"), for
purposes of providing a rail connection between the Grantors' adjoining property
(as shown on the Lot Split and Consolidation Plat, dated August 23, 1989 and
Supplemented January 9, 1991, (the "Plat") prepared by A. Thomas Powers, Bauer
Surveys Company, Registered Professional Land Surveyor No. 4432 and recorded as
Instrument No. 27976 in Cuyahoga County Records) and the main railroad
right-of-way located northeast of the Property; provided, however, that such
access right shall not arise and vest in the Grantors until such a railroad
sidetrack is actually installed and connected to the main access right, upon
vesting, shall be at all times subject to the Grantee's prior right to use of
such railroad sidetrack in its business operations. The Grantor's adjoining
property, as shown on the Plat, is referred to herein as the "Benefitted
Parcel". In the event such a right of access does not arise and vest in the
Grantors within twenty-one (21) years after the date of this instrument, the
terms and provisions of this reservation and all rights of the Grantors
hereunder, if any, shall expire and terminate, and be of no further force or
effect. This reservation shall never be construed or interpreted as creating any
right or interest in the Grantors in, on, over, under or upon any portion of the
Property other than within or upon the aforementioned railroad sidetrack.
In the event such a railroad sidetrack is installed upon the Property and
connected to the main railroad right-of-way, resulting in such right of access
arising and vesting in the
<PAGE> 154
Grantors, the Grantors hereby release and discharge the Grantee and its
employees, officers, invitees, contractors and agents from any liability
whatsoever for any injury, loss, damage or expense arising from the use or
condition of the railroad sidetrack, or in any way related thereto. The
Grantors hereby indemnify and agree to defend and hold harmless the Grantee
from and against any claim, demand, action, cause of action, loss, expense,
damage or injury relating to or arising from the Grantors' use or the condition
of any railroad sidetrack located upon the Property. The Grantee shall have no
obligation or responsibility to the Grantors with respect to the physical
condition or maintenance of any such railroad sidetrack. Any right of access
arising hereunder shall be appurtenant to and solely for the benefit of the
Benefitted Parcel, and shall expire and terminate, and be of no further force
or effect, upon the first to occur of the following: (1) removal of any
railroad sidetrack from the Property, or (2) removal of the portion of
railroad sidetrack located upon the Benefitted Parcel.
The words "Grantors" and "Grantee" as used in this instrument shall be deemed
to include their respective successors and assigns. The terms and provisions of
this instrument shall run with the land and shall be binding upon the inure to
the benefit of the respective parties hereto and their respective successors
and assigns."
The premises are subject to a Pipeline easement by and between Synthetic
Products Company, an Ohio corporation, and The Donald H. Reader Trust, filed
for record February 5, 1991 at 3:21 P.M., established by instrument recorded in
Volume 91-0620, Page 11 of Cuyahoga County Records.
Duties and obligations imposed upon the owner of the estate created by the
easements described in Schedule A hereof.
Survey dated October 5, 1995 by Bauer Surveys Co. shows the following:
A. Electric wires extend from Parcel 1 onto premises to the West;
B. Chain link fence on Parcel 1 encroaches 5.8' onto premises to the Northwest;
<PAGE> 155
Policy No. 0486912-C2 T-CLV Page: 6
C. Building on Parcel No. 1 encroaches 5.6' onto premises to the Northwest;
D. Building on Parcel 1 encroaches 0.15' over the Southerly line;
E. Building on Parcel 1 encroaches 0.46', 0.32' and 0.10' along the Easterly
line;
F. Chain link fence encroaches 0.3' over the Southwesterly corner of Parcel 3;
G. Overhead wires extend from Parcel 3 onto premises to the North.
Taxes for the year 1995 are a lien, but not yet due and payable.
<PAGE> 156
Exhibit F to the
Participation Agreement
FORM OF REQUISITION
To: Citibank, N.A., as Agent
FERRO CORPORATION
CERTIFIED CONSTRUCTION REQUISITION NO. __________
DATED _____________________, 199__
I, [Name], [Officer] of Ferro Corporation (the "Company"),
acting as construction agent (the "Construction Agent") for State Street Bank
and Trust Company, as Trustee (the "Trustee") pursuant to the Agency Agreement
dated October 31, 1995 (the "Agency Agreement"), submit this irrevocable
Requisition and certify, on behalf of the Company, the following:
1. The total amount of the Actual Project Costs for which a
Funding is hereby requested is _____________ Dollars ($___________).
Each of the Note Purchasers is hereby requested to make an Advance on
[at least 5 Business Days after the submission date] _______________,
19__, subject to the satisfaction or waiver of all conditions precedent
thereto. The Advance shall be made at [bank], account number [ ].
2. The proceeds of the Funding requested herein shall be used
solely to pay Actual Project Costs.
3. No part of the Actual Project Costs paid with the funds
advanced under any previous Requisition is a basis for this
Requisition, and none of the Actual Project Costs which are the subject
of this Requisition was included in any prior Requisition.
4. Attached to this Requisition is a copy of each invoice,
purchase order, receipt or other such document (the "Invoices") for
Actual Project Costs in an amount in excess of $_______, which Invoices
will be, or have been, paid with the proceeds of this Funding, or, as
applicable, the previous Fundings.
5. Construction of the Financed Improvements to date has been
performed in a good and workmanlike manner, substantially in accordance
with the Construction Plans and in compliance with all Insurance
Requirements, the Facility Agreements, all Laws and Legal Requirements.
6. There has been no material change in the estimated time of
completion of construction of the Improvements and the Construction
Agent has no reason
F-1
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to believe that (i) the Final Completion Date cannot be achieved by March 31,
1997 or (ii) the Actual Project Costs of the Construction of the Improvements
will exceed the Total Commitment.
7. No applicable Law prohibits, and no litigation, governmental
investigation or other proceeding is pending or, to the knowledge of the
Company, threatened in which there is a reasonable possibility of an
unfavorable judgment, decree, order or other determination which could prevent
or make unlawful, or impose any material adverse condition upon, the Parcels,
the Improvements or the construction or operation thereof or any transaction
contemplated hereby or by any other Operative Document or the ability of the
Company to perform its obligations hereunder or thereunder or, to the Company's
knowledge, State Street's ownership of the Improvements and the Parcels.
8. All amounts previously advanced pursuant to previous Requisitions
were or will be paid to the parties entitled thereto as specified in such
Requisitions.
9. All proceeds from the Investment have been applied solely to Actual
Project Costs as required under the Operative Documents.
10. [Except as set forth in this item 10,] all conditions precedent to
the Funding requested herein set forth in the Participation Agreement (as
defined below) have been satisfied: [identify unfulfilled conditions, the
actions being taken by the Construction Agent to satisfy such conditions and
the date(s) by which the Construction Agent plans to satisfy such conditions].*
11. All of the representations and warranties of each of the Company
and the Construction Agent set forth in the Operative Documents are true and
correct on and as of the date hereof or, as applicable, on and as of the date
specified in such representation and warranty. The Company and the Construction
Agent are
- ----------------------
* Waiver of any such unfulfilled condition precedent shall be effected solely
in accordance with Section 9.04 of the Participation Agreement.
F-2
<PAGE> 158
each in compliance with all of their obligations under the Operative
Documents and there exists no Default, Event of Default or
Environmental Trigger under the Operative Documents and no Termination
Notice has been delivered or been deemed to have been delivered.
All terms not defined herein shall have the meanings given in the
Participation Agreement dated as of October 31, 1995, among the Company, the
Trustee, the financial institutions and Persons named therein and Citibank,
N.A., as Agent, as the same may be amended, modified or supplemented from time
to time (the "Participation Agreement").
Dated this day of , 199 .
FERRO CORPORATION
as Construction Agent
By: ----------------------------
Name:
Title:
Accepted by:
CITIBANK, N.A., as Agent*
By: ----------------------------
Name:
Title:
- --------------
* Acceptance by the Agent shall not constitute waiver of any unfulfilled
condition precedent identified in item 10 above; any such waiver shall only
be effective in accordance with Section 9.04 of the Participation Agreement.
F-3
<PAGE> 159
EXHIBIT G TO THE
PARTICIPATION AGREEMENT
[FORM OF FINAL COMPLETION CERTIFICATE]
OFFICER'S CERTIFICATE
Ferro Corporation furnishes this Officer's Certificate pursuant to the
requirements of Section 3.02(b) of the Participation Agreement dated as of
October 31, 1995, among Ferro Corporation (the "Company"); State Street Bank and
Trust Company, not in its individual capacity, except as set forth herein, but
solely as Trustee (the "Trustee"); Citibank, N.A., as agent ("the Agent"); and
the Persons and financial institutions named therein as Purchasers (as the same
may undergo amendment, modification or supplementation from time to time, the
"Participation Agreement"). Capitalized terms used but not otherwise defined
herein shall have the meanings provided in the Participation Agreement.
The undersigned, on behalf of the Company, hereby certifies that:
1. The Property and the construction and operation of the Improvements are in
compliance in all material respects with all applicable Laws (including,
without limitation, all Environmental Laws); and
2. All Permits (including without limitation permanent certificates of
occupancy) that are or will become Applicable Permits have been obtained,
except Applicable Permits customarily obtained or which are permitted by Law to
be obtained after the Final Completion Date (in which case the Company, having
completed all appropriate diligence, shall have no reason to believe that such
Permits will not be granted in the usual course of business prior to the date
that such Permits are required by Law and the Company shall have applied for
such Permits and satisfied all legal requirements necessary to authorize
continued operation while the Permit application is pending). All such obtained
Permits shall be in proper form, in full force and effect and not subject to
any appeal or contest or to any unsatisfied conditions (other than conditions
relating to completion in the future) that may allow modification or revocation.
3. The construction and operation of the Improvements accords in all material
respects with all representations set forth in, or made in connection with, all
Permits, as
<PAGE> 160
required for occupancy and commencement of operation thereof.
4. The Company complies with all Insurance Requirements and has full force and
effect all insurance policies required thereunder.
5. The representations and warranties of the Company as set forth in the
Operative Documents are true and correct as if made on and as of the date
hereof, or, as applicable and as of the date specified in such representation
or warranty.
6. The Company has performed in all material respects each of its covenants
set forth in Section 3.02 of the Participation Agreement.
Date: FERRO CORPORATION
-------------------
By:
-----------------------------
Name:
Title:
2
<PAGE> 161
EXHIBIT H TO THE
PARTICIPATION AGREEMENT
[FORM OF INDEPENDENT ENGINEER'S CERTIFICATE]
This Independent Engineer's Certificate is being furnished pursuant to
the requirements of Section 3.02(c) of the Participation Agreement dated as of
October 31, 1995, among Ferro Corporation (the "Company"); State Street Bank
and Trust Company, not in its individual capacity, except as set forth therein,
but solely as Trustee (the "Trustee"); Citibank, N.A., as Agent ("the Agent");
and the Persons and financial institutions named therein as Purchasers (as the
same may be amended, modified or supplemented form time to time, the
"Participation Agreement"). Capitalized terms used but not otherwise defined
herein shall have the meanings provided in the Participation Agreement.
The undersigned hereby certifies that:
1. Each Plant installation has been mechanically completed and
electrically checked, and piping and equipment have been flushed and pressure
tested.
2. Each Plant has demonstrated production capability during a
continuous 72 hour period of at least 90% of nameplate capacity of stearic
acid, stearates, stabilizers and lubricants, as applicable to each such Plant,
meeting product design specifications for such products during such test
period and at levels of efficiency acceptable to the Agent, the Trustee and the
Majority Purchasers.
2. With respect to the environmental improvements, each Plant has
demonstrated at least 90% of the design recovery at levels of efficiency
acceptable to the Agent, the Trustee and the Majority Purchasers.
In making this certification, I [relied on production records provided
to me by the Company] [observed performance tests at the Plant].
Dated: _______________ CHEM SYSTEMS, INC.
By: __________________________
H-1
<PAGE> 162
Exhibit I
Form of Commitment Reduction Notice
Citibank, N.A., as Agent
Bank Loan Syndications
One Court Square
7th Floor
Long Island City, New York 11120
Attention: Stephanie James
State Street Bank and Trust Company
2 International Place
Boston, Massachusetts 02110
Attention: Corporate Trust Department
The Purchasers as set forth on Schedule I
to the Participation Agreement
Re: 1995 Ferro Plant Trust
Reference is made to the Participation Agreement dated as of October
31, 1995 (the "Participation Agreement") among Ferro Corporation, an Ohio
corporation; State Street Bank and Trust Company, a Massachusetts trust
company, not in its individual capacity except as expressly stated therein, but
solely as Trustee under the Declaration; the financial institutions named as
Purchasers on Schedule I thereto, and/or any assignee thereof who may, from
time to time, become a party thereto; and Citibank, N.A., in its capacity as
agent for the Purchasers thereunder. Capitalized terms used but not otherwise
defined herein shall have the meanings set forth in the Participation Agreement
(including by reference to Appendix A thereto).
This constitutes a Commitment Reduction Notice delivered in accordance
with Section 1.05 of the Participation Agreement.
The Company has elected to eliminate the Excluded Assets from the
Financed Improvements. Pursuant to Section 1.05 of the Participation Agreement,
the Company hereby notifies the Agent and the Trustee as follows:
1. The aggregate Total Commitment is reduced to $ .
<PAGE> 163
2. Attached hereto for your review and approval, as Attachments A, B, C,
D or E respectively, as applicable, are:
(a) a construction budget, prepared in the manner specified for
Approved Construction Budget, taking into account elimination of
costs for the Excluded Assets;
(b) a list of the Excluded Assets;
[(c) if applicable, the Construction Contract(s) reflecting the
elimination of the Excluded Assets;]
[(d) if applicable, the Construction Plans reflecting the elimination
of the Excluded Assets;] and
(e) a revised Exhibit A to the Agency Agreement.
FERRO CORPORATION
By:__________________________________
Name:
Title:
Dated: ___________________, 199______
Confirmed and Accepted:
CITIBANK, N.A., as Agent
By:_________________________________
Name:
Title:
Dated:_____________________, 199____
2
<PAGE> 164
Execution Version
APPENDIX A TO THE PARTICIPATION AGREEMENT
This Appendix A to the Participation Agreement is a glossary
of all or substantially all of the defined terms used in the Operative
Documents. Not all of the terms defined in this Appendix A are used in the
Participation Agreement.
All references herein to one gender shall include the other
and all references to the singular shall include the plural and vice-versa.
"A-Notes" has the meaning set forth in Article I of the
Declaration.
"Act" means the Securities Act of 1933, as amended, and the
Laws promulgated or issued from time to time thereunder.
"Actual Project Costs" has the meaning set forth in Recital E
of the Preliminary Statement to the Participation Agreement.
"Additional Costs" has the meaning set forth in item II of
Schedule B to the Lease.
"Additional Improvements" has the meaning set forth in
paragraph 10(a) of the Lease.
"Additional Rent" has the meaning set forth in paragraph 4(b)
of the Lease.
"Adjusted Capitalized Cost" has the meaning set forth in
Schedule C to the Lease.
"Advance" has the meaning set forth in Section 1.04(a)(i) of
the Participation Agreement.
"Advisory Fee" has the meaning set forth in Section 2.01(f) of
the Participation Agreement.
"Affiliate" when used with respect to a Person, means any
other Person which directly or indirectly through one or more intermediaries
controls, or is controlled by, or is under common control with, such Person.
The term "control" (including the correlative term "controlled") means the
possession, directly or indirectly, of the power to direct or cause the
direction
<PAGE> 165
of the management and policies of a Person, whether through the ownership of
Voting Stock, by contract or otherwise; provided, however, that under no
circumstances shall the Agent or the Purchasers be deemed to be Affiliates of
the Trustee or vice versa.
"Agency Agreement" has the meaning set forth in Recital C to
the Preliminary Statement to the Participation Agreement.
"Agent" means Citibank, N.A., or any successor selected
pursuant to the Participation Agreement, acting as agent for the Purchasers.
"Allocated Assets" has the meaning set forth in paragraph 14A
of the Lease.
"Allocated Termination Value" has the meaning set forth in
paragraph 14A of the Lease.
"Applicable Law" has the meaning set forth in Section 9.18 of
the Participation Agreement.
"Applicable Margin" means:
(i) with respect to the Notes:
(a) for any Applicable Rate determined by reference to the
LIBO Rate, the applicable percentage shown on Schedule II to the Participation
Agreement based on the debt rating of the Company on the first day of such
Interest Period; and
(b) with respect to any Applicable Rate determined by
reference to the Base Rate, 0%.
(ii) with respect to the Certificates:
(a) for any Applicable Rate determined by reference to the
LIBO Rate, 3%; and
(b) for any Applicable Rate determined by reference to the
Base Rate, 2.25%.
"Applicable Percentage" has the meaning set forth in Article I
of the Declaration.
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<PAGE> 166
"Applicable Permit" means any Permit, including any
Environmental Permit, that is necessary to own, construct, start-up, test,
maintain, operate, lease or use all or any part of the Parcel or the Property
or any part thereof in accordance with the Operative Documents.
"Applicable Rate" means the Applicable Margin plus, subject to
Section 6.01 of the Participation Agreement, either (A) the applicable LIBO
Rate or (B) the Base Rate; provided, however, that the Applicable Rate shall
never exceed the Maximum Rate.
"Appraisal" has the meaning set forth in Section 2.01(o) of
the Participation Agreement.
"Appraiser" means Arthur Andersen & Co., SC or another
appraiser satisfactory to the Agent and the Majority Holders.
"Approved Construction Budget" means the budget prepared by
the Company, in form and substance satisfactory to the Agent, which budget
specifies the estimated Actual Project Costs including: (a) all labor,
materials and services necessary for the design, engineering, construction
(including any fees which may be due to the Construction Agent), testing and
start-up of the Improvements in accordance with the Construction Plans and (b)
all interest and Distribution expenses, Facility Fees and Upfront Fees
anticipated by the Company incident to the Advances made under the Interim
Notes and the Investment made under the Certificates and the expenses to be
incurred in connection with the design, engineering, procurement, construction,
testing and start-up of the Improvements, as the same may be amended from time
to time in accordance with the provisions of the Participation Agreement and
the Agency Agreement.
"Assets" has the meaning set forth in Recital A of the
Preliminary Statement to the Participation Agreement.
"Assignee" has the meaning set forth in Section 6.02(b) of the
Participation Agreement.
"Assignor" has the meaning set forth in Section 6.02(b) of the
Participation Agreement.
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<PAGE> 167
"Assignment and Acceptance" has the meaning set forth in
Article I of the Declaration.
"B-Notes" has the meaning set forth in Article I of the
Declaration.
"Bankruptcy Law" means Title 11 of the United States Code, and
any applicable Federal, state or local insolvency, reorganization, moratorium,
fraudulent conveyance or similar Law now or hereafter in effect for the relief
of debtors.
"Base Rate" means a fluctuating interest rate per annum as
shall be in effect from time to time which rate per annum shall at all times be
equal to the higher of:
l. the rate of interest announced publicly by Citibank
in New York, New York, from time to time, as its base rate; and
2. one-half of one percent (.5%) per annum above the
Federal Funds Rate.
"Base Rate Funding" means a Funding for which the Applicable
Rate is determined by the Base Rate.
"Bedford Plant" means the production facility of the Company
located in Walton Hills, Ohio.
"Best's" means Best's Insurance Reports published by A.M. Best
Company, Inc. or any successor thereto which is a nationally recognized
statistical rating organization.
"Bill of Sale" has the meaning set forth in Recital A to the
Preliminary Statement to the Participation Agreement.
"Break Costs" means an amount equal to the amount (if any)
required to compensate any Purchaser for any losses (including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
redeployment of deposits or funds acquired by such Purchaser (from third
parties including Affiliates) to fund or maintain such Notes or Certificates)
it may incur as a result of (i) the Company's payment of the Offer Purchase
Price, the Residual Guaranty, Unwind Fee or
4
<PAGE> 168
Termination Value other than on a Payment Date or (ii) any purchase of such
Purchaser's Notes or Certificates in connection with the substitution of such
Purchaser pursuant to Section 6.04(b) of the Participation Agreement other than
on a Payment Date.
"Business Day" means any day other than a Saturday, Sunday or
any other day on which banking institutions in New York, New York or Boston,
Massachusetts are required or authorized by Law to suspend operations.
"Casualty" has the meaning set forth in paragraph 12(a) of the
Lease.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act, as amended by the Superfund Amendments and
Reauthorization Act, 42 U.S.C. Section 9601 et seq. and as further amended
from time to time.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Information System, which is a list maintained by
the United States Environmental Protection Agency of sites where there is a
known or suspected release or potential release of hazardous substances which
may require remediation.
"Certificate Commitment" of any Purchaser means the commitment
of such Person, if any, to make an Investment pursuant to the Certificates up
to the aggregate stated amount set forth below the name of such Person on
Schedule I to the Participation Agreement under the heading "Total Certificate
Commitment," as the same may be adjusted from time to time pursuant to any
Assignment(s) and Acceptance(s) executed by such Purchaser or reduced pursuant
to the terms of the Participation Agreement.
"Certificate Liquidation Amount" has the meaning set forth in
Article I of the Declaration.
"Certificate Percentage" means, with respect to any
Certificate Purchaser, the percentage that its Certificate Commitment bears to
the aggregate Total Certificate Commitment, as such Certificate Percentage may
be adjusted from time to time pursuant to any
5
<PAGE> 169
Assignment(s) and Acceptance(s) executed by any such Purchaser.
"Certificate Purchaser" means any Purchaser who has a
Certificate Commitment.
"Certificate Purchaser's Counsel" means, collectively, such
law firms, or successors thereto, which from time to time represent the
Certificate Purchasers in connection with the Certificates.
"Certificates" has the meaning set forth in Article I of the
Declaration.
"Charges" means Impositions and all liabilities with respect
thereto, other than Excluded Charges.
"Citibank" has the meaning set forth in the first paragraph of
the Participation Agreement.
"Closing Costs" means all charges incident to any sale of the
Property, including reasonable attorneys' fees of Special Counsel and Trustee's
Counsel and escrow fees, recording fees, broker's fees, any fees, costs
(including, without limitation, Break Costs) or expenses incurred by the
Trustee in connection with the same and with the release of the Declaration,
and all applicable transfer taxes which may be imposed by reason of such sale
and conveyance and the delivery of any and all instruments in connection
therewith.
"Closing Date" has the meaning set forth in paragraph 15(a) of
the Lease.
"CNAI" means Citicorp North America, Inc.
"Code" means the Internal Revenue Code of 1986, as amended,
and the Laws promulgated or issued from time to time thereunder.
"Commission" has the meaning set forth in Section 4.01(d) of
the Participation Agreement.
"Commitment Reduction" has the meaning set forth in Section
1.05(a) of the Participation Agreement.
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<PAGE> 170
"Commitment Reduction Notice" has the meaning set forth in
Section 1.05(a) of the Participation Agreement.
"Commitments" means the Certificate Commitments and the Note
Commitments of the respective Purchasers.
"Company" means Ferro Corporation, an Ohio corporation, and
any permitted successor or assignee pursuant to the terms of the Participation
Agreement.
"Condemnation" has the meaning set forth in paragraph 12(a) of
the Lease.
"Connecticut Assets" has the meaning set forth in Section 1.06
of the Participation Agreement.
"Consolidated" refers to the consolidation of the accounts of
the Company with its Subsidiaries in accordance with GAAP and with policies,
including principles of consolidation, consistent with those applied in the
preparation of the consolidated financial statements referred to in Section
4.01(d) of the Participation Agreement.
"Construction Agent" means the Company, as Construction Agent,
pursuant to the Agency Agreement.
"Construction Contract" means any agreements between the
Company and each contractor, pursuant to which such contractors have agreed to
construct and install the Financed Improvements.
"Construction Period" has the meaning set forth in paragraph
3(a) of the Lease.
"Construction Plans" means the working drawings and
specifications for the construction of the Financed Improvements including,
without limitation, the documentation provided by the Construction Agent, as
the same may be amended from time to time in accordance with the provisions of
the Agency Agreement.
"Construction Schedule" means the construction schedule for
the Financed Improvements, as the same may be amended or supplemented from time
to time in accordance with the provisions of the Agency Agreement.
7
<PAGE> 171
"Conversion Date" means any date on which the basis for the
determination of the Applicable Rate with respect to any Instrument (or any
portion thereof) is converted pursuant to Article VI of the Participation
Agreement or for any other reason pursuant to the terms of the Operative
Documents from the LIBO Rate to the Base Rate or from the Base Rate to the LIBO
Rate, as the case may be.
"Convert," "Conversion" and "Converted" each refers to a
conversion of Base Rate Fundings into LIBO Rate Fundings or LIBO Rate Fundings
into Base Rate Fundings, as the case may be.
"Conveyance Documents" means the Texas Deed, the Ohio Deed,
the Easement, the Second Easement and the Bill of Sale.
"Corporate Trust Office" has the meaning set forth in Article
I of the Declaration.
"CSI" means Citicorp Securities, Inc.
"Debt" means (a) indebtedness for borrowed money, (b)
obligations to pay the deferred purchase price of property or services (other
than services of former, present or future directors or employees), (c)
obligations evidenced by notes, bonds, debentures or other similar instruments,
(d) obligations as lessee under leases that have been or should be, in
accordance with GAAP, recorded as capital leases, (e) Guaranties in respect of
indebtedness or obligations of others of the kinds referred to in clauses (a)
through (d) above, and (f) liabilities in respect of unfunded vested benefits
under plans covered by Title IV of ERISA.
"Declaration" or "Declaration of Trust" has the meaning set
forth in Recital D of the Preliminary Statement to the Participation Agreement.
"Deeds" means the Ohio Deed and the Texas Deed.
"Default" means an event which with the lapse of time, the
giving of notice or both would become an Event of Default.
8
<PAGE> 172
"Default Rate" means the lesser of: (i) the Maximum Rate and
(ii) 2% percent in excess of the Applicable Rate then in effect.
"Disclosed Information" means all information contained in any
public report filed by the Company with the Commission and all other
information delivered to Special Environmental Counsel prior to the Financing
Closing Date, including, but not limited to, the Phase II, the Purchase
Agreement and any exhibit or schedule thereto delivered to Special
Environmental Counsel prior to the Financing Closing Date.
"Distribution" has the meaning set forth in Article I of the
Declaration.
"Easement" means the Easement Agreement dated as of the date
hereof among the Company and the Trustee.
"Easement Parcels" means, collectively, the Ohio Easement
Parcels, the Texas Leasehold Parcel and the Texas Easement Parcel.
"Eligible Assignee" means (i) any Person approved by the Agent
and the Company, such approval not to be unreasonably withheld or delayed and
(ii) each financial institution named as a party to the Revolving Credit
Facility.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of Section 3(3) of ERISA which the Company or any ERISA Affiliate
administers or administered, operates or operated, contributes to or
contributed to, sponsors or sponsored, or under which the Company or any ERISA
Affiliate is obligated or was obligated for or on behalf of its current or
former employees, officers or directors.
"Environmental Action" means any administrative, regulatory or
judicial action, suit, demand, demand letter, claim, notice of non-compliance
or violation, notice of liability or potential liability, investigation,
proceeding, consent order or consent agreement arising under any Environmental
Law or Environmental Permit or relating to Hazardous Materials or arising from
alleged injury or threat of injury to health, safety or the environment,
including, without limitation, (a) by any governmental or regulatory
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<PAGE> 173
authority for enforcement, cleanup, removal, response, remedial or other
actions or damages and (b) by any governmental or regulatory authority or any
third party for damages, contribution, indemnification, cost recovery,
compensation or injunctive relief.
"Environmental Consultant" means ERM-Northeast, Inc. or such
other reputable environmental consulting firm satisfactory to the Agent and the
Purchasers.
"Environmental Condition" has the meaning set forth in Recital
B to the Preliminary Statements of the Services Agreement.
"Environmental Event" has the meaning set forth in paragraph
13(a) of the Lease.
"Environmental Laws" means any and all Federal, state and
local Laws (as well as obligations, duties and requirements relating thereto
under common law) relating to: (a) emissions, discharges, spills, releases or
threatened releases of pollutants, contaminants, Hazardous Materials, materials
containing Hazardous Materials, or hazardous or toxic materials or wastes into
ambient air, surface water, groundwater, watercourses, publicly or
privately-owned treatment works, drains, sewer systems, wetlands, septic
systems or onto land; (b) the use, treatment, storage, disposal, handling,
manufacturing, transportation, or shipment of Hazardous Materials, materials
containing Hazardous Materials or hazardous and/or toxic wastes, material,
products or by-products (or of equipment or apparatus containing Hazardous
Materials); (c) pollution or the protection of human health or the environment;
or (d) land use laws.
"Environmental Permit" means any Permit, approval,
identification number, license or other authorization required under any
Environmental Law.
"Environmental Trigger" has the meaning set forth in paragraph
13(b) of the Lease.
"Equipment Sale Offer" has the meaning set forth in Section
1.06 of the Participation Agreement.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, any
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regulations and the Laws promulgated or issued from time to time thereunder and
any successor legislation.
"ERISA Affiliate" means any Person that for purposes of Title
IV of ERISA is a member of the Company's controlled group, or under common
control with the Company, within the meaning of Section 414 of the Internal
Revenue Code.
"ERISA Event" means (a) the occurrence of a reportable event,
within the meaning of Section 4043 of ERISA, with respect to any Title IV Plan
unless the 30-day notice requirement with respect to such event has been waived
by the PBGC; (b) the application for a minimum funding waiver with respect to a
Pension Plan required to satisfy Code Section 412; (c) the provision by the
administrator of any Title IV Plan of a notice of intent to terminate such plan
pursuant to Section 4041(a)(2) of ERISA (including any such notice with respect
to a plan amendment referred to in Section 4041(e) of ERISA); (d) the cessation
of operations at a facility of the Company or any of its ERISA Affiliates in
the circumstances described in Section 4062(e) of ERISA; (e) the withdrawal by
the Company or any of its ERISA Affiliates from a Multiple Employer Plan during
a plan year for which it was a substantial employer, as defined in Section
4001(a)(2) of ERISA; (f) the failure by the Company or any of its ERISA
Affiliates to make a payment to a Pension Plan if the conditions for the
imposition of a lien under Section 302(f)(1) of ERISA are satisfied; (g) the
adoption of an amendment to a Pension Plan requiring the provision of security
to such Plan, pursuant to Section 307 of ERISA; or (h) the institution by the
PBGC of proceedings to terminate a Title IV Plan, pursuant to Section 4042 of
ERISA, or the occurrence of any event or condition described in Section 4042 of
ERISA that could reasonably be expected to constitute grounds for the
termination of, or the appointment of a trustee to administer, a Title IV Plan;
or the imposition of any liability under Title IV of ERISA, other than for PBGC
premiums due but not delinquent under Section 4007 of ERISA; or (i) the partial
or complete withdrawal within the meaning of Sections 4203 and 4205 of ERISA of
the Company or any ERISA Affiliate from a Multiemployer Plan; or (j) any event
or condition which results in the reorganization or insolvency of a
Multiemployer Plan under Sections 4241 or 4245 of ERISA; (k) any event or
condition which results in the termination of a
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Multiemployer Plan under Section 4041A of ERISA or the institution by the PBGC
of proceedings to terminate a Multiemployer Plan under Section 4042 of ERISA;
or (l) the failure to make any required contribution to a Title IV Plan.
"Event of Default" has the meaning set forth in Section 7.01
of the Participation Agreement.
"Excess Funds" has the meaning set forth in paragraph 12(c) of
the Lease.
"Excluded Assets" has the meaning set forth in Recital B to
the Preliminary Statement to the Participation Agreement.
"Excluded Charges" means (1) Taxes imposed on the Trustee's
net income, and franchise Taxes imposed on it, to the extent such Tax is
determined solely by reference to the fees received by the Trustee under the
Operative Documents; (2) United States federal income Taxes (other than Taxes
withheld at the source) imposed on a Purchaser to the extent that such Tax is
determined solely on the basis that such Purchaser is a creditor entitled to
receive only payments of interest and principal (without discount) for such Tax
purposes; (3) Taxes imposed on a Purchaser's net income and franchise Taxes
imposed on it, by the jurisdiction under the Laws of which it is organized or
by any jurisdiction in which it is doing business or by any political
subdivision of the foregoing, to the extent that such Tax is determined solely
on the basis that such Purchaser is a creditor entitled to receive only
payments of interest and principal (without discount) for such Tax purposes;
and (4) any Taxes imposed by the United States of America by means of
withholding at the source if and to the extent that (a) such Taxes shall be in
effect and shall be applicable, on the date hereof or the effective date of the
Assignment and Acceptance pursuant to which such Person became a Note and/or
Certificate Purchaser and (b) such Taxes are determined solely on the basis
that such Purchaser is a creditor entitled to receive only payments of interest
and principal (without discount) for such Tax purposes; provided, however, that
any such Taxes are not incurred or increased directly or indirectly by actions
of the Company on or after the date of the Participation Agreement (other than
actions specifically required of
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the Company thereunder or under another Operative Document).
"Expiration Date" has the meaning set forth in paragraph 3 of
the Lease.
"Expiration Title Policy" has the meaning set forth in Section
7.05(b) of the Participation Agreement.
"Facility Agreements" has the meaning set forth in paragraph
3(d) of the Agency Agreement.
"Facility Fee" has the meaning set forth in Section 9.14(b) of
the Participation Agreement.
"Federal Funds Rate" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transactions received by Citibank from three Federal funds
brokers of recognized standing selected by it.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"Fee Parcels" has the meaning set forth in Recital A of the
Preliminary Statement to the Participation Agreement.
"Final Completion Date" means the date on and as of which the
Company has delivered to the Agent and the Trustee (i) a fully executed
Officer's Certificate in the form of Exhibit G to the Participation Agreement
and (ii) a fully executed Independent Engineer's Certificate in the form of
Exhibit H to the Participation Agreement, together with all applicable
attachments, which date shall be no later than March 31, 1997.
"Financed Improvements" has the meaning set forth in Recital B
of the Preliminary Statement to the Participation Agreement.
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"Financing Closing" has the meaning set forth in Section 1.02
of the Participation Agreement.
"Financing Closing Date" has the meaning set forth in Section
1.02 of the Participation Agreement.
"Fixed Rent" has the meaning set forth in item I.A of Schedule
B to the Lease.
"Funding" means a funding of Actual Project Costs specified in
an approved Requisition, which Funding shall consist of Advances and
Investments made by the Purchasers, pursuant to Section 1.04 of the
Participation Agreement.
"Funding Costs" means any loss, cost or expense incurred by
any Note or Certificate Purchaser as a result of any failure to fulfill on or
before the date specified in any Requisition the applicable conditions set
forth in Article II of the Participation Agreement, including, without
limitation, any loss, cost or expense incurred by reason of the liquidation or
redeployment of deposits or other funds acquired by such Purchaser (from third
parties, including Affiliates) to fund the Advance or make the Investment, as
the case may be, to be made by such Purchaser when such Funding, as a result of
such failure, is not made on such date.
"GAAP" means generally accepted accounting principles
(including principles of consolidation), in effect from time to time,
consistently applied.
"Guaranty" of any Person means and includes any agreement or
arrangement pursuant to which such Person assumes, guarantees, endorses or
otherwise becomes directly or contingently liable (including, without
limitation, liable by way of agreement, contingent or otherwise, to purchase,
to provide funds for payment, to supply funds to or otherwise invest in the
debtor or otherwise to assure the creditor against loss) in connection with any
Debt or indebtedness of any other Person.
"Hazardous Materials" means (1) hazardous materials, hazardous
wastes, and hazardous substances as those or similar terms are defined under
any Environmental Laws, including, but not limited to, the following: the
Hazardous Materials Transportation Act, 49
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U.S.C. Section 1801 et seq., as amended from time to time, the Resource
Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq., as amended from
time to time, CERCLA, the Clean Water Act, 33 U.S.C. Section 1251 et seq., as
amended from time to time, the Clean Air Act, 42 U.S.C. Section 7401 et seq.,
as amended from time to time and/or the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., as amended from time to time; (2) petroleum and
petroleum products including crude oil and any fractions thereof; (3) natural
gas, synthetic gas, and any mixtures thereof; (4) asbestos and/or any material
which contains any hydrated mineral silicate, including, but not limited to,
chrysolite, amosite, crocidolite, tremolite, anthophylite and/or actinolite,
whether friable or non-friable; (5) polychlorinated biphenyls ("PCB's"), or
PCB-containing materials, or fluids; (6) radon; (7) any other hazardous
radioactive, toxic or noxious substance, material, pollutant, or solid, liquid
or gaseous waste; and (8) any substance that, whether by its nature or its use,
is subject to regulation under any Environmental Law or with respect to which
any Federal, state or local Environmental Law or governmental agency requires
environmental investigation, monitoring or remediation.
"Holder" has meaning set forth in Article I of the
Declaration.
"Illegality Costs" means any additional amounts as may be
necessary to compensate any Note Purchaser for any losses, costs, interest and
fees incurred by it in making any conversion of Applicable Rate in accordance
with Section 6.01(i) of the Participation Agreement.
"Impositions" means without limitation all Taxes, assessments,
levies, fees, water and sewer rents and charges, inspection fees and other
authorization fees and all other governmental charges, general and special,
ordinary and extraordinary, foreseen and unforeseen, of every character
(including all penalties, additions to tax, fines or interest thereon) arising
directly or indirectly out of the transactions contemplated by the
Participation Agreement and the other Operative Documents, including (i) those
which, at any time prior to or during the Term, may accrue with respect to, be
imposed or levied upon or assessed against or be a Lien upon (A) the Parcel,
the Property or any part thereof, or the Operative Documents, including the
Instruments, (B) the Trustee in connection with the transactions
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contemplated by the Operative Documents, or (C) the Deeds, the Lease or the
leasehold estate thereby created, or which arise in respect of the acquisition,
ownership, construction, operation, occupancy, possession, disposition, use,
non-use, financing, leasing, sub-leasing or condition of the Parcel, the
Property or any part thereof or of the execution, delivery, expiration or
termination of the Lease, the Instruments or any other Operative Document; (ii)
those which may be imposed or levied upon, assessed against or measured by any
Fixed Rent, Additional Rent or other sum payable under the Lease, the
Instruments, the Participation Agreement or any other Operative Document; (iii)
all sales, value added, use and similar Taxes at any time levied, assessed or
payable on account of the ownership, operation, occupancy, use, leasing, or
subleasing of the Parcel, the Property or any part thereof; (iv) all charges,
levies, fees, rents or assessments for or in respect of utilities,
communications and other services rendered or used on or about the Parcel, the
Property or any part thereof; and (v) payments in lieu of each of the
foregoing.
"Improvements" has the meaning set forth in Recital B of the
Participation Agreement.
"Increased Costs" means any additional amounts, as set forth
in a reasonably detailed certificate submitted to the Company as to the amounts
and basis for such amounts, sufficient to compensate any Purchaser for any
increased costs or reduced return on capital as a result of funding or
maintaining such Purchaser's Notes or Certificates, as the case may be,
(including, without limitation, any such increased costs that are a result of
the imposition of any reserve, special deposit, capital adequacy or similar
requirement against assets of, or deposits with or for the account of, or
credit extended by such Purchaser) as a result of (i) the introduction or
implementation after the Financing Closing Date of any applicable Law or any
change therein, or any change in the interpretation or administration thereof
by any governmental authority, central bank or comparable agency charged with
the interpretation or administration thereof, or (ii) the compliance by any
Purchaser (or its purchasing office) with any guideline or request (whether or
not having the force of Law) of any such authority, central bank or comparable
agency, which becomes effective after the date hereof, has the effect of
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increasing the cost or reducing the rate of return on capital to any Purchaser
in respect of its agreeing to make, making, funding or maintaining its Notes or
Certificates. Notwithstanding the foregoing, amounts that relate to periods
prior to six months before the Company's receipt of the certificate notifying
it of such amounts shall not constitute "Increased Costs" hereunder.
"Indemnified Party" has the meaning set forth in Section
9.15(a) of the Participation Agreement.
"Independent Engineer" means Chem Systems, Inc. or any other
construction engineering firm satisfactory to the Agent and the Majority
Purchasers.
"Independent Engineer's Certificate" has the meaning set forth
in Section 3.02(c) of the Participation Agreement.
"Initial Advance" has the meaning set forth in Section 1.03(b)
of the Participation Agreement.
"Initial Improvements" has the meaning set forth in Recital A
to the Preliminary Statement to the Participation Agreement.
"Initial License Improvements" has the meaning set forth in
Recital A to the Preliminary Statement to the Participation Agreement.
"Initial Ohio Fee Improvements" has the meaning set forth in
Recital A to the Preliminary Statement to the Participation Agreement.
"Initial Texas Fee Improvements" has the meaning set forth in
Recital A to the Preliminary Statement to the Participation Agreement.
"Instrument Guaranty" has the meaning set forth in Recital F
of the Preliminary Statement to the Participation Agreement.
"Instruments" has the meaning set forth in Article I of the
Declaration.
"Insufficiency" means, with respect to any Plan, the "unfunded
current liability" of the Plan,
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within the meaning of Section 412 (or any successor provision thereto) of the
Code.
"Insurance Requirements" has the meaning set forth in
paragraph 1(a) of the Lease.
"Intellectual Property Rights" has the meaning set forth in
Section 4.01(q)(ii) of the Participation Agreement.
"Interest Period" means at any time that the Applicable Rate
is determined by reference to the LIBO Rate,
(i) prior to the Interim Note Maturity Date in the first
instance the period commencing on and including the date of a Funding
(in respect of the Interim Notes and Certificates), including the
Financing Closing Date, and, in the case of each subsequent and
successive Interest Period applicable thereto, respectively, on the
last day of the immediately preceding Interest Period, and
(ii) thereafter the period commencing on and including the
Interim Note Maturity Date and, in the case of each subsequent and
successive Interest Period applicable thereto, on the last day of the
immediately preceding Interest Period,
and, in each case, ending on (x) with respect only to the Short-Term LIBO
Period, the Interim Note Maturity Date or the Expiration Date, as applicable, or
(y) with respect to all periods other than the Short-Term LIBO Period, the same
numerical day in the first, second, third or sixth calendar month thereafter, in
each case to the extent available, as selected by the Company by written notice
(which may, prior to the Interim Note Maturity Date be contained in a
Requisition) to the Agent given at least three (3) Business Days before the
Interest Setting Date with respect to such Interest Period; provided that:
(a) with respect to the Interim Notes, no
Interest Period for any Advance shall extend beyond the Interim Note
Maturity Date, and with respect to the Instruments, no Interest Period
shall extend beyond the Expiration Date;
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(b) if any Interest Period would otherwise end on
a day which is not a LIBO Business Day, that Interest Period shall be
extended to the next succeeding LIBO Business Day unless the result of
such extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on the
immediately preceding LIBO Business Day;
(c) for purposes of calculating interest on the
Instruments and/or Fixed Rent for any Interest Period, such
calculations shall include the first day but exclude the last day of
any such Interest Period;
(d) any Interest Period that begins on the last
LIBO Business Day of a calendar month (or on a day for which there is
no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last LIBO Business Day of the
calendar month at the end of such Interest Period; and
(e) there may not be more than an aggregate of
six (6) Interest Periods in effect at any one time.
The Company shall select each Interest Period by giving
written notice, whether by Requisition or otherwise, in accordance with Section
6.01(b) of the Participation Agreement. If the Company fails to provide the
written notice as specified above, the Company shall be deemed to have selected
the Applicable Rate by reference to the Base Rate for the Instruments or the
applicable Advance(s), as the case may be.
"Interest Setting Date" means, (a) with respect to any
Interest Period for which the Applicable Rate is determined by reference to the
LIBO Rate, the date which is three LIBO Business Days before the first day of
such Interest Period or (b) with respect to any period for which the Applicable
Rate is determined by reference to the Base Rate, the date specified by the
Company, in the written notice delivered by the Company pursuant to Section
6.01(a) of the Participation Agreement, as the first day that such Applicable
Rate is to apply.
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"Interim Note Commitment" of any Purchaser means the
commitment of such Person, if any, to make Advances pursuant to the Interim
Notes up to the aggregate principal amount set forth below the name of such
Person on Schedule I to the Participation Agreement under the heading "Interim
Note Commitment", as the same may be adjusted from time to time pursuant to any
Assignment(s) and Acceptance(s) executed by such Purchaser or reduced pursuant
to the terms of the Participation Agreement.
"Interim Note Maturity Date" means the earlier of (i) the
Final Completion Date and (ii) March 31, 1997.
"Interim Note Maturity Formula" means that, on the Interim
Note Maturity Date, (i) A-Notes shall be issued in an aggregate principal
amount equal to (x) the aggregate outstanding principal and stated amount of
the Interim Notes and Series 2 Certificates times (y) .84; and (ii) B-Notes
shall be issued in an aggregate outstanding principal amount equal to (x) the
aggregate principal and stated amount of the Interim Notes and Series 2
Certificates minus (y) the aggregate outstanding principal and stated amounts
of the A-Notes (to be issued pursuant to clause (i) above) and the Series 2
Certificates.
"Interim Notes" has the meaning set forth in Article I of the
Declaration.
"Interim Trust Estate" has the meaning set forth in Article I
of the Declaration.
"Investment" has the meaning set forth in Section 1.01(b) of
the Participation Agreement.
"ISI" means Insurance Solvency International.
"Law" means any law (including, without limitation, any zoning
law or ordinance, ERISA, any Environmental Law, or Legal Requirements), treaty,
directive, statute, rule, regulation, ordinance, order, directive, code,
interpretation, judgment, decree, injunction, writ, determination, award,
Permit, license, authorization, direction, requirement or decision of or
agreement with or by any government or governmental department, commission,
board, court, authority, agency,
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official or officer having jurisdiction of the matter in question.
"Lease" has the meaning set forth in Recital B to the
Preliminary Statement to the Participation Agreement.
"Legal Requirements" has the meaning set forth in paragraph
6(b) of the Lease.
"Lessee" means the Company, as Lessee under the Lease.
"Lessor" means the Trustee, as Lessor under the Lease.
"Lessor Group" has the meaning set forth in paragraph 2(b) of
the Lease.
"Lessor Termination Notice" has the meaning set forth in
paragraph 12(b)(ii) of the Lease.
"LIBO Business Day" means a day of the year on which dealings
are carried on in the London interbank market and banks are open for business
in London and not required or authorized to close in New York City.
"LIBO Rate" means, for each Interest Period, an interest rate
per annum equal to the rate of interest per annum at which deposits in United
States dollars (approximately equal in amount to the Notes or the applicable
portion thereof) are offered to leading banks in the London interbank market at
11:00 a.m. (London time) on the Interest Setting Date for a period equal to
such Interest Period determined on the basis of the provisions set forth below:
(A) On the Interest Setting Date, CNAI will determine the
interest rate for deposits in United States dollars for a period equal to that
of the Interest Period to which such Interest Setting Date relates which
appears on the Telerate Page 3750 as of 11:00 a.m. (London time) on such date
or if such page on such service ceases to display such information, such other
page as may replace it on that service for the purpose of display of such
information (the "Telerate Rate"). If such rate does not appear on the
Telerate, then the rate will be determined in accordance with (B) below.
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(B) If CNAI is unable to determine the Telerate Rate,
then on the Interest Setting Date, CNAI will determine the arithmetic mean
(rounded if necessary to the nearest one-hundredth percent (1/100%)) of the
interest rate for a period equal to that of the Interest Period to which such
Interest Setting Date relates quoted on Reuters Screen page "LIBO" or (1) if
such page on such service ceases to display such information, such other page
as may replace it on that service for the purpose of displaying such
information or (2) if that service ceases to display such information, such
page as displays such information on such service (or, if more than one, that
one approved by the Agent) as may replace the Reuters Screen, as at or about
11:00 a.m. (London time) on that Interest Setting Date (the rate quoted as
aforesaid being the "LIBOR Screen Rate"). If CNAI is to make a determination
pursuant to this paragraph and one or more of the LIBO Screen Rates required
for such determination shall be unavailable, the determination shall be made on
the basis of those rates which are available.
"LIBO Rate Funding" means a Funding for which the Applicable
Rate is determined pursuant to the LIBO Rate.
"LIBO Rate Reserve Percentage" for any Interest Period for all
LIBO Rate Fundings means the reserve percentage applicable two Business Days
before the first day of such Interest Period under regulations issued from time
to time by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve requirement)
for a member bank of the Federal Reserve System in New York City with respect
to liabilities or assets consisting of or including Eurocurrency Liabilities as
defined in Regulation D (or with respect to any other category of liabilities
that includes deposits by reference to which the interest rate on LIBO Rate
Funding is determined) having a term equal to such Interest Period.
"License Assignment" means the assignment of Synpro's license
interest in the License Parcel to the Trustee.
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<PAGE> 186
"License Parcel" has the meaning set forth in Recital A to the
Preliminary Statement to the Participation Agreement.
"Lien" means any deed to secure debt, mortgage, deed of trust,
pledge, security interest, security title, encumbrance, lien, judgment lien,
writ of execution, attachment or charge of any kind, including without
limitation any agreement to give any of the foregoing, any conditional sale or
other title retention agreement, any lease in the nature thereof, and the
filing of or agreement to give, any security interest or financing statements
under the UCC or under any applicable personal property security act or any
comparable Law of any jurisdiction.
"Liquidation Event" has the meaning set forth in Article I of
the Declaration.
"Losses" has the meaning set forth in Section 9.15(a) of the
Participation Agreement.
"Majority Holders" has the meaning set forth in Article I of
the Declaration.
"Majority Purchasers" means, at any time, the Purchasers
holding at least 66-2/3% of the aggregate unpaid principal of the Notes and the
aggregate unpaid stated amount of the Certificates.
"Margin Stock" shall have the meaning assigned to that term in
Regulation G and Regulation U.
"Material Adverse Change" means any material adverse change in
the business, condition (financial or otherwise), operations, performance or
properties of the Company or the Company and its Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on
any of: (a) the Company and its Subsidiaries, taken as a whole, or the
Company's ability to perform its obligations under the Operative Documents; (b)
the value, condition, marketability or operation of the Property or the
Trustee's ownership thereof or (c) the validity or enforceability of any of the
Operative Documents.
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<PAGE> 187
"Maturity Date" has the meaning set forth in Article I of the
Declaration.
"Maximum Budget Amount" has the meaning set forth in paragraph
5(a) of the Agency Agreement.
"Maximum Rate" has the meaning set forth in Section 9.18 of
the Participation Agreement.
"Moody's" means Moody's Investors Service, Inc. and any
successor thereto which is a nationally recognized credit rating organization.
"Mortgage" has the meaning set forth in paragraph 20(d) of the
Lease.
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001(a)(3) (or any successor provision thereto) of ERISA, to which
the Company or any ERISA Affiliate is making or accruing an obligation to make
contributions, or has within any of the preceding five plan years made or
accrued an obligation to make contributions.
"Multiple Employer Plan" means a single employer plan, as
defined in Section 4001(a)(15) of ERISA, that (a) is maintained for employees
of the Company or any of its ERISA Affiliates and at least one Person other
than the Company and its ERISA Affiliates or (b) was so maintained and in
respect of which the Company or any of its ERISA Affiliates could have
liability under Section 4064 or 4069 of ERISA in the event such plan has been
or were to be terminated.
"Net Proceeds" has the meaning set forth in paragraph 12(a) of
the Lease.
"1995 Ferro Plant Trust" has the meaning set forth in Section
2.01 of the Declaration.
"Notes" has the meaning set forth in Article I of the
Declaration.
"Note Commitment" of any Purchaser means such Purchaser's
Interim Note Commitment plus such Purchaser's Series 1 Note Commitment.
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<PAGE> 188
"Noteholder" has the meaning set forth in Article I of the
Declaration.
"Note Purchaser" means any Purchaser who has a Note
Commitment.
"NPL" has the meaning set forth in Section 4.01(r)(ii) of the
Participation Agreement.
"Offer Purchase Price" has the meaning set forth in paragraph
15(b) of the Lease.
"Offer to Purchase" has the meaning set forth in paragraph 14
of the Lease.
"Officer" of any Person means the president, any vice
president or any other duly authorized and responsible officer of such Person.
"Officer's Certificate" or "Officers' Certificate" of a Person
means a certificate signed by an Officer or Officers of such Person.
"Ohio Deed" means the warranty deed from Synpro to the Trustee
conveying the Ohio Fee Parcel.
"Ohio Easement Parcel" has the meaning set forth in Recital A
of the Preliminary Statement to the Participation Agreement.
"Ohio Fee Parcels" has the meaning set forth in Recital A of
the Preliminary Statement to the Participation Agreement.
"Ohio Parcels" has the meaning set forth in Recital A of the
Preliminary Statement to the Participation Agreement.
"Ohio Plant" has the meaning set forth in Recital A of the
Preliminary Statement to the Participation Agreement.
"Ohio Title Policy" has the meaning set forth in Section
2.01(g) of the Participation Agreement.
"Operative Documents" means the Participation Agreement, the
Deeds, the Agency Agreement, the Lease, the Declaration, the Instruments, the
Bill of Sale, the
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<PAGE> 189
Instrument Guaranty and the Services Agreement, the Release Agreement, the
Easement and the Second Easement.
"Original Capitalized Cost" has the meaning set forth in item
I.B of Schedule B to the Lease.
"Other Charges" has the meaning set forth in Section 9.18 of
the Participation Agreement.
"Other Taxes" has the meaning set forth in Section 6.03(c) of
the Participation Agreement.
"Outstanding" with respect to any Instrument, has the meaning
set forth in Article I of the Declaration.
"Parcels" means, collectively, the Fee Parcels, the Easement
Parcels and the License Parcel.
"Partial Lease Termination" has the meaning set forth in
Section 14A of the Lease.
"Partial Lease Termination Closing Date" has the meaning set
forth in Section 14A of the Lease.
"Participation Agreement" means the Participation Agreement
dated as of October 31, 1995 by and among the Company, the Trustee, Citibank,
as Agent and the Purchasers, to which this Appendix is appended, as the same
may be amended, modified or supplemented from time to time.
"Payment Date" means:
(a) With respect to the Interim Notes, (i) the Interim Note
Maturity Date, (ii) each Conversion Date and (iii) the last day of
each three month period after the Financing Closing Date through the
Interim Note Maturity Date;
(b) With respect to the Series 1 A-Notes and the Series 1
B-Notes, (i) the Expiration Date, (ii) each Conversion Date and (iii)
the last day of each three month period after the Financing Closing
Date through the Expiration Date;
(c) With respect to the Series 2 A-Notes and the Series 2
B-Notes, (i) the Expiration Date, (ii)
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each Conversion Date and (iii) the last day of each three month period
after the Interim Note Maturity Date through the Expiration Date;
(d) With respect to the Certificates, (i) the Interim Note
Maturity Date, and (ii) during the Primary Term, each day that is a
Payment Date for the A-Notes and the B-Notes under clause (b) above;
(e) With respect to any Note, the maturity date thereof
(whether by acceleration or otherwise); and
(f) With respect to any Instrument, the date of any
prepayment.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Pension Plan" means any Employee Benefit Plan which is
subject to the provisions of Title IV of ERISA or Section 412 of the Code and
which the Company or any ERISA Affiliate (a) maintains, sponsors, contributes
to, is obligated under, operates or administers for employees of the Company or
any ERISA Affiliate or (b) has, at any time within the preceding 6 years,
maintained, sponsored, contributed to, been obligated under, operated or
administered for the employees of the Company or any of their current or former
ERISA Affiliates.
"Pennsylvania Assets" has the meaning set forth in Section
1.06 of the Participation Agreement.
"Percentage" means, with respect to any Note Purchaser, the
percentage that its Note Commitment bears to the aggregate Total Note
Commitment, as such Percentage may be adjusted from time to time pursuant to
any Assignment(s) and Acceptance(s) executed by any such Purchaser.
"Permit" means any approval, certificate of occupancy,
consent, waiver, exemption, variance, franchise, order, permit, authorization,
right or license of or from any Federal, state or local government or agency or
subdivision thereof.
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<PAGE> 191
"Permitted Encumbrances" means, with respect to the Property,
but only to the extent applicable thereto, any of the following: (i) rights
reserved to or vested in any municipality or public authority, by the terms of
any franchise, grant, license, Permit or provision of Law, to purchase,
condemn, appropriate or recapture, or designate a purchaser of, the Property;
(ii) any liens thereon for Impositions and any liens of mechanics, materialmen
and laborers for work or services performed or materials furnished in
connection with the Property, in each instance, which are not due and payable,
or which are being contested in good faith by the Lessee pursuant to paragraphs
11 and 18 of the Lease; (iii) rights reserved to or vested in any municipality
or public authority to control or regulate the use of the Property or to use
the Property in any manner; (iv) easements, rights-of-way, servitudes,
restrictions and other minor defects, encumbrances and irregularities in title
to the Property which do not, individually or in the aggregate, materially and
adversely affect the value, condition, marketability or operation of the
Property or the Trustee's ownership thereof; and (v) the Lease, the Bill of
Sale, the Deeds and the Declaration; and (vi) Liens existing on the Financing
Closing Date and set forth on a Title Policy.
"Permitted Investments" has the meaning set forth in Article I
of the Declaration.
"Permitted Liens" means any of the following:
(i) any mortgage, lien, encumbrance or pledge
existing on October 31, 1995;
(ii) any mortgage, lien, encumbrance or pledge given
by any Subsidiary to secure indebtedness owing to the Company or to a wholly
owned Subsidiary of the Company;
(iii) any purchase money mortgage or other lien on
property (other than the Property), real or personal, acquired or constructed
by the Company or any Subsidiary to secure the purchase price of such property
(or to secure indebtedness incurred for the purpose of financing the
acquisition or construction of any such property), or any mortgage or other
lien existing on any such property at the time of acquisition, whether or not
assumed, or any mortgage or other lien existing on any
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<PAGE> 192
property of any corporation at the time it becomes a Subsidiary, or any
conditional sales agreement or other title retention agreement with respect to
any property hereafter acquired; provided, however, that the aggregate
principal amount of the indebtedness secured by all such mortgages and other
liens on a particular parcel of property shall not exceed the cost of such
property, including the improvements thereon; and provided, further, that any
such mortgage or lien does not spread to other property thereafter acquired or
constructed other than additions to such property;
(iv) refundings or extensions of any mortgage,
pledge or other lien or encumbrance permitted by this definition of Permitted
Liens for amounts not exceeding the principal amount of the indebtedness so
refunded or extended at the time of the refunding or extension thereof, and
covering only the same property thertofore securing the same;
(v) any deposit, lien or pledge to enable the
Company or any Subsidiary to exercise any privilege or license, or to secure
payments of workers' compensation, unemployment insurance, old age pensions or
other social security, or to secure the performance of bids, tenders, contracts
or leases to which any such Person is a party, or to secure public or statutory
obligations of any such Person or to secure surety, stay or appeal bonds to
which any such Person is a party; or any other similar deposit or pledge made
in the ordinary course of business;
(vi) any mechanics', workers', repairmen's,
materialmen's or carriers' lien; or any other similar lien arising in the
ordinary course of business; or any deposit or pledge to obtain the release of
any such lien;
(vii) any lien arising out of a judgment or award
against the Company or any subsidiary with respect to which such Person shall
in good faith be prosecuting an appeal or proceedings for review; or any lien
incurred by any such Person for the purpose of obtaining a stay or discharge in
the course of any legal proceeding to which such Person is a party;
(viii) any lien for taxes contested or not yet
subject to penalties for non-payment, or any
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<PAGE> 193
minor survey exception, or any minor encumbrance, easement, or reservation of,
or right of another for, any right of way, sewer, electric line, telegraph and
telephone line and other similar purposes, or any zoning or other restriction as
to the use of real properties, which encumbrances, easements, reservations,
rights and restrictions do not in the aggregate materially detract from the
value of said properties or materially impair their use in the operation of the
business of the Person owning the same;
(ix) any mortgage, security interest or lien that
secures
(1) the obligations of the Company to the
Purchasers under this Agreement and the other Operative Documents, or
(2) other Debt of the Company or any such
Subsidiary, provided that in each such case the mortgage, security interest or
other lien shall secure the Company's Debt to the banks under the Revolving
Credit Facility and such other Debt ratably in the proportion of their
respective amounts and the Company shall give the Agent not less than seven (7)
days' prior written notice and shall deliver to the Agent on the execution date
thereof an executed counterpart of the mortgage, security agreement or other
lien instrument and the written opinion of the Company's counsel as to the
Company's compliance with this clause (ix);
(x) any lien, security interest or other charge,
encumbrance, or other type of preferential arrangement that (A) secures
obligations of the Company or any of its Subsidiaries organized in the United
States to their respective former, present or future directors or employees in
their capacities as such or (B) secures obligations of the Company or any of
its Subsidiaries to pay any bank fees, commissions or other charges in respect
of, or reimburse any bank for any draft or other item paid or accepted by that
bank pursuant to or otherwise in respect of, any letter of credit issued or
confirmed by that bank to secure all or any part of the obligations described
in the next preceding clause (A); or
(xi) any mortgage, lien encumbrance or pledge (other
than any permitted by any other clause of
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<PAGE> 194
this definition of Permitted Liens) securing Debt that does not exceed in the
aggregate $2,500,000 at any one time outstanding.
"Permitted Remediation" has the meaning set forth in paragraph
13(b) of the Lease.
"Person" means any individual, corporation, limited liability
partnership, limited liability company, partnership, joint venture,
association, joint stock company, trust, unincorporated organization or
government.
"Phase II" means the Synthetic Products Company Supplemental
Environmental Site Assessment Report prepared by the Environmental Consultant
and dated September 19, 1995.
"Plan" means a Single Employer Plan or a Multiple Employer
Plan.
"Plants" has the meaning set forth in Recital A of the
Preliminary Statement to the Participation Agreement.
"Prescribed Forms" means such duly executed form(s) or
statement(s), and in such number of copies, which may, from time to time, be
prescribed by Law and which, pursuant to applicable provisions of (a) an income
tax treaty between the United States and the country of residence of the
Purchaser providing the form(s) or statement(s), (b) the Code, or (c) any
applicable rule or regulation under the Code, permit the Company and/or the
Trustee to make payments under the Operative Documents for the account of the
Trustee and/or such Purchaser free of deduction or withholding of income or
similar taxes.
"Primary Term" has the meaning set forth in paragraph 3(a) of
the Lease.
"Proceeding" has the meaning set forth in Article I of the
Declaration.
"Proceeds" has the meaning set forth in paragraph 12(a) of the
Lease.
"Proceeds Trustee" has the meaning set forth in paragraph
12(a) of the Lease.
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<PAGE> 195
"Property" has the meaning set forth in Recital B of the
Preliminary Statement to the Participation Agreement.
"Property Charges" means all Impositions other than Excluded
Charges and any income, gross receipts, franchise or similar Taxes.
"Purchase Agreement" has the meaning set forth in Recital B of
the Preliminary Statement to the Participation Agreement.
"Purchasers" has the meaning set forth in the first paragraph
of the Participation Agreement.
"Qualified Sale" has the meaning set forth in paragraph 27(c)
of the Lease.
"Record" has the meaning set forth in Section 6.02(d) of the
Participation Agreement.
"Regulation A" means Regulation A of the Federal Reserve
Board, as in effect from time to time.
"Regulation D" means Regulation D of the Federal Reserve
Board, as in effect from time to time.
"Regulation G" means Regulation G of the Federal Reserve
Board, as in effect from time to time.
"Regulation T" means Regulation T of the Federal Reserve
Board, as in effect from time to time.
"Regulation U" means Regulation U of the Federal Reserve
Board, as in effect from time to time.
"Regulation X" means Regulation X of the Federal Reserve
Board, as in effect from time to time.
"Reinvestment Account" has the meaning set forth in Article I
of the Declaration.
"Release Agreement" means the Release Agreement among the
Sellers, the Trustee, the Agent and the Purchasers dated as of October 31,
1995.
"Requisition" has the meaning set forth in Section 1.04(b) of
the Participation Agreement.
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<PAGE> 196
"Reserve Costs" means, so long as a Note Purchaser shall be
required under regulations of the Federal Reserve Board to maintain reserves
with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities (as defined in Regulation D), additional amounts equal to the
product of (l) the aggregate principal amount of the Notes held by it,
multiplied by (2) an interest rate per annum equal, at all times during the
period in which such reserves were assessed, to the remainder obtained by
subtracting (a) the LIBO Rate for such Interest Period from (b) the rate
obtained by dividing such LIBO Rate for such Interest Period by a percentage
equal to 100% minus the LIBO Rate Reserve Percentage of such Holder, which
amounts shall be payable on each Payment Date.
"Residual Guaranty" has the meaning set forth in Section
7.05(a) of the Participation Agreement.
"Return Conditions" has the meaning set forth in Section
7.05(b) of the Participation Agreement.
"Revolving Credit Facility" means the $150,000,000 Credit
Agreement dated as of August 22, 1990 among the Company, the banks named
therein and National City Bank as agent, as amended from time to time.
"S&P" means Standard & Poor's Ratings Group, a division of
McGraw-Hill, Inc. and any successor thereto which is a nationally recognized
credit rating organization.
"Sales Proceeds" has the meaning set forth in Article I of the
Declaration.
"Second Easement" means the easement agreement with respect to
the Texas Easement Parcels.
"Secured Obligations" means:
(1) Payment when due of all obligations of the
Company under the Instrument Guaranty which accrue to the benefit
(directly or indirectly) of (a) the Holders of the Applicable
Percentage of the Interim Notes, (b) the Holders of the B-Notes, and
(c) the Holders of the Certificates, and the performance and discharge
of each and every obligation of the Company set forth in the
33
<PAGE> 197
Instrument Guaranty which accrue to the benefit (directly or
indirectly) of (i) the Holders of the Applicable Percentage of the
Interim Notes, (ii) the Holders of the B-Notes, and (iii) the Holders
of the Certificates;
(2) Payment of all Fixed Rent and Additional
Rent, with interest, if any, thereon, according to the terms of the
Lease, and any and all extensions, amendments, modifications,
substitutions or renewals thereof, and payment of the Unwind Fee, if
any, pursuant to the Participation Agreement, which accrue to the
benefit (directly or indirectly) of (a) the Holders of the Applicable
Percentage of the Interim Notes, (b) the Holders of the B-Notes, and
(c) the Holders of the Certificates, and the performance and discharge
of each and every obligation of the Company set forth in the Lease
which accrue to the benefit (directly or indirectly) of (i) the
Holders of the Applicable Percentage of the Interim Notes, (ii) the
Holders of the B-Notes, and (iii) the Holders of the Certificates.
(3) Payment of all other sums, with interest
thereon, owing by the Company and becoming due or payable under the
provisions of any of the Operative Documents which accrue to the
benefit (directly or indirectly) of (a) the Holders of the Applicable
Percentage of the Interim Notes, (b) the Holders of the B-Notes, and
(c) the Holders of the Certificates;
(4) Due, prompt and complete observance and
performance of each and every obligation, covenant and agreement of
the Company contained in any of the Operative Documents which accrue
to the benefit (directly or indirectly) of (a) the Holders of the
Applicable Percentage of the Interim Notes, (b) the Holders of the
B-Notes, and (c) the Holders of the Certificates.
"Sellers" means Synpro, Cookson America, Inc. and Cookson
Group, plc.
"Series 1 Certificate Commitment" means that portion of the
financing of the acquisition of the Parcels and the Initial Improvements to be
funded by the
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<PAGE> 198
issuance of Series 1 Certificates on the Financing Closing Date.
"Series 2 Certificate Commitment" means that portion of the
financing of the Financed Improvements to be funded by the issuance of Series 2
Certificates.
"Series 1 Certificates" has the meaning set forth in Article I
of the Declaration.
"Series 2 Certificates" has the meaning set forth in Article I
of the Declaration.
"Series 1 A-Notes" has the meaning set forth in Article I of
the Declaration.
"Series 2 A-Notes" has the meaning set forth in Article I of
the Declaration.
"Series 1 B-Notes" has the meaning set forth in Article I of
the Declaration.
"Series 2 B-Notes" has the meaning set forth in Article I of
the Declaration.
"Series 1 Note Commitment" means that portion of the financing
of the acquisition of the Parcels and the Initial Improvements to be funded by
the issuance of Series 1 Notes.
"Series 1 Notes" has the meaning set forth in Article I of the
Declaration.
"Series 2 Note Commitment" means that portion of the financing
of the acquisition of the Parcels and the Initial Improvements to be funded by
the issuance of Series 2 Notes.
"Series 2 Notes" has the meaning set forth in Article I of the
Declaration.
"Series A Maximum Amount" has the meaning set forth in Section
3.02 of the Declaration.
"Series A Portion" has the meaning set forth in item I.B of
Schedule B to the Lease.
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<PAGE> 199
"Series A Trust Estate" has the meaning set forth in Article I
of the Declaration.
"Series B Maximum Amount" has the meaning set forth in Section
3.02 of the Declaration.
"Series B Portion" has the meaning set forth in item I.B of
Schedule B to the Lease.
"Series B Trust Estate" has the meaning set forth in Article I
of the Declaration.
"Series C Maximum Amount" has the meaning set forth in Section
3.03(a)(i) of the Declaration.
"Series C Trust Estate" has the meaning set forth in Article I
of the Declaration.
"Series C Portion" has the meaning set forth in item I.B of
Schedule B to the Lease.
"Services Agreement" has the meaning set forth in Recital G of
the Preliminary Statement of the Participation Agreement.
"Short-Term LIBO Period" means any period ending on the
Interim Note Maturity Date or the Expiration Date and during which an
Applicable Rate determined by reference to the LIBO Rate for a minimum Interest
Period of at least one month is not available.
"Special Counsel" has the meaning set forth in Article I of
the Declaration.
"Special Environmental Counsel" means Chadbourne & Parke LLP
or such other counsel as shall be reasonably satisfactory to the Agent and the
Purchasers.
"SSBTC" has the meaning set forth in the first paragraph of
the Participation Agreement.
"Stated Rate" has the meaning set forth in Section 9.18 of the
Participation Agreement.
"Substitute Rate" has the meaning set forth in Section 6.01 of
the Participation Agreement.
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<PAGE> 200
"Subsidiary" means any corporation of which at least a
majority of the Voting Stock is at the time owned directly or indirectly by the
Company or by the Company and its other Subsidiaries.
"Synpro" means Synthetic Products Company, a Delaware
corporation.
"Tax" or "Taxes" means, without limitation, any fee (including
license, filing, recording, transfer and registration fees), foreign, Federal,
state or local tax (including any income, gross receipts, withholding,
franchise, excise, sales, use, value added, real, personal, tangible or
intangible property tax or any tax similar to any of the foregoing taxes),
interest equalization, recording, transfer or stamp tax, assessment (including
any maintenance charge, owner association dues or charges), levy, impost, duty,
charge or withholding of any kind or nature whatsoever, imposed or assessed by
any foreign, Federal, state or local government or agency, or governmental
authority, together with any addition to tax, penalty, fine or interest
thereon.
"Term" has the meaning set forth in paragraph 3 of the Lease.
"Termination Notice" has the meaning set forth in paragraph
12(b)(i) of the Lease.
"Termination Value" has the meaning set forth in Schedule C to
the Lease.
"Texas Deed" means the warranty deed from Synpro to the
Trustee conveying the Texas Parcel.
"Texas Easement Improvements" has the meaning set forth in
Recital A of the Preliminary Statement to the Participation Agreement.
"Texas Easement Parcels" has the meaning set forth in Recital
A of the Preliminary Statement to the Participation Agreement.
"Texas Leasehold Parcel" has the meaning set forth in Recital
A of the Preliminary Statement to the Participation Agreement.
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<PAGE> 201
"Texas Parcel" has the meaning set forth in Recital A of the
Preliminary Statement to the Participation Agreement.
"Texas Plant" has the meaning set forth in Recital A of the
Preliminary Statement to the Participation Agreement.
"Texas Title Policy" has the meaning set forth in Section
2.01(g) of the Participation Agreement.
"Title Company" means a title company acceptable to the Agent.
"Title Policy" has the meaning set forth in Section 2.01(g) of
the Participation Agreement.
"Title IV Plan" means any employee pension benefit plan within
the meaning of Section 3(2) of ERISA, which is covered by Title IV of ERISA.
"Total Commitment" means the aggregate Note Commitments and
Certificate Commitments of all of the Purchasers, not to exceed $48,500,000.
"Total Note Commitment" means the aggregate Note Commitments
of all of the Note Purchasers, not to exceed $47,045,000.
"Transaction Documents" has the meaning set forth in Section
9.18 of the Participation Agreement.
"Transactions" has the meaning set forth in Section 9.18 of
the Participation Agreement.
"Transition Obligation" means the obligation in the amount of
$38 million as a non-recurring charge recognized by the Company as of March 31,
1993 as a result of the Company's adoption of an accounting change pursuant to
Financial Accounting Standards Board Statement No. 106, Employer's Accounting
for Post-Retirement Benefits Other Than Pensions.
"Trust Estate" has the meaning set forth in Article I of the
Declaration.
"Trustee" has the meaning set forth in Article I of the
Declaration.
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<PAGE> 202
"Trustee's Counsel" has the meaning set forth in Section
2.01(c)(v) of the Participation Agreement or such other counsel as shall be
satisfactory to the Trustee.
"UCC" means the Uniform Commercial Code as in effect from time
to time in any jurisdiction whose Law governs the document in which such term
is used and/or rights thereunder.
"Unwind Event" has the meaning set forth in Section 7.03 of
the Participation Agreement.
"Unwind Fee" has the meaning set forth in Section 7.04 of the
Participation Agreement.
"Upfront Fee" has the meaning set forth in Section 9.14(c) of
the Participation Agreement.
"Voting Stock" means outstanding shares of stock having voting
power for the election of directors, whether at all times or only so long as no
senior class of stock has such voting power because of default in dividends or
some other default.
"Withdrawal Liability" has the meaning set forth under Part I
of Subtitle E of Title IV of ERISA.
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<PAGE> 203
FERRO CORPORATION
Amended and Restated
Executive Employment Agreement
I. Recitals
(A) This Amended and Restated Employment Agreement ("Agreement") is
between Ferro Corporation (the "Company") and ______________________ (the
"Executive") and is effective as of ________________.
(B) The address of the Company is 1000 Lakeside Avenue, Cleveland,
Ohio 44114. The address of the Executive is
_____________________________________.
(C) The Executive is currently employed by the Company in the
capacity of ______________________________________________ and the Executive is
one of the key executives of the Company.
(D) In consideration of the mutual promises contained herein and
other good and valuable consideration, the Executive and the Company have
entered into this Agreement.
II. Definitions
As used in this Agreement, the following terms shall have the meanings
set forth below:
"Agreement" means this Agreement.
"Bank" has the meaning set forth in Section VI.
"Base Salary" has the meaning set forth in Section III.D.(1).
"Benefit Plans" has the meaning set forth in Section
III.E.(2).
"Board" means the Board of Directors of the Company.
<PAGE> 204
"Cause" has the meaning set forth in Section IV.B(1).
"change in control of the Company" has the meaning set forth
in Section VI.
"Company" means Ferro Corporation, as modified by Section
VIII.A.
"Contract Term" has the meaning set forth in Section III.A.
"Date of Termination" has the meaning set forth in Section
IV.A.(2).
"Disabled" has the meaning set forth in Section IV.C.(1).
"Excise Tax" has the meaning set forth in Section V.A.(1).
"Escrow Account" has the meaning set forth in Section VI.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Executive" means the executive named in this Agreement.
"Firm" has the meaning set forth in Section V.A.(2) and refers
to certain Excise Tax matters.
"Good Reason" has the meaning set forth in Section IV.E.
"Gross-Up Payment" has the meaning set forth in Section
V.A.(1) and refers to certain Excise Tax matters.
"Incentive Compensation Plan" has the meaning set forth in
Section III.E.(1).
"Normal Retirement Age" means the normal retirement age
provided for in the Company's Pension Plan.
"Notice of Termination" has the meaning set forth in Section
IV.A.(1).
"Payment" has the meaning set forth in Section V.A.(1) and
refers to certain Excise Tax matters.
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<PAGE> 205
"Pension Plan" means the Company's salaried employees'
retirement plan, or any successor plan thereto.
"Retirement" has the meaning set forth in Section IV.D.(1).
"Total Disability" means total disability as defined in the
Company's Pension Plan.
"Underpayment" has the meaning set forth in Section V.A.(2)
and refers to certain Excise Tax matters.
III. Provisions Applicable to the Contract Term
A. Contract Term
Except as otherwise provided in this Agreement, the Company and the
Executive agree that the Executive will remain in the employ of the Company for
a primary term ending on ________________ and that this Agreement will
automatically continue after such primary term unless and until either party
shall have given the other at least ____ months prior written Notice of
Termination or, if earlier, until expiration of the Contract Term. The
"Contract Term" shall refer to the period commencing on the date hereof and
ending on September 30, 1993 (or any continuation thereof pursuant to the
preceding sentence); provided, however, that in no event shall the Contract
Term extend beyond the earliest to occur of (A) the Executive's attaining
Normal Retirement Age, (B) the date of death of the Executive, and (C) the Date
of Termination resulting from the termination of this Agreement for Disability
(as defined in Section IV.C.(1) hereof); and provided, further, however, that,
if a change in control of the Company (as defined in Section VI hereof) occurs
during the Contract Term, then, subject to the preceding proviso in this
sentence,
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<PAGE> 206
the Contract Term shall not expire prior to the second anniversary of the date
of such change in control of the Company.
Nothing contained in this Agreement shall prevent the Company at any
time from terminating the Executive's right and obligation to perform service
for the Company or prevent the Company from removing the Executive from any
position which the Executive holds in the Company, subject to the obligation of
the Company to make payments and provide benefits if and to the extent required
under this Agreement, which payments and benefits shall be full and complete
liquidated damages for any such action taken by the Company. The Executive
specifically acknowledges that, except for this Agreement, his employment by
the Company is employment-at-will, subject to termination by the Executive, or
by the Company, at any time with or without cause. The Executive acknowledges
that such employment-at-will status cannot be modified except in a specific
writing which has been authorized or ratified by the Board.
B. Nature of Duties
(1) The Executive agrees to serve the Company during the
Contract Term. The Executive agrees to devote his full business time during
normal business hours to the business and affairs of the Company (except as
otherwise provided herein) and to use his best efforts to promote the interests
of the Company and to perform faithfully and efficiently the responsibilities
assigned to him in accordance with the terms of this Agreement to the extent
necessary to discharge such responsibilities, except for (i) service on
corporate, civic or charitable boards or committees not significantly
interfering with the performance
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<PAGE> 207
of such responsibilities, and (ii) periods of vacation and sick leave or other
legitimate absences under Company benefit plans and established practices.
(2) The Company agrees that it will not, without the
Executive's express written consent, (a) assign to the Executive duties
inconsistent with his current positions, duties, responsibilities and status
with the Company, or (b) change his titles as currently in effect, or (c)
remove him from, or fail to re-elect him to, any of such positions, except in
connection with the termination of his employment for Cause, Disability or
Retirement or as a result of his death or voluntary termination. Except as so
limited, the powers and duties of the Executive are to be more specifically
determined and set by the Company from time to time.
C. Place of Employment
The Executive's initial place of employment is at the Company's
principal executive offices in Cleveland, Ohio. The Company agrees that it
will not, without the Executive's express written consent, require the
Executive to be based anywhere other than Cuyahoga County, Ohio, or a county
contiguous thereto, except for required travel on the Company's business to an
extent substantially consistent with present business travel obligations.
D. Compensation
(1) Base Salary. During the Contract Term, the Executive
shall receive an annual base salary (the "Base Salary"), payable in
installments, substantially in accordance with current practice, at an annual
rate at least equal to the aggregate annual Base Salary payable to the
Executive as of the date hereof. The Base Salary may be increased (but may not
be decreased) at any time and from time to time by action of the
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Board, and, if so increased, such increased Base Salary shall thereafter be the
Base Salary for the purposes of this Agreement.
(2) Incentive Compensation. During the Contract Term, the
Company agrees to pay annual incentive compensation to the Executive in an
amount at least equal to the annual incentive compensation that would have been
payable to the Executive for such year in question under the Company's
Incentive Compensation Plan as in effect for such applicable year, and giving
effect to the highest position in the Company held by the Executive during the
Contract Term.
E. Benefit Plans
(1) During the Contract Term, the Company agrees to continue
the Company's Annual Incentive Compensation Plan as the same may be modified
from time to time but substantially in the form presently in effect (the
"Incentive Compensation Plan"). The Company agrees to continue the Executive
as a participant in the Incentive Compensation Plan on a basis at least
equivalent to the present basis of his participation for the calendar year in
which the effective date of this Agreement occurs.
(2) During the Contract Term, the Company agrees to continue
in effect any perquisite, benefit or compensation plan (in addition to the
Incentive Compensation Plan) including its pension plan, excess benefits plans,
supplemental retirement program for short service executives, dental plan, life
insurance plan, health and accident plan or disability plan in which the
Executive is currently participating (but excluding the Company's stock option
plan and performance share plan, participation in which shall be at the sole
discretion of the Company's Board of Directors, or any applicable committee
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thereof) (such plans are collectively referred to with the Incentive
Compensation Plan as the "Benefit Plans"), or to maintain plans providing
substantially similar benefits; provided, however, that the Company may make
modifications in such Benefit Plans so long as such modifications (a) are
generally applicable to all salaried employees of the Company and (b) do not
discriminate against highly-paid employees of the Company.
(3) During the Contract Term, except as permitted in the
proviso contained in paragraph (2) above, the Company agrees not to take any
action that would adversely affect the Executive's participation in, or
materially reduce the benefits under, any of the Benefit Plans.
(4) Benefits herein provided are in lieu of any severance
payment benefit otherwise provided under any other agreement, policy, or
practice provided by the Company and, in the event of an effective Notice of
Termination hereunder, are also in lieu of any obligations of the Company in
favor of the Executive with respect to vacation or vacation pay. The Executive
waives all rights to such payments under any such agreement, policy or practice
provided, however, that this waiver shall not extend to entitlements provided
under any disability insurance plan, retirement plan, excess benefit plan, or
applicable supplemental pension plan or agreement for short service executives
and any related Benefit Plans (including health and insurance plans), other
than those relating to severance or vacation.
F. Conflicting Interests
Prior to the Date of Termination, the Executive agrees not to accept
any other employment or engage in any outside business or enterprise without
the Company's
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written consent. It is understood, however, that outside activities are not
prohibited provided they are legal; do not impair or interfere with the
conscientious performance of Company duties and responsibilities; do not
involve the misuse of the Company's influence, facilities or other resources;
and do not reflect discredit upon the good name and reputation of the Company.
G. Disclosure of Information
During the Contract Term and thereafter, the Executive shall not
reveal any confidential information of the Company to anyone except those
employees of the Company entitled to receive such information, or as otherwise
permitted under any contract or commitment of the Company, or as otherwise
authorized.
H. Certain Payments Upon the Occurrence of a Change in Control of
the Company
In the event a change in control of the Company (as defined in
Section VI hereof) occurs during the Contract Term, the Company shall pay to
the Executive, within five days thereafter, an amount in cash, with respect to
each grant of Performance Shares (as defined in the Company's Amended and
Restated 1995 Performance Share Plan, as amended (the "Performance Share
Plan")) previously awarded to the Executive under the Performance Share Plan
(or any predecessor thereto) in respect of a Performance Period (as defined in
the Performance Share Plan) which had not expired immediately prior to such
change in control of the Company (Performance Shares awarded in respect of any
such Performance Period being referred to as "Outstanding Performance Shares"),
which amount shall be equal to the excess (but not less than zero) of (a) over
(b), where (a)
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equals the product of (1) the number of Outstanding Performance Shares awarded
to the Executive in respect of the applicable Performance Period, (2) the "fair
market value of the Common Stock" (as defined in the Performance Share Plan)
and (3) a fraction (not to exceed one) the numerator of which is the sum of (x)
the number of days which had elapsed in the applicable Performance Period as of
the date of such change in control of the Company plus (y) 730, and the
denominator of which is the number of days in such applicable Performance
Period, and where (b) equals the value payable to the Executive under the
Performance Share Plan (or any predecessor thereto) in respect of such
Outstanding Performance Shares in connection with such change in control of the
Company. The provisions of this Section III.H. shall not affect in any manner
the determination of amounts payable to the Executive under the Performance
Share Plan (or any predecessor thereto).
IV. Provisions Applicable to Termination of Employment
A. Notice of Termination; Date of Termination
(1) Any termination of the Executive's employment by the
Company or the Executive shall be communicated by written Notice of Termination
to the other party thereto. For purposes of this Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the specific termination
provision in this Agreement relied upon and shall set forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination
under the provision so indicated. Furthermore, either the Executive or the
Company may give a Notice of Termination to the other party for the purpose of
terminating this Agreement, as such, without terminating the Executive's
employment with
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the Company, which Notice of Termination shall have the effect of terminating
this Agreement at the expiration of the Contract Term as in effect on the date
of giving such Notice of Termination.
(2) "Date of Termination" shall mean the date on which the
Executive's right and obligation to perform employment services for the Company
shall terminate (subject to the right of the Company to accelerate such date
pursuant to Section III.A.) and shall be:
(a) If the Agreement is terminated for Disability, thirty (30)
days after Notice of Termination is given (provided that the
Executive shall not have returned to the performance of his
duties on a full-time basis during such thirty (30) day
period),
(b) If the Executive's employment is terminated by the Executive
for Good Reason, pursuant to Section IV.E., the date specified
in the Notice of Termination, which date (except with the
written consent of the Company to the contrary) shall not be
more than sixty (60) days after the date that the Notice of
Termination is given,
(c) The expiration or termination of the Contract Term, and
(d) If the Executive's employment is terminated by the Company for
Cause pursuant to Section IV.B.(1), the date on which a Notice
of Termination is given.
B. Termination for Cause
(1) The Company may terminate the Executive's employment and
the Contract Term for Cause. For the purposes of this Agreement, the Company
shall have "Cause" to terminate employment hereunder only (a) if termination
shall have been the result of an act or acts by the Executive which have been
found in an applicable court to constitute a felony; or (b) if termination
shall have been the result of an act or acts of
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dishonesty by the Executive resulting or intended to result directly or
indirectly in significant gain or personal enrichment to the Executive at the
expense of the Company; or (c) upon the wilful and continued failure by the
Executive substantially to perform his duties with the Company (other than any
such failure resulting from incapacity due to mental or physical illness) after
a demand in writing for substantial performance is delivered by the Board,
which demand specifically identifies the manner in which the Board believes
that the Executive has not substantially performed his duties, and such failure
results in demonstrably material injury to the Company. The Executive's
employment shall in no event be considered to have been terminated by the
Company for Cause if such termination took place as the result of (a) bad
judgment or negligence, or (b) any act or omission believed in good faith to
have been in or not opposed to the interest of the Company. The Executive
shall not be deemed to have been terminated for Cause unless and until there
shall have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire membership of
the Board at a meeting of the Board (after reasonable notice to the Executive
and an opportunity for him, together with his counsel, to be heard before the
Board), finding that in the good faith opinion of the Board the Executive was
guilty of conduct set forth above in clauses (a), (b) or (c) of the second
sentence of this paragraph and specifying the particulars thereof in detail.
(2) If the Executive's employment shall be terminated for
Cause, the Company shall pay the Executive his full Base Salary through the
Date of Termination at
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the rate in effect at the time Notice of Termination is given and the Company
shall have no further obligations to the Executive under this Agreement.
C. Termination for Disability
(1) The Company may terminate this Agreement on account of
the Executive's "Disability" if the Executive is "Disabled." For purposes of
this Agreement, the Executive shall be considered Disabled only if, as a result
of his incapacity due to physical or mental illness, he shall have been absent
from his duties with the Company on a full-time basis for a period of six
months and within thirty (30) days after written Notice of Termination is
given, he shall not have returned to the full-time performance of his duties.
(2) If the Company terminates this Agreement because the
Executive is Disabled, the Company shall provide to the Executive (or his
successors) the benefits specified in Paragraph (3) (continued participation in
benefit plans) of Section IV.F. of this Agreement; provided, however, that for
this purpose the Contract Term shall be determined as of the Date of
Termination, but without regard to the termination of this Agreement by reason
of the Executive's Disability.
D. Termination Upon Retirement
(1) This Agreement will terminate upon the Executive's
Retirement. For purposes of this Agreement, "Retirement" shall mean
termination of the Executive's employment at or after attaining Normal
Retirement Age or early retirement if effected in accordance with any
retirement arrangement established with the Executive's consent with respect to
him.
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(2) In the event this Agreement terminates by reason of the
Executive's Retirement, the Company shall pay to the Executive the amounts, and
provide to the Executive the benefits, specified in Paragraph (3) (continued
participation in benefit plans) of Section IV.F. of this Agreement.
(3) Notwithstanding the preceding provisions of this
Section IV.D., unless the Executive otherwise consents in writing, a
termination of the Executive's employment which occurs on or after the date of
a change in control of the Company (as defined in Section VI hereof) shall not
be deemed to be a termination of employment for Retirement.
E. Termination of Employment by the Executive for Good Reason
(1) The Executive may terminate his employment for Good
Reason. For purposes of this Agreement, Good Reason will exist if any one or
more of the following occur:
(a) Failure by the Company to honor any of its
obligations under Sections III.B.2. (assignment of
duties, responsibilities, etc., election to
positions), III.C. (place of employment), III.D.
(compensation), III.E. (benefit plans), VI
(security) or VIII.A. (successors); or
(b) Any purported termination by the Company of the
Executive's employment that is not effected pursuant
to a Notice of Termination satisfying the
requirements of Section IV.A. above and, for purposes
of this Agreement, no such purported termination
shall be effective; or
(c) The issuance by or on behalf of the Company, on or
after a change in control of the Company (as defined
in Section VI hereof), of a Notice of Termination
described in the third sentence of Section IV.A.(1)
hereof which specifies that such Notice of
Termination is given for the purpose of terminating
this Agreement and which does not serve to terminate
the Executive's employment with the Company
substantially concurrently therewith; or
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(d) Voluntary resignation by the Executive at any time
during the ninety-day period commencing on the first
anniversary of a change in control of the Company (as
defined in Section VI hereof).
F. Compensation Upon Termination Other Than for Cause
(1) If the Company shall terminate the Executive's employment
other than pursuant to Sections IV.B. (Cause), IV.C. (Disability) or IV.D.
(Retirement) hereof or if the Executive shall terminate his employment for Good
Reason pursuant to Section IV.E. hereof, then the Company shall pay to the
Executive the following amounts:
(a) The Executive's Base Salary through the Date of
Termination at the rate in effect at the time Notice
of Termination is given;
(b) In a lump sum (in lieu of the installment payments
otherwise payable under this Agreement), payable on
or before the fifth (5th) day following the Date of
Termination, an amount equal to the Executive's Base
Salary through the conclusion of the Contract Term;
(c) In a lump sum (in lieu of the installment payments
otherwise payable under this Agreement), payable on
or before the fifth (5th) day following the Date of
Termination, an amount equal to the Executive's
annual incentive compensation payments, applicable to
periods through the conclusion of the Contract Term.
For this purpose, the annual incentive compensation
amounts payable shall be deemed to be thirty percent
(30%) of the Base Salary, or such greater percentage
thereof, as may be applicable to the Executive, at
target levels, under the Incentive Compensation Plan
as in effect (i) immediately prior to the Notice of
Termination or (ii) immediately prior to a change in
control of the Company (as defined in Section VI
hereof), whichever is more favorable to the
Executive;
(d) In a lump sum, payable on or before the fifth (5th)
day following the Date of Termination, an amount
equal to the pro rata portion of the Executive's
annual incentive compensation for the calendar year
in which the Date of Termination occurs, such amount
to be determined by multiplying the Executive's
annual incentive compensation amount (as described
below) by a fraction, the numerator of which is the
number of days in such calendar year which had
elapsed as of the Date of Termination and the
denominator of which is 365; provided,
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however, that this Section IV.F.(1)(d) shall have
effect only if the Date of Termination occurs in a
calendar year following the calendar year in which
occurs a change in control of the Company (as defined
in Section VI hereof). For purposes of this
paragraph, the Executive's annual incentive
compensation amount shall be equal to the amount
determined pursuant to the second sentence of Section
IV.F.(1)(c) above; and
(e) The Company shall also pay all legal fees and
expenses incurred as a result of such termination
(including all such fees and expenses, if any,
incurred in seeking to obtain or enforce any right or
benefit provided by this Agreement, or in
interpreting this Agreement).
(2) If the Company shall terminate the Executive's employment
other than pursuant to Sections IV.B. (Cause), IV.C. (Disability) or IV.D.
(Retirement) hereof or if the Executive shall terminate his employment for Good
Reason pursuant to Section IV.E. hereof, then the Company shall pay him in one
sum in cash, payable on or before the fifth (5th) day following the Date of
Termination, an amount equal to the present value as of the Date of Termination
(calculated at a discount rate equal to the discount rate used at the Date of
Termination for computing the present value of commuted payments under the
Pension Plan) of (a) the lump sum value (determined as of the Executive's
Normal Retirement Age, using the same methods and assumptions used at the Date
of Termination for purposes of the Pension Plan, of the retirement pension to
which the Executive would have been entitled under the terms of the Pension
Plan, excess benefits plan and supplemental retirement program for short
service executives in which he participates (as in effect on the date of this
Agreement) if the Executive's employment had continued through the conclusion
of the Contract Term, at compensation levels consistent with those set forth in
paragraphs (1)(b) (Base Salary) and (c) (Incentive Compensation)
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above (and including any other compensation, if any, which is to be considered
under the formulas applicable to such plans), assuming commencement of payment
of the Executive's pension at Normal Retirement Age, reduced by (b) the lump
sum value (determined as of the Executive's Normal Retirement Age using the
methods and assumptions hereinabove specified) of the retirement pension, if
any, to which the Executive will be entitled under the terms of the Pension
Plan, excess benefits plan and supplemental retirement program for short
service executives in which the Executive participates (as in effect on the
Date of Termination), based upon termination of the Executive's employment as
of the Date of Termination and assuming commencement of payment of the
Executive's pension benefits at his Normal Retirement Age. The lump sum value
to be calculated under clause (a) of the immediately preceding sentence shall
be determined (y) under the assumption that the Executive is fully vested in
his retirement pension under the Pension Plan, excess benefits plan and
supplemental retirement program for short service executives; and (z) without
regard to any amendments to any of such plans, which amendments are adopted on
or after the date of a change in control of the Company (as defined in Section
VI hereof), to the extent any such amendments adversely affect in any manner
the computation of benefits thereunder or are otherwise adverse to the
Executive.
(3) Unless the Executive is terminated for Cause, the Company
shall maintain in full force and effect, for the Executive's continued benefit
throughout the Contract Term, all active and retired employee Benefit Plans in
which he was entitled to participate immediately prior to the Date of
Termination (except as specified in
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paragraphs (2) (right of Company to make non-discriminatory changes in plans)
and (4) (this Agreement in lieu of other plans as to severance and vacation) of
Section III.E. of this Agreement), provided that continued participation is
possible under the general terms and provisions of such plans and programs. In
the event that participation in any such plan or program is barred, the
Company shall arrange to provide him with benefits substantially similar to
those which he is entitled to receive under such Benefit Plans. Unless the
Executive is terminated for Cause, if prior to the expiration of the Contract
Term the Executive attains Normal Retirement Age (or earlier retirement age
should he so elect) as defined in the Pension Plan in effect on the Date of
Termination hereunder, he shall have the right at any time prior to the
expiration of the Contract Term to so retire and the Company shall thereafter
maintain in full force and effect, for the Executive's continued benefit, all
retired employee Benefit Plans applicable to him, as in effect immediately
prior to the Date of Termination (except as specified in paragraphs (2) (right
of Company to make non-discriminatory changes in plans) and (4) (this Agreement
in lieu of other plans as to severance and vacation) of Section III.E. of this
Agreement). If the termination of the Executive's employment occurs on or
after a change in control of the Company (as defined in Section VI hereof), (a)
the Company's obligation to maintain Benefit Plans pursuant to this Section
IV.F.(3) shall be determined, on a plan-by-plan basis, based on the terms of
the applicable Benefit Plan as in effect (i) immediately prior to such change
in control of the Company or (ii) immediately prior to the Date of Termination,
whichever is more favorable to the Executive, and (b) the Executive shall be
treated as having remained in
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employment throughout the remainder of the Contract Term for purposes of
determining his rights under any such Benefit Plans applicable to retired
employees.
(4) Upon termination of employment for any reason other than
pursuant to Sections IV.B. (Cause), IV.C. (Disability) or IV.D. (Retirement),
or by reason of the Executive's death, the Company will provide to the
Executive, at the cost and expense of the Company, the services of an
outplacement firm to be mutually agreed upon between the Company and the
Executive.
G. Compensation Upon Disability
During any period that the Executive fails to perform his duties
hereunder as a result of incapacity due to physical or mental illness, he shall
continue to receive his full Base Salary and incentive compensation at the rate
then in effect until this Agreement is terminated pursuant to Section IV.C.
hereof. Thereafter, his benefits shall be determined in accordance with the
Company's Pension Plan, excess benefits plan, supplemental retirement program
for short service executives and disability insurance plans in which the
Executive participates, or a substitute plan then in effect; provided, however,
that if the Executive's employment is terminated pursuant to Section IV.C.
hereof following a change in control of the Company (as defined in Section VI
hereof), the Company shall pay to the Executive (a) in a cash lump sum on or
before the fifth (5th) day following the Date of Termination, the amounts
described in Sections IV.F(1)(a) and (d) hereof, and (b) during each month
commencing with the month in which occurs the Date of Termination and through
and including the month in which occurs the expiration of the Contract Term
(for this purpose the Contract Term shall be determined as of the Date of
Termination, but
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without regard to the Executive's termination for Disability), an aggregate
amount in cash equal to the excess (but not less than zero) of (i)
one-twenty-fourth of the aggregate amount determined under Sections IV.F.(1)(b)
and (c) hereof over (ii) the aggregate amount received by the Executive during
such month under the Company's long-term disability plans.
H. Compensation Upon Death
In the event this Agreement terminates by reason of the Executive's
death following a change in control of the Company (as defined in Section VI
hereof), the Company shall pay to the Executive's legal representatives or
estate or as may be directed by the legal representatives of his estate, as the
case may be, in a lump sum payable on or before the fifth (5th) day following
the Executive's death, an amount in cash equal to the amounts determined under
Sections IV.F.(1)(a), (b), (c) and (d) hereof (and for the purpose of
determining such amounts payable under Sections IV.F.(1)(b) and (c), the
Contract Term shall be determined as of the date of the Executive's death, but
without regard to such death).
I. Mitigation
The Executive shall not be required to mitigate the amount of any
payment or benefit provided for in this Agreement by seeking other employment
or otherwise, nor shall the amount of any payment or benefit provided for
herein be reduced by any compensation earned by the Executive as the result of
employment by another employer after the Date of Termination, or otherwise.
V. Certain Tax Matters
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A. Additional Payments
(1) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined (as hereafter provided)
that any payment or distribution to or for the Executive's benefit, whether
paid or payable or distributed or distributable pursuant to the terms of this
Agreement or otherwise pursuant to or by reason of any other agreement, policy,
plan, program or arrangement (including without limitation any stock option
agreement or Performance Share Plan Participant agreement), or similar right (a
"Payment"), would be subject to the excise tax imposed by Section 4999 of the
Internal Revenue Code of 1986 (or any successor provision thereto), or any
interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are hereafter collectively
referred to as the "Excise Tax"), then the Executive shall be entitled to
receive an additional payment or payments (a "Gross-Up Payment") in an amount
such that, after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including any Excise Tax,
imposed upon the Gross-Up Payment, the Executive retains an amount of the
Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(2) Subject to the provisions of Section V.A.(5), all
determinations required to be made under this Section V.A., including whether
an Excise Tax is payable by the Executive, the amount of such Excise Tax,
whether a Gross-Up Payment is required, and the amount of such Gross-Up
Payment, shall be made by a nationally-recognized legal or accounting firm (the
"Firm") selected by the Executive in the Executive's sole discretion. The
Executive agrees to direct the Firm to submit its determination and detailed
supporting
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calculations to both the Executive and the Company as promptly as practicable.
If the Firm determines that any Excise Tax is payable by the Executive and that
a Gross-Up Payment is required, the Company shall pay the Executive the
required Gross-Up Payment within ten business days after receipt of such
determination and calculations. If the Firm determines that no Excise Tax is
payable by the Executive, it shall, at the same time as it makes such
determination, furnish the Executive with an opinion that the Executive has
substantial authority not to report any Excise Tax on the Executive's federal
income tax return. Any determination by the Firm as to the amount of the
Gross-Up Payment shall be binding upon the Executive and the Company. As a
result of the uncertainty in the application of Section 4999 of the Internal
Revenue Code of 1986 (or any successor provision thereto) at the time of the
initial determination by the Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made (an
"Underpayment"). In the event that the Company exhausts its remedies pursuant
to Section V.A.(5) hereof and the Executive thereafter is required to make a
payment of any Excise Tax, the Executive may direct the Firm to determine the
amount of the Underpayment (if any) that has occurred and to submit its
determination and detailed supporting calculations to both the Executive and
the Company as promptly as possible. Any such Underpayment shall be promptly
paid by the Company to the Executive, or for the Executive's benefit, within
ten business days after receipt of such determination and calculations.
(3) The Executive and the Company shall each provide the Firm
access to and copies of any books, records and documents in the possession of
the Company or the
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Executive, as the case may be, reasonably requested by the Firm, and otherwise
cooperate with the Firm in connection with the preparation and issuance of the
determination contemplated by Section V.A.(2) hereof.
(4) The fees and expenses of the Firm for its services in
connection with the determinations and calculations contemplated by Section
V.A.(2) hereof shall be borne by the Company. If such fees and expenses are
initially paid by the Executive, the Company shall reimburse the Executive the
full amount of such fees and expenses within ten business days after receipt
from the Executive of a statement therefor and reasonable evidence of the
Executive's payment thereof.
(5) The Executive agrees to notify the Company in writing of
any claim by the Internal Revenue Service that, if successful, would require
the payment by the Company of a Gross-Up Payment. Such notification shall be
given as promptly as practicable but no later than ten (10) business days after
the Executive actually receives notice of such claim. The Executive agrees to
further apprise the Company of the nature of such claim and the date on which
such claim is requested to be paid (in each case, to the extent known by the
Executive). The Executive agrees not to pay such claim prior to the earlier of
(a) the expiration of the 30-calendar-day period following the date on which
the Executive gives such notice to the Company and (b) the date that any
payment with respect to such claim is due. If the Company notifies the
Executive in writing at least five business days prior to the expiration of
such period that it desires to contest such claim, the Executive agrees to:
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(a) provide the Company with any written records or documents
in the Executive's possession relating to such claim reasonably
requested by the Company;
(b) take such action in connection with contesting such claim
as the Company shall reasonably request in writing from time to time,
including without limitation accepting legal representation with
respect to such claim by an attorney competent in respect of the
subject matter and reasonably selected by the Company;
(c) cooperate with the Company in good faith in order
effectively to contest such claim; and
(d) permit the Company to participate in any proceedings
relating to such claim;
provided, however, that the Company shall bear and pay directly all costs and
expenses (including interest and penalties) incurred in connection with such
contest and shall indemnify and hold the Executive harmless, on an after-tax
basis, from and against any Excise Tax or income tax, including interest and
penalties with respect thereto, imposed as a result of such representation and
payment of costs and expenses. Without limiting the foregoing provisions of
this Section V.A.(5), the Company shall control all proceedings taken in
connection with the contest of any claim contemplated by this Section V.A.(5)
and, at its sole option, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the taxing authority in
respect of such claim (provided, however, that the Executive may participate
therein at the Executive's own cost and expense) and may, at its option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine;
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provided, however, that if the Company directs the Executive to pay the tax
claimed and sue for a refund, the Company shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income
tax, including interest or penalties with respect thereto, imposed with respect
to such advance; and provided further, however, that any extension of the
statute of limitations relating to payment of taxes for the Executive's taxable
year with respect to which the contested amount is claimed to be due is limited
solely to such contested amount. Furthermore, the Company's control of any
such contested claim shall be limited to issues with respect to which a
Gross-Up Payment would be payable hereunder and the Executive shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(6) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section V.A.(5) hereof, the Executive receives any
refund with respect to such claim, the Executive agrees (subject to the
Company's complying with the requirements of Section V.A.(5) hereof) to
promptly pay to the Company the amount of such refund (together with any
interest paid or credited thereon after any taxes applicable thereto). If,
after the Executive's receipt of an amount advanced by the Company pursuant to
Section V.A.(5) hereof, a determination is made that the Executive is not
entitled to any refund with respect to such claim and the Company does not
notify the Executive in writing of its intent to contest such denial of refund
prior to the expiration of thirty (30) calendar days after such determination,
then such advance shall be forgiven and shall not be required to be
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repaid and the amount of such advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid pursuant to this Section V.A.
VI. Security
To secure payment of the benefits provided for in this
Agreement, the Company agrees forthwith to establish an irrevocable escrow
account (the "Escrow Account") at National City Bank (the "Escrow Agent"),
Cleveland, Ohio, or, in the event that National City Bank shall resign, any
other financial institution satisfactory to the Company and the Executive (or
the Executive's executor or other personal representative) or appointed by a
court of competent jurisdiction and to keep on deposit in the Escrow Account
such amount, if any, as shall at all times be at least equal to the required
security hereinafter provided for. The maximum amount of required security to
be kept on deposit at any time shall be (A) the sum of $___________ (the
"Maximum Amount") or (B) if there has been determination with the Executive's
written consent or by a final arbitral award rendered in accordance with this
Agreement that a specific lesser amount fully secures the Company's obligations
under this Agreement, then such specific lesser amount or, in the case that the
Company has fully performed its obligations under this Agreement, nothing.
Subject to the provisions hereof, the Maximum Amount of required security shall
be kept on deposit at all times after (i) the expiration of five days following
the occurrence of a "potential change in control of the Company" or (ii) a
"change in control of the Company" (as such terms are hereinafter defined),
whichever occurs earlier. For purposes of this Agreement, a "change in control
of the Company" shall be deemed to have occurred if the conditions set forth in
any one of the following paragraphs shall have been satisfied:
25
<PAGE> 228
(1) Any "person" (as that term is used in Sections 13(d)
and 14(d)(2) of the Exchange Act) is or becomes the beneficial owner, directly
or indirectly, of securities of the Company representing twenty-five percent
(25%) or more of the combined voting power of the Company's then outstanding
voting securities; or
(2) During any period of two consecutive years,
individuals who at the beginning of such period constituted the Board of
Directors of the Company and any new director (other than a director designated
by a person who has entered into an agreement or arrangement with the Company
to effect a transaction described in clause (1) or (3) of this sentence) whose
appointment, election, or nomination for election by the Company's
shareholders, was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of
the period or whose appointment, election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
Board of Directors of the Company; or
(3) There is consummated a merger or consolidation of the
Company or a subsidiary thereof with or into any other corporation, other than
a merger or consolidation which would result in the holders of the voting
securities of the Company outstanding immediately prior thereto holding
securities which represent immediately after such merger or consolidation more
than fifty (50%) of the combined voting power of the voting securities of
either the Company or the other entity which survives such merger or
consolidation or the parent of the entity which survives such merger or
consolidation; or
(4) There is consummated a sale or disposition by the
Company of all or substantially all the Company's assets.
26
<PAGE> 229
For purposes of this Agreement, a "potential change in control of the Company"
shall be deemed to have occurred if the conditions set forth in any one of the
following paragraphs shall have been satisfied:
(a) any person is or becomes the beneficial owner,
directly or indirectly, of securities of the Company
representing twenty percent (20%) or more of the
combined voting power of the Company's then
outstanding voting securities; or
(b) the Company enters into an agreement, the
consummation of which would result in the occurrence
of a change in control of the Company; or
(c) any person publicly announces an intention to take or
to consider taking actions which, if consummated,
would constitute or result in a change in control of
the Company; or
(d) any person commences a solicitation (as defined in
Rule 14a-1 of the General Rules and Regulations under
the Exchange Act) of proxies or consents which has
the purpose of effecting or would (if successful)
result in a change in control of the Company; or
(e) a tender or exchange offer for voting securities of
the Company, made by a person (other than the
Company, any subsidiary thereof, any employee benefit
plan of the Company or any person organized,
appointed or established by the Company for or
pursuant to the terms of any such plan), is first
published or sent or given (within the meaning of
Rule 14d-2(a) of the General Rules and Regulations
under the Exchange Act).
Until the Maximum Amount of required security is required to be kept
on deposit, the Company shall only be obliged to maintain on deposit in the
Escrow Account an amount (the "Required Security") at least equal to sixty
percent (60%) of the Maximum Amount of required security; provided, however,
that if a potential change in control of the Company shall occur prior to a
change in control of the Company and if a change in control of the Company does
not occur within twelve months after the most recent
27
<PAGE> 230
occurrence of a potential change in control of the Company, the Escrow Agent
shall be entitled, upon receipt of a written request by the Company, to return
to the Company any amounts in excess of the Required Security (or reduce the
amount of any letter of credit to an amount equal to the Required Security).
Except as provided in the immediately preceding sentence and in the penultimate
paragraph of this Section VI, amounts deposited in the Escrow Account shall be
paid out by the Escrow Agent only to the Executive, in such amounts as the
Executive shall certify to the Escrow Agent as amounts that the Company is in
default in paying the Executive under this Agreement, or to the Company, to the
extent that the amount on deposit exceeds the maximum amount of required
security as specified in joint written instructions from the Executive and the
Company to the Escrow Agent or in a final arbitral award rendered pursuant to
Section VII hereof.
The Company shall have the right, at any time and from time to time,
to instruct the Escrow Agent to invest all or any or any part of the funds in
the Escrow Account in time deposits or certificates of deposit with, or
repurchase or other obligations of, National City Bank, in its individual
corporate capacity, or any of its domestic or foreign branches, or any other
"bank" (as determined by the Company), or obligations issued or guaranteed by
the United States or any of its agencies or instrumentalities, provided that no
such investment shall be for a period in excess of ninety (90) days. The
Escrow Agent shall have no liability whatsoever for following the instructions
of the Company regarding any such investment, or for any loss in value of the
Escrow Account as a consequence of any such investment or the liquidation
thereof.
28
<PAGE> 231
The Company may meet its obligation to keep amounts on deposit in the
Escrow Account through (a) deposits of assets; (b) one or more letters of
credit deposited in escrow; or (c) any combination of the foregoing. The
Company shall have right, at any time and from time to time, to substitute one
form of permitted deposit in the Escrow Account for another form of permitted
deposit in the Escrow Account.
Intending that the Escrow Agent and its successors and assigns shall
have the right to rely hereon, the Executive consents to the agreement
pertaining to the Escrow Account to be maintained pursuant to this Section VI
(the "Escrow Agreement") substantially in the form attached hereto as Exhibit
A, and consents to the amendment and restatement, pursuant to the Escrow
Agreement, of all prior escrow agreements which have been made between the
Company and National City Bank (in any capacity) and of which the Executive is
a beneficiary. The Executive further consents to amendments, modifications,
restatements and clarifications of the Escrow Agreement from time to time, so
long as, after giving effect to each such amendment, modification, restatement
or clarification, the then aggregate amount (whether in the form of cash,
investments which the Company has instructed the Escrow Agent to make as
hereinbefore provided (the amount of which shall be determined, in each case,
at the time of the investment), amounts available to be drawn by the Escrow
Agent under one or more letters of credit, or any combination of the foregoing)
credited to the Escrow Account by the Escrow Agent would not be less than the
required security provided for in this Section VI. The Escrow Agent and its
successors and assigns shall have the right to rely upon such consent of the
Executive.
29
<PAGE> 232
VII. Arbitration
Any dispute or controversy arising under or in connection with this
Agreement shall be settled exclusively by arbitration in Cleveland, Ohio in
accordance with the rules of the American Arbitration Association then in
effect; provided that all arbitration expenses shall be borne by the Company.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction; provided, however, that the Executive shall be entitled to seek
specific performance of his right to be paid until the Date of Termination
during the pendency of any dispute or controversy arising under or in
connection with this Agreement.
VIII. Miscellaneous
A. Successors, Binding Agreement
The Company will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of the Company, by agreement in form and substance
satisfactory to the Executive, to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain such agreement prior to the effectiveness of any such
succession shall be a breach of this Agreement and shall entitle the Executive
to compensation from the Company in the same amount and on the same terms as
would apply if the Executive terminated his employment for Good Reason, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used
in this Agreement, "Company" shall mean the Company as hereinbefore defined and
any successor to its business and/or
30
<PAGE> 233
assets as aforesaid that executes and delivers the agreement provided for in
this section or which otherwise becomes bound by all the terms and provisions
of this Agreement by operation of law. This Agreement shall inure to the
benefit of and be enforceable by the Executive's personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees. If the Executive should die while any amount payable
hereunder remains unpaid, all such amounts, unless otherwise provided herein,
shall be paid in accordance with the terms of this Agreement to the Executive's
devisee, legatee, or other designee or, if there be no such designee, to his
estate.
B. Notice
Notices and all other communications provided for in this Agreement
shall be in writing and shall be deemed to have been duly given when delivered
by United States registered mail, return receipt requested, postage prepaid,
addressed to the respective addresses set forth on the first page of this
Agreement, provided that all notices to the Company shall be directed to the
attention of the Secretary of the Company, or to such other address as either
party may have furnished to the other in writing in accordance herewith.
C. Waiver and Amendment; Governing Law
No provisions of this Agreement may be modified, waived or discharged
unless such modification, waiver or discharge is agreed to in writing signed by
the Executive and such officer as may be specifically designated by the Board
(which shall in any event include the Company's Chief Executive Officer). No
waiver by either party hereto at any time of any breach by the other party
hereto of, or compliance with, any condition or
31
<PAGE> 234
provision of this Agreement to be performed by such other party shall be deemed
a waiver of similar or dissimilar provisions or conditions at the same or at
any prior or subsequent time. No agreement or representations, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement,
and this Agreement constitutes the entire agreement between the parties with
respect to the subject matter hereof. Without limiting the generality of the
foregoing, this Agreement supersedes and replaces in its entirety any prior
agreement relating to the subject matter hereof (other than agreements between
the Executive and the Company which constitute Benefit Plans). The validity,
interpretation, construction and performance of this Agreement shall be
governed by the laws of the State of Ohio.
D. Release and Reaffirmation
In connection with any termination of the Executive's employment prior
to a change in control of the Company (as defined in Section VI hereof), the
Company may, as a condition to the payment by the Company to the Executive of
any post-employment benefits under this Agreement, condition such payment upon
the execution and delivery by the Executive to the Company of:
(1) A release, in form reasonably acceptable to the Company,
releasing the Company from any further obligations to the Executive, except for
obligations under Benefit Plans which remain in favor of the Executive and any
other remaining obligations under the specific terms of this Agreement or any
other written agreement in effect between the Company and the Executive; and
32
<PAGE> 235
(2) A reaffirmation by the Executive of his obligations under
any other agreement theretofore in effect between the Executive and the Company
relating to confidentiality or intellectual property rights.
This Section VIII.D. shall not apply in connection with any
termination of the Executive's employment on or after the date on which a
change in control of the Company (as defined in Section VI hereof) shall have
occurred.
E. Validity
The invalidity or unenforceability of any one or more provisions of
this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
F. Certain Obligations of the Company
All obligations of the Company to make payments and provide benefits
under this Agreement shall survive the expiration of the Contract Term.
G. Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
FERRO CORPORATION
BY:
----------------------------------
33
<PAGE> 236
----------------------------------
Executive
34
<PAGE> 1
EXHIBIT 11
FERRO CORPORATION AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
9 Months 9 Months
(Dollars in Thousands) September September
1995 1994
---- ----
<S> <C> <C>
PRIMARY:
Weighted average shares and common stock equivalents 27,995,032 28,976,931
Net Income $37,579 $34,922
Less Preferred Stock Dividend, Net of Tax (2,743) (2,678)
----------- -----------
Income Available to Common Shareholders $34,836 $32,244
PRIMARY EARNINGS PER COMMON SHARE $1.24 $1.11
FULLY DILUTED:
Weighted average shares and common stock equivalents 27,995,032 28,976,931
Adjustments (primarily assumed conversion of
convertible preferred stock) 2,433,373 2,463,903
----------- -----------
30,428,405 31,440,834
Net Income $37,579 $34,922
Additional ESOP Contribution, Net of Tax (1,516) (1,552)
----------- -----------
Adjusted Net Income $36,063 $33,370
FULLY DILUTED EARNINGS PER SHARE $1.19 $1.06
</TABLE>
<PAGE> 1
EXHIBIT 12
FERRO CORPORATION AND SUBSIDIARIES
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SEPTEMBER SEPTEMBER
(DOLLARS IN THOUSANDS) 1995 1994
------- ------
<S> <C> <C>
EARNINGS:
PRE-TAX INCOME 61,143 55,339
ADD: FIXED CHARGES 12,560 9,837
LESS: INTEREST CAPITALIZATION (617) (691)
------- -------
TOTAL EARNINGS 73,086 64,485
======= =======
FIXED CHARGES:
INTEREST EXPENSE 11,343 8,546
INTEREST CAPITALIZATION 617 691
INTEREST PORTION OF RENTAL EXPENSE 600 600
------- -------
TOTAL FIXED CHARGES 12,560 9,837
======= =======
TOTAL EARNINGS 73,086 64,485
DIVIDED BY:
TOTAL FIXED CHARGES 12,560 9,837
------- -------
RATIO 5.82 6.56
</TABLE>
NOTE: PREFERRED DIVIDENDS ARE EXCLUDED. AMORTIZATION OF DEBT EXPENSE AND
DISCOUNTS AND PREMIUMS WERE DEEMED IMMATERIAL TO THE ABOVE CALCULATION.
INTEREST PORTION OF RENTAL EXPENSE ARE CONSERVATIVE ESTIMATES BASED ON
ACTUAL AMOUNTS FROM PRIOR YEARS.
<PAGE> 1
EXHIBIT 20
FERRO CORPORATION
Consolidated Balance Sheets
As of September 30, 1995 (Unaudited) and December 31, 1994
Consolidate Statements of Income
For the Three Months and Nine Months Ended
September 30, 1995 and 1994 (Unaudited)
Consolidated Statements of Cash Flows
For the Three Months and Nine Months Ended
September 30, 1995 and 1994 (Unaudited)
<PAGE> 2
CONSOLIDATED BALANCE SHEET
FERRO CORPORATION AND SUBSIDIARIES
SEPTEMBER 30, 1995 AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
(Dollars in Thousands)
(Unaudited) (Audited)
ASSETS 1995 1994
---------- ---------
<S> <C> <C>
Current Assets:
Cash $ 65,845 $ 19,822
Marketable Securities 24,980 -
Net Receivables 231,686 217,889
Inventories 155,351 142,133
Other Current Assets 31,269 35,571
-------- --------
Total Current Assets $509,131 $415,415
Investments in Affiliated Companies 7,696 8,923
Unamortized Excess of Cost Over Net Assets Acquired 48,724 50,629
Other Assets 31,453 37,820
Net Plant and Equipment 304,349 288,589
-------- --------
$901,353 $801,376
======== ========
LIABILITIES
Current Liabilities:
Notes and Loans Payable $ 23,906 $ 18,752
Accounts Payable, Trade 126,531 120,308
Income Taxes 10,451 8,553
Accrued Payrolls 21,000 15,553
Accrued Expenses and Other Current Liabilities 75,484 65,170
-------- --------
Total Current Liabilities $257,372 $228,336
Long - Term Debt 130,482 77,611
ESOP Loan Guarantee 32,284 37,503
Deferred Income Taxes 18,204 17,309
Postretirement Liabilities 44,267 42,076
Other Liabilities 30,880 31,797
Shareholders' Equity 387,864 366,744
-------- --------
$901,353 $801,376
======== ========
</TABLE>
<PAGE> 3
Consolidated Statements of Cash Flows
Ferro Corporation and Subsidiaries
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Dollars in Thousands) 1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Cash Provided from Operating Activities $ 34,602 $ 31,039 $ 72,958 $ 66,194
Cash Flow from Investing Activities:
Investment in Marketable Securities 25,004 20,620 (24,980) 38,335
Capital Expenditures for Plant and Equipment (11,402) (15,150) (37,244) (43,913)
Acquisition of Companies, net of cash acquired 0 (718) 0 (9,514)
Proceeds from Divestitures 1,569 0 2,497 3,156
Transactions with Affiliated Companies 1,833 (1,465) 1,833 126
Change in Restricted Deposits 4,800 0 4,365 (584)
Other Investing Activities 260 (1,430) 1,800 (132)
Net Cash (Used for) Provided by Investing Activities 22,064 1,857 (51,729) (12,526)
Cash Flow from Financing Activities:
Net Borrowings (Payments) under Short-Term Lines (3,716) 761 4,810 1,454
Proceeds from Long-Term Debt 0 0 49,322 0
Purchase of Treasury Stock (13,278) (11,923) (14,114) (32,160)
Cash Dividend Paid (4,858) (4,969) (14,643) (15,099)
Other Financing Activities 205 (71) 83 1,113
Net Cash (Used for) Provided by Financing Activities (21,647) (16,202) 25,458 (44,692)
Effect of Exchange Rate Changes on Cash (451) 226 (664) 1,149
Increase (Decrease) in Cash and Cash Equivalents 34,568 16,920 46,023 10,125
Cash and Cash Equivalents at Beginning of Period 31,277 18,321 19,822 25,116
Cash and Cash Equivalents at End of Period $ 65,845 $ 35,241 $ 65,845 $ 35,241
Cash Paid During the Period for:
Interest $ 1,901 $ 1,040 $ 8,095 $ 6,742
Income Taxes $ 10,170 $ 9,281 $ 24,492 $ 20,413
</TABLE>
<PAGE> 4
CONSOLIDATED STATEMENTS OF INCOME
FERRO CORPORATION AND SUBSIDIARIES
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
(Dollars in Thousands) 1995 1994 1995 1994
- ------------------------------------------------------------------------------------------ ------------------------------
<S> <C> <C> <C> <C>
Segment Sales
Coatings, Colors, and Ceramics $185,435 $177,506 $589,565 $520,846
Plastics 61,403 65,423 208,225 197,893
Chemicals 64,003 53,874 190,009 161,613
----------- ----------- ----------- ----------
Total Net Sales $310,841 $296,803 $987,799 $880,352
Cost of Sales 240,853 223,110 748,779 659,522
Selling, Administrative and General Expenses 51,251 52,686 167,869 156,347
----------- ----------- ----------- ----------
Operating Income 18,737 21,007 71,151 64,483
Interest Expense 4,676 2,693 11,343 8,546
Net Foreign Currency (Gain) Loss (321) 20 90 755
Other (Income) Expense - Net (1,258) 564 (1,425) (157)
----------- ----------- ----------- ----------
Income before Taxes 15,640 17,730 61,143 55,339
Taxes on Income 5,815 6,098 23,564 20,417
----------- ----------- ----------- ----------
Net Income 9,825 11,632 37,579 34,922
Dividend on Preferred Stock, Net of Tax 919 898 2,743 2,678
----------- ----------- ----------- ----------
Net Income Available to Common Shareholders $ 8,906 $ 10,734 $ 34,836 $ 32,244
=========== =========== =========== ==========
Per Common Share Data:
Primary Earnings $0.32 $0.38 $1.24 $1.11
Fully Diluted Earnings $0.31 $0.36 $1.19 $1.06
Shares Outstanding:
Average Outstanding 27,913,904 28,350,428 27,995,032 28,976,931
Average Fully Diluted 30,323,976 30,807,467 30,428,405 31,440,834
Actual End of Period 27,344,105 28,031,485 27,344,105 28,031,485
- ------------------------------------------------------------------------------------------ -----------------------------
</TABLE>
10/12/95
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000035214
<NAME> FERRO CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 65,845
<SECURITIES> 24,980
<RECEIVABLES> 231,686
<ALLOWANCES> 0
<INVENTORY> 155,351
<CURRENT-ASSETS> 509,131
<PP&E> 652,630
<DEPRECIATION> 348,281
<TOTAL-ASSETS> 901,353
<CURRENT-LIABILITIES> 257,372
<BONDS> 130,482
<COMMON> 31,549
0
0
<OTHER-SE> 356,315
<TOTAL-LIABILITY-AND-EQUITY> 901,353
<SALES> 987,799
<TOTAL-REVENUES> 987,799
<CGS> 748,779
<TOTAL-COSTS> 916,648
<OTHER-EXPENSES> (1,335)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,343
<INCOME-PRETAX> 61,143
<INCOME-TAX> 23,564
<INCOME-CONTINUING> 37,579
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,579
<EPS-PRIMARY> 1.24
<EPS-DILUTED> 1.19
</TABLE>
