<PAGE> 1
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ------------ TO ------------
COMMISSION FILE NUMBER 1-13774
ARCADIAN CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 76-0275035
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
6750 POPLAR AVENUE, SUITE 600
MEMPHIS, TENNESSEE 38138-7419
(Address of principal executive offices)
(Zip Code)
(901) 758-5200
(Registrant's telephone number, including area code)
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 September 30, 1996, there were 38,703,778 outstanding shares of Common
Stock, par value $.01 per share, of Arcadian Corporation.
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<PAGE> 2
ARCADIAN CORPORATION
TABLE OF CONTENTS
FOR
QUARTERLY REPORT ON FORM 10-Q
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
Independent Auditors' Report........................................................ 3
Condensed Consolidated Balance Sheet as of September 30, 1996, and December 31,
1995............................................................................. 4
Condensed Consolidated Statements of Operations for --
Nine Months Ended September 30, 1996 and 1995.................................... 5
Three Months Ended September 30, 1996 and 1995................................... 6
Condensed Consolidated Statements of Cash Flows for --
Nine Months Ended September 30, 1996 and 1995.................................... 7
Three Months Ended September 30, 1996 and 1995................................... 8
Notes to Condensed Consolidated Financial Statements................................ 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS.................................................................... 15
PART II -- OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.............................................. 20
SIGNATURE............................................................................. 21
</TABLE>
1
<PAGE> 3
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
See next page.
2
<PAGE> 4
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Arcadian Corporation:
We have reviewed the condensed consolidated balance sheet of Arcadian
Corporation and subsidiaries as of September 30, 1996, and the related condensed
consolidated statements of operations and cash flows for the three and
nine-month periods ended September 30, 1996 and 1995, in accordance with
standards established by the American Institute of Certified Public Accountants.
A review of interim financial information consists principally of obtaining
an understanding of the system for the preparation of interim financial
information, applying analytical review procedures to financial data, and making
inquiries of persons responsible for financial and accounting matters. It is
substantially less in scope than an audit in accordance with generally accepted
auditing standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements referred to
above for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Arcadian Corporation and
subsidiaries as of December 31, 1995, and the related consolidated statements of
operations, stockholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated February 9, 1996, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying condensed consolidated balance
sheet as of December 31, 1995, is fairly presented, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
KPMG PEAT MARWICK LLP
Memphis, Tennessee
November 14, 1996
3
<PAGE> 5
ARCADIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996 DECEMBER 31,
(UNAUDITED) 1995
($000) ($000)
------------- ------------
<S> <C> <C>
ASSETS
Cash and Cash Equivalents.......................................... $ 214,752 $ 202,738
Restricted Reserve Accounts........................................ 57,801 50,450
Accounts Receivable, Net........................................... 123,172 109,496
Inventories........................................................ 118,486 136,767
Other.............................................................. 12,115 6,569
---------- ----------
Total Current Assets..................................... 526,326 506,020
Property, Plant and Equipment, Net................................. 598,882 606,410
Goodwill, Net...................................................... 94,567 96,393
Other, Net......................................................... 81,592 61,831
---------- ----------
$1,301,367 $1,270,654
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts Payable and Accrued Liabilities........................... $ 149,374 $ 170,808
Current Portion of Long-Term Debt.................................. 15,000 15,000
---------- ----------
Total Current Liabilities................................ 164,374 185,808
---------- ----------
Long-Term Debt, Less Current Portion............................... 510,000 525,000
Accrued Benefits Cost.............................................. 8,467 8,329
Other Long-Term Liabilities........................................ 15,498 14,477
Deferred Income Taxes.............................................. 108,427 100,621
---------- ----------
642,392 648,427
---------- ----------
Mandatorily Convertible Preferred Stock............................ 85,999 214,195
Common Stock....................................................... 402 305
Additional Paid-In Capital......................................... 352,466 223,190
Retained Earnings (Deficit)........................................ 92,249 (1,271)
Treasury Stock..................................................... (36,515) --
---------- ----------
Total Stockholders' Equity............................... 494,601 436,419
---------- ----------
$1,301,367 $1,270,654
========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 6
ARCADIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------
1996 1995
($000) ($000)
-------- --------
<S> <C> <C>
Net Sales.............................................................. $935,244 $960,601
Cost of Sales.......................................................... 685,601 691,451
-------- --------
Gross Profit......................................................... 249,643 269,150
Selling, General and Administrative Expenses........................... 40,081 45,925
-------- --------
Operating Income..................................................... 209,562 223,225
Interest Expense, Net.................................................. 29,842 44,319
Other, Net............................................................. 2,005 (414)
-------- --------
Income Before Non-Controlling Interest and Income Taxes................ 177,715 179,320
Non-Controlling Interest in Earnings of Partnership.................... -- (82,270)
-------- --------
Income Before Income Taxes............................................. 177,715 97,050
Income Tax Provision................................................... 61,815 42,000
-------- --------
Net Income............................................................. $115,900 $ 55,050
======== ========
Net Income Per Common Share............................................ $ 2.49 $ 2.44
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
5
<PAGE> 7
ARCADIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
SEPTEMBER 30,
---------------------
1996 1995
($000) ($000)
-------- --------
<S> <C> <C>
Net Sales.............................................................. $293,526 $269,523
Cost of Sales.......................................................... 233,129 198,529
-------- --------
Gross Profit......................................................... 60,397 70,994
Selling, General and Administrative Expenses........................... 15,472 16,789
-------- --------
Operating Income..................................................... 44,925 54,205
Interest Expense, Net.................................................. 10,141 16,293
Other, Net............................................................. 1,059 (668)
-------- --------
Income Before Non-Controlling Interest and Income Taxes................ 33,725 38,580
Non-Controlling Interest in Earnings of Partnership.................... -- (7,869)
-------- --------
Income Before Income Taxes............................................. 33,725 30,711
Income Tax Provision................................................... 10,489 10,937
-------- --------
Net Income............................................................. $ 23,236 $ 19,774
======== ========
Net Income Per Common Share............................................ $ 0.51 $ 0.58
======== ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
6
<PAGE> 8
ARCADIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
----------------------
1996 1995
($000) ($000)
-------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income.......................................................... $115,900 $ 55,050
Adjustments to Reconcile Net Income to Cash from Operating
Activities:
Depreciation and Amortization.................................... 51,092 50,102
Amortization of Deferred Financing Costs......................... 1,663 2,691
Non-Controlling Interest......................................... -- 82,270
Deferred Income Taxes............................................ 7,806 16,502
Net Change in Operating Assets and Liabilities:
Short-Term Investments......................................... -- 13,307
Accounts Receivable............................................ (13,676) 19,938
Inventories.................................................... 18,281 29,688
Other Current Assets........................................... (5,546) (3,607)
Accounts Payable, Accrued Expenses and Other Liabilities....... (20,275) (9,227)
Other, Net..................................................... (4,721) (7,499)
-------- ---------
Cash Provided by (Used for) Operating Activities............ 150,524 249,215
-------- ---------
Cash Flows from Investing Activities:
Purchase of Property, Plant and Equipment, Net...................... (30,318) (13,477)
Rotational Plant Maintenance Costs.................................. (14,294) (1,603)
Investment in Joint Venture......................................... (11,000) --
-------- ---------
Cash Provided by (Used for) Investing Activities............ (55,612) (15,080)
-------- ---------
Cash Flows from Financing Activities:
Restricted Reserve Accounts......................................... (7,351) 25,931
Cash Distributions to Non-Controlling Interest...................... -- (30,786)
Proceeds from (Repayment of) Debt, Net.............................. (15,000) (96,882)
Cash Portion of Merger Consideration................................ -- (214,205)
Repurchase of Preferred Stock....................................... (11,837) --
Repurchase of Common Stock.......................................... (36,515) --
Cash Dividends on Common and Preferred Stock........................ (22,755) (26,407)
Transaction and Financing Fees...................................... (485) (11,487)
Proceeds from Issuance of Common Stock.............................. 11,045 232,364
Other, Net.......................................................... -- (11)
-------- ---------
Cash Provided by (Used for) Financing Activities............ (82,898) (121,483)
-------- ---------
Increase (Decrease) in Cash and Cash Equivalents...................... 12,014 112,652
Cash and Cash Equivalents at Beginning of Period...................... 202,738 51,093
-------- ---------
Cash and Cash Equivalents at End of Period............................ $214,752 $ 163,745
======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
7
<PAGE> 9
ARCADIAN CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SEPTEMBER 30,
----------------------
1996 1995
($000) ($000)
-------- ---------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income.......................................................... $ 23,236 $ 19,774
Adjustments to Reconcile Net Income to Cash from Operating
Activities:
Depreciation and Amortization.................................... 17,027 16,746
Amortization of Deferred Financing Costs......................... 584 1,290
Non-Controlling Interest......................................... -- 7,869
Deferred Income Taxes............................................ (1,595) 4,379
Net Change in Operating Assets and Liabilities:
Accounts Receivable............................................ (21,032) (6,992)
Inventories.................................................... (14,600) (3,396)
Other Current Assets........................................... (6,680) 2,123
Accounts Payable, Accrued Expenses and Other Liabilities....... 1,629 18,027
Other, Net..................................................... (682) (7,202)
-------- ---------
Cash Provided by (Used for) Operating Activities............ (2,113) 52,618
-------- ---------
Cash Flows from Investing Activities:
Purchase of Property, Plant and Equipment, Net...................... (13,495) (5,075)
Rotational Plant Maintenance Costs.................................. (13,633) (1,126)
-------- ---------
Cash Provided by (Used for) Investing Activities............ (27,128) (6,201)
-------- ---------
Cash Flows from Financing Activities:
Restricted Reserve Accounts......................................... (10,718) 31,887
Cash Distributions to Non-Controlling Interest...................... -- (12,911)
Proceeds from (Repayment of) Debt, Net.............................. -- (33,191)
Cash Portion of Merger Consideration................................ -- (214,205)
Repurchase of Common Stock.......................................... (36,515) --
Cash Dividends on Common and Preferred Stock........................ (7,914) (3,196)
Transaction and Financing Fees...................................... (20) (10,432)
Proceeds from Issuance of Common Stock.............................. 300 226,834
-------- ---------
Cash Provided by (Used for) Financing Activities............ (54,867) (15,214)
-------- ---------
Increase (Decrease) in Cash and Cash Equivalents...................... (84,108) 31,203
Cash and Cash Equivalents at Beginning of Period...................... 298,860 132,542
-------- ---------
Cash and Cash Equivalents at End of Period............................ $214,752 $ 163,745
======== =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
8
<PAGE> 10
ARCADIAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements of Arcadian
Corporation and its subsidiaries (collectively "Company") are unaudited and have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to the Quarterly Report
on Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. These condensed consolidated
financial statements should be read in conjunction with the consolidated
financial statements and the notes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended December 31, 1995.
In the opinion of the Company, the accompanying condensed consolidated
financial statements contain all adjustments (consisting of only normal,
recurring adjustments) necessary to present fairly the financial position,
results of operations, and cash flows of the Company as of the dates and for the
periods presented.
Because of the seasonal nature of the Company's business, the results of
operations for the periods presented are not necessarily indicative of the
results of operations for a full fiscal year.
The accompanying condensed consolidated financial statements of the Company
include the results of operations of Arcadian Corporation ("Corporation") and
its subsidiaries, including Arcadian Partners, L.P. ("Partners"), Arcadian
Fertilizer, L.P. ("Fertilizer"), and their respective subsidiaries (collectively
"Partnership"), on a consolidated basis. All intercompany balances and
transactions have been eliminated in consolidation. Prior to the August 1995
Merger, the approximately 55% limited partner interest in the Partnership
represented by the preference units was accounted for as a "Non-Controlling
Interest."
2. PRO FORMA
The following unaudited pro forma financial information of the Company for
the nine months and three months ended September 30, 1995, gives effect to the
August 1995 Merger and Public Offering as if they had occurred on January 1,
1995. The pro forma data presented below do not purport to represent what the
Company's results of operations would have been had such transactions in fact
occurred as of January 1, 1995, or to project the Company's results of
operations in any future periods:
<TABLE>
<CAPTION>
PRO FORMA*
------------------------------
NINE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1995
($000) ($000)
------------- ------------
<S> <C> <C>
Net Sales................................................. $ 960,601 $269,523
Net Income................................................ 110,078 27,665
Net Income per Common Share............................... 2.37 0.59
</TABLE>
- ---------------
* The pro forma adjustments include amortization of goodwill resulting from the
August 1995 Merger, the decrease in interest expense as a result of the
Company's redemption of its 16% Junior Subordinated Exchange Debentures due
December 15, 2004, the elimination of the non-controlling interest in the
Partnership represented by the preference units, and the income tax effect of
the pro forma adjustments.
9
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ARCADIAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
3. SUPPLEMENTAL CASH FLOW INFORMATION
The Company considers highly liquid investments with an original maturity
of three months or less to be cash equivalents, except for those which are part
of the restricted reserve accounts. The following is supplemental cash flow
information:
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------- -------------------
1996 1995 1996 1995
($000) ($000) ($000) ($000)
------- -------- ------- --------
<S> <C> <C> <C> <C>
Interest Paid................................ $32,290 $ 40,523 $ 8,947 $ 8,889
Income Taxes Paid............................ 42,134 18,148 16,955 9,768
Non-Cash Items:
Non-Cash Portion of August 1995 Merger
Consideration -- Issuance of Preferred
Stock................................... -- 214,205 -- 214,205
Conversion of Shares of Preferred Stock
into Common Stock....................... 119,028 -- 116,546 --
</TABLE>
4. NET INCOME PER COMMON SHARE
For purposes of computing net income per common share, the conversion of
Mandatorily Convertible Preferred Stock, Series A ("Preferred Stock"), which is
a common stock equivalent because of its mandatory conversion feature, is
assumed when such conversion is dilutive. Common and common equivalent shares
outstanding were 46,501,379 and 22,522,466 for the nine months ended September
30, 1996 and 1995, and 45,679,722 and 33,837,816 for the three months ended
September 30, 1996 and 1995, respectively. Net income per common share disclosed
herein is computed on a primary basis only, as net income per common share
computed on a fully diluted basis differs from the amounts disclosed by less
than 3%.
5. INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996 DECEMBER 31,
(UNAUDITED) 1995
($000) ($000)
------------- ------------
<S> <C> <C>
Finished Products.......................................... $ 46,872 $ 70,459
Raw Materials and Supplies................................. 71,614 66,308
--------- --------
$ 118,486 $136,767
========= ========
</TABLE>
6. DEBT
Debt consists of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30,
1996 DECEMBER 31,
(UNAUDITED) 1995
($000) ($000)
------------- ------------
<S> <C> <C>
First Mortgage Notes....................................... $ 185,000 $200,000
Senior Notes............................................... 340,000 340,000
Revolving Credit Facility.................................. -- --
--------- --------
525,000 540,000
Less Current Portion of Long Term Debt..................... 15,000 15,000
--------- --------
$ 510,000 $525,000
========= ========
</TABLE>
10
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ARCADIAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
At September 30, 1996, there was no outstanding balance on the Company's
$100 million revolving credit facility, and the amount available for borrowing
in the form of loans and letters of credit, after considering outstanding and
committed letters of credit of $40 million, was $60 million.
7. RESTRICTED RESERVE ACCOUNTS
At September 30, 1996, restricted reserve accounts of $58 million were
comprised of a $28 million Cash Collateral Account maintained by Fertilizer for
the benefit of the holders of the First Mortgage Notes, a $20 million Debt
Service Reserve Account maintained by Partners for the benefit of the holders of
the 10 3/4% Series B Senior Notes due 2005 ("Senior Notes"), and a $10 million
Cash Reserve Account maintained by Fertilizer for the benefit of the Second
Lessor (as defined in Note 9).
8. STOCKHOLDERS' EQUITY
SECONDARY OFFERING OF COMMON STOCK
In February 1996, the Company completed an underwritten public offering of
2.4 million shares of Common Stock on behalf of certain holders of Common Stock
and warrants to purchase Common Stock. The Company received net proceeds of $4
million from the exercise of the warrants and $5 million from the issuance of an
additional 0.2 million shares upon the exercise of the underwriters'
over-allotment option.
PREFERRED STOCK REPURCHASE
In February 1996, the Company's Board of Directors authorized the Company
to implement a $50 million stock repurchase program for the Preferred Stock. In
the first and second quarters of 1996, the Company repurchased approximately
592,000 shares of Preferred Stock at an aggregate cost of approximately $12
million and an aggregate premium of approximately $3 million above their
original issue price.
COMMON STOCK REPURCHASE
In July 1996, the Company's Board of Directors authorized the Company to
implement a $100 million stock repurchase program for the Common Stock. In the
third quarter of 1996, the Company repurchased approximately 1,653,000 shares of
Common Stock at an aggregate cost of approximately $37 million.
PREFERRED STOCK EXCHANGED FOR COMMON STOCK
In May 1996, the Company's stockholders approved a charter amendment that
gave the holders of Preferred Stock the opportunity to convert their shares into
Common Stock if they desired to do so. Holders of Preferred Stock were allowed,
but were not required, to convert their shares of Preferred Stock into Common
Stock on a share-for-share basis, subject to a value limitation of $22.475 per
share. Holders of Preferred Stock were allowed to exercise the optional
conversion right at any time until the close of business on August 16, 1996. At
August 16, 1996, approximately 7,679,000 shares of Preferred Stock had been
converted into a like number of shares of Common Stock. Shares of Preferred
Stock not converted continue to have exactly the same rights as they had prior
to the optional conversion period.
9. COMMITMENTS AND CONTINGENCIES
OPERATING LEASE COMMITMENT
In March 1996, the Company entered into a lease agreement with an
unaffiliated entity ("Second Lessor") with respect to an ammonia plant to be
constructed at the Trinidad plant site ("Second Trinidad Plant Lease"). Upon
completion of construction, the Second Lessor will lease the plant to a
subsidiary of the Company. The annual lease payments under the Second Trinidad
Plant Lease are expected to be
11
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ARCADIAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
approximately $21 million. The initial seven-year lease term is renewable for an
additional five-year term, subject to certain conditions. If the Second Trinidad
Plant Lease is not renewed or is otherwise terminated, a subsidiary of the
Company may be required to make a residual termination payment equal to 85% of
the estimated $285 million total cost of the project. In addition, the Company
has an option to purchase the plant during the term of the Second Trinidad Plant
Lease for a price approximating its fair market value at the date of exercise.
The plant is expected to be operational in 1998.
LAKE CHARLES PLANT
In connection with an incident at its Lake Charles plant in 1992, the
Company is contesting penalties proposed by the United States Occupational
Safety and Health Administration ("OSHA") totaling $4 million. The OSHA legal
proceeding to date has generally been favorable to the Company. While management
and legal counsel believe that any civil penalty ultimately paid by the Company
will be substantially less than the remaining $4 million penalty proposed by
OSHA, they cannot predict with certainty the outcome of this proceeding.
In September 1996, the Company's liability insurers negotiated preliminary
settlements of substantially all of the civil litigation arising from the Lake
Charles incident. The settlements, which in the aggregate are within the policy
limits of the Company's liability insurance, are subject to the negotiation and
execution of definitive settlement agreements and, with respect to the class
action civil litigation, approval as to fairness by the court. There remain
three lawsuits against the Company arising from the incident, which were brought
by former employees at the Lake Charles plant who allege that they were
wrongfully terminated by the Company following the incident. Management and
legal counsel believe that these lawsuits are without merit, and that there will
be no material adverse effect on the Company upon their resolution.
PORT AUTHORITY OF NEW YORK AND NEW JERSEY
On March 13, 1996, the Company, two other nitrogen producers, and up to 30
unidentified parties were named as defendants in a lawsuit filed in the name of
the Port Authority of New York and New Jersey (the "Port Authority") in New
Jersey state court. The lawsuit was actually filed by attorneys hired by the
Port Authority's subrogated insurance carriers. The Port Authority's insurers
are seeking to recover damages allegedly incurred as a result of the explosion
at the World Trade Center in New York City on February 26, 1993. The Port
Authority's insurers allege in their complaint that the two other named
defendants and one or more unidentified parties (as manufacturers of ammonium
nitrate), the Company and one or more unidentified parties (as producers of
urea), and one or more unidentified makers of nitric acid are liable under
various tort theories for unspecified property damages, business interruption
losses, lost rent and other damages allegedly incurred by the Port Authority as
a result of the World Trade Center explosion. The Company and the other
defendants have removed the case to federal court in New Jersey. Pending the
resolution of the Port Authority's motion to disqualify its insurers' counsel,
the court stayed substantive proceedings in the lawsuit. That motion was
resolved by an order dated September 23, 1996, and substantive proceedings are
scheduled to resume on November 26, 1996. Although neither the Port Authority
nor its subrogated insurers have alleged or otherwise revealed the amount of
damages sought from the Company in the lawsuit, the Port Authority stated in an
affidavit submitted to the court in support of its motion to disqualify its
insurers' counsel that as of April 9, 1996, the Port Authority had submitted to
its insurers claims relating to the explosion totaling approximately $340
million, of which the insurers had paid approximately $160 million. The Company
is unaware of any basis for liability and intends to vigorously defend the
lawsuit.
12
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ARCADIAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
STOCKHOLDERS LITIGATION
On August 5, 1996, the Company and Freeport-McMoRan Inc. ("Freeport")
signed a non-binding letter of intent for the combination of their businesses
into a newly formed company. Following the public announcement on August 7,
1996, of the Company's execution of the letter of intent, five lawsuits were
filed in Delaware state court on behalf of a purported class of all stockholders
of the Company other than the defendants and their affiliates. The Company and
some or all of its directors (including one former director, who was
subsequently dismissed from the lawsuits) were named as defendants in the
lawsuits. On September 2, 1996, the Company entered into an Agreement and Plan
of Merger (the "Merger Agreement") with Potash Corporation of Saskatchewan Inc.
("PCS") and PCS Nitrogen, Inc., a wholly owned subsidiary of PCS ("Merger Sub"),
providing for the acquisition of the Company by PCS through the merger of the
Company with and into Merger Sub (the "Merger"). On September 5, 1996, following
the public announcement of the proposed Merger on September 3, 1996, an amended
complaint (the "Amended Complaint") was filed in two of the five lawsuits. PCS
is named as an additional defendant in the Amended Complaint, but PCS has
informed the Company that PCS has not yet received service of process. The
Amended Complaint alleges generally that the defendants acted improperly in
causing the Company to enter into the Merger Agreement, and seeks an injunction
preventing the Merger, unspecified monetary damages, and other relief. On
September 16, 1996, the court signed an order consolidating all five lawsuits
and ordering that the Amended Complaint serve as the complaint in the
consolidated action. The Company and its directors have agreed to formally
respond to the Amended Complaint on or before November 27, 1996. The Company is
unaware of any basis for liability, and the defendants intend to vigorously
defend the lawsuit.
10. SUBSEQUENT EVENTS
COMMON STOCK DIVIDEND
On November 14, 1996, the Company paid a cash dividend on the Common Stock
in the amount of $0.10 per share or approximately $4 million in the aggregate to
holders of record at the close of business on November 4, 1996.
PREFERRED STOCK DIVIDEND
On November 14, 1996, the Company paid a cash dividend on the Preferred
Stock in the amount of $0.3681 per share or approximately $2 million in the
aggregate to holders of record at the close of business on November 4, 1996.
11. MERGER
TERMINATION OF POTENTIAL BUSINESS COMBINATION WITH FREEPORT
On September 2, 1996, the Company terminated its previously disclosed
non-binding letter of intent dated August 5, 1996, with Freeport regarding their
potential business combination.
PROPOSED ACQUISITION BY PCS
On September 2, 1996, the Company, PCS and Merger Sub entered into the
Merger Agreement pursuant to which, subject to the satisfaction or waiver of
certain conditions, PCS will acquire the Company through the Merger. In the
Merger, subject to adjustment and to certain exceptions, each outstanding share
of Common Stock, including each share resulting from the mandatory conversion of
the outstanding shares of Preferred Stock immediately prior to the Merger, will
be converted into the right to receive $12.25 in cash and a fraction of a common
share of PCS expected to have a market value of between $12.75 and $14.75. The
obligations of the Company and PCS to consummate the Merger are subject to
various conditions, including
13
<PAGE> 15
ARCADIAN CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(UNAUDITED)
the condition that the holders of a majority of the outstanding shares of Common
Stock and Preferred Stock, voting together as a single class, vote in favor of
the approval of the Merger Agreement. The Company expects to hold a special
meeting of stockholders in January 1997, at which the stockholders will consider
and vote upon the Merger Agreement. If the necessary stockholder vote is
obtained and all other conditions are satisfied or waived, the Company expects
that the Merger will be consummated shortly thereafter.
14
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
Because of the seasonal nature of the Company's business, the results of
operations for the periods presented are not necessarily indicative of the
results for a full fiscal year.
NINE MONTHS ENDED SEPTEMBER 30, 1996, COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1995
For the nine months ended September 30, 1996, the Company generated net
income of $116 million, or $2.49 per common share, compared to net income of $55
million, or $2.44 per common share, for the same period last year. Operating
income decreased $14 million for the nine months ended September 30, 1996, from
the prior year period.
For the nine months ended September 30, 1996, compared to the same period
last year, net sales decreased $25 million or 3%, of which 4% was related to
decreased selling prices, partially offset by a 1% increase in sales volumes.
Lower ammonia selling prices were partially offset by an increase in the selling
prices of nitrogen solutions. Higher sales volumes reflect increased sales
tonnage of low margin purchased ammonia for resale.
Gross profit decreased $20 million for the reasons noted above. Gross
profit as a percentage of net sales decreased from 28% for the nine months ended
September 30, 1995, to 27% for the nine months ended September 30, 1996,
partially as a result of the lower ammonia selling prices. The per unit natural
gas cost included in cost of sales remained relatively flat.
Selling, general and administrative expenses as a percentage of net sales
decreased from 5% for the nine months ended September 30, 1995, to 4% for the
nine months ended September 30, 1996.
Net interest expense decreased 33% to $30 million in the nine months ended
September 30, 1996, compared to $44 million for the same period in 1995,
reflecting the improvement in the Company's net debt.
The non-controlling interest in earnings of the Partnership in 1995
reflected the approximately 55% interest of the Preference Unitholders in the
net earnings of the Partnership prior to the August 1995 Merger.
The income tax provision increased $20 million for the nine months ended
September 30, 1996, compared to the same period in 1995. The increase primarily
reflects the increase in the Partnership's income allocable to the Corporation
as a result of the August 1995 Merger, partially offset by a reduction in the
Trinidad statutory income tax rate. The effective income tax rate for the nine
months ended September 30, 1996, was approximately 35%.
THREE MONTHS ENDED SEPTEMBER 30, 1996, COMPARED TO THREE MONTHS ENDED SEPTEMBER
30, 1995
For the three months ended September 30, 1996, the Company generated net
income of $23 million, or $0.51 per common share, compared to net income of $20
million, or $0.58 per common share, for the same period last year. Operating
income decreased $9 million for the three months ended September 30, 1996, from
the prior year period.
For the three months ended September 30, 1996, compared to the same period
last year, net sales increased $24 million or 9%, of which 14% was related to
increased sales volumes, partially offset by a 5% decrease in selling prices.
Higher sales volumes reflect increased sales tonnage of low margin purchased
ammonia for resale and increased sales tonnage of nitrogen solutions. Lower
ammonia and nitrogen solutions selling prices were partially offset by an
increase in the selling prices of urea.
Gross profit decreased $11 million for the reasons noted above. Gross
profit as a percentage of net sales decreased from 26% in the third quarter of
1995 to 21% in the third quarter of 1996 partially as a result of the lower
ammonia and nitrogen solutions selling prices. The per unit natural gas cost
included in cost of sales increased approximately 5% from 1995.
Selling, general and administrative expenses as a percentage of net sales
decreased from 6% for the three months ended September 30, 1995, to 5% for the
three months ended September 30, 1996.
15
<PAGE> 17
Net interest expense decreased 38% to $10 million in the third quarter of
1996 compared to $16 million for the same period in 1995, reflecting the
improvement in the Company's net debt.
The non-controlling interest in earnings of the Partnership in 1995
reflected the approximately 55% interest of the Preference Unitholders in the
net earnings of the Partnership prior to the August 1995 Merger.
LIQUIDITY AND CAPITAL RESOURCES
Operating Activities
Net cash provided by (used for) operating activities was $151 million and
$249 million for the nine months ended September 30, 1996 and 1995, and ($2)
million and $53 million for the three months ended September 30, 1996 and 1995,
respectively. At September 30, 1996 and 1995, working capital, net of restricted
reserve accounts, was $304 million and $252 million, respectively.
Investing Activities
Net cash used for investing activities of $56 million and $15 million for
the nine months ended September 30, 1996 and 1995, and $27 million and $6
million for the three months ended September 30, 1996 and 1995, respectively,
reflects primarily capital expenditures, rotational plant maintenance cost, and
an investment of $11 million in an ammonia terminal joint venture in the second
quarter of 1996.
Financing Activities
Net cash used for financing activities was $83 million and $121 million for
the nine months ended September 30, 1996 and 1995, and $55 million and $15
million for the three months ended September 30, 1996 and 1995, respectively.
The nine months ended September 30, 1995, amount reflected a $61 million
reduction in the outstanding balance under the revolving credit facility.
At September 30, 1996, there was no outstanding balance on the Company's
$100 million revolving credit facility, and the amount available for borrowing
in the form of loans and letters of credit, after considering outstanding and
committed letters of credit of $40 million, was $60 million.
Management believes that its present working capital position, combined
with projected cash flows from operations and available borrowing capacity, will
be sufficient to meet the Company's remaining 1996 and anticipated 1997 cash
requirements for operating needs, projected capital expenditures, and dividend
payments on the Company's Mandatorily Convertible Preferred Stock, Series A
("Preferred Stock").
From 1997 through 2000, the Company's principal long-term liquidity
requirements will focus on maturities of long-term debt. Excluding the revolving
credit facility, maturities of long-term debt will range from $15 million to $18
million in 1997 through 2000. Cash from operations is expected to be sufficient
for the payment of all such maturities of long-term debt.
The Company's 10 3/4% Series B Senior Notes due 2005, its First Mortgage
Notes, and the revolving credit facility contain provisions restricting
distributions on the equity interests of Arcadian Partners, L.P., Arcadian
Fertilizer, L.P., and certain other subsidiaries in the event that certain
financial covenants are not met. Management believes that such subsidiaries will
continue to meet all such financial covenants for the foreseeable future.
In February 1996, the Company completed an underwritten public offering of
2.4 million shares of Common Stock on behalf of certain holders of Common Stock
and warrants to purchase Common Stock. The Company received net proceeds of $4
million from the exercise of the warrants and $5 million from the issuance of an
additional 0.2 million shares upon the exercise of the underwriters'
over-allotment option.
In February 1996, the Company's Board of Directors authorized the Company
to implement a stock repurchase program for the Preferred Stock. The Board of
Directors authorized the Company to spend up to $50 million in repurchasing
shares of Preferred Stock from time to time as management deems appropriate. In
the first and second quarters of 1996, the Company repurchased approximately
592,000 shares of Preferred Stock at an aggregate cost of approximately $12
million and an aggregate premium of approximately $3 million above their
original issue price. The timing of Preferred Stock repurchases is dependent
upon many factors, including the price, the Company's financial condition, and
general economic and market factors.
16
<PAGE> 18
In July 1996, the Company's Board of Directors authorized the Company to
implement a stock repurchase program for the Common Stock. The Board of
Directors authorized the Company to spend up to $100 million in repurchasing
shares of Common Stock from time to time as management deems appropriate. In the
third quarter of 1996, the Company repurchased approximately 1,653,000 shares of
Common Stock at an aggregate cost of approximately $37 million. The timing of
Common Stock repurchases is dependent upon many factors, including the price,
the Company's financial condition, and general economic and market factors.
In May 1996, the Company's stockholders approved a charter amendment that
gave the holders of Preferred Stock the opportunity to convert their shares into
Common Stock if they desired to do so. Holders of Preferred Stock were allowed,
but were not required, to convert their shares of Preferred Stock into Common
Stock on a share-for-share basis, subject to a value limitation of $22.475 per
share. Holders of Preferred Stock were allowed to exercise the optional
conversion right at any time until the close of business on August 16, 1996. At
August 16, 1996, approximately 7,679,000 shares of Preferred Stock had been
converted into a like number of shares of Common Stock. Shares of Preferred
Stock not converted continue to have exactly the same rights as they had prior
to the optional conversion period. Based on the Company's existing dividend
policies, the conversion of such shares from Preferred Stock to Common Stock
will result in a net decrease of approximately $8 million in the Company's
annual dividend requirements.
In February, May, August and November 1996, the Company paid cash dividends
on the Common Stock in the aggregate amounts of approximately $2 million ($0.05
per share), $3 million ($0.10 per share), $3 million ($0.10 per share), and $4
million ($0.10 per share), respectively.
In February, May, August and November 1996, the Company paid cash dividends
on the Preferred Stock in the aggregate amounts of approximately $5 million
($0.3682 per share), $5 million ($0.3681 per share), $5 million ($0.3681 per
share) and $2 million ($0.3681 per share), respectively.
Operating Lease Commitment
In March 1996, the Company entered into a lease agreement with an
unaffiliated entity ("Second Lessor") with respect to an ammonia plant to be
constructed at the Trinidad plant site ("Second Trinidad Plant Lease"). Upon
completion of construction, the Second Lessor will lease the plant to a
subsidiary of the Company. The annual lease payments under the Second Trinidad
Plant Lease are expected to be approximately $21 million. The initial seven-year
lease term is renewable for an additional five-year term, subject to certain
conditions. If the Second Trinidad Plant Lease is not renewed or is otherwise
terminated, a subsidiary of the Company may be required to make a residual
termination payment equal to 85% of the estimated $285 million total cost of the
project. In addition, the Company has an option to purchase the plant during the
term of the Second Trinidad Plant Lease for a price approximating its fair
market value at the date of exercise. The plant is expected to be operational in
1998.
Lake Charles Plant
In connection with an incident at its Lake Charles plant in 1992, the
Company is contesting penalties proposed by the United States Occupational
Safety and Health Administration ("OSHA") totaling $4 million. The OSHA legal
proceeding to date has generally been favorable to the Company. While management
and legal counsel believe that any civil penalty ultimately paid by the Company
will be substantially less than the remaining $4 million penalty proposed by
OSHA, they cannot predict with certainty the outcome of this proceeding.
In September 1996, the Company's liability insurers negotiated preliminary
settlements of substantially all of the civil litigation arising from the Lake
Charles incident. The settlements, which in the aggregate are within the policy
limits of the Company's liability insurance, are subject to the negotiation and
execution of definitive settlement agreements and, with respect to the class
action civil litigation, approval as to fairness by the court. There remain
three lawsuits against the Company arising from the incident, which were brought
by former employees at the Lake Charles plant who allege that they were
wrongfully terminated by the Company
17
<PAGE> 19
following the incident. Management and legal counsel believe that these lawsuits
are without merit, and that there will be no material adverse effect on the
Company upon their resolution.
Port Authority of New York and New Jersey
On March 13, 1996, the Company, two other nitrogen producers, and up to 30
unidentified parties were named as defendants in a lawsuit filed in the name of
the Port Authority of New York and New Jersey (the "Port Authority") in New
Jersey state court. The lawsuit was actually filed by attorneys hired by the
Port Authority's subrogated insurance carriers. The Port Authority's insurers
are seeking to recover damages allegedly incurred as a result of the explosion
at the World Trade Center in New York City on February 26, 1993. The Port
Authority's insurers allege in their complaint that the two other named
defendants and one or more unidentified parties (as manufacturers of ammonium
nitrate), the Company and one or more unidentified parties (as producers of
urea), and one or more unidentified makers of nitric acid are liable under
various tort theories for unspecified property damages, business interruption
losses, lost rent and other damages allegedly incurred by the Port Authority as
a result of the World Trade Center explosion. The Company and the other
defendants have removed the case to federal court in New Jersey. Pending the
resolution of the Port Authority's motion to disqualify its insurers' counsel,
the court stayed substantive proceedings in the lawsuit. That motion was
resolved by an order dated September 23, 1996, and substantive proceedings are
scheduled to resume on November 26, 1996. Although neither the Port Authority
nor its subrogated insurers have alleged or otherwise revealed the amount of
damages sought from the Company in the lawsuit, the Port Authority stated in an
affidavit submitted to the court in support of its motion to disqualify its
insurers' counsel that as of April 9, 1996, the Port Authority had submitted to
its insurers claims relating to the explosion totaling approximately $340
million, of which the insurers had paid approximately $160 million. The Company
is unaware of any basis for liability and intends to vigorously defend the
lawsuit.
Stockholders Litigation
On August 5, 1996, the Company and Freeport-McMoRan Inc. ("Freeport")
signed a non-binding letter of intent for the combination of their businesses
into a newly formed company. Following the public announcement on August 7,
1996, of the Company's execution of the letter of intent, five lawsuits were
filed in Delaware state court on behalf of a purported class of all stockholders
of the Company other than the defendants and their affiliates. The Company and
some or all of its directors (including one former director, who was
subsequently dismissed from the lawsuits) were named as defendants in the
lawsuits. On September 2, 1996, the Company entered into an Agreement and Plan
of Merger (the "Merger Agreement") with Potash Corporation of Saskatchewan Inc.
("PCS") and PCS Nitrogen, Inc., a wholly owned subsidiary of PCS ("Merger Sub"),
providing for the acquisition of the Company by PCS through the merger of the
Company with and into Merger Sub (the "Merger"). On September 5, 1996, following
the public announcement of the proposed Merger on September 3, 1996, an amended
complaint (the "Amended Complaint") was filed in two of the five lawsuits. PCS
is named as an additional defendant in the Amended Complaint, but PCS has
informed the Company that PCS has not yet received service of process. The
Amended Complaint alleges generally that the defendants acted improperly in
causing the Company to enter into the Merger Agreement, and seeks an injunction
preventing the Merger, unspecified monetary damages, and other relief. On
September 16, 1996, the court signed an order consolidating all five lawsuits
and ordering that the Amended Complaint serve as the complaint in the
consolidated action. The Company and its directors have agreed to formally
respond to the Amended Complaint on or before November 27, 1996. The Company is
unaware of any basis for liability, and the defendants intend to vigorously
defend the lawsuit.
Termination of Potential Business Combination with Freeport
On September 2, 1996, the Company terminated its previously disclosed
non-binding letter of intent dated August 5, 1996, with Freeport regarding their
potential business combination.
18
<PAGE> 20
Proposed Acquisition by PCS
On September 2, 1996, the Company, PCS and Merger Sub entered into the
Merger Agreement pursuant to which, subject to the satisfaction or waiver of
certain conditions, PCS will acquire the Company through the Merger. In the
Merger, subject to adjustment and to certain exceptions, each outstanding share
of Common Stock, including each share resulting from the mandatory conversion of
the outstanding shares of Preferred Stock immediately prior to the Merger, will
be converted into the right to receive $12.25 in cash and a fraction of a common
share of PCS expected to have a market value of between $12.75 and $14.75. The
obligations of the Company and PCS to consummate the Merger are subject to
various conditions, including the condition that the holders of a majority of
the outstanding shares of Common Stock and Preferred Stock, voting together as a
single class, vote in favor of the approval of the Merger Agreement. The Company
expects to hold a special meeting of stockholders in January 1997, at which the
stockholders will consider and vote upon the Merger Agreement. If the necessary
stockholder vote is obtained and all other conditions are satisfied or waived,
the Company expects that the Merger will be consummated shortly thereafter.
19
<PAGE> 21
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following materials are filed as exhibits to this report:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ---------- --------------------------------------------------------------------------
<C> <S>
2 -- Agreement and Plan of Merger dated as of September 2, 1996, among
Potash Corporation of Saskatchewan Inc., Arcadian Corporation, and PCS
Nitrogen, Inc.
10.1 -- Agreement for Lease dated as of June 29, 1995, between Trinidad Ammonia
Company, Limited Partnership, and Arcadian Fertilizer, L.P., as amended
by Amendment No. 1 to Agreement for Lease dated as of August 20, 1996,
between Trinidad Ammonia Company, Limited Partnership, and Arcadian
Fertilizer, L.P. (incorporated by reference to Exhibit 10.21 to the
Registration Statement on Form S-4 (Registration No. 33-90290) relating
to Arcadian Corporation's offering of Preferred Stock ("Preferred Stock
Registration Statement"), except for Amendment No. 1 which is filed
herewith).
10.2 -- Lease Agreement dated as of June 29, 1995, between Trinidad Ammonia
Company, Limited Partnership, and Arcadian Fertilizer, L.P., as amended
by Amendment No. 1 to Lease Agreement dated as of August 20, 1996,
between Trinidad Ammonia Company, Limited Partnership, and Arcadian
Fertilizer, L.P., and Amendment No. 2 to Lease Agreement dated as of
August 26, 1996, between Trinidad Ammonia Company, Limited Partnership,
and Arcadian Fertilizer, L.P. (incorporated by reference to Exhibit
10.22 to the Preferred Stock Registration Statement, except for
Amendment No. 1 and Amendment No. 2 which are filed herewith).
10.3 -- Agreement for Lease dated as of March 27, 1996, between Nitrogen
Leasing Company, Limited Partnership, and Arcadian Fertilizer, L.P., as
amended by Amendment No. 1 to Agreement for Lease dated as of May 24,
1996, between Nitrogen Leasing Company, Limited Partnership, and
Arcadian Fertilizer, L.P.
10.4 -- Lease Agreement dated as of March 27, 1996, between Nitrogen Leasing
Company, Limited Partnership, and Arcadian Fertilizer, L.P., as amended
by Amendment No. 1 to Lease Agreement dated as of August 26, 1996,
between Nitrogen Leasing Company, Limited Partnership, and Arcadian
Fertilizer, L.P.
10.5 -- Purchase Option Agreement dated as of March 27, 1996, between Nitrogen
Leasing Company, Limited Partnership, and Arcadian Corporation.
10.6 -- Employment Agreement between Arcadian Corporation and certain of its
officers (form).
11 -- Computation of Net Income per Common Share.
15 -- Letter from KPMG Peat Marwick LLP to Arcadian Corporation with respect
to interim financial information.
27 -- Financial Data Schedule.
</TABLE>
(b) Current Reports on Form 8-K
On August 7, 1996, the Company filed a Current Report on Form 8-K regarding
a potential business combination with Freeport.
On September 5, 1996, the Company filed a Current Report on Form 8-K
regarding (a) the termination of its potential business combination with
Freeport and (b) the proposed acquisition of the Company by PCS in the Merger.
20
<PAGE> 22
SIGNATURE
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, on November 14, 1996.
ARCADIAN CORPORATION
By: A. L. WILLIAMS
----------------------------------
A. L. Williams
Vice President -- Finance and
Chief Financial Officer
21
<PAGE> 23
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ---------- -----------------------------------------------------------------------------------
<C> <S> <C>
2 -- Agreement and Plan of Merger dated as of September 2, 1996, among
Potash Corporation of Saskatchewan Inc., Arcadian Corporation, and
PCS Nitrogen, Inc.
10.1 -- Agreement for Lease dated as of June 29, 1995, between Trinidad
Ammonia Company, Limited Partnership, and Arcadian Fertilizer, L.P.,
as amended by Amendment No. 1 to Agreement for Lease dated as of
August 20, 1996, between Trinidad Ammonia Company, Limited
Partnership, and Arcadian Fertilizer, L.P. (incorporated by reference
to Exhibit 10.21 to the Registration Statement on Form S-4
(Registration No. 33-90290) relating to Arcadian Corporation's
offering of Preferred Stock ("Preferred Stock Registration
Statement"), except for Amendment No. 1 which is filed herewith).
10.2 -- Lease Agreement dated as of June 29, 1995, between Trinidad Ammonia
Company, Limited Partnership, and Arcadian Fertilizer, L.P., as
amended by Amendment No. 1 to Lease Agreement dated as of August 20,
1996, between Trinidad Ammonia Company, Limited Partnership, and
Arcadian Fertilizer, L.P., and Amendment No. 2 to Lease Agreement
dated as of August 26, 1996, between Trinidad Ammonia Company,
Limited Partnership, and Arcadian Fertilizer, L.P. (incorporated by
reference to Exhibit 10.22 to the Preferred Stock Registration
Statement, except for Amendment No. 1 and Amendment No. 2 which are
filed herewith).
10.3 -- Agreement for Lease dated as of March 27, 1996, between Nitrogen
Leasing Company, Limited Partnership, and Arcadian Fertilizer, L.P.,
as amended by Amendment No. 1 to Agreement for Lease dated as of May
24, 1996, between Nitrogen Leasing Company, Limited Partnership, and
Arcadian Fertilizer, L.P.
10.4 -- Lease Agreement dated as of March 27, 1996, between Nitrogen Leasing
Company, Limited Partnership, and Arcadian Fertilizer, L.P., as
amended by Amendment No. 1 to Lease Agreement dated as of August 26,
1996, between Nitrogen Leasing Company, Limited Partnership, and
Arcadian Fertilizer, L.P.
10.5 -- Purchase Option Agreement dated as of March 27, 1996, between
Nitrogen Leasing Company, Limited Partnership, and Arcadian
Corporation.
10.6 -- Employment Agreement between Arcadian Corporation and certain of its
officers (form).
11 -- Computation of Net Income per Common Share.
15 -- Letter from KPMG Peat Marwick LLP to Arcadian Corporation with
respect to interim financial information.
27 -- Financial Data Schedule.
</TABLE>
<PAGE> 1
EXHIBIT 2
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
POTASH CORPORATION OF SASKATCHEWAN INC.,
ARCADIAN CORPORATION
AND
PCS NITROGEN, INC.
SEPTEMBER 2, 1996
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
ARTICLE 1
THE MERGER
SECTION 1.01. The Merger............................................................ 1
SECTION 1.02. Exchange Agent; Payment of Merger Consideration....................... 2
SECTION 1.03. Transfers after the Effective Time.................................... 3
SECTION 1.04. Withholding........................................................... 3
SECTION 1.05. Fractional Shares..................................................... 3
SECTION 1.06. Options, SARs, CESARs and Restricted Stock............................ 3
SECTION 1.07. Certain Adjustments................................................... 4
SECTION 1.08. Dissenting Shares..................................................... 4
SECTION 1.09. Cash/Stock Adjustment................................................. 4
ARTICLE 2
THE SURVIVING CORPORATION
SECTION 2.01. The Surviving Corporation............................................. 5
ARTICLE 3
STOCKHOLDER APPROVAL; EFFECTIVE TIME
SECTION 3.01. Stockholder Approval.................................................. 5
SECTION 3.02. Effective Time........................................................ 5
ARTICLE 4
REPRESENTATIONS AND WARRANTIESOF PCS AND MERGER SUB
SECTION 4.01. Organization, Standing and Power...................................... 6
SECTION 4.02. Corporate Authorization............................................... 6
SECTION 4.03. Governmental Authorization............................................ 7
SECTION 4.04. Non-Contravention..................................................... 7
SECTION 4.05. Capitalization........................................................ 7
SECTION 4.06. Disclosure Documents.................................................. 7
SECTION 4.07. Compliance with Laws.................................................. 8
SECTION 4.08. No Undisclosed Liabilities............................................ 8
SECTION 4.09. Litigation............................................................ 8
SECTION 4.10. Environmental Matters................................................. 8
SECTION 4.11. Proxy Statement; Registration Statement............................... 9
SECTION 4.12. Absence of Certain Changes............................................ 9
SECTION 4.13. Liabilities of Merger Sub............................................. 9
SECTION 4.14. Merger-Related Tax Matters............................................ 9
ARTICLE 5
REPRESENTATIONS AND WARRANTIESOF ARCADIAN
SECTION 5.01. Organization, Standing and Power...................................... 10
SECTION 5.02. Corporate Authorization............................................... 10
SECTION 5.03. Governmental Authorization............................................ 11
SECTION 5.04. Non-Contravention..................................................... 11
SECTION 5.05. Capitalization........................................................ 11
</TABLE>
-i-
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 5.06. SEC Documents......................................................... 12
SECTION 5.07. Compliance with Laws.................................................. 12
SECTION 5.08. No Undisclosed Liabilities............................................ 12
SECTION 5.09. Litigation............................................................ 12
SECTION 5.10. Environmental Matters................................................. 12
SECTION 5.11. ERISA................................................................. 13
SECTION 5.12. Proxy Statement; Registration Statement............................... 16
SECTION 5.13. Absence of Certain Changes............................................ 16
SECTION 5.14. Taxes................................................................. 17
SECTION 5.15. Fairness Opinion...................................................... 19
SECTION 5.16. Takeover Statutes..................................................... 19
SECTION 5.17. Merger-Related Tax Matters............................................ 19
SECTION 5.18. Brokers or Finders.................................................... 20
SECTION 5.19. Additional Matters.................................................... 20
SECTION 5.20. Certain Voting Agreements............................................. 20
ARTICLE 6
COVENANTS
SECTION 6.01. Conduct of Arcadian's Business........................................ 20
SECTION 6.02. Investigation......................................................... 22
SECTION 6.03. Cooperation........................................................... 22
SECTION 6.04. Affiliates............................................................ 23
SECTION 6.05. Insurance Extension................................................... 23
SECTION 6.06. Filings; Other Action................................................. 23
SECTION 6.07. Further Assurances.................................................... 23
SECTION 6.08. Takeover Statute...................................................... 23
SECTION 6.09. No Solicitation....................................................... 23
SECTION 6.10. Public Announcements.................................................. 24
SECTION 6.11. Indemnification and Insurance......................................... 24
SECTION 6.12. Accountants' Letters.................................................. 24
SECTION 6.13. Arcadian Preferred Stock.............................................. 24
SECTION 6.14. Additional Reports.................................................... 24
SECTION 6.15. Arcadian Warrants..................................................... 24
SECTION 6.16. No Purchase........................................................... 25
SECTION 6.17. Employee Benefit Plans................................................ 25
SECTION 6.18. Conduct of PCS's Business............................................. 26
ARTICLE 7
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to Merger.................................................. 26
SECTION 7.02. Additional Conditions of PCS and Merger Sub........................... 27
SECTION 7.03. Additional Conditions of Arcadian..................................... 27
ARTICLE 8
TERMINATION, WAIVER, AMENDMENT AND CLOSING
SECTION 8.01. Termination or Abandonment............................................ 27
SECTION 8.02. Amendment or Supplement............................................... 28
</TABLE>
-ii-
<PAGE> 4
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
SECTION 8.03. Extension of Time, Waiver, Etc........................................ 28
SECTION 8.04. Closing............................................................... 29
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. No Survival of Representations and Warranties......................... 29
SECTION 9.02. Expenses.............................................................. 29
SECTION 9.03. Counterparts; Effectiveness........................................... 29
SECTION 9.04. Governing Law; Consent to Jurisdiction................................ 29
SECTION 9.05. Notices............................................................... 30
SECTION 9.06. Assignment; Binding Effect............................................ 30
SECTION 9.07. Severability.......................................................... 30
SECTION 9.08. Enforcement of Agreement.............................................. 30
SECTION 9.09. Miscellaneous......................................................... 31
SECTION 9.10. Headings.............................................................. 31
</TABLE>
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<PAGE> 5
TABLE OF DEFINITIONS
AAC Warrant......................6.15(b)(ii)
AAC Warrant Agreement.............6.15(b)(i)
Affiliate Agreement.....................6.04
Agreement...........................Preamble
Arcadian............................Preamble
Arcadian Benefit Arrangements........5.11(e)
Arcadian Common Stock................5.05(a)
Arcadian Employee Plans..............5.11(a)
Arcadian International Plan..........5.11(k)
Arcadian Preferred Stock............Preamble
Arcadian SEC Documents..................5.06
Arcadian Title IV Plan...............5.11(b)
Canadian GAAP...........................4.06
Canadian Securities Laws..........4.01(b)(v)
Certificate of Designation..........Preamble
Certificate of Merger...................3.02
CESAR................................1.06(c)
CESAR Plan...........................1.06(c)
Change in Control....................6.17(a)
Change of Control....................6.17(a)
Code................................Preamble
Common Conversion Option............Preamble
Confidentiality Agreement...............6.02
Current Employees....................6.17(b)
Delaware Law.........................1.01(a)
Determination Date................1.01(b)(v)
Effective Date.......................7.01(f)
Effective Time..........................3.02
Employment Agreements................5.13(j)
Environmental Claim.....................4.10
Environmental Laws......................4.10
Environmental Permits...................4.10
ERISA................................5.11(a)
ERISA Affiliate......................5.11(b)
Exchange Act............................4.03
Exchange Agent.......................1.02(a)
Final PCS Common Stock Price......1.01(b)(v)
Five Percent Holder.....................1.09
GAAP....................................5.06
Holders..............................1.02(a)
HSR Act.................................4.03
Lien....................................4.04
Material Adverse Effect.........4.01(b)(iii)
Merger...............................1.01(a)
Merger Cash..........................1.02(a)
Merger Consideration.................1.02(a)
Merger Shares........................1.02(a)
Merger Sub..........................Preamble
Multiemployer Plan...................5.11(b)
NYSE..............................1.01(b)(v)
Old Certificate......................1.02(b)
Option Plan..........................1.06(a)
Optionees............................1.06(a)
Options..............................1.06(a)
PCS.................................Preamble
PCS Common Stock.....................4.05(a)
PCS Disclosure Documents................4.06
PCS DRIP........................4.05(a)(iii)
Pension Plans........................5.11(a)
Per Share Cash Amount............1.01(b)(iv)
Per Share Stock Amount...........1.01(b)(iv)
Person...........................4.01(b)(ii)
Proxy Statement.........................4.11
Registration Statement...............6.03(a)
Restricted Stock Plan................1.06(d)
SAR..................................1.06(b)
SAR Plan.............................1.06(b)
SBCA.............................4.01(b)(iv)
Series B Warrant.................6.15(b)(iv)
Series B Warrant Agreement......6.15(b)(iii)
Severance Program....................5.13(j)
Special Meeting.........................3.01
Subsidiary........................4.01(b)(i)
Surviving Corporation................1.01(a)
Tax..................................5.14(m)
Tax Return...........................5.14(m)
Taxes................................5.14(m)
Taxing Authorities...................5.14(m)
Termination Date........................6.01
Third Party Acquisition Proposal........6.09
Total Consideration.....................1.09
Treasury Regulation..................5.14(m)
Valuation Period..................1.01(b)(v)
-iv-
<PAGE> 6
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement"), dated as of September
2, 1996, is by and among Potash Corporation of Saskatchewan Inc., a Saskatchewan
corporation ("PCS"), Arcadian Corporation, a Delaware corporation ("Arcadian"),
and PCS Nitrogen, Inc., a Delaware corporation and a wholly-owned subsidiary of
PCS ("Merger Sub").
W I T N E S S E T H
WHEREAS, the Boards of Directors of PCS and Arcadian have deemed that it is
advisable and in the best interests of the security holders of PCS and Arcadian,
respectively, that PCS acquire Arcadian pursuant to the merger of Arcadian with
and into Merger Sub as set forth herein; and
WHEREAS, in connection with the Merger described herein, Arcadian will
exercise the "Common Conversion Option" set forth in the Certificate of
Designation (the "Certificate of Designation") creating Arcadian's Mandatorily
Convertible Preferred Stock, Series A ("Arcadian Preferred Stock"), so that (a)
all shares of Arcadian Preferred Stock outstanding immediately prior to the
Merger will be converted into shares of Arcadian Common Stock immediately prior
to the Merger as provided in the Certificate of Designation, and (b) all such
shares of Arcadian Common Stock resulting from such conversion of the Arcadian
Preferred Stock will be treated in the Merger identically to all other shares of
Arcadian Common Stock outstanding immediately prior to the Merger; and
WHEREAS, the parties hereto intend that the merger of Arcadian with and
into Merger Sub shall be accomplished in a manner that will qualify as a
reorganization under Section 368(a)(2)(D) of the Internal Revenue Code of 1986,
as amended (the "Code").
NOW, THEREFORE, in consideration of the foregoing and the agreements and
conditions specified in this Agreement, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.01. The Merger. (a) At the Effective Time, Arcadian shall be
merged (the "Merger") with and into Merger Sub in accordance with the provisions
of the General Corporation Law of the State of Delaware, as amended ("Delaware
Law"), whereupon the separate existence of Arcadian shall cease, and Merger Sub
shall be the surviving corporation (the "Surviving Corporation"). From and after
the Effective Time, the Surviving Corporation shall possess all the rights,
privileges, powers and franchises and be subject to all of the restrictions,
disabilities and duties of Arcadian and Merger Sub, all as provided under
Delaware Law.
(b) Pursuant to the Merger, at the Effective Time:
(i) each share of Arcadian Common Stock outstanding immediately prior
to the Effective Time shall, except as otherwise provided in Section
1.01(b)(ii), Section 1.05, Section 1.08, or Section 1.09, be converted into
cash equal to the Per Share Cash Amount and that fraction of a share of PCS
Common Stock equal to the Per Share Stock Amount;
(ii) each share of Arcadian Common Stock held by Arcadian or any
Subsidiary of Arcadian or owned by PCS or any Subsidiary of PCS immediately
prior to the Effective Time shall be canceled, and no payment shall be made
with respect thereto;
(iii) each share of common stock of Merger Sub outstanding immediately
prior to the Effective Time shall be converted into and become one share of
common stock of the Surviving Corporation with the same rights, powers and
privileges as the shares so converted and shall constitute the only
outstanding share of capital stock of the Surviving Corporation; except for
such additional common stock as will be issued to PCS by Surviving
Corporation in consideration of PCS agreeing to deliver the Merger Shares
to the Exchange Agent. The share certificates evidencing the common stock
of Merger Sub shall be canceled and a new share certificate of the
Surviving Corporation shall be issued to PCS.
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<PAGE> 7
(iv) for purposes hereof, the term "Per Share Cash Amount" shall mean
$12.25; the term "Per Share Stock Amount" shall mean the number of shares
(or a fraction thereof) of PCS Common Stock (expressed as a decimal and
with the result rounded up or down to the nearest one one-thousandth,
0.0005 being rounded up to 0.001) equal to:
(A) if the Final PCS Common Stock Price is at least $72.00 but not
greater than $83.25, then 0.17713;
(B) if the Final PCS Common Stock Price is less than $72.00, then
the lesser of (1) 0.19615 and (2) the quotient of (x) $12.75 divided by
(y) the Final PCS Common Stock Price; and
(C) if the Final PCS Common Stock Price is greater than $83.25,
then the greater of (1) 0.16389 and (2) the quotient of (x) $14.75
divided by (y) the Final PCS Common Stock Price;
(v) for purposes hereof, the term "Final PCS Common Stock Price" shall
mean the quotient obtained by dividing (A) the sum of the averages of the
daily high and low trading prices of the PCS Common Stock on the New York
Stock Exchange (the "NYSE") for each trading day during the Valuation
Period by (B) the number of trading days in the Valuation Period; the term
"Valuation Period" shall mean the 20 consecutive days on which shares of
PCS Common Stock are traded on the NYSE ending on the second business day
immediately prior to the anticipated Effective Time; and the term
"Determination Date" shall mean the last day of the Valuation Period; and
(vi) for purposes hereof, the term "dollars" and the symbol "$" shall
both mean United States dollars.
SECTION 1.02. Exchange Agent; Payment of Merger Consideration.
(a) As soon as reasonably practicable after the Effective Time, and subject
to the provisions of Section 1.09, (i) PCS shall deposit or cause to be
deposited with ChaseMellon Shareholder Services, L.L.C. or such other
institution as may be designated by PCS, as exchange agent (including any
co-exchange agent, the "Exchange Agent"), for the benefit of the holders of
Arcadian Common Stock (collectively, the "Holders"), certificates representing
the number of whole shares of PCS Common Stock (collectively, the "Merger
Shares") to which each Holder has become entitled pursuant to Section 1.01, and
(ii) Merger Sub shall deposit (A) cash equal to the aggregate Per Share Cash
Amount to which the Holders have become entitled pursuant to Section 1.01 (the
"Merger Cash"), and (B) the cash to which the Holders are entitled as provided
in Section 1.05 (the Merger Shares, the Merger Cash and any cash to which a
Holder is entitled as provided in Section 1.05 together being the "Merger
Consideration"). In consideration of PCS agreeing to deliver the Merger Shares
to the Exchange Agent, Surviving Corporation shall issue to PCS common stock of
Surviving Corporation having a value equal to the Merger Shares.
(b) As soon as reasonably practicable after the Effective Time, and in any
event within 30 days after the Effective Time, the Exchange Agent shall mail to
each Holder of record as of the Effective Time, a form of letter of transmittal
and instructions for use in effecting the surrender of the certificates
representing Arcadian Common Stock or Arcadian Preferred Stock, as the case may
be (each such certificate, an "Old Certificate"), in exchange for the Merger
Consideration. Upon the proper delivery and surrender to the Exchange Agent of
an Old Certificate, together with a duly completed and executed letter of
transmittal, the record holder of such Old Certificate shall be entitled to
receive, and the Exchange Agent (pursuant to irrevocable instructions from PCS)
shall deliver to such record holder, in exchange therefor, subject to Section
1.09, (i) a certificate representing the Merger Shares to which such Holder
shall have become entitled pursuant to Section 1.01, (ii) the Merger Cash to
which such Holder shall have become entitled pursuant to Section 1.01, and (iii)
if applicable, cash in lieu of fractional shares as provided in Section 1.05.
Any Old Certificate delivered to the Exchange Agent with a duly completed and
executed letter of transmittal shall forthwith be canceled. Until so delivered,
each Old Certificate shall, after the Effective Time, represent for all purposes
only the right to receive the Merger Consideration as set forth in this
Agreement. No interest will be paid or will accrue on any portion of the Merger
Consideration payable on the surrender of an Old Certificate. Any Holder whose
Old Certificate has been lost or destroyed may nevertheless obtain the Merger
Consideration into which the
2
<PAGE> 8
Arcadian Common Stock, represented by such lost Old Certificate would have been
converted pursuant to Section 1.01, provided such Holder delivers to PCS and the
Exchange Agent a statement certifying such loss or destruction and providing for
indemnity reasonably satisfactory to PCS and the Exchange Agent against any loss
or expense either of them may incur as a result of such lost or destroyed Old
Certificate being thereafter surrendered to the Exchange Agent or PCS. In the
event of a transfer of ownership of any Arcadian Common Stock which is not
registered in the transfer records of Arcadian, the Merger Consideration may be
delivered to a transferee if the Old Certificate representing such Arcadian
Common Stock so transferred is presented to the Exchange Agent, accompanied by
all documents required to evidence and effect such transfer and by evidence that
any applicable transfer taxes have been paid or are not payable.
(c) No dividends payable with respect to any Merger Shares shall be paid to
persons entitled to receive such Merger Shares until such persons have
surrendered their Old Certificates (or certification with respect to lost or
destroyed Old Certificates) to the Exchange Agent in accordance with Section
1.02(b). After such surrender, there shall be paid to the person in whose name
the Merger Shares shall be issued any dividends on such Merger Shares that have
a record date prior to such surrender. If the payment date for such dividend is
after the date of such surrender, payment shall be made on such payment date. In
no event will any person entitled to receive Merger Shares be entitled to
interest on any dividend declared with respect to Merger Shares.
(d) Any of the Old Certificates, and any certification with respect to lost
or destroyed Old Certificates, that have not been surrendered or delivered to
the Exchange Agent within six months after the Effective Time may be delivered
to PCS, and any Holder who has not theretofore complied with Section 1.02(b)
shall thereafter look only to PCS for payment of the Merger Consideration.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable for any cash or securities delivered to a public official
pursuant to applicable abandoned property, escheat or similar laws.
(e) All deliveries and payments in respect of Arcadian Common Stock that
are made in accordance with the terms hereof shall be deemed to have been made
in full satisfaction of all rights pertaining to such securities, except as may
be otherwise required by law.
SECTION 1.03. Transfers after the Effective Time. No transfers of Arcadian
Common Stock or Arcadian Preferred Stock shall be made on the transfer books of
the Surviving Corporation at or after the Effective Time.
SECTION 1.04. Withholding. PCS shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
Holder such amounts as PCS may be required to deduct and withhold with respect
to the making of such payment under the Code or any provision of state, local or
foreign tax law. To the extent that such amounts are so withheld by PCS, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the Holder in respect of whom such deduction and withholding were
made.
SECTION 1.05. Fractional Shares. No fractional shares of PCS Common Stock
shall be issued in connection with the Merger, but in lieu thereof each holder
of Arcadian Common Stock otherwise entitled to a fractional share of PCS Common
Stock (considering all Old Certificates held of record by such holder together)
will be entitled to receive a cash payment (rounded up or down to the nearest
$.01, $.005 being rounded up to $.01) in an amount equal to such fractional part
of a share of PCS Common Stock multiplied by the Final PCS Common Stock Price.
SECTION 1.06. Options, SARs, CESARs and Restricted Stock. (a) As soon as
reasonably practicable after receiving written instructions from PCS and before
the Effective Time, Arcadian shall take all necessary and appropriate actions to
implement the provisions of clause (1) or (3) of Section 6(j) of Arcadian's
Stock Option Plan, as amended (the "Option Plan"), with respect to the
outstanding options to purchase shares of Arcadian Common Stock (the "Options")
granted under the Option Plan. Arcadian and PCS understand and agree that
subject to certain conditions set forth in the Option Plan, (i) said clause (1)
of Section 6(j) permits Arcadian to accelerate the time at which the then
outstanding Options may be exercised in full for a limited period of time on or
before a specified date (which, in the case of the Merger, will permit the
holders of the
3
<PAGE> 9
Options (the "Optionees") to participate in the Merger with the shares of
Arcadian Common Stock received upon the exercise of such Options) to be fixed by
the Committee (as defined in the Option Plan), after which specified date all
unexercised Options and all rights of the Optionees thereunder shall terminate,
and (ii) said clause (3) permits Arcadian to require the mandatory surrender to
Arcadian of the then outstanding Options, as of a date before or not later than
sixty (60) days after the Effective Time as specified by the Committee, in which
event such Options shall be canceled and Arcadian shall pay to each Optionee an
amount of cash equal to the excess of the fair market value (as determined in
accordance with the Option Plan) of the aggregate shares of Arcadian Common
Stock subject to such Option over the aggregate option price of such shares.
(b) As soon as reasonably practicable before the Effective Time, Arcadian
shall take all necessary and appropriate actions to further amend Arcadian's
Stock Appreciation Rights Plan, as amended (the "SAR Plan"), to provide that at
the Effective Time, each stock appreciation right unit granted under the SAR
Plan ("SAR") that is outstanding immediately prior to the Effective Time shall
be converted into (i) cash equal to the Per Share Cash Amount less the
applicable Award Price (as set forth in the applicable SAR agreement) of such
SAR and (ii) a fraction of a share of PCS Common Stock equal to the Per Share
Stock Amount or cash of equal value.
(c) As soon as reasonably practicable before the Effective Time, Arcadian
shall take all necessary and appropriate actions to amend Arcadian's Cash
Equivalent Stock Appreciation Rights Plan (the "CESAR Plan") to provide that at
the Effective Time, each cash equivalent stock appreciation right unit granted
under the CESAR Plan ("CESAR") that is outstanding immediately prior to the
Effective Time shall be converted into (i) cash equal to the Per Share Cash
Amount less $6.67 and (ii) a fraction of a share of PCS Common Stock equal to
the Per Share Stock Amount or cash of equal value.
(d) Immediately prior to the Effective Time, all restrictions relating to
all shares of Arcadian Common Stock theretofore granted pursuant to Arcadian's
Restricted Stock Plan (the "Restricted Stock Plan") shall lapse, and all
conditions to the holders' receipt of such shares free of any such restrictions
shall be deemed satisfied. At the Effective Time, each share of Arcadian Common
Stock theretofore granted pursuant to the Restricted Stock Plan shall be
converted into the Merger Consideration pursuant to Section 1.01(b).
SECTION 1.07. Certain Adjustments. If at any time during the period between
the date of this Agreement and the Effective Time, any change in the outstanding
shares of capital stock of Arcadian shall occur, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
such period, the Merger Consideration shall be appropriately adjusted; provided,
however, that none of (a) the exercise between the date of this Agreement and
the Effective Time of Stock Options outstanding on the date of this Agreement,
(b) the issuance of shares of Arcadian Common Stock pursuant to the Restricted
Stock Plan, (c) the conversion of shares of Arcadian Preferred Stock in or at
any time prior the Merger, shall require any such adjustment.
SECTION 1.08. Dissenting Shares. Notwithstanding any of the foregoing
provisions of this Article 1, shares of Arcadian Common Stock and Arcadian
Preferred Stock outstanding immediately prior to the Effective Time and held by
a Holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such shares in accordance with
Delaware Law shall not be converted into a right to receive the Merger
Consideration, unless such Holder fails to perfect or withdraws or otherwise
loses his right to appraisal. If after the Effective Time such holder fails to
perfect or withdraws or loses his or her right to appraisal, such shares of
Arcadian Common Stock shall be treated as if they had been converted as of the
Effective Time into a right to receive the Merger Consideration. Arcadian shall
give PCS prompt notice of any demands received by Arcadian for appraisal of
shares of Arcadian Common Stock or Arcadian Preferred Stock, and PCS shall have
the right to participate in all negotiations and proceedings with respect to
such demands.
SECTION 1.09. Cash/Stock Adjustment. In the event that holders of Arcadian
Common Stock, in the aggregate, would not receive PCS Common Stock in the Merger
without the adjustment described herein, in an amount representing at least
47.94% of the Total Consideration, then the Per Share Stock Amount shall be
increased and the Per Share Cash Amount shall be decreased by the same dollar
value, so that at least 47.94% of the Total Consideration is represented by PCS
Common Stock. As used herein, the term "Total
4
<PAGE> 10
Consideration" means the sum of (a) the aggregate Merger Consideration (but
excluding the value of shares of Arcadian Common Stock as to which appraisal
rights have been demanded and not waived or otherwise lost), (b) the value of
the shares of Arcadian Common Stock as to which appraisal rights have been
demanded and not waived or otherwise lost, and (c) any amount paid in redemption
of Arcadian Common Stock and Arcadian Preferred Stock, other than redemptions
undertaken in the ordinary course of business and not in contemplation of the
Merger, within one year prior to the effective date of the Merger. Solely for
purposes of the foregoing computation, shares of PCS Common Stock to be received
by any Five Percent Holder (other than any Five Percent Holder who has delivered
to Arcadian a statement satisfactory to Arcadian to the effect that such Five
Percent Holder then has no intention to dispose of the shares of PCS Common
Stock to be received by such Five Percent Holder in the Merger for a period of
two years after the effective date of the Merger) shall be considered to be
cash, and shall not be considered to be shares of PCS Common Stock. As used
herein, the term "Five Percent Holder" means any stockholder of Arcadian who,
immediately prior to the Effective Time, is the owner of five percent or more of
(a) the aggregate number of shares of Arcadian Common Stock then outstanding
plus (b) the aggregate number of shares of Arcadian Common Stock into which the
Arcadian Preferred Stock then outstanding will be converted immediately prior to
the Merger pursuant to Arcadian's exercise of the Common Conversion Option.
ARTICLE 2
THE SURVIVING CORPORATION
SECTION 2.01. The Surviving Corporation. (a) The certificate of
incorporation of Merger Sub in effect at the Effective Time shall be the
certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law.
(b) The bylaws of Merger Sub in effect at the Effective Time shall be the
bylaws of the Surviving Corporation until amended in accordance with applicable
law.
(c) From and after the Effective Time, until successors are duly elected or
appointed and qualified in accordance with applicable law, (i) the directors of
Merger Sub at the Effective Time shall be the directors of the Surviving
Corporation, and (ii) the officers of Merger Sub at the Effective Time shall be
the officers of the Surviving Corporation.
ARTICLE 3
STOCKHOLDER APPROVAL; EFFECTIVE TIME
SECTION 3.01. Stockholder Approval. Subject to the terms and conditions
contained herein, this Agreement and the transactions contemplated hereby, shall
be submitted for approval to the holders of shares of Arcadian Common Stock and
Arcadian Preferred Stock at a meeting to be duly held for such purpose by
Arcadian (the "Special Meeting"). PCS and Arcadian shall coordinate and
cooperate with respect to the timing of such meeting and shall endeavor to hold
such meeting as soon as practicable after the date hereof. Arcadian's Board of
Directors shall recommend unanimously that its stockholders approve and adopt
this Agreement and the transactions contemplated hereby and such recommendation
shall be contained in the Proxy Statement; provided that nothing herein shall
prevent the Board of Directors of Arcadian from withdrawing or modifying this
recommendation if, in the good faith judgment of such Board of Directors after
consultation with legal counsel and financial advisors, such Board's fiduciary
duties require such withdrawal or modification.
SECTION 3.02. Effective Time. On the first business day on or after both
(a) this Agreement has been duly approved by the requisite vote of the holders
of shares of Arcadian Common Stock and Arcadian Preferred Stock and (b) the
closing of the Merger shall have occurred, a Certificate of Merger relating to
the Merger (the "Certificate of Merger"), specifying that the Merger shall
become effective at such date and time as are specified therein, shall be filed
in accordance with Delaware Law, and the Merger shall become
5
<PAGE> 11
effective in accordance with the terms of the Certificate of Merger (such time
and date are referred to as the "Effective Time").
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF PCS AND MERGER SUB
PCS and Merger Sub jointly and severally represent and warrant to Arcadian
as follows:
SECTION 4.01. Organization, Standing and Power. (a) Each of PCS and its
Subsidiaries is a corporation or partnership duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization and has
all requisite power and authority to carry on its business as now conducted.
Each of PCS and its Subsidiaries is duly qualified to do business and is in good
standing in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure to so qualify
would not, individually or in the aggregate, have a Material Adverse Effect on
PCS. PCS has furnished to Arcadian complete and correct copies of its charter
documents and By-laws.
(b) As used in this Agreement:
(i) "Subsidiary" means, as to any Person, any corporation or other
entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time directly or indirectly owned
by such Person;
(ii) "Person" means an individual, corporation, limited liability
company, partnership, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof; and
(iii) "Material Adverse Effect" means, as to any Person, a Material
Adverse Effect on the business, assets, condition (financial or otherwise)
or results of operations of such Person and its Subsidiaries, taken as a
whole, which effect shall be measured net of, and only after giving the
Person the benefit of, any payments under any insurance, indemnity,
reimbursement, contribution, compensation or other similar rights which
reduce, offset, compensate or otherwise limit the impact thereof on the
Person and its Subsidiaries.
(iv) "SBCA" means The Business Corporations Act (Saskatchewan).
(v) "Canadian Securities Laws" means the SBCA, the Securities Act,
1988 (Saskatchewan) and the equivalent legislation in the other provinces
of Canada, all as now enacted or as the same may from time to time be
amended, re-enacted or replaced, and the applicable rules, regulations,
rulings, orders and forms made or promulgated under such statutes and the
published policies of the regulatory authorities administering such
statutes, as well as the rules, regulations, bylaws and policies of the
Montreal Exchange and The Toronto Stock Exchange.
SECTION 4.02. Corporate Authorization. The execution, delivery and
performance by PCS and Merger Sub of this Agreement and the consummation by PCS
and Merger Sub of the transactions contemplated hereby are within their
corporate powers and have been duly authorized by all necessary corporate
action. Without limiting the generality of the foregoing, the Board of Directors
(or the Executive Committee) of PCS and the Board of Directors of Merger Sub
have unanimously adopted resolutions adopting and approving this Agreement, the
transaction contemplated hereby and the Merger. No vote of any class or series
of PCS's capital stock is necessary to approve and adopt this Agreement and the
transactions contemplated hereby. PCS, as sole stockholder of Merger Sub, has
approved and adopted this Agreement and the transactions contemplated hereby,
including the Merger. This Agreement has been duly executed and delivered by PCS
and Merger Sub and constitutes the valid and binding agreements of PCS and
Merger Sub, enforceable against PCS and Merger Sub in accordance with its terms,
subject to (a) bankruptcy, insolvency, moratorium
6
<PAGE> 12
and other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and (b) general principles of equity (regardless of
whether considered in a proceeding at law or in equity).
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by PCS and Merger Sub of this Agreement and the consummation of the
Merger by PCS and Merger Sub require no action by or in respect of, or filing
with, any governmental body, agency, official or authority other than (a) the
filing of a Certificate of Merger in accordance with Delaware Law, (b)
compliance with any applicable requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (c) compliance with any
applicable requirements of the Canadian Securities Laws, the Securities Act and
of the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder (the "Exchange Act"), (d) approval of the
NYSE, (e) blue sky filings, and (f) applicable environmental protection
clearances.
SECTION 4.04. Non-Contravention. Except as previously disclosed in writing
to Arcadian or as disclosed in any of the PCS Disclosure Documents, the
execution, delivery and performance by PCS and Merger Sub of this Agreement and
the consummation by PCS and Merger Sub of the transactions contemplated hereby
do not and will not (a) contravene or conflict with the charter documents or
By-laws of PCS or Merger Sub, (b) assuming compliance with the matters referred
to in Section 4.03, contravene or conflict with or constitute a violation of any
provision of any law, regulation, judgment, injunction, order or decree binding
upon or applicable to PCS or any of its Subsidiaries, (c) constitute a default
(or an event which with notice, the lapse of time or both would become a
default) under or give rise to a right of termination, cancellation or
acceleration of any right or obligation to which PCS or any of its Subsidiaries
is entitled under any provision of any agreement, contract or other instrument
binding upon PCS or any of its Subsidiaries, or (d) result in the creation or
imposition of any Lien on any asset of PCS or any of its Subsidiaries, except
for such contraventions, conflicts or violations referred to in clause (b) or
defaults or rights of termination, cancellation or acceleration referred to in
clause (c) or creations or impositions of any Lien referred to in clause (d)
that would not, individually or in the aggregate, have a Material Adverse Effect
on PCS. For purposes of this Agreement, "Lien" means, with respect to any asset,
any mortgage, lien, pledge, charge, security interest or encumbrance of any kind
in respect of such asset.
SECTION 4.05. Capitalization. (a) As of the date hereof, the authorized
capital stock of PCS consists of an unlimited number of common shares without
par value (the "PCS Common Stock"), and an unlimited number of preferred shares,
issuable in series without par value. At the close of business on July 31, 1996,
(i) 45,544, 896 shares of PCS Common Stock were issued and outstanding, (ii)
1,288,325 shares of PCS Common Stock were reserved for issuance pursuant to
options issued by PCS, and (iii) no preferred shares were issued or outstanding.
All outstanding shares of capital stock of PCS have been validly issued and are
fully paid and nonassessable. Except for the options referred to above, and
shares to be issued under PCS's Dividend Reinvestment Plan (the "PCS DRIP"), as
of the date hereof, there are no options, warrants, calls, rights, commitments
or agreements to which PCS or any of its Subsidiaries is a party or by which it
is bound, obligating PCS or any of its Subsidiaries to issue, deliver, sell,
purchase, redeem or acquire, or cause to be issued, delivered, sold, purchased,
redeemed or acquired, additional shares of capital stock or other voting
securities of PCS or any of its Subsidiaries or obligating PCS or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
right, commitment or agreement.
(b) Except as disclosed in any of the PCS Disclosure Documents, all of the
outstanding capital stock of, or other ownership interests in, each Subsidiary
of PCS is owned by PCS, directly or indirectly, free and clear of any Lien and
free of any other limitation or restriction (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other
ownership interests).
SECTION 4.06. Disclosure Documents. PCS has previously furnished to
Arcadian true and complete copies of:
(a) PCS Annual Reports to Shareholders for each of the years ended
December 31, 1993 through 1995;
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(b) PCS Annual Reports on Form 10-K or Annual Information Forms for
each of the years ended December 31, 1993 through 1995;
(c) PCS Quarterly Financial Statements for the quarters ended March 31
and June 30, 1996 and Reports on Form 10-Q furnished in respect of such
periods;
(d) each definitive proxy statement of PCS since December 31, 1993;
(e) each final prospectus filed by PCS since December 31, 1993; and
(f) all Material Change Reports filed by PCS since December 31, 1995.
As of their respective dates, such reports, proxy statements and
prospectuses (collectively, the "PCS Disclosure Documents") (i) complied as to
form in all material respects with the applicable requirements of the Canadian
Securities Laws and, to the extent applicable, the Securities Act and the
Exchange Act, and (ii) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and
unaudited consolidated interim financial statements included in the PCS
Disclosure Documents (including any related notes and schedules) fairly present
the financial position of PCS and its consolidated Subsidiaries as of the dates
thereof and the results of operations and cash flows for the periods or as of
the dates then ended (subject, where appropriate, to normal year-end
adjustments), in each case in accordance with past practice and generally
accepted accounting principles in Canada ("Canadian GAAP") consistently applied
during the periods involved (except as otherwise disclosed in the notes
thereto). Since December 31, 1993, PCS has timely filed all reports,
registration statements and other filings required to be filed by it under the
applicable requirements of the Canadian Securities Laws.
SECTION 4.07. Compliance with Laws. The businesses of PCS and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental entity (provided that no representation or
warranty is made in this Section 4.07 with respect to Environmental Laws),
except as disclosed in any of the PCS Disclosure Documents and except for such
violations as would not, individually or in the aggregate, have a Material
Adverse Effect on PCS.
SECTION 4.08. No Undisclosed Liabilities. As of June 30, 1996, neither PCS
nor any of its Subsidiaries had any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, that would be required by
Canadian GAAP to be reflected on a consolidated balance sheet of PCS and its
Subsidiaries (including the notes thereto), except (a) liabilities or
obligations reflected in any of the PCS Disclosure Documents and (b) liabilities
or obligations which would not, individually or in the aggregate, have a
Material Adverse Effect on PCS.
SECTION 4.09. Litigation. Except as previously disclosed in writing to
Arcadian or as disclosed in any of the PCS Disclosure Documents, there is no (i)
class action litigation pending or, to the best knowledge of PCS, threatened
against or affecting PCS or any of its Subsidiaries, (ii) other suit, action or
proceeding pending or, to the best knowledge of PCS, threatened against or
affecting PCS or any of its Subsidiaries that is reasonably likely to have a
Material Adverse Effect on PCS, or (iii) judgment, decree, injunction, or, to
the best knowledge of PCS, any rule or order of any governmental entity or
arbitrator outstanding against PCS or any of its Subsidiaries, that is
reasonably likely to have a Material Adverse Effect on PCS.
SECTION 4.10. Environmental Matters. Except as previously disclosed in
writing to Arcadian, as described in the PCS Disclosure Documents, (a) PCS and
each of its Subsidiaries are in material compliance with all applicable federal,
state, provincial, local and foreign laws, regulations, rules, common law,
orders, decrees, ordinances, treaties, judicial and administrative decisions,
judgments, injunctions, consent agreements, permits and governmental
restrictions relating to pollution or protection of human health and safety or
the environment (including, without limitation, ambient air, surface water,
ground water, land surface and subsurface strata) (collectively, "Environmental
Laws"), except for non-compliance which would not, individually or in the
aggregate, have a Material Adverse Effect on PCS and, to the best knowledge of
PCS, there are no existing or reasonably foreseeable circumstances, conditions,
events or occurrences that are
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reasonably likely to materially prevent or interfere with such compliance in the
next three years, (b) PCS and each of its Subsidiaries have obtained and
maintained in effect (or are in the process of obtaining) all permits, licenses,
certificates and other governmental authorizations required under applicable
Environmental Laws ("Environmental Permits") with respect to their properties,
assets, businesses, and operations except where the failure to do so would not
have a Material Adverse Effect on PCS; (c) neither PCS nor any of its
Subsidiaries has received written notice of, or, to the best knowledge of PCS,
is the subject of, any action, cause of action, claim, investigation, demand,
notice, request for information, complaint, suit or proceeding by any Person
alleging liability under or in connection with or non-compliance with any
Environmental Law, including, without limitation, toxic tort, nuisance, trespass
and similar claims (collectively, "Environmental Claim"), which is reasonably
likely to, individually or in the aggregate, have a Material Adverse Effect on
PCS; (d) as of June 30, 1996, neither PCS nor any of its Subsidiaries had any
liabilities or obligations of any nature, whether accrued, contingent or
otherwise, and whether relating to PCS, any of its Subsidiaries or any
predecessor entities of PCS or any of its Subsidiaries, arising under or
relating to any Environmental Law or Environmental Claim, except for liabilities
or obligations which would not, individually or in the aggregate, be reasonably
expected to have a Material Adverse Effect on PCS; and (e) neither PCS nor any
of its Subsidiaries owns, leases or operates or, since January 1, 1986, has
owned, leased or operated, any real property in New Jersey or Connecticut, or
conducts or, since January 1, 1986, has conducted, any operations in New Jersey
or Connecticut.
SECTION 4.11. Proxy Statement; Registration Statement. Neither the Proxy
Statement nor the Registration Statement will, in the case of the Proxy
Statement or any amendments or supplements thereto, at the time of the mailing
of the Proxy Statement or any amendments or supplements thereto, at the time of
the Special Meeting, and at the Effective Time, or, in the case of the
Registration Statement, at the time it becomes effective, contain any untrue
statement of a material fact relating to PCS, its Subsidiaries or the Merger, or
omit to state any material fact required to be stated therein relating to PCS,
its Subsidiaries or the Merger, or necessary in order to make the statements
therein relating to PCS, its Subsidiaries or the Merger, in light of the
circumstances under which they were made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act, and the Registration Statement will comply as to form in all
material respects with the provisions of the Securities Act. The letter to
stockholders, notice of meeting, proxy statement/prospectus and forms of proxies
to be distributed to stockholders of Arcadian in connection with the Special
Meeting, and any schedules required to be filed with the SEC in connection
therewith, are collectively referred to herein as the "Proxy Statement".
SECTION 4.12. Absence of Certain Changes. Except as permitted by this
Agreement, as disclosed in any of the PCS Disclosure Documents, or as
specifically permitted by Section 6.18, since June 30, 1996, PCS and its
Subsidiaries have conducted their business in the ordinary course consistent
with past practice and there has not been:
(a) any event, occurrence or facts which has or have had, or is or are
reasonably expected to have, a Material Adverse Effect on PCS;
(b) any amendment of any term of any outstanding security of PCS or
any Subsidiary of PCS; or
(c) any change in the capitalization of PCS as described in Section
4.05, except for the exercise of employee stock options and shares issued
pursuant to the PCS DRIP.
SECTION 4.13. Liabilities of Merger Sub. Merger Sub has no liabilities or
obligations of any nature, whether accrued, contingent or otherwise, except its
obligations under this Agreement and has conducted no business activities. As of
the date hereof, the authorized capital stock of Merger Sub consists solely of
1,000 shares of Common Stock, no par value, one share of which is outstanding.
All of Merger Sub's issued and outstanding shares of capital stock are duly
authorized, validly issued, fully paid and nonassessable.
SECTION 4.14. Merger-Related Tax Matters. (a) Neither PCS nor, to the
knowledge of PCS, any of its affiliates has taken or agreed to take any action
that would prevent the Merger from constituting a reorganization qualifying
under the provisions of Section 368(a) of the Code.
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(b) PCS and Merger Sub will each pay their respective expenses, if any,
incurred in connection with the Merger. Neither PCS nor Merger Sub will pay any
of the expenses of any Arcadian stockholder incurred in connection with the
Merger.
(c) There is no intercorporate indebtedness existing between Arcadian and
PCS or between Arcadian and Merger Sub that was issued, acquired, or will be
settled at a discount.
(d) Neither PCS nor Merger Sub is under the jurisdiction of a court in a
title 11 or similar case within the meaning of Section 368(a)(3)(A) of the Code.
(e) The fair market value of the PCS stock and other consideration received
by each Arcadian stockholder in the Merger will be approximately equal to the
fair market value of the Arcadian stock surrendered in the exchange.
(f) Prior to the Merger, PCS will be in control of Merger Sub within the
meaning of section 368(c)(2) of the Code.
(g) Following the Merger, Surviving Corporation will not issue additional
shares of its stock that would result in PCS losing control of Surviving
Corporation within the meaning of section 368(c) of the Code.
(h) PCS has no present plan or intention to reacquire any of its stock
issued in the Merger.
(i) PCS has no plan or intention to liquidate Surviving Corporation; to
merge Surviving Corporation with and into another corporation in a manner that
would cause the Merger to fail to qualify under Section 368 of the Code; to sell
or otherwise dispose of the stock of Surviving Corporation in a manner that
would cause the Merger to fail to qualify under Section 368 of the Code; or to
cause Surviving Corporation to sell or otherwise dispose of any of the assets of
Arcadian acquired in the Merger, except for dispositions made in the ordinary
course of business or transfers described in section 368(a)(2)(C) of the Code.
(j) Following the Merger, Surviving Corporation will continue the historic
business of Arcadian or use a significant portion of Arcadian's business assets
in a business.
(k) Neither PCS nor Merger Sub is an investment company as defined in
section 368(a)(2)(F)(iii) or (iv) of the Code.
(l) No stock of Merger Sub will be issued in the Merger except as described
herein.
(m) PCS is not aware of any plan or intention by any stockholder of
Arcadian to sell, exchange, transfer by gift or otherwise dispose of any PCS
Common Stock to be received by them in the Merger. In addition, PCS is not aware
of any transfer of Arcadian stock by any Arcadian stockholder prior to the
Merger having been made in contemplation of the Merger.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF ARCADIAN
Arcadian represents and warrants to PCS and Merger Sub as follows:
SECTION 5.01. Organization, Standing and Power. Each of Arcadian and its
Subsidiaries is a corporation or partnership duly organized, validly existing
and in good standing under the laws of its jurisdiction of organization and has
all requisite power and authority to carry on its business as now conducted.
Each of Arcadian and its Subsidiaries is duly qualified to do business and is in
good standing in each jurisdiction in which the business it is conducting, or
the operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure to so qualify
would not, individually or in the aggregate, have a Material Adverse Effect on
Arcadian. Arcadian has furnished to PCS complete and correct copies of its
Restated Certificate of Incorporation, as amended, and its Amended and Restated
Bylaws.
SECTION 5.02. Corporate Authorization. The execution, delivery and
performance by Arcadian of this Agreement and the consummation by Arcadian of
the transactions contemplated hereby are within Arcadian's
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corporate powers and, except for approval by Arcadian's stockholders in
connection with the consummation of the Merger, have been duly authorized by all
necessary corporate action. Without limiting the generality of the foregoing,
the Board of Directors of Arcadian has unanimously adopted a resolution adopting
and approving this Agreement. The affirmative vote of a majority of the
outstanding shares of Arcadian Common Stock and Arcadian Preferred Stock
entitled to vote thereon, voting as a single class, is the only vote of any
class or series of Arcadian's capital stock necessary to approve and adopt this
Agreement and the transactions contemplated hereby. This Agreement has been duly
executed and delivered by Arcadian and constitutes a valid and binding agreement
of Arcadian, enforceable against Arcadian in accordance with its terms, subject
to (a) bankruptcy, insolvency, moratorium and other similar laws now or
hereafter in effect relating to or affecting creditors' rights generally and (b)
general principles of equity (regardless of whether considered in a proceeding
at law or in equity).
SECTION 5.03. Governmental Authorization. The execution, delivery and
performance by Arcadian of this Agreement and the consummation of the Merger by
Arcadian require no action by or in respect of, or filing with, any governmental
body, agency, official or authority other than (a) the filing of a Certificate
of Merger in accordance with Delaware Law; (b) compliance with any applicable
requirements of the HSR Act; (c) compliance with any applicable requirements of
the Securities Act and the Exchange Act; and (d) compliance with any applicable
requirements of Environmental Law relating to Environmental Permits and any
other applicable environmental protection clearances.
SECTION 5.04. Non-Contravention. Except as previously disclosed in writing
to PCS or as disclosed in any of the Arcadian SEC Documents, the execution,
delivery and performance by Arcadian of this Agreement and the consummation by
Arcadian of the transactions contemplated hereby do not and will not (a)
contravene or conflict with the Restated Certificate of Incorporation, as
amended, or the Amended and Restated Bylaws of Arcadian, (b) assuming compliance
with the matters referred to in Section 5.03, contravene or conflict with or
constitute a violation of any provision of any law, ordinance, regulation,
judgment, injunction, order or decree binding upon or applicable to Arcadian or
any of its Subsidiaries, (c) constitute a default (or an event which with
notice, the lapse of time or both would become a default) under or give rise to
a right of termination, cancellation or acceleration of any right or obligation
to which Arcadian or any of its Subsidiaries is entitled under any provision of
any agreement, contract or other instrument binding upon Arcadian or any of its
Subsidiaries, or (d) result in the creation or imposition of any Lien on any
asset of Arcadian or any of its Subsidiaries, except for such contraventions,
conflicts or violations referred to in clause (b) or defaults or rights of
termination, cancellation or acceleration referred to in clause (c) or creations
or impositions of any Lien referred to in clause (d) that would not,
individually or in the aggregate, have a Material Adverse Effect on Arcadian.
SECTION 5.05. Capitalization. (a) As of the date hereof, the authorized
capital stock of Arcadian consists of 150,000,000 shares of common stock, par
value $0.01 per share (the "Arcadian Common Stock"), and 50,000,000 shares of
preferred stock, par value $0.01 per share. At the close of business on August
29, 1996, (i) 38,540,261 shares of Arcadian Common Stock were issued and
outstanding, (ii) 7,680,640 shares of Arcadian Common Stock were reserved for
issuance pursuant to options granted or available for grant by Arcadian,
warrants issued by Arcadian, pursuant to the Restricted Stock Plan, and upon
conversion of the Arcadian Preferred Stock, and (iii) 5,534,157 shares of
Arcadian Preferred Stock were issued and outstanding and 12,593 shares of
Arcadian Preferred Stock were reserved for issuance. All outstanding shares of
capital stock of Arcadian have been validly issued and are fully paid and
nonassessable. Except as set forth above, as of the date hereof, there are no
options, warrants, calls, rights, commitments or agreements to which Arcadian or
any of its Subsidiaries is a party or by which it is bound, obligating Arcadian
or any of its Subsidiaries to issue, deliver, sell, purchase, redeem or acquire,
or cause to be issued, delivered, sold, purchased, redeemed or acquired,
additional shares of capital stock or other voting securities of Arcadian or any
of its Subsidiaries or obligating Arcadian or any of its Subsidiaries to grant,
extend or enter into any such option, warrant, call, right, commitment or
agreement.
(b) Except as disclosed in Schedule 5.05 or any of the Arcadian SEC
Documents, all of the outstanding capital stock of, or other ownership interests
in, each Subsidiary of Arcadian is owned by Arcadian, directly or
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indirectly, free and clear of any Lien and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock or other ownership interests).
SECTION 5.06. SEC Documents. Arcadian has previously furnished to PCS true
and complete copies of:
(a) Arcadian Annual Reports on Form 10-K filed with the SEC for each
of the years ended December 31, 1993 through 1995;
(b) Arcadian Quarterly Reports on Form 10-Q filed with the SEC for the
quarters ended March 31 and June 30, 1996;
(c) each definitive proxy statement filed by Arcadian with the SEC
since December 31, 1993;
(d) each final prospectus filed by Arcadian with the SEC since
December 31, 1993, except any final prospectus on Form S-8; and
(e) all Current Reports on Form 8-K filed by Arcadian with the SEC
since December 31, 1995.
As of their respective dates, such reports, proxy statements and
prospectuses (collectively, the "Arcadian SEC Documents") (i) complied as to
form in all material respects with the applicable requirements of the Securities
Act and the Exchange Act and (ii) did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited consolidated financial
statements and unaudited consolidated interim financial statements included in
the Arcadian SEC Documents (including any related notes and schedules) fairly
present the financial position of Arcadian and its consolidated Subsidiaries as
of the dates thereof and the results of operations and cash flows for the
periods or as of the dates then ended (subject, where appropriate, to normal
year-end adjustments), in each case in accordance with past practice and
generally accepted accounting principles in the United States ("GAAP")
consistently applied during the periods involved (except as otherwise disclosed
in the notes thereto). Since December 31, 1993, Arcadian has timely filed all
reports, registration statements and other filings required to be filed by it
with the SEC under rules and regulations of the SEC.
SECTION 5.07. Compliance with Laws. The businesses of Arcadian and its
Subsidiaries are not being conducted in violation of any law, ordinance or
regulation of any governmental entity (provided that no representation or
warranty is made in this Section 5.07 with respect to Environmental Laws),
except as disclosed in any of the Arcadian SEC Documents and except for such
violations as would not, individually or in the aggregate, have a Material
Adverse Effect on Arcadian.
SECTION 5.08. No Undisclosed Liabilities. As of June 30, 1996, neither
Arcadian nor any of its Subsidiaries had any liabilities or obligations of any
nature, whether or not accrued, contingent or otherwise, that would be required
by GAAP to be reflected on a consolidated balance sheet of Arcadian and its
Subsidiaries (including the notes thereto), except for (a) the liabilities or
obligations reflected in any of the Arcadian SEC Documents, (b) the liabilities
and obligations described on Schedule 5.08, and (c) the liabilities or
obligations which would not, individually or in the aggregate, have a Material
Adverse Effect on Arcadian.
SECTION 5.09. Litigation. Except as previously disclosed in writing to PCS
or as disclosed in any of the Arcadian SEC Documents, there is no (i) class
action litigation pending or, to the best knowledge of Arcadian, threatened
against or affecting Arcadian or any of its Subsidiaries, (ii) other suit,
action or proceeding pending or, to the best knowledge of Arcadian, threatened
against or affecting Arcadian or any of its Subsidiaries that is reasonably
likely to have a Material Adverse Effect on Arcadian or (iii) judgment, decree,
injunction, rule or order of any governmental entity or arbitrator outstanding
against Arcadian or any of its Subsidiaries that is reasonably likely to have a
Material Adverse Effect on Arcadian.
SECTION 5.10. Environmental Matters. Except as previously disclosed in
writing to PCS, as described in the Arcadian SEC Documents, or as disclosed in
Schedule 5.10, (a) Arcadian and each of its Subsidiaries are in compliance with
all applicable Environmental Laws except for non-compliance which would not,
individually or in the aggregate, have a Material Adverse Effect on Arcadian
and, to the best knowledge of
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Arcadian, there are no existing or reasonably foreseeable circumstances,
conditions, events or occurrences that are reasonably likely to materially
prevent or interfere with such compliance in the next three years; (b) Arcadian
and each of its Subsidiaries have obtained and maintained in effect, or are in
the process of obtaining, all Environmental Permits required with respect to
their properties, assets, businesses, and operations, except where the failure
to do so would not, individually or in the aggregate, have a Material Adverse
Effect on Arcadian; (c) neither Arcadian nor any of its Subsidiaries has
received written notice of, or, to the best knowledge of Arcadian, is the
subject of, any Environmental Claim which is reasonably likely to, individually
or in the aggregate, have a Material Adverse Effect on Arcadian; (d) as of June
30, 1996, neither Arcadian nor any of its Subsidiaries had any liabilities or
obligations of any nature, whether accrued, contingent or otherwise, and whether
relating to Arcadian, any of its Subsidiaries or any predecessor entities of
Arcadian or any of its Subsidiaries, arising under or relating to any
Environmental Law or Environmental Claim, except for liabilities or obligations
which would not, individually or in the aggregate, be reasonably expected to
result in losses (excluding capital expenditures) in excess of $5,000,000 during
the five-year period from the date hereof or (ii) individually or in the
aggregate, have a Material Adverse Effect on Arcadian; and (e) neither Arcadian
nor any of its Subsidiaries owns, leases or operates or, since January 1, 1986,
has owned, leased or operated, any real property in New Jersey or Connecticut,
or conducts or, since January 1, 1986, has conducted, any operations in New
Jersey or Connecticut.
SECTION 5.11. ERISA. (a) Schedule 5.11 contains a list identifying each
"employee benefit plan", as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974 ("ERISA"), which (i) is subject to any provision of
ERISA and (ii) is maintained, administered or contributed to by Arcadian or any
Subsidiary of Arcadian and covers any employee or former employee of Arcadian or
any Subsidiary of Arcadian or under which Arcadian or any Subsidiary of Arcadian
has any liability. Copies of such plans (and, if applicable, related trust
agreements and/or insurance contracts) and all amendments thereto and written
interpretations thereof have been furnished to PCS together with (A) the three
most recent annual reports (Form 5500 including, if applicable, Schedule A or
Schedule B thereto or both) prepared in connection with any such plan, (B) the
most recent annual actuarial valuation report prepared in connection with any
such plan, and (c) the summary plan description (as defined in ERISA), if any,
and, all modifications thereto, prepared in connection with any such plan. Such
plans are referred to collectively herein as the "Arcadian Employee Plans". The
only Arcadian Employee Plans which individually or collectively would constitute
an "employee pension benefit plan (the "Pension Plans"), as defined in Section
3(2) of ERISA, are identified as such in the list referred to above.
(b) Except as set forth in Schedule 5.11, no Arcadian Employee Plan (i)
constitutes a "Multiemployer Plan", as defined in Section 3(37) of ERISA (a
"Multiemployer Plan"), (ii) is maintained in connection with any trust described
in Section 501(c)(9) of the Code, or (iii) is subject to Title IV of ERISA.
Neither Arcadian nor any ERISA Affiliate, as defined below, of Arcadian has (A)
engaged in, or is a successor to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA or (B) incurred, or reasonably
expects to incur prior to the Effective Time, (1) any liability under Title IV
of ERISA arising in connection with the termination of, or a complete or partial
withdrawal from, any plan covered or previously covered by Title IV of ERISA or
(2) any liability under Section 4971 of the Code that in either case could
become a liability of PCS or any of its Affiliates after the Effective Time.
Nothing done or omitted to be done and no transaction or holding of any asset
under or in connection with any Arcadian Employee Plan has or will make Arcadian
or any Subsidiary of Arcadian, or any officer or director of Arcadian or any
Subsidiary of Arcadian, subject to any liability under Title I of ERISA or
liable for any tax pursuant to Section 4975 of the Code that could have a
Material Adverse Effect on Arcadian. As of December 31, 1995, the present value
of all benefits accrued under each Arcadian Employee Plan subject to Title IV of
ERISA, other than a Multiemployer Plan (an "Arcadian Title IV Plan"), determined
on an ongoing basis using the assumptions used in the most recently prepared
annual actuarial valuation report, did not exceed the fair market value of the
assets of such Arcadian Title IV Plan as of such date (excluding for these
purposes any accrued but unpaid contributions) by more than $1,000,000. As of
December 31, 1995, there was no aggregate unfunded liability of Arcadian and any
Subsidiary of Arcadian in respect of all Arcadian Employee Plans or Arcadian
Benefit Arrangements described under Sections 4(b)(5) or 401 (a)(1) of ERISA,
computed using reasonable actuarial assumptions and determined as if all
benefits under such plans were vested and payable as
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of such date. All contributions or payments required to be made or accrued on
behalf of any Arcadian Employee Plan maintained by Arcadian, any of its
Subsidiaries, or any ERISA Affiliate, before the Effective Time, under the terms
of any Arcadian Employee Plan, will have been made or accrued by Arcadian, or by
its Subsidiaries, or any ERISA Affiliate, as applicable, by the Effective Time.
No Arcadian Employee Plan subject to Section 412 of the Code has incurred any
"accumulated funding deficiency" (as defined in ERISA), whether or not waived.
For purposes of this Section 5.11. "ERISA Affiliate" shall mean any entity which
is considered one employer with Arcadian under Section 4001 of ERISA or Section
414 of the Code.
(c) With respect to each Arcadian Employee Plan which is intended to be
qualified under Section 401(a) of the Code, Arcadian has received a favorable
determination letter that the plan is so qualified and that each trust forming a
part thereof is exempt from tax pursuant to Section 501(a) of the Code and, to
the best knowledge of Arcadian, no event has occurred since the date of such
determination that would adversely affect such qualification and exception.
Arcadian has furnished to PCS copies of the most recent Internal Revenue Service
determination letters with respect to each such Plan. Each Arcadian Employee
Plan has been maintained in all material respects in compliance with its terms
and with the requirements prescribed by any and all statutes, orders, rules and
regulations, including but not limited to ERISA and the Code, which are
applicable to such Plan.
(d) Except as set forth in Schedule 5.11, there is no contract, agreement,
plan or arrangement covering any employee or former employee of Arcadian or any
Subsidiary of Arcadian that, individually or collectively, could give rise to
the payment of any amount that would not be deductible pursuant to the terms of
Sections 162(a)(1), 162(m) or 280G of the Code.
(e) Schedule 5.11 contains a list of each employment, severance or other
similar contract, arrangement or policy and each plan or arrangement (written or
oral) providing for insurance coverage (including any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment benefits, vacation benefits, retirement benefits or for deferred
compensation, profit-sharing, bonuses, stock options, stock appreciation or
other forms of incentive compensation or post-retirement insurance, compensation
or benefits which (i) is not an Arcadian Employee Plan, (ii) is entered into,
maintained or contributed to, as the case may be, by Arcadian or any of its
Subsidiaries and (iii) covers any United States employee or former employee of
Arcadian or any of its Subsidiaries. Such contracts, plans and arrangements as
are described above, copies (or descriptions, in the case of oral arrangements)
of all of which have been furnished or made available previously to PCS are
referred to collectively herein as the "Arcadian Benefit Arrangements". Each
Arcadian Benefit Arrangement has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all statutes, orders,
rules and regulations that are applicable to such Arcadian Benefit Arrangement.
(f) Neither Arcadian nor any Subsidiary of Arcadian has any current or
projected liability in respect of post-employment or post-retirement health or
medical or life insurance benefits for retired, former or current employees of
Arcadian or any Subsidiary of Arcadian, except as required to avoid excise tax
under Section 4980B of the Code. No condition exists that would prevent Arcadian
or any Subsidiary of Arcadian from amending or terminating any Arcadian Employee
Plan or Arcadian Benefit Arrangement providing health or medical benefits in
respect of any active or former employee of Arcadian or any Subsidiary other
than limitations imposed under the terms of a collective bargaining agreement.
(g) Except as set forth in Schedule 5.11 or as described in Section
5.13(j), there has been no amendment to, written interpretation or announcement
(whether or not written) by Arcadian or any of its Subsidiaries relating to, or
change in employee participation or coverage under, any Arcadian Employee Plan
or Arcadian Benefit Arrangement which would increase materially the expense of
maintaining such Arcadian Employee Plan or Arcadian Benefit Arrangement above
the level of the expense incurred in respect thereof for the fiscal year ended
on December 31, 1995.
(h) Except as set forth in Schedule 5.11, neither Arcadian nor any
Subsidiary of Arcadian is a party to or subject to (i) any employment contract
or arrangement providing for annual future cash compensation of $250,000 or more
with any officer, director or employee, or (ii) any collective bargaining
agreement or union contract.
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(i) Arcadian has provided to PCS a list of (a) the names, titles, annual
salaries and other compensation of all officers of Arcadian or its Subsidiaries
and all other employees of Arcadian or its Subsidiaries whose annual base salary
exceeds $250,000 and (b) the wage rates for non-salaried employees of Arcadian
and its Subsidiaries (by classification). None of the employees referred to in
clause (a) and no other key employee of Arcadian or its Subsidiaries has
disclosed to Arcadian and its Subsidiaries that he or she intends to resign or
retire as a result of the transactions contemplated by this Agreement, or
otherwise for any other reason within one year after the date of this Agreement.
(j) Arcadian and its Subsidiaries are in compliance with all currently
applicable laws respecting employment and employment practices, terms and
conditions of employment and wages and hours, and are not engaged in any unfair
labor practice, failure to comply with which or engagement in which, as the case
may be, would reasonably be expected to have a Material Adverse Effect on
Arcadian. There is no unfair labor practice complaint pending or, to the best
knowledge of Arcadian, threatened against Arcadian or any Subsidiary of Arcadian
before the National Labor Relations Board which would reasonably be expected to
have a Material Adverse Effect on Arcadian.
(k) Schedule 5.11 identifies each employment, severance or other similar
contract, arrangement or policy and each plan or arrangement (written or oral)
providing for insurance coverage (including any self-insured arrangements),
workers' compensation, disability benefits, supplemental unemployment benefits,
vacation benefits, retirement benefits or for deferred compensation,
profit-sharing, bonuses, stock options, stock appreciation or other forms of
incentive compensation or post-retirement insurance, compensation or benefits
which (i) is not an Arcadian Employee Plan or Arcadian Benefit Arrangement, (ii)
is entered into, maintained or contributed to, as the case may be, by Arcadian
or any of its Subsidiaries and (iii) covers any employee or former employee of
Arcadian or any of its Subsidiaries (each an "Arcadian International Plan").
Arcadian has furnished to PCS copies of each Arcadian International Plan. Each
Arcadian International Plan has been maintained in substantial compliance with
its terms and with the requirements prescribed by any and all applicable
statutes, orders, rules and regulations (including any special provisions
relating to qualified plans where such Plan was intended to so qualify) and has
been maintained in good standing with applicable regulatory authorities. There
has been no amendment to, written interpretation of or announcement (whether or
not written) by Arcadian or any Subsidiary relating to, or change in employee
participation or coverage under, any Arcadian International Plan that would
increase materially the expense of maintaining such International Plan above the
level of expense incurred in respect thereof for the most recent fiscal year
ended prior to the date hereof. According to the actuarial assumptions and
valuations most recently used for the purpose of funding each Arcadian
International Plan (or, if the same has no such assumptions and valuations or is
unfunded, according to reasonable actuarial assumptions and valuations), as of
December 31, 1994, the total amount or value of the funds available under such
Plan to pay benefits accrued thereunder or segregated in respect of such accrued
benefits, together with any reserve or accrual with respect thereto, was not
less than the present value of all benefits (actual or contingent) accrued as of
such date of all participants and past participants therein in respect of which
Arcadian or any Subsidiary has or would have after the Closing any obligation.
From and after the Closing Date, PCS and its Affiliates will get the full
benefit of any such funds, accruals or reserves, to the extent permitted by
applicable law.
(l) Except as previously disclosed in writing to PCS, there is no issue
with respect to any Arcadian Employee Plan or Benefit Arrangement that is now,
or within the last twelve months has been, under examination by the Internal
Revenue Service or the Department of Labor and no audit with respect to any
Arcadian Employee Plan or Benefit Arrangement by either the Internal Revenue
Service or the Department of Labor has occurred. There are no pending
investigations by any governmental or regulatory agency or authority involving
or relating to any Arcadian Employee Plan or Benefit Arrangement, no threatened
or pending claims (except for claims for benefit payable in the normal
operations of the Arcadian Employee Plans or Benefit Arrangement), suits or
proceedings against any Arcadian Employee Plan or Benefit Arrangement or
asserting any rights or claims to benefits under any Arcadian Employee Plan or
Benefit Arrangement which could reasonably be expected to have a Material
Adverse Effect on Arcadian.
(m) Neither Arcadian nor any of its Subsidiaries nor any ERISA Affiliate
has provided, or is required to provide, security to any Arcadian Employee Plan
pursuant to Section 401(a)(29) of the Code.
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SECTION 5.12. Proxy Statement; Registration Statement. Neither the Proxy
Statement nor the Registration Statement will, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the time of the
mailing of the Proxy Statement or any amendments or supplements thereto, at the
time of the Special Meeting, and at the Effective Time, or, in the case of the
Registration Statement, at the time it becomes effective, contain any untrue
statement of a material fact relating to Arcadian, its Subsidiaries or the
Merger or omit to state any material fact required to be stated therein relating
to Arcadian, its Subsidiaries or the Merger or necessary in order to make the
statements therein relating to Arcadian, its Subsidiaries or the Merger, in
light of the circumstances under which they were made, not misleading. The Proxy
Statement will comply as to form in all material respects with the provisions of
the Exchange Act.
SECTION 5.13. Absence of Certain Changes. Except as disclosed elsewhere
herein or in any of the Arcadian SEC Documents, as set forth on Schedule 5.13,
or as specifically permitted by Section 6.01, since June 30, 1996, Arcadian and
its Subsidiaries have conducted their business in the ordinary course consistent
with past practice and there has not been:
(a) any event, occurrence or facts which has had or is reasonably
expected to have a Material Adverse Effect on Arcadian;
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Arcadian (other
than payment of Arcadian's regular quarterly dividend on Arcadian Common
Stock in an amount not exceeding $0.10 per share and on the Arcadian
Preferred Stock), or any repurchase, redemption or other acquisition by
Arcadian or any Subsidiary of Arcadian of any outstanding shares of capital
stock or other securities of, or other ownership interests in, Arcadian,
which repurchase, redemption or other acquisition, individually or in the
aggregate, is material to Arcadian and its Subsidiaries, taken as a whole;
(c) any amendment of any term of any outstanding security of Arcadian
or any Subsidiary of Arcadian;
(d) any incurrence, assumption or guarantee by Arcadian or any
Subsidiary of Arcadian of any indebtedness from any third party for
borrowed money other than in the ordinary course of business and in amounts
and on terms consistent with past practices;
(e) any creation or assumption by Arcadian or any Subsidiary of
Arcadian of any Lien on any material asset other than in the ordinary
course of business consistent with past practices;
(f) any making of any loan, advance or capital contribution to or
investment in any Person other than (i) loans, advances or capital
contributions to or investments in Subsidiaries of Arcadian, (ii)
investments in securities consistent with past practice or (iii) other
loans, advances, capital contributions or investments in an aggregate
amount not exceeding $25,000,000;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of Arcadian or any
Subsidiary of Arcadian which, individually or in the aggregate, is or may
reasonably be expected to have a Material Adverse Effect on Arcadian;
(h) except in the ordinary course of business consistent with past
practice, any transaction or commitment made, or any contract or agreement
entered into, by Arcadian or any Subsidiary of Arcadian relating to its
assets or business (including, without limitation, the acquisition or
disposition of any assets) or any relinquishment by Arcadian or any
Subsidiary of Arcadian of any contract, license or other right, other than
transactions, commitments, contracts or agreements contemplated by this
Agreement;
(i) any change in any method of accounting or accounting principle or
practice by Arcadian or any Subsidiary of Arcadian, except for any such
change required by reason of a concurrent change in GAAP;
(j) except (i) in the ordinary course of business, (ii) for Arcadian's
adoption of the Arcadian Corporation Severance Program and the Arcadian
Corporation Severance Program for Key Employees (collectively, the
"Severance Program"), a copy of which has been furnished to PCS, (iii) for
Arcadian's execution and delivery of certain Employment Agreements with the
persons listed on Schedule 5.13 (the
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"Employment Agreements"), a copy of the form of which has been furnished to
PCS, and (iv) for Arcadian's adoption of the Restricted Stock Plan, (A) any
grant by Arcadian or any of its Subsidiaries of any severance or
termination pay to, or entry into any employment, termination or severance
arrangement with, any employee or director of Arcadian; (B) any amendment
in any material respect of any employment, termination or severance
arrangement with any directors, officers or employees (it being understood
that any increase or acceleration of benefits under any such agreement or
arrangement shall be deemed material); (C) any establishment, adoption,
entry into, or amendment or action to accelerate or enhance any rights or
benefits under, (i) any plan providing for options, stock, performance
awards or other forms of incentive or deferred compensation or (ii) any
collective bargaining, bonus, profit sharing, thrift, compensation,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any of its directors, officers or employees;
or (D) any increase in the compensation or benefits of any other employees
or payment of any benefit not required by any plan or arrangement as in
effect on June 30, 1996;
(k) except such contracts as would not be material to Arcadian and its
Subsidiaries as a whole, any entry by Arcadian or any of its Subsidiaries
into any contract limiting the right of Arcadian or any of its Subsidiaries
at any time on or after the date of this Agreement or PCS or any of its
Subsidiaries or affiliates at or after the Effective Time, to engage in, or
to compete with any Person in, any business; or
(l) any entry by Arcadian or any of its Subsidiaries into any
acquisition or joint venture which is material to Arcadian and its
Subsidiaries, taken as a whole.
SECTION 5.14. Taxes. (a) All Tax Returns required to be filed (taking into
account all extensions heretofore granted) on or before the Effective Time by or
on behalf of Arcadian or any of its Subsidiaries have been filed with the
appropriate Taxing Authorities within the time and in the manner prescribed by
law, other than those Tax Returns the failure of which to file in the aggregate
would not have a Material Adverse Effect on Arcadian.
(b) All such Tax Returns are true, correct and complete in all material
respects. Except as listed on Schedule 5.14, no such Tax Return for tax years
beginning after September 1, 1988 contains a disclosure statement under Section
6662(d)(2)(B)(ii)(I) of the Code or any similar provision of state, local or
foreign law. For each taxable year of Arcadian and its Subsidiaries beginning
after December 31, 1989, Arcadian will furnish or make available (or cause to be
furnished or made available) to PCS or its representatives, immediately after
the date hereof, true and complete copies of all Tax Returns filed by Arcadian
and its Subsidiaries.
(c) All Taxes shown to be due and payable by Arcadian and any of its
Subsidiaries on all such Tax Returns have been paid, or withheld or collected
and remitted or deposited in full to or with the appropriate Taxing Authorities,
and Arcadian and its Subsidiaries have made appropriate provision in their June
30, 1996 financial statements for any Taxes owed but not yet paid.
(d) Except as set forth on Schedule 5.14, (i) all applicable statutes of
limitations for the assessment, reassessment, or collection of material Taxes
against Arcadian and any of its Subsidiaries have expired, (ii) no deficiency
payment of any Taxes for any period has been asserted or raised by any Taxing
Authority which remains unpaid at the date hereof except for deficiencies which
would not have a Material Adverse Effect on Arcadian, (iii) no adjustment,
assessment, reassessment or collection for Taxes applicable to Arcadian or any
of its Subsidiaries has been proposed or, to the knowledge of Arcadian and its
Subsidiaries, threatened by any Taxing Authorities, except for adjustments,
assessments, reassessments or collections that would not, individually, or in
the aggregate, have a Material Adverse Effect on Arcadian; (iv) no closing
agreement is in effect for any period with respect to any Tax applicable to
Arcadian or any of its Subsidiaries; (v) no power of attorney has been granted
by Arcadian or any of its Subsidiaries with respect to any matter relating to
Taxes, which is currently in force; (vi) any material adjustment or material
assessment of federal Taxes prior to the Effective Time which is required to be
reported by Arcadian or any of its Subsidiaries to the appropriate Taxing
Authorities has been reported and any additional amount due and payable with
respect thereto has
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<PAGE> 23
been paid in full; and (vii) there is, and there will be, no valid basis for the
Internal Revenue Service to request an extension of the statute of limitation
with respect to any federal income Tax Return of Arcadian or any of its
Subsidiaries beyond the limitations period which generally expires three years
after the filing of any such Tax Return as a result of a more than 25% omission
from gross income in connection with such Tax Return. Schedule 5.14 lists all
Tax Returns filed with respect to Arcadian and any of its Subsidiaries for the
taxable periods beginning on or after January 1, 1989 that have been audited,
and indicates those Tax Returns that currently are the subject of audit.
(e) Except for Tax Returns required to be filed with respect to the 1995
taxable year, neither Arcadian nor any of its Subsidiaries has requested any
extension of time within which to file any Tax Return which has not yet been
filed.
(f) There are no material Liens applicable to either Arcadian or any of its
Subsidiaries or any property or assets of Arcadian or any of its Subsidiaries
for Taxes except for Liens in respect of Taxes (i) not yet due, or (ii) which
are being contested in good faith and by appropriate proceedings (and for the
payment of which adequate reserves have been provided) and which are reflected
in the Arcadian SEC Documents, and neither Arcadian nor any of its Subsidiaries
has received any notice of such Liens for Taxes.
(g) Except as set forth on Schedule 5.14, there is no claim, audit, action,
suit, proceeding or investigation now pending or threatened against or with
respect to Arcadian or any of its Subsidiaries in respect of any Taxes, except
for any such matters as would not, individually or in the aggregate, have a
Material Adverse Effect on Arcadian.
(h) Neither Arcadian nor any of its Subsidiaries has any contractual
obligations under any tax sharing or similar agreement or arrangement or tax
indemnity agreement with any individual or entity which is not a member, as of
the date hereof, of the affiliated group of corporations (within the meaning of
Section 1504 of the Code) filing a consolidated federal income Tax Return of
which Arcadian is the common parent. Neither Arcadian nor any of its
Subsidiaries is or has been a member of an affiliated group (within the meaning
of Section 1504 of the Code) filing a consolidated federal income Tax Return
during any part of any consolidated Tax Return year within any part of such year
any corporation other than Arcadian and its Subsidiaries also was a member of
such affiliated group. Neither Arcadian nor any of its Subsidiaries has any
liability for the taxes of any person (other than Arcadian or any of its
Subsidiaries) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign law), as a transferee or successor, by
contract or otherwise.
(i) There are no requests for rulings, determinations or information or
subpoenas in respect of any material Tax pending between Arcadian or any of its
Subsidiaries and any Taxing Authorities, and to the knowledge of Arcadian and
its Subsidiaries, no such requests or subpoenas are threatened or contemplated
by any Taxing Authority.
(j) Neither Arcadian or any of its Subsidiaries owns any interest in real
property in the State of New York or in any other jurisdiction in which a Tax is
imposed on the transfer of a controlling interest in an entity that owns any
interest in real property.
(k) Except as set forth on Schedule 5.14, (i) neither Arcadian nor any of
its Subsidiaries has income reportable for a period ending after the Effective
Time but attributable to a transaction (e.g., an installment sale) occurring in
or a change in accounting method made for a period ending on or prior to the
Effective Time which resulted in a deferred reporting of income from such
transaction or from such change in accounting method (other than a deferred
intercompany transaction), or deferred gain or loss arising out of any deferred
company transaction; (ii) neither Arcadian nor any of its Subsidiaries has filed
a consent under Section 341 of the Code; (iii) neither Arcadian nor any of its
Subsidiaries has entered into any compensatory contract, agreement or other
arrangement (whether formally or informally) with respect to the performance of
services which contain terms that would cause any payments thereunder made after
the Effective Time to result in a nondeductible expense to Arcadian or any of
its Subsidiaries (or their successors) pursuant to Section 162(m) or 280G of the
Code or an excise tax to the recipient of such payment pursuant to Section 4999
of the Code; (iv) neither Arcadian nor any of its Subsidiaries is the borrower
or guarantor of any outstanding industrial revenue bonds, and neither Arcadian
nor any of its Subsidiaries is a tenant, principal
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<PAGE> 24
user or related person to any principal user (within the meaning of Section
144(a) of Code) of any property which is currently financed or improved with the
proceeds of any industrial revenue bonds; (v) neither Arcadian nor any of its
Subsidiaries is a party to any safe harbor lease within the meaning of Section
168(f) of the Code, as in effect prior to its amendment by the Tax Equity and
Fiscal Responsibility Act of 1982; and (vi) neither Arcadian nor any of its
Subsidiaries has participated in or cooperated with any international boycott
within the meaning of Section 999 of the Code.
(l) Neither Arcadian nor any of its Subsidiaries is a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(m) In this Section 5.14, (i) "Tax" or "Taxes" shall mean any and all
taxes, fees, levies, duties, assessments and any other charges of any kind
whatsoever (whether payable directly or by withholding), together with any and
all interest, penalties, fines, additions to tax and additional amounts imposed
with respect thereto, imposed by any Taxing Authorities which relate to or
affect Arcadian or its Subsidiaries; (ii) "Tax Return" shall mean all returns,
reports, information statements, declarations, estimates, filings and other
information (including any schedules, attachments and additional or supporting
material), and any amendments thereto, filed or maintained, or required to be
filed or maintained, in respect of Taxes; (iii) "Taxing Authorities" shall mean
any federal, state, local, foreign or other governmental, administrative,
regulatory or self-regulating authority, agency, body or official; and (iv)
"Treasury Regulation" shall mean a final or temporary Treasury Regulation
promulgated under the Code.
SECTION 5.15. Fairness Opinion. Arcadian has received the opinion of CS
First Boston to the effect that, as of the date hereof, the consideration to be
received by the holders of Arcadian Common Stock in the Merger is fair to such
holders from a financial point of view.
SECTION 5.16. Takeover Statutes. Assuming that none of PCS and its
Affiliates is an "Interested Stockholder" as such term is defined in Section 203
of the Delaware Law, no Takeover Statute, including, without limitation, Section
203 of the Delaware Law, applicable to Arcadian or any of its Subsidiaries is
applicable to the Merger or the other transactions contemplated hereby.
SECTION 5.17. Merger-Related Tax Matters.
(a) Neither Arcadian nor any of its affiliates has taken or agreed to take
any action that would prevent the Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code.
(b) Arcadian will deliver to PCS a letter from Mr. Gordon Cain prior to the
Effective Date to the effect that (i) Mr. Cain has no current intention to sell,
exchange, or otherwise dispose of, or reduce his risk of loss with respect to,
any PCS Common Stock received by him pursuant to the Merger, and (ii) Mr. Cain
agrees not to sell, exchange, or otherwise dispose of, or reduce his risk of
loss with respect to, 50% of the PCS Common Stock received by him in the Merger
for a period of two years after the Effective Date, and to Arcadian's knowledge,
there is no plan or intention by any stockholder of Arcadian who owns five (5)
percent or more of the Arcadian Common Stock, or the Arcadian Preferred Stock,
and to Arcadian's knowledge there is no plan or intention on the part of the
remaining holders of the Arcadian Common Stock, or of the Arcadian Preferred
Stock, to sell, exchange or otherwise dispose of a number of shares of PCS
Common Stock to be received in the Merger that would reduce the Arcadian
stockholders' ownership of the PCS Common Stock to a number of shares having a
value, as of the Effective Date, of less than fifty (50) percent of the value of
all of the Arcadian Common Stock and Arcadian Preferred Stock outstanding
immediately prior to the Effective Time. In making this determination, Arcadian
Common Stock and Arcadian Preferred Stock redeemed within one year prior to the
Merger and Arcadian Common Stock and Arcadian Preferred Stock exchanged for cash
or other property, surrendered by dissenters for cash or exchanged for cash in
lieu of fractional shares of PCS Common Stock will be included.
(c) The Surviving Corporation will acquire at least ninety (90) percent of
the fair market value of the net assets and at least seventy (70) percent of the
fair market of the gross assets held by Arcadian immediately prior to the
Merger. For purposes of this representation, amounts used by Arcadian to pay
Merger expenses
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and all redemptions and distributions (except for regular normal dividends) made
by Arcadian within one year preceding the Merger, will be included as assets of
Arcadian held immediately prior to the Merger.
(d) The liabilities of Arcadian to be assumed by the Surviving Corporation
and the liabilities to which the assets of Arcadian are subject were incurred by
Arcadian in the ordinary course of its business.
(e) Arcadian and the holders of Arcadian Common Stock and Arcadian
Preferred Stock will pay their own respective expenses, if any, incurred in
connection with the Merger.
(f) There is no indebtedness existing between PCS and Arcadian or between
Merger Sub and Arcadian that was issued, acquired, or will be settled at a
discount.
(g) Neither Arcadian nor any of its Subsidiaries is an investment company
as defined in Section 368(a)(2)(F)(iii) or (iv) of the Code.
(h) Arcadian is not under the jurisdiction of a court in a U.S.C. Title 11
or similar case within the meaning of Section 368(a)(3)(A) of the Code.
(i) The fair market value of the assets of Arcadian to be acquired by the
Surviving Corporation will equal or exceed the sum of the liabilities to be
assumed by the Surviving Corporation in the Merger, plus the amount of the
liabilities to which Arcadian's assets are subject.
SECTION 5.18. Brokers or Finders. Arcadian has not engaged any agent,
broker, investment banker, financial advisor or other firm or person who is or
will be entitled to any brokers' or finders' fee in connection with the
transactions contemplated by this Agreement other than CS First Boston.
SECTION 5.19. Additional Matters. Arcadian has delivered to PCS complete
and correct copies of certain resolutions adopted by the Board of Directors of
Arcadian prior to the date hereof.
SECTION 5.20. Certain Voting Agreements. Arcadian has delivered to PCS
commitments of each member of the Board of Directors to vote all shares of
Arcadian Common Stock and Arcadian Preferred Stock over which such member
exercises voting control in favor of the adoption of this Agreement and approval
of the Merger.
ARTICLE 6
COVENANTS
PCS, Merger Sub and Arcadian further agree as follows:
SECTION 6.01. Conduct of Arcadian's Business. Prior to the Effective Time
or the date, if any, on which this Agreement is earlier terminated pursuant to
Section 8.01 (the "Termination Date"), and except as may be permitted pursuant
to this Agreement, Arcadian:
(a) shall, and shall cause its Subsidiaries to, conduct its and their
operations in the ordinary and usual course of business in substantially the
same manner as heretofore conducted;
(b) shall use its reasonable efforts, and shall cause each of its
Subsidiaries to use its reasonable efforts, to preserve intact their respective
business organizations and goodwill in all material respects, keep available the
services of its officers and employees as a group, subject to changes in the
ordinary course, and maintain satisfactory relationships with suppliers,
distributors, customers and others having business relationships with it;
(c) shall notify PCS of any material emergency or material change in the
normal course of its or its Subsidiaries' businesses or in the operation of
their properties and of any governmental complaints, investigations or hearings
(or communications indicating that the same may be contemplated) if such
emergency, change, complaint, investigation or hearing would have a Material
Adverse Effect on Arcadian;
(d) except as expressly permitted by this Agreement, shall not, and shall
not permit any of its Subsidiaries which is not wholly-owned to, declare or pay
any dividends on or make any distribution with
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respect to its outstanding shares of capital stock other than Arcadian's regular
quarterly dividend on Arcadian Common Stock in an amount not exceeding $0.10 per
share and the dividend on the Arcadian Preferred Stock;
(e) except as contemplated by Section 5.13(j), and except in the ordinary
course of business, shall not (i) grant or permit any of its Subsidiaries to
grant any severance or termination pay to, or enter into any employment,
termination or severance arrangement with, its employee or directors, (ii) amend
in any material respect any employment, termination or severance arrangement
with any directors, officers or employees (it being understood that any increase
or acceleration of benefits under any such agreement or arrangement (other than
bonuses paid in the ordinary course of business consistent with past practice)
shall be deemed material); (iii) establish, adopt, enter into, or amend or take
action to accelerate or enhance any rights or benefits under, (A) any plan
providing for options, stock, performance awards or other forms of incentive or
deferred compensation or (B) any collective bargaining, bonus, profit sharing,
thrift, compensation, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any of its directors,
officers or employees; or (iv) increase the compensation or benefits of any
other employees or payment of any benefit not required by any plan or
arrangement as in effect on June 30, 1996;
(f) subject to Section 6.09, shall not, and shall not permit any of its
Subsidiaries to, authorize, propose or announce an intention to authorize or
propose, or enter into an agreement with respect to, any merger, consolidation
or business combination (other than the Merger and any partnership or joint
venture arrangements entered into in the ordinary course of business consistent
with past practice), any acquisition of a material amount of assets or
securities, any disposition of a material amount of assets or securities or any
release or relinquishment of any material contract rights not in the ordinary
course of business;
(g) except as otherwise contemplated herein, shall not, and shall not
permit any of its Subsidiaries to, issue any shares of capital stock except upon
exercise of rights pursuant to securities outstanding on June 30, 1996, or upon
exercise of rights or options issued pursuant to existing employee incentive and
benefit plans, programs or arrangements (including, without limitation, shares
issued in connection with stock grants or awards or the exercise of rights or
options granted in the ordinary course of business consistent with past practice
pursuant to such plans, programs or arrangements) or effect any stock split not
previously announced or otherwise change its capitalization as it existed on
June 30, 1996;
(h) shall not, and shall not permit any of its Subsidiaries to, grant,
confer or award any options, warrants, conversion rights or other rights, not
existing on the date hereof, to acquire any shares of its capital stock, except
grants of options pursuant to employee incentive and benefit plans, programs or
arrangements in existence on the date hereof in the ordinary course of business
consistent with past granting practices and policies;
(i) except as otherwise described herein shall not, and shall not permit
any of its Subsidiaries to, except in the ordinary course of business in
connection with employee incentive and benefit plans, programs or arrangements
in existence on the date hereof, purchase or redeem any shares of its capital
stock;
(j) shall not, and shall not permit any of its Subsidiaries to, incur,
assume or guaranty any indebtedness from any third party for borrowed money,
other than in the ordinary course of business consistent with past practice;
(k) shall not, and shall not permit any of its Subsidiaries to, amend any
term of any of their outstanding securities;
(l) shall not, and shall not permit any of its Subsidiaries to, create or
assume any Lien on any material asset other than in the ordinary course of
business consistent with past practices;
(m) shall not, and shall not permit any of its Subsidiaries to, make any
loan, advance or capital contribution to or investment in any Person other than
(i) loans, advances or capital contributions to or investments in its
Subsidiaries, (ii) investments in securities consistent with past practice or
(iii) other loans,
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advances, capital contributions or investments in an aggregate amount not
exceeding $25,000,000 since June 30, 1996;
(n) except in the ordinary course of business consistent with past
practice, shall not, and shall not permit any of its Subsidiaries to, enter into
any transaction, commitment, contract or agreement relating to their assets or
businesses (including, without limitation, the acquisition or disposition of any
assets) or to relinquish any contract, license or other right other than
transactions, commitments, contracts or agreements contemplated by this
Agreement;
(o) shall not, and shall not permit any of its Subsidiaries to, change any
of their respective methods of accounting or accounting principles or practices,
except for any such change required by reason of a concurrent change in GAAP;
(p) shall not, and shall not permit any of its Subsidiaries to enter into
any contract limiting the right of Arcadian, or any of its Subsidiaries at any
time on or after the date of this Agreement to engage in, or to compete with any
Person in, any business, except such contracts as would not be material to
Arcadian, and its Subsidiaries, taken as a whole;
(q) subject to Section 6.09, shall not, and shall not permit any of its
Subsidiaries to, agree, in writing or otherwise, to take any of the foregoing
actions or any action which would make any representation or warranty in Article
5 hereof untrue or incorrect in any material respect; and
(r) shall not propose or adopt any amendments to its Restated Certificate
of Incorporation, as amended, or its Amended and Restated Bylaws.
SECTION 6.02. Investigation. Each of PCS and Arcadian shall afford to one
another and to one another's officers, employees, accountants, counsel and other
authorized representatives full and complete access during normal business
hours, throughout the period prior to the earlier of the Effective Time or the
Termination Date, to its and its Subsidiaries' plants, properties, contracts,
commitments, books, and records (including but not limited to tax returns) and
any report, schedule or other document filed or received by it pursuant to the
requirements of federal or state securities laws, and shall use their reasonable
best efforts to cause their respective representatives to furnish promptly to
one another such additional financial and operating data and other information
as to its and its Subsidiaries' respective businesses and properties as the
other or its duly authorized representatives may from time to time reasonably
request; provided that nothing herein shall require either PCS or Arcadian or
any of their respective Subsidiaries to disclose any information to the other
that would cause significant competitive harm to such disclosing party or its
affiliates if the transactions contemplated by this Agreement are not
consummated. The parties hereby agree that each of them will treat any such
information in accordance with the confidentiality letter agreement effective
August 30, 1994 (the "Confidentiality Agreement"). Notwithstanding any provision
of this Agreement to the contrary, no party shall be obligated to make or
refrain from making any disclosure in violation of applicable laws or
regulations.
SECTION 6.03. Cooperation. PCS and Arcadian shall together, or pursuant to
an allocation of responsibility to be agreed upon by them:
(a) prepare and file with the SEC as soon as is reasonably practicable
the Proxy Statement and a registration statement on Form S-4 under the
Securities Act with respect to the PCS Common Stock issuable in the Merger
(the "Registration Statement"), and shall use their reasonable best efforts
to have the Registration Statement (including the Proxy Statement contained
therein) declared effective by the SEC under the Securities Act;
(b) as soon as is reasonably practicable take all such action as may
be required under state blue sky or securities laws in connection with the
transactions contemplated by this Agreement;
(c) promptly prepare and file with the NYSE and such other stock
exchanges as shall be agreed upon listing applications covering the shares
of PCS Common Stock issuable in the Merger and use its reasonable best
efforts to obtain, prior to the Effective Time, approval for the listing of
such PCS Common Stock, subject only to official notice of issuance; and
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(d) cooperate with one another in order to lift any injunctions or
remove any other impediment to the consummation of the transactions
contemplated herein.
Subject to the limitations contained in Section 6.02, PCS and Arcadian
shall each furnish to one another and to one another's counsel all such
information as may be required or appropriate in order to effect the foregoing
actions.
SECTION 6.04. Affiliates. Arcadian shall, prior to the Effective Time,
deliver to PCS a list setting forth the names and addresses of all Persons who
are, in its opinion, at the time of the meeting of the Arcadian stockholders to
be held in accordance with Section 2.01, "affiliates" of Arcadian for purposes
of Rule 145 under the Securities Act. Arcadian shall furnish such information
and documents as PCS may reasonably request for the purpose of reviewing such
list. Arcadian shall use its reasonable best efforts to cause each person who is
identified as an "affiliate" in the list furnished pursuant to this Section 6.04
to execute a written agreement on or prior to the Effective Time, in a form
satisfactory to PCS (an "Affiliate Agreement"), that such person will not offer
or sell or otherwise dispose of any of the shares of PCS Common Stock issued to
such Person pursuant to the Merger in violation of the Securities Act or the
rules and regulations promulgated by the SEC thereunder.
SECTION 6.05. Insurance Extension. PCS and Arcadian shall cooperate to
extend, renew or otherwise continue any existing insurance coverage (or to
provide new insurance coverage) on and after the Effective Time with respect to
claims arising from acts or omissions which occurred on or before the Effective
Time.
SECTION 6.06. Filings; Other Action. Subject to the terms and conditions
herein provided, PCS and Arcadian shall (a) promptly make their respective
filings and thereafter make any other required submissions under the HSR Act,
(b) use reasonable best efforts to cooperate with one another in (i) determining
whether any filings are required to be made with, or consents, permits,
authorizations or approvals are required to be obtained from, any third party,
the United States or Canadian federal government or any agencies, departments or
instrumentalities thereof or governmental, provincial or regulatory authorities
of the several states, provinces and foreign jurisdictions in connection with
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby and thereby and (ii) timely making all such
filings and timely seeking all such consents, permits, authorizations or
approvals, and (c) use reasonable best efforts to take, or cause to be taken,
all other actions and do, or cause to be done, all other things necessary,
proper or advisable to consummate and make effective the transactions
contemplated hereby, including, without limitation, taking all such further
action as reasonably may be necessary to resolve such objections, if any, as the
Federal Trade Commission, the Antitrust Division of the Department of Justice,
state antitrust enforcement authorities or competition authorities of any other
nation or other jurisdiction or any other Person may assert under relevant
antitrust or competition laws with respect to the transactions contemplated
hereby.
SECTION 6.07. Further Assurances. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers or directors of PCS and the Surviving
Corporation shall take all such necessary action.
SECTION 6.08. Takeover Statute. If any Takeover Statute shall become
applicable to the transactions contemplated hereby, each of PCS and Arcadian
shall grant and use their respective reasonable best efforts to obtain such
approvals and take such actions as are reasonably necessary so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate or minimize the
effects of such statute or regulation on the transactions contemplated hereby.
SECTION 6.09. No Solicitation. Unless and until this Agreement shall have
been terminated by either party pursuant to Section 8.01, neither PCS nor
Arcadian nor any of their respective Subsidiaries, officers, directors or agents
shall, directly or indirectly, take any action to solicit, initiate or encourage
any proposal or offer with respect to a merger, acquisition, consolidation or
similar transaction involving, or any purchase of all or any significant portion
of the assets or any equity securities of, it or any of its Subsidiaries (any
such proposal or offer being hereinafter referred to as a "Third Party
Acquisition Proposal"); provided, however, that the foregoing limitation shall
not apply if, in the good faith judgment of Arcadian's Board of Directors after
consultation with legal counsel and financial advisors, such Board's fiduciary
duties require such Board or
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Arcadian to take any such action. PCS and Arcadian each will promptly notify the
other of its receipt of any Third Party Acquisition Proposal, and will provide
the other with two business days' advance notice of any agreement to be entered
into with any Person making a Third Party Acquisition Proposal.
SECTION 6.10. Public Announcements. PCS and Arcadian will consult with each
other before issuing any press release relating to this Agreement or the
transactions contemplated herein and shall not issue any such press release
prior to such consultation except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange.
SECTION 6.11. Indemnification and Insurance. For a period of six years
after the Effective Time, PCS shall cause to be maintained in effect (a) the
current provisions regarding indemnification of officers and directors contained
in the Restated Certificate of Incorporation and Amended and Restated Bylaws of
Arcadian, and (b) if available, the current policies of directors' and officers'
liability insurance and fiduciary liability insurance maintained by Arcadian
(provided that PCS may substitute therefor policies of at least the same
coverage and amounts containing terms and conditions which are, in the
aggregate, no less advantageous to the insured) with respect to claims arising
from acts or omissions which occurred on or before the Effective Time; provided,
that PCS shall not be obligated to pay premiums in excess of 200% of the amount
per annum that Arcadian paid in the aggregate in its last fiscal year, it being
understood that PCS shall nevertheless be obligated to provide such coverage as
may be obtained for such amount. PCS shall assume all obligations of Arcadian
and any of its Subsidiaries under any indemnification or similar agreements with
any employee, officer or director of Arcadian in effect immediately prior to the
Effective Time, in each case without releasing the indemnitor under such
agreements.
SECTION 6.12. Accountants' Letters. PCS and Arcadian will each use
reasonable best efforts to cause to be delivered to each other letters from
their respective independent accountants, dated a date within two business days
before the effective date of the Registration Statement, in form and substance
reasonably satisfactory to the recipient and customary in scope and substance
for "comfort" or similar agreed upon procedures letters delivered by independent
accountants in connection with registration statements on Form S-4 under the
Securities Act.
SECTION 6.13. Arcadian Preferred Stock. In connection with the Merger,
Arcadian (i) will elect the "Common Conversion Option" (as defined in the
Certificate of Designation), and the holders of shares of Arcadian Preferred
Stock immediately prior to the conversion thereof pursuant to the exercise of
such Common Conversion Option shall be entitled to the benefits thereof, all as
set forth in the Certificate of Designation.
SECTION 6.14. Additional Reports. PCS and Arcadian shall each furnish to
the other copies of any reports of the type referred to in Sections 4.06 and
5.06 which it files with the SEC on or after the date hereof, and PCS or
Arcadian, as the case may be, represents and warrants that as of the respective
dates thereof, such reports will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statement therein, in light of the circumstances under which they
were made, not misleading. Any unaudited consolidated interim financial
statements included in such reports (including any related notes and schedules)
will fairly present the financial position of PCS or Arcadian, as the case may
be, and its consolidated Subsidiaries, as of the dates thereof and the results
of operations and changes in financial position or other information included
therein for the periods or as of the date then ended (subject, where
appropriate, to normal year-end adjustments), in each case in accordance with
past practice and GAAP or Canadian GAAP, as the case may be, consistently
applied during the periods involved (except as otherwise disclosed in the notes
thereto).
SECTION 6.15. Arcadian Warrants. (a) In connection with the Merger,
Arcadian will (i) take such action as may be reasonably necessary to cause or
require each outstanding AAC Warrant to be exercised for shares of Arcadian
Common Stock prior to the Effective Time pursuant to the third sentence of
Section IV(A)(3) of the AAC Warrant Agreement, and at the Effective Time the
Arcadian Common Stock issued upon such exercise shall be converted into the
Merger Consideration in the Merger pursuant to Section 1.01(b)(i) of this
Agreement; and (ii) take all action necessary under the Series B Warrant
Agreement so that at the Effective Time, each outstanding Series B Warrant
shall, pursuant to Sections 2.05
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and 3.02 of the Series B Warrant Agreement, be deemed to constitute a warrant
having such terms and conditions as may be required by the Series B Warrant
Agreement.
(b) As used in this Agreement:
(i) "AAC Warrant Agreement" means the Warrant Issuance Agreement dated
as of May 31, 1989, between Arcadian (formerly named Fertilizer Industries,
Inc.) and AAC Holdings, Inc., on behalf of the holders of the AAC Warrants;
(ii) "AAC Warrant" means a warrant issued pursuant to the AAC Warrant
Agreement;
(iii) "Series B Warrant Agreement" means the Warrant Agreement dated
as of December 22, 1989, between Arcadian and Chemical Bank, as Warrant
Agent, as amended; and
(iv) "Series B Warrant" means a warrant issued pursuant to the Series
B Warrant Agreement.
SECTION 6.16. No Purchase. Except for the transactions contemplated by this
Agreement, without the prior written consent of Arcadian, in the case of PCS, or
PCS, in the case of Arcadian, from the date hereof until the Effective Time,
neither PCS nor Arcadian shall (a) acquire, offer to acquire or agree to
acquire, directly or indirectly, by purchase or otherwise, any securities or
direct or indirect rights to acquire any securities of Arcadian, in the case of
PCS, or PCS in the case of Arcadian, or any of their respective Subsidiaries, or
of any successor to, or any assets of, Arcadian, in the case of PCS, or PCS, in
the case of Arcadian, or any of their respective Subsidiaries or divisions; or
(b) make, or in any way participate in, directly or indirectly, any
"solicitation" of "proxies" (as such terms are used in the rules of the SEC) to
vote, or seek to advise or influence any Person with respect to the voting of,
any voting securities of Arcadian, in the case of PCS, or PCS, in the case of
Arcadian, or of any of their respective Subsidiaries, and PCS and Arcadian shall
each use reasonable efforts to cause their respective affiliates not to do any
of the foregoing. Arcadian shall promptly advise PCS, and PCS shall promptly
advise Arcadian, of any inquiry or proposal made to it with respect to any of
the foregoing. Notwithstanding clauses (a) and (b) of this Section 6.16, PCS and
Arcadian may make any proposals or communications to each other.
SECTION 6.17. Employee Benefit Plans. (a) It is understood and agreed that
the Merger shall constitute a "Change of Control" or "Change in Control" within
the meaning assigned to such terms, as applicable, under certain employee
incentive plans, option plans, severance programs and employment contracts of
Arcadian and any agreements relating thereto.
(b) At the Effective Time or as soon thereafter as administratively
practicable, PCS shall cause those employees of Arcadian and its Subsidiaries
who are then employed by the Surviving Corporation or any of its Subsidiaries in
positions that are not covered by a collective bargaining agreement (the
"Current Employees") either (i) to be covered by the benefit plans and programs
of PCS and its Subsidiaries with substantially equivalent benefits in respect of
future service that accrue in respect of future services to the employees of PCS
and its Subsidiaries who are employed in comparable positions, or (ii) to be
covered by the benefit plans and programs of Arcadian and its Subsidiaries as in
effect immediately prior to the Effective Time; provided, however, that nothing
herein shall relieve the Surviving Corporation of its obligations under the
Severance Program or under any Employment Agreement or similar contractual
obligation. Current Employees shall be credited for their service with Arcadian
and its Subsidiaries and their predecessors for purposes of participation,
eligibility and vesting under the benefit plans and programs provided by PCS,
and benefit accrual purposes for vacation, severance, pension and retirement
benefits only, and PCS shall cause its group health plan that will provide
coverage to Current Employees to waive any limitations regarding pre-existing
conditions of Current Employees and their eligible dependents (except to the
extent that such limitations would have applied to any such individual under the
group health plan of Arcadian and its Subsidiaries). Upon request of PCS,
Arcadian and its Subsidiaries shall provide PCS's employees with reasonable
access prior to the Effective Time to the Current Employees for purposes of
enrolling such employees and their eligible dependents in the benefit plans and
programs of PCS and its Subsidiaries that are to be provided to such
individuals.
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(c) PCS agrees that each officer and other employee of Arcadian or any of
its Subsidiaries who is a party to a written employment agreement with Arcadian
or any of its Subsidiaries, and who remains in the employment of PCS, Surviving
Corporation or any of its other Subsidiaries after the expiration of the term of
such agreement, shall be entitled to the benefits of an employment agreement
with PCS in form and substance substantially similar to the employment
agreement, then in place between PCS and other employees of PCS holding
comparable positions.
SECTION 6.18. Conduct of PCS's Business. Prior to the Effective Time or the
Termination Date, and except as may be permitted pursuant to this Agreement,
PCS:
(a) shall, and shall cause its Subsidiaries to, conduct its and their
operations in the ordinary and usual course of business in substantially
the same manner as heretofore conducted;
(b) except as otherwise contemplated herein, shall not effect any
stock split or otherwise change its capitalization as it existed on June
30, 1996 (provided, however, that the exercise of employee stock options
and issuance of shares of PCS Common Stock pursuant to the PCS DRIP shall
not be considered to be a change in the capitalization of PCS); and
(c) shall not, and shall not permit any of its Subsidiaries to, amend
any term of any of its or their outstanding securities.
ARTICLE 7
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to Merger. The obligations of PCS, Merger Sub and
Arcadian to effect the Merger shall be subject to the following conditions:
(a) The holders of issued and outstanding shares of Arcadian Common
Stock and Arcadian Preferred Stock, voting as a single class, shall have
duly adopted this Agreement, all in accordance with applicable law.
(b) No statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or enforced by any
court or governmental authority that prohibits the consummation of the
Merger substantially on the terms contemplated hereby. If any such order,
decree or injunction shall have been issued, each party shall use its
reasonable best efforts to remove such order, decree or injunction.
(c) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act and shall be effective
at the Effective Time, and no stop order suspending such effectiveness
shall have been issued and remain in effect.
(d) The shares of PCS Common Stock issuable in the Merger shall have
been approved for listing on the NYSE, The Toronto Stock Exchange and the
Montreal Stock Exchange, subject only to official notice of issuance.
(e) Any applicable waiting period under the HSR Act shall have expired
or been terminated and any other approvals sets forth in Sections 4.03 and
5.03 shall have been obtained, except where the failure to obtain such
other approvals (other than the expiration or termination of the waiting
period under the HSR Act) would not have a Material Adverse Effect on PCS
or Arcadian, as the case may be.
(f) Arcadian shall have received an opinion of its tax counsel,
Bracewell & Patterson, L.L.P., in form and substance reasonably
satisfactory to it, and dated within five days prior to the date of the
Proxy Statement to the effect that neither it nor any of its stockholders
shall recognize gain or loss for United States federal income tax purposes
as a result of the Merger (other than the Merger Cash, cash paid in
connection with appraisal rights and any cash paid in lieu of fractional
shares) which opinion shall have been reconfirmed as of the date on which
the Effective Time occurs (the "Effective Date").
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(g) PCS shall have received an opinion of its tax counsel, Goodman,
Phillips & Vineberg, in form and substance reasonably satisfactory to it,
and dated within five days prior to the date of the Proxy Statement, to the
effect that the Merger will constitute a tax-free reorganization under Code
section 368(a)(2)(D), which opinion shall have been reconfirmed as of the
Effective Date.
SECTION 7.02. Additional Conditions of PCS and Merger Sub. The obligation
of PCS and Merger Sub to effect the Merger is further subject to the conditions
that (a) the representations and warranties of Arcadian contained herein shall
be true and correct in all respects (but without regard to any materiality
qualifications contained in any specific representation or warranty) as of the
Effective Time with the same effect as though made as of such time except for
changes specifically permitted by the terms of this Agreement and except where
any such failure of the representations and warranties in the aggregate to be
true and correct in all respects as of the Effective Time would not have a
Material Adverse Effect on Arcadian, and (b) Arcadian shall have performed in
all material respects all obligations and complied in all material respects with
all covenants required by this Agreement to be performed or complied with by it
prior to the Effective Time.
SECTION 7.03. Additional Conditions of Arcadian. The obligation of Arcadian
to effect the Merger is further subject to the conditions that (a) the
representations and warranties of PCS contained herein shall be true and correct
in all respects (but without regard to any materiality qualifications contained
in any specific representation or warranty) as of the Effective Time with the
same effect as though made as of the Effective Time except for changes
specifically permitted by the terms of this Agreement and except where any such
failure of the representations and warranties in the aggregate to be true and
correct in all respects as of the Effective Time would not have a Material
Adverse Effect on PCS, and (b) PCS and Merger Sub shall have performed in all
material respects all obligations and complied in all material respects with all
covenants required by this Agreement to be performed or complied with by it
prior to the Effective Time.
ARTICLE 8
TERMINATION, WAIVER, AMENDMENT AND CLOSING
SECTION 8.01. Termination or Abandonment. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may be terminated
and abandoned at any time prior to the Effective Time, whether before or after
approval of this Agreement by the stockholders of Arcadian:
(a) by the mutual written consent of PCS and Arcadian;
(b) by PCS or Arcadian if the Effective Time shall not have occurred
on or before February 28, 1997; provided, that the party seeking to
terminate this Agreement pursuant to this Section 8.01(b) shall not have
breached in any material respect its obligations under this Agreement in
any manner that shall have proximately contributed to the failure to
consummate the Merger on or before such date;
(c) by PCS or Arcadian if a United States federal or state court of
competent jurisdiction or United States governmental, regulatory or
administrative agency or commission shall have issued an order, decree or
ruling or taken any other action permanently restraining, enjoining or
otherwise prohibiting the transactions substantially on the terms
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and non-appealable; provided, that the party
seeking to terminate this Agreement pursuant to this Section 8.01(c) shall
have used its reasonable best efforts to remove such restraint, injunction
or prohibition;
(d) by PCS if (i) the approvals of the stockholders of Arcadian
contemplated by this Agreement shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of
stockholders or any adjournment thereof or (ii) prior to the Special
Meeting, the Board of Directors of Arcadian shall have withdrawn or
modified, or resolved to withdraw or modify its approval or recommendation
of this Agreement;
(e) by Arcadian or PCS, by a written notice delivered to the other
party on or before 5:00 p.m. (Memphis time) on the 14th day after the date
of this Agreement, if Arcadian's or PCS's, as the case may be,
investigation of the business and operations of the other party shall have
revealed the existence of
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a fact or condition relating to such other party or its Subsidiaries that
(i) is not disclosed in the PCS Disclosure Documents or the Arcadian SEC
Documents, as the case may be, and (ii) in the terminating party's
reasonable, good-faith judgment has had or may reasonably be expected to
have a Material Adverse Effect on the other party in excess of any
provision made with respect thereto in the other party's December 31, 1995
or June 30, 1996 financial statements included in the PCS Disclosure
Documents or Arcadian SEC Documents, as the case may be. Any such notice
delivered pursuant to the first sentence of this Section 8.01(e) shall
outline in reasonable detail the basis for such termination;
(f) by Arcadian, if its Board of Directors shall have determined, in
its good faith judgment after consultation with legal counsel and financial
advisors, that such Board's fiduciary duties require termination of this
Agreement;
(g) by Arcadian, if the approval of the stockholders of Arcadian
contemplated by this Agreement shall not have been obtained by reason of
the failure to obtain the required vote at a duly held meeting of such
stockholders or any adjournment thereof;
(h) by Arcadian or by PCS, if the Final PCS Common Stock Price is
either (i) less than $65.00 or (ii) greater than $90.00; and
(i) by PCS, by a written notice delivered to Arcadian on or before
5:00 p.m. Memphis time on the 14th day after the date of this Agreement
based on PCS's reasonable determination that the cost of causing Arcadian's
interests in Arcadian Trinidad Corporation, Arcadian Fertilizer
Corporation, AA Sulfuric Corporation, August Service Company Inc., Arcadian
LCD Corporation and Arcadian FMF, L.L.C. and any other interests in
corporations or limited liability companies held by Arcadian Partners, L.P.
or Arcadian Fertilizer L.P. to be held through a chain of corporations with
no partnership in the chain of ownership exceeds $25,000,000 in addition to
the costs of retiring debt (including, in the costs of retiring such debt,
all prepayment premiums payable thereon).
In the event of termination of this Agreement pursuant to this Section
8.01, this Agreement shall terminate, and there shall be no other liability
under this Agreement on the part of either party to the other party except that
(i) the obligations contained in Section 9.02 and in the Confidentiality
Agreement shall survive the termination hereof and (ii) no such termination
shall relieve either party of any liability or damages arising out of a breach
of this Agreement by that party.
SECTION 8.02. Amendment or Supplement. At any time before or after approval
of this Agreement by the stockholders of Arcadian and prior to the Effective
Time, this Agreement may be amended or supplemented in writing by PCS, Merger
Sub, and Arcadian with respect to any of the terms contained in this Agreement,
except that following approval by the stockholders of Arcadian there shall be no
amendment or change to the provisions hereof with respect to the conversion
ratio of shares of Arcadian Common Stock into shares of PCS Common Stock and the
Merger Cash as provided herein nor any amendment or change not permitted under
applicable law, without further approval by the stockholders of Arcadian.
SECTION 8.03. Extension of Time, Waiver, Etc. At any time prior to the
Effective Time, either PCS or Arcadian may:
(a) extend the time for the performance of any of the obligations or
acts of the other;
(b) waive any inaccuracies in the representations and warranties of
the other party contained herein or in any document delivered pursuant
hereto; or
(c) waive compliance with any of the agreements or conditions of the
other party contained herein.
Notwithstanding the foregoing, no failure or delay by PCS or Arcadian in
exercising any right hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right hereunder. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
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SECTION 8.04. Closing. The closing of the transactions contemplated by this
Agreement and the Merger Agreement shall take place at the offices of Bracewell
& Patterson, L.L.P., South Tower Pennzoil Place, 711 Louisiana Street, Suite
2900, Houston, Texas 77002, at 10:00 a.m., local time, on the Effective Date or
at such other time and place as PCS and Arcadian shall agree.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. No Survival of Representations and Warranties. None of the
representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Merger, except
for the agreements set forth in Article 3, the agreements of "affiliates" of
Arcadian to be delivered pursuant to Section 6.04, the provisions of Sections
6.07, 6.11 and 6.17 and this Article 9. Any of the current officers and
directors of Arcadian may enforce the agreements of PCS or Merger Sub set forth
in Sections 6.11 or 6.17.
SECTION 9.02. Expenses. (a) Except as provided in this Section 9.02,
whether or not the Merger is consummated, all costs and expenses incurred in
connection with this Agreement, and the transactions contemplated hereby and
thereby shall be paid by the party incurring such expenses, except that the
filing fee in connection with any HSR Act filing, the commissions, transfer
taxes and other out-of-pocket transaction costs, including the expenses and
compensation of the Exchange Agent, and the expenses incurred in connection with
the printing and mailing of the Proxy Statement and the Registration Statement
and any expenses incurred by PCS relating to the issuance, registration and
listing of the PCS Common Stock and the qualification thereof under state blue
sky or securities laws, shall be shared equally by PCS and Arcadian.
(b) Arcadian agrees that if this Agreement is terminated pursuant to any of
the Sections described in clauses (i) through (iii) below, Arcadian will pay PCS
an amount equal to $25,000,000, plus all out-of-pocket expenses incurred by PCS
in connection with this Agreement, the Merger and all related transactions by
wire transfer of immediately available funds promptly, but in no event later
than two business days, after such termination (or, in the case of Section
9.2(b)(iii) below, no later than two business days after the consummation of the
Third Party Acquisition Proposal):
(i) Section 8.01(d)(ii);
(ii) Section 8.01(f); or
(iii) Section 8.01(d)(i) or 8.01(g) if, but only if, both (A) after
the date hereof but before the date of the Special Meeting, a Third Party
Acquisition Proposal is publicly disclosed, and (B) within one year after
the date of such public disclosure the transaction contemplated by such
Third Party Acquisition Proposal, or by any subsequent Third Party
Acquisition Proposal, is consummated.
SECTION 9.03. Counterparts; Effectiveness. This Agreement may be executed
in two or more counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered (by telecopy or otherwise) to the other
parties.
SECTION 9.04. Governing Law; Consent to Jurisdiction. This Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware without regard to the principles of conflicts of laws thereof. Each
party hereto irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of courts of the State of Delaware or any United States district
court located in the State of Delaware for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in such courts), waives
any objection to the laying of venue of any such litigation in such courts and
agrees not to plead or claim in any such court that such litigation brought
therein has been brought in an inconvenient forum.
29
<PAGE> 35
SECTION 9.05. Notices. All notices and other communications hereunder shall
be in writing (including telecopy or similar writing) and shall be effective (a)
if given by telecopy, when such telecopy is transmitted to the telecopy number
specified in this Section 9.05 and the appropriate telecopy confirmation is
received or (b) if given by any other means, when delivered at the address
specified in this Section 9.05:
To PCS or Merger Sub:
Potash Corporation of Saskatchewan Inc.
Suite 500
122-1st Avenue South
Saskatoon, Saskatchewan S7K 7G3
Canada
Attention: General Counsel
Telecopy: 306-933-8877
with a copy to:
James B. Halpern
Arent Fox Kintner Plotkin & Kahn
1050 Connecticut Avenue, NW
Washington, DC 20036-5339
Telecopy: 202-857-6395
To Arcadian:
Arcadian Corporation
6750 Poplar Avenue, Suite 600
Memphis, Tennessee 38138-7419
Attention: Peter H. Kesser, Esq.
Telecopy: 901-758-5201
with a copy to:
Bracewell & Patterson, L.L.P.
South Tower, Pennzoil Place
711 Louisiana Street, Suite 2900
Houston, Texas 77002-2781
Attention: John Bland, Esq.
Telecopy: 713-221-1212
SECTION 9.06. Assignment; Binding Effect. Neither this Agreement nor any of
the rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of law or otherwise) without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and assigns.
SECTION 9.07. Severability. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
SECTION 9.08. Enforcement of Agreement. The parties hereto agree that money
damages or other remedy at law would not be sufficient or adequate remedy for
any breach or violation of, or a default under, this Agreement by them and that
in addition to all other remedies available to them, each of them shall be
entitled to the fullest extent permitted by law to an injunction restraining
such breach, violation or default or
30
<PAGE> 36
threatened beach, violation or default and to any other equitable relief,
including, without limitation, specific performance, without bond or other
security being required.
SECTION 9.09. Miscellaneous. This Agreement, including the Schedules
hereto:
(a) along with the Confidentiality Agreement constitutes the entire
agreement, and supersedes all other prior agreements and understandings,
both written and oral, between the parties, or any of them, with respect to
the subject matter hereof and thereof; and
(b) except for the provisions of Sections 6.11 and 6.17, is not
intended to and shall not confer upon any Person other than the parties
hereto any rights or remedies hereunder.
SECTION 9.10. Headings. Headings of the Articles and Sections of this
Agreement are for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
POTASH CORPORATION OF
SASKATCHEWAN INC.
By: /s/ C. E. CHILDERS
----------------------------------
Name: C. E. Childers
Title: Chief Executive Officer
ARCADIAN CORPORATION
By: /s/ J. D. CAMPBELL
----------------------------------
Name: J. D. Campbell
Title: President and Chief
Executive Officer
PCS NITROGEN, INC.
By: /s/ JOHN HAMPTON
----------------------------------
Name: John Hampton
Title: Sole Incorporator
31
<PAGE> 1
EXHIBIT 10.1
AMENDMENT NO. 1
Dated as of August 20, 1996
to
AGREEMENT FOR LEASE
Dated as of June 29, 1995
between
Trinidad Ammonia Company, Limited Partnership
as Owner
and
Arcadian Fertilizer, L.P.
as Agent
This Amendment has been manually executed in 8 counterparts, numbered
consecutively from 1 through 8, of which this is No. 2. To the extent,
if any, that this Amendment constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any
jurisdiction), no security interest in this Amendment may be created or
perfected through the transfer or possession of any counterpart other
than the original executed counterpart which shall be the counterpart
identified as counterpart No. 1.
<PAGE> 2
Amendment No. 1 dated as of August 20, 1996 to Agreement for
Lease ("Amendment No. 1"), dated as of June 29, 1995, between Trinidad Ammonia
Company, Limited Partnership, a Delaware limited partnership ("Owner"), and
Arcadian Fertilizer, L.P., a Delaware limited partnership ("Agent"), amending
the Agreement for Lease referred to below.
WHEREAS, Owner and Agent have heretofore entered into an
Agreement for Lease, dated as of June 29, 1995 (the "Agreement for Lease"); and
WHEREAS, Owner and Agent wish to amend the Agreement for Lease as
hereinafter provided;
NOW, THEREFORE, Owner and Agent hereby agree that the Agreement
for Lease is amended as follows:
1. The definition of "Unit Budget" in subsection 1.1 of the
Agreement for Lease is amended to delete the amount "$75,000,000" and to
replace such amount with the amount "$79,500,000".
2. Subsection 2.2 of the Agreement for Lease is amended to
delete the amount "$75,000,000" and to replace such amount with the amount
"$79,500,000".
3. This Amendment No. 1 may be executed in several
counterparts, each of which when executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute but
one and the same Amendment No. 1.
4. This Amendment No. 1 shall in all respects be governed by,
and construed in accordance with, the laws of the State of New York, including
all matters of construction, validity and performance.
5. Except as provided herein, all provisions, terms and
conditions of the Agreement for Lease shall remain in full force and effect.
As amended hereby, the Agreement for Lease is ratified and confirmed in all
respects.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed as of the date first above written.
Trinidad Ammonia Company, Limited Partnership
By Trinidad Ammonia Capital, Inc.,
its General Partner
By: /s/ THOMAS W. WIDENER
-------------------------------------
Name: THOMAS W. WIDENER
Title: VICE PRESIDENT
SECRETARY AND TREASURER
Arcadian Fertilizer, L.P.
By Arcadian Corporation, its General Partner
By: /s/ JOHN H. GHEENS
-------------------------------------
Name: JOHN H. GHEENS
Title: TREASURER
2
<PAGE> 1
EXHIBIT 10.2
AMENDMENT NO. 1
Dated as of August 20, 1996
to
LEASE AGREEMENT
Dated as of June 29, 1995
between
Trinidad Ammonia Company, Limited Partnership
as Lessor
and
Arcadian Fertilizer, L.P.
as Lessee
This Amendment has been manually executed in 8 counterparts, numbered
consecutively from 1 through 8, of which this is No. 2. To the extent,
if any, that this Amendment constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any
jurisdiction), no security interest in this Amendment may be created or
perfected through the transfer or possession of any counterpart other
than the original executed counterpart which shall be the counterpart
identified as counterpart No. 1.
<PAGE> 2
Amendment No. 1 dated as of August 20, 1996 to Lease Agreement
("Amendment No. 1"), dated as of June 29, 1995, between Trinidad Ammonia
Company, Limited Partnership, a Delaware limited partnership ("Lessor"), and
Arcadian Fertilizer, L.P., a Delaware limited partnership ("Lessee"), amending
the Lease Agreement referred to below.
WHEREAS, Lessor and Lessee have heretofore entered into an Lease
Agreement, dated as of June 29, 1995 (the "Lease Agreement"); and
WHEREAS, Lessor and Lessee wish to amend the Lease Agreement as
hereinafter provided;
NOW, THEREFORE, Lessor and Lessee hereby agree that the Lease
Agreement is amended as follows:
1. The definition of "Cash Reserve Requirement Amount" in
Section 1 of the Lease Agreement is amended to read in its entirety as follows:
"'Cash Reserve Requirement Amount' means an amount equal
to the quotient of $13,250,000 divided by the number of whole
semi-annual periods between the Cash Reserve Account Commencement
Date and the date which is three months before the first Basic
Rent Payment Date in the last month of the Initial Term hereof."
2. Paragraph (s) of Section 2 of the Lease Agreement is
hereby amended to delete the amount "$30,000,000" and to replace such amount
with the amount "$31,800,000".
3. Exhibit E to the Lease Agreement is hereby amended to read
in its entirety in the form attached hereto and made a part hereof as Annex I.
4. This Amendment No. 1 may be executed in several
counterparts, each of which when executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute but
one and the same Amendment No. 1.
5. This Amendment No. 1 shall in all respects be governed by,
and construed in accordance with, the laws of the State of New York, including
all matters of construction, validity and performance.
6. Except as provided herein, all provisions, terms and
conditions of the Lease Agreement shall remain in full force and effect. As
amended hereby, the Lease Agreement is ratified and confirmed in all respects.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed as of the date first above written.
Trinidad Ammonia Company, Limited Partnership
By: Trinidad Ammonia Capital, Inc., its General Partner
By: /s/ THOMAS W. WIDENER
-------------------------------------
Name: THOMAS W. WIDENER
Title: VICE PRESIDENT
SECRETARY AND TREASURER
Arcadian Fertilizer, L.P.
By: Arcadian Corporation, its General Partner
By: /s/ JOHN H. GHEENS
-------------------------------------
Name: JOHN H. GHEENS
Title: TREASURER
2
<PAGE> 4
ANNEX I
Copy of Letter of Credit to be provided by Rabobank
3
<PAGE> 5
AMENDMENT NO. 2
Dated as of August 26, 1996
to
LEASE AGREEMENT
Dated as of June 29, 1995
between
Trinidad Ammonia Company, Limited Partnership
as Lessor
and
Arcadian Fertilizer, L.P.
as Lessee
This Amendment has been manually executed in 8 counterparts, numbered
consecutively from 1 through 8, of which this is No. 2. To the extent,
if any, that this Amendment constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any
jurisdiction), no security interest in this Amendment may be created or
perfected through the transfer or possession of any counterpart other
than the original executed counterpart which shall be the counterpart
identified as counterpart No. 1.
<PAGE> 6
Amendment No. 2 dated as of August 26, 1996 to Lease Agreement
("Amendment No. 2"), dated as of June 29, 1995, between Trinidad Ammonia
Company, Limited Partnership, a Delaware limited partnership ("Lessor"), and
Arcadian Fertilizer, L.P., a Delaware limited partnership ("Lessee"), amending
the Lease Agreement referred to below.
WHEREAS, Lessor and Lessee have heretofore entered into an Lease
Agreement, dated as of June 29, 1995, as amended by Amendment No. 1, dated as
of August 20, 1996 (collectively, the "Lease Agreement"); and
WHEREAS, Lessor and Lessee wish to further amend the Lease
Agreement as hereinafter provided;
NOW, THEREFORE, Lessor and Lessee hereby agree that the Lease
Agreement is amended as follows:
1. Section 1 of the Lease Agreement is hereby amended by
adding the following definition thereto:
"'Appraisal Procedure' means the following procedure
whereby an independent appraiser shall be appointed by the Lessor
and the Lessee, with the consent of the Assignee, to determine
the amount, if any, by which the sales price of the Ammonia
Project has been reduced as the direct result of wear and tear in
excess of the wear and tear that would have occurred if the
Lessee's obligations contained in the second sentence of
paragraph (b) of Section 9 of this Lease had been satisfied, if
such determination is required under Section 19 of this Lease.
If no such appraiser is appointed by the Lessor and the Lessee
within thirty (30) days after the written request of either the
Lessor or the Lessee that an appraiser be appointed, the Lessor
and the Lessee shall each appoint an independent appraiser within
thirty (30) days thereafter, and the two appraisers so appointed
shall appoint a third independent appraiser. Each appraiser
appointed pursuant to the foregoing procedure shall, within
thirty (30) days after appointment of the last appraiser,
independently determine the amount, if any, by which the sales
price of the Ammonia Project has been reduced as the direct
result of wear and tear in excess of the wear and tear that would
have occurred if the Lessee's obligations contained in the second
sentence of paragraph (b) of Section 9 of this Lease had been
satisfied. If the Lessor or the Lessee shall fail to appoint an
independent appraiser within the above-mentioned thirty (30) day
period, the appraiser appointed by the other party shall
determine such amount. If a single appraiser is appointed, such
appraiser's determination shall be final. If three appraisers
are appointed, the amounts determined by the three appraisers
shall be averaged, the amount which differs the most from such
average shall be excluded, the remaining two amounts shall then
be averaged and such average shall be final. The expenses off
all appraisers shall be paid by the Lessee. Each appraiser
appointed pursuant to this "Appraisal Procedure" shall be an
independent engineering firm of recognized standing and shall
have experience in the construction, maintenance and operation of
ammonia production plants."
<PAGE> 7
2. Paragraph (d) of Section 10 of the Lease Agreement is
hereby amended to read in its entirety as follows:
"(d) Political Risk Insurance. The Lessee shall, as agent
for the Lessor, procure or cause to be procured and maintain or
cause to be maintained in respect of Property or Equipment not
located in the United States, for the Lessor, with the
Multilateral Investment Guaranty Agency or such other insurance
company as shall be reasonably acceptable to the Lessor, a policy
of political risk insurance covering (i) transfer restrictions,
(ii) expropriation and (iii) war and civil disturbance; provided,
that the amount of such political risk insurance in respect of
the Ammonia Project shall equal or exceed the Acquisition Cost of
the Ammonia Project less the sum of (A) the face amount of the
Letter of Credit, (B) the cash on deposit in the Cash Reserve
Account and (C) the value of all investments of such cash and
investments of earnings on investments of such cash (as
determined pursuant to the CRA Agreement). Upon obtaining such
policy of political risk insurance, the Lessee will furnish to
the Lessor evidence reasonably satisfactory to the Lessor that
such insurance complies with the terms of this paragraph (d)."
3. Section 19 of the Lease Agreement is hereby amended by
adding the following paragraph (j) to such section, to read in its entirety as
follows:
"(j) If (i) an Event of Default arising solely as a result
of the Lessee's failure to comply with its obligations contained
in the second sentence of paragraph (b) of Section 9 of this
Lease shall have occurred and be continuing, (ii) the Lessor
shall terminate this Lease or the Lessee's right to the use and
possession of the Ammonia Project, and (iii) the Lessor shall
sell the Ammonia Project, then if the proceeds of such sale are
less than 15% of the Acquisition Cost of the Ammonia Project, the
Lessee shall pay to the Lessor the amount by which the sales
price of the Ammonia Project has been reduced as the direct
result of wear and tear in excess of the wear and tear that would
have occurred if the Lessee's obligations contained in the second
sentence of paragraph (b) of Section 9 of this Lease had been
satisfied (the amount by which the sales price of the Ammonia
Project has been reduced as the direct result of wear and tear in
excess of the wear and tear that would have occurred if the
Lessee's obligations contained in the second sentence of
paragraph (b) of Section 9 of this Lease had been satisfied, to
be such amount, if any, as the Lessor and the Lessee agree, or if
no agreement is reached, the amount, if any, determined pursuant
to the Appraisal Procedure); provided that, in no event shall the
Lessee be required to pay an amount that, when combined with the
proceeds received by the Lessor from the purchaser of the Ammonia
Project, exceeds 15% of the Acquisition Cost of the Ammonia
Project."
4. This Amendment No. 2 may be executed in several
counterparts, each of which when executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute but
one and the same Amendment No. 2.
2
<PAGE> 8
5. This Amendment No. 2 shall in all respects be governed by,
and construed in accordance with, the laws of the State of New York, including
all matters of construction, validity and performance.
6. Except as provided herein, all provisions, terms and
conditions of the Lease Agreement shall remain in full force and effect. As
amended hereby, the Lease Agreement is ratified and confirmed in all respects.
3
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 2 to be duly executed as of the date first above written.
Trinidad Ammonia Company, Limited Partnership
By: Trinidad Ammonia Capital, Inc., its General Partner
By: /s/ JAMES A. BROWN
-------------------------------------------------
Name: JAMES A. BROWN
Title: Vice President-Finance
and Assistant Secretary
Arcadian Fertilizer, L.P.
By: Arcadian Corporation, its General Partner
By: /s/ JOHN H. GHEENS
-------------------------------------------------
Name: JOHN H. GHEENS
Title: TREASURER
4
<PAGE> 1
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT 10.3
================================================================================
AGREEMENT FOR LEASE
between
Nitrogen Leasing Company, Limited Partnership
and
Arcadian Fertilizer, L.P.
Dated as of March 27, 1996
================================================================================
THIS AGREEMENT HAS BEEN ASSIGNED AS SECURITY
FOR INDEBTEDNESS OF THE OWNER. SEE SECTION 17.
This Agreement has been manually executed in 8 counterparts, numbered
consecutively from 1 through 8, of which this is No. ____. To the extent, if
any, that this Agreement constitutes chattel paper (as such term is defined in
the Uniform Commercial Code as in effect in any jurisdiction), no security
interest in this Agreement may be created or perfected through the transfer or
possession of any counterpart other than the original counterpart which shall be
the counterpart identified as counterpart No. 1.
<PAGE> 2
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
DB DRAFT 3/26/96
TABLE OF CONTENTS
Page
----
SECTION 1. DEFINITIONS................................................... 1
SECTION 2. APPOINTMENT OF AGENT.......................................... 10
SECTION 3. ADVANCES...................................................... 12
SECTION 4. CONDITIONS PRECEDENT TO THE INITIAL
ADVANCE WITH RESPECT TO A UNIT................................ 14
SECTION 5. CONDITIONS PRECEDENT TO OWNER'S OBLIGATION TO
MAKE INTERIM ADVANCES AFTER THE INITIAL ADVANCE
WITH RESPECT TO A UNIT........................................ 18
SECTION 6. CONDITIONS PRECEDENT TO THE FINAL ADVANCE WITH
RESPECT TO A UNIT............................................. 19
SECTION 7. CONDITIONS PRECEDENT TO THE COMPLETION
ADVANCE WITH RESPECT TO A UNIT................................ 21
SECTION 8. REPRESENTATIONS AND WARRANTIES OF AGENT....................... 22
SECTION 9. AFFIRMATIVE COVENANTS......................................... 26
SECTION 10. NEGATIVE COVENANTS............................................ 33
SECTION 11. EVENTS OF DEFAULT, EVENTS OF UNIT TERMINATION
AND CASUALTY EVENTS........................................... 34
SECTION 12. INDEMNITIES................................................... 42
SECTION 13. LEASEHOLD INTERESTS........................................... 43
SECTION 14. PURCHASES..................................................... 43
SECTION 15. CHARACTER OF AMMONIA PROJECT.................................. 43
SECTION 16. PERMITTED CONTESTS............................................ 43
SECTION 17. SALE OR ASSIGNMENT BY OWNER................................... 44
SECTION 18. GENERAL CONDITIONS............................................ 45
i
<PAGE> 3
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
DB DRAFT 3/26/96
SECTION 19. AGENT'S RIGHT TO PURCHASE..................................... 52
<TABLE>
<S> <C>
Exhibit A The Lease Agreement
Exhibit B Form of AFL Unit Leasing Record
Exhibit C Form of Acquisition Certificate
Exhibit D Form of Interim Advance
Exhibit E Form of Certificate of Substantial Completion
Exhibit F Form of Certificate of Increased Cost
Exhibit G Unit FF&E Specifications
Exhibit H Environmental Certificate
Exhibit I Operating Agreement
Exhibit J Description of the Ammonia Project
Exhibit K Project Parcel
Exhibit L Draft of Construction Agreements for Ammonia Project
Exhibit M-1 Electricity Supply Agreement
Exhibit M-2 Water Supply Agreement
Exhibit M-3 Form of Savonetta Pier User Agreement
Exhibit N Description of OSHA Litigation
Exhibit O Form of AIA Document G722
</TABLE>
ii
<PAGE> 4
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
AGREEMENT FOR LEASE
Agreement for Lease dated as of March 27, 1996 (as the same
may be amended, restated, modified or supplemented from time to time as
permitted by and in accordance with the Operative Documents, this "Agreement"),
between Nitrogen Leasing Company, Limited Partnership, a Delaware limited
partnership ("Owner") and Arcadian Fertilizer, L.P., a Delaware limited
partnership, individually and, to the extent provided for herein, as agent of
Owner (in either such capacity, the "Agent").
WHEREAS, Owner may from time to time acquire either (i) a fee
interest or (ii) a leasehold interest pursuant to a Ground Lease (hereinafter
defined) in certain Unit Premises (hereinafter defined); and
WHEREAS, on or about the date of this Agreement, Owner and
Agent propose to enter into a lease agreement (hereinafter defined), providing
for the lease or sublease by Agent of certain Unit Improvements (hereinafter
defined) which will be constructed and furnished on such Unit Premises pursuant
to the terms of this Agreement; and
WHEREAS, Owner desires to appoint Agent to act as agent for
Owner in connection with the selection of Owner's fee and/or leasehold interests
in Unit Premises from time to time, and with the construction of Unit
Improvements and the installation of Unit FF&E thereon, if any, and in
connection with all matters related to such construction, and Agent wishes to
accept such appointment.
NOW, THEREFORE, in consideration of the mutual covenants
herein contained and other valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Owner and Agent hereby agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. For the purposes of this Agreement each of
the following terms shall have the meaning specified with respect thereto:
Accrued Default Obligations: Defined pursuant to paragraph (e)
of subsection 11.2 hereof.
Acquisition Certificate: The written certification of Agent to
be delivered to Owner in connection with the making of the Initial Advance
hereunder, which contains the information and representations of Agent as
required by Section 4 of this Agreement, and which is substantially in the form
of Exhibit C hereto.
Affiliate: Defined pursuant to subsection 1.2 hereof.
AFL Unit Leasing Record: An instrument, substantially in the
form of Exhibit B hereto, evidencing the lease of a Unit under the Lease.
<PAGE> 5
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Agreement: This Agreement for Lease, as the same may be
amended, restated, modified or supplemented from time to time pursuant to and in
compliance with the Operative Documents.
Ammonia Project: The Unit Premises located in the Republic of
Trinidad and Tobago and described on Exhibit J hereto in which Owner will,
subject to the provisions hereof, acquire a leasehold interest and the related
Unit Improvements and Unit FF&E constituting the ammonia production plant which
are to be located on or about such Unit Premises, as described in Exhibit J
hereto.
Ancillary Facility Agreement: Any of the contracts entered
into or to be entered into by Agent or an Affiliate of Agent and assigned to
Owner which provide for the use of and access to storage tanks, loading and
unloading facilities, pipelines and similar facilities and equipment necessary
for the operation and maintenance of and access to the Ammonia Project as listed
on Exhibits M-1 through M-3 hereto and the License Agreements relating to
pipelines and similar facilities necessary for the operation and maintenance of
the Ammonia Project.
Ancillary Facility Agreement Consents: Each Estoppel
Certificate, Consent and Agreement relating to an Ancillary Facility Agreement
entered into or to be entered into by the National Energy Corporation of
Trinidad and Tobago Limited, the Trinidad and Tobago Electricity Commission and
the Water and Sewage Authority of Trinidad and Tobago and the consent of ATAL
and the Operator relating to the License Agreement.
ANL: Arcadian Nitrogen Limited, a Trinidad and Tobago private
limited company.
Arcadian Corporation: Arcadian Corporation, a Delaware
corporation and the general partner of Agent.
Assignee: Defined pursuant to subsection 1.2 hereof.
Assignment Agreement: Each agreement entered into or to be
entered into between ANL and Owner, pursuant to which ANL's rights under an
Ancillary Facility Agreement is assigned to Owner.
ATAL: Arcadian Trinidad Ammonia Limited, a Trinidad and Tobago
private limited company.
ATAL Agreement: The Estoppel Certificate, Consent and
Agreement relating to the Sublease entered into by ATAL.
Business Day: Defined pursuant to subsection 1.2 hereof.
Casualty Event: Any of the events specified in subsection 11.5
hereof.
2
<PAGE> 6
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Certificate of Increased Cost: The certificate delivered by
Agent to Owner pursuant to Section 7 hereof in connection with a request for a
Completion Advance, and which is substantially in the form of Exhibit F hereto.
Certificate of Substantial Completion: The certificate
delivered by Agent to Owner pursuant to Section 6 hereof in connection with a
request for a Final Advance, and which is substantially in the form of Exhibit E
hereto.
Completion Advance: Any advance made by Owner upon
satisfaction or waiver of the conditions set forth in Section 7 hereof.
Consent: Defined pursuant to subsection 1.2 hereof.
Construction Agreement: Each agreement between Owner and a
General Contractor, providing for the construction of Unit Improvements, as the
same may be amended, restated, modified or supplemented from time to time
pursuant to and in compliance with the Operative Documents. A copy of the most
recent draft of each Construction Agreement related to the Ammonia Project is
attached as Exhibit L hereto.
Construction Agreement Surety: A guaranty in form and
substance reasonably acceptable to Owner, of Dresser Industries, Inc. with
respect to the General Contractor's obligations under the Construction
Agreement, which guaranty shall be for the benefit of the Owner.
Construction Documents: The collective reference to the
Construction Agreement(s), the Unit Plans, the Permits and all other agreements
entered into by Agent or its Affiliate with respect to constructing, equipping,
furnishing and decorating the Unit.
CRA Agreement: Defined pursuant to subsection 1.2 hereof.
Credit Agreement: Defined pursuant to subsection 1.2 hereof.
Designated Effective Date: Thirty (30) months from the date on
which the Initial Advance is made by Owner to Agent pursuant to Section 4
hereof.
Effective Date: Defined pursuant to subsection 1.2 hereof.
Environmental Consultant: Pilko & Associates, Inc.
ERISA: Defined pursuant to subsection 1.2 hereof.
ERISA Event: Defined pursuant to subsection 1.2 hereof.
Event of Default: Any of the events constituting an Event of
Default, as specified in subsection 11.1 hereof.
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Event of Unit Termination: Any of the events constituting an
Event of Unit Termination, as specified in subsection 11.3 hereof.
Final Advance: Any advance made by Owner upon satisfaction or
waiver of the conditions of Section 6 hereof.
Financing Costs: All interest costs (including, without
limitation, interest at a default rate), other costs, fees and expenses incurred
by or accrued to any date for the determination thereof for the account of Owner
under a Credit Agreement, and all costs, fees and expenses incurred by or
accrued for the account of Owner to such date in connection with obtaining
equity financing, including return on equity capital and interest on overdue
payments thereof.
Force Majeure Delay: Any delay caused by conditions beyond the
control of Agent or any of its Affiliates (assuming that Agent and its
Affiliates are in compliance with their obligations under the Operative
Documents), including, without limitation, acts of God or the elements, fire,
strikes, labor disputes, delays in delivery of material and disruption of
shipping, which does not have the effect of extending the Unit Completion Date
for the relevant Unit beyond two hundred and seventy (270) days in the
aggregate.
Gas Contract: The gas contract or subcontract to be entered
into by an Affiliate of Agent with respect to the supply of natural gas to the
Ammonia Project.
General Contractor: Any contractor or contractors as may be
engaged by Agent or its Affiliate from time to time for construction of Unit
Improvements.
Governmental Action: Any action as defined in subsection 8.5
hereof.
Governmental Authority: Any nation or government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, or agencies, courts or arbitral panels having jurisdiction over
or application to any Unit Premises, Unit Improvements, Unit FF&E, Unit, Agent,
any Affiliate of Agent or Owner.
Ground Lease: Each ground lease, including, without
limitation, the Site Lease and the Sublease (each of which Site Lease and
Sublease must be a Mortgageable Ground Lease) and each additional lease under
which a leasehold interest in a Unit Premises is leased to Owner or is subleased
to Agent or a Permitted Sublessee (as defined in the Lease).
Indebtedness: Defined pursuant to subsection 1.2 hereof.
Indemnified Person: Any Person as defined in Section 12
hereof.
Initial Advance: Any advance made by Owner upon satisfaction
or waiver of the conditions set forth in Section 4 hereof.
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Insurance Requirements: Defined pursuant to subsection 1.2
hereof.
Interim Advance: Any advance made by Owner upon satisfaction
or waiver of the conditions set forth in Section 5 hereof.
Interim Advance Certificate: A certificate delivered by Agent
to Owner pursuant to Section 5 hereof in connection with a request for an
Interim Advance, and which is substantially in the form of Exhibit D hereto.
Lease: The Lease Agreement, dated as of the date hereof, by
and between Owner, as lessor, and Agent, as lessee, as it may be amended,
restated, modified or supplemented from time to time pursuant to, and in
compliance with, the provisions of the Operative Documents, a copy of which is
attached as Exhibit A hereto.
Legal Requirements: All laws, judgments, decrees, ordinances
and regulations and any other governmental rules, orders and determinations and
all requirements having the force of law of Governmental Authorities, now or
hereinafter enacted, made or issued, whether or not presently contemplated,
including, without limitation, compliance with all requirements of labor laws
and environmental statutes (including, without limitation, all environmental
laws and statutes of the Republic of Trinidad and Tobago), compliance with which
is required at any time from the date hereof through the term of this Agreement,
whether or not such compliance shall require structural, unforeseen or
extraordinary changes to any Unit or the operation, occupancy or use thereof,
except any thereof promulgated by a Governmental Authority of the jurisdiction
of organization of Owner with application exclusively to Owner.
License Agreements: Defined pursuant to subsection 1.2 hereof.
Lien: Defined pursuant to subsection 1.2 hereof.
Merrill Leasing: ML Leasing Equipment Corp., a Delaware
corporation.
Merrill Lynch: Merrill Lynch & Co., Inc., a Delaware
corporation.
Mortgageable Ground Lease: Defined pursuant to subsection 1.2
hereof.
Multiemployer Plan: Defined pursuant to subsection 1.2 hereof.
Multiple Employer Plan: Defined pursuant to subsection 1.2
hereof.
Note Agreement: Defined pursuant to subsection 1.2 hereof.
Operating Agreement: Defined pursuant to subsection 1.2
hereof.
Operative Documents: This Agreement, the Lease, the
Construction Documents, the Project Documents, each Ground Lease, each
Assignment Agreement, the
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Ancillary Facility Agreement Consents, the ATAL Agreement and the Point Lisas
Agreement.
Operator: Defined pursuant to subsection 1.2 hereof.
Owner: Nitrogen Leasing Company, Limited Partnership or any
successor or successors to all of its rights and obligations as Owner hereunder.
Permits: All consents, licenses, building, and operating
permits required for construction, completion, and operation of any Unit in
accordance with all Legal Requirements affecting such Unit.
Permitted Contest: Defined pursuant to paragraph (a) of
Section 16 hereof.
Permitted Liens: Defined pursuant to subsection 1.2 hereof.
Person: Defined pursuant to subsection 1.2 hereof.
Plan: Defined pursuant to subsection 1.2 hereof.
Point Lisas: The Point Lisas Industrial Port Development
Corporation.
Point Lisas Agreement: The Deed of Direct Covenant relating to
the Site Lease entered into by Point Lisas.
Potential Default: Any event which, but for the lapse of time,
or giving of notice, or both, would constitute an Event of Default.
Potential Event of Unit Termination: Any event which, but for
the lapse of time, or giving of notice, or both, would constitute an Event of
Unit Termination.
Project Documents: The Gas Contract, the Operating Agreement
and each Ancillary Facility Agreement.
Project Parcel: The land, together with all required
appurtenant easements thereto, which is necessary for the siting, construction
and proper operation of the Ammonia Project as described on Exhibit K hereto.
Responsible Officer: The President, any Vice President or any
Treasurer of the general partner of Agent, or any other officer or similar
official of the general partner of Agent responsible for the administration of
the obligations of Agent with respect to this Agreement.
Revolving Loan Facility: Defined pursuant to subsection 1.2
hereof.
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Site Lease: The Lease Agreement, dated as of July 26, 1982,
between Point Lisas and ATAL, as the same may be amended, restated, modified or
supplemented from time to time pursuant to and in compliance with the Operative
Documents.
Sublease: The Sublease Agreement, dated as of the date hereof,
between ATAL and Owner, as the same may be amended, restated, modified or
supplemented from time to time pursuant to and in compliance with the Operative
Documents.
Subsidiary: Defined pursuant to subsection 1.2 hereof.
Substantial Completion: With respect to any Unit, the
satisfaction of all requirements of Section 6 hereof.
Surrender Date: Defined pursuant to paragraph (a) of
subsection 11.4 hereof.
Taking: Any event which is described in paragraph (b) of
subsection 11.5 hereof.
Unit: Any Unit Premises and any Unit Improvements thereon and
related Unit FF&E, including without limitation the Ammonia Project.
Unit Acquisition Cost: With respect to any Unit the sum of (a)
the aggregate amount of advances made pursuant to this Agreement with respect to
the Unit and (b) all other costs of Owner (including costs incurred by Agent but
reimbursed by Owner) with respect to the Unit (except costs which are not
properly capitalized and costs for which Owner has been reimbursed or chooses,
in lieu of capitalization hereunder, to be reimbursed by Agent, pursuant to the
provisions of subsection 9.5 or Section 12 hereof) arising from the acquisition,
construction, equipping, and financing (including, without limitation, Financing
Costs and Owner's out-of-pocket expenses and fee obligations in connection
therewith) prior to the lease of the Unit under the Lease, including all rent
under any Ground Lease which is paid or prepaid by Owner. Unit Acquisition Cost
shall be reflected in the applicable AFL Unit Leasing Record, as modified by any
revised AFL Unit Leasing Record.
Unit Budget: The budget to be prepared by Agent and delivered
to, and approved by, Owner prior to the Initial Advance with respect to any
Unit, as amended from time to time, which budget shall set forth in general
detail costs relating to such of the following as Agent deems to be appropriate:
(a) the installation of Unit FF&E, if any, thereon; (b) all costs, including,
without limitation, the purchase price, survey and survey inspection charges,
appraisal, architectural, engineering, environmental analysis, soil analysis and
market analysis fees, title insurance premiums, brokerage commissions, transfer
fees and taxes that are customarily the responsibility of the purchaser, closing
adjustments for taxes, utilities and the like, escrow and closing fees,
recording and filing fees, the legal fees of Owner and Agent, and all related
costs and expenses incurred in acquiring and maintaining marketable fee or
leasehold title to such Unit and in leasing or subleasing such
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Unit to Agent; (c) the costs of completion of the Unit Improvements in
conformity with the Unit Plans, the Construction Agreement or any contracts in
replacement thereof, including without limitation, costs of site preparation,
acquiring or granting easements necessary for completion of the Unit
Improvements, making utility connections, demolition, streets, parking areas,
landscaping, development, off-site improvements, design and related construction
of the Unit Improvements and related facilities and the costs of necessary
studies, surveys, plans and permits, insurance and examination and incidental
costs and expenses related thereto incurred in acquiring and maintaining
marketable fee or leasehold title to such Unit and in leasing or subleasing such
Unit and Unit FF&E to Agent; (d) the costs of architects', attorneys',
engineers' and other professionals' fees and disbursements, in connection with
the development, planning, renovation, construction, start-up, testing and
construction financing of the Unit Improvements, including, without limitation,
the fees and disbursements of Owner's counsel in connection with this Agreement
and the duties of Owner hereunder, the Construction Agreement, and in all other
matters involving or reasonably related to this transaction; (e) costs of all
charges and assessments for the construction, improvement, maintenance, repair
and restoration of streets, roads, walks, sewer, gas, electrical, telephone and
water lines and other improvements levied upon the Unit until the Effective
Date; (f) the costs of all insurance, real estate, property and excise tax
assessments, sales and use taxes on materials used in construction, and other
operating and carrying costs paid, accrued, or levied upon the Unit or Owner in
connection with the Unit during the period from acquisition of the Unit Premises
until the Effective Date for such Unit; (g) costs of Agent's project
representatives (inspectors, consultants, etc.) incurred in its capacity as
agent for Owner; (h) a contingency amount of up to an additional twenty percent
(20%) of the aggregate of all such projected expenditures, which shall include
Financing Costs and otherwise shall be allocated to unexpected increases in the
costs associated with such Unit; and (i) any and all other costs arising from or
in connection with the construction period for such Unit Improvements and until
the Effective Date for such Unit. The Unit Budget with respect to the Ammonia
Project shall not exceed $285,000,000.
Unit Completion Date: With respect to the Ammonia Project,
thirty-six (36) months from the date on which the Initial Advance is made by
Owner to Agent pursuant to Section 4 hereof plus any Force Majeure Delay, and
with respect to any other Unit, as agreed to in writing among Agent, Owner and
any Assignee.
Unit FF&E: The specific items of furniture, fixtures and
equipment, if any, from the Unit FF&E Specifications which are installed or (if
such items have been acquired by Owner for installation) to be installed in a
particular Unit Improvement and for which advances are made by Owner hereunder.
Unit FF&E Specifications: The list of furniture, fixtures and
equipment to be installed with the proceeds of advances hereunder in a
particular Unit Improvement, a copy of which with respect to the Ammonia Project
is attached as Exhibit G hereto.
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Unit Improvements: The improvements to be constructed on an
individual Unit Premises in accordance with the Unit Plans for the Unit
Improvements to be built on such Unit Premises.
Unit Plans: The plans and specifications for the construction
and operating characteristics of any Unit Improvements, including, without
limitation, installation of curbs, sidewalks, gutters, landscaping, utility
connections (whether on or off the Unit Premises) and all fixtures necessary for
construction, operation and occupancy of the Unit and certain equipment to be
used in connection therewith, prepared or to be prepared by an architect and
Agent and approved by Owner, including such amendments, modifications and
supplements thereto as may from time to time be made by Agent; provided that any
subsequent material deviation from the Unit Plans selected for the Unit shall be
made only with Owner's prior consent, which consent shall not be unreasonably
withheld or delayed.
Unit Premises: Each individual parcel of land, in which either
a fee interest or a leasehold interest has been acquired by Owner for the
construction of Unit Improvements thereon, including without limitation the
Project Parcel.
Withdrawal Liability: Defined pursuant to subsection 1.2
hereof.
1.2 Other Definitional Provisions.
(a) For purposes of this Agreement, the terms "Affiliate",
"Assignee", "Business Day", "Consent", "CRA Agreement", "Credit Agreement",
"Effective Date", "ERISA", "ERISA Event", "Indebtedness", "Insurance
Requirements", "License Agreements", "Lien", "Mortgageable Ground Lease",
"Multiemployer Plan", "Multiple Employer Plan", "Note Agreement", "Operating
Agreement", "Operator", "Permitted Liens", "Person", "Plan", "Revolving Loan
Facility", "Subsidiary" and "Withdrawal Liability" shall have the meanings set
forth opposite those terms in the Lease, except that, for purposes of this
Agreement, the terms "the Lessor", "the Lessee" and "this Lease" if used in
those definitions in the Lease shall be deemed to be the terms "Owner", "Agent"
and "this Agreement", respectively, and if used in those definitions in the
Lease, each of the terms "Parcel", "Parcel of Property" and "Property" shall be
deemed to be the phrase "Unit Premises and related Unit Improvements" and each
of the terms "Unit of Equipment" and "Unit", shall be deemed to be an item of
"Unit FF&E".
(b) All terms defined in this Agreement shall have their
defined meanings when used in any certificate or other document made or
delivered pursuant hereto.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and section,
subsection, paragraph, schedule and exhibit references are to this Agreement
unless otherwise specified.
9
<PAGE> 13
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
SECTION 2. APPOINTMENT OF AGENT
2.1 Appointment and Duties of Agent. Subject to the terms
hereof, including, without limitation, the requirements of Section 4 hereof,
Owner hereby appoints Agent as its agent for the design, construction,
equipping, and installation of the Ammonia Project on the Project Parcel in
accordance with the Unit Plans and Unit Budget and, to the extent identified in
Exhibit G hereto, Unit FF&E with respect thereto and Agent hereby accepts such
appointment. By written agreement, Owner may appoint Agent as its agent in
respect of additional Unit Premises and Unit Improvements. Unit Improvements
must be of a type permitted to be leased under the Lease, as set forth in
Exhibit A to the Lease. Agent agrees to contract for, supervise and achieve the
good, workmanlike and timely completion of the Unit Improvements and
installation of Unit FF&E on each Unit Premises in accordance with the Unit
Budget and in all material respects in accordance with the Unit Plans, suitable
for its intended use. Owner and Agent agree that any obligation of Agent
herewith may be performed by an Affiliate of Agent; provided that Agent shall in
no event be relieved of any of its obligations under this Agreement by virtue of
any such performance. Upon request of Agent, Owner agrees to deliver to Agent a
separate executed power or attorney confirmatory of the power granted herein in
form suitable for recording. Owner and Agent agree that Agent shall be
responsible for the supervision of all matters relating to any Construction
Agreement; provided that, with respect to any Construction Agreement relating to
the Ammonia Project, all obligations of Owner under such Construction Agreement
shall be performed by ANL; provided, however, that Agent shall not be relieved
of any of its obligations hereunder.
2.2 Cost and Completion of a Unit. Owner and Agent agree that
(a) Unit Acquisition Cost shall be no more than $285,000,000 with respect to the
Ammonia Project and such amount as Agent, Owner and any Assignee agree in
writing with respect to any other Unit. Agent agrees to effect Substantial
Completion of any Unit Improvements on or before the applicable Unit Completion
Date. After receiving the Initial Advance with respect to a Unit, Agent may from
time to time amend, modify or supplement the Unit Plans, Unit Budget or Unit
FF&E Specifications relating thereto; provided, that no such amendment,
modification or supplement shall increase the Unit Budget to an amount in excess
of the maximum cost for acquisition set forth in the first sentence of this
subsection 2.2 or result in the Unit not being completed on or prior to its Unit
Completion Date in all material respects in accordance with the Unit Plans.
Agent shall promptly deliver to Owner and any Assignee any such amended,
modified or supplemented Unit Plans, Unit Budget or Unit FF&E Specifications.
2.3 Lease of a Unit.
(a) Upon Substantial Completion of any Unit Agent will deliver
to Owner the Certificate of Substantial Completion in the form of Exhibit E
hereto with respect to such Unit (including, without limitation, the AFL Unit
Leasing Record), and Agent shall request the Final Advance with respect to such
Unit. If the conditions set forth in Section 6 hereof have been satisfied in the
reasonable judgment of Owner, Owner,
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<PAGE> 14
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
within five (5) Business Days of receipt of the Certificate of Substantial
Completion, a fully completed AFL Unit Leasing Record executed by Agent and the
other documents required in Section 6 hereof, shall execute and deliver to Agent
such AFL Unit Leasing Record. Except as provided below, the Final Advance shall
be made by Owner on the date of execution by Owner of the AFL Unit Leasing
Record. If Substantial Completion of the Unit will not be effected on or before
the Designated Effective Date with respect to the Unit, Agent shall prepare and
execute an AFL Unit Leasing Record with respect to the Unit and deliver it to
Owner, at least five (5) days prior to the Designated Effective Date. Owner
shall execute and deliver to Agent the AFL Unit Leasing Record by the Designated
Effective Date, and Owner's obligation to make further advances, other than a
Completion Advance, with respect to the Unit under this Agreement shall
terminate on the Designated Effective Date. Agent may request and receive on the
Designated Effective Date an advance pursuant to Section 5, provided all
conditions to such advance under Section 5 are met. Such AFL Unit Leasing Record
shall have an Effective Date as of the date of the Designated Effective Date.
Execution and delivery by Agent of the AFL Unit Leasing Record shall constitute
(i) acknowledgment and representation by Agent that each Unit included therein
(taking into account its then current state of construction) is in good
condition, conforms in all material respects to the Unit Plans and has been
accepted for lease under the Lease by Agent as of the Effective Date of the AFL
Unit Leasing Record, (ii) acknowledgment by Agent that each such Unit is subject
to all of the covenants, terms and conditions of the Lease, and (iii)
certification by Agent that the representations and warranties contained in
Section 2 of the Lease are true and correct in all material respects on and as
of the Effective Date of the AFL Unit Leasing Record as though made on and as of
such date and that there exists on such date no (1) Event of Default or, with
respect to such Unit, Event of Unit Termination or Casualty Event under this
Agreement or Event of Default (as defined in the Lease) or (2) Potential Default
or, with respect to such Unit, Potential Event of Unit Termination under this
Agreement or Potential Default (as defined in the Lease). Upon execution and
delivery of an AFL Unit Leasing Record by Owner, such Unit shall become a Parcel
of Property (as defined in the Lease).
(b) Notwithstanding the foregoing, but subject to the terms of
subsection 3.1 hereof, Agent may, by delivering to Owner a Certificate of
Increased Cost (in the form of Exhibit F hereto), at any time up to six (6)
months after the date on which the Final Advance has been made with respect to a
Unit or, if no Final Advance was made prior to the Designated Effective Date, at
any time prior to the Unit Completion Date, request a Completion Advance in
order to pay to Agent construction costs that were not the subject of any
previous advance. Owner, within five (5) Business Days of receipt and upon
Owner's approval of a request for the Completion Advance and the Certificate of
Increased Cost, shall execute and deliver to Agent a revised AFL Unit Leasing
Record for such Unit reflecting such increased cost, and Agent, within five (5)
Business Days of receipt of such revised AFL Unit Leasing Record, shall sign the
revised AFL Unit Leasing Record and return it to Owner. If no Final Advance was
made on or prior to the Designated Effective Date, at the time Agent returns the
executed revised AFL Unit Leasing Record (which shall occur on a date on or
prior to the Unit Completion Date for such Unit), it shall also deliver the
documents required by Section 6 hereof as if a Final Advance was being made at
such time. The Completion Advance shall be made by
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<PAGE> 15
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Owner upon receipt of the revised AFL Unit Leasing Record signed by Agent and,
if applicable, the documentation required by the previous sentence. Execution
and delivery by Agent of the revised AFL Unit Leasing Record shall constitute
(i) acknowledgment and representation by Agent that each Unit included therein
is in good condition, conforms in all material respects to the Unit Plans and
has been accepted for lease under the Lease by Agent as of the Effective Date of
the AFL Unit Leasing Record, (ii) acknowledgment by Agent that each such Unit is
subject to all of the covenants, terms and conditions of the Lease, and (iii)
certification by Agent that the representations and warranties contained in
Section 2 of the Lease are true and correct in all material respects on and as
of the Effective Date of the revised AFL Unit Leasing Record as though made on
and as of such date and that there exists on such date no (1) Event of Default
or, with respect to such Unit, Event of Unit Termination or Casualty Event under
this Agreement or Event of Default (as defined in the Lease) or (2) Potential
Default or, with respect to such Unit, Potential Event of Unit Termination under
this Agreement or Potential Default (as defined in the Lease).
2.4 Powers of Agent. Agent shall have the right to act for and
on behalf of Owner with full and complete authority to appear before each
applicable Governmental Authority to resolve issues related to the platting,
zoning and use of the Unit Premises, to obtain all Permits, to grant and obtain
easements for the benefit of any Unit Premises or which are reasonably deemed
necessary by Agent for the installation or operation of the Ammonia Project
(provided that no such action shall contravene any provision of any Ground
Lease) in all material respects in accordance with the Unit Plans, appoint,
employ and deal with the architects, engineers, consultants and contractors,
purchase and arrange for delivery of all materials, supplies, furniture,
fixtures, and equipment, and to approve all related vouchers, invoices and
statements. Notwithstanding the foregoing, Owner agrees to execute directly any
and all such documents which Governmental Authorities do not permit to be
exercised pursuant to a power of attorney or as Agent may reasonably deem to be
necessary to effect the purposes of this Agreement. No payment shall be made for
any property or services of such architects, engineers, consultants, or
contractors relating to the acquisition, construction and equipping of any Unit
without the prior approval of Agent, and each amount so approved and paid shall
be in accordance with the Unit Budget, and shall be part of the Unit Acquisition
Cost of such Unit. If Agent has unreasonably delayed or withheld giving the
approvals required to make such payments, Owner may make payments to any
architects, engineers, consultants, contractors, vendors or suppliers which are
properly due and payable in accordance with the contracts with said parties, and
any such payment so made shall be and become a part of the Unit Acquisition Cost
of the Unit; provided, however, that Owner shall not make any such payment if it
is subject to a Permitted Contest.
SECTION 3. ADVANCES
3.1 Agreement to Make Advances. Subject to the conditions and
upon the terms herein provided, including, without limitation, that the Unit
Budget not be exceeded, Owner agrees to make available to Agent advances from
time to time for each Unit up to an aggregate principal amount for such Unit
determined in accordance with the
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<PAGE> 16
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Unit Budget for such Unit and not in excess of the maximum amount per Unit set
forth in subsection 2.2 hereof. Subject to the terms of this Agreement, Owner
agrees to make (a) an Initial Advance with respect to a Unit in accordance with
Section 4 of this Agreement, (b) Interim Advances from time to time in
accordance with Section 5 of this Agreement, (c) a Final Advance in accordance
with Section 6 of this Agreement and (d) a Completion Advance in accordance with
Section 7 of this Agreement.
3.2 Procedure for Advances. Agent shall give Owner notice in
accordance with Sections 4, 5, 6 and 7 hereof of its irrevocable request for an
advance pursuant to this Agreement, specifying a Business Day on which such
advance is to be made and the amount of the advance. Not later than 11:00 a.m.
New York time on the date for the advance specified in such notice, provided all
conditions to that advance have been satisfied, Owner shall provide to Agent, or
to such other party as may be designated by Agent, in immediately available
funds, the amount of the advance then requested.
3.3 Determination of Amounts of Advances.
(a) Initial Advance. The amount of the Initial Advance with
respect to a Unit shall be made within the limits of the Unit Budget and in
accordance with the Acquisition Certificate, and shall be sufficient to pay in
full all components of Unit Acquisition Cost paid or incurred to the date
thereof including acquisition and closing costs of the respective Unit
including, without limitation, the purchase price, survey and survey inspection
charges, recording and filing fees, brokerage commissions, appraisal,
architectural, engineering, environmental analysis, soil analysis and market
analysis fees, transfer fees and taxes that are customarily the responsibility
of the purchaser, title insurance premiums, closing adjustments for taxes,
utilities, and the like, escrow fees, if any, construction materials and
existing structures, and the legal fees of Owner and Agent. All such costs for
which the Initial Advance is requested shall be set forth in the Unit Budget
attached to the Acquisition Certificate, and in the request for the Initial
Advance.
(b) Interim Advances. Disbursements for the payment of or the
reimbursement of Agent for components of Unit Acquisition Cost for a Unit shall
be made upon the request of Agent from time to time, based upon the
certifications of Agent contained in an Interim Advance Certificate. Owner shall
have no obligation to make Interim Advances more often than once every seven (7)
days.
(c) Final Advance. The amount of the Final Advance shall be
made within the limits of the Unit Budget and in accordance with the Certificate
of Substantial Completion, and shall be sufficient, subject to the provisions of
paragraph (d) of this subsection 3.3, the payment of or the reimbursement of
Agent for components of Unit Acquisition Cost in connection with Substantial
Completion of the Unit, free of all Liens other than Permitted Liens. Owner
shall have no obligation to make the Final Advance unless Owner is satisfied
that all such costs as set forth in the Unit Budget, the Certificate of
Substantial Completion, and the request for the Final Advance have been actually
incurred, or in the case of punch list items will be incurred, in construction
and equipping
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<PAGE> 17
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
of the Unit, free of all Liens, except for Permitted Liens and shall not cause
the Unit Acquisition Cost of the Unit to exceed the Unit Budget.
(d) Completion Advance. The amount of the Completion Advance
shall be made in accordance with and shall not exceed the amount set forth in
the Certificate of Increased Cost, shall not cause the Unit Acquisition Cost of
the Unit to exceed the Unit Budget, and shall be sufficient for payment in full
of all costs that are properly capitalizable and that were not the subject of
any previous advance with respect to such Unit. Owner shall have no obligation
to make the Completion Advance unless Owner is satisfied that all such costs
were reasonably estimated in the Unit Budget and are adequately set forth in the
Certificate of Increased Cost and will be sufficient for payment in full of all
costs with respect to such Unit.
3.4 Partial Advances. If any or all conditions precedent to
any advance have not been satisfied on the applicable date for a requested
advance, Owner, in its sole discretion, and with the consent of Assignee may,
but shall have no obligation to, disburse a part of the requested advance.
SECTION 4. CONDITIONS PRECEDENT TO THE INITIAL ADVANCE WITH
RESPECT TO A UNIT
Owner's obligation to make the Initial Advance with respect to
a Unit shall be subject both to the satisfaction of the conditions set forth in
this Section 4 and to the receipt by Owner and any Assignee of the documents set
forth in this Section 4, in each case in form and substance reasonably
satisfactory to Owner and any Assignee. Owner and any Assignee shall have at
least five (5) Business Days to review the Acquisition Certificate and its
attachments prior to making any Initial Advance.
The following are the documents to be received by Owner and
the conditions to be satisfied:
(a) Lease. With respect to the first advance only under this
Agreement, a fully executed copy of the Lease.
(b) Acquisition Certificate. A duly executed copy of the
Acquisition Certificate the statements in which shall be true.
(c) Warranty Deed. Where fee title is being acquired by Owner,
a photocopy of the executed purchase and sale agreement and the
warranty deed to be executed and delivered at the closing of the
acquisition of Owner's fee interest in such Unit Premises, conveying
marketable title to Owner, free of all Liens other than Permitted
Liens. For purposes of the Initial Advance, Permitted Liens shall not
include any mechanics' liens or materialmen's liens, or any taxes,
assessments, governmental charges or levies, except to the extent that
such taxes, assessments,
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THIS AGREEMENT FOR LEASE IS
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governmental charges or levies are due and payable but not yet
delinquent, and have been properly apportioned with the seller at
closing.
(d) Memorandum of Lease Agreement. Except with respect to the
Ammonia Project, two original counterparts of a memorandum of lease
agreement in the appropriate form for recording in the jurisdiction in
which the Unit Premises is located, executed by Agent, as lessee, and
otherwise reasonably acceptable to Owner and Assignee.
(e) Ground Lease. Where a leasehold interest is being acquired
by Owner, a true and complete copy of the Site Lease, the Sublease and
each other Ground Lease, including a true and complete copy of the
legal description of the Unit Premises, executed or intended to be
executed and delivered at the closing of the acquisition of Owner's
leasehold interest, in a form approved by Owner, and complying in all
respects with this Agreement and with Section 28 of the Lease, and not
subject to any Liens other than Permitted Liens, along with a
memorandum of ground lease in statutory recordable form and any
necessary estoppel certificates, recognition and attornment agreements,
confirmations, and subordinations required by Owner's and any
Assignee's counsel regarding the Ground Lease. For purposes of the
Initial Advance, Permitted Liens shall not include any taxes,
assessments, governmental charges or levies, except to the extent that
such taxes, assessments, governmental charges or levies are due and
payable but not yet delinquent.
(f) Taxes. Certification by Agent that all past and current
taxes and assessments (excluding those which are due and payable but
not yet delinquent) applicable in respect of the acquisition of the
Unit or any component thereof by Owner, its leasing to Agent, or
otherwise in connection with the transactions contemplated hereby, and
in respect of the Unit Premises have been paid in full.
(g) Title Information. A copy of the underlying documents of
record affecting fee title to the Unit Premises from the appropriate
Governmental Authority, or such other evidence in respect of title as
Owner may reasonably request.
(h) Survey. A current survey or an update of an existing
survey of the Unit Premises prepared by a licensed public land
surveyor, and dated a date within one hundred eighty (180) days prior
to the date of the Initial Advance.
(i) Availability of Access Rights and Utilities. Certification
by Agent that all easements, licenses, rights of way, access rights and
utility services and facilities (including, without limitation, gas,
electrical, water and sewage services and facilities) (i) which are
necessary and required during the construction period have been
completed or will be available in such a manner as to assure Owner that
construction will not be impeded by a lack thereof and (ii) which are
necessary for the occupancy of the Unit and the installation of the
Unit Improvements thereon
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THIS AGREEMENT FOR LEASE IS
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and for the completion and operation of the Unit in accordance with the
Unit Plans are or will be completed in such a manner and at such a time
as will assure the completion and operation of the Unit on or before
the Unit Completion Date.
(j) Permits. Certification by Agent that all Permits and
governmental approvals required for the construction of the Unit
Improvements (other than the governmental approval of the Town and
Country Planning Authority of the Republic of Trinidad and Tobago,
which approval will be obtained prior to completion of construction of
the Ammonia Project) have been or will be issued or obtained in such a
manner as to assure Owner that construction will not be impeded by a
lack thereof and all such Permits and governmental approvals required
therefor which have been issued or obtained are in full force and
effect.
(k) Opinions of Counsel for Agent. An opinion of Dewey
Ballantine, counsel for Agent, in form and substance reasonably
satisfactory to Owner and Assignee, an opinion of counsel for Agent
licensed in the Republic of Trinidad and Tobago, in form and substance
reasonably satisfactory to Owner and Assignee.
(l) Construction Agreements. A fully executed and complete
copy of each Construction Agreement or, if each such Construction
Agreement has not been executed on such date, a copy of the letter
agreement, dated February 16, 1996 between Owner and The M.W. Kellogg
Company with respect to construction of the Ammonia Project, a copy of
the interim work scope set forth in the four "Schedule A" books dated
January, 1996, and a copy of the letter agreement dated March 14, 1996,
between The M.W. Kellogg Company and Owner with respect to the
anticipated cost and construction period with respect to the completion
of the Ammonia Project.
(m) Consent and Acknowledgement Documentation. Fully executed
originals of the Point Lisas Agreement, the ATAL Agreement and the
Ancillary Facility Agreement Consents (other than the Ancillary
Facility Consent of the National Energy Corporation of Trinidad and
Tobago Limited).
(n) Unit Plans. A copy of the Unit Plans satisfactory to Owner
and Assignee.
(o) Unit Budget. A copy of the Unit Budget and certification
by Agent that such Unit Budget is (i) true, complete and correct, (ii)
accurately representative at the time of delivery of all expected costs
to Owner of the Unit and (iii) within the dollar limits set forth in
the first sentence of subsection 2.2 hereof.
(p) Certificates of Insurance. Certificates of insurance or
other evidence reasonably acceptable to Owner certifying that the
insurance then carried or maintained on the Unit required by subsection
9.3 hereof complies with the terms of such subsection.
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THIS AGREEMENT FOR LEASE IS
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(q) Request for Advance. A duly executed AIA Document G722 (or
substantially similar document), stating the total amount of the
Initial Advance requested, the date on which the advance is to be made,
the name, address and, if applicable, the escrow reference number of
the escrow or closing agent or party to whom the Initial Advance is to
be tendered, wiring instructions and an itemization of the various
costs constituting the amount of the Initial Advance in such detail as
will be necessary to provide disbursement instructions to the escrow or
closing agent, including, specifically, an accounting of all
expenditures for costs shown on the Unit Budget for which payment or
reimbursement is being requested with respect to the Unit. A form of
AIA Document G722 is attached hereto as Exhibit O.
(r) Environmental Certificate and Report. An environmental
certificate in the form of Exhibit H hereto, duly executed by the
general partner of Agent, and an environmental report satisfactory to
Owner and any Assignee in all respects, prepared by the Environmental
Consultant. If Owner or Assignee shall reasonably require additional
assurance as to any matter or matters contained or not adequately
addressed in such environmental report, Owner or Assignee may require
that further investigation be conducted and a supplemental or
additional environmental report with respect to such matter or matters,
satisfactory to Owner and Assignee in all respects, be delivered.
(s) Use of Proceeds, No Liens and Representations of Agent.
(i) All costs and expenses which are the subject of the Initial Advance
requested have been paid in full or will be paid in full out of the
proceeds of the Initial Advance, (ii) there are no Liens on the Unit of
which Agent has knowledge that are not Permitted Liens, (iii) all
representations and warranties made in this Agreement, in the Lease and
in connection with the Initial Advance, are and remain true and correct
in all material respects on and as of the date of the Initial Advance
(except to the extent such representations and warranties expressly
relate specifically to an earlier date) and (iv) no Event of Default,
Potential Default or, with respect to the Unit for which the Initial
Advance is requested, Casualty Event, Event of Unit Termination or
Potential Event of Unit Termination, under this Agreement has occurred
and is continuing on the date such Initial Advance is to be made or by
reason of giving effect to such Initial Advance.
(t) Project Documents. With respect to the Ammonia Project,
copies of each Project Document.
(u) Appraisal. With respect to the Ammonia Project, an
appraisal prepared by Arthur Andersen & Co., which appraisal shall
include (i) a "value in use" fair market valuation of at least
$285,000,000 as of the date of Substantial Completion of the Ammonia
Project and (ii) a "value in use" fair market valuation of the Ammonia
Project of at least $199,500,000 as at March 31, 2003.
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THIS AGREEMENT FOR LEASE IS
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(v) Assignment Agreement. With respect to the Ammonia Project,
an executed Assignment Agreement with respect to the Ancillary Facility
Agreements (other than an Assignment Agreement relating to the
Savonetta Pier User Agreement) and the License Agreements.
(w) Unit FF&E Specifications. A true and complete copy of the
Unit FF&E Specifications with respect to the Unit.
SECTION 5. CONDITIONS PRECEDENT TO OWNER'S OBLIGATION TO MAKE
INTERIM ADVANCES AFTER THE INITIAL ADVANCE WITH
RESPECT TO A UNIT
Owner's obligation to make any Interim Advance with respect to
a Unit after the Initial Advance with respect to such Unit shall be subject to
the satisfaction of the conditions set forth in this Section 5 and to the
receipt by Owner and any Assignee of the documents set forth in this Section 5,
in each case in form and substance reasonably satisfactory to Owner and any
Assignee. Owner and any Assignee shall have at least five (5) Business Days to
review the Interim Advance Certificate and its attachments prior to making any
Interim Advance.
The following are the documents to be received by Owner and
any Assignee and the conditions to be satisfied:
(a) Interim Advance Certificate. A duly executed Interim
Advance Certificate the statements in which shall be true.
(b) Continuing Representations of Agent. All representations
and warranties made in this Agreement, in the Lease, and in connection
with the Interim Advance, are and remain true and correct in all
material respects on and as of the date of the Interim Advance as if
made on and as of the date of the Interim Advance (except to the extent
such representations and warranties expressly relate specifically to an
earlier date) and no Event of Default, Potential Default or, with
respect to the Unit for which such Interim Advance is requested,
Casualty Event, Event of Unit Termination or Potential Event of Unit
Termination, under this Agreement has occurred and is continuing on the
date such Interim Advance is to be made or by reason of giving effect
to such Interim Advance.
(c) Construction Progress. If reasonably requested in writing
by Owner or any Assignee at least three (3) Business Days prior to the
making of an Interim Advance, Owner shall have received and approved
(i) an inspection report from an independent party satisfactory to
Owner or any Assignee, if any, covering conformity of the work to the
Unit Plans, quality of work completed, percentage of work completed and
(ii) true copies of unpaid invoices, receipted bills and Lien waivers,
and such other reasonably available supporting information as Owner or
any Assignee may reasonably request.
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THIS AGREEMENT FOR LEASE IS
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(d) Evidence of Compliance. Agent shall furnish Owner and any
Assignee with such additional or updated documents, reports,
certificates, affidavits and other information, in form and substance
reasonably satisfactory to Owner and any Assignee in its reasonable
judgment, as Owner and any Assignee may reasonably require to evidence
compliance by Agent with all of the provisions of this Agreement.
(e) Request for Advance. A duly executed AIA Document G722 (or
a substantially similar document), stating the total amount of the
Interim Advance requested, the date on which such Interim Advance is to
be made, and a specific breakdown of items and costs for which the
Interim Advance is being made.
(f) No Other Security Interests. All materials and fixtures
incorporated in the construction of the Unit Improvements have been
purchased so that title thereto or a leasehold interest therein, as the
case may be, shall have vested in Owner immediately upon delivery
thereof to the Unit Premises, except for Permitted Liens, and Agent
shall have produced and furnished, if requested in writing by Owner at
least three (3) Business Days prior to the making of an Interim
Advance, the contracts, bills of sale, statements, receipted vouchers,
or other documents under which title thereto or a leasehold interest
therein is claimed; provided that, if Agent does not have any documents
under which title thereto or a leasehold interest thereon is claimed,
upon Owner's request, Agent shall use commercially reasonable efforts
to obtain such documents.
(g) Statement of Expenditures. If requested in writing by
Owner, Agent or any General Contractor shall supply Owner with a
statement setting forth the names, addresses and amounts due or to
become due as well as the amounts previously paid to every contractor,
subcontractor or Person furnishing materials, performing labor or
entering into the construction of any part of the Unit Improvements.
(h) Construction Agreements. If not previously delivered to
Owner, a fully executed and complete copy of any Construction Agreement
in effect on such date.
SECTION 6. CONDITIONS PRECEDENT TO THE FINAL ADVANCE
WITH RESPECT TO A UNIT
Owner's obligation to make the Final Advance with respect to a
Unit shall be subject to the satisfaction of the conditions set forth in this
Section 6 and to the receipt by Owner and any Assignee of the documents set
forth in this Section 6, in each case in form and substance reasonably
satisfactory to Owner and any Assignee. When all of the conditions set forth in
this Section 6 shall have been satisfied to the reasonable satisfaction of Owner
and any Assignee, Substantial Completion of a Unit shall be deemed to occur.
Owner and any Assignee shall have at least five (5) Business Days to review the
Certificate of Substantial Completion and its attachments prior to making a
Final Advance.
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THIS AGREEMENT FOR LEASE IS
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The following are the documents to be received by Owner and
any Assignee and the conditions to be satisfied:
(a) Certificate of Substantial Completion. A duly executed
Certificate of Substantial Completion the statements in which shall be
true.
(b) Construction and Equipping of the Unit. The Unit
Improvements (including all interior finish work, but exclusive of
punch list items) have been completed within the Unit Budget and in all
material respects in accordance with the Unit Plans and are accepted by
Agent.
(c) Permits. All Permits and governmental approvals with
respect to the Unit shall have been issued or obtained and shall be in
full force and effect.
(d) Liens. The Unit, including interior finish work, has been
completed as contemplated in paragraph (c) above, free of all Liens,
except for Permitted Liens (all of which are to be itemized as to the
nature, amount, claimant and status), and there are no current
Permitted Contests with respect to the Unit (or, if any, the nature,
amount, claimant and status thereof).
(e) Final Survey. A final survey showing the completed Unit
Improvements, all easements on the Unit Premises, and indicating the
location of access to the Unit Premises and all utility and water
easements directly affecting the Unit Premises.
(f) Utilities. Connection has been made to all appropriate
utility facilities and the Unit Improvements are ready for occupancy
and operation.
(g) Continuing Representations of Agent. All representations
and warranties made in this Agreement, in the Lease, and in connection
with the Final Advance are to remain true and correct in all material
respects on and as of the date of the Final Advance (except to the
extent such representations and warranties expressly relate
specifically to an earlier date) as if made on and as of the date of
the Final Advance and no Event of Default, Potential Default or, with
respect to the Unit for which the Final Advance is requested, Casualty
Event, Event of Unit Termination or Potential Event of Unit
Termination, under this Agreement has occurred and is continuing on the
date such Final Advance is to be made or by reason of giving effect to
such Final Advance.
(h) AFL Unit Leasing Record. An AFL Unit Leasing Record
prepared and duly executed by Agent. All Unit Premises and Unit
Improvements included in the Ammonia Project shall be included on one
(1) AFL Unit Leasing Record.
(i) Request for Advance. A duly executed AIA Document G722 (or
a substantially similar document), stating the total amount of the
Final Advance
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THIS AGREEMENT FOR LEASE IS
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requested, the date on which such advance is to be made, wiring
instructions and a specific breakdown of items and costs for which the
Final Advance is to be made.
SECTION 7. CONDITIONS PRECEDENT TO THE COMPLETION
ADVANCE WITH RESPECT TO A UNIT
Owner's obligation to make the Completion Advance with respect
to a Unit shall be subject to the satisfaction of the conditions set forth in
this Section 7 and to the receipt by Owner and any Assignee of the documents set
forth in this Section 7, in each case in form and substance reasonably
satisfactory to Owner and Assignee. The amount of the Completion Advance shall
not cause the Unit Acquisition Cost of a Unit to exceed the Unit Budget. The
proceeds of the Completion Advance shall be used to pay in full all costs
relating to completion of such Unit for which Agent has received invoices
subsequent to such Effective Date. Owner and any Assignee shall have at least
five (5) Business Days to review the Certificate of Increased Cost and its
attachments prior to making the Completion Advance.
The following are the documents to be received by Owner and
any Assignee and the conditions to be satisfied:
(a) Certificate of Increased Cost. A duly executed Certificate
of Increased Cost the statements in which shall be true.
(b) Continuing Representations of Agent. All representations
and warranties made in this Agreement, in the Lease, and in connection
with the Completion Advance are and remain true and correct in all
material respects on and as of the date of the Completion Advance
(except to the extent such representations and warranties expressly
relate specifically to an earlier date) as if made on and as of the
date of the Completion Advance and no Event of Default, Potential
Default or, with respect to the Unit for which the Completion Advance
is requested, Casualty Event, Event of Unit Termination or Potential
Event of Unit Termination under this Agreement has occurred and is
continuing on the date such Completion Advance is to be made or by
reason of giving effect to such Completion Advance.
(c) Request for Advance. A duly executed AIA Document G722 (or
a substantially similar document), stating the total amount of the
Completion Advance requested, the date on which such advance is to be
made, wiring instructions and a specific breakdown of items and costs
for which the Completion Advance is to be made.
(d) Revised AFL Unit Leasing Record. A revised AFL Unit
Leasing Record prepared by Agent pursuant to subsection 2.3(b) hereof.
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THIS AGREEMENT FOR LEASE IS
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SECTION 8. REPRESENTATIONS AND WARRANTIES OF AGENT
Agent represents and warrants to Owner now and on the date of
each advance that:
8.1 Partnership Matters. Agent (i) has been duly organized and
is validly existing as a limited partnership in good standing under the laws of
the State of Delaware, (ii) has full power, authority and legal right to own and
operate its properties and to conduct its business as presently conducted and to
execute, deliver and perform its obligations under this Agreement and any other
Operative Document to which it is or is to be a party and to consummate the
transactions contemplated hereby and by the other Operative Documents and (iii)
to the best of its knowledge after due inquiry, is duly qualified to do business
as a foreign limited partnership in good standing in each jurisdiction in which
its ownership or leasing of properties or the conduct of its business or the
consummation of the transactions contemplated hereby and by the other Operative
Documents requires such qualification, except where the failure to so qualify
would not materially impair the ability of Agent to perform its obligations
hereunder or under the other Operative Documents. The sole general partner of
Agent is Arcadian Corporation.
8.2 Power and Authority. The consummation by Agent of the
transactions contemplated by the Operative Documents and the execution, delivery
of and performance and observance by Agent of its obligations under this
Agreement and the other Operative Documents to which it is or is to be a party
have been duly authorized by all necessary action on the part of the partners of
Agent. None of the execution, delivery and performance by Agent of this
Agreement or any other Operative Document to which Agent is or is to be a party
will result in any violation of any term of the certificate of limited
partnership or the partnership agreement of Agent, or require the approval or
consent of any limited partner or general partner of Agent except such as have
been obtained prior to the date hereof and will not conflict with or result in a
breach in any material respect of any terms or provisions of, or constitute a
default under, or result in the creation or imposition of any Lien (other than a
Permitted Lien) upon any property or assets of Agent under, any indenture,
mortgage or other agreement or instrument to which Agent is a party or by which
it or any of its property is bound, or any existing applicable law, rule,
regulation, license, judgment, order or decree of any Governmental Authority or
court having jurisdiction over Agent or any of its activities or properties.
8.3 Binding Agreement. Each of this Agreement and each other
Operative Document to which Agent is or is to be a party has been duly
authorized and has been or will be duly executed and delivered by Agent and,
assuming the due authorization, execution and delivery of this Agreement and any
other such Operative Document by the parties thereto other than Agent, this
Agreement is, and each such other Operative Document when executed and delivered
will be, the legal, valid and binding obligation of Agent, enforceable against
Agent according to their terms, subject, as to enforceability, to applicable
bankruptcy, insolvency and similar laws affecting creditors' rights generally,
and to general principles of equity (regardless of whether enforcement is sought
in a proceeding in equity or at law).
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THIS AGREEMENT FOR LEASE IS
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8.4 No Litigation. Except as described in Exhibit N hereto,
there is no action, suit, proceeding or investigation at law or in equity by or
before any court, governmental body, agency, commission or other tribunal now
pending or, to the knowledge of Agent, threatened against or affecting Agent or
any property or rights of Agent which questions the enforceability of this
Agreement or any other Operative Document or which affects any or relates to any
Unit Premises, Unit Improvements, Unit FF&E or Unit or which, if adversely
determined, would have a reasonable possibility of causing a material adverse
impact on the business of Agent in the aggregate or would materially impair the
ability of Agent to perform its obligations hereunder or under any other
Operative Document.
8.5 Consents, Approvals, Authorizations, Etc. There are no
consents, licenses, orders, authorizations, approvals, waivers, extensions or
variances of, or notices to or registrations or filings with (each a
"Governmental Action"), any Governmental Authority or public body or authority
in any jurisdiction which are or will be required in connection with or are
necessary to the valid execution, delivery and performance of this Agreement or
any other Operative Document or any Governmental Action (i) which is or will be
required in connection with any participation by Owner in the transactions
contemplated by, or the exercise of remedies or the enforcement of rights by
Owner under, this Agreement or any other Operative Document, any bill of sale,
deed, assignment, assumption, ownership agreement, or operating agreement
relating to any Unit Premises, Unit Improvements, Unit FF&E or Unit or (ii)
which is or will be required to be obtained by Owner, Agent, any Assignee or an
Affiliate of the foregoing, during the term of this Agreement, with respect to
any Unit Premises, Unit Improvements, Unit FF&E or Unit except the Governmental
Action of the Town and Country Planning Authority of the Republic of Trinidad
and Tobago, which Governmental Action Agent reasonably believes will be obtained
in the normal course prior to the completion of construction of the Ammonia
Project, and such other Governmental Actions (A) as have been duly obtained,
given or accomplished, with true copies thereof delivered to Owner, (B) as may
be required by applicable law not now in effect, (C) which, individually or in
the aggregate, if not obtained or effected, (x) will not place either Owner or
any Assignee in any danger of any monetary civil liability for which Owner or
any Assignee is not adequately indemnified (Agent's obligations under Section 12
of this Agreement shall be deemed to be adequate indemnification if no Event of
Default exists) or any other material civil liability or penalty or subject
Owner or any Assignee to any criminal liability as a result of a failure to
comply therewith, (y) will not result in a material diminution in the value of
any Unit Premises, Unit Improvements, Unit FF&E or Unit or in any material risk
of the loss, sale or forfeiture or loss of use of any thereof, and (z) will not
materially impair the ability of Agent to perform its obligations hereunder, (D)
as may be required for the construction or operation of the Ammonia Project and
have been or will be timely obtained or (E) which may be required as a result of
the business, properties or activities of Owner, any Assignee or any Affiliate
of the foregoing and which are not solely dependent on the nature of the Unit
Premises, Unit Improvements, Unit FF&E or Units or the business of Agent.
8.6 Compliance with Legal Requirements and Insurance
Requirements. The construction, operation, use, and physical condition of each
Unit Premises, the Unit
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THIS AGREEMENT FOR LEASE IS
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Improvements, Unit and item of Unit FF&E comply with all Legal Requirements and
Insurance Requirements; except any Legal Requirements, the non-compliance with
which, individually or in the aggregate, (i) will not place either Owner or any
Assignee in any danger of any monetary civil liability which Owner or any
Assignee is not adequately indemnified for (Agent's obligations under Section 12
of this Agreement shall be deemed to be adequate indemnification if no Event of
Default exists) or any other material civil liability or penalty or subject
Owner or any Assignee to any criminal liability as a result of a failure to
comply therewith and (ii) will not result in a material diminution in the value
of any Unit Premises, Unit Improvements, Unit FF&E or Unit or in any material
risk of the loss, sale or forfeiture or loss of use of any thereof.
8.7 No Default. Agent is not in violation of or in default
under or with respect to any Legal Requirement in any respect which could have a
materially adverse effect on the business, operations, properties or financial
or other condition of Agent, or which could materially adversely affect the
ability of Agent to perform its obligations under this Agreement or any other
Operative Document to which Agent is or is to be a party.
8.8 Ownership; Liens. No Unit Premises, Unit Improvements,
Unit FF&E or Unit is subject to any Lien, except for Permitted Liens.
8.9 Financial Statements. Agent has furnished to Owner copies
of its annual audited consolidated financial statements for the year ended
December 31, 1994 and copies of its quarterly unaudited consolidated financial
statements (balance sheet, income statement and cash flow statement) for the
quarters ended September 30, 1995 and December 31, 1995. The financial
statements contained in such documents fairly present in all material respects
the financial position, results of operations and statements of cash flows of
Agent as of the dates and for the periods indicated therein and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis.
8.10 Changes. Since September 30, 1995, there has been no
material adverse change in the financial condition or business of Agent in the
aggregate nor any change which would materially impair the ability of Agent to
perform its obligations under this Agreement or any other Operative Document to
which Agent is or is to be a party.
8.11 Suitability of Each Unit Premises. Each Unit Premises is
suitable in all material respects (including, without limitation, ground
conditions, utilities, and condition of title) for the construction and
operation of the related Unit Improvements in all material respects in
accordance with the related Unit Plans.
8.12 ERISA. (a) No ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan.
(b) As of the last annual actuarial valuation date, the funded
current liability percentage, as defined in Section 302(d)(8) of ERISA, of each
Plan exceeds 90 percent, other than with respect to Plans whose unfunded current
liability does not exceed
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THIS AGREEMENT FOR LEASE IS
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$1,000,000 in the aggregate, and there has been no material adverse change in
the funding status of any such Plan since such date.
(c) Agent has not incurred or is reasonably expected to incur
any Withdrawal Liability to any Multiemployer Plan.
(d) Agent has not 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.
(e) Except as set forth in the financial statements referred
to in subsection 8.9 hereof, Agent 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.
(f) The execution and delivery of this Agreement will not
involve any non-exempt "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code.
8.13 Ground Lease. Each Ground Lease is a Mortgageable Ground
Lease except to the extent agreed to in writing by Owner and Assignee, and is in
full force and effect and has not been modified, amended or changed in any
manner that has not been approved in writing by Owner, nor is there any material
default under any Ground Lease nor event which, with the giving of notice or the
passage of time or both, would constitute a default under such Ground Lease, nor
to the best knowledge of Agent has any party under any Ground Lease commenced
any action or given or received any notice for the purpose of terminating any
Ground Lease.
8.14 Operating Agreement. The Operating Agreement has been
duly authorized, executed and delivered by the Operator and, assuming the due
authorization, execution and delivery of the Operating Agreement by Owner, is a
legal, valid and binding obligation of the Operator, enforceable according to
its terms.
8.15 Gas Contract. The Gas Contract has been duly authorized
and will be duly executed and delivered by an Affiliate of Agent and, assuming
the due authorization, execution and delivery of the Gas Contract by any party
to the Gas Contract other than an Affiliate of Agent, when executed and
delivered will be a legal, valid and binding obligation of such Affiliate of
Agent, enforceable according to its terms.
8.16 Ancillary Facility Agreements. Each Ancillary Facility
Agreement has been duly authorized, and has been or will be duly executed and
delivered by Agent or an Affiliate of Agent and, assuming the due authorization,
execution and delivery of each Ancillary Facility Agreement by the parties
thereto other than Agent or an Affiliate of Agent, when executed and delivered
will be a legal, valid and binding obligation of Agent or such Affiliate,
enforceable according to its terms.
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
SECTION 9. AFFIRMATIVE COVENANTS
Agent hereby agrees that, so long as this Agreement remains in
effect, Agent shall keep and perform fully each and all of the following
covenants:
9.1 Performance under Other Agreements. Agent shall duly
perform and observe in all material respects all of the covenants, agreements
and conditions on its part to be performed and observed hereunder and under each
other Operative Document to which it is or is to be a party, except to the
extent that Agent's obligation in respect of such covenant, agreement or
condition may be subject to a Permitted Contest.
9.2 No Encroachments. The Unit Improvements shall be
constructed entirely on the related Unit Premises and shall not encroach upon or
overhang (unless consented to by the affected property owner or permitted by the
terms of any easement, license or right-of-way agreement) any easement or
right-of-way or the land of others, and when erected shall be wholly within any
building restriction lines, however established. If Owner shall have a
reasonable basis to believe any Unit Improvements are not in compliance with
this subsection 9.2, Owner may request, and Agent shall furnish from time to
time satisfactory evidence of compliance with the foregoing covenants,
including, without limitation, a survey prepared by a surveyor or engineer. If
any discrepancies exist between the legal description set forth on the survey
described in Section 4(h) hereof and the final as-built survey described in
Section 6(f) hereof, Owner and Agent shall cooperate, at Agent's expense, in
amending the legal descriptions in all recorded documents creating or
encumbering or otherwise affecting the Unit Premises, including, without
limitation, any easements, to reflect the correct as-built description.
9.3 Insurance.
(a) Insurance with respect to each Unit Premises, the Unit
Improvements, Unit FF&E and Unit. Agent will maintain or cause to be maintained
on each Unit Premises, the Unit Improvements, Unit FF&E and Unit insurance of
the same types, in the same amounts and on the same terms and conditions as the
insurance required by paragraph (c) through (l) of Section 10 of the Lease,
except that the terms "Owner", "Agent" and "this Agreement" shall substitute for
the terms "the Lessor", "the Lessee" and "this Lease", respectively, the phrase
"Unit Premises, Unit Improvements, Unit FF&E and Unit" shall substitute for the
phrase "Parcel of Property" or "Property", references to "Equipment" or "Unit of
Equipment" shall be deemed deleted, and the phrase "Unit Acquisition Cost" shall
substitute for the phrase "Acquisition Cost"; provided, that in lieu of the
insurance required by paragraph (c)(i) of Section 10 of the Lease, Agent shall,
as Owner's agent, maintain or cause to be maintained for Owner All Risk
Builders' Risk Completed Value Non-Reporting Form Insurance, including collapse
coverage and fire insurance with extended coverage, in an amount not less than
one hundred percent (100%) of the completed insurable value of the respective
Unit Improvements and Unit FF&E; provided however, that with respect to the
Ammonia Project, Agent shall not be required to maintain or cause to be
maintained All Risk Builders' Risk Completed Value Non-Reporting Form Insurance
until such date as any Unit
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THIS AGREEMENT FOR LEASE IS
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Improvements or Unit FF&E relating to the Ammonia Project are located in the
Republic of Trinidad and Tobago. The term "completed insurable value" as used
herein means the actual replacement cost, including the cost of debris removal,
but excluding the cost of constructing foundation and footings. Such insurance
may provide for such deductibles and Agent may self-insure with respect to the
required coverage to the extent consistent with Agent's customary practice with
respect to similar property owned by Agent.
(b) Use or Operation of Unit Premises, Unit Improvements, Unit
FF&E or Unit. Agent covenants that it will not use, carry on construction with
respect to, or occupy any Unit or permit the use, construction, or occupancy of
any Unit Premises, Unit Improvements, Unit FF&E or Unit at a time when the
insurance required by paragraph (a) of this subsection is not in force with
respect to such Unit Premises, Unit Improvements, Unit FF&E or Unit.
(c) Construction Bonding. In order to secure the performance
by the General Contractor for the Ammonia Project of its obligations under its
Construction Agreement, Agent shall furnish to Owner and maintain the
Construction Agreement Surety in such amounts and for such durations as may be
required pursuant to such Construction Agreement.
9.4 Inspection. Upon at least five (5) Business Days written
notice (or upon two (2) Business Days written notice if an Event of Default
shall have occurred and be continuing), Owner or Assignee or any authorized
representatives of either of them, shall have during reasonable business hours
the right of entry and free access to each Unit Premises, the Unit Improvements,
Unit FF&E and each Unit and the right to inspect all work done, labor performed
and materials furnished in and about each Unit Premises, the Unit Improvements,
Unit FF&E and each Unit and at reasonable times the right to inspect all
contracts of Agent relating to each Unit Premises, the Unit Improvements, Unit
FF&E and each Unit, but neither Owner nor any Assignee shall have any duty to
make any such inspection; provided that Agent shall be permitted to withhold
from Owner or any Assignee any information with respect to its business or work
products not related to any Unit Premises, Unit Improvements, Unit FF&E or Unit.
Owner may recover from Agent (i) the reasonable costs and expenses associated
with any inspection of the Ammonia Project, in an amount not to exceed, when
aggregated with (A) the expenses referred to in clause (i) of paragraph (d) of
Section 8 of the Lease, and (B) the fees and expenses of Owner and any Assignee
for engineering and legal services, $650,000 in the aggregate, (ii) the
reasonable costs and expenses associated with any such inspection which are
incurred following the occurrence and during the continuation of any Event of
Default throughout the term of this Agreement and (iii) all of Owner's and any
Assignee's mortgage recordation, lien and filing fees, and all out-of-pocket
expenses of Owner's legal counsel and any Assignee's legal counsel, and all
out-of-pocket expenses of any Assignee. Notwithstanding anything to the contrary
contained in the immediately preceding sentence, Agent shall not be required to
reimburse Owner for any of the foregoing costs and expenses to the extent such
costs and expenses are capitalized by Owner in Unit Acquisition Cost.
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
9.5 Expenses. Agent shall pay, whether or not Owner is
obligated to make any Advance under Sections 3 through 7 hereof, upon demand all
obligations, costs and expenses incurred in good faith by Owner with respect to
any and all transactions contemplated herein and the preparation of any document
reasonably required hereunder and the prosecution or defense of any action or
proceeding or other litigation affecting Agent or any Unit Premises, Unit
Improvements, Unit FF&E or Unit, including (without limiting the generality of
the foregoing) all Financing Costs not capitalized by Owner in Unit Acquisition
Cost and amounts required to reimburse Owner for its obligations, costs and
expenses arising in connection with the termination of any Credit Agreement
(whether as a result of a default thereunder or otherwise), costs incurred in
connection with obligations of Owner under or in respect of any interest rate
swap, cap, collar or other financial hedging arrangement, including without
limitation costs incurred by Owner under any such arrangement to reduce the
notional amount thereof by the amount of any prepayment of any borrowing to
which such interest rate swap, cap, collar or other financial hedging
arrangement relates, title and conveyancing charges, recording and filing fees
and taxes, title search fees, rent under the Ground Leases, mortgage taxes,
intangible personal property taxes, escrow fees, revenue and tax stamp expenses,
insurance premiums (including title insurance premiums), brokerage commissions,
finders' fees, placement fees, court costs, surveyors', photographers',
appraisers', architects', engineers', accountants' and reasonable attorneys'
fees and disbursements, and will reimburse to Owner all expenses paid by Owner
of the nature described in this subsection 9.5 which have been or may be
incurred by Owner with respect to any and all of the transactions contemplated
herein. In the event Agent shall fail to reimburse Owner within ten (10)
Business Days after presentation of a bill and demand for payment therefor,
Owner may pay or deduct from the advances to be made any of such expenses and
any proceeds so applied shall be deemed advances under this Agreement, and
deducted from the total funds available to Agent under this Agreement.
Notwithstanding anything to the contrary contained in the foregoing, Agent shall
not be required to reimburse Owner for any of the foregoing obligations, costs
and expenses which constitute properly capitalizable costs under generally
accepted accounting principles. Expenses incurred by Owner (including, without
limitation, Financing Costs) in financing obligations, costs and expenses
pending allocation as a capitalized cost to a Unit shall be payable by Agent
hereunder, if not capitalized by Owner. Agent shall not be required to pay any
start-up costs associated with the commencement of operations at the Ammonia
Project or any related operating costs associated with the Ammonia Project,
which costs and expenses shall be borne by the Operator under the Operating
Agreement.
9.6 Certificates; Other Information. Agent shall furnish to
Owner:
(a) concurrently with the delivery of the financial statements
referred to in subsection 9.6(b) hereof, a certificate of a Responsible
Officer stating that, to the best of such Responsible Officer's
knowledge, Agent during such period has observed or performed in all
material respects all of its covenants and other agreements, and
satisfied in all material respects every condition contained in this
Agreement and in the Construction Documents to be observed, performed
or
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
satisfied by it, and that such Responsible Officer has obtained no
knowledge of any Event of Default or Potential Default except as
specified in such certificate;
(b) from time to time, (i) promptly upon their becoming
available (but in any event, within 120 days after the end of each
fiscal year with respect to annual statements and within 90 days after
the end of each fiscal quarter with respect to quarterly statements),
copies of Agent's annual consolidated audited financial statements and
quarterly consolidated unaudited financial statements (balance sheet,
income statement and cash flow statement), (ii) promptly upon request,
such other information with respect to Agent's operations, business,
property, assets, financial condition or litigation as Owner shall
reasonably request, (iii) promptly after a Responsible Officer of Agent
obtains knowledge of any Event of Default or Potential Default or Event
of Unit Termination or Potential Event of Unit Termination or Casualty
Event, a certificate of a Responsible Officer of Agent specifying to
the extent known the nature and period of existence of such Event of
Default or Potential Default or Event of Unit Termination or Potential
Event of Unit Termination or Casualty Event, and what action, if any,
Agent has taken, is taking, or proposes to take with respect thereto
and (iv) promptly after a Responsible Officer of Agent obtains
knowledge of any material adverse change in the financial condition or
business of Agent or of any litigation of the type described in
subsection 8.4 hereof, a certificate of a Responsible Officer of Agent
describing such change or litigation as the case may be.
9.7 Conduct of Business and Maintenance of Existence. Agent
shall preserve, renew and keep in full force and effect its existence as a
limited partnership (except as otherwise permitted herein), and take all
reasonable action to maintain all rights, privileges and franchises material to
the conduct of its business, and comply with all Legal Requirements; except any
Legal Requirements, the non-compliance with which, individually or in the
aggregate, (i) will not place either Owner or any Assignee in any danger of any
monetary civil liability which Owner or any Assignee is not adequately
indemnified for (Agent's obligations under Section 12 of this Agreement shall be
deemed to be adequate indemnification if no Event of Default exists) or any
other material civil liability or penalty or subject Owner or any Assignee to
any criminal liability as a result of a failure to comply therewith and (ii)
will not result in a material diminution in the value of any Unit Premises, Unit
Improvements, Unit FF&E or Unit or in any material risk of the loss, sale or
forfeiture or loss of use of any thereof; provided, however, that nothing
contained in this subsection 9.7 shall prevent Agent from ceasing or omitting to
exercise any rights, privileges or franchises which in the reasonable judgment
of Agent can no longer be profitably exercised or prevent Agent from selling,
abandoning or otherwise disposing of any property, the retention of which in the
reasonable judgment of Agent is inadvisable in relation to the business of
Agent, or prevent any liquidation of any subsidiary of Agent, or any merger,
consolidation or sale, permitted by the provisions of subsection 10.2 hereof.
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
9.8 Notices. Agent shall give notice to Owner promptly upon
the occurrence of:
(a) any notice given by or to Agent pursuant to any of the
Construction Documents that a default has occurred thereunder;
(b) any condition which results or is reasonably likely to
result in a Force Majeure Delay in completion of the Unit Improvements
that is reasonably likely to extend the Unit Completion Date (without
taking into account any Force Majeure Delay);
(c) the termination of the Note Agreement, or upon the Note
Agreement ceasing to be in full force and effect or the occurrence of
any "Event of Default" or "Potential Default" under the Lease; and
(d) notices received from the lessor under any Ground Lease.
Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action, if any, Agent proposes to take with respect thereto.
9.9 Legal Requirements and Insurance Requirements. Agent shall
comply with every Insurance Requirement and Legal Requirement affecting (i) the
execution, delivery and performance of this Agreement and the Construction
Documents to which Agent is a party and (ii) any Unit Premises, Unit
Improvements, item of Unit FF&E or Unit, and Agent will not do or permit any act
or thing which is contrary to any Insurance Requirement or which is contrary to
any Legal Requirement; except any Legal Requirements, the non-compliance with
which, individually or in the aggregate, (i) will not place either Owner or any
Assignee in any danger of any monetary civil liability which Owner or any
Assignee is not adequately indemnified for (Agent's obligations under Section 12
of this Agreement shall be deemed to be adequate indemnification if no Event of
Default exists) or any other material civil liability or penalty or subject
Owner or any Assignee to any criminal liability as a result of a failure to
comply therewith and (ii) will not result in a material diminution in the value
of any Unit Premises, Unit Improvements, Unit FF&E or Unit or in any material
risk of the loss, sale or forfeiture or loss of use of any thereof.
9.10 Payment of Taxes. With respect to any Unit Premises, Unit
Improvements, Unit FF&E or Unit, Agent shall make all required reports to the
appropriate taxing authorities and Owner shall capitalize and include as an
element of Unit Acquisition Cost of a Unit during the term of this Agreement the
taxes that Agent would be required to pay if such Unit Premises, Unit
Improvements or Unit was a Parcel of Property under paragraph (c) of Section 9
of the Lease.
9.11 Filings, Etc. Agent shall promptly and duly execute,
deliver, file, and record, all such documents, statements, filings, and
registrations, and take such further
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
action as Owner or any Assignee shall from time to time reasonably request and
shall install such signs or other markings as shall be required by any
applicable Legal Requirement in order to establish, perfect and maintain Owner's
or any Assignee's title to and interest in any Unit Premises, Unit Improvements,
Unit FF&E and any Unit and any Assignee's interest in this Agreement, any Unit
Premises, Unit Improvements, Unit FF&E or any Unit as against Agent or any third
party in any applicable jurisdiction. All costs and expenses arising out of
Agent's obligations under this subsection 9.11 shall be capitalized by Owner and
included as an element of Unit Acquisition Cost of a Unit.
9.12 Use of Proceeds. The proceeds of each advance shall be
used by Agent for payment of costs specified in the applicable request for the
advance and in accordance with the respective Unit Budget or to reimburse Agent
for any such costs paid by Agent.
9.13 Compliance with Other Requirements. Agent shall use every
commercially reasonable precaution to prevent loss or damage to any Unit
Premises, Unit Improvements, Unit FF&E, or any Unit and to prevent injury to
third Persons or property of third Persons. Agent shall cooperate fully with
Owner and any additional insured or loss payee and all insurance companies
providing insurance pursuant to subsection 9.3 hereof in the investigation and
defense of any claims or suits arising from the ownership or operation of
equipment or ownership, use, or occupancy of any Unit Premises, Unit
Improvements, Unit FF&E or any Unit and Owner and any Indemnified Person shall
comply, at the expense of Agent, with all reasonable requests for assistance of
Agent and any insurance companies in connection therewith; provided, that
nothing contained in this subsection shall be construed as imposing on Owner any
duty to investigate or defend any such claims or suits. Agent shall comply and
shall use reasonable efforts to cause all Persons operating equipment on, using
or occupying any Unit Premises, Unit Improvements, Unit FF&E, or any Unit to
comply with every Insurance Requirement and Legal Requirement regarding
acquiring, titling, registering, leasing, subleasing, insuring, using,
occupying, operating and disposing of any Unit Premises, Unit Improvements, Unit
FF&E, or any Unit, and, if applicable, the licensing of operators thereof;
except any Legal Requirements, the non-compliance with which, individually or in
the aggregate, (i) will not place either Owner or any Assignee in any danger of
any monetary civil liability which Owner or any Assignee is not adequately
indemnified for (Agent's obligations under Section 12 of this Agreement shall be
deemed to be adequate indemnification if no Event of Default exists) or any
other material civil liability or penalty or subject Owner or any Assignee to
any criminal liability as a result of a failure to comply therewith and (ii)
will not result in a material diminution in the value of any Unit Premises, Unit
Improvements, Unit FF&E or Unit or in any material risk of the loss, sale or
forfeiture or loss of use of any thereof.
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
9.14 Site Lease. Agent agrees to pay or cause to be paid, on
or before the first Business Day of each calendar year, all rent to be due under
the Site Lease for such calendar year.
9.15 Cash Reserve Account Deposits. Simultaneously with its
execution and delivery hereof, Agent will deposit into the Cash Reserve Account
(as defined in the CRA Agreement) $2,474,475.14 to be held as provided in the
CRA Agreement. By 1:00 p.m. of the Business Day immediately succeeding each date
on which Owner receives any advance (including any advance deemed to have been
made) under any Credit Agreement (whether such advance is for the purpose of
making advances to Agent hereunder, or to pay accrued interest, reimbursement
obligations, fees or expenses owing thereunder, to make distributions in respect
of the equity of Owner or for any other purpose permitted thereunder) or causes
a letter of credit to be issued, Agent will deliver or cause to be delivered to
such Cash Reserve Account cash, to be held as provided in the CRA Agreement, in
an amount equal to at least 10% of the aggregate amount of such advance or the
available amount of such letter of credit, as the case may be; provided that
Owner shall deliver to Agent, no later than 1:00 p.m. on the date of such
advance, a statement describing the amount and purposes of such advance and the
amount to be deposited in the Cash Reserve Account by Agent with respect
thereto.
9.16 Construction Agreement and Construction Agreement Surety.
Agent agrees to deliver to Owner, on or before the date that is sixty (60) days
from the date of this Agreement, an executed copy of each Construction Agreement
with respect to the Ammonia Project, each in form and substance and with a
General Contractor reasonably satisfactory to Owner, and a copy of the
Construction Agreement Surety in form and substance reasonably satisfactory to
Owner. Agent agrees that until such time as it has delivered a copy of such
Construction Agreement and such Construction Agreement Surety to Owner, Agent
shall only request advances under this Agreement and the Construction Agency
Agreement, dated as of February 15, 1996, between Agent and Owner, as amended,
up to an aggregate principal amount of $40,000,000 and to the extent permitted
by any Credit Agreement.
9.17 Savonetta Pier User Agreement and Related Documents.
Agent agrees to deliver to Owner and any Assignee, on or before the date that is
thirty (30) days from the date of this Agreement, an executed copy of the
Savonetta Pier User Agreement between the National Energy Corporation of
Trinidad and Tobago Limited and ANL, a related Ancillary Facility Agreement
Consent and Assignment Agreement, and such other opinions of counsel,
certificates, instruments and documents related thereto as Owner or any Assignee
may reasonably request, each in form and substance satisfactory to Owner and any
Assignee in their sole discretion; provided, however, that in the event the
Savonetta Pier User Agreement complies in all material respects with Exhibit M-3
of this Agreement, the Savonetta Pier User Agreement shall be deemed to be
satisfactory to Owner and any Assignee. Agent agrees that until such time as it
has delivered a copy of the documents required by this subsection 9.17 to Owner
and any Assignee, Agent shall only request advances under this Agreement and the
Construction Agency Agreement,
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THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
dated as of February 15, 1996, between Agent and Owner, as amended, up to an
aggregate principal amount of $40,000,000 and to the extent permitted by any
Credit Agreement.
9.18 Gas Contract and Related Documents. Agent agrees to
deliver to Owner and any Assignee, on or before the date that is thirty (30)
days from the date of this Agreement, an executed copy of the Gas Contract and
such other opinions of counsel, certificates, instruments and documents related
thereto as Owner or any Assignee may reasonably request, each in form and
substance satisfactory to Owner and any Assignee in their sole discretion;
provided, however, that in the event the Gas Contract complies in all material
respects with the Letter, dated August 21, 1995 from the National Gas Company of
Trinidad and Tobago Limited to Arcadian Trinidad Limited with respect to the
supply of natural gas to the Ammonia Project, and is otherwise in form and
substance reasonably satisfactory to Owner and any Assignee, the Gas Contract
shall be deemed to be satisfactory to Owner and any Assignee. Agent agrees that
until such time as it has delivered a copy of the documents required by this
subsection 9.18 to Owner and any Assignee, Agent shall only request advances
under this Agreement and the Construction Agency Agreement, dated as of February
15, 1996, between Agent and Owner, as amended, up to an aggregate principal
amount of $40,000,000 and to the extent permitted by any Credit Agreement.
SECTION 10. NEGATIVE COVENANTS
Agent hereby agrees that, so long as this Agreement remains in
effect, Agent shall not directly or indirectly:
10.1 Changes in Unit Plans or Unit Budget. (a) Modify or
supplement in any material respect any Unit Plans or any Unit Budget without the
prior written consent of Owner (which consent will not be unreasonably withheld
or delayed) and all Governmental Authorities which previously have approved the
matters to be changed, if the effect of the failure to obtain such consent will,
(i) place either Owner or any Assignee in any danger of any monetary civil
liability for which Owner or any Assignee is not adequately indemnified for
(Agent's obligations under Section 12 of this Agreement shall be deemed to be
adequate indemnification if no Event of Default exists) or any other material
civil liability or penalty or subject Owner or any Assignee to any criminal
liability as a result of a failure to comply therewith, (ii) result in a
material diminution in the value of any Unit Premises, Unit Improvements, Unit
FF&E or Unit or in any material risk of the loss, sale or forfeiture or loss of
use of any thereof, or (iii) materially impair the ability of Agent to perform
its obligations hereunder or (b) receive advances with respect to a Unit which
exceed the Unit Budget for such Unit.
10.2 Prohibition of Fundamental Changes. Consolidate with or
merge into any other Person as such prohibition is set forth in Section 26 of
the Lease, except that the term "Owner" shall substitute for the term "the
Lessor" and the term "Agent" shall substitute for the term "the Lessee".
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THIS AGREEMENT FOR LEASE IS
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10.3 Acquire Fee or Leasehold Interest. Acquire a fee or
leasehold interest on behalf of Owner in any Unit Premises other than the
Project Parcel until Agent has delivered all documents required by Section 4
hereof and in the reasonable judgment of Owner satisfied the conditions set
forth in such Section 4.
10.4 Assignment of Obligations. Except as provided in
subsection 2.1 hereof, assign its obligations hereunder to any other party.
SECTION 11. EVENTS OF DEFAULT, EVENTS OF UNIT TERMINATION AND
CASUALTY EVENTS
11.1 Events of Default. The occurrence of any of the following
shall constitute an Event of Default:
(a) Failure to Make Payments. Failure of Agent to make any
payment required by Section 9.15, 11.2(e), 11.4(a), 11.6 or 19 hereof
when due or failure by Agent to pay any other amount due hereunder for
more than fifteen (15) days after written demand for such other
payment.
(b) Unauthorized Assignments, Etc. Except as provided in
subsection 2.1 hereof, assignment by Agent of any interest in this
Agreement or any advance to be made hereunder or any interest in
either.
(c) Misrepresentations. Any representation or warranty made or
deemed made or certified to by Agent in this Agreement or any Operative
Document or which is contained in any certificate, document or
financial or other statement furnished under or in connection with this
Agreement shall prove to have been false or inaccurate in any material
respect on or as of the date made or deemed made.
(d) Involuntary Bankruptcy, Etc. The entry of a decree or
order for relief in respect of Agent by a court having jurisdiction in
the premises, or the appointment of a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or other similar official) of Agent
or of any substantial part of its property, or ordering the winding up
or liquidation of its affairs, in an involuntary case under the Federal
Bankruptcy Code, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency, reorganization,
composition or other similar law of any jurisdiction; or the
commencement against Agent of an involuntary case under the Federal
Bankruptcy Code, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency, reorganization,
composition or other similar law of any jurisdiction, and the
continuance of any such case unstayed and in effect for a period of 60
consecutive days.
(e) Voluntary Bankruptcy, Etc. Entry or deemed entry of an
order for relief in any case under the Federal Bankruptcy Code
involving Agent or the
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THIS AGREEMENT FOR LEASE IS
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suspension or discontinuance of Agent's business operations, Agent's
insolvency (however evidenced) or Agent's admission of insolvency or
bankruptcy, or the commencement by Agent of a voluntary case under the
Federal Bankruptcy Code, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency, reorganization,
composition or other similar law of any jurisdiction, or the consent by
Agent to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of Agent or of any substantial part of Agent's
property, or the making by Agent of an assignment for the benefit of
creditors, or the failure of Agent generally to pay its debts as such
debts become due, or the taking of partnership or other action by or on
behalf of Agent in furtherance of any such action.
(f) Certain Covenants. Agent shall default in the performance
or observance of any agreement, covenant or condition contained in
Section 9.16, 9.17, 9.18 or 10 hereof.
(g) Other Defaults. Agent shall default in the performance or
observance of any other term, covenant, condition or obligation
contained in this Agreement or any other Operative Document (except a
Ground Lease), and if such default is capable of cure, such default
shall continue for thirty (30) days after written notice shall have
been given to Agent by Owner specifying such default and requiring such
default to be remedied; provided that, if such default is of a nature
that it is capable of being cured but not within such thirty (30) day
period and Agent shall have diligently commenced curing such default
within such thirty (30) day period and Agent shall have proceeded
diligently and in good faith thereafter to complete curing such
default, such thirty (30) day period shall be extended to one hundred
eighty (180) days; provided further, that an Event of Unit Termination
and a Casualty Event shall not constitute an Event of Default
hereunder.
(h) Default under Lease. An Event of Default (as defined in
the Lease) shall occur under the Lease or the Lease shall be terminated
or otherwise cease to be in full force and effect.
(i) Payment of Obligations. An Event of Default (as defined in
the Revolving Loan Facility) shall occur under the Revolving Loan
Facility. Agent or any Subsidiary (as principal or guarantor or other
surety) shall default in the payment when due or within any applicable
period of grace of any amount of principal of or premium or interest on
any Indebtedness other than under the Revolving Loan Facility which is
outstanding in a principal amount of at least $10,000,000 in the
aggregate; or any event shall occur or condition shall exist in respect
of any such other Indebtedness which is outstanding in a principal
amount of at least $10,000,000, or under any evidence of any such
Indebtedness or of any mortgage indenture or other agreement relating
thereto, the effect of which is to cause (or to permit one or more
Persons to cause) such Indebtedness to become due before its stated
maturity or before its regularly scheduled dates of payment or
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THIS AGREEMENT FOR LEASE IS
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to permit the holders thereof to cause Agent or any Subsidiary to
repurchase or repay such Indebtedness, and such default, event or
condition shall continue for more than the period of grace, if any,
specified therein and in the case where such Indebtedness has not been
declared due and payable such event or condition shall not have been
cured or waived within the later of fifteen (15) days of such
occurrence pursuant thereto and the expiration of any applicable period
of grace.
(j) Defaults under any Ground Lease. Agent shall fail to
observe or perform, after the expiration of any applicable grace
period, any material term, covenant or condition of any Ground Lease
relating to a Unit Premises, to be observed or performed, unless any
such observance or performance shall have been waived or not required
by the landlord under such Ground Lease, or if any one or more of the
events referred to in the Site lease, the Sublease or any Ground Lease
shall occur which would cause the Site Lease, the Sublease or such
Ground Lease to terminate without notice or action by the landlord
thereunder or which would entitle the landlord under the Site Lease,
the Sublease or such Ground Lease to terminate the Site Lease, the
Sublease or such Ground Lease and the term thereof by the giving of
notice to Owner without opportunity to cure, as tenant thereunder, or
if any of the terms, covenants or conditions of the Site Lease, the
Sublease or any Ground Lease shall in any manner be modified, changed,
terminated, supplemented, altered or amended in any material respect
without the consent of Owner and any Assignee.
(k) Gas Contract; Ancillary Facility Agreements. The Gas
Contract or any Ancillary Facility Agreement or any other Operative
Document shall be modified, changed, terminated, supplemented, altered
or amended in any material respect without the consent of Owner and
Assignee.
(l) Partnership Interest. Arcadian Corporation shall cease to
be the general partner of Agent without the prior written consent of
Owner.
11.2 Owner's Rights upon an Event of Default. (a) Upon the
occurrence and continuation of any Event of Default Owner may, in addition to
exercising any other rights and remedies available to it under applicable law,
do any one or more of the following (if, within fifteen (15) Business Days of
receipt by Agent of an Event of Default Notice (as defined in Section 19
hereof), Agent has not made a request to purchase all Unit Premises, Unit
Improvements, Unit FF&E or Units under Section 19 or, if Agent has so made such
a request but has not consummated within thirty (30) Business Days of receipt of
the Event of Default Notice such purchase in full compliance with Section 19):
(i) Terminate this Agreement and/or Owner's obligations to
make any further advances hereunder by written notice to Agent, subject
to the maximum amount Owner shall be entitled to recover from Agent, as
described in paragraph (f) of this subsection 11.2;
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(ii) Take immediate possession of any Unit Premises, Unit
Improvements, Unit FF&E and Unit and remove any equipment or property
of Owner in the possession of Agent, wherever situated, and for such
purpose, enter upon any Unit Premises, Unit Improvements or Unit
without liability to Agent for so doing; provided that the taking of
possession of any Unit Premises, Unit Improvements, Unit FF&E or Unit
shall take place in a commercially reasonable manner;
(iii) Whether or not any action has been taken under (a)
above, sell any Unit Premises, Unit Improvements, Unit FF&E or Unit
(free of or subject to the rights of Agent or any other Person under
this Agreement and with or without the concurrence or request of
Agent);
(iv) Hold, use, occupy, operate, remove, lease, sublease or
keep idle any Unit Premises, Unit Improvements, Unit FF&E or Unit as
Owner in its sole discretion may determine, without any duty to account
to Agent with respect to any such action or inaction, except that Owner
agrees that any profit it derives from the occupation or use of any
Unit Premises, Unit Improvements, Unit FF&E or Unit while exercising
its rights under this subsection 11.2 will be applied to reduce the
Accrued Default Obligations; and
(v) Exercise any other right or remedy which may be available
under applicable law and in general proceed by appropriate judicial
proceedings, either at law or in equity, to enforce the terms hereof or
to recover damages for the breach hereof.
(b) Suit or suits for the recovery of any default in the
payment of any sum due hereunder or for damages may be brought by Owner from
time to time at Owner's election, and nothing herein contained shall be deemed
to require Owner to await the date whereon this Agreement or the term hereof
would have expired by limitation had there been no such default by Agent or no
such termination or cancellation.
(c) The receipt of any payments under this Agreement by Owner
with knowledge of any breach of this Agreement by Agent or of any default by
Agent in the performance of any of the terms, covenants or conditions of this
Agreement, shall not be deemed to be a waiver of any provision of this
Agreement.
(d) No receipt of moneys by Owner from Agent after the
termination or cancellation hereof in any lawful manner shall reinstate or
continue this Agreement, or operate as a waiver of the right of Owner to recover
possession of any Unit Premises, Unit Improvements, Unit FF&E or Unit by proper
suit, action, proceedings or remedy or operate as a waiver of the right to
receive any and all amounts owing by Agent to or on behalf of Owner hereunder;
it being agreed that, after the service of notice to terminate or cancel this
Agreement, and the expiration of the time therein specified, if the default has
not been cured in the meantime, or after the commencement of suit, action or
summary proceedings or of any other remedy, or after a final order, warrant or
judgment for the
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THIS AGREEMENT FOR LEASE IS
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possession of any Unit Premises, Unit Improvements, Unit FF&E or Unit, Owner may
demand, receive and collect any moneys payable hereunder, without in any manner
affecting such notice, proceedings, suit, action, order, warrant or judgment;
and any and all such moneys so collected shall be deemed to be payments on
account for the use, operation and occupation of the Unit Premises, Unit
Improvements, Unit FF&E or Unit, or at the election of Owner, on account of
Agent's liability hereunder and will be applied to reduce the Accrued Default
Obligations.
(e) Agent hereby expressly confirms that, in any event,
including after any Event of Default, and notwithstanding any termination of
this Agreement or reentry or repossession by Owner, Agent shall be liable for,
and Owner may recover from Agent, (i) all of Owner's obligations, costs and
expenses incurred in good faith in connection with its obligations under this
Agreement and for which Owner may demand reimbursement pursuant to subsection
9.5 hereof, (ii) all amounts payable hereunder or under any other Operative
Document and (iii) all losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses, commissions, filing fees
and sales or transfer taxes) sustained by Owner by reason of such Event of
Default and the exercise of Owner's remedies with respect thereto, including, in
the event of a sale by Owner of any Unit Premises, Unit Improvements, Unit FF&E
or Unit pursuant to this subsection 11.2, all costs and expenses associated with
such sale. The amounts payable in clauses (i) through (iii) above are
hereinafter sometimes referred to as the "Accrued Default Obligations". Accrued
Default Obligations shall not include any damages for loss of profits arising
from the prospective use, operation and occupancy by parties other than Agent of
any Unit Premises, Unit Improvements, Unit FF&E or Unit or the anticipated
receipt of income therefrom subsequent to Agent's possession of such Unit
Premises, Unit Improvements, Unit FF&E or Unit.
(f) After an Event of Default, Owner may sell its interest in
any Unit Premises, Unit Improvements, Unit FF&E and Unit in any commercially
reasonable manner upon any terms that Owner deems satisfactory, free of any
rights of Agent or any Person claiming through or under Agent. In the event of
any such sale, or in the event Owner elects not to sell any Unit Premises, Unit
Improvements, Unit FF&E or Unit, in addition to the Accrued Default Obligations,
Owner shall be entitled to recover from Agent, as liquidated damages, and not as
a penalty, an amount equal to 84.5% of the Unit Acquisition Cost of any Unit
Premises, Unit Improvements, Unit FF&E and Units under this Agreement. Proceeds
of any such sale received by Owner, or, in the event Owner elects not to sell,
proceeds at any time thereafter received by Owner from any sale, occupation,
operation, use or lease of any Unit Premises, Unit Improvements, Unit FF&E or
Unit (net of all reasonable costs and expenses incurred by Owner in connection
with any sale, occupation, operation, use or lease of any Unit Premises, Unit
Improvements, Unit FF&E or Unit) in excess of 15.5% of the Unit Acquisition Cost
of such Unit Premises, Unit Improvements, Unit FF&E or Unit, shall be credited
against the Accrued Default Obligations Agent is required to pay under this
subsection 11.2. If such excess proceeds exceed the Accrued Default Obligations,
or, if Agent has paid all amounts required to be paid under this subsection
11.2, such excess shall be paid by Owner to Agent. If Agent converts any such
Unit Premises, Unit Improvements, Unit FF&E or Unit after an Event of
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Default, or if such Unit Premises, Unit Improvements, Unit FF&E or Unit is lost
or destroyed, in addition to the Accrued Default Obligations, Owner may cause
such Agent to pay to Owner, and Agent shall pay to Owner, as liquidated damages
and not as a penalty, an amount equal to 84.5% of the Unit Acquisition Cost of
such Unit Premises, Unit Improvements, Unit FF&E or Unit.
(g) In the event of a sale pursuant to this subsection 11.2,
upon receipt by Owner of the amounts payable hereunder, Owner shall transfer all
of Owner's right, title and interest in and to the Unit Premises, Unit
Improvements, Unit FF&E and Unit to the purchaser thereof.
(h) In addition to its other rights in this subsection 11.2,
Owner may exercise its various rights under the Operating Agreement, the Gas
Contract, the Ancillary Facility Agreements or any Construction Agreement or
transfer such rights to the purchaser in a sale.
(i) No remedy referred to in this subsection 11.2 is intended
to be exclusive, but each shall be cumulative and in addition to any other
remedy referred to above or otherwise available to Owner at law or in equity,
and the exercise in whole or in part by Owner of any one or more of such
remedies shall not preclude the simultaneous or later exercise by Owner of any
or all such other remedies. No waiver by Owner of any Event of Default hereunder
shall in any way be, or be construed to be, a waiver of any future or subsequent
Event of Default.
11.3 Events of Unit Termination. The occurrence of any of the
following shall constitute an Event of Unit Termination with respect to a Unit:
(a) Nonconforming Work. If the construction of the Unit
Improvements, or any part thereof, deviates from the Unit Plans and
results in a material diminution in the value of any Unit Premises,
Unit Improvements, Unit FF&E or Unit or there shall be any structural
defect in any Unit Improvement and Agent fails to correct such
nonconforming work or structural defect in a reasonably prompt and
satisfactory fashion after notice and demand by Owner.
(b) Failure to Complete. If as of the close of business on a
Unit Completion Date the related Unit Improvements have not for
whatever reason (including an event of force majeure deferring
completion beyond the Force Majeure Delay) been completed as herein
provided, or if the Certificate of Substantial Completion and AFL Unit
Leasing Record have not been executed and delivered by the respective
Unit Completion Date, or if Owner shall reasonably determine during the
course of construction that the Unit Improvements cannot for whatever
reason (including an event of force majeure deferring completion beyond
the Force Majeure Delay) be completed by the Unit Completion Date.
(c) Unsatisfactory Title. If at any time title to the Ammonia
Project or any other Unit is not reasonably satisfactory to Owner by
reason of any Lien,
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encumbrance, or other environmental defect affecting title, except for
Permitted Liens, and such Lien, encumbrance or other defect is not
corrected by and at the expense of Agent within ninety (90) days after
notice to Agent.
(d) Other Security Agreements. If (i) Agent executes any
chattel mortgage or other security agreement on any materials, fixtures
or articles of personal property used in the construction or operation
of the Unit Improvements or if any such materials, fixtures or articles
are purchased pursuant to any conditional sales contract or other
security agreement or otherwise so that the title thereto will not vest
in Owner free from encumbrance or (ii) Agent does not furnish to Owner
upon request the contracts, bills of sale, statements, receipted
vouchers and other agreements and documents, or any of them, under
which Owner claims title to such materials, fixtures or articles.
(e) Permits. If Agent shall fail in respect of the Ammonia
Project to obtain or be unable to obtain any material Permit, or if any
Permit shall be revoked or otherwise cease to be in full force and
effect unless, if such revocation or cessation shall not be due to
Agent's negligence or willful misconduct, Agent shall have obtained
reinstatement or reissuance of such Permit within thirty (30) days
after the revocation or expiration thereof, or if such reinstatement or
reissuance is of a nature that it cannot be completely effected within
thirty (30) days, Agent shall have diligently commenced application for
such reinstatement or reissuance and shall thereafter be diligently
proceeding to complete said reinstatement or reissuance.
11.4 Owner's Rights upon Event of Unit Termination. (a) If any
Event of Unit Termination with respect to a Unit shall occur, Owner shall have
no further obligation to make advances to Agent with respect to such Unit, and
Agent shall, upon written notice by Owner of such Event of Unit Termination,
either (i) purchase such Unit within ninety (90) days after written notice by
Owner of such Event of Unit Termination at a price equal to the Unit Acquisition
Cost for such Unit, or (ii) pay to Owner, within five (5) Business Days of
Owner's written notice of such Event of Unit Termination (the "Surrender Date"),
an amount equal to 89.9% of the Unit Acquisition Cost of such Unit and to be
subject to the requirements of paragraph (b) of this subsection 11.4. In the
event Agent elects to purchase such Unit from Owner, at the time of such sale,
Agent shall be required, in addition to its obligation to pay all amounts
contemplated by subsection 9.5 hereof, to pay to Owner Owner's obligations,
costs, losses, damages, and expenses (including, without limitation, taxes and
reasonable attorneys' fees and expenses) sustained by Owner in good faith by
reason of such Event of Unit Termination and exercise of Owner's rights under
this subsection 11.4.
(b) In the event Agent elects to proceed under clause (ii) of
subsection 11.4(a) and makes the payment contemplated thereby, Owner may sell
such Unit to a third party and Agent shall have no further right, claim or
interest in such Unit. If Owner shall fail to sell such Unit within seven (7)
days of the Surrender Date, the Assignee shall have the right, but not the
obligation, to sell such Unit to a third party. The proceeds of
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THIS AGREEMENT FOR LEASE IS
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sale received by Owner or such Assignee, as the case may be, from any sale of
such Unit shall be retained by Owner or such Assignee, as the case may be,
provided that if the proceeds of sale exceed 10.1% of the Unit Acquisition Cost
of such Unit, such excess shall be paid by Owner or such Assignee, as the case
may be, to Agent net of all amounts to be paid by Agent to Owner pursuant to the
last sentence of subsection 11.4(a) hereof.
11.5 Casualty Events. The occurrence of any of the following
shall constitute a Casualty Event with respect to a Unit:
(a) Damage or Destruction. If any Unit Improvements are
partially or totally damaged or destroyed by fire or any other cause and the
restoration thereof cannot reasonably be expected to be completed so that the
Unit Improvements will be completed on or before the applicable Unit Completion
Date, subject to any Force Majeure Delay.
(b) Takings. If the use, occupancy or title to any Unit is
taken, requisitioned or sold in, by or on account of actual or threatened
eminent domain or confiscation or similar proceedings or other action by any
Governmental Authority (such events collectively referred to as a "Taking") and
such Taking affects a substantial portion of a Unit. Upon receipt of proceeds
from any award or sale made in connection with such Taking, so long as no Event
of Default or Potential Default has occurred and is continuing, and so long as
Agent has made all payments to Owner required under subsection 11.6 hereof,
Owner shall remit to Agent the net amount of such proceeds remaining after
reimbursement for all costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred by Owner in connection with the negotiation
and settlement of any proceedings related to such Taking. If such proceeds are
received prior to Agent making the payments required under subsection 11.6
hereof, the net proceeds shall be applied to the amount payable thereunder. A
Taking shall be deemed "to affect a substantial portion" of a Unit if after such
Taking such Unit is, or will be, in Agent's reasonable judgment, unusable for
Agent's ordinary business purposes.
11.6 Owner's Rights upon the occurrence of a Casualty Event.
If any Casualty Event shall occur, (i) Agent shall promptly notify Owner in
writing of such event, (ii) on a date designated by Agent, which shall be a date
within ninety (90) days following such event, Agent shall pay to Owner an amount
equal to 84.5% of the Unit Acquisition Cost of such Unit and (iii) Agent shall
be required, in addition to its obligation to pay all amounts contemplated by
subsection 9.5 hereof, to pay to Owner Owner's obligations, costs, losses,
damages, and expenses (including, without limitation, taxes and reasonable
attorneys' fees and expenses) sustained by Owner by reason of such Casualty
Event and exercise of Owner's rights under this subsection 11.6. Insurance and
condemnation proceeds, if any, received by Owner that, together with the amounts
paid by Agent to Owner pursuant to clause (ii) of the preceding sentence, exceed
the Unit Acquisition Cost of such Unit, shall be paid by Owner to Agent upon
payment by Agent of all amounts referred to in clause (iii) of the preceding
sentence.
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SECTION 12. INDEMNITIES
(a) Agent shall, and hereby does, indemnify and hold harmless
Owner, Merrill Lynch, Merrill Leasing, any Assignee, any successor or successors
and any Affiliate of each of them, and their respective officers, directors,
incorporators, shareholders, partners (general and limited, including, without
limitation, the general and limited partners of Owner), employees, agents and
servants (each of the foregoing an "Indemnified Person") from and against all
liabilities (including, without limitation, strict liability in tort and
environmental law), taxes, losses, obligations, claims (including, without
limitation, strict liability in tort), damages, penalties, causes of action,
suits, costs and expenses (including, without limitation, reasonable attorneys'
and accountants' fees and expenses) or judgments of any nature relating to or in
any way arising out of:
(i) The Operative Documents and the transactions
contemplated thereby and the ordering, delivery, assembly,
installation, acquisition, construction (including, without
limitation, all obligations of Owner under any Construction
Agreement), title on acquisition, rejection, installation,
possession, titling, retitling, registration, reregistration,
custody by Agent of title and registration documents,
ownership, use, non-use, misuse, financing (including, without
limitation, all obligations of Owner under or in respect of
any interest rate swap, cap, collar or other financial hedging
arrangement and any amounts payable by Owner under any such
arrangement to reduce the notional amount thereof by the
amount of any prepayment of any borrowing to which such
interest rate swap, cap, collar or other financial hedging
arrangement relates), lease, sublease, operation,
transportation, repair, return, redelivery or control of any
Unit Premises, Unit Improvements, Unit FF&E or Unit, or the
release of hazardous substances on, under, to or from, or the
generation or transportation of hazardous substances to or
from, any Unit Premises except (x) to the extent that such
costs are included in the Unit Acquisition Cost of such Unit
Premises, Unit Improvements, Unit FF&E or Unit, (y) for any
general administrative expenses of Owner, and (z) for the
income taxes with respect to which indemnification is excluded
under paragraph (c) of Section 11 of the Lease; and
(ii) Any of the claims, demands, fees, taxes,
violations of contract, or any other matter or situation
described in or contemplated by the indemnification provisions
of subparagraphs (b), (c) and (d) of Section 11 of the Lease,
except that this Agreement shall substitute the terms "Owner"
for "the Lessor", "Agent" for "the Lessee", "this Agreement"
for "this Lease", and shall substitute the phrase "Unit
Premises, Unit Improvements, Unit FF&E or Unit" for the phrase
"Property or Equipment."
(b) The indemnification required under this Section 12 shall
be upon the terms provided in the paragraphs of Section 11 of the Lease
following paragraph (d)
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THIS AGREEMENT FOR LEASE IS
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thereof, except that this Agreement shall substitute the terms in the same
manner as described in subparagraph (a)(ii) above.
SECTION 13. LEASEHOLD INTERESTS
The provisions of Section 28 of the Lease shall govern each
Ground Lease hereunder, including without limitation the Site Lease, the
Sublease and each additional lease under which a leasehold interest in a Unit
Premises is subleased to Agent or an Affiliate of Agent hereunder, except this
Agreement shall substitute the terms "Owner" for "the Lessor", "Agent" for "the
Lessee", "Unit Premises, Unit Improvements, Unit FF&E and Unit" for "Parcel of
Property" and "Section 13" for "Section 28".
SECTION 14. PURCHASES
In connection with, and as a condition to, the purchase of any
Unit Premises, Unit Improvements, Unit FF&E or Unit pursuant hereto, (i) Agent
shall pay at the time of purchase, in addition to the Unit Acquisition Cost and
all other amounts payable by Agent under this Agreement, and without limitation
of any of its obligations hereunder or under any other Operative Document, all
transfer taxes, transfer gains taxes, mortgage recording tax, if any, recording
and filing fees and all other similar taxes, fees, expenses and closing costs
(including reasonable attorneys' fees) in connection with the conveyance of such
Unit Premises, Unit Improvements, Unit FF&E or Unit to Agent and all other
amounts owing hereunder, and (ii) when Owner transfers title, such transfer
shall be on an as-is, non-installment sale basis, without warranty by, or
recourse to, Owner, except that such title shall be free of any Liens resulting
from Owner's willful or knowing act or omission not contemplated by this
Agreement, the Lease or the transactions contemplated thereby.
SECTION 15. CHARACTER OF AMMONIA PROJECT
It is the intention of Owner and Agent that the components of
the Ammonia Project identified as personal property components in Exhibit J
hereto maintain their character as personal property for commercial law
purposes. Agent shall take all reasonable action to maintain such character and
shall obtain and record such instruments and take such steps as may be necessary
to prevent any Person from acquiring any rights in such components by reason of
such components being deemed to be real property.
SECTION 16. PERMITTED CONTESTS
(a) Agent shall not be required, nor shall Owner have the
right, to pay, discharge or remove any tax, assessment, levy, fee, rent, charge,
Lien or encumbrance, or to comply or cause any Unit Premises, Unit Improvements
item of Unit FF&E or Unit to comply with any Legal Requirement applicable to any
Unit Premises, Unit Improvements item of Unit FF&E or Unit or the occupancy, use
or operation thereof, so long as no Event of Default exists under this
Agreement, and, in the judgment of Agent's counsel, Agent shall have reasonable
grounds to contest the existence, amount, applicability or
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validity thereof by appropriate proceedings, which proceedings in the reasonable
judgment of Owner, (i) shall not involve any material danger that any Unit
Premises, Unit Improvements, item of Unit FF&E or Unit would be subject to sale,
forfeiture, loss or loss of use as a result of failure to comply therewith, (ii)
shall not affect the payment of any sums due and payable hereunder or result in
any such sums being payable to any Person other than Owner or any Assignee,
(iii) will not place Owner in any danger of any monetary civil liability which
is not adequately indemnified (Agent's obligations under Section 12 of this
Agreement shall be deemed to be adequate indemnification if no Event of Default
exists) or any other material civil liability or penalty or to any criminal
liability, (iv) if involving taxes, shall suspend the collection of the taxes,
and (v) shall be permitted under and be conducted in accordance with the
provisions of any other instrument to which Agent or any Unit Premises, Unit
Improvements, item of Unit FF&E, or Unit is subject and shall not constitute a
default thereunder (the "Permitted Contest"). Agent shall conduct all Permitted
Contests in good faith and with due diligence and shall promptly after the final
determination (including appeals) of any Permitted Contest, pay and discharge
all amounts which shall be determined to be payable therein. Owner shall at
Agent's expense cooperate in good faith with Agent with respect to all Permitted
Contests conducted by Agent pursuant to this Section 16, including without
limitation in assisting in the preparation of, and participating in, filings
related to such Permitted Contests.
(b) At least ten (10) days prior to the commencement of any
Permitted Contest, Agent shall notify Owner in writing thereof if the amount in
contest exceeds $1,000,000, and shall describe such proceeding in reasonable
detail. In the event that a taxing authority or subdivision thereof proposes an
additional assessment or levy of any tax for which Agent is obligated to
reimburse Owner under this Agreement, or in the event that Owner is notified of
the commencement of an audit or similar proceeding which could result in such an
additional assessment, then Owner shall in a timely manner notify Agent in
writing of such proposed levy or proceeding.
(c) Owner and Agent agree that no Event of Default, Potential
Default, Event of Unit Termination or Potential Event of Unit Termination shall
be deemed to have occurred if the existence of the event causing such Event of
Default, Potential Default, Event of Unit Termination or Potential Event of Unit
Termination, as the case may be, is being contested by Agent as a Permitted
Contest in accordance with the terms of this Section 16.
SECTION 17. SALE OR ASSIGNMENT BY OWNER
(a) Owner shall have the right to obtain equity and debt
financing for the acquisition and ownership of any Unit Premises, Unit
Improvements, Unit FF&E and Unit by selling or assigning its right, title and
interest in any or all amounts due from Agent or any third Person under this
Agreement; provided, that any such sale or assignment shall be subject to the
rights and interests of Agent under this Agreement.
(b) Any Assignee shall, except as otherwise agreed by Owner
and Assignee, have (to the exclusion of Owner) all the rights, powers,
privileges and remedies
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of Owner hereunder, and Agent's obligations as between itself and such Assignee
hereunder shall not be subject to any claims or defense that Agent may have
against Owner, other than the defense of payment or satisfaction of the
obligation; provided that the foregoing shall not be deemed to be a waiver of
any claims Agent may have against Owner. Upon written notice to Agent of any
such assignment, Agent shall thereafter make payments of any and all sums due
hereunder to Assignee, to the extent specified in such written notice, and only
such payments to the applicable Assignee shall discharge the obligation of Agent
hereunder and only to the extent of such payments. Anything contained herein to
the contrary notwithstanding, no Assignee shall be obligated to perform any
duty, covenant or condition required to be performed by Owner hereunder, and any
such duty, covenant or condition shall be and remain the sole obligation of
Owner.
SECTION 18. GENERAL CONDITIONS
The following conditions shall be applicable throughout the
term of this Agreement:
18.1 Survival. All indemnities, representations and warranties
and the obligation to pay Additional Rent (as defined in the Lease) shall
survive the expiration or other termination hereof.
18.2 No Waivers. No advance hereunder shall constitute a
waiver of any of the conditions of Owner's obligation to make further advances
nor, in the event Agent is unable to satisfy any such condition, shall any
waiver of such condition have the effect of precluding Owner from thereafter
declaring such inability to be an Event of Default as herein provided. Any
advance made by Owner and any sums expended by Owner pursuant to this Agreement
shall be deemed to have been made pursuant to this Agreement, notwithstanding
the existence of an uncured Event of Default. No advance at a time when an Event
of Default exists shall constitute a waiver of any right or remedy of Owner
existing by reason of such Event of Default, including, without limitation, the
right to refuse to make further advances.
18.3 Owner and Assignee Sole Beneficiaries. All conditions of
the obligation of Owner to make advances hereunder are imposed solely and
exclusively for the benefit of Owner and Assignee and their assigns and no other
Person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Owner will refuse to
make advances in the absence of strict compliance with any or all thereof and no
other Person shall, under any circumstances, be deemed to be a beneficiary of
such conditions, any or all of which may be freely waived in whole or in part by
Owner, with the consent of Assignee, at any time if in its sole discretion, it
deems it advisable to do so. Inspections and approvals of any Unit Plans, Unit
Premises, Unit Improvements, Unit FF&E, and Unit and the workmanship and
materials used therein impose no responsibility or liability of any nature
whatsoever on Owner, and no Person shall, under any circumstances, be entitled
to rely upon such inspections and approvals by Owner for any reason.
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18.4 No Offsets, Etc. The obligations of Agent to pay all
amounts payable pursuant to this Agreement shall be absolute and unconditional
under any and all circumstances of any character (including, without limitation,
the circumstances set forth in clauses (A) through (K) below), and such amounts
shall be paid without notice, demand, defense (except the defense of prior
payment), setoff, deduction or counterclaim and without abatement, suspension,
deferment, diminution or reduction of any kind whatsoever, except as herein
expressly otherwise provided. Without limitation of the foregoing, the
obligation of Agent to lease and pay Basic Rent (as defined in the Lease) for a
Unit upon Substantial Completion is without any warranty or representation,
express or implied, as to any matter whatsoever on the part of Owner or any
Assignee or any Affiliate of either, or anyone acting on behalf of any of them.
AGENT HAS SELECTED AND SHALL SELECT ALL UNIT PREMISES, UNIT
IMPROVEMENTS, UNITS AND ITEMS OF UNIT FF&E CONSTRUCTED, ACQUIRED OR ORDERED ON
THE BASIS OF ITS OWN JUDGMENT. NEITHER OWNER NOR ANY ASSIGNEE NOR ANY AFFILIATE
OF EITHER, NOR ANYONE ACTING ON BEHALF OF ANY OF THEM, MAKES ANY REPRESENTATION
OR WARRANTY OF ANY KIND WHATSOEVER, EXPRESS OR IMPLIED, INCLUDING, WITHOUT
LIMITATION, AS TO THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS FOR
USE, MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR ANY OTHER CHARACTERISTIC,
OF ANY UNIT PREMISES, UNIT IMPROVEMENTS, UNIT OR ITEM OF UNIT FF&E, OR AS TO
WHETHER ANY UNIT PREMISES, UNIT IMPROVEMENTS, UNIT OR ITEM OF UNIT FF&E OR THE
OWNERSHIP, USE, OCCUPANCY OR POSSESSION THEREOF COMPLIES WITH ANY LAWS, RULES,
REGULATIONS OR REQUIREMENTS OF ANY KIND.
AS BETWEEN OWNER AND AGENT, ANY ASSIGNEE OR ANY INDEMNIFIED
PERSON, AGENT WAIVES ANY AND ALL DEFENSES (EXCEPT THE DEFENSE OF FINAL AND
INDEFEASIBLE PRIOR PAYMENT), SET-OFFS, DEDUCTIONS, COUNTERCLAIMS (OTHER THAN
COMPULSORY COUNTERCLAIMS) (OR OTHER RIGHTS), EXISTING OR FUTURE, TO ITS
OBLIGATION TO PAY ALL AMOUNTS PAYABLE HEREUNDER, INCLUDING, WITHOUT LIMITATION,
ANY RELATING TO:
(A) THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS
FOR USE, MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR ANY OTHER QUALITY OR
CHARACTERISTIC OF ANY UNIT PREMISES, UNIT IMPROVEMENTS, UNIT OR ITEM OF UNIT
FF&E, LATENT OR NOT;
(B) ANY SET-OFF, COUNTERCLAIM (OTHER THAN COMPULSORY
COUNTERCLAIMS), RECOUPMENT, ABATEMENT, DEFENSE (EXCEPT THE DEFENSE OF FINAL AND
INDEFEASIBLE PRIOR PAYMENT) OR OTHER RIGHT WHICH AGENT MAY HAVE AGAINST OWNER,
ANY ASSIGNEE, OR ANY INDEMNIFIED PERSON FOR ANY REASON WHATSOEVER ARISING OUT OF
THIS OR ANY OTHER TRANSACTION OR MATTER;
46
<PAGE> 50
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
(C) ANY DEFECT IN TITLE OR OWNERSHIP OF ANY UNIT PREMISES,
UNIT IMPROVEMENTS, OR UNIT OR ANY TITLE ENCUMBRANCE NOW OR HEREAFTER EXISTING
WITH RESPECT TO THE UNIT PREMISES, UNIT IMPROVEMENTS, UNIT OR ITEM OF UNIT FF&E;
(D) ANY FAILURE OR DELAY IN DELIVERY OR ANY LOSS, THEFT OR
DESTRUCTION OF, OR DAMAGE TO, ANY UNIT PREMISES, UNIT IMPROVEMENTS, UNIT OR ITEM
OF UNIT FF&E IN WHOLE OR IN PART, OR CESSATION OF THE USE OR POSSESSION OF ANY
UNIT PREMISES, UNIT IMPROVEMENTS, UNIT OR ITEM OF UNIT FF&E BY AGENT FOR ANY
REASON WHATSOEVER AND OF WHATEVER DURATION, OR ANY CONDEMNATION, CONFISCATION,
REQUISITION, SEIZURE, PURCHASE, TAKING OR FORFEITURE OF ANY UNIT PREMISES, UNIT
IMPROVEMENTS, UNIT OR ITEM OF UNIT FF&E IN WHOLE OR IN PART;
(E) ANY INABILITY OR ILLEGALITY WITH RESPECT TO THE USE,
OWNERSHIP, OCCUPANCY OR POSSESSION OF THE UNIT PREMISES, UNIT
IMPROVEMENTS, UNIT OR ITEMS OF UNIT FF&E BY AGENT;
(F) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR
PROCEEDING BY OR AGAINST AGENT OR OWNER OR ANY ASSIGNEE;
(G) ANY FAILURE TO OBTAIN, OR EXPIRATION, SUSPENSION OR OTHER
TERMINATION OF, OR INTERRUPTION TO, ANY REQUIRED LICENSES, PERMITS, CONSENTS,
AUTHORIZATIONS, APPROVALS OR OTHER LEGAL REQUIREMENTS RELATING TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT;
(H) THE INVALIDITY OR UNENFORCEABILITY OF THIS AGREEMENT OR
ANY OTHER INFIRMITY HEREIN OR ANY LACK OF POWER OR AUTHORITY OF OWNER OR AGENT
TO ENTER INTO THIS AGREEMENT;
(I) ANY RESTRICTION ON THE EXCHANGE OF THE CURRENCY OF THE
REPUBLIC OF TRINIDAD AND TOBAGO INTO U.S. DOLLARS OR THE TRANSFER OF FUNDS TO
THE UNITED STATES;
(J) AGENT OR ANY OTHER PERSON AT ANY TIME HAVING IMMUNITY FROM
SUIT, PREJUDGMENT, ATTACHMENT, ATTACHMENT IN AID OF EXECUTION OR EXECUTION ON
THE GROUNDS OF SOVEREIGNTY OR OTHERWISE; OR
(K) ANY OTHER CIRCUMSTANCES OR HAPPENING WHATSOEVER RELATING
TO THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, WHETHER OR NOT SIMILAR TO
ANY OF THE FOREGOING.
47
<PAGE> 51
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
AGENT HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE
LAW, ANY AND ALL RIGHTS WHICH IT MAY NOW HAVE OR WHICH AT ANY TIME HEREAFTER MAY
BE CONFERRED UPON IT, BY STATUTE OR OTHERWISE, TO TERMINATE, CANCEL, QUIT,
RESCIND OR SURRENDER THIS AGREEMENT EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS
HEREOF. The making of payments under this agreement by Agent (including without
limitation payments pursuant to Section 12 hereof) shall not be deemed to be a
waiver of any claim or claims that Agent may in a separate action assert against
Owner or any other person. Owner agrees to repay Agent amounts paid to Owner to
the extent such payments were in error and are not required by any of the terms
and provisions of this Agreement.
18.5 No Recourse. (a) Owner's obligations hereunder are
intended to be the obligations of a limited partnership and of the corporation
which is the general partner thereof only and no recourse for the payment of any
amount due under this Agreement or any other Operative Document, or for any
claim based thereon or otherwise in respect thereof, shall be had against any
limited partner of Owner or any incorporator, shareholder, officer, director or
Affiliate, as such, past, present or future, of such corporate general partner
or of any corporate limited partner or of any successor corporation to such
corporate general partner or any corporate limited partner of Owner, or against
any direct or indirect parent corporation of such corporate general partner or
of any limited partner of Owner or any other subsidiary or Affiliate or any such
direct or indirect parent corporation or any incorporator, shareholder, officer
or director, as such, past, present or future, of any such parent or other
subsidiary or Affiliate, it being understood that Owner is a limited partnership
formed for the purpose of the transactions involved in and relating to this
Agreement, the Lease and the Operative Documents on the express understanding
aforesaid. Nothing contained in this subsection 18.5(a) shall be construed to
limit the exercise or enforcement, in accordance with the terms of this
Agreement, the Lease and the Operative Documents and any other documents
referred to herein, of rights and remedies against the limited partnership or
the corporate general partner of Owner or the assets of the limited partnership
or the corporate general partner of Owner.
(b) Agent's obligations hereunder are intended to be the
obligations of a limited partnership and of the corporation which is the general
partner thereof only and no recourse for any obligation of Agent hereunder, or
for any claim based thereon or otherwise in respect thereof, shall be had
against any limited partner of Agent or any incorporator, shareholder, officer
or director, or Affiliate, as such, past, present or future of such corporate
general partner or limited partner or of any successor corporation to such
corporate general partner or any corporate limited partner of Agent, or against
any direct or indirect parent corporation of such corporate general partner or
of any limited partner of Agent or any other subsidiary or Affiliate of any such
direct or indirect parent corporation or any incorporator, shareholder, officer
or director, as such, past, present or future, of any such parent or other
subsidiary or Affiliate. Nothing contained in this subsection 18.5(b) shall be
construed to limit the exercise or enforcement, in accordance with the terms of
this Agreement, the Lease and the Operative Documents and any other documents
referred to herein, of rights and remedies against the limited partnership or
the
48
<PAGE> 52
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
corporate general partner of Agent or the assets of the limited partnership or
the corporate general partner of Agent.
18.6 Notices.
(a) All notices, offers, acceptances, approvals, waivers,
requests, demands and other communications hereunder or under any other
instrument, certificate or other document delivered in connection with the
transactions described herein shall be in writing, shall be addressed as
provided below and shall be considered as properly given (i) if delivered in
person, (ii) if sent by express courier service (including, without limitation,
Federal Express, Emery, DHL, Airborne Express, and other similar express
delivery services), (iii) in the event overnight delivery services are not
readily available, if mailed by international airmail, postage prepaid,
registered or certified with return receipt requested, or (iv) if sent by
telecopy and confirmed; provided, that in the case of a notice by telecopy, the
sender shall in addition confirm such notice by writing sent in the manner
specified in clauses (i), (ii) or (iii) of paragraph (a) of this subsection
18.6. All notices shall be effective upon receipt by the addressee; provided,
however, that if any notice is tendered to an addressee and the delivery thereof
is refused by such addressee, such notice shall be effective upon such tender.
For the purposes of notice, the addresses of the parties shall be as set forth
below; provided, however, that any party shall have the right to change its
address for notice hereunder to any other location by giving written notice to
the other party in the manner set forth herein. The initial addresses of the
parties hereto are as follows:
If to Owner:
Nitrogen Leasing Company, Limited Partnership
c/o Nitrogen Leasing Capital, Inc.
North Tower-27th Floor
World Financial Center
250 Vesey Street
New York, NY 10281
Attention: Marjorie A. Hargrave
Telephone: (212) 449-6155
Telecopy: (212) 449-7298
49
<PAGE> 53
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
If to Agent:
Arcadian Fertilizer, L.P.
6750 Poplar Avenue
Suite 600
Memphis, Tennessee 38138-7419
Attention: Vice President-Legal and General Counsel
Telephone: (901) 758-5233
Telecopy: (901) 758-5201
and
Arcadian Fertilizer, L.P.
6750 Poplar Avenue
Suite 600
Memphis, Tennessee 38138-7419
Attention: Treasurer
Telephone: (901) 758-5266
Telecopy: (901) 758-5202
With a copy of all notices under this subsection 18.6 to Arcadian Corporation at
the same address as Agent and to any Assignee at such address as such Assignee
may specify by written notice to Owner and Agent.
(b) Owner shall use reasonable efforts to give to Agent,
within five days of receipt, a copy of all notices received by Owner pursuant to
any Credit Agreement and any other notices received with respect to any Unit
Premises, Unit Improvements, item of Unit FF&E, or Unit.
18.7 Modifications. Neither this Agreement nor any provision
hereof may be changed, waived or terminated, orally, but only by an instrument
in writing signed by the party against whom enforcement of the change, waiver or
termination is sought.
18.8 Rights Cumulative. All rights, powers and remedies herein
given to Owner are cumulative and not alternative, and are in addition to all
statutes or rules of law; any forbearance or delay by Owner in exercising the
same shall not be deemed to be a waiver thereof, and the exercise of any right
or partial exercise thereof shall not preclude the further exercise thereof, and
the same shall continue in full force and effect until specifically waived by an
instrument in writing executed by Owner. All representations and covenants by
Agent shall survive the making of the advances, and the provisions hereof shall
be binding upon and inure to the benefit of the respective successors and
permitted assigns, if any, of the parties hereto. Except to the extent provided
in subsection 2.1 hereof, Agent may not, however, assign its rights or
obligations as agent hereunder.
50
<PAGE> 54
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
18.9 GOVERNING LAW. THIS AGREEMENT HAS BEEN EXECUTED AND
DELIVERED IN THE STATE OF NEW YORK. AGENT AND OWNER AGREE THAT, TO THE MAXIMUM
EXTENT PERMITTED BY THE LAWS OF THE STATE OF NEW YORK, THIS AGREEMENT, AND THE
RIGHTS AND DUTIES OF AGENT AND OWNER HEREUNDER, SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW) IN ALL RESPECTS, INCLUDING WITHOUT LIMITATION IN RESPECT OF ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. AGENT HEREBY IRREVOCABLY
SUBMITS, FOR ITSELF AND ITS PROPERTIES, TO THE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND THE SUPREME COURT OF
THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED
BY APPLICABLE LAW, AGENT HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF
MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY
CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT
THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE
VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS AGREEMENT OR
ANY DOCUMENT OR ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF
MAY NOT BE LITIGATED IN OR BY SUCH COURT. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, AGENT AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE
JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION
WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT. AGENT AGREES
THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO
THE ADDRESS FOR NOTICES SET FORTH IN THIS AGREEMENT OR ANY METHOD AUTHORIZED BY
THE LAWS OF NEW YORK. OWNER AND AGENT EXPRESSLY WAIVE ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER IN TORT OR CONTRACT OR
OTHERWISE) RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
OWNER AND AGENT ACKNOWLEDGE THAT THE PROVISIONS OF THIS SUBSECTION 18.9 HAVE
BEEN BARGAINED FOR AND THAT THEY HAVE BEEN REPRESENTED BY COUNSEL IN CONNECTION
THEREWITH.
18.10 Confidentiality. Agent and Owner agree to treat
information concerning the structure and documentation of this Agreement and the
Lease confidentially, except to the extent that disclosure is required by law
(in which circumstance such party will use reasonable efforts to notify the
other party prior to such disclosure of any information). The foregoing
constraint shall not include information: (i) that is now in the public domain
or subsequently enters the public domain without fault on the part of the party
proposing to disclose the same; (ii) currently known to Agent or
51
<PAGE> 55
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Owner from its own sources as evidenced by its prior written records; (iii) that
Agent or Owner receives from a third party not under any obligation to keep such
information confidential; and (iv) that is provided by Owner or Agent to
counsel, consultants, other advisors and regulatory authorities or lenders under
the Revolving Loan Facility, and Assignees or proposed Assignees, provided such
parties agree (including in writing if so requested by the non-providing party)
to treat any information so provided as similarly confidential.
18.11 Captions. The captions in this Agreement are for
convenience of reference only, and shall not be deemed to affect the meaning or
construction of any of the provisions hereof.
18.12 Unit Designation. Owner recognizes Agent's right to call
any Unit by such name or designation as Agent may deem appropriate or reliable
in the ordinary course of Agent's business and to place such signs, labels,
plates or other markings on any Unit Premises, Unit Improvements or Unit as
Agent may desire in exercising such right, subject to the provisions of
subsection 9.11 hereof.
18.13 Owner Capitalization. Owner shall provide to Agent on
the date hereof and hereafter upon the reasonable request of Agent, a balance
sheet of Owner certified by Owner and showing that Owner's capitalization is
such that at least 3.9% of its capitalization shall consist of contributions
from Owner's general partner and limited partners.
18.14 Conveyance of Easements, etc. In connection with any
sale of any Unit Premises, Unit Improvements, Unit FF&E or Unit pursuant to this
Agreement, Owner shall convey, and the purchaser shall accept a conveyance of,
Owner's interest in the Operating Agreement, the Gas Contract, all easements,
licenses, Ground Leases, Ancillary Facility Agreements and similar agreements
for the benefit of such Unit Premises, Unit Improvements, Unit FF&E or Unit, or
adjacent property, such conveyance to be without warranty by, or recourse to,
Owner, except that such interest shall be free of any Liens resulting from
Owner's willful or knowing act or omission unrelated to an occurrence of an
Event of Default or an Event of Unit Termination.
18.15 Partnership Existence. Upon obtaining the prior written
consent of Owner, which consent shall not be unreasonably withheld or denied,
Agent shall not be obligated to preserve its status as a partnership not taxable
as a corporation, and Agent shall be permitted to change its status as a
partnership.
SECTION 19. AGENT'S RIGHT TO PURCHASE
Upon the occurrence of an Event of Default and upon the
written request of Agent, which shall be received by Owner and any Assignee not
later than fifteen (15) Business Days subsequent to receipt by Agent of notice
(an "Event of Default Notice") from Owner or any Assignee pursuant to this
Agreement that an Event of Default has occurred, Agent shall have the right, but
not the obligation, not later than thirty (30)
52
<PAGE> 56
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Business Days after Agent received the notice of the Event of Default from Owner
or any Assignee, to purchase all Units at a price equal to the Unit Acquisition
Cost for such Units; provided that the purchase option contained in this
paragraph shall not be available to Agent if the purchase price and all other
amounts paid by Agent would in the circumstances in which such payment is made
constitute a preferential payment or a voidable transfer pursuant to the
provisions of the Federal Bankruptcy Code in a bankruptcy proceeding by or
against Agent or would otherwise result in the payment being subject to
recapture from Owner. In connection with, and as a condition to, the purchase of
all Units pursuant hereto, (i) Agent shall pay at the time of purchase, in
addition to the Unit Acquisition Cost, all other amounts payable by Agent under
this Agreement, including, without limitation, all Accrued Default Obligations,
and all transfer taxes, transfer gains taxes, mortgage recording tax, if any,
recording and filing fees and all other similar taxes, fees, expenses and
closing costs (including reasonable attorneys' fees) in connection with the
conveyance of such Unit to Agent and all other amounts owing hereunder, and (ii)
when Owner transfers title, such transfer shall be on an as-is, non-installment
sale basis, without warranty by, or recourse to, Owner, except that such title
shall be free of any Liens resulting from Owner's willful or knowing act or
omission.
53
<PAGE> 57
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first above written.
Nitrogen Leasing Company, Limited
Partnership, by
Nitrogen Leasing Capital, Inc., its
General Partner
By /s/ Marjorie A. Hargrave
--------------------------------------
Name: Marjorie A. Hargrave
Title: Vice President and
Assistant Secretary
Arcadian Fertilizer, L.P., by
Arcadian Corporation, its General Partner
By /s/ John H. Gheens
--------------------------------------
Name: John H. Gheens
Title: Treasurer
54
<PAGE> 58
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT A
COPY OF LEASE AGREEMENT
(SEE TAB 15)
<PAGE> 59
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT B
AFL UNIT LEASING RECORD to Lessor: Nitrogen Leasing Company,
the Lease Agreement, dated Limited Partnership
as of March 27, 1996, Lessee: Arcadian Fertilizer, L.P.
between Nitrogen Leasing Company,
Limited Partnership, as lessor,
and Arcadian Fertilizer, L.P.,
as lessee (the "Lease Agreement").
A. Unit Premises No.: ____
Effective Date of this AFL
Unit Leasing Record ("AFL ULR") ___________ __, 19__.
B. PLEASE COMPLETE THE FOLLOWING STATEMENTS, IF APPLICABLE:
1. This AFL ULR relates to [Deed/Ground Lease] dated
________ __ 19__.
UNIT PREMISES DESCRIPTION AND RENTAL INFORMATION.
C. Type of Property (use category specified in Exhibit A to the Lease
Agreement)
D. Specific Description: (See Schedule A hereto if more space needed)
----------------------------------------------------------------------
----------------------------------------------------------------------
E. Location of
Unit Premises
-----------------------------------------------------
State County City Country
F. Unit Acquisition Cost under the Agreement for Lease as at the date
hereof is $_____________.
G. If the effective date of this AFL ULR is after the first day of the
month and prior to the Lease Rate Date in such month, the partial
first month's Basic Rent for Unit Premises placed under lease by this
AFL ULR will be paid from the date of this AFL ULR until the end of
the month on the Basic Rent Payment Date in such month. If the
Effective Date of the AFL ULR falls on or after the Lease Rate Date,
the partial first month's Basic Rent will be paid from the date of
this AFL ULR until the end of the month on the next succeeding Basic
Rent Payment Date.
H. The Initial Term and Renewal Term for the Unit Premises placed under
lease pursuant to this AFL ULR will be in accordance with the Lease
Agreement.
I. The Basic Rent is as defined in the Lease Agreement.
<PAGE> 60
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
J. Termination of the lease of the Property or Equipment leased pursuant
to this AFL ULR will be in accordance with the Lease Agreement.
K. ACKNOWLEDGMENT AND EXECUTION
The undersigned Lessor hereby leases to the undersigned Lessee, and
the Lessee acknowledges delivery to it in good condition and otherwise
as required by the Lease of the Unit Premises described on this AFL
ULR. The Lessee agrees to pay the Basic Rent, Additional Rent and
additional payments set forth in the Lease Agreement. The covenants,
terms and conditions of this lease are those appearing in the Lease
Agreement, as it may from time to time be amended, which covenants,
terms and conditions are hereby incorporated by reference. The terms
used herein have the meaning assigned to them in the Lease Agreement.
Arcadian Fertilizer, L.P., Lessee Nitrogen Leasing Company, Limited
By Arcadian Corporation, its Partnership, Lessor
General Partner By Nitrogen Leasing Capital,
Inc., its General Partner
By By
----------------------------------- -------------------------------
Name: Name:
Title: Title:
2
<PAGE> 61
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT C
FORM OF ACQUISITION CERTIFICATE
WITH RESPECT TO UNIT PREMISES LOCATED AT _____________*
Arcadian Fertilizer, L.P. ("Agent"), under a certain Agreement
for Lease (the "Agreement for Lease") dated as of March 27, 1996 entered into
between Nitrogen Leasing Company, Limited Partnership ("Owner") and Agent,
hereby certifies to Owner and Assignee as follows:
1. Legal Description. Attached hereto at Tab 1 is a
complete and correct copy of the legal description of
the Unit Premises located at _____________. The Unit
Premises are being (acquired in fee; leased pursuant
to a Ground Lease).
2. Unit Plans. Attached hereto at Tab 2 is a complete
and correct copy of the Unit Plans for the Unit
Improvement to be constructed on the Unit Premises,
and initialed to show Agent's and Owner's approval.
3. Unit Budget. Attached hereto at Tab 3 is a complete
and correct copy of the Unit Budget for the Unit,
including an itemization of all Unit Acquisition
Costs to Owner incurred to date or to be incurred in
connection with the acquisition of Owner's interest
in the Unit Premises and with the construction and
equipping of the Unit.
4. Unit FF&E Specifications. Attached hereto at Tab 4
is a complete and correct copy of the Unit FF&E
Specifications initialed to show Agent's approval.
[IF NO UNIT FF&E ARE CONTEMPLATED, PLEASE INDICATE
THIS.]
5. Title Information. Attached hereto at Tab 5 is a
copy of the underlying documents of record affecting
fee title to the Unit Premises from the appropriate
Governmental Authority or such other evidence of
title reasonably required by Owner in paragraph (g)
of Section 4 of the Agreement for Lease.
6. Utilities. All easements, licenses, rights of way,
rights of access and utility services and facilities
(including, without limitation, gas, electrical,
water and sewage services and facilities) (a) which
are necessary and required during the construction
period [HAVE BEEN COMPLETED; OR WILL BE AVAILABLE IN
SUCH A MANNER THAT CONSTRUCTION WILL NOT BE IMPEDED
BY
- -------------------------------------
* All capitalized terms used in this Certificate shall have the meanings
given to such terms in the Agreement for Lease.
<PAGE> 62
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
A LACK THEREOF] and (b) which are necessary for the
occupancy of the Unit and the installment of the Unit
Improvements thereon and for the completion and
operation of the Unit in accordance with the Unit
Plans are or will be completed in such a manner and
at such a time as will assure the completion and
operation of the Unit on or before the Unit
Completion Date.
7. Permits. All Permits required for the construction
of the Unit Improvements (other than the governmental
approval of the Town and Country Planning Authority
of the Republic of Trinidad and Tobago, which
approval will be obtained prior to completion of
construction of the Ammonia Project) have been or
will be issued in such a manner that construction
will not be impeded by a lack thereof. No work for
which a Permit or governmental approval is required
will be commenced or continued unless and until such
permit or governmental approval required therefor has
been issued or obtained, and once issued or obtained
will remain in full force and effect.
8. Construction Agreements. Attached hereto at Tab 6 is
a complete and correct copy of each Construction
Agreement, or if each such Construction Agreement has
not been executed on such date, a copy of the letter
agreement, dated February 16, 1996 between Owner and
The M.W. Kellogg Company with respect to
construction of the Ammonia Project, a copy of the
interim work scope set forth in the four "Schedule A"
books dated January, 1996, and a copy of the letter
agreement dated March 14, 1996 between The M.W.
Kellogg Company and Owner with respect to the
anticipated cost and construction period with respect
to the completion of the Ammonia Project.
9. Request for Advance. Attached hereto at Tab 7 is a
duly executed AIA Document G722 or a substantially
similar document.
10. Representations of Agent. (i) All costs and expenses
which are the subject of the Initial Advance
requested have been paid in full or will be paid in
full out of the proceeds of the Initial Advance, (ii)
there are no Liens on the Unit Premises of which
Agent has knowledge that are not Permitted Liens,
(iii) all representations and warranties made in the
Agreement for Lease, in the Lease, and in connection
with the Initial Advance, are and remain true and
correct in all material respects on and as of the
date of the Initial Advance (except to the extent
such representations and warranties expressly relate
specifically to an earlier date) and (iv) no Event of
Default, Potential Default or, with respect to the
Unit for which the
2
<PAGE> 63
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Initial Advance is requested, Event of Unit
Termination or Casualty Event or Potential Event of
Unit Termination, under the Agreement for Lease has
occurred and is continuing on the date such Initial
Advance is to be made or by reason of giving effect
to such Initial Advance.
11. Appraisal. If this advance relates to the Ammonia
Project, attached hereto at Tab 8 is an appraisal
prepared by Arthur Andersen & Co., which appraisal
shall include (i) a "value in use" fair market
valuation of the Ammonia Project as of the date of
Substantial Completion of the Ammonia Project, which
fair market valuation shall equal or exceed
$285,000,000, and (ii) a "value in use" fair market
valuation of the Ammonia Project of at least
$199,500,000 as at March 31, 2003.
Dated: , 19 Arcadian Fertilizer, L.P. by Arcadian
------------ -- --- Corporation, its General Partner
By:
----------------------------------
Name:
Title:
Unit Completion Date:
3
<PAGE> 64
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT D
FORM OF INTERIM ADVANCE CERTIFICATE
WITH RESPECT TO UNIT PREMISES LOCATED AT _________
IN CONNECTION WITH A REQUEST FOR AN INTERIM ADVANCE
Arcadian Fertilizer, L.P. ("Agent"), under a certain Agreement
for Lease (the "Agreement"), dated as of March 27, 1996, entered into with
Nitrogen Leasing Company, Limited Partnership ("Owner"), delivers this Interim
Advance Certificate pursuant to Section 5 of the Agreement with respect to the
above noted Unit Premises. All terms used in this Certificate shall have the
meanings given to such terms in the Agreement. Agent hereby certifies to Owner
and Assignee as follows:
1. Continuing Representations of Agent. All
representations and warranties made in the Agreement,
in the Lease, and in connection with the Interim
Advance are and remain true and correct in all
material respects on and as of the date of the
Interim Advance (except to the extent such
representations and warranties expressly relate
specifically to an earlier date) and no Event of
Default, Potential Default or, with respect to the
Unit for which the Interim Advance is requested,
Event of Unit Termination or Casualty Event or
Potential Event of Unit Termination under this
Agreement has occurred and is continuing on the date
such Interim Advance is to be made or by reason of
giving effect to such Interim Advance.
2. Construction Progress. If reasonably requested in
writing by Owner at least three (3) Business Days
prior to the making of an Interim Advance, attached
hereto at Tab 1 is (a) an inspection report from an
independent party and (b) true copies of unpaid
invoices, receipted bills and Lien waivers and such
other supporting information as may be requested by
Owner.
3. No Other Security Interests. All materials and
fixtures incorporated in the construction of the Unit
Improvements have been purchased so that title
thereto shall have vested in Owner immediately upon
delivery thereof to the Unit Premises, except for
Permitted Liens and if requested by Owner at least
three (3) Business Days prior to the making of an
Interim Advance, attached hereto at Tab 2 are copies
of the contracts, bills of sale, statements,
receipted vouchers, or other documents under which
title thereto is claimed.
4. Statements of Expenditures. If requested in writing
by Owner, attached hereto at Tab 3 is a statement
setting forth the names, addresses and amounts due or
to become due as well as the amounts previously paid
to every contractor or subcontractor furnishing
materials, performing labor or entering into the
construction of any part of the Unit Improvements.
<PAGE> 65
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
5. Request for Advance. Attached hereto at Tab 4 is a
duly executed AIA Document G722 or a substantially
similar document.
6. Evidence of Compliance. If requested, attached
hereto at Tab 5 are such documents, reports,
certificates, affidavits and other information as
reasonably required by Owner and any Assignee to
evidence compliance by Agent with all of the
provisions of the Agreement.
7. Construction Agreements. If not previously delivered
to Owner, attached hereto at Tab 6 is a fully
executed and complete copy of any Construction
Agreement in effect on the date hereof.
Dated: , 19 Arcadian Fertilizer, L.P. by Arcadian
---------- -- -- Corporation, its General Partner
By:
-----------------------------------------
Name:
Title:
2
<PAGE> 66
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT E
FORM OF CERTIFICATE OF SUBSTANTIAL COMPLETION
WITH RESPECT TO UNIT PREMISES LOCATED AT _________
IN CONNECTION WITH A REQUEST FOR A FINAL ADVANCE
Arcadian Fertilizer, L.P. ("Agent"), under a certain Agreement
for Lease (the "Agreement"), dated as of March 27, 1996, entered into with
Nitrogen Leasing Company, Limited Partnership ("Owner"), delivers this
Certificate of Substantial Completion pursuant to Section 6 of the Agreement
with respect to the above noted Unit Premises. All terms used in this
Certificate shall have the meanings given to such terms in the Agreement.
Agent hereby certifies to Owner and Assignee as follows:
1. Construction and Equipping of the Unit. The Unit
Improvements (including all interior finish work, but
exclusive of punch list items) has been completed
within the Unit Budget and in all material respects
in accordance with the Construction Agreement and the
Unit Plans, including testing, and are accepted by
Agent.
2. Permits. All Permits and governmental approvals with
respect to the Unit have been issued or obtained and
are in full force and effect.
3. Liens. The Unit, including interior finish work, has
been completed as contemplated in paragraph (e) of
Section 6 of the Agreement free of all Liens, except
for Permitted Liens (all of which are to be itemized
as to the nature, amount, claimant and status) and
there are no current Permitted Contests with respect
to the Unit (or, if any, the nature, amount, claimant
and status thereof).
4. Final Survey. Attached hereto at Tab 3 is a final
survey showing the completed Unit Improvements, all
easements on the Unit Premises and indicating the
location of access to the Unit Premises and all
utility and water easements directly affecting the
Unit Premises.
5. Utilities. Connection has been made to all
appropriate utility facilities and the Unit
Improvements are ready for occupancy and operation.
6. Continuing Representations of Agent. All
representations and warranties made in the Agreement,
in the Lease, and in connection with this Final
Advance are and remain true and correct in all
material respects on and as of the date of the Final
Advance (except to the extent such representations
and warranties expressly relate specifically to an
earlier date) and no Event of Default, Potential
Default or, with respect to the Unit for which the
Final
<PAGE> 67
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Advance is requested, Event of Unit Termination or
Casualty Event or Potential Event of Unit Termination
under this Agreement has occurred and is continuing
on the date such Final Advance is to be made or by
reason of giving effect to such Final Advance.
7. AFL Unit Leasing Record. Attached hereto at Tab 4 is
a duly executed AFL Unit Leasing Record.
8. Request for Advance. Attached hereto at Tab 5 is a
duly executed AIA Document G722 or a substantially
similar document.
Dated: , 19 Arcadian Fertilizer, L.P. by Arcadian
----------- -- -- Corporation, its General Partner
By:
------------------------------------
Name:
Title:
2
<PAGE> 68
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT F
FORM OF CERTIFICATE OF INCREASED COST
WITH RESPECT TO UNIT PREMISES LOCATED AT _________
IN CONNECTION WITH A REQUEST FOR A COMPLETION ADVANCE
Arcadian Fertilizer, L.P. ("Agent"), under a certain Agreement
for Lease (the "Agreement"), dated as of March 27, 1996, entered into with
Nitrogen Leasing Company, Limited Partnership ("Owner"), delivers this
Certificate of Increased Cost pursuant to Section 7 of the Agreement with
respect to the above noted Unit Premises. All terms used in this Certificate
shall have the meanings given to such terms in the Agreement. Agent hereby
certifies to Owner and Assignee as follows:
1. Continuing Representations of Agent. All
representations and warranties made in the Agreement,
in the Lease, and in connection with this Completion
Advance are and remain true and correct in all
material respects on and as of the date of the
Completion Advance (except to the extent such
representations and warranties expressly relate
specifically to an earlier date) and no Event of
Default, Potential Default or, with respect to the
Unit for which the Completion Advance is requested,
Event of Unit Termination or Casualty Event or
Potential Event of Unit Termination under this
Agreement has occurred and is continuing on the date
such Completion Advance is to be made or by reason of
giving effect to such Completion Advance.
2. Revised AFL Unit Leasing Record. Attached hereto at
Tab 1 is a revised AFL Unit Leasing Record prepared
by Agent.
3. Request for Advance. Attached hereto at Tab 2 is a
duly executed AIA Document G722 or a substantially
similar document.
Dated: , 19 Arcadian Fertilizer, L.P. by Arcadian
---------- -- -- Corporation, its General Partner
By:
------------------------------------
Name:
Title:
<PAGE> 69
EXHIBIT G
UNIT FF&E SPECIFICATIONS
ARCADIAN CORPORATION MW KELLOGG
TRAIN 4 AMMONIA PLANT 1850 MTPD KAAP JOB NO. 7710
POINT LISAS, TRINIDAD 16-FEB-96
REV. C
EQUIPMENT LIST
ISBL
<TABLE>
<CAPTION>
Rev. No. Item No. Description Remarks
- -------- -------- ----------- -------
<S> <C> <C> <C>
CLASS B: FURNACES/FIRED HEATERS
101-B Primary Reformer
101-BJ1 Forced Draft Fan
101-BJ1M Motor for 101-BJ1
101-BJ2 Induced Draft Fan
101-BJ2T Turbine for 101-BJ2
101-BL1 Combustion Air Preheater
102-B Start-up Heater
102-BL2 Primary Reformer Catalyst Unloading Equip.
CLASS C: EXCHANGERS
101-C Secondary Reformer Waste Heat Boiler
102-C HP Steam Superheater
103-C1/C2 HTS Effluent BFW Preheater/Steam Generator
105-C CO2 Stripper Reboiler
106-C LTS Effluent/LP BFW Exchanger
107-C CO2 Stripper Quench Cooler
109-C Lean Solution/BFW Exchanger
110-C Lean Solution Cooler
111-C CO2 Stripper Ejector Steam Generator
114-C Methanator Feed/Effluent Exchanger
115-C Methanator Effluent Cooler
120-C Ammonia Unitized Chiller
120-CF1 1st Stage Refrig. Flash Drum
120-CF2 2nd Stage Refrig. Flash Drum
</TABLE>
PAGE 1 OF 7
<PAGE> 70
ARCADIAN CORPORATION MW KELLOGG
TRAIN 4 AMMONIA PLANT 1850 MTPD KAAP JOB NO. 7710
POINT LISAS, TRINIDAD 16-FEB-96
REV. C
EQUIPMENT LIST
ISBL
<TABLE>
<CAPTION>
Rev. No. Item No. Description Remarks
- -------- -------- ----------- -------
<S> <C> <C> <C>
120-CF3 3rd Stage Refrig. Flash Drum
120-CF4 4rd Stage Refrig. Flash Drum
121-C Ammonia Conv. Feed/Effluent Exchanger Integral w/105D
122-C1 Ammonia Conv. Bed 1 Interchang. Integral w/105D
122-C2 Ammonia Conv. Bed 2 Interchang. Integral w/105D
122-C3 Ammonia Conv. Bed 3 Interchang.
123-C1 Ammonia Conv. Eff./Preheater Exch.
123-C2A Ammonia Conv. Eff./Stm. Gen.
123-C2B Ammonia Conv. Eff./BFW Preheater
124-C Ammonia Conv. Eff./Cooler
127-C Regrigerant Condenser
128-C Refrig. Comp. 3rd Stage Intercooler
130-C Syn. Gas Comp. Suction Chiller
133-C Feed Gas Comp. Kickback Cooler
134-C Syn. Gas Comp. Kickback Cooler
B 160-C Ammonia Dist. Column Reboiler
161-C1 Aqual Ammonia Interchanger
161-C2 Aqual Ammonia Interchanger
167-C Regrig. Comp. Second Stage Intercooler
172-C Methanator Start-Up Heater
173-C Start-Up Cooler
174-C Stripped Cond. Cooler
183-C MOL Sieve Regeneration Heater
188-CA Condensate Stripper Feed/Eff. Exchanger
188-CB Condensate Stripper Feed/Eff. Exchanger
188-CC Condensate Stripper Feed/Eff. Exchanger
</TABLE>
PAGE 2 OF 7
<PAGE> 71
ARCADIAN CORPORATION MW KELLOGG
TRAIN 4 AMMONIA PLANT 1850 MTPD KAAP JOB NO. 7710
POINT LISAS, TRINIDAD 16-FEB-96
REV. C
EQUIPMENT LIST
ISBL
<TABLE>
<CAPTION>
Rev. No. Item No. Description Remarks
- -------- -------- ----------- -------
<S> <C> <C> <C>
CLASS D: REACTORS
103-D Secondary Reformer
104-D1 High Temperature Shift Converter
104-D2 Low Temperature Shift Converter
105-D Ammonia Syn Converter
106-D Methanator
107-D Primary Reformer eff. Transfer Line Asoc. w/RAD Sect. 101B & 103D
108-DA Desulfurizer
108-DB Desulfurizer
109-DA Molecular Sieve Drier
109-DB Molecular Sieve Drier
CLASS E: TOWERS
101-E CO2 Absorber
102-E CO2 Stripper
103-E LP Ammonia Scrubber
104-E HLP Ammonia Scrubber
105-E Ammonia Distillation Column
105-E Process Condensate Stripper
CLASS F: DRUMS/TANKS
101-F Steam Drum
102-F1 Raw Gas Separator Single Drum/2 Compartments
102-F2 CO2 Absorber Overhead K.O. Drum Single Drum/2 Compartments
104-F Stm. Gas Comp. Suction Drum
106-F Ammonia Separator
107-F Ammonia Letdown Drum
</TABLE>
PAGE 3 OF 7
<PAGE> 72
ARCADIAN CORPORATION MW KELLOGG
TRAIN 4 AMMONIA PLANT 1850 MTPD KAAP JOB NO. 7710
POINT LISAS, TRINIDAD 16-FEB-96
REV. C
EQUIPMENT LIST
ISBL
<TABLE>
<CAPTION>
Rev. No. Item No. Description Remarks
- -------- -------- ----------- -------
<S> <C> <C> <C>
109-F Refrigerant Receiver
114-F Benfield Solution Storage Tank
115-F Benfield Solution Sump
118-F Benfield Carbon Filter
132-F Lean Solution Flash Tank
144-F Feed Gas K.O. Drum
156-F Steam Blowdown Drum
157-F Mole Sieve Regn. Cond. Drum
CLASS J: ROTATING EQUIPMENT
101-J Air Compressor
101-JCA Air Compressor 1st Stage Intercooler
101-JCB Air Compressor 2nd Stage Intercooler
101-JCC Air Compressor 3rd Stage Intercooler
101-JCD Air Compressor 4th Stage Intercooler
101-JL Lube Oil Console for 101-J
101-JT Turbine for 101-J
102-J Feed Gas Compressor
102-JT Turbine Drive for 102-J Note: P&ID shows motor.
103-J Syn Gas Compressor
103-JL Common Lube Oil Console 102-J, 103-J & 105-J
103-JT Turbine for 103-J & 105-J
103-JTC Combine Surface Condenser
103-JTCC Inter/After Cond. for 103-JTC
104-J H.P. Boiler feed water pump
104-JT Turbine Drive for 104-J
104-JA H.P. Boiler feed water pump
</TABLE>
PAGE 4 OF 7
<PAGE> 73
ARCADIAN CORPORATION MW KELLOGG
TRAIN 4 AMMONIA PLANT 1850 MTPD KAAP JOB NO. 7710
POINT LISAS, TRINIDAD 16-FEB-96
REV. C
EQUIPMENT LIST
ISBL
<TABLE>
<CAPTION>
Rev. No. Item No. Description Remarks
- -------- -------- ----------- -------
<S> <C> <C> <C>
104-JAM Motor Drive for 104-JA
105-J Ammonia Refrigerant Compressor
B 107JA Lean Solution Pump Helper Motor Included
107JAHT Hydraulic Turbine Drive for 107-JA
107-JB Lean Solution Pump
107-JBM Motor Drive for 107-JB
107-JC Lean Solution Pump
107-JCT Turbine Driver for 107-JC
111-J Benfield Transfer Pump
111-JM Motor Drive for 111-J
112-J Cond. Pump
112-JM Motor Drive for 112-J
112-JA Cond. Pump
112-JAM Motor Drive for 112-JA
115-J Benfield Sump Pump
115-JM Motor Drive for 115-J
116-J CO2 Stripper Quench Pump
116-JM Motor Drive for 116-J
116-JA Co2 Stripper Quench Pump
116-JAM Motor Drive for 116-JA
120-J Ammonia Reflux Pump
120-JM Motor Drive for 120-J
120-JA Ammonia Reflux Pump
120-JAM Motor Drive for 120-JA
121-J Process Cond. Pump
121-JM Motor Drive for 121-J
121-JA Process Cond. Pump (Spare)
</TABLE>
Page 5 of 7
<PAGE> 74
ARCADIAN CORPORATION MW KELLOGG
TRAIN 4 AMMONIA PLANT 1850 MTPD KAAP JOB NO. 7710
POINT LISAS, TRINIDAD 16-FEB-96
REV. C
EQUIPMENT LIST
ISBL
<TABLE>
<CAPTION>
Rev. No. Item No. Description Remarks
- -------- -------- ----------- -------
<S> <C> <C> <C>
121-JAM Motor Drive for 121-JA
124-J Cold Ammonia Product Pump
124-JM Motor Drive for 124-J
124-JA Cold Ammonia Product Pump
124-JAM Motor Drive for 124-JA
130-J Ammonia Distillation Column Feed Pump
130-JM Motor Drive for 130-J
130-JA Ammonia Distillation Column Feed Pump
130-JAM Motor Drive for 130-JA
131-J H.P. Scrubber Feed Pump
131-JM Motor Drive for 131-J
131-JA H.P. Scrubber Feed Pump
131-JAM Motor Drive for 131-JA
C CLASS K:
C 2601-K Control Building Located outside of Battery Limits
C 2609-K Switchgear Building Located outside of Battery Limits
CLASS L: SPECIAL EQUIPMENT
101-L Air Filter for 101-J
104-L Benfield Solution Filter
106-L Oxygen Scavenger Injection System
107-L Aqueous Ammonia Injection System
108-L Phosphate Injection System
109-L Benfield Antiform Injection System
110-L Benfield Solution Mixer
111-L Compressor Discharge Separator Deleted, resulting from type of comp. utilized.
</TABLE>
PAGE 6 OF 7
<PAGE> 75
ARCADIAN CORPORATION MW KELLOGG
TRAIN 4 AMMONIA PLANT 1850 MTPD KAAP JOB NO. 7710
POINT LISAS, TRINIDAD 16-FEB-96
REV. C
EQUIPMENT LIST
ISBL
<TABLE>
<CAPTION>
Rev. No. Item No. Description Remarks
- -------- -------- ----------- -------
<S> <C> <C> <C>
115-L Benfield Sump Filter
132-L1 Flash Tank Ejector #1
132-L2 Flash Tank Ejector #2
132-L3 Flash Tank Ejector #3
132-L4 Flash Tank Ejector #4
160-L Purge Gas Recovery Unit PGRU
161-L Coalescer
CLASS U: UTILITY EQUIPMENT
B 101-U Deaerator
</TABLE>
PAGE 7 OF 7
<PAGE> 76
ARCADIAN CORPORATION MW KELLOGG
TRAIN 4 AMMONIA PLANT 1850 MTPD KAAP JOB NO. 7710
POINT LISAS, TRINIDAD 08-FEB-96
REV. C
EQUIPMENT LIST
OSBL
<TABLE>
<CAPTION>
Rev. No. Item No. Description Remarks
- -------- -------- ----------- -------
<S> <C> <C> <C>
CLASS A: UTILITY BASIN & SUMP
C 2101A Cooling Tower Basin
C 2201A Sea Water Intake Structure
C 2403A Oil Intercepter
C 2405A Oil Containment Sump
CLASS B: FLARE
2201-B Ammonia Plant Flare
C 2201-BL Flame Front Generator
2202-B Ammonia Storage Flare Stack
2202-BL Flame Front Generator
CLASS C: EXCHANGERS
C 2201-CA Fresh Water/Sea Water Plate Exchanger
C 2201-CB Fresh Water/Sea Water Plate Exchanger
C 2201-CC Fresh Water/Sea Water Plate Exchanger
C 2201-CD Fresh Water/Sea Water Plate Exchanger
C 2201-CE Fresh Water/Sea Water Plate Exchanger
C 2201-CF Fresh Water/Sea Water Plate Exchanger
CLASS F: DRUMS/TANKS
C 2001-F Raw Water Storage Tank
C 2002-F Boiler Feed Water Tank
C 2006-F Boiler Blowdown Drum
2010-F Raw Water Receiving Tank
C 2101-F Ammonia Storage Tank
</TABLE>
PAGE 1 OF 5
<PAGE> 77
ARCADIAN CORPORATION MW KELLOGG
TRAIN 4 AMMONIA PLANT 1850 MTPD KAAP JOB NO. 7710
POINT LISAS, TRINIDAD 08-FEB-96
REV. C
EQUIPMENT LIST
OSBL
<TABLE>
<CAPTION>
Rev. No. Item No. Description Remarks
- -------- -------- ----------- -------
<S> <C> <C> <C>
2103-F Fresh Cooling Water Makeup Tank
C 2203-F Caustic Storage Drum
C 2204-F Sulfuric Acid Drum
2205-F Ammonia Flare KO Drum
C 2401-F Wastewater Neutralization Tank
CLASS J: ROTATING EQUIPMENT
C 2001-JA Demineralizer Feed Pump
C 2001-JB Demineralizer Feed Pump
C 2001-JC Demineralizer Feed Pump
C 2001-JAM Motor Driver for 2001-JA
C 2001-JBM Motor Driver for 2001-JB
C 2001-JCM Motor Driver for 2001-JC
2002-J Boiler Feed Water Makeup Pump
2002-JA Boiler Feed Water Makeup Pump
2002-JM Motor Driver for 2002-J
2002-JAM Motor Driver for 2002-JA
2003-J Boiler Feed Water Pump
2003-JA Boiler Feed Water Pump
2003-JM Motor Driver for 2003-J
2003-JAM Motor Driver for 2003-JA
2010-J Fresh Water Receiving Pump
2010-JA Fresh Water Receiving Pump
2010-JM Motor for 2010-J
2010-JAM Motor for 2010-JA
2201-JA Fresh Cooling Water Pump
</TABLE>
PAGE 2 OF 5
<PAGE> 78
ARCADIAN CORPORATION MW KELLOGG
TRAIN 4 AMMONIA PLANT 1850 MTPD KAAP JOB NO. 7710
POINT LISAS, TRINIDAD 08-FEB-96
REV. C
EQUIPMENT LIST
OSBL
<TABLE>
<CAPTION>
Rev. No. Item No. Description Remarks
- -------- -------- ----------- -------
<S> <C> <C> <C>
2201-JB Fresh Cooling Water Pump
2201-JC Fresh Cooling Water Pump
2201-JAM Motor Driver for 2201-JA
2201-JBM Motor Driver for 2201-JB
2201-JCM Motor Driver for 2201-JC
2202-JA Seawater Cooling Water Pump
2202-JB Seawater Cooling Water Pump
2202-JC Seawater Cooling Water Pump
2202-JAM Driver for 2202-JA
2202-JBM Driver for 2202-JB
2202-JCM Driver for 2202-JC
B 2205-J Caustic Transfer Pump
B 2205-JA Caustic Transfer Pump
B 2205-JM MOTOR DRIVER FOR 2205-J
B 2205-JAM MOTOR DRIVER FOR 2205-JA
B 2206-J Sulfuric Acid Transfer Pump
B 2206-JA Sulfuric Acid Transfer Pump
B 2206-JM Motor driver for 2206-J
B 2206-JAM Motor Driver for 2206-JA
C 2208-J Seawater CW Make-up Pump
C 2208-JA Seawater CW Make-up Pump
C 2208-JM Driver for 2208-J
C 2208-JAM Driver for 2208-JA
B 2303-J Emergency Generator
B 2303-JF Diesel Fuel Oil Storage Tank
B 2303-JDE Diesel Drive for 2303-J
</TABLE>
PAGE 3 OF 5
<PAGE> 79
ARCADIAN CORPORATION MW KELLOGG
TRAIN 4 AMMONIA PLANT 1850 MTPD KAAP JOB NO. 7710
POINT LISAS, TRINIDAD 08-FEB-96
REV. C
EQUIPMENT LIST
OSBL
<TABLE>
<CAPTION>
Rev. No. Item No. Description Remarks
- -------- -------- ----------- -------
<S> <C> <C> <C>
C 2401-J Neutralization Tank Pump
C 2401-JA Neutralization Tank Pump
C 2401-JM Motor Driver for 2401-J
C 2401-JAM Motor Driver for 2401-JA
CLASS L: SPECIAL EQUIPMENT
2001-L Phosphate Injection System
2003-L PA/IA Compressor Package
2003-LJ Plant Air Compressor
2003-JF1 Plant Air KO Drum
2003-LL Instrument Air Dryer Package
2003-LF2 Instrument Air Receiver
2101-L Ammonia Refrigeration Package
C 2201-L Seawater Filter
C 2202-L Seawater Chlorination Unit
C 2203-L Cooling Tower Chlorination Unit
C 2205-L Seawater Acid Injection
C 2206-L Seawater Dispersant Inject. (Bromide)
2402-L Sanitary Lift Station
B 2404-L Belt Oil Skimmer
CLASS U: UTILITY EQUIPMENT
2001-U Water Treatment Unit
C 2001-UL Acid/Caustic Injection Package
2001-UL1 Bisulfate Injection Unit
2002-U Package Boiler
</TABLE>
PAGE 4 OF 5
<PAGE> 80
ARCADIAN CORPORATION MW KELLOGG
TRAIN 4 AMMONIA PLANT 1850 MTPD KAAP JOB NO. 7710
POINT LISAS, TRINIDAD 08-FEB-96
REV. C
EQUIPMENT LIST
OSBL
<TABLE>
<CAPTION>
Rev. No. Item No. Description Remarks
- -------- -------- ----------- -------
<S> <C> <C> <C>
C 2003-U Mixed Bed Polisher
2101-U Seawater Cooling Tower
</TABLE>
Page 5 of 5
<PAGE> 81
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT H
ENVIRONMENTAL CERTIFICATE
1. Arcadian Fertilizer, L.P. ("Agent"), is a party to a
certain Agreement for Lease, dated as of March 27, 1996 (the "Agreement for
Lease"), entered into with Nitrogen Leasing Company, Limited Partnership
("Owner"). Agent is herewith delivering to Owner and Cooperatieve Centrale
Raiffeisen-Boerenleenbank B.A. "Rabobank Nederland", New York Branch (the
"Assignee") an Acquisition Certificate with respect to a leasehold interest in
certain premises located at the Ward of Couva, County of Caroni in the Republic
of Trinidad and Tobago. Capitalized terms used herein and not otherwise
defined shall have the meaning given such terms in the Agreement for Lease.
2. Except as described in the Environmental Report
(hereinafter defined), Agent has no actual knowledge and has not given or
received any notice indicating, that (a) any prior or present owner, operator,
tenant or occupant of any portion of the Unit has spilled, released, disposed
of, or discharged (collectively "managed") any Hazardous Substances
(hereinafter defined) on, from, beneath or affecting the Unit or any portion
thereof in amounts or concentrations requiring remediation under applicable
Environmental Regulations; (b) any prior or present owner, operator, tenant or
occupant of any portion of the Unit Premises has received any notice,
directive, citation, subpoena, summons, order to show cause, complaint or other
communication from any Governmental Authority or entity or Person with respect
to the management of any Hazardous Substances on, from, beneath or affecting
the Unit Premises or any portion thereof; (c) Agent has not given notice to any
insurance broker or insurance carrier under any insurance policy that there has
been an occurrence relating to the release of Hazardous Substances on, from,
beneath, or affecting the Unit or any portion thereof; or (d) there are
currently any agreements, consent orders, decrees or other directives of any
applicable court or governmental or quasi-governmental agency requiring any
tests, studies, inspections, work, monitoring or other removal or remedial
activities with respect to the management of any Hazardous Substances on, from,
beneath or affecting the Unit Premises or any portion thereof, or any
threatened proceeding concerning the Unit Premises or any portion thereof which
is related to Environmental Regulations (hereinafter defined).
3. For purposes of this document, the following terms
shall have the following meanings: (i) "Environmental Regulations" shall mean
each and every applicable federal, state or local law, statute, ordinance,
code, rule, order, regulation, or other published requirement (including but
not limited to, consent decrees and administrative orders) of any jurisdiction
regulating, relating or imposing obligations, liabilities or standards of
conduct with respect to human health or safety, to the environment, or to
Hazardous Substances, including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended ("CERCLA")
(42 U.S.C. Section 9601, et seq.), as amended by the Superfund Amendments and
Reauthorization Act of 1986 (42 U.S.C. Sections 9601-9675), the Resource
Conservation and Recovery Act, as amended (42 U.S.C. Section 6901, et seq.),
the Emergency Planning and Community Right-To-Know Act, as amended (42 U.S.C.
Section 11001, et seq.) the Water Pollution Control Act, as amended (33 U.S.C.
Section 1251, et seq.), the Hazardous Materials Transportation
<PAGE> 82
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Act, as amended (49 U.S.C. Section 1801, et seq.), the Toxic Substances
Control Act, as amended (15 U.S.C. Section 2601, et seq.), and any so called
"Superfund" or "Superlien" law, (ii) "Environmental Report" shall mean the
environmental report delivered pursuant to paragraph (v) of Section 4 of the
Agreement for Lease to and accepted by Owner and the Assignee in connection
with the acquisition of the Unit Premises, and (iii) "Hazardous Substances"
shall mean, without limitation, any solid, liquid or gaseous wastes, substances
or materials containing or constituting urea formaldehyde, polychlorinated
biphenyls, petroleum products, methane, radioactive materials, hazardous
wastes, hazardous or toxic substances, or related materials, asbestos or any
material containing asbestos, pollutants, or any other substance, material,
chemical compound, waste or item defined as or determined by a governmental
authority having jurisdiction to be hazardous or toxic pursuant to any
Environmental Regulations applicable to the Unit Premises or the business
operations conducted thereon.
Arcadian Fertilizer, L.P. by
Arcadian Corporation, its General Partner
By:
--------------------------------------------
Title:
-----------------------------------------
2
<PAGE> 83
EXHIBIT I
OPERATING AGREEMENT
1
OPERATING AGREEMENT - 04 Plant
THIS CONTRACT made in duplicate with effect from the 1st day of January 1998,
by and between the NITROGEN LEASING COMPANY, LIMITED PARTNERSHIP, a Delaware
Limited Partnership having an address c/o Nitrogen Leasing Capital, Inc.
Project and Lease Finance Group North Tower, 27th Floor World Financial Center,
250 Vesey Street, New York, New York 10281 (hereinafter referred to as "NLC")
which expression shall where the context so admits include its lessees, sub-
lessees, successors and assigns of the One Part and ARCADIAN TRINIDAD LIMITED,
a company duly incorporated as above and having its registered office at
Goodrich Bay Road, Point Lisas, Couva, Trinidad, W. 1. (hereinafter referred to
as "ATL"), of the Other Part, NLC and ATL hereinafter sometimes individually
referred to as party and collectively as the Parties.
WITNESSETH THAT
WHEREAS, NLC is the owner of a plant for the purpose of producing Anhydrous
Ammonia at Point Lisas, Trinidad hereinafter referred to as "the Ammonia
Plant";
WHEREAS, NLC desires to lease the Ammonia Plant with the benefit, inter alia,
of a competent and effective operator and with the benefit of the use of the
shared facilities set out in Section 17 hereof ("the Shared Facilities"),,
WHEREAS, ATL is the owner and operator of two ammonia plants also situate at
Point Lisas, Trinidad hereinafter referred to as "the ATL Plants" and has
agreed to undertake the operation of the Ammonia Plant, and to provide such
plant with all or any of the Shared Facilities.
WHEREAS, the Parties desire to set out in this Contract rights, duties,
privileges and obligations as between themselves concerning the operation of
the Ammonia Plant;
NOW THEREFORE, in consideration of the premises and of the mutual covenants
hereinafter set forth the Parties hereto agree as follows:
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1. DEFINITIONS
For the purposes of this Contract the following terms shall have the
following meanings:
(a) "Affiliate Company" means a company:
i) in which a Party hereto owns directly or indirectly share
capital conferring a majority of votes at the shareholder's
meetings of each company or
ii) which is the owner directly or indirectly of share capital
conferring a majority of votes at the shareholder's meeting
of a Party hereto or
iii) whose share capital conferring a majority of votes at the
shareholder's meetings of such company is owned directly or
indirectly by a company which also owns the share capital
conferring a majority of votes at the shareholder's meetings
of a Party hereto.
(b) "Ammonia Plant" means the Plant and facilities for the production of
anhydrous ammonia owned by NLC and located at Point Lisas, Trinidad,
(c) "Coordinating Committee" means the Coordinating Committee described
in Section 13 hereof;
(d) "Direct Costs" means the ATL costs defined in Section 18 (b) hereof,
(e) "Direct Employee Costs" is a part of Direct Costs and means the
total costs to ATL of ATL employees identifiable as being applicable
solely to the Ammonia Plant operations, including the salaries,
benefits and related payroll costs specific to those employees,
(f) "Invoice" means the bill submitted by ATL to NLC as defined by
Section 15 hereof;
(g) "Overhead and Other Costs" means the ATL costs defined in Section
18(c):
(h) "Party" means a signatory of this Contract;
(i) "Parties" means both signatories to this Contract;
(j) "Rent" means the charge defined by Section 18(a) hereof,
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(k) "Senior Executive Management" means the Managing Director of each of
the Parties hereto;
(1) "Shared Facilities" means those facilities as described in Section
17 hereof;
(m) "Spending Plan" means the spending plan for the Ammonia Plant as
described in Section 12 hereof;
(n) "Third Parties" means parties other than NLC and ATL;
(o) "TT Dollar" means currency of the Republic of Trinidad and Tobago;
(p) "Work Programme" means the programme for operation and maintenance
of the Ammonia Plant described in Section 12 hereof.
2. APPOINTMENT OF OPERATOR
NLC appoints ATL as operator of the Ammonia Plant and in accordance
with the provisions hereof, ATL accepts such appointment and shall act as
such operator.
3. RELATION OF PARTIES
It is the express intention of the parties hereto that in the performance of
this contract, ATL's status shall be that of independent contractor, and the
relation of the parties hereunder shall in no event be construed as that of
principal and agent or master and servant for any purpose whatsoever.
As an independent contractor any and all individuals utilized, directly or
indirectly by ATL shall be deemed to be the employees or subcontractors of ATL
and not those of NLC and ATL shall be solely responsible for the payment of
such individuals. ATL will have the authority to control and direct the
performance of its employees with respect to the detail of its work carried out
hereunder.
4. COMPLIANCE WITH LAWS
ATL shall be subject to and shall require its employees, subcontractors and all
others directly or indirectly employed or engaged by ATL to be subject to all
valid applicable laws, statutes, ordinances, rules and regulations of national
and local governments (and subdivisions or agencies thereof) of the Republic of
Trinidad and Tobago.
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5. ATL PERSONNEL
The selection of workers, the hours of labour and the compensation for services
to be paid to any and all workers in connection with ATL's operations hereunder
and the decision to terminate such workers shall be determined solely by ATL
taking into account the Work Programmes and Spending Plans and shall comply
with all applicable employment laws. All such workers used in ATL's operations
hereunder shall be employees of ATL.
6. DUTIES OF NLC
In carrying out its obligations hereunder, NLC shall:
(a) Procure, pay for and arrange for timely delivery to the Ammonia
Plant of raw materials and utilities as provided for under this
Contract;
(b) Cause to be carried insurance of the types and amounts which NLC is
obliged to carry under all applicable laws and which shall include
insurance in respect of the Ammonia Plant equipment, buildings,
spare parts, vehicles supplies and Ammonia;
(c) Provide all necessary information required by ATL for the
preparation of Work Programmes and Spending Plans hereunder or the
revision thereof.
7. ATL's DUTIES
In carrying out its obligations hereunder ATL shall:
(a) Direct, supervise and be responsible for operations and maintenance
at the Ammonia Plant, which shall include solving technical and
operating problems which arise in the ordinary course of the Ammonia
Plant business, improving plant operations, maintaining product
quality and yields, seeking energy efficiency and the like in
accordance with the approved Work Programmes and Spending Plans;
(b) Efficiently utilize the resources provided by NLC to produce and
store Ammonia of commercial quality consistent with the capability
of the resources provided and the specifications which NLC shall
provide;
(c) Operate and supervise the loading mechanism for the purpose of
loading Ammonia into ships;
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(d) Be responsible for the shipping of the Ammonia production at the
Ammonia plant;
(e) Assign, for the Ammonia Plant operations, staff skilled in Ammonia
Plant operations and only workers who possess the necessary permits,
licences, skills and qualifications to perform their work,
(f) Keep true and correct books, accounts and records of all the Ammonia
Plant financial, accounting, manufacturing and maintenance
operations performed by ATL hereunder;
(g) Subject to performance by NLC of Section 15 to pay all bills for
costs and expenses incurred by ATL in the course of the Ammonia
Plant operations;
(h) Promptly notify NLC of claims and litigation of Third Parties which
come to its notice relating to the Ammonia Plant or operation
thereof, and unless otherwise directed by NLC to prosecute, defend
or settle such claims and litigation on NLC's behalf;
(i) Train all the employees selected for employment by ATL in connection
with its operations hereunder;
(j) Furnish NLC with all information in its possession relating to, and
the preparation of financial, accounting and tax reports and any
other reports required by the Government of Trinidad and Tobago and
its agencies concerning the Ammonia Plant its operation, production
and loading activities.
(k) Submit in a timely manner directly to local authorities all reports
required by such authorities from ATL. Such authorities include but
are not limited to the Factory Inspectorate, Police, Fire Services,
Ministry of Energy and the Ministry of Health. Copies of these
reports will be furnished to the Executive Committee prior to their
submission to such authorities;
(1) Prepare Work Programmes and Spending Plans as required hereunder;
(m) Perform any other services or duties regarding the Ammonia Plant
operation and maintenance which NLC may request and which is within
ATL's ability to perform and which ATL agrees to perform,
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(n) Obtain all regulatory approvals from the local governmental
authorities necessary for conducting the operations of the Ammonia
plant.
8. WARRANTY
ATL warrants that all work hereunder shall be done in accordance with this
Contract and in a safe efficient and workmanlike manner in accordance with good
industry practice
9. INDEMNITY AGREEMENT
ATL agrees to indemnify, hold harmless and defend NLC, its shareholder and all
of its respective directors, officers, employees, agents and representatives
from and against any- claim demand cause of action liability loss and expense
by reason of:
(a) claims of any actual or asserted violation by ATL of any law,
ordinance, regulation, rule or order of any government or;
(b) injury to or death of persons (including, but not limited to, the
employees or agents of NLC, ATL or ATL's sub-contractors and
suppliers) or damage to or loss of property (including but not
limited to, the property of NLC) or pollution arising directly or
indirectly out of the acts or omissions of ATL or its sub-
contractors, suppliers or agents, or any of their employees in the
performance of this Contract.
ATL, however, shall not be liable under any circumstances for any loss, damage
or expense incurred or suffered by NLC or its shareholder with respect to the
Ammonia Plant and/or its operation, unless such loss, damages or expense, is
caused by ATL's reckless or intentional misconduct or occasioned by the breach
of any of its duties contained herein.
10. CONSEQUENTIAL DAMAGES
Except for gross negligence or willful misconduct neither party shall be liable
to the other for special or consequential damages for loss of profits,
liability to third parties for failure to deliver products or loss of
opportunity for business with third parties.
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11. SAFETY
ATL shall require its employees, sub-contractors and agents to be subject to
all applicable national, international and local health and safety laws and
regulations and ATL shall ensure the implementation of all applicable health
and safety rules and procedures while on the Ammonia Plant and shall also have
the primary responsibility for notifying and training its employees,
sub-contractors and agents with respect to the said health and safety rules and
procedures and any other governmental laws or regulations pertaining to the
health and safety of workers.
12. WORK PROGRAMMES AND SPENDING PLANS
(a) A Work Programme for the purposes of this Contract shall be an
annual plan. A Work Programme shall include desired Ammonia
production rates, desired inventory levels, forecast of quantity to
be shipped, shipping and loading requirements, repair and
maintenance programmes in accordance with good industry practice. A
Work Programme shall also include but not be limited to capital
improvements, debottlenecking projects, modification and repair of
the Ammonia Plant.
(b) A Spending Plan for the purposes of this Contract shall be the
schedule of estimated costs including operating, maintenance and
capital expenditures by monthly periods which will reflect the
various levels and types of activities set out in the Work Programme
for the same period.
(c) On or about January 1st, 1998, NLC shall prepare the monthly
production requirements and shipping volumes of Ammonia, and a
programme for capital expenditure.
(d) Within sixty (60) days of receipt of the proposed production and
shipping volumes, ATL shall then propose a Work Programme and
Spending Plan covering operations to be conducted during the period.
(e) Within thirty (30) days after ATL has furnished to NLC each proposed
Work Programme and Spending Plan, the Coordinating Committee shall
meet for the purpose of reviewing, and if necessary revising, and
approving such Work Programme and Spending Plan.
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13. COORDINATING COMMITTEE
1. There shall be established a committee to be known as the Coordinating
Committee which shall be responsible for day-to-day coordination between
NLC and ATL of ATL's operations of the Ammonia Plant
2. The Coordinating Committee shall be composed of the ATL Plant Manager with
the ATL Operations Manager appointed as an alternate, and the Plant
Superintendent of NLC with a designated alternate, such alternates to act
in the absence of the substantive members. These appointments shall be
made within seven days of the execution of this Contract, and from time to
time thereafter upon written notice.
3. Such other additional personnel as required from ATL and/or NLC may attend
Coordinating Committee meetings from time to time.
4. The Coordinating Committee shall be subject to the general direction of
the Senior Executive Management of ATL and NLC respectively, and
5. Matters considered but not settled by the Coordinating Committee shall be
referred to the said Senior Executive Management.
14. RAW MATERIALS
NLC shall procure and pay for raw materials and utilities required by ATL for
making Ammonia, including, but not limited to natural gas, water and
electricity.
15. INVOICING AND PAYMENT
(A) INVOICING
By the fifteenth day of each month ATL will submit to NLC, an invoice for the
priori month's operations in such detail as may be reasonably required by NLC,
together with a statement and all verifying documentation together with a
statement detailing estimated expenditure for the current and following month.
(B) PAYMENT
NLC will make payment in Trinidad and Tobago Dollars to ATL of the amount shown
in the invoice for the prior month's operations on or by the fifteenth day of
the following month.
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If all or any part of the sum shown due on any invoice provided for herein is
not paid when due, or if all or any part of the sums shown due are disputed and
unpaid by NLC, but it is subsequently determined that NLC was in error, the
interest on any unpaid amount shall be paid by NLC. Such interest shall accrue
and be compounded daily at an annual rate equivalent to one percentage point
above the prime lending rate as quoted on the due date by Citibank (Trinidad &
Tobago) Limited, main branch in Port of Spain, Trinidad, W.I. from the due date
thereof until paid.
16. REPORTS
ATL shall furnish or cause to be furnished to the Senior Executive Management
of NLC, the following reports
(a) Copies of each monthly operating report for the prior month with
such information as would be required by NLC to complete financial
statements. Such report to be submitted to NLC on or before the
fifteenth (15th) of the month;
(b) A daily report, with month and year-to-date accumulations showing
Ammonia production and shipment quantities, beginning and ending
inventories and consumption of raw materials and utilities"
(c) A report summarizing operating activities for the prior month and
any anticipated variation, and the cause for variation, from the
current Work Programme. Such report shall be submitted on or before
the fifteenth of each month;
(d) Such other reports as NLC may from time to time reasonably require.
17. SHARED FACILITIES
ATL agrees to provide NLC with all or any of the Shared Facilities and to
subordinate in favor of NLC, its rights access and entitlement to the said
Shared Facilities hereinafter enumerated:
A. (a) Ammonia product storage and loading facilities;
(b) Package refrigeration
(c) Storage flare
(d) Loading emergency shutdown device
(e) Sea water intake (to cooling tower) chlorinator
(f) Potable water
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(g) Fire water
(h) Instrument air
(i) Plant air
(j) Nitrogen
(k) Non-contaminated water
(1) Sanitary sewerage
(m) Cooling tower blowdown
(n) Demineralized water
(o) Sulphuric acid
(p) Caustic soda solution
(B) The list at (A) above may be amended by the parties from time to time.
18. CHARGES
NLC shall pay ATL each of the following charges:
(a) Rent - ATL shall charge NLC a rental for each of ATL's owned or
leased facilities or items which are used for the benefit of the
Ammonia Plant and ATL's existing plants referred to in Section 17
above. In such cases, the rent for such facilities or items shall
be based on ATL's depreciation of its investment cost allocated in
accordance with the provisions of subSection (d) below,
(b) Direct Costs - ATL shall charge NLC for all costs identifiable as
being applicable solely to the Ammonia Plant operations, including
but not limited to Direct Employee Costs, repair materials, spare
parts, chemicals, tools and equipment, office and other supplies,
repairs and the cost of insurance required in Section (21) hereof;
(c) Overhead and Other Costs - ATL shall charge NLC for Overhead and
Other costs incurred with respect to this Contract and not covered
in Sections (a) and (b) above including but not limited to
management, supervisory, technical, clerical and administrative
personnel costs and costs of shared facilities and services. These
Overhead and Other Costs shall be allocated in accordance with the
provisions of sub-Section (d) below;
(d) Allocations - Rent for each ATL owned or leased facility or item
used for the benefit of the Ammonia Plant and ATL's plants, and
Overhead and Other Costs shall be allocated seventy-two percent to
ATL and twenty- eight percent (28%) to NLC;
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19. AUDITS
NLC, upon at least seven (7) days advance written notice to ATL, shall have the
right at its sole expense, to inspect and/or audit ATL's books and records
pertaining to ATL's operations of the Ammonia Plant hereunder for any calendar
year or portion thereof within the preceding twenty four (24) months.
20. CONFIDENTIALITY
(a) ATL will treat as confidential all technical and other information,
data, techniques and materials developed or provided by NLC to carry
out the terms of this Contract and will not use the same or any part
thereof to any third Party without the prior specific written
approval of NLC.
(b) NLC will treat as confidential all technical and other information,
data, techniques and materials developed or provided by ATL to carry
out the terms of this Contract, will not use the same or any part
thereof except in accordance with the terms and provisions of this
Contract, and will not disclose the same or any part thereof to any
third Party without the prior specific written approval of ATL.
(c) Notwithstanding (a) and (b) above, there will be no obligation on
either Party to treat as confidential under this Section any
technical or other information, data, techniques and materials which
were part of the public domain at the effective date of this
Contract or become part of the public domain through no fault of
either Party.
21. INSURANCE
(a) ATL shall carry such insurance as may be required by the laws and
regulations of the Republic of Trinidad and Tobago for its
performance under this Contract and such other insurance as the
Parties may deem necessary and desirable. NLC shall pay the cost of
such insurance as a Direct Cost under Section 18(b) hereof.
(b) ATL shall require and ensure that its contractors and subcontractors
comply with the workmen's compensation laws of the Republic of
Trinidad and Tobago or laws of similar import, and to carry
insurance in such amounts as they may be instructed to carry by ATL.
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22. TERM
(a) Except as otherwise provided in this section 22, this Contract will
have an initial term of ten (10) years from the date on which it is
executed by both Parties. Upon a written request from NLC to ATL
made at least twelve months prior to the expiration of this
Contract, the Parties may agree to extend this Contract for a
further period upon terms and conditions to be agreed between the
Parties.
(b) In the event of termination of this Contract, ATL shall make readily
available to NLC for removal from ATL's Plant all assets in its
possession relating to the Ammonia Plant and owned by NLC and copies
of all records and other information in its possession and necessary
for its successor to discharge duties and obligations similar to the
duties and obligations of ATL hereunder. ATL shall endeavor to
effect an orderly transfer of operations to its successor, if any.
23. LIENS AND ENCUMBRANCES
Except as may be authorized by NLC, ATL shall not permit any lien or other
encumbrance to be filed or to remain against the Ammonia Plant, its materials,
physical equipment, real or personal property, and shall use all action
necessary to require its subcontractors and suppliers to so agree:
24. ASSIGNMENT
(a) This Contract shall not be assigned by either Party without the
prior written consent of the other party, such consent not to be
unreasonable withheld, except that either Party may, upon written
notice to the other Party, assign all of this Contract to an
affiliate company, provided that any such assignment shall not
relieve the assignor of its obligations under this contract, except
to the extent to which such obligations are in fact performed by the
assignee.
(b) This Contract shall be binding up on and inure to the benefit of the
successors or assigns of the Parties whether such succession results
from assignment, merger, consolidation, sale or transfer of
substantially all the assets and business of the Parties or
otherwise.
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25. FORCE MAJEURE
(a) Any delays in performance of either party under this contract shall
be excused if and to the extent caused by occurrences beyond the
control if the parties affected, including but not limited to any
action or inaction of any government or government entity, acts of
God, strikes, or other concerted acts of workmen, fires, floods,
explosion, riots, wars, rebellion, sabotage and non-availability of
materials or labour. The affected party shall give written notice
to the other party within five (5) mailing days after such party
becomes aware of such occurrence and the Impact thereof. In no of
funds be considered a force majeure event.
(b) The parties shall meet within seven (7) days of receipt of the said
notice to discuss the consequences of the events of force majeure
with a view to minimizing the effects thereof.
(c) Upon the occurrence of an event constituting Force Majeure, the
Party affected shall notify the other Party in writing as soon as
possible far as Possible, remedy the concerning the event and shall,
so event with all reasonable dispatch. The settlement of strikes or
other labour difficulties shall be entirely within the discretion of
the Party or Parties having the difficulty, and the above
requirement that any Force Majeure shall be remedied with all
reasonable dispatch shall not require the settlement of strikes or
other labour difficulties by acceding to the demands of any
opposing individual or organization therein when such course is
inadvisable in the discretion of the Party having the difficulty.
(d) Without prejudice to the other provisions of this Section, the
Parties, shall meet within seven days of receipt of such notice and
discuss the consequences of the events of Force Majeure with a view
to minimizing the effects thereof.
(e) It is expressly agreed that this Section 25 shall not deprive ATL of
any rights or remedies otherwise available in case of expropriation,
requisition, confiscation or nationalization or restriction on
convertibility of currency by any law, regulation or action.
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26. NOTICES
All notices, requests, and other communications required or desired to be
delivered pursuant to this Contract shall be in writing and delivered or mailed
postage prepaid as follows:
If to ATL, addressed as follows:
Arcadian Trinidad Limited
Atlantic Avenue
Point Lisas Industrial Estate
Couva
TRINIDAD W I.
Attention: The Managing Director
If to NLC, addressed as follows:
c/o Nitrogen Leasing Capital Inc.
Project and lease Finance Group North Tower
27th Floor World Financial Center
250 Vesey Street
New York, NY 10281, USA
Attention:
Either Party may change the address to which notices are to be given by mailing
written notice thereof to the other Party as hereinabove provided.
27. ARBITRATION
(a) Any disputes arising between the Parties in connection with this
Contract which cannot be settled between the Parties shall be
referred to and determined by Arbitration.
(b) Arbitration shall be conducted before a panel of three (3)
Arbitrators one of whom shall be appointed by each Party to the
dispute and the third Arbitrator shall be appointed by the two
Arbitrators so appointed.
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(c) Either Party may give notice in writing to the other that it wishes
a dispute settled by Arbitration. With fifteen (15) days of
delivery of such notice, each Party shall appoint an Arbitrator as
required by sub-section (b) above. Should a party fail to appoint
an Arbitrator when required to do so, then the single Arbitrator
appointed by the other shall proceed to arbitrate on the dispute as
if he were appointed and approved by both Parties. The two
arbitrators shall appoint the third arbitrator within fifteen (15)
days of their appointment, and if they fail to do so, either Party
may apply to the Chief Justice of Trinidad and Tobago to make the
appointment of the third arbitrator.
(d) Arbitration shall be conducted in accordance with the Arbitration
Act Ch 5:01 of the Laws of the Republic of Trinidad and Tobago and
any amendments thereto. The cost of Arbitration shall be for the
account of the Party against whom an award is made or as ordered by
the Arbitrator of the dispute.
(e) The award or determination of the Arbitrators, including a decision
as regards cost of the arbitration, shall be final and binding on
the Parties hereto and the Parties agree that judgment may be
entered in any Court having jurisdiction upon the terms of the award
or application may be made to such Court for a judicial acceptance
of the award or an order of enforcement as the case may be.
(f) The failure of either Party in any one or more instances, to insist
upon performance of any of the provisions of this Contract, or to
exercise any of its rights and privileges hereunder, shall not be
construed as a waiver of the future enforcement of that Provision.
Either party may give written notice of its desire to such amendment of any
term of the contract and upon receipt of such notice, the parties shall within
thirty (30) days thereafter, diligently meet and discuss the proposed
amendments with a view to finally resolving the same. No amendments shall be
binding unless effected by an instrument in writing signed by both of the
parties hereto.
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28. HEADINGS
The Headings of this Contract are for convenience and reference only and shall
not define or limit the terms hereof. Any provision of this Contract which is
prohibited, penalized or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective only to the extent of such prohibition, penalty or
unenforceability without invalidating the remaining provisions hereof, or
affecting the validity of enforceability of such provisions in another
jurisdiction of the validity or enforceability of this Contract as a whole.
This Contract set forth the entire Contract and understanding of the Parties in
respect of the transactions contemplated hereby and supersedes any and all
prior agreements, arrangements and understandings relating to the subject
matter hereof. No promise, inducement or statement of intention has been made
by either Party hereto which is not set forth in this Contract, and the Parties
hereto shall not be bound or liable for any alleged promise, inducement or
statement of intention not so set forth.
IN WITNESS WHEREOF, the Parties have duly executed this Contract in duplicate
on the 5th day of March, 1996.
NITROGEN LEASING COMPANY, LIMITED PARTNERSHIP
By: [Illegible]
----------------------------------
Title: Vice President and
Assistant Secretary
-------------------------------
Witnessed By: [Illegible]
------------------------
Title: Legal Assistant
-------------------------------
ARCADIAN TRINIDAD LIMITED
By: [Illegible]
----------------------------------
Title: Managing Director
-------------------------------
Witnessed By: [Illegible]
------------------------
Title: Company Secretary
-------------------------------
<PAGE> 99
EXHIBIT J
DESCRIPTION OF THE AMMONIA
PROJECT
DESCRIPTION OF THE PROPERTY TO BE LEASED
Ammonia Plant Project
The project is to build at the existing Arcadian complex in Trinidad a
1,850 metric tonne per day ("MTPD") ammonia plant. Ammonia will be produced as
refrigerated product going to the new atmospheric refrigerated storage tankage.
The plant will be operated by Arcadian Trinidad Limited (ATL) and will be
engineered, procured, and constructed by The M. W. Kellogg Company ("MWK").
The project will utilize MWK's 1,850 MTPD ammonia process based on the low
energy natural gas reforming process offered and licensed by MWK.
The ammonia plant will be designed to produce 1,850 MTPD ammonia at -28
degrees F for storage in non-pressurized tanks. Processing steps consist of
the following:
1. Raw Synthesis Gas Preparation - Raw synthesis gas is produced from
natural gas as follows: compression, preheating and desulfurization
is followed by steam reforming of the hydrocarbons in the natural
gas in the primary reformer furnace. Auto thermal reforming in the
secondary reformer where the remainder of the natural gas is
converted to hydrogen, carbon monoxide and carbon dioxide while
introducing sufficient process air to provide the nitrogen required
for ammonia synthesis. The carbon
<PAGE> 100
monoxide is further reformed to carbon dioxide and hydrogen in shift
reactor utilizing steam.
2. Synthesis Gas Purification - In this section, the raw synthesis gas
is processed to remove carbon dioxide and carbon monoxide yielding a
highly pure hydrogen-nitrogen rich synthesis gas. The carbon
dioxide removal is accomplished by use of an improved Benfield
Low-Heat process (licensed by VOP). Final removal of residual
carbon dioxide and carbon monoxide is accomplished by methanation.
3. Purified Synthesis Gas Compression and Ammonia Synthesis - The above
gas along with a recycled hydrogen stream is then compressed in a
single case centrifugal compressor, a recycle wheel also compresses
the loop circulating gases. The combined gases are then preheated
before going to the ammonia reactor for conversion to ammonia.
After heat recovery, the reactor effluent is cooled with cooling
water and then ammonia refrigerant to condense the ammonia from the
gases. The liquid ammonia formed is depressurized and sent to
refrigerated ammonia storage.
The plant will contain a new control room and motor control center located
at its battery limits. No new administration buildings or offices will be
required. There will be no changes to the existing urea facility or the ship
loading dock.
<PAGE> 101
All normal plant utilities, including fresh water, potable water, cooling
water, main and emergency power, and fire water will be provided as part of
this project. Such services will also involve an operating agreement with ATL.
<PAGE> 102
EXHIBIT K
PROJECT PARCEL
Tab 1
Legal Description
<PAGE> 103
FIRST SCHEDULE
DESCRIPTION OF INDUSTRIAL ESTATE
ALL AND SINGULAR that certain niece or parcel of land situate in the Ward of
Couva in the Island of Trinidad comprising ELEVEN HUNDRED AND FIFTY SIX ACRES
AND TWENTY THREE PERCHES be the same more or less and which said parcel of
land. is delineated and coloured Pink on the Plan annexed to and marked "A" on
the Deed of Conveyance dated 1Oth day of April, 1978 a.-Id registered as number
8301 of 1978.
ALL AND SINGULAR those four pieces or parcels of land situate in the Ward of
Couva in the Island of Trinidad the First Thereof comprising ONE HUNDRED SIXTY
AND SIXTY ACRES more or less and bounded on the North partly by lands of United
Molasses Company Limited partly by parcel 2 secondly herein described and
partly
<PAGE> 104
- 22 -
as are herein contained.
(c) This Lease shall be construed interpreted and performed in accordance with
the laws of the Republic of Trinidad and Tobago.
(d) Headings are inserted for convenience only and shall be ignored in the
construction and interpretation of this lease.
(e) No amendment, alterations, change or addition to this lease shall be
effective unless it is in writing and signed by the duly authorised
representatives of both parties.
IN WITNESS WHEREOF the Common Seal of POINT LISAS INDUSTRIAL PORT DEVELOPMENT
CORPORATION LIMITED was hereunto affixed the 26th day of July 1982 and the
Common Seal of FERTILIZERS OF TRINIDAD AND TOBAGO LIMITED was hereunto affixed
the 26th day of July 1982.
FIRST SCHEDULE - DESCRIPTION OF INDUSTRIAL ESTATE
ALL AND SINGULAR that certain piece or parcel of land situate in the Ward of
Couva in the Island of Trinidad comprising ELEVEN HUNDRED AND FIFTY SIX ACRES
AND TWENTY THREE PERCHES be the same more or less and which said parcel of
land is delineated and coloured Pink on the Plan annexed to and marked "A" on
the Deed of Conveyance dated 1Oth day of April, 1978 and registered as number
8301 of 1978.
ALL AND SINGULAR those four pieces or parcels of land situate in the Ward of
Couva in the Island of Trinidad the First Thereof compromising ONE HUNDRED AND
SIXTY ACRES More or less and bounded on the North partly by lands of United
Molasses Company Limited partly by parcel 2 secondly herein described and
partly
<PAGE> 105
- 23 -
by the Gulf of Paria and partly by State Lands on the East part by parcel 2
secondly herein described and partly by (Abandoned) Trinidad Government Railway
reserve and on the West partly lands of United Molasses Company limited partly
by a Mangrove being the lands fourthly herein described and partly by the
Gulf of Paria. The Second Thereof comprising ONE HUNDRED AND SEVENTY-ONE
ACRES AND TWO PERCHES more or less and bounded on the North partly by lands
formerly of Caroni Limited but now of Caroni (1975) Limited partly by an
existing road partly by lands of Federation Chemicals Limited partly by lands
of the Lessor and partly by (Abandoned) Trinidad Government Railway Reserve on
the South partly by parcel 1 hereinabove described partly by lands formerly of
Caroni Limited but now of Caroni (1975) Limited and partly by lands of Liquid
Carbonic or the East partly by (Abandoned) Trinidad Government Railway Reserve
partly by lands of Liquid Carbonic and partly by lands of the Lessor and on the
West partly by lands of Federation Chemicals Limited partly by lands formerly
of Caroni Limited but now of Caroni (1975) and partly by lands of Liquid
Carbonic or the (East partly by (Abandoned) Trinidad Government Railway
Reserve partly by lands of Liquid Carbonic and partly by lands of the. Lessor
and on the West partly by lands of Federation Chemicals Limited partly by lands
formerly of Caroni Limited but now of Caroni (1975) Limited by lands of United
Molasses Company Limited and partly by parcel 1 hereinabove described.) The
Third Thereof comprising ACRES AND THREE ROODS more or less and bounded on the
North part by (Abandoned) Trinidad Government Railway Reserve and partly by the
Southern Main Road on the South partly by (Abandoned) Trinidad Government
Railway Reserve partly by lands now or formerly of the Phoenix Park Estate and
partly by Southern Main Road on East by the Southern Main Road and on the West
<PAGE> 106
- 24 -
(Abandoned) Trinidad Government Railway Reserve and The Fourth Thereof
comprising ELEVEN ACRES TWO ROODS AND TWENTY SEVEN PERCHES more or less and
bounded on the North partly by, lands of Federation Chemicals Limited and
partly by a Road on the South partly by lands of United Molasses Limited and
partly by the Gulf of Paria on the East partly by the said Road partly by lands
of United Molasses Limited and partly by parcel 1 hereinabove firstly described
and on the West partly by lands of Federation Chemicals Limited and partly by
the Gulf of Paria.
The four above-mentioned pieces or parcels of land are shown on the plan
annexed to and described in the Deed of Conveyance dated 20th day of February,
1980 and registered as number 5756 of 1980.
<PAGE> 107
EXHIBIT L
DRAFT OF CONSTRUCTION AGREEMENTS FOR AMMONIA PROJECT
DRAFT
March 21, 1996
AGREEMENT
BETWEEN
NITROGEN LEASING COMPANY, LIMITED PARTNERSHIP
AND
KELLOGG PAN AMERICAN CORPORATION
Ammonia Production Facility
Construction and Related Services
Effective: [February 15 or 16, 1996?]
<PAGE> 108
INDEX
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
------- ----- ----
<S> <C>
1 - GENERAL SCOPE OF WORK AND DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 - PRICE/PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3 - MECHANICAL COMPLETION DEADLINE, PROGRESS REPORTS PROJECT SURETY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4 - SCOPE OF WORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5 - CERTAIN CONTRACTOR RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6 - CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7 - MATERIALS AND EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
8 - ENGINEERING, DESIGN AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
9 - INSPECTION OF WORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
10 - PROCUREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
11 - CONTRACTOR REPRESENTATIONS, WARRANTIES AND GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
12 - CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
13 - LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
14 - USE OF INFORMATION AND CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
15 - PATENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
16 - SERVICES, AND OTHER ITEMS TO BE FURNISHED BY OWNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
17 - INSURANCE,INDEMNITY AND RISK ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
18 - FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
</TABLE>
<PAGE> 109
<TABLE>
<S> <C>
19 - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
20 - ASSIGNMENTS AND SUBCONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
21 - PUBLICITY RELEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
22 - PERMITS, LICENSES & TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
23 - INDEPENDENT CONTRACTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
24 - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
25 - ACCOUNTING AND INSPECTION OF RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
26 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
ANNEX A SCOPE OF WORK
ANNEX B COORDINATION PROCEDURES
ANNEX C PERFORMANCE GUARANTEES
ANNEX D RATES
ANNEX E TERMS OF PAYMENTS
ANNEX F MECHANICAL COMPLETION
ii
<PAGE> 110
THIS AGREEMENT is executed and entered into on April _______, 1996,
but effective as of [December 21, 1995?; February 15, 16, 1996?], by and
between NITROGEN LEASING COMPANY, LIMITED PARTNERSHIP, a Delaware, U.S.A.
limited partnership with offices at North Tower, 27th Floor, World Financial
Center, 250 Vesey Street, New York, New York 10281, (hereinafter referred to as
"OWNER"), and KELLOGG PAN AMERICAN CORPORATION, a Delaware, U.S.A. corporation
with offices at 601 Jefferson Avenue, Houston, Texas 77002, [and registered as
a Trinidad and Tobago private limited company] (hereinafter referred to as
"CONTRACTOR").
WITNESSETH THAT:
WHEREAS, OWNER desires to have CONTRACTOR perform on a lump sum basis
construction, erection, procurement, project management, and other associated
services, and furnish materials, machinery and equipment necessary for the
construction, erection, start-up, and operation of a facility for the
production of anhydrous ammonia on a site in the Republic of Trinidad and
Tobago to be leased by OWNER;
WHEREAS, CONTRACTOR has represented that it is familiar with the
proposed Work (as defined below), that it possesses the requisite expertise and
resources to perform such Work, and that it desires and has the ability to
perform and procure the services and furnish and procure the labor, engineering
services, drawings, tools, equipment, machinery, technology, materials,
transportation, supervision, project management, construction services, and
other services and materials necessary to fully perform and execute such Work
in accordance with the terms hereof; and
WHEREAS, CONTRACTOR desires to undertake the performance of such
services on a lump sum basis under and pursuant to the terms and conditions
hereafter provided;
NOW THEREFORE, OWNER and CONTRACTOR, each in consideration of the
undertakings and agreements on the part of the other hereinafter contained,
hereby mutually agree as follows:
ARTICLE 1 - GENERAL SCOPE OF WORK AND DEFINITIONS
1.1 CONTRACTOR shall furnish construction and erection services and
shall furnish procurement, project management, transportation,
supervision and other services, and materials, equipment, machinery,
tools, technology, drawings, and labor, and shall otherwise perform
the Work, necessary for the construction, erection, start-up and
operation of the Facility (as defined below). The scope of
CONTRACTOR's Work is more particularly set forth in Annex A and
elsewhere in this Agreement.
1.2 When used in this Agreement, the terms set forth below shall have the
following meanings:
1
<PAGE> 111
(a) "Affiliate" of any entity shall mean any other entity directly
or indirectly controlling, controlled by or under common
control with such entity.
(b) "Agreement" shall mean this contract between OWNER and
CONTRACTOR which consists of ____________ Articles and Annexes
__________________.
(c) "Change" shall mean a change in the Work which may result in
a revision to the guarantees made by CONTRACTOR, the Target
Date or the Contract Price.
(d) "Change Order" shall mean the document referred to in Article
_____ below which describes a Change and its effects and
which is signed by OWNER and CONTRACTOR.
(e) "Complex" means those portions of the existing ammonia/urea
facilities owned or operated by Arcadian Trinidad Ammonia
Limited, Arcadian Trinidad Limited, and/or any Affiliate
thereof, located on Goodrich Bay Road in Point Lisas, Couva on
the island of Trinidad, West Indies, and associated property
areas.
(f) "Contract Price" shall have the meaning set forth in Section
____ below.
(g) "Contractor Indemnified Parties" shall mean CONTRACTOR, each
of its direct and indirect parents, subsidiaries and other
Affiliates, each of the foregoing entities' respective
successors and assignees, and each of the foregoing entities'
(including, without limitation, successors and assignees)
respective stockholders, partners, directors, officers,
employees, and representatives.
(h) "Date of Mechanical Completion" shall mean the actual calendar
date upon which the Plant and Facility achieves, and all Work
hereunder and Engineering Work under the Engineering Contract
has been completed to, Mechanical Completion, as further
specified in Annex ______ [Annex F of Engineering Contract?].
(i) "Dollar" or "dollar" or the symbol "$" shall mean United
States Dollars.
(j) _____________________ shall mean currency of Trinidad and
Tobago.
(k) "Encumbrance" shall have the meaning specified in Section
_____ hereof.
(l) "Engineering Contract" shall mean the Agreement between OWNER
and The M. W. Kellogg Company effective
________________________ , 1996, for the engineering, design,
and process design of the Facility.
2
<PAGE> 112
(m) "Engineering Contractor" shall mean The M. W. Kellogg Company,
a Delaware corporation.
(n) "Engineering Work" shall mean "Work" under the Engineering
Contract as defined therein.
(o) "Facility" shall mean the Plant plus related Offsites and
other facilities as further described in Annex A and elsewhere
herein.
(p) "Final Completion" shall mean that all Work hereunder and all
Engineering Work under the Engineering Contract shall have
been completed, and OWNER shall be in a position to issue, and
shall have issued, the written Notice of Acceptance of the
[Plant, Facility] pursuant to and as contemplated by Section
______ of the Engineering Contract.
(q) "Force Majeure" shall have the meaning set forth in Section
______ below.
(r) "ISBL" shall mean
_______________________________________________________________
______________________________________________________________.
(s) "OSBL" shall mean
_______________________________________________________________
______________________________________________________________.
(t) ["Kellogg Advanced Ammonia Process" shall mean
___________________________________________________________
___________________________________________________________
and is sometimes referred to herein as "KAAP".]
(u) "Liquidated Damages" shall mean any amount or amounts of money
which may become due hereunder by CONTRACTOR to OWNER (as
specified in Section ____) for failure to achieve the Target
Date. [CONTRACTOR and OWNER acknowledge and agree that any
such Liquidated Damages shall not constitute a penalty,
instead representing a reasonable approximation of damages
which are difficult or impossible of being calculated with
certainty at this time. It is the intent of the parties that
any such Liquidated Damages not be construed as a penalty.]
(v) "Losses" shall mean any and all costs, damages, expenses,
judgements, charges, losses and other liabilities (including,
without limitation, all reasonable legal and expert fees and
expenses and court costs) and all claims, demands, actions,
suits and other legal proceedings, regardless of the alleged
legal basis therefor or by whom asserted.
3
<PAGE> 113
(w) "Mechanical Completion" shall mean that the Work, the
Engineering Work, the Plant, and the Facility have been
sufficiently completed so that OWNER can occupy and use them
for their intended purposes, and that the tasks set forth in
Annex ____ [Annex F of Engineering Contract?] have been
performed in accordance with such annex. The specific
procedures for assessing and determining Mechanical Completion
are set forth in Annex _________. OWNER's agreement from time
to time, pursuant to Annex _______, that Mechanical
Completion has occurred, shall not limit or affect OWNER's
rights and remedies hereunder, or otherwise, or CONTRACTOR's
obligations hereunder.
(x) "Offsites" shall mean [power supply systems, water supply
systems, instrument air, water treatment systems, fresh water
cooling pumps and exchangers, demineralized water systems, sea
water cooling towers and pumps, fire water systems, and such
other equipment and items necessary to support Plant
operations].
(y) "Owner Indemnified Parties" shall mean OWNER, Arcadian
Corporation, a Delaware corporation, Arcadian Corporation, as
general partner, Arcadian Fertilizer, L.P., a Delaware limited
partnership, Arcadian Trinidad Limited, a Trinidad and Tobago
private limited company, each of their direct and indirect
parents, subsidiaries and other Affiliates, each of the
foregoing entities' respective successors and assignees, and
each of the foregoing entities' (including, without
limitation, successors and assignees) respective stockholders,
partners, directors, officers, employees, and representatives.
(z) "Plant" shall mean a facility for the production of anhydrous
ammonia having a design capacity of 1,850 metric tons per day
as further described in Annex A and elsewhere herein.
(aa) "Retainage Amount" shall have the meaning specified in Section
2.5 hereof.
(bb) "Site" shall mean the real property owned, leased or licensed
by OWNER in or near Point Lisas, Republic of Trinidad and
Tobago, upon which the Facility is to be constructed, erected
and operated, and including, without limitation, any laydown
and similar areas dedicated for use in connection with
Facility construction.
(cc) "Subcontractor" shall mean any third party, other than an
Affiliate of CONTRACTOR, which furnishes services relative to
the Work or Engineering Work under an agreement with
CONTRACTOR or Engineering Contractor. All Subcontractors must
be pre-approved by OWNER and are listed in Annex A.
4
<PAGE> 114
(dd) "Target Date" shall mean the date by which CONTRACTOR under
this Agreement, and Engineering Contractor under the
Engineering Contract, shall be required to have achieved
Mechanical Completion of the Work, the Engineering Work, the
Plant, and the Facility, and such date is February 15, 1998.
(ee) "Vendor" shall mean any third party which supplies materials
or equipment, plus any attendant services, under a purchase
order or other agreement with CONTRACTOR or Engineering
Contractor made in connection with the Work or Engineering
Work. [All such vendors must be preapproved by OWNER and are
listed in Annex A.]
(ff) "Work" shall mean the construction, erection, transportation,
shipping, loading, unloading, fabrication, assembly, project
management, expediting, inspection, supervision, scheduling,
purchasing, procurement and other associated services, and all
equipment, machinery, materials, tools, supplies, labor, and
technology, which shall be provided or procured by CONTRACTOR
hereunder, as more fully enumerated and described in Annex A
and elsewhere herein.
1.3 In the event of any conflict between the provisions of the Articles of
this Agreement and the provisions of the Annexes, the provisions of
the Articles shall prevail.
ARTICLE 2 - PRICE/PAYMENT
2.1 As full compensation for the performance of the Work hereunder and any
and all Engineering Work under the Engineering Contract, inclusive of
all Subcontractor, Vendor and other third-party fees and charges,
direct and indirect costs and fees of CONTRACTOR (and of Engineering
Contractor), and any other cost, expense, fee or charge of any nature
whatsoever (including, without limitation, those of suppliers of
services, labor, machinery, equipment, materials, tools and supplies),
OWNER shall pay the CONTRACTOR (or Engineering Contractor, as the case
may be) the total, aggregate, fixed lump sum price of $236,000,000.
Such total, fixed lump sum price shall not be subject to escalation
although it may be adjusted pursuant to Article ______ [Change Orders]
hereof. As of the execution date hereof, CONTRACTOR acknowledges the
payment by OWNER, and receipt of $___________________ of such fixed
lump sum price; and the remaining fixed lump sum price to be paid
hereunder is $___________________. [Should cost of this Contract be
segregated?]
2.2 [This concept perhaps should be in Annexes ___ and/or ___.] OWNER
shall pay CONTRACTOR progress payments, representing in each case a
portion of the fixed lump sum price described in Section 2.1 above, as
contemplated by Annex ____ hereto. Such payments shall be based on
the percentage of progress reported by
5
<PAGE> 115
CONTRACTOR as of the dates specified in Annex _____, and agreed to by
OWNER. OWNER shall be required to pay only that progress payment
amount, for each progress payment date, which is equal to the
percentage of progress that OWNER agrees has been completed;
provided, however, that if OWNER's determination of the percentage of
progress (for any progress payment other than the final progress
payment) is within _____% of the percentage of progress specified for
such progress payment date in Annex _____, then OWNER shall pay the
amount specified for such progress payment date in Annex _____.
Disputes as to percentages of progress shall be resolved as soon as
reasonably possible; provided that OWNER shall be required to pay only
those amounts representing completed progress as agreed to by OWNER.
CONTRACTOR shall submit invoices in form and accompanied by supporting
documentation reasonably satisfactory to OWNER, for each progress
payment specified in Annex ____. Subject to the terms and conditions
of this Section 2.2, OWNER shall make required payments via direct
bank wire transfer within ______ days after receipt of invoice by
OWNER.
2.3 Any payments made hereunder by OWNER shall not (i) preclude OWNER from
disputing any item or matter, including, without limitation, whether
the particular percentage of completion in question has in fact been
achieved; (ii) constitute or be construed as OWNER's acceptance of the
Plant, Facility, Work, Engineering Work or any portion thereof, or
OWNER's acknowledgment that the Work, Engineering Work or any portion
thereof has been satisfactorily completed in accordance with the terms
and conditions of this Agreement; or (iii) limit or otherwise affect
OWNER's rights and remedies hereunder or otherwise, or CONTRACTOR's
obligations hereunder.
2.4 In order to assure performance of its obligations under this
Agreement, CONTRACTOR agrees that OWNER shall retain certain amounts
from payments due CONTRACTOR hereunder. OWNER shall retain an amount
equal to ____% from each progress payment hereunder. The retained
monies shall be held in a bookkeeping account maintained by OWNER
("Retainage Account"). OWNER shall segregate the funds posted to the
Retainage Account. The amounts posted to the Retainage Account shall
bear simple interest at ______. All interest shall become part of the
Retainage Account due CONTRACTOR as provided herein. In lieu of
actual retainage, CONTRACTOR may, at CONTRACTOR's expense, post
Irrevocable Standby Letters of Credit in form and substance
satisfactory to OWNER (and its lenders), in amounts equal to _____% of
each progress payment as described above. If from time to time
CONTRACTOR fails to perform its obligations under this Agreement in
accordance with the terms and conditions hereof, OWNER shall notify
CONTRACTOR and CONTRACTOR shall promptly remedy any such failure. If
CONTRACTOR fails to promptly remedy any such failure, OWNER shall have
the right, in addition to any other rights and remedies it may have
hereunder or otherwise, to withdraw such amounts from the Retainage
Account, or draw such amounts under such letters of
6
<PAGE> 116
credit, as may be necessary to remedy any such failures. OWNER shall
also have the right to withdraw such amounts, or draw such amounts
under such letters of credit, as may be necessary to provide for the
release of any Encumbrance filed by any of CONTRACTOR's
Subcontractors, agents, suppliers, Vendors or workers in connection
with the Work. If retainage is used, CONTRACTOR shall be paid the
funds remaining in the Retainage Account following the expiration of
30 days following the later of the Date of Mechanical Completion, or
payment in full of all of CONTRACTOR's and Engineering Contractor's
Subcontractors, agents, suppliers, Vendors and workers. If such
letters of credit are used, letters of credit shall remain in effect
until the later of the two events referenced immediately above.
ARTICLE 3 - MECHANICAL COMPLETION DEADLINE, PROGRESS REPORTS
PROJECT SURETY
3.1 CONTRACTOR shall commence the Work promptly upon the effective date of
this Agreement.
3.2 Except to the extent a delay is caused by the occurrence of a Force
Majeure event pursuant to and as contemplated by Section _________ ,
and except for delays contemplated by Section ________[Change Orders],
all Work, Construction Work, the Plant, and the Facility shall be
Mechanically Complete (i.e., shall have achieved Mechanical
Completion) no later than the Target Date, February 15, 1998.
3.3 To the extent CONTRACTOR fails to achieve the Target Date, OWNER shall
be entitled to Liquidated Damages in accordance with the following
schedule. To the extent CONTRACTOR achieves Mechanical Completion in
advance of the Target Date, CONTRACTOR shall be entitled to a bonus in
accordance with the following schedule:
<TABLE>
<CAPTION>
Number of days Amount
early or late per day
------------- -------
<S> <C>
15 or less zero
16-45 $50,000
46-60 $75,000
</TABLE>
The maximum bonus payable and the maximum amount of Liquidated
Damages payable (subject to the proviso below) hereunder shall be
$2,625,000. OWNER's receipt of Liquidated Damages shall be in lieu of
any other claims pursuant to Sections 3.2 and 3.3; provided, however,
that in the event the Target Date is missed by 61 or
7
<PAGE> 117
more days, and such delay is attributable to CONTRACTOR's willful
failure to perform the Work or Engineering Contractor's willful
failure to perform the Engineering Work, such limitation shall not
apply and OWNER shall be entitled to pursue any and all rights and
remedies hereunder, under the Engineering Contract or otherwise.
3.4 CONTRACTOR shall issue to OWNER monthly progress reports no later than
the tenth day following the end of the month in respect of which such
report is prepared, detailing the progress made by CONTRACTOR during
the preceding month toward the achievement of the Target Date. The
reports shall include, but shall not be limited to, the following:
1. A description of any and all delays which CONTRACTOR
anticipates.
2. An updated schedule.
3. A statement of the CONTRACTOR's assessment of the percentage
of construction, erection, procurement, delivery of equipment
and materials, and other matters which are complete.
4. A narrative of the activities conducted during the month,
including action items and problems.
3.5 In lieu of providing a performance and payment bond, contemporaneously
with the execution hereof, CONTRACTOR shall deliver to OWNER a
guaranty of its parent, Dresser Industries, Inc., a Delaware
corporation, guaranteeing that CONTRACTOR will faithfully perform
promptly and with due diligence all of the terms and conditions of
this Agreement on its part to be performed, including all of the
undertakings, guarantees, warranties, obligations and liabilities of
CONTRACTOR or of any Subcontractor, supplier or Vendor of CONTRACTOR,
protecting OWNER against Losses by reason of the breach of or default
in the performance of any such undertakings, guarantees, warranties or
obligations, and protecting OWNER against all claims and Encumbrances
for the payment of sums for labor, services and materials provided in
connection with the Work. Such guaranty shall remain in effect at
least until the expiration of all warranty periods provided for under
Article _______ hereof [Engineering Contract], and shall apply to all
matters (otherwise covered by such guaranty) of which notice has been
provided to CONTRACTOR prior to the expiration of such guaranty.
8
<PAGE> 118
ARTICLE 4 - SCOPE OF WORK
4.1 The Scope of Work, attached hereto as [Annex A] and as otherwise
described herein, specifically enumerates and describes the Work to be
performed by CONTRACTOR under this Agreement; provided, however, that
the Work (and hence the Scope of Work) shall include, without
limitation, such additional services and items as may be necessary or
appropriate to enable CONTRACTOR to perform its obligations under this
Agreement in accordance with the terms and conditions hereof. It is
understood and agreed that the Engineering Work (which shall be
performed entirely within the United States) shall be performed by the
Engineering Contractor. Portions of the fixed lump sum price
described in Article 2 hereof shall be paid to Engineering Contractor
to reflect its performance of such Engineering Work.
ARTICLE 5 - CERTAIN CONTRACTOR RESPONSIBILITIES
5.1 CONTRACTOR shall perform the Work in a good, expeditious, workmanlike,
safe, efficient and lawful manner, and in conformity with sound,
recognized, and generally accepted industry, engineering and
construction standards and practices for projects similar in scope and
size to this project, and otherwise in accordance with the terms and
conditions of this Agreement.
5.2 In the performance of the Work, CONTRACTOR shall (and shall cause its
Subcontractors, Vendors and agents to) comply with (i) all applicable
laws, rules, regulations, orders, consents and decrees of any
governmental authority with jurisdiction; and (ii) any and all rules,
regulations, policies and procedures governing conduct at the Complex,
including, without limitation, "Safety Rules and Regulations for
Contractors", copies of which have been provided to CONTRACTOR
(collectively, "Complex Rules and Regulations").
5.3 CONTRACTOR represents and warrants to OWNER, and covenants and agrees,
that the Plant, the Facility, the Work, and the Engineering Work shall
be at the time of Final Completion free and clear of any and all
liens, security interests, charges, and encumbrances (collectively,
"Encumbrances").
5.4 Risk of loss of and damage to the Work, the Engineering Work, the
Plant, and the Facility, will be and remain with Engineering
Contractor until the Date of Mechanical Completion of all Work, the
Engineering Work, the Plant, and the Facility; provided that the
insurance policies and coverages required under Article _______ shall
(except as provided therein) remain in effect until Final Completion,
and shall continue to cover such Losses as provided in such policies.
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5.5 Except as provided in Section _______ of the Engineering Contract
[Kellogg proprietary data], all drawings, specifications, designs,
engineering data and studies, process data and studies, intellectual
property (including all patentable and copyrightable materials), and
any other data, materials or items which are generated, produced or
created as part of or in connection with the Work, shall be the sole
and exclusive property of OWNER. CONTRACTOR shall (and shall cause
its Subcontractors, Vendors and agents to) (i) provide all such
property (and all copies and other reproductions thereof) to OWNER by
the date of Final Completion; and (ii) execute such instruments as
OWNER may reasonably require to evidence OWNER's ownership of such
property. Neither CONTRACTOR nor its Subcontractors, Vendors or
agents may retain, use, or otherwise exercise dominion over any such
property; provided that CONTRACTOR may retain a complete set of Work
drawings and other Work documents as necessary for archives, in order
to provide OWNER with information and advice in the future concerning
the Work performed under this Agreement. Any such retained drawings
and documents shall be subject to the confidentiality provisions set
forth in Section _______[Contractor confidentiality obligations], and
CONTRACTOR may not use such drawings and documents in the performance
of services for other clients.
5.6 While performing Work at the Site, CONTRACTOR shall (and shall cause
its Subcontractors and agents to) at all times keep its/their work
areas as free from waste material and rubbish as reasonably possible.
With respect to Work conducted at the Site, CONTRACTOR shall remove
and dispose of all waste materials and rubbish generated in connection
with the Work as soon as reasonably possible after the generation
thereof by CONTRACTOR or its Subcontractors. Further, as soon as
practicable after Final Completion, CONTRACTOR shall remove (or cause
to be removed) all of its and its Subcontractors' equipment and
materials and any remaining waste material and rubbish generated in
connection with the Work from the Complex, and shall return any Work
areas to the general condition existing prior to the performance of
the Work.
5.7 CONTRACTOR shall (and shall cause its Subcontractors and agents to)
take all reasonable steps to prevent the release to the environment
of, the contamination of the environment with, and exposure to,
pollutants, contaminants, or hazardous or toxic substances, materials
or wastes. In the event that any environmental contamination results
from performance of the Work at the Site, CONTRACTOR shall (after
notice to and approval of OWNER) remediate such contamination as
promptly as possible (restoring any such contaminated media to the
condition existing prior to the commencement of Work) in accordance
with all applicable laws, rules, regulations and orders, and Complex
Rules and Regulations. All solid and liquid wastes, and hazardous or
toxic substances or materials introduced or generated by CONTRACTOR or
its Subcontractors or agents (e.g. solvents, cleaners, petroleum
products, waste oils, etc.) shall be handled, disposed of or otherwise
removed from the
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Site and Complex in full compliance with all applicable laws, rules,
regulations and orders of any governmental authority with
jurisdiction. OWNER reserves the right to suspend the Work, or any
portion thereof, if, in its sole discretion, it considers CONTRACTOR's
actions (or those of its agents or subcontractors) to be
environmentally irresponsible.
5.8 While on property which constitutes or includes the Site or Complex,
CONTRACTOR's employees, Subcontractors and agents, and their
employees, shall confine themselves to areas designated by OWNER.
CONTRACTOR agrees to place and shall require that its Subcontractors
and agents and their employees place the highest importance on safety
and environmental responsibility and exercise all reasonable care
during the prosecution of the Work.
5.9 CONTRACTOR and CONTRACTOR's employees, agents, Subcontractors and
their employees will be subject to any and all security rules and
regulations, badge and pass requirements (including vehicle
inspections), and safety programs and procedures (including, without
limitation, Complex Rules and Regulations) that may be in effect at
the Complex. CONTRACTOR shall be responsible for the safety of its
employees, Subcontractors, and agents and their employees, and shall
take (and cause its agents and Subcontractors to take) all reasonable
actions and precautions (in connection with the prosecution of the
Work) to provide for the safety of persons and the protection of
property in the areas where Work is being performed under CONTRACTOR's
or any Subcontractor's control. CONTRACTOR shall initiate and
maintain all safety precautions and programs necessary to comply with
applicable health and safety laws, rules and regulations (whether
federal, state, international or otherwise), and with Complex Rules
and Regulations concerning health and safety. Further, CONTRACTOR
will cause its agents and employees (and those of its Subcontractors
and agents) to attend all safety orientation and training sessions
required under Complex Rules and Regulations prior to the commencement
of Work at the Complex. OWNER reserves the right to suspend any
portion of Work if, in its sole discretion, it considers CONTRACTOR's
actions to be unsafe.
5.10 In the event of any emergency endangering life, health, safety or
property related to and during the prosecution of Work at the Site,
CONTRACTOR shall take all actions as may be reasonably necessary to
prevent, avoid or mitigate injury, damage or loss and shall, as soon
as possible, report any such incidents, including CONTRACTOR's
response thereto, to OWNER. If, in the opinion of the OWNER,
CONTRACTOR has failed to take sufficient precautions for the safety of
workers or the public or the protection of the Work, Plant, Facility,
Complex, or other property constituting or including the Complex,
creating, in the sole opinion of OWNER, an emergency requiring
immediate action, then the OWNER, after notice to CONTRACTOR, may
cause such sufficient precautions to be taken or provide such
protection. The taking or provision of any such precautions or
protection by OWNER shall be for the account
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of CONTRACTOR and CONTRACTOR shall reimburse OWNER for the cost
thereof.
5.11 Although OWNER does not seek nor intend to approve or control
CONTRACTOR's (or its subcontractors' or agents') selection of
employees assigned to the Work, OWNER shall have the right to
disapprove and require the removal from the Work being prosecuted at
the Site of any employee of CONTRACTOR (or any of its Subcontractors
or agents) who, in OWNER's sole opinion, is incompetent, careless,
unqualified, or guilty of violation of Site Rules and Regulations.
Any employee of CONTRACTOR or any Subcontractor or agent testing
positive for controlled substances or alcohol abuse shall be removed
from the project. Implementation of a controlled substance and alcohol
abuse screening and check policy will be at the discretion of
CONTRACTOR, including frequency and limitations for determining
positive results and actual interpretations of testing results;
provided, however, that CONTRACTOR shall (and shall cause its
Subcontractors and agents to) institute and maintain those controlled
substance and alcohol screening and check procedures as may be
necessary to comply with applicable laws, rules and regulations and
Complex Rules and Regulations.
5.12 CONTRACTOR's Project Manager and other designated key personnel,
including construction manager, shall be mutually agreed upon by
CONTRACTOR and OWNER before starting the Work.
5.13 CONTRACTOR shall require all of its employees, agents and
Subcontractors and their employees to have all required passports,
visas, work permits or other necessary documentation to perform any of
the Work.
ARTICLE 6 - CONSTRUCTION
6.1 Without limiting the generality of Sections 1.1, 1.2(ff) [Work
definition], Article 4 and [Annex A], CONTRACTOR shall construct and
erect the Facility on the Site, and shall perform all related Work
for, and required to construct, erect, start-up and operate the
Facility, all in accordance with the terms and conditions of this
Agreement (including, without limitation, Annex A), the Engineering
Work, and the procedures, plans, designs, drawings and specifications
to be prepared as part of the Work. Except as otherwise provided in
Article ___ below, CONTRACTOR shall furnish all superintendence,
labor, construction tools, erection equipment (including portable
fire-fighting equipment during construction), construction supplies,
temporary offices and storage facilities, and other services and items
required for such services.
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ARTICLE 7 - MATERIALS AND EQUIPMENT
7.1 Without limiting the generality of Sections 1.1, 1.2(ff) [Work
definition], Article 4 and Annex A, CONTRACTOR shall procure and
furnish all required materials, machinery, and equipment (?including
operating equipment) for the Facility as more particularly set forth
in Annex A and which are supplied from sources in the Republic of
Trinidad and Tobago, except for those materials, machinery and
equipment which OWNER agrees to furnish as provided in Article ____
[Owner responsibilities] below, and Annex A.
7.2 CONTRACTOR shall inspect, expedite and arrange shipment for all
materials, machinery and equipment (?including operating equipment) in
accordance with CONTRACTOR's usual practice, which practice CONTRACTOR
represents is in accordance with standard industry and professional
practice. CONTRACTOR shall check, receive and maintain all such items
received at the Site, together with all materials and operating
equipment shipped to the Site under the Engineering Contract.
ARTICLE 8 - ENGINEERING, DESIGN AND OTHER SERVICES
8.1 Engineering, process design, and design of the Facility and all other
Engineering Work shall be undertaken exclusively in the United States
by The M. W. Kellogg Company pursuant to the Engineering Contract.
8.2 CONTRACTOR shall perform support services in Trinidad and Tobago as
may be necessary for the Work and Engineering Work.
ARTICLE 9 - INSPECTION OF WORK
9.1 CONTRACTOR shall perform all tests and inspections of the Work, the
Engineering Work, Plant, and the Facility, and all components of any
thereof (including, without limitation, mechanical and operational
tests and inspections) necessary to assure that the Work, the
Engineering Work, the Plant, and the Facility conform to all
requirements, standards and specifications of this Agreement.
Complete records of all CONTRACTOR tests and inspections shall be
maintained and delivered to OWNER at the time(s) such tests or
inspections are completed.
9.2 All Work, the Plant, and the Facility (and all components thereof)
shall be subject to inspection and approval by OWNER from time to time
and at any and all times (at its expense), at such locations as may be
necessary for the performance of the Work (including, without
limitation, point of manufacture); provided, however, that OWNER shall
not interfere with CONTRACTOR's own inspection procedures.
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Further, OWNER shall cooperate with CONTRACTOR in conducting its
inspections so that extra expense and delay to CONTRACTOR are avoided.
CONTRACTOR shall provide OWNER and its representatives unrestricted
access to the Work, the Plant, and the Facility (and all components
thereof) for the purposes specified above, and for any other purpose;
provided that CONTRACTOR may provide (and OWNER and its
representatives shall accept) an escort or other reasonable safety
measures which CONTRACTOR deems necessary or advisable. CONTRACTOR
shall also promptly provide all information requested by OWNER or its
representatives with respect to the Work, Plant, or Facility. Any
inspection or failure to inspect by OWNER shall not limit or otherwise
affect any obligations of CONTRACTOR under this Agreement, or any
rights and remedies of OWNER hereunder or otherwise. If upon
inspection, OWNER determines that any part of the Work, Plant, or
Facility does not meet, or has not been performed in accordance with,
the standards, requirements, specifications or covenants set forth in
this Agreement, then CONTRACTOR shall promptly remedy or replace any
such defective Work at its sole risk, cost and expense.
ARTICLE 10 - PROCUREMENT
10.1 Without limiting the generality of Sections 1.1, 1.2(ff)[Work
definition], Article 4 and Annex A, CONTRACTOR shall be responsible
for providing or procuring all services, labor, tools, equipment,
machinery, materials, supplies, and other items necessary or
appropriate for the performance of the Work.
10.2 CONTRACTOR may subcontract portions of the Work to Subcontractors
designated in Annex A; provided that (i) CONTRACTOR shall remain
responsible for the performance of the Work in accordance with the
terms and conditions of this Agreement; and (ii) OWNER shall not have
any obligations under subcontracts entered into by CONTRACTOR.
CONTRACTOR shall be solely responsible for the engagement, management
and payment of any such Subcontractors. CONTRACTOR shall pay such
Subcontractors all amounts owed when due.
10.3 CONTRACTOR shall be solely responsible for providing or procuring all
tools, equipment, machinery, materials, supplies and other items
necessary or appropriate for the performance of the Work. CONTRACTOR
may procure such items from reputable Vendors and suppliers [Vendors
listed in Annex A? Approval by OWNER?]; provided that (i) CONTRACTOR
shall remain responsible for the performance of the Work in accordance
with the terms and conditions of this Agreement; and (ii) OWNER shall
not have any obligations under contracts or purchase orders entered
into by CONTRACTOR. [CONTRACTOR shall be solely responsible for the
[selection], management and payment of such Vendors and suppliers.]
CONTRACTOR shall pay such Vendors and suppliers all amounts owed
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when due. OWNER shall have sole and exclusive title to any and all
tools, equipment, machinery, materials, supplies, and items which
become part of the Plant or Facility. CONTRACTOR will execute or
cause to be executed such instruments as OWNER may reasonably request
to evidence OWNER's title to such items, and shall take such actions
as may be necessary to have such items transferred to OWNER free and
clear of any and all Encumbrances.
ARTICLE 11 - CONTRACTOR REPRESENTATIONS, WARRANTIES
AND GUARANTEES
11.1 Construction/Erection. CONTRACTOR represents, warrants and guarantees
that the construction and erection of the Plant and the Facility, and
any other Work hereunder, shall be performed in accordance with, and
shall comply and be consistent with, sound, recognized and generally
accepted construction and engineering standards and practices, all
applicable codes, standards and governing authorities, and the other
requirements of this Agreement. If at any time within one (1) year
after the Date of Mechanical Completion, any defect in the
construction, erection or other Work or other breach of this warranty
is discovered by OWNER, OWNER shall promptly notify CONTRACTOR
thereof, and CONTRACTOR shall promptly remedy and correct any such
defects or breaches (including any associated equipment or machinery
failures) at its sole risk, cost and expense. Without limiting the
generality of the foregoing, to the extent any such defect or breach
results in a reduction in the Plant's [Facility's] performance level
demonstrated pursuant to Article 12 and Annex C of the Engineering
Contract, CONTRACTOR shall restore (or cause to be restored) such
demonstrated performance level at its sole risk, cost and expense.
11.2 Material and Workmanship. CONTRACTOR represents, warrants and
guarantees all equipment, machinery, parts, materials, supplies and
other items supplied, procured or specified by CONTRACTOR or any
Vendor or Subcontractor, and all workmanship (including field
workmanship), labor and services furnished in connection with the Work
(whether by CONTRACTOR or any Subcontractor) against defects (latent
or patent) in materials or workmanship, or otherwise, for a period of
one (1) year after the Date of Mechanical Completion. If at any time
during the warranty period, OWNER discovers any defect in such
equipment . . . materials, etc. or workmanship, or if OWNER determines
that such equipment . . . materials, etc. or workmanship do not
otherwise comply with the requirements of this Agreement, OWNER shall
promptly notify CONTRACTOR thereof, and CONTRACTOR shall [subject to
the limitations set forth below?] remedy and correct any such defects
to the reasonable satisfaction of OWNER by repairing or replacing the
defective equipment . . . materials, etc. or workmanship at
CONTRACTOR's sole risk, cost and expense. Without limiting the
generality of the foregoing, [and notwithstanding the limitations
below] to the extent any such defect results in a reduction in the
Plant's [Facility's]
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performance level demonstrated pursuant to Article 12 and Annex C of
the Engineering Contract, CONTRACTOR shall restore such demonstrated
performance level at its sole risk, cost and expense. Except with
respect to reductions in the Plant's performance level, [?CONTRACTOR
shall not be obligated to perform any of the aforesaid repairs or
replacements on each occasion upon which OWNER, after discovering
defective equipment . . . materials, etc. or workmanship, estimates
the cost of repair or replacement thereof to be [and the cost actually
is] ____________________ thousand U.S. Dollars (US$______________) or
less; provided that in the event the cost of such repairs or
replacements in the aggregate equal $_____________, CONTRACTOR shall
be obligated for any further repairs or replacements. Subject to the
preceding proviso, on each such occasion OWNER shall be responsible
for such repair or replacement and shall bear the cost thereof. If
OWNER estimates the cost of a repair or replacement to be in excess of
_________________ thousand U.S. Dollars (US$____________) and
CONTRACTOR performs the same and the cost therefor is less than such
amount, OWNER shall pay to CONTRACTOR the costs of such repair or
replacement within thirty (30) days after OWNER receives CONTRACTOR's
invoice therefor. For the purposes of this Section 11.2 the words
[?"cost" or "costs" shall mean those amounts which would have been
paid by OWNER to CONTRACTOR for the aforesaid repairs or replacements
had they been made pursuant to the costs, rates, charges and
allowances set forth in Annex D.?] CONTRACTOR shall not be obligated
to repair or replace any such workmanship which becomes defective as
the result of improper operation or maintenance or of operating
conditions more severe than those contemplated in the original design
for the Work [set forth in __________].
11.3 Subcontractors and Vendors. CONTRACTOR shall secure or cause its
Subcontractors to secure the most favorable industry-standard
warranties and guarantees possible extending over the longest possible
time obtainable from Subcontractors and Vendors with respect to
services, equipment, machinery, parts, materials, supplies and other
items [technology?] furnished by them. CONTRACTOR will request, at a
minimum, that Vendors of equipment, machinery, materials, etc., and
service providers, furnish a guarantee against defects in materials
and workmanship of one (1) year after initial use or eighteen (18)
months after shipping. All such warranties shall be for the benefit
of CONTRACTOR and OWNER.
11.4 THE ONLY WARRANTIES APPLICABLE TO THE WORK PERFORMED PURSUANT TO THIS
AGREEMENT ARE THOSE SET FORTH IN THIS AGREEMENT. CONTRACTOR EXPRESSLY
DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR FITNESS FOR A PARTICULAR USE.
11.5 In no event shall either party or its Affiliates be liable to the
other or its Affiliates, either individually or jointly and
irrespective of whether alleged to be due to negligence (including the
sole negligence of any party or any Affiliate), breach of
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contract, strict liability or any other legal theory, for special,
punitive or consequential damages (including lost production, lost
profits, and lost revenues) except to the extent such damages are
attributable to a party's (or its Affiliate's) intentional conduct;
provided that such damages shall be recoverable hereunder to the
extent included in damages asserted pursuant to a Third Party Claim
[defined in indemnity section] with respect to which a party is
entitled to indemnity hereunder.
ARTICLE 12 - CHANGES
12.1 All Work shall be in accordance with this Agreement, and it is the
intent of the parties that Changes be avoided to the extent
practicable. To this end, the correction by CONTRACTOR (with OWNER's
prior approval) of [normal errors and minor changes [What does this
mean?]]made by CONTRACTOR in the course of the Work shall not be
deemed to constitute a Change.
12.2 At any time during the course of the Work, OWNER may modify the Scope
of Work as set forth in this Agreement, by written notice to
CONTRACTOR. Without limiting the generality of the foregoing, OWNER
may make changes in drawings, designs and specifications, issue
additional instructions, require additional work, or direct the
omission of Work previously ordered. When a Change is under
consideration by OWNER, OWNER shall so notify CONTRACTOR. OWNER may
request a "scoping estimate" (one which requires no more than five
manhours to prepare) before requesting a detailed cost estimate. If
OWNER wishes to consider the proposed Change after reviewing the
scoping estimate, OWNER will request a detailed cost estimate.
CONTRACTOR shall then prepare and submit a detailed cost estimate
(including, if deemed necessary by CONTRACTOR, revisions to the Target
Date and to any of CONTRACTOR's guarantees which will result
therefrom). Once the parties mutually agree on the detailed cost
estimate, they shall confirm their agreement in writing by means of a
Change Order. OWNER shall compensate CONTRACTOR for preparing all
estimates made at OWNER's request.
12.3 If any of the events set forth below occur and CONTRACTOR determines
that the result thereof is or will be a Change, CONTRACTOR shall
promptly submit in writing to OWNER its proposed revision to the
Contract Price together with the effect, if any, predicted by
CONTRACTOR on the Target Date or CONTRACTOR's guarantees. Once the
parties mutually agree on such items, they shall promptly thereafter
agree in writing upon a Change Order. Such events are:
(a) a change in the basic design data or Site data (including
soils, feedstock, etc.) from that set forth in this Agreement;
(b) suspension of Work by OWNER [provisions governing suspension?];
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(c) Force Majeure events preventing CONTRACTOR's performance
hereunder; provided that delays attributable to causes other
than Force Majeure events affecting Subcontractors and/or
Vendors directly shall not constitute Force Majeure;
(d) [VAT?] [?Any change in Trinidad taxes?]; or
(e) in connection with the Work, any act, or failure to act, on
the part of OWNER or any Affiliate of OWNER or any entity in
privity of contract with OWNER or any entity exclusively under
OWNER's direction or control.
12.4 CONTRACTOR shall not proceed with any Change until a Change Order has
been signed by the parties.
12.5 Except to the extent agreed otherwise pursuant to a Change Order, the
compensation payable to CONTRACTOR for preparing estimates pursuant to
this Article 13, shall be determined in accordance with Annex _____.
ARTICLE 13 - LIENS
13.1 CONTRACTOR shall immediately pay and discharge or shall provide
security sufficient and satisfactory in itself to pay and discharge
any obligation CONTRACTOR or any of its Subcontractors or Vendors may
have, in respect of which any Encumbrance may be levied or is levied
against the Work, the Engineering Work, the Plant, the Facility, the
Site, or the Owner Indemnified Parties. CONTRACTOR shall indemnify,
defend and hold harmless the Owner Indemnified Parties from and
against any such Encumbrance and any and all associated Losses. If
at any time OWNER shall receive notice or information of the recording
of any such Encumbrance or any evidence of any such Encumbrance which,
if valid, would constitute a legal charge upon property of OWNER , the
Plant, the Facility or any part thereof, it shall forthwith
communicate the receipt of such notice, information or evidence to
CONTRACTOR.
13.2 If any such Encumbrance remains unsatisfied after the Date of
Mechanical Completion, CONTRACTOR shall promptly refund to OWNER all
amounts that OWNER may be compelled to pay in discharging any such
Encumbrance.
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ARTICLE 14 - USE OF INFORMATION AND CONFIDENTIALITY
[Provisions with respect to Kellogg proprietary data deleted because covered by
off-shore contract]
14.1 [This may need to be expanded] CONTRACTOR agrees to hold in
confidence any technical or commercial information supplied to it by
OWNER or any agent of OWNER in connection with the design,
construction, start-up, operation or maintenance of the Facility, or
otherwise, which information is identified by such OWNER or any agent
of OWNER in writing to be confidential or proprietary at or prior to
its disclosure. Said information shall remain the property of such
OWNER or agent, and CONTRACTOR shall not disclose such information to
any third party or use such information for any purpose other than
performing the Work.
14.2 The provisions of Sections 14.1 shall not apply to:
(a) any information which, at the time of disclosure, the
receiving party can show was in the public domain;
(b) any information which, after disclosure, becomes part of the
public domain by publication or otherwise, through no fault of
the receiving party;
(c) any information which the receiving party can show by
supporting documentation was in its possession at the time of
disclosure to it by the disclosing party and had not been
acquired directly or indirectly under the obligation of
confidence to the disclosing party;
(d) any information furnished to the receiving party rightfully
by a third party not under an obligation of confidentiality
to the disclosing party, provided again that the receiving
party is in compliance with any restrictions on disclosure or
limitation of use imposed by such third party;
(e) any information independently developed by employees or
consultants of the recipients or its Affiliates who have not
had access to such information; or
(f) any information required by law, rule, regulation or bona fide
legal process to be disclosed, provided that the receiving
party making such disclosure shall take all reasonable steps
to restrict, and maintain to the extent possible the
confidentiality of, such disclosure, and shall provide
reasonable notice to the other party whose information is
involved in order that such other party may take reasonable
steps to oppose the requirement of disclosure.
For the purpose of this Section 14.2, any disclosure of such
information which is specific to the operating or design conditions of
the Plant shall not be deemed to be within the
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foregoing exceptions merely because it is contained within the scope of a
broad disclosure.
ARTICLE 15 - PATENTS
15.1 Subject to the provisions of this Article 15, CONTRACTOR shall, at
its sole cost and expense, indemnify, defend and hold the Licensees
(as defined in the Engineering Contract) and Owner Indemnified Parties
harmless in respect of any and all Losses incurred in connection with
any claim, suit or proceeding based on any claim that the Work as
incorporated into the Plant, the Facility or any part of any thereof,
constitutes an infringement or violation of any patent or other
intellectual property right of a third party, including, without
limitation, infringement or violation of any copyright, trademark or
trade secret, and infringement of any patent issued in the United
States or the Republic of Trinidad and Tobago.
15.2 OWNER agrees to notify CONTRACTOR promptly in writing of any notice or
claim of infringement and/or violation as described in Section
15.1 above which is received by or brought against OWNER.
15.3 In connection with any claim described in Section 15.1 above,
CONTRACTOR reserves the right to acquire for the Licensees, at
CONTRACTOR's sole cost and expense, immunity from suit and license to
use the offending technology, which are acceptable to the Licensees.
CONTRACTOR also reserves the right, in connection with such claim, of
making such alterations of the Facility, at CONTRACTOR's sole cost
and expense, as may be required to eliminate the alleged infringement;
provided such alteration is acceptable to the Licensees and does not
prevent the Facility from being capable of normal operation, reduce
the capacity of the Facility, interfere with the Performance
Guarantees (as defined in the Engineering Contract) or performance
levels, or cause a default by the Licensees under any contract or
other obligation.
15.4 Neither CONTRACTOR nor OWNER shall settle or compromise any suit or
action described in Section 15.1 above without the written consent of
the other.
15.5 Except to the extent that substantial deviation by the Licensees from
information furnished by CONTRACTOR is the sole cause for a claim of
infringement, CONTRACTOR shall defend, indemnify and hold the
Licensees and Owner Indemnified Parties harmless from and against any
and all Losses that may be assessed in or become payable under any
decree or judgment of any court, or under any arbitral decree or
other order, including costs and expert and professional fees, with
respect to any suit or action described in Section 15.1 above.
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15.6 OWNER shall defend, indemnify and hold CONTRACTOR harmless from and
against any claim that any technology or know-how supplied to
CONTRACTOR by OWNER wrongly incorporates proprietary technical data or
infringes letters patent issued to, or otherwise infringes any other
intellectual property rights of a third party.
15.7 The provisions of Sections 15.1, 15.5 and 15.6 shall not apply to any
Vendor's or Subcontractor's wrongful use of proprietary technical data
or infringement of patents (unless caused by such Vendor's or
Subcontractor's compliance with specific design requirements imposed
by CONTRACTOR or Engineering Contractor). In the event of any such
wrongful use or infringement, CONTRACTOR and OWNER shall rely on the
provisions for indemnity against infringement and other terms
contained in applicable purchase order, subcontract or other agreement
with the Vendor or Subcontractor; provided, however, that to the
extent (i) there exists any excess liability not covered by and
discharged pursuant to the provisions contained in applicable purchase
order, subcontract or other agreements with the Vendor or
Subcontractor, and/or (ii) there are no such provisions, the
CONTRACTOR shall bear sole and complete responsibility and liability
for, and shall indemnify the Owner Indemnified Parties with respect
to, any such wrongful use or infringement.
ARTICLE 16 - SERVICES, AND OTHER ITEMS TO BE
FURNISHED BY OWNER
16.1 OWNER shall at its own expense and at such times as may be required by
CONTRACTOR for the successful and continuous prosecution of the Work:
(a) procure all necessary [priorities, allocations and
allotments?] for materials and operating equipment, and all
licenses and permits required to be obtained in the name of
the OWNER, including building and environmental operating
permits, required by governmental or regulatory authorities in
connection with the supply, erection and operation of the
Facility, not including, however, business licenses required
of CONTRACTOR;
(b) provide prior to the commencement of any field Work, a clear,
solid site for the Facility; remove all existing pipelines,
foundations and other obstructions which are overground (but
not underground) and which would interfere with the
construction and operation of the Plant; and level the Site in
accordance with CONTRACTOR's instructions; [Kellogg providing
all necessary soils reports and geotechnical recommendations;]
(c) furnish CONTRACTOR with the proper bench-marks, elevations and
liens for locating the Facility, and stake out and install
monuments locating the battery limits lines;
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(d) furnish clear, level, solid, reasonably self-draining ground
of adequate size, as part of the Site, (i) for the unloading,
moving and storage of materials and operating equipment, (ii)
for temporary construction buildings, and (iii) a parking lot
for the use of CONTRACTOR's and Subcontractors' employees;
(e) subject to the terms and conditions of this Agreement,
including Article _____ [certain Contractor responsibilities],
furnish unrestricted access to the Site and to the storage
area specified in (d) above, and allow CONTRACTOR to unload
all materials and operating equipment therefrom;
(f) furnish and maintain a clear solid roadway connecting the
Site, storage area and parking area with a main public
highway;
(g) furnish a site for the disposal of spoil within [one-half
(1/2) mile] of the Site;
(h) furnish at the Site all necessary fill (to the extent then
available at the Site) as requested by CONTRACTOR;
(i) supply an adequate quantity of drinking water at the battery
limits of the Plant and the Facility;
(j) furnish for construction purposes water, steam, gas and
electricity all in sufficient quantities and of proper
character, at the battery limits at locations specified by
CONTRACTOR and agreed to by OWNER;
(k) provide such intra-Facility telephone lines as reasonably may
be required by CONTRACTOR;
(l) provide information to CONTRACTOR concerning location of
connections for utilities, product lines, drainage, etc.;
(m) during active construction furnish water at the Site in
adequate quantity and under sufficient pressure for
fire-fighting assistance within the battery limits of the
Facility and provide watchmen if required by OWNER;
(n) furnish only tie-in connections for the connection at the
battery limits of all piping built by CONTRACTOR. The
foregoing tie-in connections shall include those for service
lines for water, oil, steam, fuel, gas, flaring and sewers;
(o) furnish all utilities, fuel and feedstock in sufficient
quantities and of the proper character for the testing of
operating equipment and for operation of the Plant, and
connect the electric power to the panel board;
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(p) furnish and install all necessary charging stock, catalysts,
(except for the first charge of catalyst which is
CONTRACTOR's responsibility), chemicals, lubricants and
supplies (except for the first charge of Benfield chemicals,
lubricants, and supplies, which is CONTRACTOR's
responsibility) required for the starting and operation of the
Facility in the quantity and of the kind and quality necessary
and which do not contain impurities in such quantities as to
interfere with the proper operation of the Facility. [?Except
as otherwise specified in Annex A], CONTRACTOR shall also
supply the equipment required to introduce such charging
stock, catalysts, chemicals, lubricants and supplies into the
Facility;
(q) furnish all personnel, materials, fuel feedstock and tools
required for the start-up, testing, operation and maintenance
of the Plant beginning with the Date of Mechanical
Completion;
(r) furnish a classification of accounts in accordance with
OWNER's established accounting procedure for the guidance of
CONTRACTOR in preparing final cost distributions; and
(s) issue all necessary hot-work permits promptly.
ARTICLE 17 - INSURANCE,
INDEMNITY AND RISK ALLOCATION
17.1 CONTRACTOR and Engineering Contractor shall have care, custody and
control of, and shall be solely responsible for, the Work in progress
(including, without limitation, the Plant, the Facility (or any
portion thereof), equipment, machinery, parts, materials and supplies
on the premises of CONTRACTOR, the Site or any Subcontractor or
Vendor, or in transit or in storage, which are intended for
incorporation into the Work) until the Date of Mechanical Completion.
CONTRACTOR assumes all risk of any loss or damage thereto until the
Date of Mechanical Completion. For the purpose of this Agreement,
those temporary facilities erected by CONTRACTOR at the Site which are
affixed to the Site so as to be nonportable (such as job-built
buildings, roads, security fences, electrical power polelines,
underground septic tanks, deadmen, and piping for construction
utilities) shall be deemed to be Work in progress. CONTRACTOR hereby
releases and discharges and shall defend, indemnify and hold
harmless the Owner Indemnified Parties from and against any and all
Losses arising from or related to any loss or damage as described in
the first sentence of this Section 17.1, irrespective of any
negligence, including sole or concurrent negligence, on the part of
any Owner Indemnified Party.
17.2 With respect to the machinery, tools, equipment, materials and other
property not intended to become a permanent part of the Facility and
which are supplied or used by
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CONTRACTOR, Engineering Contractor, or any Subcontractor or Vendor
thereof, CONTRACTOR assumes all risk of any loss or damage thereto.
CONTRACTOR hereby releases and discharges and shall defend, indemnify
and hold harmless the Owner Indemnified Parties from and against any
and all Losses arising from orrelated to any such loss or damage,
irrespective of any negligence, including sole or concurrent
negligence, on the part of any Owner Indemnified Party.
17.3 With respect to any and all claims of loss or damage to any property
owned, leased, operated, used or controlled by any Owner Indemnified
Party other than the Facility at or within
_____________________________________ from the Site and any property
owned, leased, operated, used or controlled by any Affiliate of
Arcadian Trinidad Limited, and with respect to all occurrences and
circumstances prior to the Date of Mechanical Completion [completed
operations insurance?], CONTRACTOR hereby releases and discharges and
shall defend, indemnify and hold harmless the Owner Indemnified
Parties from and against any and all Losses arising from or related to
any such claims, occurrences or circumstances which are alleged to
arise from any act or omission on the part of CONTRACTOR, Engineering
Contractor, any Subcontractor or Vendor thereof, or any Owner
Indemnified Party, irrespective of any negligence, including sole or
concurrent negligence, on the part of any Owner Indemnified Party;
provided, however, that the aggregate amount of liability assumed by
CONTRACTOR under this sentence shall in no event exceed
______________________________________ (US$_______________ _). [The
following may be inconsistent with Arcadian's proposal that Kellogg
keep completed operations insurance in place for 3 years after
acceptance.] For all other claims regarding the property described in
the preceding sentence of this Section [15.3] and to the extent such
claims are not assumed by CONTRACTOR as aforesaid, OWNER hereby
releases CONTRACTOR from, and agrees to defend, indemnify and hold
CONTRACTOR harmless against all such claims.
17.4 [The following may be inconsistent with Arcadian's proposal that
Kellogg keep completed operations insurance in place for 3 years after
acceptance.] With respect to the Facility and for all occurrences on
or after the Date of Mechanical Completion, OWNER hereby assumes the
risk of all loss or damage thereto and releases CONTRACTOR from, and
agrees to defend, indemnify and hold CONTRACTOR harmless against all
Losses arising from or directly or indirectly related to the Work,
except to the extent attributable to any act or omission of
CONTRACTOR, Engineering Contractor, or any Subcontractor or Vendor,
including, without limitation, any breach of any warranty or other
provision of this Agreement or the Engineering Contract.
17.5 CONTRACTOR hereby releases and discharges and shall indemnify, defend
and hold harmless the Owner Indemnified Parties from and against any
and all Losses arising from or related to any injury to or death of
any of CONTRACTOR's, Engineering Contractor's, or any Subcontractor or
Vendor's employees, agents, officers, representatives, licensees, or
invitees in connection with or incidental to the Work or
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the Engineering Work, irrespective of any negligence, including sole
or concurrent negligence, on the part of any Owner Indemnified Party.
17.6 With respect to products, materials, or substances (including, without
limitation, any pollutant, contaminant or hazardous or toxic
substance, material or waste) introduced to the Site by CONTRACTOR,
Engineering Contractor, or any Subcontractor or Vendor, CONTRACTOR
releases and discharges and shall defend, indemnify and hold harmless
the Owner Indemnified Parties from and against any and all Losses
arising from or related to any such introduction, including, without
limitation, any failure to properly handle, store or dispose of any
such products, materials, substances, etc., irrespective of any
negligence, including sole or concurrent negligence, on the part of
any Owner Indemnified Party. With respect to environmental
contamination (if any) due to the presence of any pollutant,
contaminant or hazardous or toxic substance, material or waste at the
Site, prior to the commencement of Work, OWNER hereby releases and
discharges and shall defend, indemnify and hold harmless the
Contractor Indemnified Parties from and against any and all Losses
arising from or related to such environmental contamination,
irrespective of any negligence, including sole or concurrent
negligence, on the part of any Contractor Indemnified Party.
17.7 With respect to any and all Losses which arise from or relate to
occurrences or circumstances prior to the Date of Mechanical
Completion [expiration of completed operations coverage?] and which
are not provided for in Sections [17.1-17.6] above, CONTRACTOR
releases and discharges and shall defend, indemnify and hold harmless
the Owner Indemnified Parties therefrom, if such Losses are alleged to
arise from any act or omission on the part of OWNER, CONTRACTOR, the
Engineering Contractor, or any Subcontractor or Vendor, and
irrespective of any negligence, including sole or concurrent
negligence, on the part of any Owner Indemnified Party. [Completed
Operations proposal consistency] With respect to all such claims,
etc. as described in the preceding sentence of this Section 18.7, and
which arise from occurrences on or after [?expiration of completed
operations coverage], OWNER shall defend, indemnify and hold
CONTRACTOR harmless therefrom if such claims, etc. arise from any act
or omission on the part of OWNER or CONTRACTOR and irrespective of any
negligence, including sole or concurrent negligence, on the part of
CONTRACTOR.
17.8 The party making a claim for indemnity under this Article 17
("Indemnified Party") shall promptly notify the party obligated to
indemnify ("Indemnifying Party") of the assertion or commencement of
any claim, demand, investigation, action, suit or other legal
proceeding in respect of which indemnity is or may be sought
hereunder; provided, however, that this notice requirement shall not
apply to any claim, demand, investigation, action, suit or other legal
proceeding in which the parties are adversaries. The failure by the
Indemnified Party to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations under this Article
17, except
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to the extent, if any, that it has been prejudiced by the lack of
timely and adequate notice.
17.9 The Indemnifying Party shall have the right to assume the defense or
settlement of any third-party claim, demand, investigation, action,
suit or other legal proceeding (collectively "Third-Party Claims")
with counsel reasonably satisfactory to the Indemnified Party;
provided, however, that the Indemnifying Party shall not settle or
compromise any Third-Party Claim without the Indemnified Party's prior
written consent thereto. Notwithstanding the foregoing, (1) the
Indemnified Party shall have the right, at its option and expense, to
participate fully in the defense or settlement of any Third-Party
Claim; and (2) if the Indemnifying Party does not commence and
continuously and diligently continue to defend or seek the settlement
of any Third-Party Claim within ten (10) days after it is notified of
the assertion or commencement thereof, then (a) the Indemnified Party
shall have the right, but not the obligation, to undertake the defense
or settlement of such Third-Party Claim for the account of and at the
risk of the Indemnifying Party, and (b) the Indemnifying Party shall
be bound by any defense or settlement that the Indemnified Party may
make as to such Third-Party Claim. The Indemnified Party shall be
entitled to join the Indemnifying Party in any Third-Party Claim for
the purpose of enforcing any right of indemnity hereunder. The
Indemnified Party shall cooperate with the Indemnifying Party in the
defense or settlement of any Third- Party Claim and, at the expense of
the Indemnifying Party, shall furnish any and all non-privileged
materials in its possession and endeavor to make any and all witnesses
under its control available to the Indemnifying Party for any lawful
purpose relevant to the defense or settlement of any such Third-Party
Claim.
17.10 With respect to the performance of the Work and Engineering Work
(whether in the United States or Trinidad and Tobago), CONTRACTOR
shall obtain (as of the effective date hereof) and shall maintain at
least until Final Completion (except as provided below),the following
insurance policies and coverages:
(a) Statutory Workers' Compensation and Employer's Liability
Insurance with a limit of $1,000,000 covering all persons
employed by CONTRACTOR or Engineering Contractor on the Work
or Engineering Work during the period such persons are so
engaged.
(b) Comprehensive General Liability insurance covering, among
other things, bodily injury and property damage liability,
premises/operations, underground/explosion and collapse
hazard, product/completed operations, independent contractors,
broad form contractual (including, without limitation,
contractual liabilities assumed by Contractor under this
Agreement and by Engineering Contractor under the Engineering
Contract), and broad
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form property damage, with a minimum policy limit of US
$5,000,000 per occurrence;
(c) Comprehensive Automobile Liability Insurance on motor vehicles
owned or rented by CONTRACTOR or Engineering Contractor, or
owned or rented by CONTRACTOR's or Engineering Contractor's
employees, and used in connection with the Work or Engineering
Work, protecting CONTRACTOR and Engineering Contractor and
covering Bodily Injury Liability, for injury or death of
persons, and Property Damage Liability with a combined single
limit of $5,000,000 per occurrence [and in the aggregate?].
(d) Excess/Umbrella General Liability Insurance, including,
without limitation, contractual liability, auto liability, and
employer's liability insurance and completed operations
liability insurance, written on an occurrence basis, with
minimum limits of not less than US $25,000,000 per occurrence.
Such completed operations coverage shall remain in effect
until three (3) years after Final Completion.
17.11 OWNER shall provide "All Risk Builder's Risk" Insurance protecting the
respective interests of OWNER, CONTRACTOR and Engineering Contractor
covering physical loss or damage during the course of Work or
Engineering Work, and any materials, equipment, or supplies furnished
or procured by CONTRACTOR, Engineering Contractor, or any
Subcontractor or Vendor for the Facility while (i) in transit, (ii) in
temporary storage, (iii) at the Site awaiting erection, and (iv)
during erection until Final Completion. Such insurance shall be
maintained to cover the full value of the Facility at risk, subject
to normal exclusions. It is understood that such insurance shall not
provide coverage for machinery, tools, equipment or other property not
destined to become a permanent part of the Facility which are supplied
or used by CONTRACTOR or Engineering Contractor. Such insurance shall
name CONTRACTOR and Engineering Contractor as an additional insureds,
as their interests may appear.
17.12 CONTRACTOR shall cause all insurance policies providing coverage as
required hereunder, to be endorsed to provide for the waiver of
subrogation rights against the Additional Insureds, as defined in
Section 17.13, and their successors and assigns, and all of their
respective officers, directors, partners and employees. [All policies
and coverages required under this Agreement shall be obtained from
insurance companies rated A+10 or better by A. M. Best Company, unless
otherwise agreed.]
17.13 The insurance policies and coverages described in Section 17.10
(a)-(d) above shall name OWNER, [OWNER's general partner], Arcadian
Trinidad Ammonia Limited, a Trinidad and Tobago private limited
company, Arcadian Trinidad Limited, a Trinidad and Tobago private
limited company, Arcadian Fertilizer Corporation, a
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Delaware corporation, Arcadian Nitrogen Limited, a Trinidad and
Tobago private limited company, Arcadian Corporation, Arcadian
Fertilizer, L.P., and such other affiliated and non-affiliated
entities as Owner may designate (collectively "Additional Insureds"),
as additional insured parties. Additionally, all such liability
policies and coverages shall name Rabobank Nederland, New York Branch
(for itself and as agent for other lenders to OWNER) as additional
insured. Further, all such property damage/loss policies shall name
Rabobank Nederland, New York Branch (for itself and as agent for other
lenders to OWNER) as loss payee. All such insurance policies shall be
maintained in full force and effect until Final Completion.
Maintaining the prescribed insurance shall not relieve CONTRACTOR of
any other obligation or any liability under this Agreement; and
OWNER's rights and remedies under this Agreement (including, without
limitation, those under the indemnity provisions hereof) or otherwise,
shall not be limited or modified by the maintenance by CONTRACTOR of
the prescribed insurance, OWNER's status as an Additional Insured, or
OWNER's exercise of rights under this Article 17. The damages
limitations set forth in Section ________ [limit w/r/t adjacent
Facilities] above shall not limit, and does not apply to, the right
to receive insurance proceeds by the Additional Insureds or Rabobank
Nederland, New York Branch. All such insurance policies shall (1)
provide that they will not be canceled or allowed to lapse and their
coverages and limits will not be changed in any way without OWNER
being given written notice at least 30 days before the effective date
of any such cancellation, lapse or change; (2) be provided by
insurance companies authorized to do business in the appropriate state
or country and reasonably acceptable to OWNER; (3) otherwise be
reasonably acceptable in form and substance to OWNER. If any such
insurance policy lapses or is canceled or its coverage or limit is
changed, CONTRACTOR shall immediately replace the affected policy with
an insurance policy as called for in this Article 17; and if
CONTRACTOR does not comply with this covenant, OWNER may obtain the
replacement insurance policy and recover all premiums paid therefor
from CONTRACTOR. CONTRACTOR shall deliver to OWNER evidence of all
such insurance in the form of an insurance certificate(s); CONTRACTOR
shall provide such additional insurance certificates as OWNER may
reasonably request from time to time.
17.14 If CONTRACTOR subcontracts any part of the Work, the insurance
provisions of each subcontract shall be in accordance with
CONTRACTOR's usual practice. CONTRACTOR shall be responsible to ensure
that its Subcontractors maintain insurance as required in the
subcontracts during the course of Subcontractor's operations in
connection with the Work.
17.15 [OWNER shall provide Extended Cargo and Charter's Legal Liability
insurance at its own cost in an amount sufficient to protect the
interests of OWNER and CONTRACTOR. Such insurance shall name
CONTRACTOR as an additional insured. OWNER shall also provide Cargo
Insurance for land transportation on all
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Work items with a declared replacement value in excess of
US$1,000,000. CONTRACTOR will provide a list of cargo for each ocean
freight shipment noting each item's replacement value.] [Ship to,
bill of lading party has to be ANL.]
ARTICLE 18 - FORCE MAJEURE
18.1 In the event that either OWNER (or its agents) or CONTRACTOR is
rendered unable, wholly or in part, by force majeure, to carry out
its obligations under this Agreement, other than to make payments due
hereunder, it is agreed that upon giving notice and full particulars
of such force majeure event by telephone (confirmed in writing),
facsimile transmission or in writing to the other party, as soon as
possible after the occurrence of the cause relied upon, then the
obligations of OWNER or CONTRACTOR, so far as they are affected by
such force majeure event, shall be suspended during the continuance
of any inability so caused, but for no longer period, and such cause
so far as possible shall be remedied with all reasonable dispatch.
The term "force majeure" as employed herein shall mean acts of God,
acts, omissions to act or delays in action by any governmental
authority, strikes, lockouts or other industrial disturbances, acts
of the public enemy, wars, blockades, insurrection, riots, epidemics,
landslides, lightning, earthquakes, fire, storms, floods, washouts,
arrests and restraint of government or people, civil disturbances,
explosions, unforeseeable breakage or accident to machinery,
equipment or pipelines, and any other unforeseeable causes, similar
to the kind herein enumerated, not within the reasonable control of
affected party and which by the exercise of due diligence it is
unable to prevent or overcome.
ARTICLE 19 - TERMINATION [Suspensions]
19.1 OWNER shall have the right to terminate the Work upon not less than
ten (10) days' prior written notice to CONTRACTOR. In the event of
such termination of the Work, CONTRACTOR shall take immediate steps
to terminate the Work as quickly and efficiently as possible, both in
the field and elsewhere, and shall cancel all commitments on the best
possible terms, unless otherwise instructed in writing by OWNER. In
the event of such termination by OWNER, CONTRACTOR shall be paid by
OWNER for:
(a) all amounts due and payable to CONTRACTOR as of the effective
date of the termination;
(b) such reasonable costs which CONTRACTOR incurs for such parts of
the Work as are specifically authorized by OWNER or which are
incurred by CONTRACTOR in complying with the aforesaid notice
of termination, including a close-out period (not to exceed 4
weeks from the effective date of the notice of termination) for
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reassignment of CONTRACTOR's employees to other jobs. Such
reassignment shall be accomplished as quickly as possible;
(c) all termination and cancellation charges incurred in
terminating commitments made to Subcontractors, Vendors [and
other third parties?] for the Work prior to the effective date
of the notice of termination;
(d) the cost of nonterminable commitments [any of these?] made to
Subcontractors, Vendors, and other third parties for the Work
prior to the effective date of the notice of termination; and
(e) [reasonable costs for the travel, living and related costs
incurred by CONTRACTOR for relocating and reassigning
CONTRACTOR's personnel who are not ordinarily residents of
Trinidad and Tobago at the time of the effective date of the
notice of termination plus any severance or similar payments
required to be made by CONTRACTOR to such personnel.]
OWNER's sole liability to CONTRACTOR for termination under this
Paragraph 16.1 shall be determined in accordance with this Section
19.1 and OWNER shall not be liable for any other damages including,
without limitation, loss of anticipated profits.
[Do we need a provision for suspensions?]
19.2 If CONTRACTOR shall commit any breach of any material provision
hereof and such breach shall not be corrected within ten (10) days
after written notice from OWNER to CONTRACTOR (or, if such breach is
not correctable within ten (10) days, then within a reasonable time
after such notice, not to exceed _____), or if CONTRACTOR shall
become insolvent, either voluntary or involuntary bankruptcy or
receivership proceedings [initiated, undismissed?] or make an
assignment for the benefit of creditors, OWNER may terminate this
Agreement and complete the Work under substantially similar terms and
conditions as specified herein in any manner OWNER deems expedient,
provided that OWNER shall be required to mitigate its damages in so
completing the Work. In the event the reasonable and necessary costs
incurred by OWNER to complete the Work exceed the Contract Price,
CONTRACTOR shall be required to reimburse OWNER for such excess.
19.3 [Arcadian proposal: limit to failure to pay undisputed amounts not
covered by Letter of Credit.] If OWNER shall commit any substantial
breach of any material provision hereof, including without limitation
the payment of any sum due hereunder as and when due, and such breach
shall not be correct within ten (10) days after written notice from
OWNER to CONTRACTOR (or, if such breach is not correctable within ten
days, then within a reasonable time after such notice), or if OWNER
shall become insolvent, enter voluntary or involuntary bankruptcy or
receivership proceedings [undismissed] or make an assignment for the
benefit of creditors, CONTRACTOR may terminate this Agreement. In
the event
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of termination of this Agreement pursuant to this Paragraph 19.3,
CONTRACTOR shall receive from OWNER those amounts set forth in
Paragraph 19.1 above [?plus five percent (5%) of the unpaid portion
of the Contract Price as of the effective date of termination.?]
ARTICLE 20 - ASSIGNMENTS AND SUBCONTRACTS
20.1 OWNER may assign, convey, transfer or otherwise dispose of all or any
portion of its interest in, and/or its rights and obligations under,
this Agreement to (i) any direct or indirect parent, subsidiary or
other Affiliate of OWNER; (ii) Arcadian Corporation (its successors
and assignees), Arcadian Trinidad Limited (its successors and
assignees), or any direct or indirect parent, subsidiary or other
Affiliate of any thereof; (iii) any successor to OWNER or to any
assignee of OWNER by merger, consolidation, sale or other disposition
of all or substantially all of OWNER's or such assignee's assets, or
otherwise; and (iv) any secured lender or creditor of OWNER or any of
its successors or assignees, in each case without the consent or
approval of CONTRACTOR.
20.2 Except to the extent provided in Sections 20.3 and 20.4, CONTRACTOR
may not assign, convey, transfer or otherwise dispose of all or any
portion of its interest in, or its rights and obligations under, this
Agreement without the prior written consent of OWNER. Any such
permitted assignment shall not relieve CONTRACTOR of any of its
liabilities or obligations under this Agreement. Any assignment,
conveyance, transfer, or other disposition made or attempted in
violation of this Section 20.2 shall be void and of no force or
effect.
20.3 CONTRACTOR may have part of the Work performed by one or more of its
Affiliates; provided that CONTRACTOR shall remain liable and
responsible for the performance of such Work in accordance with the
terms and conditions of this Agreement. For all purposes of this
Agreement, including without limitation Articles
____________________________, CONTRACTOR and any such Affiliates
shall be considered one and the same entity.
20.4 CONTRACTOR may subcontract portions of the Work, as provided in
Sections ______ and _________[Subcontractors, procurement].
ARTICLE 21 - PUBLICITY RELEASES
21.1 CONTRACTOR shall make no publicity announcements regarding the Work
or CONTRACTOR's activities relating thereto without OWNER's prior
written consent.
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ARTICLE 22 - PERMITS, LICENSES & TAXES
22.1 Except for permits, licenses and other governmental authorizations
which must be obtained in the name of the OWNER, and those referenced
in Section ______ [Owner responsibilities] CONTRACTOR shall procure
all permits, licenses and other governmental authorizations that may
be needed to perform the Work, including, without limitation, Work to
be performed at the Site; provided however, that OWNER shall obtain,
or assist CONTRACTOR in obtaining, all Trinidad and Tobago
construction permits necessary for the performance of Work at the
Site.
22.2 CONTRACTOR shall be responsible for the reporting, filing, and
payment of any and all taxes, duties, charges and fees (and any
related fines, penalties, or interest) imposed directly or indirectly
by any governmental authority on the Work, the performance of the
Work, items, materials or services employed in connection with the
Work, CONTRACTOR or its Subcontractors, Vendors, employees, agents,
or servants, as a result of CONTRACTOR's performance of Work. OWNER
will be responsible for local Trinidad custom duties and import taxes
or fees (or related bonds) for all Trinidad Work related materials,
tools, supplies, consumables, and equipment. OWNER will pay
CONTRACTOR for VAT required to be imposed on the lump sum billings
for Trinidad Work invoiced to OWNER under Section _______.
22.3 CONTRACTOR and all Subcontractors shall be registered and licensed to
perform services (including the Work) in all States, if any, in which
Work is being performed hereunder, and the Republic of Trinidad and
Tobago, to the extent required by applicable laws, rules or
regulations of each jurisdiction in which Work is or may be
performed.
ARTICLE 23 - INDEPENDENT CONTRACTOR
23.1 It is expressly understood and agreed that in the performance of the
Work, CONTRACTOR is, and shall be an independent contractor, and is
and shall be solely responsible for the means, method and manner of
performing the Work, including, without limitation, the selection of
suitable tools and equipment and a sufficient number of qualified
employees and subcontractors. The selection of personnel, their
training and supervision, their hours of labor, and the compensation
and benefits to be paid to or provided such personnel shall be
determined by and shall be the responsibility of CONTRACTOR or its
Subcontractors or agents, as the case may be. Under no circumstances
shall activities or omissions of CONTRACTOR, its agents,
representatives, or Subcontractors, or CONTRACTOR's employees, be
considered those of OWNER or its agents, and in no event shall the
relationship between the parties (or any party's agent) be construed
as that of principal and agent, master and servant, joint venturers,
or employer and employee for any purpose whatsoever. As an
independent contractor, any and all personnel utilized directly or
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indirectly by CONTRACTOR shall not be deemed to be employees, agents
or representatives of OWNER or its agents. CONTRACTOR acknowledges
and agrees that it and not OWNER will make or cause to be made any
payments on behalf of CONTRACTOR, any of its agents or
Subcontractors, or any of their respective employees.
ARTICLE 24 - NOTICES
24.1 The Coordination Procedure in Annex ______ sets forth the procedures
and addresses for the routine and ongoing communications between
OWNER and CONTRACTOR.
24.2 All notices, demands, requests and other communications hereunder
(not addressed by the Coordination Procedures) shall be made in
writing and shall be delivered in person or by certified mail
(postage prepaid and return receipt requested), courier or overnight
delivery service (delivery charge prepaid), or telecopy or facsimile.
A copy of any notice sent by telecopy or facsimile shall be promptly
sent by certified mail. Any notice, demand, request or other
communication shall be effective only if and when it is received by
the addressee. For the purposes hereof, the addresses and telecopier
numbers of the parties hereto are as follows:
To Owner:
Nitrogen Leasing Company, Limited Partnership
c/o ML Leasing Equipment Corp.
Project and Lease Finance Group
250 Vesey Street
North Tower, 27th Floor
New York, New York 10281
Attention: Marjorie A. Hargrave, Vice President
Telecopier: [(212) 449-7148]
with a copy to:
Arcadian Nitrogen Limited
6750 Poplar Avenue, Suite 600
Memphis, Tennessee 38138-7419
Attention: Mr. Fritz D. Bertz, Vice President, Technical, Arcadian
Corporation
Telecopier: (901) 758-5201
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Mr.____________________________, Project Manager
Arcadian Nitrogen Limited
Goodrich Bay Road
Point Lisas, Couva
Trinidad, West Indies
Telecopier: [(809) 636-2052]
and to Contractor as follows:
The M. W. Kellogg Company [?Kellogg Pan American]
601 Jefferson Avenue
Houston, Texas 77002
Attention: Senior Vice President
Telecopier: (713) 753-5353
Any party hereto may change its address or telecopier number for the
purposes hereof by giving notice thereof to the other party in the
manner provided for herein.
ARTICLE 25 - ACCOUNTING AND INSPECTION OF RECORDS
25.1 CONTRACTOR shall maintain suitable accounting records with respect to
the Work. Upon completion of the Work, CONTRACTOR shall provide
OWNER with a distribution of the total costs thereof to OWNER
according to a classification of accounts to be furnished by OWNER.
[Fit with lump sum price?]
25.2 CONTRACTOR shall keep full and accurate records of payments for and
costs of the Work and shall preserve such records for one (1) year
after the Date of Mechanical Completion. OWNER shall have the right,
to be exercised at its discretion at all reasonable times during
regular business hours, to inspect such records insofar as may be
necessary to verify items paid for by OWNER pursuant to Annex ______.
In no event shall OWNER be entitled to audit the composition of any
specified percentages, fixed rates, fixed prices or other agreed
compensation referred to in this Agreement or any amendment or
modification thereto.
[Need to have due authorization, execution representations and warranties for
each entity--I have some short ones if you don't.]
ARTICLE 26 - MISCELLANEOUS
26.1 Entire Agreement. This Agreement (including the attached annexes)
constitutes the full understanding of the parties, a complete
allocation of risks between them, and a complete and exclusive
statement of the terms and conditions of their agreement
34
<PAGE> 144
relating to the subject matter hereof and supersedes any and all
prior negotiations, understandings and agreements, whether written or
oral, between the parties with respect thereto, including, without
limitation, any and all interim arrangements and agreements. Except
as otherwise specifically provided in this Agreement, no term,
condition, usage of trade, course of dealing or performance,
understanding or agreement purporting to modify, vary, explain or
supplement the provisions of this Agreement shall be effective or
binding on the parties, unless the same hereafter is effected in
accordance with Section 26.2.
26.2 Amendments. This Agreement may not be altered, modified, amended or
changed (other than any waiver of any provision hereof, which shall
be effective only if made in accordance with Section 26.3) in any
manner, except by a written agreement executed and delivered by all
parties. Without limiting the generality of the foregoing, this
Agreement shall not be altered, modified, amended or changed by any
terms or provisions of purchase orders, invoices or other documents
issued, delivered, and/or executed by or to CONTRACTOR or OWNER in
connection with the Work or otherwise.
26.3 Waivers. No waiver by any party of any breach of the covenants set
forth herein or any claim, right or remedy provided for hereunder and
no course of dealing shall be deemed a waiver of the same or any
other breach, claim, right or remedy, unless such waiver is in
writing and is signed by the party sought to be bound. The failure
of a party to assert or exercise any claim, right or remedy shall not
be deemed a waiver of such claim, right or remedy in the future. Any
failure by either OWNER or CONTRACTOR at any time or from time to
time to enforce or insist upon the strict keeping and/or performance
of any of the terms or conditions of this Agreement, shall not
constitute a waiver of such terms or conditions, and shall not affect
or impair such terms or conditions in any way, or the rights of OWNER
or CONTRACTOR at any time to avail itself of such remedies as it may
have for any breach or breaches of such terms or conditions.
26.4 Modification and Severability. If an arbitration tribunal or court
of competent jurisdiction declares that any provision of this
Agreement is illegal, invalid or unenforceable, then such provision
shall be modified automatically to the extent necessary to make such
provision fully legal, valid and enforceable. If such arbitration
tribunal or court does not modify any such provision as contemplated
herein, but instead declares it to be wholly illegal, invalid or
unenforceable, then such provision shall be severed from this
Agreement, and this Agreement, and the rights and obligations of the
parties hereto, shall be construed as if this Agreement did not
contain such severed provision, and this Agreement otherwise shall
remain in full force and effect.
35
<PAGE> 145
26.5 Enforceability. This Agreement shall be enforceable by and against
CONTRACTOR and OWNER and their respective successors, permitted
assignees and legal representatives.
26.6 Survival. Any and all guarantees, representations, warranties,
standards and specifications concerning the Work, Engineering Work,
Facility or Plant set forth herein shall survive (I) the inspection,
test, acceptance (including acceptance pursuant to Section _____ __
of the Engineering Contract) and payment for the Work or any portion
thereof; and (ii) for the maximum period permitted by applicable law
(subject to the duration limitations set forth in Article _____), the
termination, suspension or expiration of the Work (or any portion
thereof) or this Agreement (or any portion thereof). The provisions
of Articles ______________ [indemnity, patent, confidentiality], and
the parties' respective obligations, rights and remedies thereunder,
shall survive the termination, suspension or expiration of the Work
(or any portion thereof) or this Agreement (or any portion thereof)
for the maximum period permitted by applicable law.
26.7 Conflicts. In the event there are conflicts between the provisions
set forth in the body of this Agreement and those set forth in
annexes hereto, the provisions set forth in the body of this
Agreement shall control.
26.8 Captions. The captions contained in this Agreement are for
convenience of reference only and shall not affect in any way the
meaning, construction or scope of the provisions of this Agreement.
26.9 Joint Venture. OWNER and CONTRACTOR are not and shall not be deemed
or construed to be joint venturers, partners, agents, servants,
employees, fiduciaries or representatives of each other by virtue of
this Agreement or the performance thereof.
26.10 Equitable Remedies. The parties acknowledge and agree that
irreparable damage would occur in the event that material provisions
of this Agreement were not performed in accordance with their
specific terms and conditions or were otherwise breached.
Accordingly, in the event of any breach by a party hereto of any
covenant contained in this Agreement, the other party shall be
entitled to equitable relief (including, without limitation, specific
performance of such covenant), in addition to any and all other
remedies to which said party may be entitled hereunder or by law.
Any party's full or partial exercise of any remedy shall not preclude
any subsequent exercise by said party of the same or any other
remedy.
26.11 Cumulative Nature. The respective rights and remedies of the parties
under this Agreement shall be cumulative of, in addition to, and not
in limitation of, one another, and any and all other rights and
remedies which may be available under applicable law.
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<PAGE> 146
26.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED UNDER,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TENNESSEE,
UNITED STATES OF AMERICA, EXCLUDING THE CONFLICT-OF-LAWS PROVISIONS
THEREOF. OWNER AND CONTRACTOR SHALL SUBMIT TO THE JURISDICTION OF
THE STATE COURTS IN SHELBY COUNTY, TENNESSEE, IN CONNECTION WITH ANY
ACTION, SUIT OR OTHER LEGAL PROCEEDING ARISING FROM OR BASED ON THIS
AGREEMENT.
26.13 Multiple Counterparts. This Agreement may be executed by the parties
hereto in multiple counterparts, each of which shall be deemed an
original for all purposes, and all of which together shall constitute
one and the same instrument.
26.14 [Required by Merrill Lynch] No Recourse. OWNER's obligations
hereunder are intended to be the obligations of the limited
partnership and of the corporation which is the general partner
thereof only and no recourse for any obligation of OWNER hereunder,
or for any claim based thereon or otherwise in respect thereof, shall
be had against any limited partner of OWNER or any incorporator,
shareholder, officer or director, or affiliate, as such, past,
present or future of such corporate general partner or limited
partner or of any successor corporation to such corporate general
partner or any corporate limited partner of OWNER, or against any
direct or indirect parent corporation of such corporate general
partner or of any limited partner of OWNER or any other subsidiary or
affiliate of any such direct or indirect parent corporation or any
incorporator, shareholder, officer or director, as such, past,
present or future, of any such parent or other subsidiary or
affiliate. Nothing contained in this section shall be construed to
limit the exercise or enforcement, in accordance with the terms of
this Agreement and any other documents referred to herein, of rights
and remedies against the limited partnership or the corporate general
partner of OWNER or the assets of the limited partnership or the
corporate general partner of OWNER.
26.15 [Required by Merrill Lynch] Agent. CONTRACTOR acknowledges and
agrees that (I) all of OWNER's obligations under this Agreement shall
be performed by [ANL, as agent], and (ii) Arcadian Fertilizer, L.P.
shall be responsible to OWNER for the supervision of such agent's
performance hereunder as agent of OWNER under an Agreement for Lease,
dated as of March _____, 1996, between OWNER and Arcadian Fertilizer,
L.P.
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<PAGE> 147
IN WITNESS WHEREOF, this Agreement is executed as of the day and year first
above written but is effective as of [February 15, 16, 1996].
NITROGEN LEASING COMPANY, THE M. W. KELLOGG COMPANY
LIMITED PARTNERSHIP
By: ML Leasing Corp., General Partner
By: By:
------------------------------ ---------------------------
Name: Name:
---------------------------- -------------------------
Title: Title:
--------------------------- ------------------------
38
<PAGE> 148
DRAFT
March 20, 1996
AGREEMENT
BETWEEN
NITROGEN LEASING COMPANY, LIMITED PARTNERSHIP
AND
THE M. W. KELLOGG COMPANY
Ammonia Production Facility
Services Outside Trinidad
and Tobago
Effective: [December 21, 1995--
first letter between
Kellogg Arcadian--?]
[February 15 or 16, 1996?]
<PAGE> 149
INDEX
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE
------- ----- ----
<S> <C>
1 - GENERAL SCOPE OF WORK AND DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 - PRICE/PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3 - MECHANICAL COMPLETION DEADLINE, PROGRESS REPORTS PROJECT SURETY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4 - SCOPE OF WORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5 - CERTAIN CONTRACTOR RESPONSIBILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
6 - CONTRACTOR'S DESIGN AND ENGINEERING WORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
7 - MATERIALS AND OPERATING EQUIPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8 - CONSTRUCTION AND OTHER SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
9 - INSPECTION OF WORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
10 - PROCUREMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11 - CONTRACTOR REPRESENTATIONS, WARRANTIES AND GUARANTEES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
12 - PERFORMANCE TESTS AND ACCEPTANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
13 - CHANGES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
14 - LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
15 - TECHNOLOGY-LICENSE, USE OF INFORMATION AND CONFIDENTIALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
16 - PATENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
17 - SERVICES, AND OTHER ITEMS TO BE FURNISHED BY OWNER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
18 - INSURANCE,INDEMNITY AND RISK ALLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
<PAGE> 150
<TABLE>
<S> <C>
19 - FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
20 - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
21 - ASSIGNMENTS AND SUBCONTRACTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
22 - PUBLICITY RELEASES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
23 - PERMITS, LICENSES & TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
24 - INDEPENDENT CONTRACTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
25 - NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
26 - ACCOUNTING AND INSPECTION OF RECORDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
27 - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
</TABLE>
ANNEX A SCOPE OF WORK
ANNEX B COORDINATION PROCEDURES
ANNEX C PERFORMANCE GUARANTEES
ANNEX D RATES
ANNEX E TERMS OF PAYMENTS
ANNEX F MECHANICAL COMPLETION
ii
<PAGE> 151
THIS AGREEMENT is executed and entered into on April _______, 1996,
but effective as of [December 21, 1995?; February 15, 16, 1996?], by and between
NITROGEN LEASING COMPANY, LIMITED PARTNERSHIP, a Delaware, U.S.A. limited
partnership with offices at North Tower, 27th Floor, World Financial Center,
250 Vesey Street, New York, New York 10281, (hereinafter referred to as
"OWNER"), and THE M. W. KELLOGG COMPANY, a Delaware, U.S.A. corporation with
offices at 601 Jefferson Avenue, Houston, Texas 77002 (hereinafter referred to
as "CONTRACTOR").
WITNESSETH THAT:
WHEREAS, OWNER desires to have CONTRACTOR perform on a lump sum basis
engineering, design, procurement, project management, and other associated
services, and furnish materials, machinery and equipment, outside the Republic
of Trinidad and Tobago necessary for the construction, erection, start-up, and
operation of a facility for the production of anhydrous ammonia on a site in
the Republic of Trinidad and Tobago to be leased by OWNER;
WHEREAS, CONTRACTOR has represented that it is familiar with the
proposed Work (as defined below), that it possesses the requisite expertise and
resources to perform such Work, and that it desires and has the ability to
perform and procure the services and furnish and procure the labor, engineering
services, drawings, tools, equipment, machinery, technology, materials,
transportation, supervision, project management, and other services and
materials necessary to fully perform and execute such Work in accordance with
the terms hereof; and
WHEREAS, CONTRACTOR desires to undertake the performance of such
services on a lump sum basis under and pursuant to the terms and conditions
hereafter provided;
NOW THEREFORE, OWNER and CONTRACTOR, each in consideration of the
undertakings and agreements on the part of the other hereinafter contained,
hereby mutually agree as follows:
ARTICLE 1 - GENERAL SCOPE OF WORK AND DEFINITIONS
1.1 CONTRACTOR shall furnish engineering, design, process design,
procurement, project management, transportation,
supervision,construction and other services, and materials, equipment,
machinery, tools, technology, drawings, and labor, and shall otherwise
perform the Work, necessary for the construction, erection, start-up
and operation of the Facility (as defined below). None of such
services will be performed within the Republic of Trinidad and Tobago.
The scope of CONTRACTOR's Work is more particularly set forth in Annex
A and elsewhere in this Agreement.
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1.2 When used in this Agreement, the terms set forth below shall have the
following meanings:
(a) "Affiliate" of any entity shall mean any other entity directly
or indirectly controlling, controlled by or under common
control with such entity.
(b) "Agreement" shall mean this contract between OWNER and
CONTRACTOR which consists of ____________ Articles and Annexes
A, B, C, D, E and F.
(c) "Change" shall mean a change in the Work which may result in a
revision to the guarantees made by CONTRACTOR, the Target Date
or the Contract Price.
(d) "Change Order" shall mean the document referred to in Article
_____ below which describes a Change and its effects and which
is signed by OWNER and CONTRACTOR.
(e) "Contract Price" shall have the meaning set forth in Section
____ below.
(f) "CONTRACTOR Indemnified Parties" shall mean CONTRACTOR, each
of its direct and indirect parents, subsidiaries and other
Affiliates, each of the foregoing entities' respective
successors and assignees, and each of the foregoing entities'
(including, without limitation, successors and assignees)
respective stockholders, partners, directors, officers,
employees, and representatives.
(g) "Construction Contract" shall mean the Agreement between OWNER
and Kellogg Pan American Corporation effective
______________________________, 1996, for the construction,
erection and start-up of the Facility.
(h) "Construction Work" shall mean "Work" under the Construction
Contract as defined therein.
(i) "Constructor" shall mean Kellogg Pan American Corporation, a
_____________________ corporation, registered ___________.
(j) "Date of Mechanical Completion" shall mean the actual calendar
date upon which the Plant and Facility achieves, and all Work
hereunder and Construction Work under the Construction
Contract has been completed to, Mechanical Completion, as
further specified in Annex F.
(k) "Dollar" or "dollar" or the symbol "$" shall mean United
States Dollars.
(l) "Encumbrance" shall have the meaning specified in
Section _____ hereof.
(m) "Facility" shall mean the Plant plus related Offsites and
other facilities as further described in Annex A and elsewhere
herein.
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<PAGE> 153
(n) "Final Completion" shall mean that all Work hereunder and all
Construction Work under the Construction Contract shall have
been completed, and OWNER shall be in a position to issue, and
shall have issued, the written Notice of Acceptance of the
[Plant, Facility] pursuant to and as contemplated by Section
______.
(o) "Force Majeure" shall have the meaning set forth in Section
______ below.
(p) "ISBL" shall mean
____________________________________________________________
_____________________________.
(q) "OSBL" shall mean
___________________________________________________________
___________________.
(r) "Kellogg Advanced Ammonia Process" shall mean
_______________________________________________________________
______________ and is sometimes referred to herein as "KAAP".
(s) "Licensees" shall mean the OWNER, Arcadian Fertilizer, L.P., a
Delaware limited partnership, Arcadian Trinidad Limited, a
Trinidad and Tobago private limited company, and each of their
Affiliates.
(t) "Liquidated Damages" shall mean any amount or amounts of money
which may become due hereunder by CONTRACTOR to OWNER (as
specified in Annex C) for failure to achieve any or all of the
Performance Guarantees. [CONTRACTOR and OWNER acknowledge and
agree that any such Liquidated Damages shall not constitute a
penalty, instead representing a reasonable approximation of
damages which are difficult or impossible of being calculated
with certainty at this time. It is the intent of the parties
that any such Liquidated Damages not be construed as a
penalty.]
(u) "Losses" shall mean any and all costs, damages, expenses,
judgements, charges, losses and other liabilities (including,
without limitation, all reasonable legal and expert fees and
expenses and court costs) and all claims, demands, actions,
suits and other legal proceedings, regardless of the alleged
legal basis therefor or by whom asserted.
(v) "Mechanical Completion" shall mean that the Work, the
Construction Work, the Plant, and the Facility have been
sufficiently completed so that OWNER can occupy and use them
for their intended purposes, and that the tasks set forth in
Annex F have been performed in accordance with such annex.
The specific procedures for assessing and determining
Mechanical Completion are set forth in Annex F. OWNER's
agreement from time to time, pursuant to Annex F, that
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<PAGE> 154
Mechanical Completion has occurred, shall not limit or affect
OWNER's rights and remedies hereunder, or otherwise, or
CONTRACTOR's obligations hereunder.
(w) "Offsites" shall mean [power supply systems, water supply
systems, instrument air, water treatment systems, fresh water
cooling pumps and exchangers, demineralized water systems, sea
water cooling towers and pumps, fire water systems, and such
other equipment and items necessary to support Plant
operations].
(x) "Owner Indemnified Parties" shall mean OWNER, Arcadian
Corporation, a Delaware corporation, Arcadian Corporation, as
general partner, Arcadian Fertilizer, L.P., a Delaware limited
partnership, Arcadian Trinidad Limited, a Trinidad and Tobago
private limited company, each of their direct and indirect
parents, subsidiaries and other Affiliates, each of the
foregoing entities' respective successors and assignees, and
each of the foregoing entities' (including, without
limitation, successors and assignees) respective stockholders,
partners, directors, officers, employees, and representatives.
(y) "Performance Guarantees" shall mean those guarantees of
capacity, product purity, utilities and related matters made
by CONTRACTOR for the Plant [Facility] and as further
described in Annex C.
(z) "Plant" shall mean a facility for the production of anhydrous
ammonia having a design capacity of 1,850 metric tons per day
as further described in Annex A and elsewhere herein.
(aa) "Retainage Amount" shall have the meaning specified in Section
2.5 hereof.
(bb) "Site" shall mean the real property owned, leased or licensed
by OWNER in or near Point Lisas, Republic of Trinidad and
Tobago, upon which the Facility is to be constructed, erected
and operated, and including, without limitation, any laydown
and similar areas dedicated for use in connection with
Facility construction.
(cc) "Subcontractor" shall mean any third party, other than an
Affiliate of CONTRACTOR, which furnishes services relative to
the Work under an agreement with CONTRACTOR. All
Subcontractors must be pre-approved by OWNER and are listed in
Annex A.
(dd) "Target Date" shall mean the date by which CONTRACTOR under
this Agreement, and Constructor under the Construction
Contract, shall be required to have achieved Mechanical
Completion of the Work, the Construction Work
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<PAGE> 155
as defined in the Construction Contract), the Plant, and the
Facility, and such date is February 15, 1998.
(ee) "Vendor" shall mean any third party which supplies materials
or equipment, plus any attendant services, under a purchase
order or other agreement with CONTRACTOR made in connection
with the Work. [All such vendors must be preapproved by OWNER
and are listed in Annex A.]
(ff) "Work" shall mean the process design, engineering, design,
transportation, shipping, loading, unloading, construction,
fabrication, assembly, project management, expediting,
inspection, supervision, scheduling, purchasing, procurement
and other associated services, and all equipment, machinery,
materials, tools, supplies, labor, and technology, which shall
be provided or procured by CONTRACTOR hereunder, as more fully
enumerated and described in Annex A and elsewhere herein.
1.3 In the event of any conflict between the provisions of the Articles of
this Agreement and the provisions of the Annexes, the provisions of
the Articles shall prevail.
ARTICLE 2 - PRICE/PAYMENT
2.1 As full compensation for the performance of the Work hereunder and any
and all Construction Work under the Construction Contract, inclusive
of all Subcontractor, Vendor and other third-party fees and charges,
direct and indirect costs and fees of CONTRACTOR (and of Constructor),
and any other cost, expense, fee or charge of any nature whatsoever
(including, without limitation, those of suppliers of services, labor,
machinery, equipment, materials, tools and supplies), OWNER shall pay
the CONTRACTOR (or Constructor, as the case may be) the total,
aggregate, fixed lump sum price of $236,000,000. Such total, fixed
lump sum price shall not be subject to escalation although it may be
adjusted pursuant to Article ______ [Change Orders] hereof. As of the
execution date hereof, CONTRACTOR acknowledges the payment by OWNER,
and receipt of $___________________ of such fixed lump sum price; and
the remaining fixed lump sum price to be paid hereunder is
$___________________. [Should cost of this Contract be segregated?]
2.2 For all purposes of this Agreement, the parties have agreed that the
amount of $_______________ shall be allocated as a fee for the license
granted by CONTRACTOR pursuant to Section _______.
2.3 [This concept perhaps should be in Annexes D and/or E.] OWNER shall
pay CONTRACTOR progress payments, representing in each case a portion
of the fixed lump sum price described in Section 2.1 above, as
contemplated by Annex E hereto. Such payments shall be based on the
percentage of progress reported by
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<PAGE> 156
CONTRACTOR as of the dates specified in Annex E, and agreed to by
OWNER. OWNER shall be required to pay only that progress payment
amount, for each progress payment date, which is equal to the
percentage of progress that OWNER agrees has been completed;
provided, however, that if OWNER's determination of the percentage of
progress (for any progress payment other than the final progress
payment) is within _____% of the percentage of progress specified for
such progress payment date in Annex E, then OWNER shall pay the amount
specified for such progress payment date in Annex E. Disputes as to
percentages of progress shall be resolved as soon as reasonably
possible; provided that OWNER shall be required to pay only those
amounts representing completed progress as agreed to by OWNER.
CONTRACTOR shall submit invoices in form and accompanied by supporting
documentation reasonably satisfactory to OWNER, for each progress
payment specified in Annex E. Subject to the terms and conditions of
this Section 2.3, OWNER shall make required payments via direct bank
wire transfer within ______ days after receipt of invoice by OWNER.
2.4 Any payments made hereunder by OWNER shall not (i) preclude OWNER from
disputing any item or matter, including, without limitation, whether
the particular percentage of completion in question has in fact been
achieved; (ii) constitute or be construed as OWNER's acceptance of the
Plant, Facility, Work, Construction Work or any portion thereof, or
OWNER's acknowledgment that the Work, Construction Work or any portion
thereof has been satisfactorily completed in accordance with the terms
and conditions of this Agreement; or (iii) limit or otherwise affect
OWNER's rights and remedies hereunder or otherwise, or CONTRACTOR's
obligations hereunder.
2.5 In order to assure performance of its obligations under this
Agreement, CONTRACTOR agrees that OWNER shall retain certain amounts
from payments due CONTRACTOR hereunder. OWNER shall retain an amount
equal to ____% from each progress payment hereunder. The retained
monies shall be held in a bookkeeping account maintained by OWNER
("Retainage Account"). OWNER shall segregate the funds posted to the
Retainage Account. The amounts posted to the Retainage Account shall
bear simple interest at ______. All interest shall become part of the
Retainage Account due CONTRACTOR as provided herein. In lieu of
actual retainage, CONTRACTOR may, at CONTRACTOR's expense, post
Irrevocable Standby Letters of Credit in form and substance
satisfactory to OWNER (and its lenders), in amounts equal to _____% of
each progress payment as described above. If from time to time
CONTRACTOR fails to perform its obligations under this Agreement in
accordance with the terms and conditions hereof, OWNER shall notify
CONTRACTOR and CONTRACTOR shall promptly remedy any such failure. If
CONTRACTOR fails to promptly remedy any such failure, OWNER shall have
the right, in addition to any other rights and remedies it may have
hereunder or otherwise, to withdraw such amounts from the Retainage
Account, or draw such amounts under such letters of credit, as may be
necessary to remedy any such failures. OWNER shall also have the
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<PAGE> 157
right to withdraw such amounts, or draw such amounts under such
letters of credit, as may be necessary to provide for the release of
any Encumbrance filed by any of CONTRACTOR's Subcontractors, agents,
suppliers, Vendors or workers in connection with the Work. If
retainage is used, CONTRACTOR shall be paid the funds remaining in the
Retainage Account following the expiration of 30 days following the
later of the Date of Mechanical Completion, or payment in full of all
of CONTRACTOR's and Constructor's Subcontractors, agents, suppliers,
Vendors and workers. If such letters of credit are used, letters of
credit shall remain in effect until the later of the two events
referenced immediately above.
ARTICLE 3 - MECHANICAL COMPLETION DEADLINE, PROGRESS REPORTS
PROJECT SURETY
3.1 CONTRACTOR shall commence the Work promptly upon the effective date of
this Agreement.
3.2 Except to the extent a delay is caused by the occurrence of a Force
Majeure event pursuant to and as contemplated by Section __________,
and except for delays contemplated by Section ________[Change Orders],
all Work, Construction Work, the Plant, and the Facility shall be
Mechanically Complete (i.e., shall have achieved Mechanical
Completion) no later than the Target Date, February 15, 1998.
3.3 CONTRACTOR shall issue to OWNER monthly progress reports no later than
the tenth day following the end of the month in respect of which such
report is prepared, detailing the progress made by CONTRACTOR during
the preceding month toward the achievement of the Target Date. The
reports shall include, but shall not be limited to, the following:
1. A description of any and all delays which CONTRACTOR
anticipates.
2. An updated schedule.
3. A statement of the CONTRACTOR's assessment of the percentage
of design, process design, engineering, procurement, delivery
of equipment and materials, and construction which is
complete.
4. A narrative of the activities conducted during the month,
including action items and problems.
3.4 [There will need to be a corresponding provision in the Construction
Contract.] In lieu of providing a performance and payment bond,
contemporaneously with the execution hereof, CONTRACTOR shall deliver
to OWNER a guaranty of its parent, Dresser Industries, Inc., a
Delaware corporation, guaranteeing that CONTRACTOR
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will faithfully perform promptly and with due diligence all of the
terms and conditions of this Agreement on its part to be performed,
including all of the undertakings, guarantees, warranties, obligations
and liabilities of CONTRACTOR or of any Subcontractor, supplier or
Vendor of CONTRACTOR, protecting OWNER against Losses by reason of
the breach of or default in the performance of any such undertakings,
guarantees, warranties or obligations, and protecting OWNER against
all claims and Encumbrances for the payment of sums for labor,
services and materials provided in connection with the Work. Such
guaranty shall remain in effect at least until the expiration of all
warranty periods provided for under Article _______ hereof, and shall
apply to all matters (otherwise covered by such guaranty) of which
notice has been provided to CONTRACTOR prior to the expiration of such
guaranty.
ARTICLE 4 - SCOPE OF WORK
4.1 The Scope of Work, attached hereto as [Annex A] and as otherwise
described herein, specifically enumerates and describes the Work to be
performed by CONTRACTOR under this Agreement; provided, however, that
the Work (and hence the Scope of Work) shall include, without
limitation, such additional services and items as may be necessary or
appropriate to enable CONTRACTOR to perform its obligations under this
Agreement in accordance with the terms and conditions hereof. It is
understood and agreed that the Construction Work required to be
performed in the Republic of Trinidad and Tobago shall be performed by
Constructor. Portions of the fixed lump sum price described in
Article 2 hereof shall be paid to Constructor to reflect its
performance of such Construction Work. Notwithstanding the foregoing,
CONTRACTOR shall supervise and shall be liable and responsible for the
performance of the Construction Work by Constructor and for its
undertakings and obligations under the Construction Contract.
ARTICLE 5 - CERTAIN CONTRACTOR RESPONSIBILITIES
5.1 CONTRACTOR shall perform the Work in a good, expeditious, workmanlike,
safe, efficient and lawful manner, and in conformity with sound,
recognized, and generally accepted industry, engineering and
construction standards and practices for projects similar in scope and
size to this project, and otherwise in accordance with the terms and
conditions of this Agreement.
5.2 In the performance of the Work, CONTRACTOR shall (and shall cause its
Subcontractors, Vendors and agents to) comply with all applicable
laws, rules, regulations, orders, consents and decrees of any
governmental authority with jurisdiction.
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5.3 CONTRACTOR represents and warrants to OWNER, and covenants and agrees,
that the Plant, the Facility, the Work, and the Construction Work
shall be at the time of Final Completion free and clear of any and all
liens, security interests, charges, and encumbrances (collectively,
"Encumbrances").
5.4 Risk of loss of and damage to the Work, [the Construction Work], the
Plant, and the Facility, will be and remain with CONTRACTOR until the
Date of Mechanical Completion of all Work, the Construction Work, the
Plant, and the Facility; provided that the insurance policies and
coverages required under Article _______ shall (except as provided
therein) remain in effect until Final Completion, and shall continue
to cover such Losses as provided in such policies.
5.5 Except as provided in Section _______ [Kellogg proprietary data], all
drawings, specifications, designs, engineering data and studies,
process data and studies, intellectual property (including all
patentable and copyrightable materials), and any other data, materials
or items which are generated, produced or created as part of or in
connection with the Work, shall be the sole and exclusive property of
OWNER. CONTRACTOR shall (and shall cause its Subcontractors, Vendors
and agents to) (i) provide all such property (and all copies and other
reproductions thereof) to OWNER by the date of Final Completion; and
(ii) execute such instruments as OWNER may reasonably require to
evidence OWNER's ownership of such property. Neither CONTRACTOR nor
its Subcontractors, Vendors or agents may retain, use, or otherwise
exercise dominion over any such property; provided that CONTRACTOR may
retain a complete set of Work drawings and other Work documents as
necessary for archives, in order to provide OWNER with information and
advice in the future concerning the Work performed under this
Agreement. Any such retained drawings and documents shall be subject
to the confidentiality provisions set forth in Section
_______[Contractor confidentiality obligations], and CONTRACTOR may
not use such drawings and documents in the performance of services for
other clients.
ARTICLE 6 - CONTRACTOR'S DESIGN AND ENGINEERING WORK
6.1 Without limiting the generality of Sections 1.1, 1.2(gg)[Work
definition], Article 4 and Annex A, CONTRACTOR shall prepare and
furnish the design, process design and engineering drawings and data
required to procure the materials, machinery and equipment (including
operating equipment) and perform related Workfor, and required to
construct, erect, start-up and operate the Facility, all in accordance
with the procedures, designs, plans and specifications set forth in
Annex A and those approved pursuant to Section 6.3.
6.2 The basic design conditions and certain technical and process data for
the Facility [either have been or will be furnished] [Aren't these
set forth in Annex A, "Basis for Design"?] to CONTRACTOR by OWNER or
by parties in privity of contract with OWNER or have
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been reviewed and approved by OWNER. If any further data or
information of this nature is required by CONTRACTOR, OWNER will
furnish such data and information to CONTRACTOR without cost to
CONTRACTOR. The design of the Facility shall be based upon all of the
foregoing, and CONTRACTOR shall be entitled to rely upon such data and
information in the performance of the Work.
6.3 Upon completion of CONTRACTOR's [preliminary?] planning engineering
and design Work with respect to any part of the Facility and prior to
commencing Work on the final detailed design of such part, CONTRACTOR
shall submit for OWNER's prior approval plot plans, planning drawings,
engineering flow sheets and specification sheets (collectively,
"Drawings and Specifications") [?for major items of operating
equipment with respect to such part]. Within ten (10) working days
after receipt, OWNER shall approve or disapprove (and provide comments
with respect to) all Drawings and Specifications submitted by
CONTRACTOR. OWNER's failure to notify CONTRACTOR within ten (10)
working days after receipt, of approval or disapproval, shall be
deemed an approval by OWNER. OWNER's approval, however, shall not
relieve CONTRACTOR of any of its obligations under this Agreement, or
limit or impair any of OWNER's rights and remedies hereunder or
otherwise. The details for the preceding provisions of this Section
6.3 are set forth in Annex B.
6.4 OWNER shall have the right to review at its own expense the progress
of CONTRACTOR's engineering and other Work as it proceeds, and in so
doing OWNER shall cooperate with CONTRACTOR so as not to increase
CONTRACTOR's engineering cost.
6.5 CONTRACTOR shall appoint a representative to act on CONTRACTOR's
behalf in the administration and performance of this Agreement. Such
representative will be available to OWNER at all reasonable times, as
more specifically set forth in Annex B.
6.6 If such Subcontractors are preapproved by OWNER and listed in Annex A,
CONTRACTOR shall have the right to have engineering, design and
drafting services performed inside or outside CONTRACTOR's offices by
Subcontractors who are not employees of CONTRACTOR, but who are under
CONTRACTOR's supervision; provided, however, such shall not relieve
CONTRACTOR from any of its obligations under this Agreement.
6.7 Commencing on or about [December _________, 1995], CONTRACTOR
performed certain services relative to the Facility including
preliminary engineering, process design and cost estimating.
CONTRACTOR acknowledges that it has been compensated in full for such
services (or, CONTRACTOR's sole compensation for such services is
included in, and is a part of, the lump sum Contract Price.) Further,
it is agreed that this Agreement supersedes[Letters] and that such
services shall be deemed to be Work. [Does this mean that "effective
date" should be February 15, 16, 1996?]
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ARTICLE 7 - MATERIALS AND OPERATING EQUIPMENT
7.1 Without limiting the generality of Sections 1.1, 1.2(gg)[Work
definition], Article 4 and Annex A, CONTRACTOR shall procure and
furnish all required materials, machinery, and equipment (including
operating equipment) for the Facility as more particularly set forth
in Annex A, except for those materials, machinery, and equipment which
OWNER agrees to furnish as provided in Article _____[Owner
responsibilities] below, and Annex A.
7.2 CONTRACTOR shall inspect, expedite and arrange shipment for all
materials, machinery, and equipment (including operating equipment) in
accordance with CONTRACTOR's usual practice, which practice CONTRACTOR
represents is in accordance with standard industry and professional
practice. All such items received at the Site will be checked,
received and maintained in accordance with to the Construction
Contract.
ARTICLE 8 - CONSTRUCTION AND OTHER SERVICES
8.1 Construction and erection of the Facility shall be undertaken by
Kellogg Pan American Corporation--Constructor-- pursuant to the
Construction Contract.
8.2 CONTRACTOR shall perform construction support and project management
services in its offices and such other services as may be necessary
for the Work and Construction Work.
ARTICLE 9 - INSPECTION OF WORK
9.1 CONTRACTOR shall perform all tests and inspections of the Work, the
Construction Work, Plant, and the Facility, and all components of any
thereof (including, without limitation, mechanical and operational
tests and inspections) necessary to assure that the Work, the
Construction Work, the Plant, and the Facility conform to all
requirements, standards and specifications of this Agreement.
Complete records of all CONTRACTOR tests and inspections shall be
maintained and delivered to OWNER at the time(s) such tests or
inspections are completed.
9.2 All Work, the Plant, and the Facility (and all components thereof)
shall be subject to inspection and approval by OWNER from time to time
and at any and all times (at its expense), at such locations as may be
necessary for the performance of the Work (including, without
limitation, point of manufacture); provided, however, that OWNER shall
not interfere with CONTRACTOR's own inspection procedures. Further,
OWNER shall cooperate with CONTRACTOR in conducting its inspections so
that extra expense and delay to CONTRACTOR are avoided. CONTRACTOR
shall provide OWNER and its representatives unrestricted access to the
Work, the Plant,
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and the Facility (and all components thereof) for the purposes
specified above, and for any other purpose; provided that CONTRACTOR
may provide (and OWNER and its representatives shall accept) an escort
or other reasonable safety measures which CONTRACTOR deems necessary
or advisable. CONTRACTOR shall also promptly provide all information
requested by OWNER or its representatives with respect to the Work,
Plant, or Facility. Any inspection or failure to inspect by OWNER
shall not limit or otherwise affect any obligations of CONTRACTOR
under this Agreement, or any rights and remedies of OWNER hereunder or
otherwise. If upon inspection, OWNER determines that any part of the
Work, Plant, or Facility does not meet, or has not been performed in
accordance with, the standards, requirements, specifications or
covenants set forth in this Agreement, then CONTRACTOR shall promptly
remedy or replace any such defective Work at its sole risk, cost and
expense.
ARTICLE 10 - PROCUREMENT
10.1 Without limiting the generality of Sections 1.1, 1.2(gg)[Work
definition], Article 4 and Annex A, CONTRACTOR shall be responsible
for providing or procuring all services, labor, tools, equipment,
machinery, materials, supplies, and other items necessary or
appropriate for the performance of the Work.
10.2 CONTRACTOR may subcontract portions of the Work to Subcontractors
designated in Annex A; provided that (i) CONTRACTOR shall remain
responsible for the performance of the Work in accordance with the
terms and conditions of this Agreement; and (ii) OWNER shall not have
any obligations under subcontracts entered into by CONTRACTOR.
CONTRACTOR shall be solely responsible for the engagement, management
and payment of any such Subcontractors. CONTRACTOR shall pay such
Subcontractors all amounts owed when due.
10.3 CONTRACTOR shall be solely responsible for providing or procuring all
tools, equipment, machinery, materials, supplies and other items
necessary or appropriate for the performance of the Work. CONTRACTOR
may procure such items from reputable Vendors and suppliers [Vendors
listed in Annex A? Approval by OWNER?]; provided that (i) CONTRACTOR
shall remain responsible for the performance of the Work in accordance
with the terms and conditions of this Agreement; and (ii) OWNER shall
not have any obligations under contracts or purchase orders entered
into by CONTRACTOR. [CONTRACTOR shall be solely responsible for the
[selection], management and payment of such Vendors and suppliers.]
CONTRACTOR shall pay such vendors and suppliers all amounts owed when
due. OWNER shall have sole and exclusive title to any and all tools,
equipment, machinery, materials, supplies, and items which become part
of the Plant or Facility. CONTRACTOR will execute or cause to be
executed such instruments as OWNER may reasonably request to evidence
OWNER's title to such items, and shall take such
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actions as may be necessary to have such items transferred to OWNER
free and clear of any and all Encumbrances.
ARTICLE 11 - CONTRACTOR REPRESENTATIONS, WARRANTIES
AND GUARANTEES
11.1 From and after the Date of Mechanical Completion, CONTRACTOR
represents, warrants and guarantees that the Plant [Facility?] shall
fulfill the Performance Guarantees. Such fulfillment of the
Performance Guarantees shall be demonstrated in Performance Test(s)
(as defined in Article 12) conducted pursuant to Article 12 and Annex
C. If at any time within one (1) year after the Date of Mechanical
Completion, OWNER determines that the Plant [Facility] or any
operation or performance thereof does not fulfill the Performance
Guarantees, then OWNER shall promptly notify CONTRACTOR and, subject
to the immediately succeeding sentence, CONTRACTOR shall promptly
correct any such deficiencies at CONTRACTOR's sole risk, cost and
expense. In the event any Liquidated Damages become due and are paid
to OWNER pursuant to Annex C (either because the Plant [Facility]
achieves only a certain percentage of the Performance Guarantees
during Performance Test(s) [which in any event shall equal or exceed
95%], or experiences a decline in such percentage achieved during
Performance Test(s) [with the level of performance still equaling or
exceeding 95%] during the one (1) year period referred to above), such
amounts shall be in lieu of any other claims pursuant to this Section
11.1 OWNER might have with respect to the performance of the Plant
[Facility?] [see Annex C].
11.2 Engineering/Design. CONTRACTOR represents, warrants and guarantees
that the engineering, process design and design of the Plant and the
Facility, and any other Work hereunder and Construction Work under the
Construction Contract, shall be performed in accordance with, and
shall comply and be consistent with, sound, recognized and generally
accepted engineering and design standards and practices, all
applicable codes, standards and governing authorities, and the other
requirements of this Agreement. If at any time within one (1) year
after the Date of Mechanical Completion, any defect in the
engineering, design or other Work or Construction Work or other breach
of this warranty is discovered by OWNER, OWNER shall promptly notify
CONTRACTOR thereof, and CONTRACTOR shall promptly remedy and correct
any such defects or breaches (including any associated equipment or
machinery failures) at its sole risk, cost and expense. Without
limiting the generality of the foregoing, to the extent any such
defect or breach results in a reduction in the Plant's [Facility's]
performance level demonstrated pursuant to Article 12 and Annex C,
CONTRACTOR shall restore such demonstrated performance level at its
sole risk, cost and expense.
11.3 Material and Workmanship. CONTRACTOR represents, warrants and
guarantees all equipment, machinery, parts, materials, supplies and
other items supplied,
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procured or specified by CONTRACTOR, and all labor and services
furnished in connection with the Work or Construction Work against
defects (latent or patent) in materials or workmanship, or otherwise,
for a period of one (1) year after the Date of Mechanical Completion.
If at any time during the warranty period, OWNER discovers any defect
in such equipment . . . materials, etc. or workmanship, or if OWNER
determines that such equipment . . . materials, etc. or workmanship do
not otherwise comply with the requirements of this Agreement, OWNER
shall promptly notify CONTRACTOR thereof, and CONTRACTOR shall remedy
and correct any such defects to the reasonable satisfaction of OWNER
by repairing or replacing the defective equipment . . . materials,
etc. or workmanship. Without limiting the generality of the
foregoing, to the extent any such defect results in a reduction in the
Plant's [Facility's] performance level demonstrated pursuant to
Article 12 and Annex C, CONTRACTOR shall restore such demonstrated
performance level at its sole risk, cost and expense.
11.4 Subcontractors and Vendors. CONTRACTOR shall secure or cause its
Subcontractors to secure the most favorable industry-standard
warranties and guarantees possible extending over the longest possible
time obtainable from Subcontractors and Vendors with respect to
services, equipment, machinery, parts, materials, supplies and other
items [technology?] furnished by them. CONTRACTOR will request, at a
minimum, that Vendors of equipment, machinery, materials, etc., and
service providers, furnish a guarantee against defects in materials
and workmanship of one (1) year after initial use or eighteen (18)
months after shipping. All such warranties shall be for the benefit
of CONTRACTOR and OWNER.
11.5 Environmental. CONTRACTOR represents, warrants and guarantees that
the Plant and Facility shall be designed to meet applicable World Bank
Environmental Guidelines, September, 1988, and the 1995 proposed World
Bank Guidelines published as part of the Preliminary Version of the
World Bank's Industrial Pollution Prevention and Abatement Handbook,
June 30, 1995. If within one (1) year after the Date of Mechanical
Completion, OWNER discovers a defect or other breach of this warranty,
OWNER shall promptly notify CONTRACTOR, and CONTRACTOR shall remedy
and correct any such defect or breach at its sole risk, cost and
expense.
11.6 THE ONLY WARRANTIES APPLICABLE TO THE WORK PERFORMED PURSUANT TO THIS
AGREEMENT ARE THOSE SET FORTH IN THIS AGREEMENT. CONTRACTOR EXPRESSLY
DISCLAIMS ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A
PARTICULAR PURPOSE OR FITNESS FOR A PARTICULAR USE.
11.7 In no event shall either party or its Affiliates be liable to the
other or its Affiliates, either individually or jointly and
irrespective of whether alleged to be due to negligence (including the
sole negligence of any party or any Affiliate), breach of contract,
strict liability or any other legal theory, for special, punitive or
consequential
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damages (including lost production, lost profits, and lost revenues)
except to the extent such damages are attributable to a party's (or
its Affiliate's) intentional conduct; provided that such damages shall
be recoverable hereunder to the extent included in damages asserted
pursuant to a Third Party Claim [defined in indemnity section] with
respect to which a party is entitled to indemnity hereunder.
ARTICLE 12 - PERFORMANCE TESTS AND ACCEPTANCE
12.1 [Put in Annex C?] Within ________ days following the Date of
Mechanical Completion, OWNER agrees to commence conducting mechanical
and process performance tests (the "Performance Tests") to determine
whether the Plant and the Facility perform as required by Section
12.1, Annex A, or any other provision of this Agreement [or the
Construction Contract], unless OWNER's failure to timely conduct such
Performance Tests is caused by CONTRACTOR's actions or inactions or is
attributable to a Force Majeure event. Failure to timely commence
Performance Tests (except as excused hereby) shall be deemed a waiver
of the rights to such tests. Prior to the commencement of the
Performance Tests, detailed methods to be used in the Performance
Tests [Annex C?] shall be agreed upon in writing by CONTRACTOR and
OWNER. Such methods shall be in accordance with normal practice, and
shall include methods for measuring various process streams by
calibrated measuring devices, methods for calibrating such measuring
devices, methods for sampling and analyzing process streams, as well
as methods for evaluating the results of the measurements and
analyses. Further, acceptable tolerances for all results shall be
specified. OWNER may, at its option, waive the Performance Tests. In
the event the Performance Tests indicate that the Plant, the Facility,
or any portion of the Work or Construction Work does not meet all the
requirements of this Agreement [or the Construction Contract], OWNER
will advise CONTRACTOR, and CONTRACTOR shall as promptly as possible,
at its sole risk, cost and expense, make (or cause to be made) such
alterations, adjustments, repairs, or replacements as may be necessary
or appropriate in order that the Plant, the Facility, the Work, and
Construction Work meet and comply with all of the requirements of this
Agreement, and the Construction Contract including, without
limitation, Section 12.1 and Annex A hereof.
12.2 With respect to the Performance Tests, OWNER shall provide at its
expense (i) raw materials and utilities in quantities necessary for
the startup and operation of the Plant; and (ii) operations and
maintenance personnel necessary for the preparation of the Plant for
operation and for operating the Plant during commissioning.
12.3 After correction of all deficiencies under Section 12.1, OWNER may, at
its option, reconduct the Performance Tests. If such reconducted
tests indicate deficiencies, the procedures described in Sections
12.1-12.2 shall be repeated (provided that the ______-day deadline
shall not apply) until such time as the Plant, the Facility, the Work
and the Construction Work meet and comply with all the requirements of
this Agreement
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and the Construction Contract. OWNER may, at its option, waive
reconducting any Performance Test. OWNER will issue CONTRACTOR a
written Notice of Acceptance of the Plant when all of the following
conditions have been satisfied:
A. All Work, Construction Work, the Plant and the Facility have
been completed in accordance with, and meet and comply with,
all of the requirements of this Agreement and the Construction
Contract, including, without limitation, all guarantees,
specifications, standards, representations and warranties set
forth herein or therein.
B. The completed Work, Construction Work, the Plant and the
Facility have passed all Performance Tests, or Performance
Tests have been waived.
C. There are no Encumbrances outstanding with respect to the
Work, Construction Work, the Plant and the Facility.
D. All of CONTRACTOR's and Constructor's Subcontractors and
Vendors, suppliers and employees have been paid in full for
materials and services provided in connection with the Work or
Construction Work. CONTRACTOR shall deliver to OWNER a
certificate indicating that all such payments have been made.
OWNER's issuance of the Notice of Acceptance of the Plant shall in no
way (i) relieve, limit or otherwise modify CONTRACTOR's or
Constructor's liability for their respective obligations and
responsibilities under this Agreement and the Construction Contract;
or (ii) limit or modify any rights and remedies that OWNER has under
this Agreement, the Construction Contract or otherwise.
ARTICLE 13 - CHANGES
13.1 All Work shall be in accordance with this Agreement, and it is the
intent of the parties that Changes be avoided to the extent
practicable. To this end, the correction by CONTRACTOR (with OWNER's
prior approval) of its [normal design or related errors and minor
changes [What does this mean?]] made by CONTRACTOR in the course of
the Work shall not be deemed to constitute a Change.
13.2 At any time during the course of the Work, OWNER may modify the Scope
of Work as set forth in this Agreement, by written notice to
CONTRACTOR. Without limiting the generality of the foregoing, OWNER
may make changes in drawings, designs and specifications, issue
additional instructions, require additional work, or direct the
omission of Work previously ordered. When a Change is under
consideration by OWNER, OWNER shall so notify CONTRACTOR. OWNER may
request a "scoping estimate" (one which requires no more than five
manhours to prepare) before requesting a
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detailed cost estimate. If OWNER wishes to consider the proposed
Change after reviewing the scoping estimate, OWNER will request a
detailed cost estimate. CONTRACTOR shall then prepare and submit a
detailed cost estimate (including, if deemed necessary by CONTRACTOR,
revisions to the Target Date and to any of CONTRACTOR's guarantees
which will result therefrom). Once the parties mutually agree on the
detailed cost estimate, they shall confirm their agreement in writing
by means of a Change Order. OWNER shall compensate CONTRACTOR for
preparing all estimates made at OWNER's request.
13.3 If any of the events set forth below occur and CONTRACTOR determines
that the result thereof is or will be a Change, CONTRACTOR shall
promptly submit in writing to OWNER its proposed revision to the
Contract Price together with the effect, if any, predicted by
CONTRACTOR on the Target Date or CONTRACTOR's guarantees. Once the
parties mutually agree on such items, they shall promptly thereafter
agree in writing upon a Change Order. Such events are:
(a) a change in the basic design data or Site data (including
soils, feedstock, etc.) from that set forth in this Agreement;
(b) suspension of Work by OWNER [provisions governing suspension?];
(c) Force Majeure events preventing CONTRACTOR's performance
hereunder; provided that delays attributable to causes other
than Force Majeure events affecting Subcontractors and/or
Vendors directly shall not constitute Force Majeure;
(d) [VAT?] [?Any change in Trinidad taxes?]; or
(e) in connection with the Work, any act, or failure to act, on
the part of OWNER or any Affiliate of OWNER or any entity in
privity of contract with OWNER or any entity exclusively under
OWNER's direction or control.
13.4 CONTRACTOR shall not proceed with any Change until a Change Order has
been signed by the parties.
13.5 Except to the extent agreed otherwise pursuant to a Change Order, the
compensation payable to CONTRACTOR for preparing estimates pursuant to
this Article 13, shall be determined in accordance with Annex D.
ARTICLE 14 - LIENS
14.1 CONTRACTOR shall immediately pay and discharge or shall provide
security sufficient and satisfactory in itself to pay and discharge
any obligation
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CONTRACTOR or any of its Subcontractors or Vendors may have, in
respect of which any Encumbrance may be levied or is levied against
the Work, the Construction Work, the Plant, the Facility, the Site,
or the Owner Indemnified Parties. CONTRACTOR shall indemnify, defend
and hold harmless the Owner Indemnified Parties from and against any
such Encumbrance and any and all associated Losses. If at any time
OWNER shall receive notice or information of the recording of any such
Encumbrance or any evidence of any such Encumbrance which, if valid,
would constitute a legal charge upon property of OWNER, the Plant, the
Facility or any part thereof, it shall forthwith communicate the
receipt of such notice, information or evidence to CONTRACTOR.
14.2 If any such Encumbrance remains unsatisfied after the Date of
Mechanical Completion, CONTRACTOR shall promptly refund to OWNER all
amounts that OWNER may be compelled to pay in discharging any such
Encumbrance.
ARTICLE 15 - TECHNOLOGY-
LICENSE, USE OF INFORMATION AND CONFIDENTIALITY
15.1 Subject to the terms and conditions of this Article 15, including
without limitation payment in full of the license fee described in
Section _______, CONTRACTOR grants to the Licensees the non-exclusive,
non-transferable, perpetual and non-cancelable right and license to
use and practice the Kellogg Advanced Ammonia Process in connection
with the design, construction, start-up, testing, operation,
maintenance, repair, and, if necessary, reconstruction of the Facility
and the Plant (collectively, "Licensed Activities"), including,
without limitation,the right to make and have made for use in
connection with the Licensed Activities any apparatus therefor, and
further including, without limitation,the right to use and sell the
product(s) (including, without limitation, co-products and byproducts)
of the Plant throughout the world.
15.2 All drawings, prints and specifications which are furnished to any
Licensee by CONTRACTOR in connection with the Work shall be
permanently retained by any Licensee only for use in monitoring
CONTRACTOR's Work or Construction Work, in training the Licensee's
employees and in performing any other Licensed Activities (including
the replacement of parts). Subject to the license and rights granted
in Section 15.1, such drawings, prints and specifications shall at all
times remain the property of CONTRACTOR.
15.3 OWNER undertakes to hold in confidence all know-how, drawings, manuals
and data (collectively referred to as "Technical Information")
supplied by CONTRACTOR pertaining to the design, construction,
start-up, operation, maintenance and repair of the Facility which
know-how, drawings, manuals or data are [part of the KAAP process],
and are identified by CONTRACTOR in writing, at or before their
disclosure, to be confidential or proprietary. OWNER agrees that it
will not, without
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the written permission of CONTRACTOR, use the Technical Information
for any purpose except as provided in Section 15.2 or otherwise for
any other Licensed Activity.
15.4 In the event OWNER retains the services of any third party in
connection with any part of the Licensed Activities, and such third
party has a need for any of the Technical Information, OWNER shall
cause such third party to execute an agreement substantially identical
to the confidentiality provisions of this Article 15 and shall be
responsible for enforcing the third party's adherence to the terms of
such agreement.
15.5 [This may need to be expanded] CONTRACTOR agrees to hold in
confidence any technical or commercial information supplied to it by
any Licensee in connection with the design, construction, start-up,
operation and maintenance of the Facility, or otherwise, which
information is identified by such Licensee in writing to be
confidential or proprietary at or prior to its disclosure. Said
information shall remain the property of such Licensee, and CONTRACTOR
shall not disclose such information to any third party or use such
information for any purpose other than performing the Work.
15.6 The provisions of Sections 15.3 and 15.5 shall not apply to:
(a) any information (including Technical Information) which, at
the time of disclosure, the receiving party can show was in
the public domain;
(b) any information (including Technical Information) which, after
disclosure, becomes part of the public domain by publication
or otherwise, through no fault of the receiving party;
(c) any information (including Technical Information) which the
receiving party can show by supporting documentation was in
its possession at the time of disclosure to it by the
disclosing party and had not been acquired directly or
indirectly under the obligation of confidence to the
disclosing party;
(d) any information (including Technical Information) furnished to
the receiving party rightfully by a third party not under an
obligation of confidentiality to the disclosing party,
provided again that the receiving party is in compliance with
any restrictions on disclosure or limitation of use imposed by
such third party;
(e) any information (including Technical Information)
independently developed by employees or consultants of the
recipients or its Affiliates who have not had access to such
information; or
(f) any information (including Technical Information) required by
law, rule, regulation or bona fide legal process to be
disclosed, provided that the receiving party making such
disclosure shall take all reasonable steps to restrict, and
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maintain to the extent possible the confidentiality of, such
disclosure, and shall provide reasonable notice to the other
party whose information is involved in order that such other
party may take reasonable steps to oppose the requirement of
disclosure.
For the purpose of this Section 15.6, any disclosure of such
information which is specific to the operating or design conditions of
the Plant shall not be deemed to be within the foregoing exceptions
merely because it is contained within the scope of a broad disclosure.
15.7 Notwithstanding anything herein to the contrary, each Licensee shall
have the right to disclose (subject to Section 15.4) the Kellogg
Advanced Ammonia Process or Technical Information to third parties for
any valid effectuation by the Licensees of the Licensed Activities.
15.8 Notwithstanding the expiration, suspension or termination of this
Agreement, the Licensees and/or (subject to Section 15.4) any third
party retained or to be retained by any Licensee, shall be entitled,
for the duration of the time period in which any Licensee or any such
third party shall be conducting any Licensed Activity, to the benefits
and use of, and rights and interest in, the Kellogg Advanced Ammonia
Process and the Technical Information, as provided herein.
15.9 Upon the expiration or termination of this Agreement, CONTRACTOR
shall, promptly upon demand, provide the Licensees for the duration of
the time period in which any Licensee, or any third party retained or
to be retained by any Licensee described in Section 15.8 above, shall
be conducting any Licensed Activity, the use of any know-how,
drawings, manuals and data (including, without limitation, KAAP
updates and revisions) necessary or useful for the Licensed
Activities, to the extent that such know-how, drawings, manuals, data,
etc. are not in the possession of the Licensees.
ARTICLE 16 - PATENTS
16.1 CONTRACTOR covenants, represents and warrants that (a) CONTRACTOR is
the sole owner or has the right to use and license the Kellogg
Advanced Ammonia Process and Technical Information as of the date
hereof; (b) CONTRACTOR has the right, at no cost to the Licensees
other than the fee specified in Section _______ herein, to grant the
license and rights to the Licensees, as provided in Article 15,
including the right to license or sublicense any intellectual property
not owned by it; (c) CONTRACTOR has no knowledge of, and has received
no notification (written, oral or otherwise) with respect to, any
challenge by a third party as to (x) the validity of any patent or
other intellectual property rights of the CONTRACTOR in the Kellogg
Advanced Ammonia Process or in Technical Information, or (y)
CONTRACTOR's rights as licensee or
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owner, as the case may be, with respect to the Kellogg Advanced
Ammonia Process or Technical Information.
16.2 Subject to the provisions of this Article 16, CONTRACTOR shall, at its
sole cost and expense, indemnify, defend and hold the Licensees and
Owner Indemnified Parties harmless in respect of any and all Losses
incurred in connection with any claim, suit or proceeding based on any
claim that the Work (or Construction Work) as incorporated into the
Plant, the Facility or any part of any thereof, or the Kellogg
Advanced Ammonia Process, or any part thereof, or any Technical
Information, or any part thereof, constitutes an infringement or
violation of any patent or other intellectual property right of a
third party, including, without limitation, infringement or violation
of any copyright, trademark or trade secret, and infringement of any
patent issued in the United States or the Republic of Trinidad and
Tobago.
16.3 OWNER agrees to notify CONTRACTOR promptly in writing of any notice or
claim of infringement and/or violation as described in Section 16.2
above which is received by or brought against OWNER.
16.4 In connection with any claim described in Section 16.2 above,
CONTRACTOR reserves the right to acquire for the Licensees, at
CONTRACTOR's sole cost and expense, immunity from suit and license to
use the offending technology, which are acceptable to the Licensees.
CONTRACTOR also reserves the right, in connection with such claim, of
making such alterations of the Facility, at CONTRACTOR's sole cost and
expense, as may be required to eliminate the alleged infringement;
provided such alteration is acceptable to the Licensees and does not
prevent the Facility from being capable of normal operation, reduce
the capacity of the Facility, interfere with the Performance
Guarantees or performance levels, or cause a default by the Licensees
under any contract or other obligation.
16.5 Neither CONTRACTOR nor OWNER shall settle or compromise any suit or
action described in Section 16.2 above without the written consent of
the other.
16.6 Except to the extent that substantial deviation by the Licensees from
information furnished by CONTRACTOR is the sole cause for a claim of
infringement, CONTRACTOR shall defend, indemnify and hold the
Licensees and Owner Indemnified Parties harmless from and against any
and all Losses that may be assessed in or become payable under any
decree or judgment of any court, or under any arbitral decree or
other order, including costs and expert and professional fees, with
respect to any suit or action described in Section 16.2 above.
16.7 OWNER shall defend, indemnify and hold CONTRACTOR harmless from and
against any claim that any technology or know-how supplied to
CONTRACTOR by OWNER wrongly incorporates proprietary technical data or
infringes letters patent issued to, or otherwise infringes any other
intellectual property rights of, a third party.
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16.8 The provisions of Sections 16.2, 16.6 and 16.7 shall not apply to any
Vendor's or Subcontractor's wrongful use of proprietary technical data
or infringement of patents (unless caused by such Vendor's or
Subcontractor's compliance with specific design requirements imposed
by CONTRACTOR). In the event of any such wrongful use or
infringement, CONTRACTOR and OWNER shall rely on the provisions for
indemnity against infringement and other terms contained in applicable
purchase order, subcontract or other agreement with the Vendor or
Subcontractor; provided, however, that to the extent (i) there exists
any excess liability not covered by and discharged pursuant to the
provisions contained in applicable purchase order, subcontract or
other agreements with the Vendor or Subcontractor, and/or (ii) there
are no such provisions, the CONTRACTOR shall bear sole and complete
responsibility and liability for, and shall indemnify the Owner
Indemnified Parties with respect to, any such wrongful use or
infringement.
ARTICLE 17 - SERVICES, AND OTHER ITEMS TO BE
FURNISHED BY OWNER
17.1 OWNER shall at its own expense and at such times as may be required by
CONTRACTOR for the successful and continuous prosecution of the Work:
(a) provide the Site in accordance with the Construction Contract;
(b) furnish all personnel, materials and tools required for the
start-up, testing, operation and maintenance of the Plant
beginning with the Date of Mechanical Completion;
(c) furnish a classification of accounts in accordance with
OWNER's established accounting procedure for the guidance of
CONTRACTOR in preparing final cost distributions; and
(d) promptly pay when due all duties, fees and charges imposed by
the Republic of Trinidad and Tobago relative to the import of
all materials and equipment to be delivered to the Site, or
arrange for exemption from such duties, fees and charges.
17.2 OWNER shall appoint a representative to act on OWNER's behalf in the
administration and performance of this Agreement [as provided in the
Coordination Procedures?]. Such representative will be available to
CONTRACTOR at all reasonable times.
17.3 After the Facility has commenced commercial operation, upon reasonable
advance notice from CONTRACTOR and subject to the approval of OWNER in
each instance, representatives of CONTRACTOR and CONTRACTOR's
customers may visit the Facility. Such visits shall be limited to a
reasonable number of personnel during normal business hours, and shall
be scheduled at times mutually agreed with OWNER to assure minimal
interference with OWNER's Facility operations. CONTRACTOR shall cause
its
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representatives and those of its customers to strictly abide by all
safety rules and regulations of OWNER during such visits.
ARTICLE 18 - INSURANCE,
INDEMNITY AND RISK ALLOCATION
18.1 CONTRACTOR shall have care, custody and control of, and shall be
solely responsible for, the Work and Construction Work in progress
(including, without limitation, the Plant, the Facility (or any
portion thereof), equipment, machinery, parts, materials and supplies
on the premises of CONTRACTOR, the Site or any Subcontractor or
Vendor, or in transit or in storage, which are intended for
incorporation into the Work or Construction Work) until the Date of
Mechanical Completion. CONTRACTOR assumes all risk of any loss or
damage thereto until the Date of Mechanical Completion. For the
purpose of this Agreement, those temporary facilities erected by
CONTRACTOR or the Constructor at the Site which are affixed to the
Site so as to be nonportable (such as job-built buildings, roads,
security fences, electrical power polelines, underground septic tanks,
deadmen, and piping for construction utilities) shall be deemed to be
Construction Work in progress. CONTRACTOR hereby releases and
discharges and shall defend, indemnify and hold harmless the Owner
Indemnified Parties from and against any and all Losses arising from
or related to any loss or damage as described in the first sentence of
this Section 18.1, irrespective of any negligence, including sole or
concurrent negligence, on the part of any Owner Indemnified Party.
18.2 With respect to the machinery, tools, equipment, materials and other
property not intended to become a permanent part of the Facility and
which are supplied or used by CONTRACTOR, Constructor, or any
Subcontractor or Vendor thereof, CONTRACTOR assumes all risk of any
loss or damage thereto. CONTRACTOR hereby releases and discharges and
shall defend, indemnify and hold harmless the Owner Indemnified
Parties from and against any and all Losses arising from or related to
any such loss or damage, irrespective of any negligence, including
sole or concurrent negligence, on the part of any Owner Indemnified
Party.
18.3 With respect to any and all claims of loss or damage to any property
owned, leased, operated, used or controlled by any Owner Indemnified
Party other than the Facility at or within
_____________________________________ from the Site and any property
owned, leased, operated, used or controlled by any Affiliate of
Arcadian Trinidad Limited, and with respect to all occurrences and
circumstances prior to the Date of Mechanical Completion, CONTRACTOR
hereby releases and discharges and shall defend, indemnify and hold
harmless the Owner Indemnified Parties from and against any and all
Losses arising from or related to any such claims, occurrences or
circumstances which are alleged to arise from any act or omission on
the part of CONTRACTOR, Constructor, any Subcontractor or Vendor
thereof, or any Owner Indemnified Party, irrespective of any
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<PAGE> 174
negligence, including sole or concurrent negligence, on the part of
any Owner Indemnified Party; provided, however, that the aggregate
amount of liability assumed by CONTRACTOR under this sentence shall in
no event exceed ____________ _________________________
(US$_________________). [The following may be inconsistent with
Arcadian's proposal that Kellogg keep completed operations insurance
in place for 3 years after acceptance.] For all other claims regarding
the property described in the preceding sentence of this Section
[15.3] and to the extent such claims are not assumed by CONTRACTOR as
aforesaid, OWNER hereby releases CONTRACTOR from, and agrees to
defend, indemnify and hold CONTRACTOR harmless against all such
claims.
18.4 [The following may be inconsistent with Arcadian's proposal that
Kellogg keep completed operations insurance in place for 3 years after
acceptance.] With respect to the Facility and for all occurrences on
or after the Date of Mechanical Completion, OWNER hereby assumes the
risk of all loss or damage thereto and releases CONTRACTOR from, and
agrees to defend, indemnify and hold CONTRACTOR harmless against all
Losses arising from or directly or indirectly related to the Work,
except to the extent attributable to any act or omission of
CONTRACTOR, Constructor, or any Subcontractor or Vendor, including,
without limitation, any breach of any warranty or other provision of
this Agreement or the Construction Contract.
18.5 CONTRACTOR hereby releases and discharges and shall indemnify, defend
and hold harmless the Owner Indemnified Parties from and against any
and all Losses arising from or related to any injury to or death of
any of CONTRACTOR's, Constructor's, or any Subcontractor or Vendor's
employees, agents, officers, representatives, licensees, or invitees
in connection with or incidental to the Work or the Construction Work,
irrespective of any negligence, including sole or concurrent
negligence, on the part of any Owner Indemnified Party.
18.6 With respect to products, materials, or substances (including, without
limitation, any pollutant, contaminant or hazardous or toxic
substance, material or waste) introduced to the Site by CONTRACTOR,
Constructor, or any Subcontractor or Vendor, CONTRACTOR releases and
discharges and shall defend, indemnify and hold harmless the Owner
Indemnified Parties from and against any and all Losses arising from
or related to any such introduction, including, without limitation,
any failure to properly handle, store or dispose of any such products,
materials, substances, etc., irrespective of any negligence, including
sole or concurrent negligence, on the part of any Owner Indemnified
Party. With respect to environmental contamination (if any) due to
the presence of any pollutant, contaminant or hazardous or toxic
substance, material or waste at the Site, prior to the commencement of
Work, OWNER hereby releases and discharges and shall defend, indemnify
and hold harmless the Contractor Indemnified Parties from and against
any and all Losses arising from or related to such environmental
contamination, irrespective of any negligence, including sole or
concurrent negligence, on the part of any Contractor Indemnified
Party.
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18.7 With respect to any and all Losses which arise from or relate to
occurrences or circumstances prior to the Date of Mechanical
Completion [expiration of completed operations coverage?] and which
are not provided for in Sections [18.1-18.6] above, CONTRACTOR
releases and discharges and shall defend, indemnify and hold harmless
the Owner Indemnified Parties therefrom, if such Losses are alleged to
arise from any act or omission on the part of OWNER, CONTRACTOR, the
Constructor, or any Subcontractor or Vendor, and irrespective of any
negligence, including sole or concurrent negligence, on the part of
any Owner Indemnified Party. [Completed Operations proposal
consistency] With respect to all such claims, etc. as described in
the preceding sentence of this Section 18.7, and which arise from
occurrences on or after Mechanical Completion, OWNER shall defend,
indemnify and hold CONTRACTOR harmless therefrom if such claims, etc.
arise from any act or omission on the part of OWNER or CONTRACTOR and
irrespective of any negligence, including sole or concurrent
negligence, on the part of CONTRACTOR.
18.8 The party making a claim for indemnity under this Article 18
("Indemnified Party") shall promptly notify the party obligated to
indemnify ("Indemnifying Party") of the assertion or commencement of
any claim, demand, investigation, action, suit or other legal
proceeding in respect of which indemnity is or may be sought
hereunder; provided, however, that this notice requirement shall not
apply to any claim, demand, investigation, action, suit or other legal
proceeding in which the parties are adversaries. The failure by the
Indemnified Party to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations under this Article
18, except to the extent, if any, that it has been prejudiced by the
lack of timely and adequate notice.
18.9 The Indemnifying Party shall have the right to assume the defense or
settlement of any third-party claim, demand, investigation, action,
suit or other legal proceeding (collectively "Third-Party Claims")
with counsel reasonably satisfactory to the Indemnified Party;
provided, however, that the Indemnifying Party shall not settle or
compromise any Third-Party Claim without the Indemnified Party's prior
written consent thereto. Notwithstanding the foregoing, (1) the
Indemnified Party shall have the right, at its option and expense, to
participate fully in the defense or settlement of any Third-Party
Claim; and (2) if the Indemnifying Party does not commence and
continuously and diligently continue to defend or seek the settlement
of any Third-Party Claim within ten (10) days after it is notified of
the assertion or commencement thereof, then (a) the Indemnified Party
shall have the right, but not the obligation, to undertake the defense
or settlement of such Third-Party Claim for the account of and at the
risk of the Indemnifying Party, and (b) the Indemnifying Party shall
be bound by any defense or settlement that the Indemnified Party may
make as to such Third-Party Claim. The Indemnified Party shall be
entitled to join the Indemnifying Party in any Third-Party Claim for
the purpose of enforcing any right of indemnity hereunder. The
Indemnified Party shall cooperate with the Indemnifying Party in the
defense or settlement of any Third-Party Claim and, at the expense of
the
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Indemnifying Party, shall furnish any and all non-privileged materials
in its possession and endeavor to make any and all witnesses under its
control available to the Indemnifying Party for any lawful purpose
relevant to the defense or settlement of any such Third-Party Claim.
18.10 With respect to the performance of the Work and Construction Work
(whether in the United States or Trinidad and Tobago), CONTRACTOR
shall obtain (as of the effective date hereof) and shall maintain at
least until Final Completion (except as provided below), the following
insurance policies and coverage:
(a) Statutory Workers' Compensation and Employer's Liability
Insurance with a limit of $1,000,000 covering all persons
employed by CONTRACTOR or Constructor on the Work or
Construction Work during the period such persons are so
engaged.
(b) Comprehensive General Liability insurance covering, among
other things, bodily injury and property damage liability,
premises/operations, underground/explosion and collapse
hazard, product/completed operations, independent contractors,
broad form contractual (including, without limitation,
contractual liabilities assumed by Contractor under this
Agreement and by Constructor under the Construction Contract),
and broad form property damage, with a minimum policy limit of
US $5,000,000 per occurrence;
(c) Comprehensive Automobile Liability Insurance on motor vehicles
owned or rented by CONTRACTOR or Constructor, or owned or
rented by CONTRACTOR's or Constructor's employees, and used in
connection with the Work or Construction Work, protecting
CONTRACTOR and Constructor and covering Bodily Injury
Liability, for injury or death of persons, and Property Damage
Liability with a combined single limit of $5,000,000 per
occurrence[and in the aggregate?].
(d) Excess/Umbrella General Liability Insurance, including,
without limitation, contractual liability, auto liability, and
employer's liability insurance and completed operations
liability insurance, written on an occurrence basis, with
minimum limits of not less than US $25,000,000 per occurrence.
Such completed operations coverage shall remain in effect
until three (3) years after Final Completion.
18.11 OWNER shall provide "All Risk Builder's Risk" Insurance protecting the
respective interests of OWNER, CONTRACTOR and Contractor covering
physical loss or damage during the course of Work or Construction
Work, and any materials, equipment, or supplies furnished or procured
by CONTRACTOR, Constructor, or any Subcontractor or Vendor for the
Facility while (i) in transit, (ii) in temporary storage, (iii) at the
Site awaiting erection, and (iv) during erection until Final
Completion. Such insurance shall be maintained to cover the full
value of the Facility at risk, subject to normal exclusions.
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It is understood that such insurance shall not provide coverage for
machinery, tools, equipment or other property not destined to become a
permanent part of the Facility which are supplied or used by
CONTRACTOR or Constructor. Such insurance shall name CONTRACTOR and
Constructor as an additional insureds, as their interests may appear.
18.12 CONTRACTOR shall cause all insurance policies providing coverage as
required hereunder, to be endorsed to provide for the waiver of
subrogation rights against the Additional Insureds, as defined in
Section 18.12, and their successors and assigns, and all of their
respective officers, directors, partners and employees. [All policies
and coverages required under this Agreement shall be obtained from
insurance companies rated A+10 or better by A. M. Best Company, unless
otherwise agreed.]
18.13 The insurance policies and coverages described in Section 18.9 (a)-(d)
above shall name OWNER, [OWNER's general partner], Arcadian Trinidad
Ammonia Limited, a Trinidad and Tobago private limited company,
Arcadian Trinidad Limited, a Trinidad and Tobago private limited
company, Arcadian Fertilizer Corporation, a Delaware corporation,
Arcadian Nitrogen Limited, a Trinidad and Tobago private limited
company, Arcadian Corporation, Arcadian Fertilizer, L.P., and such
other affiliated and non-affiliated entities as Owner may designate
(collectively "Additional Insureds"), as additional insured parties.
Additionally, all such liability policies and coverages shall name
Rabobank Nederland, New York Branch (for itself and as agent for other
lenders to OWNER) as additional insured. Further, all such property
damage/loss policies shall name Rabobank Nederland, New York Branch
(for itself and as agent for other lenders to OWNER) as loss payee.
All such insurance policies shall be maintained in full force and
effect until Final Completion. Maintaining the prescribed insurance
shall not relieve CONTRACTOR of any other obligation or any liability
under this Agreement; and OWNER's rights and remedies under this
Agreement (including, without limitation, those under the indemnity
provisions hereof) or otherwise, shall not be limited or modified by
the maintenance by CONTRACTOR of the prescribed insurance, OWNER's
status as an Additional Insured, or OWNER's exercise of rights under
this Article 18. The damages limitations set forth in Section
________ [limit w/e/t adjacent Facilities] above shall not limit, and
does not apply to, the right to receive insurance proceeds by the
Additional Insureds or Rabobank Nederland, New York Branch. All such
insurance policies shall (1) provide that they will not be canceled or
allowed to lapse and their coverages and limits will not be changed in
any way without OWNER being given written notice at least 30 days
before the effective date of any such cancellation, lapse or change;
(2) be provided by insurance companies authorized to do business in
the appropriate state or country and reasonably acceptable to OWNER;
(3) otherwise be reasonably acceptable in form and substance to OWNER.
If any such insurance policy lapses or is canceled or its coverage or
limit is changed, CONTRACTOR shall immediately replace the affected
policy with an insurance policy as called for in this Article 18; and
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if CONTRACTOR does not comply with this covenant, OWNER may obtain the
replacement insurance policy and recover all premiums paid therefor
from CONTRACTOR. CONTRACTOR shall deliver to OWNER evidence of all
such insurance in the form of an insurance certificate(s); CONTRACTOR
shall provide such additional insurance certificates as OWNER may
reasonably request from time to time.
18.14 If CONTRACTOR subcontracts any part of the Work, the insurance
provisions of each subcontract shall be in accordance with
CONTRACTOR's usual practice. CONTRACTOR shall be responsible to ensure
that its Subcontractors maintain insurance as required in the
subcontracts during the course of Subcontractor's operations in
connection with the Work.
18.15 [OWNER shall provide Extended Cargo and Charter's Legal Liability
insurance at its own cost in an amount sufficient to protect the
interests of OWNER and CONTRACTOR. Such insurance shall name
CONTRACTOR as an additional insured. OWNER shall also provide Cargo
Insurance for land transportation on all Work items with a declared
replacement value in excess of US$1,000,000. CONTRACTOR will provide
a list of cargo for each ocean freight shipment noting each item's
replacement value.] [Ship to, bill of lading party has to be ANL.]
ARTICLE 19 - FORCE MAJEURE
19.1 In the event that either OWNER (or its agents) or CONTRACTOR is
rendered unable, wholly or in part, by force majeure, to carry out
its obligations under this Agreement, other than to make payments due
hereunder, it is agreed that upon giving notice and full particulars
of such force majeure event by telephone (confirmed in writing),
facsimile transmission or in writing to the other party, as soon as
possible after the occurrence of the cause relied upon, then the
obligations of OWNER or CONTRACTOR, so far as they are affected by
such force majeure event, shall be suspended during the continuance
of any inability so caused, but for no longer period, and such cause
so far as possible shall be remedied with all reasonable dispatch.
The term "force majeure" as employed herein shall mean acts of God,
acts, omissions to act or delays in action by any governmental
authority, strikes, lockouts or other industrial disturbances, acts
of the public enemy, wars, blockades, insurrection, riots, epidemics,
landslides, lightning, earthquakes, fire, storms, floods, washouts,
arrests and restraint of government or people, civil disturbances,
explosions, unforeseeable breakage or accident to machinery,
equipment or pipelines, and any other unforeseeable causes, similar
to the kind herein enumerated, not within the reasonable control of
affected party and which by the exercise of due diligence it is
unable to prevent or overcome.
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ARTICLE 20 - TERMINATION
20.1 OWNER shall have the right to terminate the Work upon not less than
ten (10) days' prior written notice to CONTRACTOR. In the event of
such termination of the Work, CONTRACTOR shall take immediate steps
to terminate the Work as quickly and efficiently as possible, both in
the field and elsewhere, and shall cancel all commitments on the best
possible terms, unless otherwise instructed in writing by OWNER. In
the event of such termination by OWNER, CONTRACTOR shall be paid by
OWNER for:
(a) all amounts due and payable to CONTRACTOR as of the effective
date of the termination;
(b) such reasonable costs which CONTRACTOR incurs for such parts of
the Work as are specifically authorized by OWNER or which are
incurred by CONTRACTOR in complying with the aforesaid notice
of termination, including a close-out period (not to exceed 4
weeks from the effective date of the notice of termination) for
reassignment of CONTRACTOR's employees to other jobs. Such
reassignment shall be accomplished as quickly as possible;
(c) all termination and cancellation charges incurred in
terminating commitments made to Subcontractors, Vendors [and
other third parties?] for the Work prior to the effective date
of the notice of termination;
(d) the cost of nonterminable commitments [any of these?] made to
Subcontractors, Vendors, and other third parties for the Work
prior to the effective date of the notice of termination; and
(e) [relevant for off-shore contract; reasonable?] [reasonable
costs for the travel, living and related costs incurred by
CONTRACTOR for relocating and reassigning CONTRACTOR's
personnel located in Trinidad and Tobago at the time of the
effective date of the notice of termination plus any severance
or similar payments required to be made by CONTRACTOR to such
personnel.]
OWNER's sole liability to CONTRACTOR for termination shall be
determined in accordance with this Section 20.1 and OWNER shall not
be liable for any other damages including, without limitation, loss
of anticipated profits.
[Do we need a provision for Suspensions?]
20.2 If CONTRACTOR shall commit any breach of any material provision
hereof and such breach shall not be corrected within ten (10) days
after written notice from OWNER to CONTRACTOR (or, if such breach is
not correctable within ten (10) days, then within a reasonable time
after such notice, not to exceed _______________), or if CONTRACTOR
shall become insolvent, either voluntary or involuntary bankruptcy or
receivership proceedings
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[initiated, undismissed?] or make an assignment for the benefit of
creditors, OWNER may terminate this Agreement and complete the Work
under substantially similar terms and conditions as specified herein
in any manner OWNER deems expedient, provided that OWNER shall be
required to mitigate its damages in so completing the Work. In the
event the reasonable and necessary costs incurred by OWNER to
complete the Work exceed the Contract Price, CONTRACTOR shall be
required to reimburse OWNER for such excess.
20.3 [Arcadian proposal: limit to failure to pay undisputed amounts not
covered by Letter of Credit.] [If OWNER shall commit any substantial
breach of any material provision hereof, including without limitation
the payment of any sum due hereunder as and when due, and such breach
shall not be corrected within ten (10) days after written notice from
OWNER to CONTRACTOR (or, if such breach is not correctable within ten
days, then within a reasonable time after such notice), or if OWNER
shall become insolvent, enter voluntary or involuntary bankruptcy or
receivership proceedings [undismissed] or make an assignment for the
benefit of creditors, CONTRACTOR may terminate this Agreement. In
the event of termination of this Agreement pursuant to this Section
20.3, CONTRACTOR shall receive from OWNER those amounts set forth in
Section 20.1 above [?plus five percent (5%) of the unpaid portion of
the Contract Price as of the effective date of termination.?]
ARTICLE 21 - ASSIGNMENTS AND SUBCONTRACTS
21.1 OWNER may assign, convey, transfer or otherwise dispose of all or any
portion of its interest in, and/or its rights and obligations under,
this Agreement to (i) any direct or indirect parent, subsidiary or
other Affiliate of OWNER; (ii) Arcadian Corporation (its successors
and assignees), Arcadian Trinidad Limited (its successors and
assignees), or any direct or indirect parent, subsidiary or other
Affiliate of any thereof; (iii) any successor to OWNER or to any
assignee of OWNER by merger, consolidation, sale or other disposition
of all or substantially all of OWNER's or such assignee's assets, or
otherwise; and (iv) any secured lender or creditor of OWNER or any of
its successors or assignees, in each case without the consent or
approval of CONTRACTOR.
21.2 Except to the extent provided in Sections 21.3 and 21.4, CONTRACTOR
may not assign, convey, transfer or otherwise dispose of all or any
portion of its interest in, or its rights and obligations under, this
Agreement without the prior written consent of OWNER. Any such
permitted assignment shall not relieve CONTRACTOR of any of its
liabilities or obligations under this Agreement. Any assignment,
conveyance, transfer, or other disposition made or attempted in
violation of this Section 21.2 shall be void and of no force or
effect.
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21.3 CONTRACTOR may have part of the Work performed by one or more of its
Affiliates; provided that CONTRACTOR shall remain liable and
responsible for the performance of such Work in accordance with the
terms and conditions of this Agreement. For all purposes of this
Agreement, including without limitation Articles
_____________________________, CONTRACTOR and any such Affiliates
shall be considered one and the same entity.
21.4 CONTRACTOR may subcontract portions of the Work, as provided in
Sections ______ and _________[Subcontractors, procurement].
ARTICLE 22 - PUBLICITY RELEASES
22.1 CONTRACTOR shall make no publicity announcements regarding the Work
or CONTRACTOR's activities relating thereto without OWNER's prior
written consent.
ARTICLE 23 - PERMITS, LICENSES & TAXES
23.1 Except for permits, licenses and other governmental authorizations
which must be obtained in the name of the OWNER, CONTRACTOR shall
procure all permits, licenses and other governmental authorizations
that may be needed to perform the Work, including, without
limitation, Work to be performed at the Site; provided however, that
OWNER shall obtain, or assist CONTRACTOR in obtaining, all Trinidad
and Tobago construction permits necessary for the performance of Work
at the Site.
23.2 CONTRACTOR shall be responsible for the reporting, filing, and
payment of any and all taxes, duties, charges and fees (and any
related fines, penalties, or interest) imposed directly or indirectly
by any governmental authority on the Work, the performance of the
Work, items, materials or services employed in connection with the
Work, CONTRACTOR or its Subcontractors, Vendors, employees, agents,
or servants, as a result of CONTRACTOR's performance of Work. OWNER
will be responsible for local Trinidad custom duties and import taxes
or fees (or related bonds) for all Trinidad Work related materials,
tools, supplies, consumables, and equipment. OWNER will pay
CONTRACTOR for VAT required to be imposed on the lump sum billings
for Trinidad Work invoiced to OWNER under Section ________.
23.3 CONTRACTOR and all Subcontractors shall be registered and licensed to
perform services (including the Work) in all States in which Work is
being performed hereunder, and the Republic of Trinidad and Tobago,
to the extent required by applicable laws, rules or regulations of
each jurisdiction in which Work is or may be performed.
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ARTICLE 24 - INDEPENDENT CONTRACTOR
24.1 It is expressly understood and agreed that in the performance of the
Work, CONTRACTOR is, and shall be an independent contractor, and is
and shall be solely responsible for the means, method and manner of
performing the Work, including, without limitation, the selection of
suitable tools and equipment and a sufficient number of qualified
employees and subcontractors. The selection of personnel, their
training and supervision, their hours of labor, and the compensation
and benefits to be paid to or provided such personnel shall be
determined by and shall be the responsibility of CONTRACTOR or its
Subcontractors or agents, as the case may be. Under no circumstances
shall activities or omissions of CONTRACTOR, its agents,
representatives, or Subcontractors, or CONTRACTOR's employees, be
considered those of OWNER or its agents, and in no event shall the
relationship between the parties (or any party's agent) be construed
as that of principal and agent, master and servant, joint venturers,
or employer and employee for any purpose whatsoever. As an
independent contractor, any and all personnel utilized directly or
indirectly by CONTRACTOR shall not be deemed to be employees, agents
or representatives of OWNER or its agents. CONTRACTOR acknowledges
and agrees that it and not OWNER will make or cause to be made any
payments on behalf of CONTRACTOR, any of its agents or
Subcontractors, or any of their respective employees.
ARTICLE 25 - NOTICES
25.1 The Coordination Procedure in Annex B sets forth the procedures and
addresses for the routine and ongoing communications between OWNER
and CONTRACTOR.
25.2 All notices, demands, requests and other communications hereunder
(not addressed by the Coordination Procedures) shall be made in
writing and shall be delivered in person or by certified mail
(postage prepaid and return receipt requested), courier or overnight
delivery service (delivery charge prepaid), or telecopy or facsimile.
A copy of any notice sent by telecopy or facsimile shall be promptly
sent by certified mail. Any notice, demand, request or other
communication shall be effective only if and when it is received by
the addressee. For the purposes hereof, the addresses and telecopier
numbers of the parties hereto are as follows:
To Owner:
Nitrogen Leasing Company, Limited Partnership
c/o ML Leasing Equipment Corp.
Project and Lease Finance Group
250 Vesey Street
North Tower, 27th Floor
New York, New York 10281
Attention: Marjorie A. Hargrave, Vice President
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<PAGE> 183
Telecopier: [(212) 449-7148]
with a copy to:
Arcadian Nitrogen Limited
6750 Poplar Avenue, Suite 600
Memphis, Tennessee 38138-7419
Attention: Mr. Fritz D. Bertz, Vice President, Technical,
Arcadian Corporation
Telecopier: (901) 758-5201
Mr.____________________________, Project Manager
Arcadian Fertilizer Limited
Goodrich Bay Road
Point Lisas, Couva
Trinidad, West Indies
Telecopier: [(809) 636-2052]
and to Contractor as follows:
The M. W. Kellogg Company
601 Jefferson Avenue
Houston, Texas 77002
Attention: Senior Vice President
Telecopier: (713) 753-5353
Any party hereto may change its address or telecopier number for the
purposes hereof by giving notice thereof to the other party in the
manner provided for herein.
ARTICLE 26 - ACCOUNTING AND INSPECTION OF RECORDS
26.1 CONTRACTOR shall maintain suitable accounting records with respect to
the Work. Upon completion of the Work, CONTRACTOR shall provide
OWNER with a distribution of the total costs thereof to OWNER
according to a classification of accounts to be furnished by OWNER.
[Fit with lump sum price?]
26.2 CONTRACTOR shall keep full and accurate records of payments for and
costs of the Work and shall preserve such records for one (1) year
after the Date of Mechanical Completion. OWNER shall have the right,
to be exercised at its discretion at all reasonable times during
regular business hours, to inspect such records insofar as may be
necessary to verify items paid for by OWNER pursuant to Annex D. In
no event shall OWNER be entitled to audit the composition of any
specified percentages, fixed rates, fixed prices or other agreed
compensation referred to in this Agreement or any amendment or
modification thereto.
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<PAGE> 184
[Need to have due authorization, execution representations and warranties for
each entity--I have some short ones if you don't.]
ARTICLE 27 - MISCELLANEOUS
27.1 Entire Agreement. This Agreement (including the attached annexes)
constitutes the full understanding of the parties, a complete
allocation of risks between them, and a complete and exclusive
statement of the terms and conditions of their agreement relating to
the subject matter hereof and supersedes any and all prior
negotiations, understandings and agreements, whether written or oral,
between the parties with respect thereto, including, without
limitation, any and all interim arrangements and agreements. Except
as otherwise specifically provided in this Agreement, no term,
condition, usage of trade, course of dealing or performance,
understanding or agreement purporting to modify, vary, explain or
supplement the provisions of this Agreement shall be effective or
binding on the parties, unless the same hereafter is effected in
accordance with Section 27.2.
27.2 Amendments. This Agreement may not be altered, modified, amended or
changed (other than any waiver of any provision hereof, which shall
be effective only if made in accordance with Section 27.3) in any
manner, except by a written agreement executed and delivered by all
parties. Without limiting the generality of the foregoing, this
Agreement shall not be altered, modified, amended or changed by any
terms or provisions of purchase orders, invoices or other documents
issued, delivered, and/or executed by or to CONTRACTOR or OWNER in
connection with the Work or otherwise.
27.3 Waivers. No waiver by any party of any breach of the covenants set
forth herein or any claim, right or remedy provided for hereunder and
no course of dealing shall be deemed a waiver of the same or any
other breach, claim, right or remedy, unless such waiver is in
writing and is signed by the party sought to be bound. The failure
of a party to assert or exercise any claim, right or remedy shall not
be deemed a waiver of such claim, right or remedy in the future. Any
failure by either OWNER or CONTRACTOR at any time or from time to
time to enforce or insist upon the strict keeping and/or performance
of any of the terms or conditions of this Agreement, shall not
constitute a waiver of such terms or conditions, and shall not affect
or impair such terms or conditions in any way, or the rights of OWNER
or CONTRACTOR at any time to avail itself of such remedies as it may
have for any breach or breaches of such terms or conditions.
27.4 Modification and Severability. If an arbitration tribunal or court
of competent jurisdiction declares that any provision of this
Agreement is illegal, invalid or unenforceable, then such provision
shall be modified automatically to the extent necessary to make such
provision fully legal, valid and enforceable. If such arbitration
34
<PAGE> 185
tribunal or court does not modify any such provision as contemplated
herein, but instead declares it to be wholly illegal, invalid or
unenforceable, then such provision shall be severed from this
Agreement, and this Agreement, and the rights and obligations of the
parties hereto, shall be construed as if this Agreement did not
contain such severed provision, and this Agreement otherwise shall
remain in full force and effect.
27.5 Enforceability. This Agreement shall be enforceable by and against
CONTRACTOR and OWNER and their respective successors, permitted
assignees and legal representatives.
27.6 Survival. Any and all guarantees, representations, warranties,
standards and specifications concerning the Work, Construction Work,
Facility or Plant set forth herein shall survive (I) the inspection,
test, acceptance (including acceptance pursuant to Section ________)
and payment for the Work or any portion thereof; and (ii) for the
maximum period permitted by applicable law (subject to the duration
limitations set forth in Article _____), the termination, suspension
or expiration of the Work (or any portion thereof) or this Agreement
(or any portion thereof). The provisions of Articles ______________
[indemnity, license, patent, confidentiality], and the parties'
respective obligations, rights and remedies thereunder, shall survive
the termination, suspension or expiration of the Work (or any portion
thereof) or this Agreement (or any portion thereof) for the maximum
period permitted by applicable law.
27.7 Conflicts. In the event there are conflicts between the provisions
set forth in the body of this Agreement and those set forth in
annexes hereto, the provisions set forth in the body of this
Agreement shall control.
27.8 Captions. The captions contained in this Agreement are for
convenience of reference only and shall not affect in any way the
meaning, construction or scope of the provisions of this Agreement.
27.9 Joint Venture. OWNER and CONTRACTOR are not and shall not be deemed
or construed to be joint venturers, partners, agents, servants,
employees, fiduciaries or representatives of each other by virtue of
this Agreement or the performance thereof.
27.10 Equitable Remedies. The parties acknowledge and agree that
irreparable damage would occur in the event that material provisions
of this Agreement were not performed in accordance with their
specific terms and conditions or were otherwise breached.
Accordingly, in the event of any breach by a party hereto of any
covenant contained in this Agreement, the other party shall be
entitled to equitable relief (including, without limitation, specific
performance of such covenant), in addition to any and all other
remedies to which said party may be entitled hereunder or by law.
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<PAGE> 186
Any party's full or partial exercise of any remedy shall not preclude
any subsequent exercise by said party of the same or any other
remedy.
27.11 Cumulative Nature. The respective rights and remedies of the parties
under this Agreement shall be cumulative of, in addition to, and not
in limitation of, one another, and any and all other rights and
remedies which may be available under applicable law.
27.12 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED UNDER,
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TENNESSEE,
UNITED STATES OF AMERICA, EXCLUDING THE CONFLICT-OF-LAWS PROVISIONS
THEREOF. OWNER AND CONTRACTOR SHALL SUBMIT TO THE JURISDICTION OF
THE STATE COURTS IN SHELBY COUNTY, TENNESSEE, IN CONNECTION WITH ANY
ACTION, SUIT OR OTHER LEGAL PROCEEDING ARISING FROM OR BASED ON THIS
AGREEMENT.
27.13 Multiple Counterparts. This Agreement may be executed by the parties
hereto in multiple counterparts, each of which shall be deemed an
original for all purposes, and all of which together shall constitute
one and the same instrument.
27.14 [Required by Merrill Lynch] No Recourse. OWNER's obligations
hereunder are intended to be the obligations of the limited
partnership and of the corporation which is the general partner
thereof only and no recourse for any obligation of OWNER hereunder,
or for any claim based thereon or otherwise in respect thereof, shall
be had against any limited partner of OWNER or any incorporator,
shareholder, officer or director, or affiliate, as such, past,
present or future of such corporate general partner or limited
partner or of any successor corporation to such corporate general
partner or any corporate limited partner of OWNER, or against any
direct or indirect parent corporation of such corporate general
partner or of any limited partner of OWNER or any other subsidiary or
affiliate of any such direct or indirect parent corporation or any
incorporator, shareholder, officer or director, as such, past,
present or future, of any such parent or other subsidiary or
affiliate. Nothing contained in this section shall be construed to
limit the exercise or enforcement, in accordance with the terms of
this Agreement and any other documents referred to herein, of rights
and remedies against the limited partnership or the corporate general
partner of OWNER or the assets of the limited partnership or the
corporate general partner of OWNER.
27.15 [Required by Merrill Lynch] Agent. CONTRACTOR acknowledges and
agrees that (I) all of OWNER's obligations under this Agreement shall
be performed by [ANL, as agent], and (ii) Arcadian Fertilizer, L.P.
shall be responsible to OWNER for the supervision of such agent's
performance hereunder as agent of OWNER under an
36
<PAGE> 187
Agreement for Lease, dated as of March _____, 1996, between OWNER and
Arcadian Fertilizer, L.P.
IN WITNESS WHEREOF, this Agreement is executed as of the day and year first
above written but is effective as of [February 15, 16, 1996].
NITROGEN LEASING COMPANY, THE M. W. KELLOGG COMPANY
LIMITED PARTNERSHIP
By: ML Leasing Corp., General Partner
By: By:
-------------------------------- ----------------------------
Name: Name:
------------------------------ --------------------------
Title: Title:
----------------------------- -------------------------
JCA\ 01174.2
37
<PAGE> 188
ANNEX A
SCOPE OF WORK
ANNEX A is contained in a separate bound volume. Is Annex A the 5 notebooks?
Does this include the Basis for Design?
<PAGE> 189
ANNEX B
COORDINATION PROCEDURE
(To be prepared)
<PAGE> 190
ANNEX C
PERFORMANCE GUARANTEES
The Performance Guarantees will provide a schedule of Liquidated Damages
payable by Contractor from 95% of guaranteed items to 100%. Arcadian proposes
that Liquidated Damages equal $2 million for each percent below 100%. Arcadian
further proposes that a bonus not apply for performance in excess of 100%. [?:
Is it possible to quantify on a percentage basis each of the components of the
Performance Guarantee?]
<PAGE> 191
ANNEX D
RATES
This Annex will consist of the list of rates, charges, costs, etc. Since this
is a lump sum contract, will these rates apply only to estimates for Change
Orders? Should this Annex be included?
<PAGE> 192
ANNEX E
TERMS OF PAYMENT
This Annex will set forth the schedule and method of payments. Will the
progress payment schedule together with associated percentages of completion be
set forth here? Will there be separate payment schedules for the 2 contracts?
Note: Need to provide for provisions requiring the LC currently required
under the interim agreement.
<PAGE> 193
ANNEX F
MECHANICAL COMPLETION
(To be prepared)
<PAGE> 194
EXHIBIT M-1
ELECTRICITY SUPPLY AGREEMENT
TRINIDAD AND TOBAGO
AN AGREEMENT made in duplicate this 22nd day of February in the year One
Thousand Nine Hundred and Ninety Six Between the TRINIDAD AND TOBAGO
ELECTRICITY COMMISSION a body corporate established under the Laws of Trinidad
and Tobago with its principal place of business at 63 Frederick Street in the
City of Port of Spain in the Island of Trinidad (hereinafter called "the
Commission") of the One Part and ARCADIAN NITROGEN LIMITED a Company
incorporated under the Companies ordinance Chapter 31 No. 1 the registered
office of which is at Atlantic Avenue, Point Lisas, Couva, Trinidad
(hereinafter called "the Consumer") of the Other Part.
WHEREAS:
A. The Consumer will be operating on its premises at Point Lisas, Couva, a
plant to manufacture anhydrous ammonia and for this purpose requires a
constant and uninterrupted supply of electricity.
B. The Commission under the powers conferred upon it by the Trinidad and
Tobago Electricity Commission Act, Chapter 54:70 of the Laws of the
Republic of Trinidad and Tobago is willing to sell and deliver
electricity to the Consumer's plant under the terms and conditions set
out below.
NOW THEREFORE IT IS HEREBY AGREED by and between the Parties hereto as
follows:-
<PAGE> 195
DEFINITIONS
1. In this Agreement and in the schedules hereto unless the context
otherwise requires the following expressions shall have the meanings herein
assigned to them respectively that is to say:
"Date of Commencement of Supply" means the first date on which the Commission
shall make available to the Premises and the Consumer shall take electrical
energy pursuant to Clause 2 of this Agreement.
"Day" means any period of twenty-four (24) hours.
"Month" or "Billing Month" means the period of approximately a month from one
reading of the metering equipment to the next such reading.
"Electric Lines" include the overhead electric lines and support therefor,
underground electric cables and ducts and other appurtenant fittings and
appliances required for their successful installation, operation and
maintenance.
"Maximum Demand" shall be the average monthly kilovolt ampere load during the
fifteen minute period of greatest use over any particular month as indicated by
the Commission's meter or at the Commission's option as indicated by tests over
a fifteen minute period from time to time.
"Metering Equipment" means the whole equipment specified in the Second Schedule
hereto employed in metering the Supply.
"The Premises" means the Consumer's plant and/or installations at Atlantic
Avenue, Point Lisas and all buildings now or from time to time to be erected in
its vicinity and used and/or occupied by persons in the employ of the Consumer.
2
<PAGE> 196
"Pressure" means Voltage.
"Start-up Date" shall be a date notified by the Consumer to the Commission by
twenty-one (21) days' notice in writing being a date within a period of six
months the commencement of which period shall be on a date notified by the
Consumer to the Commission not less than six months beforehand.
"The Supply" means the electricity provided by the Commission and taken by the
Consumer within or for the purposes of the Premises.
"Year of Supply" means twelve months termination on any December 31.
"Hertz" means cycle per second.
"KVA" means kilovolt amperes.
"V" means volts.
"KWHR" means kilowatt hour.
"MVA" means one thousand KVA.
Provision of the Supply
2. From and including the date of commencement of the supply the Commission
shall provide and the Consumer shall take from the Commission and pay for the
Supply upon the terms and conditions herein appearing.
Availability of Supply
3 The Commencement Date shall be January 1, 1998. In the event that the
Consumer fails to meet this Date the Commission shall be entitled to bill the
Consumer in accordance with Schedule 3 hereto unless otherwise agreed.
4. The Commission will supply on request values of positive, negative and
zero sequence impedances for each line at the Point of Supply and shall inform
the company of any major changes in
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<PAGE> 197
these values which may occur during the term of this Agreement.
System and Pressure of the Supply
5. The Supply be provided and taken at the pressure and on the system and
at the point of supply all as set forth in the First Schedule hereto. Without
the consent of the Commission in writing the Supply shall not be taken at a
level in excess of the maximum specified in the said First Schedule PROVIDED
HOWEVER that without notice to the Commission the Consumer may take up the
Supply at a level of ten percent (10%) in excess of the maximum reserve
capacity but shall not be at liberty to take up supply at any greater level
without the consent in writing of the Commission.
Substation Accommodation
6. The Consumer shall provide and keep in good repair and condition on a
convenient site on the premises to be agreed upon between the parties
accommodation of the type specified in the First Schedule hereto (hereinafter
called "the Consumer's Substation") of a size and construction approved by the
Commission for the reception of the Electric Lines provided for the purpose of
the Supply and for accommodating the apparatus to be installed for the purpose
of providing transforming controlling and/or metering the Supply.
Electrical Lines
7. The Commission shall provide erect and maintain all necessary Electrical
Lines and apparatus requisite for the purpose of providing the Supply and the
consumer hereby grants free of all charges to the Commission the necessary
twenty-five feet wide wayleaves for such electric lines along and immediately
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<PAGE> 198
below the course or proposed course of the Electrical Lines over and/or under
land owned and/or occupied by the Consumer. The Consumer shall maintain such
wayleaves by cutting and clearing all underbrush trees and other growth which
may endanger such Electric Lines. The Supply shall be provided by the
Commission subject to all requisite wayleaves and consents being obtained and
retained by the Commission in respect of such Electric Lines.
Right of Commission to Apparatus Supplied by them
8. All electric lines and apparatus provided by the Commission shall remain
the property of the Commission and subject as otherwise herein provided shall
be kept in good repair by them and may be removed by the Commission at any time
and from time to time for repairs or exchange and except in so far as may be
specifically authorised by the Commission in writing no person other than the
authorised officials of the Commission shall be permitted to interfere in any
way therewith PROVIDED HOWEVER and it is hereby expressly agreed and declared
that whenever the Commission or its employees or its agents shall desire to
remove, maintain or exchange any equipment which might interfere with the
Supply to the Consumer, the Commission and the Consumer shall mutually agree on
the time when such work shall be done by the Commission.
Damage to Apparatus Provided by Commission
9. The Consumer shall be responsible for and will make good to the
Commission all damage to the Electrical Lines and/or apparatus of the
Commission or injury to personnel on the Premises due to accident or negligence
on the part of the Consumer or the Consumer's employee or to fire or to trees
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falling on the premises but shall not be responsible for any such damage,
injury or loss attributable to any act or default of the Commission or any of
its servants and/or agents or any other third party.
Connection of Installation to the System
10. The Consumer shall ensure that the Consumer's installation within the
Premises will at all times comply with the appropriate Regulations detailed in
the Electricity (Inspection) Act, Chapter 54:72 of the Laws of the Republic of
Trinidad and Tobago and any Rules or Regulations having the force of statute
and of any modifications thereof applicable to the taking and/or use of
electricity within the Premises PROVIDED HOWEVER that on specific authorization
in writing from the Government Electrical Inspector the Consumer may deviate
from such regulations. If the Consumer and/or the Commission shall discover any
serious defects in any part of the Consumer's installation the Consumer and/or
the Commission shall forthwith disconnect the same from the circuits of supply.
However, the Commission and the Consumer shall mutually agree on the way these
defects shall be rectified.
Undertaking as to Maintenance of Installation for High Voltage Use
11. The Consumer undertakes and agrees that every portion of the Consumer's
installation which is for use at high voltage will be maintained in an
efficient state and if so required to the satisfaction of the Commission and
that in cases where any portion of the Consumer's installation is not enclosed
in a building or other structure to which access can only be obtained by means
of a key or special appliance the Consumer will ensure that an authorised
person will be available to cut off the supply
6
<PAGE> 200
in the event of emergency and the Consumer further agrees that instructions as
to the treatment or persons suffering from electric shock will be affixed on or
in the premises.
Damage to Consumer's Installation
12. The Commission shall be responsible for and shall make good to the
Consumer all damage or injury to the Consumer's substation caused by negligence
on the part of the Commission or the Commission's employees but shall otherwise
be under no responsibility of any kind for or in connection with the Consumer's
installation and/or apparatus.
Improper use of Supply
13. The Commission may disconnect the Supply if the same is improperly used
by the Consumer or is used in such manner as would affect the continuity or
quality of the supply of electricity to other consumers. The Supply and any
electricity or energy produced directly or indirectly from the use of the
Supply shall only be used for the purpose for which the Supply is provided. The
Commission shall except in cases of emergency (as to the existence of which it
shall be the sole judge) before exercising its rights under this Clause give
the Consumer reasonable notice of its intention to make any such disconnection
and afford the Consumer an opportunity of removing the cause of such intended
disconnection.
Entry for Inspection
14. The Commission by its properly identified servants shall be entitled at
all times to enter the premises for the purposes of inspecting altering
replacing testing maintaining and repairing
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<PAGE> 201
electric lines and apparatus and for all other purposes incidental to or in
connection with the Supply.
Accounts
15(1). The Consumer shall make to the Commission at the end of each month
during the period of this Agreement payment in respect of the Supply at the
rates stated in the Third Schedule hereto.
15(2). All accounts rendered by the Commission to the Consumer shall be deemed
to be accepted by the Consumer as correct unless within twenty-one (21) days of
the delivery of any such account the Consumer shall give to the Commission
written notice that such account is objected to the Consumer shall pay all
accounts due to the Commission within twenty-eight (28) days after the delivery
of the account and in case of default shall also (if required by the
Commission) pay interest from the date of delivery of the account at the rate
of one percent above the prevailing prime bank rate on the moneys remaining
unpaid and not bona fide disputed.
Discontinuance of Supply and Termination of Agreement in certain Events
16. If either party shall commit any breach of this Agreement or shall
commit an act of bankruptcy or (being a Company) shall enter into liquidation
(not merely being a voluntary liquidation for the purpose of reconstruction or
amalgamation) or enter into any arrangement or composition with or for the
benefit of its creditors then it shall be lawful in any such case for the other
party at its option after giving twenty-four (24) hours notice in writing to
terminate this Agreement without prejudice to any right of action or remedy of
such other party in respect of any such breach of this Agreement.
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<PAGE> 202
Accident Damage and Failure of the Supply
17. The Commission shall not be responsible for any loss accident or damage
direct or indirect caused by the use or misuse of the Supply or by any failure
or interruption in the provision of the Supply in the event of any such failure
or interruption the Commission shall use all reasonable endeavors in restoring
the Supply. Wherever practicable the Commission will give to the Consumer
advance notice of any interruptions necessary for the purpose of tests
alterations and repairs of the Commission's system and such work shall be done
at a time or times to be mutually agreed upon.
Agreement not to be Assigned
18. This Agreement or any benefit accruing hereunder shall not be assigned
by the Consumer without the consent of the Commission provided that such
consent shall not be unreasonably withheld but the Commission shall be entitled
as a condition of giving it to require the assignees to enter into an agreement
with the Commission directly binding them to the terms hereof with such
modifications if any as may be agreed upon or properly required by the
Commission.
Period of Agreement
19. The Supply shall continue to be provided by the Commission and taken by
the Consumer subject to the terms and conditions of this Agreement until the
expiration of five (5) years after the date of commencement of supply and may
be renewed for successive periods of five (5) years by the Consumer giving
notice in
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<PAGE> 203
writing to the Commission of at least three (3) months prior to the expiration
of the initial or any renewed term of its desire for such extension.
Reservation of Statutory Rights
20. Save as hereby expressly provided to the contrary the Commission
reserves to itself all powers rights authorities privileges and exemptions
conferred upon it by or under the Laws of the Republic of Trinidad and Tobago
and/or any orders or regulations for the time being governing or regulating the
supply of electricity by the Commission. Save as provided by this Agreement the
Company shall be entitled to all powers rights authorities privileges and
exemptions conferred upon it by or under the Laws of Trinidad and Tobago.
Notices and Accounts
21. Any notice intended for the Commission shall be deemed to be properly
and sufficiently served if delivered at or forwarded by registered post to its
principal place of business in Trinidad and Tobago and any notice to be given
or account to be delivered to the Consumer shall be deemed to be properly and
sufficiently served if delivered at or forwarded by registered post to its
registered office in Trinidad and Tobago. A notice or account sent by
registered post shall be deemed to be given on the date on which it is received
at the address to which it is sent.
Schedules
22. The Schedules hereto shall form part of this Agreement PROVIDED ALWAYS
that in order to give effect to changes in the rates and charges authorized in
accordance with the provisions
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<PAGE> 204
of the Public Utilities Act Chapter 54:01 and the Trinidad and Tobago
Electricity Commission Act Chapter 54:70 and applicable to consumers receiving
a supply under an agreement similar to these presents the Commission shall be
entitled at any time and from time to time during the continuance of this
Agreement to give to the Consumer one (1) month's notice in writing of its
intention to amend the charges set out in the Third Schedule hereto. Upon
receipt of any such notice and within fourteen (14) days of the receipt thereof
the Consumer shall notify the Commission in writing whether or not it accepts
the amendment. Should the consumer fail to notify the Commission in
writing within the aforesaid period whether or not it accepts the amendment the
Consumer shall be deemed to have accepted the amendment and shall be bound
accordingly and should the Consumer notify the Commission in writing within the
aforesaid period that it does not accept the amendment then and in such case
this Agreement shall cease and terminate at the expiration of the period of the
Commission's notice of intention to amend but any such termination shall be
without prejudice to any antecedent rights of the parties hereto.
No Waiver
23. No waiver by either party of any failure or failures on the part of the
other to perform any of the terms conditions and stipulations of this Agreement
shall in any circumstances be construed as a waiver of any other failures or of
any future or continuing failure or failures whether similar or dissimilar
thereto.
11
<PAGE> 205
Full Agreement
24. This Agreement constitutes the full agreement between the parties hereto
and no other statements, oral or written made prior to or at the time of the
execution of this Agreement shall vary or modify the written terms hereof; and
no amendment or modification of or release from any provision herein contained
shall be valid or effectual unless the same shall be in writing and signed by
both parties specifically stating it is an amendment of this Agreement.
Arbitration
25. In case any question, dispute or difference shall at any time arise
between the Consumer and the Commission as to the meaning or effect of these
presents or any Clause or matter herein contained or as to the rights, duties,
or liabilities of the parties hereunder or otherwise howsoever in relation to
these presents, the same shall be referred to the determination of a single
arbitrator in case the parties can agree upon one or otherwise to two
arbitrators, one to be appointed by each party, or to an umpire to be appointed
by such arbitrators before entering in the reference and such arbitration shall
be in accordance with the provisions of the Arbitration Act Chapter 5:01 of the
Laws of the Republic of Trinidad and Tobago or any statutory modification or
re-enactment thereof for the time being in force.
Force Majeure
26. Neither party shall be responsible for failure to discharge its
obligations hereunder if such failure is due to Force Majeure. Force Majeure
shall mean and include acts of God,
12
<PAGE> 206
strikes, lockouts or other industrial disturbances, acts of the public enemy,
wars, blockades, insurrections, riots, landslides, earthquakes, lightning,
storms, floods, washouts, arrests and restraints of governments, civil
disturbances, explosions, breakage or accident to machinery, operating
equipment or electric lines, and all other causes which may affect the
performance of the obligations under this Agreement which are not within the
control of the Commission or the Consumer, as the case may be and which by the
exercise of due diligence the Commission or the Consumer as the case may be
shall have been unable to prevent or overcome.
HEAD NOTES
27. The Head Notes shall not affect the construction hereof.
13
<PAGE> 207
THE FIRST SCHEDULE
(a) The System and Pressure of Supply shall be:-
3 phase 4 Wire (1 for ground) 60 Hertz
66,000 or 132,000 Volts Alternating Current
(hereinafter referred to as the required Voltage).
(b) The point of Supply shall be the load terminals of the two (2) outgoing
isolators which are connected to the 66kV or 132kV Bus as the case may
be at the T&TEC's Arcadian 04 Substation.
(c) The maximum reserve capacity of the Supply shall be 16000kW or such
increased capacity as agreed between the Consumer and the Commission.
(d) The Consumer's Substation accommodation shall be located at the
Consumer's premises at Atlantic Avenue, Point Lisas Industrial Estate
and shall consist of circuit breakers of the required Voltage and other
isolating devices, transformers and associated equipment with a switch
house and a metering station.
(e) The supply will consist of two (2) feeders for the required voltage
emanating from the Commission's Subtransmission System originating at
the Point Lisas Power Station.
(f) The Consumer will be billed in accordance with the T&TEC D3 Tariff as
provided in the Third Schedule.
14
<PAGE> 208
THE SECOND SCHEDULE
(a) The Supply shall be measured by apparatus provided mounted maintained
and when necessary replaced and renewed by the Commission at the expense
of the Commission. Such apparatus shall be suitable for the purposes of
metering the number of kilowatt-hours provided and the Maximum Demand.
(b) The metering equipment shall be read and where necessary reset and
resealed at monthly intervals and for the purposes of the monthly
accounts to be rendered by the Commission each month shall be deemed to
terminate and the subsequent month to commence at the time and date of
such reading.
(c) The records taken by the Commission of the readings of such metering
equipment shall be deemed to be correct unless the accuracy of the
metering equipment shall be disputed by notice given by the one party to
the other either at the time of the taking thereof or not later than
thirty (30) days from the rendering by the Commission of any account
based on the readings of the metering equipment. Notwithstanding
anything contained in Clause 25 of this Agreement in the event of the
accuracy of the metering equipment being disputed the matter shall
failing agreement be determined by arbitration in accordance with
Section 59 of the Trinidad and Tobago Electricity Commission Act Chapter
54:70 of the Laws of the Republic of
15
<PAGE> 209
Trinidad and Tobago.
If in consequence of such dispute it is ascertained that the metering equipment
is inaccurate to the extent of two and one half percentum or more, such
inaccuracy shall be deemed to have commenced at the beginning of the period to
which the monthly account rendered immediately preceding such notice relates
and accounts in respect to that period and subsequent periods (if any) during
which meter readings have been taken from metering equipment of such inaccuracy
shall be appropriately corrected either in favour of the Consumer or of the
Commission. If the metering equipment is accurate within the limits aforesaid
no adjustment shall be made in favour of either party and the party who
required that the matter be determined by arbitration shall pay the cost of
such proceedings.
16
<PAGE> 210
THE THIRD SCHEDULE
INDUSTRIAL
LARGE LOAD (RATE D3)
AVAILABILITY: Three phase high voltage supply for all purposes supplied
and metered at one point.
CHARACTER OF 3 Phase, 60 Hertz, Alternating Current at 33kV, 66kV or
SERVICE 132kV for loads from 4,000KVA to 25,000KVA.
MAXIMUM DEMAND: $21.25 per KVA of maximum demand in a month. Maximum
Demand shall be the average KVA load during the 15 minute
period of greatest use during the month as indicated by
the Commission's meter or at the Commission's option as
indicated by tests from time to time. In cases where
demand is intermittent or subject to violent fluctuations,
the Commission may establish the Maximum Demand on the
basis of a shorter interval of measurement, or the KVA of
transformer capacity required to serve the customer's load
or may assess the demand on the basis of the installed
capacity.
ENERGY: 6.0 cents per KWH for all KWH.
FUEL CHARGE: For every one cent change from 218.9 cents in the average
gross price per 1,055,100 KJ's of fuel used in a month,
the charge per KWH will be increased or decreased by
0.0154 cents. This charge will be applied to all KWH
billed in the month corresponding to that for which the
charge was calculated. This charge will be billed in the
month following that for which the charge was calculated
and applied.
DEVALUATION For every one percent devaluation of the Trinidad and
CLAUSE: Tobago Dollar above the exchange rate of US$1 = TT$4.25,
the charge per KWH shall be increased. The surcharge
17
<PAGE> 211
per KWH to be applied shall be calculated in accordance
with the formula as defined in Order No. 80 of the Public
Utilities Commission.
This surcharge will be applied from the calendar month
following the month in which the devaluation occurs.
RESERVE CAPACITY: The Commission will reserve at the customer's request a
declared transmission and distribution capacity. The
minimum demand charge for the month will be based on 75%
of the Reserve Capacity.
MINIMUM BILL: The Reserve Capacity Charge.
18
<PAGE> 212
IN WITNESS WHEREOF this Agreement is executed in duplicate by the
duly authorized representatives of the Parties hereto.
SIGNED AND DELIVERED by )
S.P. OTTLEY, GENERAL MANAGER for ) /s/ [ILLEGIBLE]
TRINIDAD AND TOBAGO ELECTRICITY ) -------------------------------------
COMMISSION )
) -------------------------------------
in the presence of )
/s/ [ILLEGIBLE] )
SIGNED AND DELIVERED by )
NAZIR KHAN, MANAGING DIRECTOR for ) /s/ [ILLEGIBLE]
ARCADIAN NITROGEN LIMITED ) -------------------------------------
)
in the presence of ) -------------------------------------
/s/ [ILLEGIBLE] )
19
<PAGE> 213
This Agreement for Lease is
Confidential and Proprietary
EXHIBIT M-2
WATER SUPPLY AGREEMENT
2
<PAGE> 214
EXHIBIT M- 2
WATER SUPPLY AGREEMENT
AGREEMENT
between
WATER AND SEWERAGE AUTHORITY
and
ARCADIAN NITROGEN LIMITED
dated February 15th, 1996
<PAGE> 215
1
TRINIDAD AND TOBAGO
THIS AGREEMENT made in duplicate this 10th day of February in the year of Our
Lord One Thousand Nine Hundred and Ninety-Six between the WATER AND SEWERAGE
AUTHORITY, a body corporate established by the Water and Sewerage Act Chap.
54:40 (hereinafter called "the Authority") of the One Part and ARCADIAN NITROGEN
LIMITED, a company incorporated under the Companies Ordinance Chapter 31 No. 1
and having its registered office at Atlantic Avenue, Point Lisas, Couva in the
island of Trinidad (hereinafter called "the Company") of the Other Part "the
Authority" and "the Company" being sometimes jointly referred to hereinafter as
"the Parties".
WHEREAS:
A. The Company is in the process of constructing a plant for the
manufacture of ammonia and related operations (hereinafter called "the
said operations") on lands comprising 5.9404 hectares more or less at
Point Lisas, Trinidad (which land of the Company is herein referred to
as "the said lands").
B. The Company desires to purchase from the Authority water in the amounts
and of the quality and at the prices specified below for use in the
manufacture of ammonia and related operations on the said lands.
C. The Authority under and by virtue of its powers under the Water and
Sewerage Act Chap. 54:40 is able to sell and willing to supply water in
the amounts and at the prices and of the quality specified below and on
the terms and conditions hereinafter expressed.
NOW THEREFORE it is hereby agreed by and between the parties hereto as follows:
1. FUNDAMENTAL OBLIGATIONS
(a) The Authority will supply to the Company and the Company will
receive pay for and utilize for the purposes of the said
operations the Company's total annual requirements subject to the
qualifications hereinafter stipulated and estimated to be 2500M(3)
per day of potable water for use in the said operations but not
exceeding in any one day a total quantity of 3200M(3).
(b) This Agreement shall come into operation on January 1, 1998 and
shall continue in force thereafter for a period expiring fifteen
(15) years after the said date unless it be sooner determined as
hereinafter provided and may be renewed, subject to the agreement
of the parties for further successive periods of five (5) years
by either party giving notice in writing to the other at least
six (6) months prior to the expiration of the initial or any
renewed term of its desire for such renewal.
(c) Any alteration in the amount of the water required to be supplied
by the Authority to the Company under this Agreement may be
arrived at after consultation between the Parties and their
accord thereto.
(d) The water to be supplied to the Company by the Authority under
the terms hereof will be utilized by it for the purposes of and
in connection with the said operations to be conducted by it at
its plant on the said lands situate at Point Lisas Industrial
Estate in the Island of Trinidad.
<PAGE> 216
2
2. MEASUREMENT AND INSPECTION
(a) The Authority shall install and at all times thereafter during
the continuance of this Agreement maintain in proper working
order and condition at such locations on the said lands of the
Company, as the Authority in its discretion, considers most
suitable and/or convenient for the purpose all meters and/or
other instruments requisite and/or necessary for accurately
measuring the quantity of water supplied hereunder from day to
day.
(b) All such meters and/or other instruments referenced in sub-
paragraph 2 (a) immediately preceding shall at all times be open
to inspection by the Authority its servants and agents or jointly
by the Authority and the Company their servants, agents and
others duly authorized by them in their behalf who shall also be
at liberty to take written or other notes of the readings and/or
recordings thereof.
(c) The Authority shall at its discretion but in any event not less
frequently than once every year check, test and calibrate the
Authority's meters and/or other instruments located at the said
lands for the purposes of the supply to be provided hereunder.
The Company may request the Authority to check, test and
calibrate the said meters and/or other instruments at such other
reasonable times as the Company considers necessary provided
however that in such event if the meters and/or other instruments
are found to be reading correctly or to have a margin of error
not exceeding five percent (5%) the Company shall bear the
expense of every such check, test and calibration so requested by
it. The register of the meter installed by the Authority shall be
prima facie evidence of the quantity of water consumed. If upon
any test any meters and/or instruments are proved to register
incorrectly to any degree exceeding five percent (5%) then:
(i) The meters and/or instrument shall be deemed to have
registered incorrectly to that degree since the last
meters and/or instruments' check before the date of the
test on which a reading of the index of the meters and/or
instruments was taken by the Authority unless it or they
are proved to have begun to register incorrectly on some
later date;
(ii) If a meter or other instrument is found to be out of order
or if it or they be removed for repairs, adjustments or
alterations the fact shall be noted by the Authority and a
written memorandum thereof shall be served on the Company.
In such event, unless the Authority provides a replacement
meter in the interim, the records kept by the Company of
its consumption based on the Company's own meters during
that period shall be conclusive until the Authority's
meter or instrument is repaired or replaced and
calibrated.
3. QUALITY
All water supplied by the Authority to the Company pursuant to this
Agreement shall be potable water of a quality comparable to the
Authority's standard supply of water to the public of Trinidad and
Tobago for ordinary domestic purposes.
4. COMPANY RECORDS
The Company will keep or cause to be kept on some convenient location on
the said lands, proper books of account or other records wherein shall
be entered daily the quantity of all water supplied to it by the
Authority (on that particular day) and will permit the Authority its
servants and agents and all others duly
<PAGE> 217
3
authorized by it on its behalf and at the Authority's sole cost and
expense, at all reasonable times to inspect the said books of account or
other records and to make copies thereof and/or to take abstracts
therefrom.
5. COMPLIANCE WITH REGULATIONS
The Company will punctually and faithfully comply with all rules and
regulations of Governmental authorities and/or the Authority and notices
properly given thereunder relating to the utilization of water on the
said lands and on the Company's part to be observed and performed. The
Company will not, without the consent in writing of the Authority, which
consent shall not unreasonably be withheld, for such purpose first had
and obtained, dispose of, or otherwise part with or transfer to anyone
whatsoever or whensoever any right, liberty, power and/or privilege
granted hereunder.
6. BILLINGS
As soon as possible after the end of each calendar month the Authority
shall read its meters and/or instruments and shall render to the Company
a statement of account specifying the total amount of water supplied by
it in such month and the amount owing to the Authority calculated in
accordance with the rates hereunder agreed as may be varied by agreement
between the Parties from time to time.
7. PAYMENT AND RATES
(a) The Company shall pay the Authority for supplies of water
provided under this Agreement at the standard rate fixed and
allowed by law or notified by the competent authority from time
to time for the Authority's metered supplies to its industrial
customers in Trinidad and Tobago.
PROVIDED always that the above rates shall be subject to review by the
parties hereto at the expiration of each three year period commencing
from the date on which the Company first started receiving supplies
hereunder and the parties may, pursuant to any such review, agree to
apply another rate instead of the above stipulated rates.
AND PROVIDED further that rates applicable to maximum or minimum
quantities of water supplied will not be chargeable on a daily basis but
on the basis of the consumption over the period billed for in accordance
with the principle incorporated in the contractual rates set out above.
(b) Subject to the Company's right to challenge the correctness of
any account submitted to it, the Company shall pay to the
Authority, the United States currency equivalent of the Trinidad
and Tobago Dollars specified therein converted at the average bid
rate of five commercial banks within seven (7) days of receipt of
the said account. In the event of a dispute the Company shall
nonetheless pay the undisputed portion thereof as above provided
and subject to settlement by such methods as are by this
Agreement otherwise provided. In case of default of payment the
Company shall pay interest on the amount due from the date of
default until payment at the rate of one percent (1%) above the
prime lending rate as quoted on the due date by Citibank
(Trinidad and Tobago Limited), main branch in Port of Spain.
<PAGE> 218
4
8. TERMINATION
Either Party shall be at liberty to terminate this Agreement at any time
upon giving the other party six (6) calendar months previous notice in
writing of its intention so to do at the expiration of which notice this
Agreement shall absolutely cease and determine provided that if this
Agreement is terminated by the Company within five (5) years from the
date on which the Company first receives supplies Of water hereunder the
Company shall be liable to the Authority for damages for premature
termination of the contract measured by the capital expenditure of the
Authority specifically incurred for the purpose of providing water
pursuant to this Agreement less however reasonable depreciation up to
the date of such termination.
9. INTERRUPTION OF SUPPLIES
The Authority shall at all times endeavor to notify the Company in
advance if at all possible of any interruption of supply under this
Agreement or of the inability of the Authority to supply the minimum
total requirements under this Agreement and in the event of either or
both of those events the Authority shall use its best efforts to supply
the required amount by other means. Should the Authority be unable to do
so the Company shall be entitled to obtain the shortfall from whatever
other source(s) is available to the Company and in such case no payments
shall be due from the Company to the Authority in respect of such period
of interruption in the supply by the Authority.
10. FORCE MAJEURE
(a) Neither party hereto shall be liable for loss caused by failure
or delay in the performance, observance or fulfillment of any
term, obligation, provision or condition of this Agreement, if
such failure or delay arises either wholly or in part from a
cause or causes reasonably beyond the control of such party.
(b) Without limiting the generality of sub-paragraph 10(a) above the
following causes shall be deemed to be reasonably beyond the
control of the Parties hereto, viz: strikes, lockouts or other
industrial disturbances, acts of an enemy, blockades,
insurrections, riots, acts of God, epidemics, landslides,
lightning, earthquakes, fires, storms, floods, washouts, arrests,
restraints of Governments order or requirements of any civil or
military power, civil disturbances, explosions, breakages or
accident to machinery or lines of pipe, shortages, interruptions
or delays in transportation and any other causes, whether of the
kind herein enumerated or otherwise not within the control of the
party claiming under this paragraph 10 and which in the exercise
of due diligence such party is unable to prevent or overcome.
11. INDEMNITY
(a) Subject to paragraph 10 hereof the Company will indemnify and
keep harmless, the Authority and each and everyone of its
officers, servants or agents from all direct or consequential
losses, damages, claims suits and demands whatsoever of all
persons whosoever which may be in anywise sustained or be made
for or by reason or in consequence or as a result of negligence
of the Company its servants or agents in connection with this
Agreement.
(b) Subject to paragraph 10 hereof the Authority shall indemnify and
keep harmless the Company and each and everyone of its officers,
servants or agents from all direct or consequential losses,
damages, claims, suits and demands whatsoever of all persons
whomsoever which may be in anywise sustained or be made for or by
reason or in consequence or as a result of the negligence of the
Authority its servants or agents in connection with this
Agreement.
<PAGE> 219
5
12. ARBITRATION
If any question, difference or dispute shall arise between the Parties
hereto or any person or persons or corporation claiming under them
respectively concerning the charges hereby reserved and/or to be
reserved hereunder or touching the construction of any clause herein
contained or the rights, duties or liabilities of the Parties hereunder
or if the Parties hereto shall fail to agree upon the quantum of any
compensation payable hereunder or in any other way touching or arising
out of these presents the same shall be referred to the decision of a
single arbitrator if the Parties can agree on one; failing such
agreement to three arbitrators, one to be appointed by each party to the
difference and the third arbitrator to be appointed by those two
arbitrators before proceeding in the reference in accordance with the
Arbitration Act or any Statutory re-enactment or modification and/or
amendment thereof for the time being in force. The decision of the
arbitrator or arbitrators as the case may be shall be final and binding
on all parties to the question or dispute.
13. NOTICES
All communications and notices intended for the Authority shall be
deemed to be properly and sufficiently served if delivered at or
forwarded by registered post to its registered or other office or other
place of business for the time being in Trinidad and Tobago, and all
notices intended for the Company shall be deemed to be properly and
sufficiently served if delivered at or forwarded by registered post to
its registered office for the time being in Trinidad and Tobago. A
notice sent by post shall be deemed to be given at the time when in due
course of post it would be delivered at the address to which it is sent.
14. PRESERVATION OF REMEDIES
Nothing contained in this Agreement is intended to or shall deprive the
Company or the Authority of any rights or remedies to which they or
either of them shall be entitled at law or in equity by reason of or
based upon default of both or either of them hereunder.
IN WITNESS WHEREOF the Authority has caused these presents to be duly executed
this 15th day of February in the year of Our Lord One Thousand Nine Hundred and
Ninety-Six and the Company has duly executed this Agreement by its authorized
representative by Authority of the Board of Directors the day and year first
hereinabove written.
SIGNED for and on behalf of the )
Water and Sewerage Authority )
by its Acting Executive Director ) /s/ [ILLEGIBLE]
and Acting Secretary )
in the presence of: )
/s/ [ILLEGIBLE] )
Executed by ARCADIAN NITROGEN )
LIMITED by the Managing Director ) /s/ [ILLEGIBLE]
of the said Company, by order and )
authority of the Board of Directors and )
in conformity with the Articles of )
Association of the said Company and )
signed by the said Managing Director )
and in the presence of: )
/s/ [ILLEGIBLE]
<PAGE> 220
AMENDMENT OF
WATER SUPPLY CONTRACT
BETWEEN
THE WATER AND SEWERAGE AUTHORITY
AND
ARCADIAN NITROGEN LIMITED
THIS AGREEMENT is made in duplicate with effect as from the 19th day of March
1996, between the Water and Sewerage Authority, a body corporate established by
the Water and Sewerage Act, Chap. 54:40 (hereinafter called "the Authority") of
the One Part and ARCADIAN NITROGEN LIMITED, a company duly incorporated under
the Companies Ordinance Chap. 31 No. 1 and having its registered office at
Atlantic Avenue, Point Lisas Industrial Estate, Couva in the island of Trinidad
(hereinafter called "the Company") of the Other Part.
WITNESSETH:
WHEREAS, the Authority and the Company entered into a Water Supply Contract
dated the 15th day of February 1996, for the supply by the Authority to the
Company of water for use by the Company in its ammonia manufacturing plant
("the Agreement"); and
WHEREAS, the Authority and the Company mutually desire to amend certain terms
of the Agreement in the manner set out hereinafter.
NOW, THEREFORE, in consideration of the premises and the mutual covenants and
agreements contained herein, the Authority and the Company agree as follows:
1. Section 8 is hereby amended by the deletion of the words "Either Party"
in line one and the substitution of the words "The Company" and by the
deletion of the words "the other party" in line two and the substitution
of the words "to the Authority so that the said Section 8 will read as
amended thus:
"8. TERMINATION
The Company shall be at liberty to terminate this Agreement at any time
upon giving to the Authority six (6) calendar months previous notice in
writing of its intention so to do at the expiration of which notice this
Agreement shall absolutely cease and determine provided that if this
Agreement is terminated by the Company within five (5) years from the
date on which the Company first receives supplies of water hereunder the
Company shall be liable to the Authority for damages for premature
termination of the contract measured by the capital expenditure of the
Authority specifically incurred for the purpose of providing water
pursuant to this Agreement less however reasonable depreciation up to
the date of such termination".
<PAGE> 221
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
Amendment - 03/18/96
2. There shall be inserted, immediately before the existing Section 9
entitled "Interruption of Supplies", a new Section 9 which shall be
entitled "Breach" as follows:
"9. BREACH
Either party hereto may terminate this Agreement for a breach thereof committed
by the other party, other than non-payment of any money due if such breach is
not remedied within thirty (30) days after service on the other party of a
notice identifying the breach and requiring that it be remedied within the said
period of thirty (30) days.
In the case of a failure by the Company, to pay the rates stipulated in this
Agreement, within fourteen (14) days after notice thereof has been given to the
Company by the Authority, the Authority may without prejudice to any other of
its rights or remedies terminate this Agreement by giving written notice of
such termination".
3. There shall be inserted, immediately before the current Section 13, a
new Section 13 which shall be entitled "Amendments" as follows:
"13. AMENDMENTS
This Agreement or any terms hereof may be changed, amended, modified, waived,
discharged or terminated by instrument in writing signed by both Parties
hereto".
4. Having regard to the insertion of the new Sections 9 and 13, the
numbering of the current Sections 9 through 14 will be accordingly
amended.
5. Except as expressly amended hereby, the Agreement shall remain unchanged
and, as amended, the Agreement shall continue in full force and effect.
IN WITNESS WHEREOF, this Amendment is executed in duplicate by the duly
authorized representatives of the Authority and the Company as of the day and
year first above written.
SIGNED for and on behalf of )
THE WATER AND SEWERAGE AUTHORITY )
by its Acting Executive Director ) /s/ [ILLEGIBLE]
and Acting Secretary )
in the presence of: )
/s/ [ILLEGIBLE]
SIGNED for and on behalf of )
ARCADIAN NITROGEN LIMITED ) /s/ [ILLEGIBLE]
by its Managing Director )
in the presence of: )
/s/ [ILLEGIBLE]
<PAGE> 222
EXHIBIT M-3
FORM OF SAVONETTA PIER USER
AGREEMENT
REPUBLIC OF TRINIDAD AND TOBAGO
THIS AGREEMENT is made the 27th day of March, 1996 between THE NATIONAL GAS
COMPANY OF TRINIDAD AND TOBAGO LIMITED, a Company duly incorporated under the
laws of Trinidad and Tobago and having its registered office at Orinoco Drive,
Point Lisas Industrial Estate, Point Lisas, in the Ward of Couva, in the Island
of Trinidad, NATIONAL ENERGY CORPORATION OF TRINIDAD AND TOBAGO LIMITED, a
Company duly incorporated under the laws of Trinidad and Tobago and having its
registered office at Orinoco Drive, Point Lisas Industrial Estate, Point Lisas,
in the Ward of Couva, in the Island of Trinidad (hereinafter collectively
called "Company") of the One Part and ARCADIAN NITROGEN LIMITED, a Company also
incorporated under the laws of Trinidad and Tobago and having its registered
office at Atlantic Avenue, Point Lisas, in the Ward of Couva, in the Island of
Trinidad (hereinafter called "User") of the Other Part.
WHEREAS:
(1) Company is possessed of a pier (known as the Savonetta Pier 2) and
harbour, marine and port facilities situate at Point Lisas, Couva in the
said Island of Trinidad (hereinafter collectively called "Marine
Facilities") together with certain tugs and workboats.
(2) Company has appointed Point Lisas Industrial Port Development
Corporation Limited, a Company duly registered in Trinidad and Tobago as
its manager to provide management service for the Savonetta Pier 2,
Marine Facilities and tugs and workboats.
(3) Company has at the request of User agreed to the use of the Savonetta
Pier 2 by User subject to and upon the terms and conditions hereinafter
appearing.
(4) User is desirous of constructing loading equipment on the Savonetta Pier
2.
Page 1 of 17
<PAGE> 223
(5) There has been established a Committee known as the Savonetta Pier Co-
ordinating Committee to determine the priority of berthing of vessels
using the Savonetta Pier 2.
NOW THIS AGREEMENT WITNESSETH AS FOLLOWS:
1. DEFINITIONS
In th Agreement the following words and expressions shall bear the
following meanings unless a contrary intention appears:
1.1 The term "Agents" shall mean all persons, firms, companies or
other bodies who are the Agents of Company including without
limiting the generality of the foregoing, the Manager.
1.2 The term "Co-ordinating Committee" shall mean the Savonetta Pier
Co-ordinating Committee comprising of a representative of
Company, the Manager, Arcadian Trinidad Ammonia Limited, Arcadian
Trinidad Limited (formerly Arcadian Trinidad Urea Limited),
Caribbean Methanol Company Limited, Shell Lubricants Caribbean
Limited, Trinidad and Tobago Methanol Company Limited, User and
any other participant as may be advised by Company from time to
time. The representative of Company shall be the Chairman of the
Co-ordinating Committee and the Manager shall act as an advisor.
1.3 The term "Contract Year" shall mean the continuous twelve (12)
month period commencing each January 1 during the term of the
Agreement, except that the first Contract Year shall be the
period commencing from the effective date of the Agreement to
December 31 of that year and the last Contract Year shall be the
period commencing from January 1 to the end of the Agreement.
1.4 The term "Equipment" shall mean User's loading and utility lines,
loading arm, cables, conveyor systems and other equipment,
fittings, effects and facilities to be erected or installed on
the Pier by User which shall be and remain the sole property of
User.
Page 2 of 17
<PAGE> 224
1.5 The term "Month" shall mean a calendar month.
1.6 The term "Other Users" shall mean the Agents (excluding the
Manager), contractors and third parties of Company, Arcadian
Trinidad Ammonia Limited, Arcadian Trinidad Limited (formerly
Arcadian Trinidad Urea Limited), Caribbean Methanol Company
Limited, Shell Lubricants Caribbean Limited, Trinidad and Tobago
Methanol Company Limited and any other user of the Pier as may be
advised by Company from time to time.
1.7 The term "Pier" shall mean the Savonetta Pier 2 situated at Point
Lisas, Couva consisting of multi-user loading facilities for
petro-chemicals intended to be used by User and others and more
particularly described in the First Schedule hereto.
1.8 The term "Port" shall mean the port of Point Lisas.
1.9 The term "Plant" shall mean User's plant for the production of
ammonia situated at Point Lisas.
1.10 The term "Product" shall mean the substance produced from User's
plant. When User desires to import a substance through the Pier
for use in User's Plant situated at Point Lisas, User shall
request of Company its consent to so use the Pier which consent
shall not be unreasonably withheld. However, User and Company
shall agree on all terms and conditions before such importation
can commence.
1.11 The term "Quarter" shall mean a period of three (3) months
commencing January 1, April 1, July 1 and October 1, during any
Contract Year.
1.12 The term "The Manager" shall mean Point Lisas Industrial Port
Development Corporation Limited or such other person or body
corporate appointed from time to time by Company.
1.13 The term "Vessel" shall mean any boat, ship or vessel using the
Pier for the purpose of being loaded or offloaded by or on behalf
of User.
Page 3 of 17
<PAGE> 225
1.14 The term "Week" shall mean a calendar week.
2. USE OF THE PIER
2.1 In consideration of the several sums hereinafter specified,
Company hereby grants to User:
(a) the full right and liberty to enter upon and to use the
Pier and the Marine Facilities in common with Company and
Other Users having like right and User shall use the Pier
as a pier and for no other purpose. All loading/offloading
operations shall be conducted at the berth on the south
side of the Pier (Savonetta Pier 2 South) shown in the
sketch plan annexed hereto and marked "A".
(b) the right to construct and maintain the Equipment in
position on the Pier at a location to be agreed between
Company and User and to manage, work and use the Equipment
with the intent that the right hereby granted may be
annexed and appurtenant to the business of User, provided
that such management, work and use of the Equipment do not
cause any damage to the Pier or a nuisance, danger or
annoyance to Company and to Other Users of the Pier.
3. USER'S COVENANTS
3.1 User hereby agrees with Company as follows:
(a) to pay the sums herein set out in Article 6.0 hereof.
(b) to comply with the Rules and Regulations issued by the
Manager for the management and operation of the Port
hereto annexed as Appendices 1, 2, and 3 and with all
modifications or amendments thereto as may be issued from
time to time by the Manager.
(c) to observe and to be bound by the guidelines for the
operation of the Co-ordinating Committee as set
Page 4 of 17
<PAGE> 226
out in Appendix 4 hereto annexed with all modifications or
amendments thereto.
(d) to observe and to be bound by regulations agreed to for
the safe operations of the loading/discharging equipment
during loading/discharging operations.
(e) not to do or permit to be done upon the Pier anything
which may cause a nuisance, damage, danger or annoyance to
Company or to Other Users of the Pier or Port.
(f) to exercise the rights hereby granted within the limits of
the design criteria for the Pier and shall not directly or
indirectly do, permit or suffer to be done in the
purported exercise of the said rights any act or thing
inconsistent with or outside the scope of the design
criteria. User hereby acknowledges that it has seen,
understood and is familiar with the design criteria for
the Pier.
(g) to be liable for and to indemnify and hold Company, its
servants, Agents and contractors harmless against any
loss, damage or injury to any person or property
whatsoever (including but not limited to claims,
proceedings and demands by third parties) caused by the
escape or discharge of Product or other substances from
the Equipment and any vessel or from any loading arm, hose
or other loading device connected to any vessel by User or
used in connection with the loading or unloading of such
vessel. Without prejudice to the indemnity herein Company
and/or the Manager shall have the right (though they are
not compelled so to do) to take any measures it deems fit
to avoid any fire hazard and/or to clean up the pollution
resulting from such escape or discharge and the costs
occasioned thereby shall constitute a debt payable by User
and shall be recoverable as such.
(h) at its own cost, to provide and maintain such insurances
as User may deem necessary or expedient to cover the risks
indemnified by User herein but without limiting the
generality of the
Page 5 of 17
<PAGE> 227
foregoing User shall provide the insurances as set out in
Article 11 hereto.
(i) to co-operate with the Co-ordinating Committee in
determining the priority of berthing of vessels.
(j) shall give at least two (2) working days written notice to
the Manager and Company of its intention to carry out
maintenance of the Equipment and User's facilities
situated on the Pier except that in the event of an
emergency or breakdown during loading the two (2) days
requirement may be waived.
(k) at its own cost and expense, to keep the Equipment in good
repair and condition and to indemnify and keep indemnified
Company, its servants, Agents, contractors and Other Users
of the Pier from and against all claims and liabilities
whatsoever in respect of the exercise of the rights hereby
granted, caused by reason of the use of and existence of
the Equipment. User shall further indemnify Company from
and against any damage by or to the Equipment or the
escape of any Product or any other substances therefrom,
except where such damage or escape is due to wilful act or
negligence of Company.
(l) to punctually give the notices set out in Article 5.1 (c)
hereunder.
(m) to pay all charges for the use of the Pier, Marine
Facilities and tugs and workboats.
(n) to provide promptly on completion of each loading of
Product the completed Bill of Lading showing the quantity
of Product loaded in the respective shipment.
4. COMPANY'S COVENANTS
4.1 Company hereby agrees:
Page 6 of 17
<PAGE> 228
(a) to provide a manager with responsibility for management
and operation of the Pier, Marine Facilities, tugs and
workboats, and for ensuring compliance by User with the
said Rules and Regulations (referred to in Article 3.1 (b)
hereof) and with Statutory requirements.
(b) to maintain the Pier in good order and condition in
accordance with international standards.
(c) to procure and maintain reasonable insurance coverage for
the purposes of the repair of the Pier. Such insurance
coverage shall name User as an additional assured and
shall contain a waiver of subrogation clause in favour of
User.
(d) to be responsible for and indemnify User for any damage to
the Equipment caused by the wilful act or negligence of
Company, its servants, Agents of contractors.
4.2 Company shall, as far as possible, make available for use by
User, at User's cost, the following services:
(a) a suitable launch service to transfer the pilot or other
official to or from any vessel calling at the Pier and for
the purposes connected therewith.
(b) an adequate and sufficient tugboat service for the purpose
of assisting any vessel calling at the Pier in connection
with User's use of the Pier to berth and unberth safely.
(c) an adequate line-handling service for the purpose of
safely mooring and unmooring any vessel at the Pier in
connection with User's use of the Pier.
So long as the said services are available from Company, User
shall be obliged to use Company to provide the services.
Page 7 of 17
<PAGE> 229
5. GENERAL COVENANTS
5.1 It is hereby expressly agreed and declared as follows:
(a) Company and/or its servants, Agents or contractors shall
not be liable for any loss, damage or delay from whatever
cause arising in consequence of any assistance, advice or
instructions whatsoever or howsoever given or tendered in
respect of any vessel whether by way of berthing services,
the provision and maintenance of navigational and port
facilities or otherwise howsoever.
(b) The Co-ordinating Committee shall be responsible for
determining the priority of vessels desiring to berth at
the Pier, and in all matters pertaining to, or within the
scope of authority of the Co-ordinating Committee, the
decision of the Co-ordinating Committee shall be final and
conclusive and the Co-ordinating Committee shall not be
deemed to be acting on behalf of Company or User.
(c) In order to ensure the efficient discharge of the
functions of the Co-ordinating Committee, User shall give
the Co-ordinating Committee the following notices in
writing:-
(i) At the beginning of each Week nomination of its
vessels and the anticipated tonnages to be loaded
on each such Vessel for the ensuing week.
(ii) Notices of seven (7) days, seventy-two (72) hours,
forty-eight (48) hours and twenty-four (24) hours
prior to the expected time of arrival of each
Vessel.
(iii) Prompt notice of any circumstances causing or
likely to cause a change of twelve (12) hours or
more in the expected time of arrival of any Vessel.
Page 8 of 17
<PAGE> 230
6. CHARGES
6.1 USER CHARGE
In consideration of the rights and liberties hereby granted, User
shall, from the date of first shipment of Product from the Pier
pay to Company a throughput user charge of One United States
dollar (US$1.00) per metric tonne of Product shipped from the
Pier (which said charge is hereinafter referred to as "the User
Charge"); provided that User shall at no time pay to Company less
than a minimum charge ("the Minimum Charge") of Three Hundred
Thousand United States dollars (US$300,000.00) per annum.
6.2 MAINTENANCE CHARGES
User shall pay its proportionate share of the maintenance charges
for the Pier prorated with respect to time spent alongside the
Pier.
6.3 INSURANCE CHARGES
User shall pay its proportionate share of the insurance charges
for the Pier prorated with respect to time spent alongside the
Pier.
6.4 The charges as set out in this Article 6 above shall remain in
effect for a period of five (5) years from the date of first
shipment of Product from the Pier. Thereafter, the said charges
shall be varied as Company and User shall mutually agree but in
no event shall the new charges be less than the existing ones and
such new charges shall take effect from the expiration of the
five (5) year period to the date of termination of the Agreement.
7. PAYMENT
7.1 USER CHARGE
(a) On or before the twenty-first (21st) day of the Quarter,
Company shall render to User an invoice
Page 9 of 17
<PAGE> 231
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
for the User Charge denominated in United States dollars
due for the preceding Quarter as calculated pursuant to
the terms of Article 6.1 above. User shall pay the User
Charge in United States dollars within thirty (30) days of
the receipt of the Invoice thereof.
(b) If at the end of a Contract Year, the User Charge paid by
User for that Contract Year is less than the Minimum
Charge, User shall pay Company the difference between the
Minimum Charge and the said User Charge paid. On or before
the twenty-first (21st) day of January of the following
Contract Year, Company shall invoice User for any such
difference and User shall pay Company within thirty (30)
days of receipt of the invoice thereof.
7.2 MAINTENANCE CHARGES
On or before the fifteenth (15th) day of each Month, Company
shall invoice User for its proportionate share of the maintenance
charges to be paid by User pursuant to Article 6.2 above for the
preceding Month and User shall pay Company within thirty (30)
days of receipt of invoice thereof.
7.3 INSURANCE CHARGES
On or before the fifteenth (15th) day of each Contract Year,
Company shall invoice User for its proportionate share of the
insurance charges to be paid by User pursuant to Article 6.3
above for the preceding Contract Year and User shall pay Company
within thirty (30) days of receipt of invoice thereof.
7.4 If User disputes any portion of the amount as shown as due on an
invoice, User may withhold payment of any amount with respect to
which there is a dispute until the resolution of such dispute but
shall, nevertheless, pay the undisputed portion and provide with
its payment a detailed statement of the basis of the dispute.
7.5 If all or any part of the sum shown due on any statements
provided for herein is not paid when due, or if all or any
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<PAGE> 232
part of the sums shown due are disputed and unpaid by User, but
it is subsequently determined that User was in error, then
interest on any unpaid amount shall be paid by User. Such
interest shall accrue and be compounded daily at an annual rate
equivalent to one percentage point above the US prime lending
rate as quoted on the due date by Citibank (Trinidad and Tobago)
Limited, main branch in Port of Spain, Trinidad, from the due
date thereof until paid.
8. TERM
This Agreement shall take effect from the date first hereinabove written
and, without prejudice to the rights of either Party accrued hereunder
prior to the determination thereof this Agreement shall continue in
effect for a period of ten (10) years from the date of first shipment of
Product from the Pier. Upon a written request by User to Company made at
least three (3) Months prior to the expiration of the Agreement, the
Parties may agree to extend the Agreement for a further period upon
terms and conditions to be agreed between the Parties.
9. FORCE MAJEURE
9.1 Any delays in or failure of performance by either Party, except
delays or failures in the payment of monies due shall not
constitute default hereunder or give rise to any claims for
damages if and to the extent such delays in or failures of
performance are caused by events of Force Majeure. Force Majeure
events shall include but shall not be limited to Acts of God,
order or request of any Government Authority, acts of war, riots,
rebellion or sabotage, fires, floods, earthquakes or other
physical disasters, strikes or other industrial actions, breakage
or failure of plant machinery or equipment and any other causes
which are not within the control of either Party and which, by
the exercise of reasonable diligence, such Party is unable to
foresee or prevent.
9.2 If either Party to the Agreement is prevented from or delayed in
performing any of its obligations under the
Page 11 of 17
<PAGE> 233
Agreement by an event of Force Majeure as defined above, such
Party shall immediately notify the other Party in writing of the
occurrence of the circumstances constituting Force Majeure. In
such an event, the Parties shall meet promptly to examine the
consequence of the occurrence of Force Majeure and to agree on
the measures to be taken accordingly.
9.3 Where an event of Force Majeure as defined in Article 9.1 above
extends for more than six (6) Months, User shall have the right
to suspend this Agreement. Where an Event of Force Majeure
extends for more than twelve (12) months either Party shall have
the right to terminate this Agreement.
9.4 Where any event of Force Majeure results in damage to or the
destruction of the Pier due to no fault or neglect (whether sole
joint or concurrent) or any wilful act on the part of User so
that User cannot ship any Product because of such damage or
destruction then User shall have the right to suspend this
Agreement immediately upon notification by Company of the
unavailability of the Pier.
10. INDEMNITY
User shall save and hold free and harmless Company from and against any
and all claims and demands for loss, injury, damage or liability caused
to any person or property whatsoever (including the employees of User
and the property and equipment owned by User) as a result of, or in
connection with, or arising out of the use of the Pier by User, save
where such claims and demands for loss, injury, damage or liability is
caused by the gross negligence or willful act of Company.
11. INSURANCES
11.1 User shall take out and maintain the following insurances:
(i) Employers Liability with a limit of Two Million United
States dollars (US$2,000,000.00) per
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<PAGE> 234
occurrence in respect of claims for personal injury to any
person under a contract of service or apprenticeship with
User or its sub-contractor as the case may be and arising
out of and in the course of such person's employment and
such insurance as may be required under the Workmen's
Compensation Act or any statutory replacement, re-
enactment or modification thereto.
(ii) General liability insurance against any injury or death to
any person and damage or loss to any property whatsoever
whether owned or possessed by User, Company or the Other
Users arising out of the use of the Pier by User in a sum
not less than One Million United States dollars
(US$1,000,000.00) for any one occurrence, and Automobile
Liability coverage for any vehicle operated by any
employee, contractor or agent of User, whether or not
owned by User limited to One Million United States dollars
(US$1,000,000.00) per occurrence.
(iii) Wharfingers Liability coverage with respect to any death
or injury to any person or loss or damage to any property
whatsoever whether owned or possessed by User, Company or
the Other Users arising out of or connected with the
loading or discharging of vessels. Provided that in
respect of loss or damage to property such insurance cover
may be limited to Fifteen Million United States Dollars
(US$15,000,000.00) in respect of any one occurrence.
11.2 All insurance policies to be provided by User under this
Agreement shall be taken out with a licensed and reputable
company approved by Company and User shall, produce to Company,
all policies of insurance and the receipts of payment of the
current premiums. All insurance policies shall name Company as an
additional assured and shall contain a waiver of subrogation
clause in favour of Company as follows:
"THE INSURERS HEREBY WAIVE THEIR RIGHTS OF
SUBROGATION AGAINST THE NATIONAL GAS
Page 13 of 17
<PAGE> 235
COMPANY OF TRINIDAD AND TOBAGO LIMITED (NGC),
NATIONAL ENERGY CORPORATION OF TRINIDAD AND TOBAGO
LIMITED (NEC), THEIR AFFILIATES, AND ANY OTHER
OFFICER, EMPLOYEE, AGENT, SERVANT, OR CONTRACTOR OF
NGC, NEC OR THEIR AFFILIATES."
11.3 User shall not charge, restrict or reduce the coverage or cancel
the policies herein until Company has received correspondence
giving at least ten (10) days notice before such change or
cancellation.
12. TERMINATION
12.1 In the event that a material breach of this Agreement has not
been remedied within thirty (30) days after notice of such breach
to the defaulting Party, the other Party shall have the right to
terminate the Agreement upon the giving of seven (7) days notice
to the defaulting Party.
12.2 If bankruptcy proceedings, whether voluntary or involuntary, are
commenced by User or by way of creditor's petition, or if User,
being a company, should make a general assignment for the benefit
of creditors, or if a resolution is passed or any order is made
for the winding up or dissolution of User, or if a resolution is
passed authorizing sale of substantially all of its assets, or if
a receiver is appointed over any part of its undertaking or
assets, or User represents in writing that it is unable to
perform this Agreement because User cannot meet its financial
obligations, or if any distress or execution is levied against
any part of its undertaking or assets and not discharged
immediately, then Company may, without prejudice to any other
right or remedy, forthwith terminate the Agreement.
12.3 Without prejudice to Article 12.1 above, if at any time, User
fails to pay any amounts due herein, Company may, in addition to
all other remedies available to it herein and under law, suspend
this Agreement for so long and until such time as User makes
payment thereto.
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<PAGE> 236
13. ASSIGNMENT
This Agreement shall not be assigned by either Party, nor shall User
give or grant a licence or sub-licence of its rights and obligations
hereunder, without the prior written consent of the other Party, such
consent not to be unreasonably withheld.
14. AGREEMENT NOT TO CREATE A LEGAL INTEREST
This Agreement is intended to operate as an Agreement only and nothing
herein contained shall create or be construed as creating a demise or
grant and shall not give User any legal interest in the Pier or any part
thereof.
15. ARBITRATION
Any dispute or difference arising out of, or in connection with this
Agreement which cannot be settled between the Parties shall be referred
to arbitration in accordance with the provisions of the Arbitration Act,
Chapter 5:01 of the revised laws of Trinidad and Tobago and any
statutory modification or re-enactment thereof for the time being in
force.
16. AGREEMENT BINDING ON SUCCESSORS AND ASSIGNS
This Agreement shall ensure to the benefit of, and shall bind, the
successors and assigns of the Parties.
17. WAIVER
No omissions of either Party to require performance by the other Party
of any of the terms of this Agreement nor any forbearance or indulgence
granted or shown by either Party to the other shall in any manner affect
or prejudice the right of either Party at any time to require strict and
full performance by the other of any or all of the provisions or
obligations of this Agreement on the other's part to be performed
subsequent to any such omission, forbearance or indulgence and the
waiver by either Party of any term, provision or condition of this
Agreement whether by conduct or otherwise shall not be
Page 15 of 17
<PAGE> 237
deemed to be a further or continuing waiver of such term, provision or
condition or any other term, provision or condition.
18. NOTICES
18.1 All notices, requests and other communications required or
desired to be delivered to any Party pursuant to this Agreement
shall be in writing and shall be deemed to be properly given by
hand by registered mail, or by telefax providing the original
copy is submitted within twenty-four (24) hours thereof as
follows:
IF TO COMPANY:
The National Gas Company of Trinidad and Tobago Limited
Orinoco Drive
Point Lisas Industrial Estate
Point Lisas
Attention : Vice President, Business Development
Telefax : 679-2381
IF TO USER:
Arcadian Trinidad Ammonia Limited
Atlantic Avenue
Point Lisas
Attention : Managing Director
Telefax : 636-2052
18.2 Either Party may change the address set forth above to which
notices are to be given by giving reasonable notice thereof to
the other party as hereinabove provided. Notices shall be
effective on the dates of receipt.
IN WITNESS WHEREOF the Parties hereto have set their hands the day and year
first hereinabove written.
FIRST SCHEDULE
ALL THAT Pier known as Savonetta Pier 2 (SP2) as shown in the sketch plan
annexed hereto and marked "A", which is designed for
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<PAGE> 238
vessels from 15,000 DWT to 42,000 DWT and is fitted to load bulk petrochemical
products at a rate of 1,000 metric tonnes per hour.
Savonetta Pier 2 South (SP2S) consists of inter alia:
- - Two (2) Breasting dolphins and one (1) protective dolphin.
- - Two (2) mooring dolphins.
- - Personnel access.
- - Cathodic Protection.
- - Fire water mains.
Signed by )
for and behalf of THE NATIONAL GAS )
COMPANY OF TRINIDAD AND TOBAGO )
LIMITED in the presence of:- )
Signed by )
for and behalf of NATIONAL ENERGY )
CORPORATION OF TRINIDAD AND )
TOBAGO LIMITED in the presence of:- )
Signed by )
for and on behalf of ARCADIAN )
NITROGEN LIMITED in the presence of:- )
Page 17 of 17
<PAGE> 239
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT N
DESCRIPTION OF OSHA LITIGATION
In January 1993, OSHA issued citations to Agent and proposed a
total civil penalty of $5.1 million as a result of the failure of the urea unit
at the Lake Charles plant in 1992. In December 1993, the judge in the ensuing
administrative law proceeding reduced the proposed penalty for the principal
citation from $4.4 million to $50,000 in granting Agent's motion for partial
summary judgment and severance. OSHA has appealed this decision to the
Occupational Safety and Health Review Commission ("Review Commission"), and on
September 15, 1995, the Review Commission affirmed the judge's decision. The
Review Commission also remanded the case to the judge and ordered the
consolidation of the previously severed citations in order to allow OSHA to
seek the judge's permission to amend the citation. OSHA chose not to seek an
amendment, and the judge again severed the citations. OSHA has again appealed
the decision reducing the penalty to the Review Commission as a procedural
prerequisite to seeking judicial review of the decision in the United States
Court of Appeals. In the meantime, the trial on the merits of the underlying
citation has been concluded, but a decision is not expected for several months.
In October 1994, Agent paid $.4 million to OSHA to settle the
remaining citations. Agent did not admit to violating any law, regulation or
safety standard and entered into the partial settlement solely to avoid the
substantial cost and burden of litigating these issues. Agent maintains that
it operated the Lake Charles plant in accordance with applicable health and
safety regulations and industry standards, and continues to believe
emphatically that OSHA's claims are without merit.
While management and legal counsel believe that any civil
penalty ultimately paid by Agent will be substantially less than the remaining
$4.4 million penalty proposed by OSHA, they cannot predict with certainty the
outcome of this proceeding.
Agent received a large number of claims for personal injury
and property damage as a result of the Lake Charles incident. Most of the
claims were settled through a claims adjuster retained by Agent and its
liability insurance carriers. A number of suits arising from the incident also
were filed against Agent. There are currently 11 suits pending in the United
States District Court for the Western District of Louisiana, Lake Charles
Division, which have been consolidated for joint administration, and 13 cases
(including one suit that has been certified as a class action) pending in the
14th Judicial District Court of Calcasieu Parish, Louisiana, which also have
been consolidated for joint administration. The plaintiffs in these suits
generally are seeking damages for alleged physical, mental and emotional
suffering and other personal injuries, and/or property damage, lost earnings
and other economic losses as a result of the failure. Most of the suits also
include claims for punitive damages. All but three of the suits are being
defended by Agent's liability insurance carriers on its behalf, and the damages
alleged in such suits are believed to be within the maximum coverage limit of
the liability insurance. The remaining three actions, in which the plaintiffs
are substantially identical and assert substantially the same claims of
economic and other injuries, are being defended by Agent
<PAGE> 240
THIS AGREEMENT FOR LEASE IS
CONFIDENTIAL AND PROPRIETARY
and may not be covered by its liability insurance. Agent believes that many of
the unsettled claims and the suits are frivolous and/or insubstantial and is
vigorously defending against the same.
2
<PAGE> 241
AMENDMENT NO. 1
Dated as of May 24, 1996
to
AGREEMENT FOR LEASE
Dated as of March 27, 1996
between
Nitrogen Leasing Company, Limited Partnership
as Owner
and
Arcadian Fertilizer, L.P.
as Agent
This Amendment has been manually executed in 8 counterparts, numbered
consecutively from 1 through 8, of which this is No. 2. To the extent,
if any, that this Amendment constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any
jurisdiction), no security interest in this Amendment may be created or
perfected through the transfer or possession of any counterpart other
than the original executed counterpart which shall be the counterpart
identified as counterpart No. 1.
<PAGE> 242
Amendment No. 1 dated as of May 24, 1996 to Agreement for Lease
("Amendment No. 1"), dated as of March 27, 1996, between Nitrogen Leasing
Company, Limited Partnership, a Delaware limited partnership ("Owner"), and
Arcadian Fertilizer, L.P., a Delaware limited partnership ("Agent"), amending
the Agreement for Lease referred to below.
WHEREAS, Owner and Agent have heretofore entered into an
Agreement for Lease, dated as of March 27, 1996 (the "Agreement for Lease");
and
WHEREAS, Owner and Agent wish to amend the Agreement for Lease as
hereinafter provided;
NOW, THEREFORE, Owner and Agent hereby agree that the Agreement
for Lease is amended as follows:
1. Subsection 9.16 of the Agreement for Lease is amended to
read in its entirety as follows:
"Construction Agreement and Construction Agreement Surety. Agent
agrees to deliver to Owner, on or before the date that is ninety
(90) days from the date of this Agreement, an executed copy of
each Construction Agreement with respect to the Ammonia Project,
each in form and substance and with a General Contractor
reasonably satisfactory to Owner, and a copy of the Construction
Agreement Surety in form and substance reasonably satisfactory to
Owner. Agent agrees that until such time as it has delivered a
copy of such Construction Agreement and such Construction
Agreement Surety to Owner, Agent shall only request advances
under this Agreement and the Construction Agency Agreement, dated
as of February 15, 1996, between Agent and Owner, as amended, up
to an aggregate principal amount of $40,000,000 and to the extent
permitted by any Credit Agreement."
2. This Amendment No. 1 may be executed in several
counterparts, each of which when executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute but
one and the same Amendment No. 1.
3. This Amendment No. 1 shall in all respects be governed by,
and construed in accordance with, the laws of the State of New York, including
all matters of construction, validity and performance.
4. Except as provided herein, all provisions, terms and
conditions of the Agreement for Lease shall remain in full force and effect.
As amended hereby, the Agreement for Lease is ratified and confirmed in all
respects.
<PAGE> 243
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed as of the date first above written.
Nitrogen Leasing Company, Limited Partnership
By: Nitrogen Leasing Capital, Inc., its General Partner
By: /s/ JEAN M. TOMASELLI
---------------------------------------
Name: Jean M. Tomaselli
Title: Vice President and
Assistant Secretary
Arcadian Fertilizer, L.P.
By: Arcadian Corporation, its General Partner
By: /s/ JOHN H. GHEENS
---------------------------------------
Name: JOHN H. GHEENS
Title: TREASURER
2
<PAGE> 1
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT 10.4
CONFIDENTIAL AND PROPRIETARY
LEASE AGREEMENT
Dated as of March 27, 1996
BETWEEN
Nitrogen Leasing Company, Limited Partnership
as Lessor
AND
Arcadian Fertilizer, L.P.
as Lessee
THIS LEASE HAS BEEN ASSIGNED AS SECURITY
FOR INDEBTEDNESS OF THE LESSOR. SEE SECTION 21.
This Lease has been manually executed in 8 counterparts, numbered consecutively
from 1 through 8, of which this is No. . 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 or perfected through the transfer or possession of any
counterpart other than the original executed counterpart which shall be the
counterpart identified as counterpart No. 1.
<PAGE> 2
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
TABLE OF CONTENTS
PAGE
----
PARTIES ............................................................... 1
SECTION 1. DEFINED TERMS.................................................. 1
SECTION 2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF LESSEE........... 15
SECTION 3. LEASE OF PROPERTY OR EQUIPMENT................................. 19
SECTION 4. OPERATING LEASE................................................ 21
SECTION 5. DELIVERY....................................................... 21
SECTION 6. INITIAL TERM; RENEWAL TERM..................................... 24
SECTION 7. RENT AND OTHER PAYMENTS........................................ 25
SECTION 8. RESTRICTED USE; COMPLIANCE WITH LAWS........................... 26
SECTION 9. MAINTENANCE, IMPROVEMENT AND REPAIR OF PROPERTY OR
EQUIPMENT...................................................... 28
SECTION 10. INSURANCE...................................................... 31
SECTION 11. INDEMNITIES.................................................... 34
SECTION 12. LEASE RENEWAL.................................................. 37
SECTION 13. LEASE EXPIRATION............................................... 38
SECTION 14. CHARACTER OF AMMONIA PROJECT................................... 39
SECTION 15. LOSS OF OR DAMAGE TO PROPERTY OR EQUIPMENT..................... 39
SECTION 16. CONDEMNATION AND DEDICATION OF PROPERTY; EASEMENTS............. 41
SECTION 17. SURRENDER OF PROPERTY OR EQUIPMENT............................. 42
SECTION 18. EVENTS OF DEFAULT.............................................. 43
SECTION 19. RIGHTS UPON DEFAULT............................................ 45
SECTION 20. EQUIPMENT TO BE PERSONAL PROPERTY.............................. 47
SECTION 21. SALE OR ASSIGNMENT BY LESSOR................................... 47
<PAGE> 3
SECTION 22. INCOME TAXES................................................... 48
SECTION 23. NOTICES AND REQUESTS........................................... 48
SECTION 24. COVENANT OF QUIET ENJOYMENT.................................... 49
SECTION 25. RIGHT TO PERFORM FOR LESSEE.................................... 50
SECTION 26. MERGER, CONSOLIDATION OR SALE OF ASSETS........................ 50
SECTION 27. PERMITTED CONTESTS............................................. 50
SECTION 28. LEASEHOLD INTERESTS............................................ 51
SECTION 29. MISCELLANEOUS.................................................. 52
SECTION 30. NO RECOURSE.................................................... 55
SECTION 31. NO MERGER...................................................... 56
<PAGE> 4
CONFIDENTIAL
LEASE AGREEMENT
Lease Agreement, dated as of March 27, 1996 (as the same may
be amended, restated, modified or supplemented from time to time as permitted by
and in accordance with the Operative Documents, "this Lease"), between Nitrogen
Leasing Company, Limited Partnership, a Delaware limited partnership, as lessor
(the "Lessor"), and Arcadian Fertilizer, L.P., a Delaware limited partnership,
as lessee (the "Lessee").
SECTION 1. DEFINED TERMS.
Unless the context otherwise requires, each term defined in
this Section 1 shall, when used in this Lease, have the meaning indicated:
"Accrued Default Obligations" has the meaning set forth in
paragraph (e) of Section 19 hereof.
"Acquisition Cost" means, (i) in the case of a Parcel of
Property or Unit of Equipment acquired and built pursuant to the Agreement for
Lease, the Unit Acquisition Cost (as defined in the Agreement for Lease)
therefor; (ii) with respect to any other Unit of Equipment, an amount equal to
the sum of (a) the vendor's invoice price to the Lessor therefor, including any
progress payments, costs of labor, delivery or installation, sales, use, excise
or similar taxes and any other charges included in such invoice, after deduction
for any refundable fleet or other discounts or credits actually used by the
Lessee or the Lessor, (b) any construction or assembly costs, expenses or
charges paid by the Lessor in connection therewith, (c) similar amounts paid or
payable with respect to such Unit to parties other than the vendor of such Unit,
including by way of reimbursement, (d) similar costs incurred with respect to
such Unit by the Lessee, and (e) legal, printing, reproduction, closing and
other normally capitalizable administrative fees and expenses paid by the Lessee
and approved by the Lessor; and (iii) with respect to any Parcel of Property not
acquired and built pursuant to the Agreement for Lease, an amount equal to the
amounts included in (ii)(e) above which are applicable to such Parcel plus (a)
the vendor's contract price therefor or the appraised value thereof, (b)
vendee's closing costs, including, without limitation, title insurance premiums,
survey and survey inspection charges, recording and filing fees, title closer
fees, vendee's attorneys' fees and brokerage commissions, (c) other costs
related to the acquisition, including, without limitation, appraisal,
architectural, engineering, soil analysis, environmental analysis and market
analysis fees, and (d) any amounts paid by vendee on behalf of vendor in
addition to, and not as a credit against the contract price, including, without
limitation, payments made in satisfaction of prior liens, and payment of any
transfer, transfer gains or similar taxes imposed in respect of the conveyance
of such Property.
"Additional Insureds" has the meaning set forth in paragraph
(e) of Section 10 hereof.
"Additional Rent" has the meaning set forth in paragraph (c)
of Section 7 hereof.
"Affiliate" of any Person means any other Person controlling,
controlled by or under direct or indirect common control with such Person. For
the purposes of this definition, "control," when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, provided, that, in any event, any Person
which owns directly or indirectly more than 10% of the securities having
ordinary voting power for the
<PAGE> 5
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
election of directors or other governing body of a corporation or more than 10%
of the partnership or other ownership interest of any other Person (other than
as a limited partner of such other Person) will be deemed to control such
corporation or other Person; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"AFL Unit Leasing Record" means an instrument, substantially
in the form of Exhibit B hereto, evidencing the lease under this Lease of
Equipment or Property and related personal property acquired and built pursuant
to the Agreement for Lease. The terms "lease" or "leased" when used in this
Lease shall be deemed to mean "sublease" or "subleased" when referenced to the
Equipment or Property subleased pursuant to the AFL Unit Leasing Record.
"Agreement for Lease" means the Agreement for Lease, dated as
of the date hereof, between the Lessor, as owner, and the Lessee, as the same
may be amended, restated, modified or supplemented from time to time as
permitted by and in accordance with the Operative Documents.
"Ammonia Project" means the Equipment and improvements
constituting the Ammonia Project described in Exhibit D hereto to be located on
and including the Parcel of Property described in Exhibit E hereto located in
the Republic of Trinidad and Tobago in which the Lessor has acquired or will
acquire a leasehold interest. To the extent that portions of the Ammonia Project
are personal or real property, respectively, the provisions of this Lease in
respect to Equipment or Property, respectively, shall be applicable thereto.
"Ancillary Facility Agreement" means any of the contracts
entered into or to be entered into by the Lessee or an Affiliate of the Lessee
and assigned to the Lessor which provide for the use of and access to storage
tanks, loading and unloading facilities, pipelines and similar facilities and
equipment necessary for the operation and maintenance of and access to the
Ammonia Project and the License Agreements relating to pipelines and similar
facilities necessary for the operation and maintenance of the Ammonia Project.
"Arcadian Corporation" means Arcadian Corporation, a Delaware
corporation and the general partner of the Lessee.
"Arcadian Lease Group" means the Lessee, Arcadian Fertilizer
Corporation, a Delaware corporation, and Arcadian Nitrogen Limited, a Trinidad
and Tobago private limited company.
"Assignee" means each Person to which any part of the Lessor's
interest under this Lease or in any Parcel of Property or Unit of Equipment
shall at the time have been collaterally assigned, conditionally or otherwise,
by the Lessor in accordance with Section 21 of this Lease.
"Assignment" means each assignment agreement referred to in
Section 21 hereof, between the Lessor and a third party, pursuant to which the
Lessor assigns certain of its rights under this Lease to such third party, as
the same may be amended, restated, modified or supplemented from time to time.
"Average Ammonia Market Price" means, for any calendar month,
the average of the Weekly Ammonia Price, FOB Trinidad, for each calendar week.
"Weekly Average Ammonia Price, FOB Trinidad" means, for any calendar week that
begins during such calendar month, the
2
<PAGE> 6
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
average of the "Green Markets Caribbean Price", the "Fertecon Caribbean Price",
and the "FMB Trinidad Price", except that (x) if, for any reason, any such price
cannot be determined with respect to such calendar week, the Weekly Average
Ammonia Price, FOB Trinidad shall be the average of such prices as can be so
determined (or, if only one such price can be so determined, such price), and
(y) if no such price can be so determined, the Weekly Average Ammonia Price, FOB
Trinidad shall be determined in a manner as shall be mutually agreed to between
the Lessee and the Lessor.
(a) The "Green Markets Caribbean Price" for any calendar
week shall be the average of:
(i) the low International Caribbean Market Price
for Anhydrous Ammonia on the spot market as
reported for such week in the Table
"International Market Prices" by the
publication Green Markets Fertilizers Market
Intelligence Weekly (a Pike & Fischer
publication); and
(ii) the high International Caribbean Market
Price for Anhydrous Ammonia on the spot
market as reported for such week in the
manner aforesaid by the said publication.
(b) The "Fertecon Caribbean Price" for any calendar week
shall be the average of:
(i) the low FOB Caribbean Ammonia Spot Price as
reported for such week in the Table "AMMONIA
SPOT PRICE INDICATIONS" by the publication
Fertecon Weekly Ammonia Fax (a Fertecon
Limited publication); and
(ii) the high FOB Caribbean Ammonia Spot Price as
reported for such week in the manner
aforesaid by the said publication.
(c) The "FMB Trinidad Price" for any calendar week shall
be the average of:
(i) the low Ammonia - FOB Trinidad Spot Price as
reported for such week in the table "FMB
International Price Guide" under the heading
"RAW MATERIALS/INTERMEDIATES" by the
publication FMB Fertilizer Market Bulletin
(a FMB Consultants Ltd. publication); and
(ii) the high ammonia - FOB Trinidad Spot Price
as reported for such week in the manner
aforesaid by the said publication.
If the Green Markets Caribbean Price, the Fertecon Caribbean
Price or the FMB Trinidad Price is quoted for other than short ton of anhydrous
ammonia (for example tonne), the quotation shall be converted to a short ton
basis using generally accepted conversion methods.
"ATAL" means Arcadian Trinidad Ammonia Limited, a Trinidad and
Tobago private limited company.
3
<PAGE> 7
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
"Basic Rent" means, with respect to any Parcel of Property or
Unit of Equipment commencing on the Effective Date with respect to such Parcel
of Property or Unit of Equipment:
(a) for each calendar month during the Lease Term of such
Parcel or Unit, an amount computed by multiplying the following:
(i) the Acquisition Cost of such Parcel or Unit, by
(ii) a fraction having a numerator equal to the number of
days in such month and a denominator of 365, or in a
leap year, 366, by
(iii) the decimal equivalent of .14625% plus the Lessor's
weighted average percentage cost per annum
(including, without duplication, any interest
accruing at a default rate and any facility,
commitment or other fees under a Credit Agreement) of
borrowings outstanding at any time during the period
from and including the last Business Day of the
preceding calendar month to and including the day
immediately preceding the last Business Day of the
calendar month for which Basic Rent is being computed
(the "Computation Period") for which Basic Rent is
being computed to finance or refinance the
acquisition and ownership of Property or Equipment;
and
(b) for any partial first calendar month during the Lease Term
of such Parcel or Unit, an amount computed by multiplying the following:
(i) the Acquisition Cost of such Parcel or Unit, by
(ii) a fraction having a numerator equal to the number of
days such Parcel or Unit is under lease during such
partial first month and a denominator of 365, or in a
leap year, 366, by
(iii) the decimal referred to in paragraph (a)(iii) above;
provided, that if the Effective Date for such Parcel
or Unit falls on or after the Lease Rate Date during
such partial first calendar month such decimal shall
be the decimal determined as of the next succeeding
Lease Rate Date.
"Basic Rent Payment Date" means the last Business Day of each
calendar month during the Lease Term of any Property or Equipment and the Lease
Termination Date.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions in the City of New York or the City of
London are authorized by law to close.
"Cash Reserve Account" shall have the meaning set forth in
paragraph (q) of Section 2 hereof.
"Cash Reserve Account Commencement Date" means the Effective
Date with respect to the Ammonia Project.
4
<PAGE> 8
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
"Cash Reserve Requirement Amount" means an amount equal to the
quotient of 40% of the Acquisition Cost of the Ammonia Project divided by the
number of Scheduled Reserve Payment Dates.
"Code" means the Internal Revenue Code of 1986, as amended.
"Companies Act" means Companies Act, Chapter 31, No. 1, of May
1, 1939, as amended.
"Computation Period" has the meaning set forth in subclause
(a)(iii) of the definition of Basic Rent in Section 1 hereof.
"Consent" means each consent or acknowledgement or similar
instrument of the Lessee with respect to an Assignment, as the same may be
amended, restated, modified or supplemented from time to time.
"Consolidated Current Assets" means, as at any date of
determination, the total assets of the Lessee and its Subsidiaries which may be
properly classified as current assets in accordance with generally accepted
accounting principles on a consolidated basis, after eliminating all
intercompany transactions, provided, that in determining such current assets (a)
notes and accounts receivable shall be included only if good and collectible and
payable on demand or within one year from such date (and if not by their terms
or by the terms of any instrument or agreement relating thereto directly or
indirectly renewable or extendible at the option of the debtor beyond such year)
and shall be taken at their face value less reserves determined to be sufficient
in accordance with generally accepted accounting principles, (b) life insurance
policies (other than cash surrender value of unencumbered policies) shall be
excluded, and (c) investments, other than those properly classified as current
assets, shall be excluded.
"Consolidated Current Liabilities" means, as at any date of
determination, the total liabilities of the Lessee and its Subsidiaries which
may properly be classified as current liabilities in accordance with generally
accepted accounting principles on a consolidated basis, after eliminating all
intercompany transactions, but in any event including as current liabilities,
without limitation, (a) any portion of Funded Debt of the Lessee and its
Subsidiaries outstanding on such date of determination which by its terms or the
terms of any instrument or agreement relating thereto matures on demand or
within one year from such date and is not directly or indirectly renewable,
extendible or refundable, at the option of debtor under an agreement or firm
commitment in effect on such date, to a date one year or more from such date,
and (b) all taxes (as estimated) due within one year from such date, other than
deferred income taxes not due within one year from such date, if and to the
extent that such deferred income taxes would otherwise be classified as current
liabilities in accordance with generally accepted accounting principles.
"Consolidated Depreciation, Depletion and Amortization
Expense" means, with respect to any Person for any period, the total amount of
depreciation, depletion and amortization expense (exclusive of the amortization
of the principal amount of any Indebtedness) and other non-cash non-operating
charges for such Person and its consolidated Subsidiaries for such period.
"Consolidated EBITDA" of the Lessee with respect to any period
means the aggregate amount of Consolidated Net Income of the Lessee and its
Subsidiaries for the preceding twelve fiscal months (prior to any minority
interests for interests outstanding on May 11, 1993)
5
<PAGE> 9
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
plus (to the extent deducted in calculating Consolidated Net Income) Interest
Expense, consolidated income taxes and consolidated depreciation, depletion and
amortization expense (but without giving any effect to any extraordinary gain or
loss).
"Consolidated Net Income" means, for any period, the net
income of the Lessee and its consolidated Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting principles;
provided, however, that there shall not be included such Consolidated Net
Income:
(i) any net income or net loss of any Person if such Person is
not a Subsidiary, except that Lessee shall include in such Consolidated
Net Income the aggregate amount of cash actually distributed by such
Person during such period to Lessee or a Subsidiary as a dividend or
other distribution (subject, in the case of a dividend or other
distribution to a Subsidiary, to the limitations contained in clause
(iii) below);
(ii) any net income of any Person acquired by Lessee or a
Subsidiary in a pooling of interests transaction for any period prior
to the date of such acquisition;
(iii) any net income of any Subsidiary if such Subsidiary is
subject to restrictions, directly or indirectly, on the payment of
dividends or the making of distributions by such Subsidiary, directly
or indirectly, to Lessee, including any restrictions or encumbrances or
the ability to exchange or repatriate its earnings into the United
States in United States dollars, except that (A) Lessee's equity in the
net income of any such Subsidiary for such period shall be included in
such Consolidated Net Income up to the aggregate amount of cash
actually distributed by such Subsidiary (in compliance with such
restrictions) during such period to Lessee or another Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or
other distribution to another Subsidiary, to the limitation contained
in this clause) and (B) Lessee's equity in a net loss of any such
Subsidiary for such period shall be included in determining such
Consolidated Net Income;
(iv) any gain (but not loss) realized upon the sale or other
disposition of any property, plant or equipment of Lessee or its
consolidated Subsidiaries (including pursuant to any sale and leaseback
arrangement) which is not sold or otherwise disposed of in the ordinary
course of business and gain (but not loss) realized upon the sale or
other disposition of any interests of any Person; and
(v) the cumulative effect of change in accounting principles.
"Consolidated Net Worth" means, respecting any Person, the
amount by which:
(i) the total assets of such Person and, if applicable, its
Subsidiaries appearing on a balance sheet (consolidated, if applicable)
of such Person and, if applicable, its Subsidiaries prepared in
accordance with generally accepted accounting principles on a
consolidated basis, as of the date of determination, exceeds,
(ii) total liabilities of such Person and, if applicable, its
Subsidiaries appearing on a balance sheet of such Person and, if
applicable, its Subsidiaries prepared in accordance with generally
accepted accounting principles as of the date of determination on a
consolidated basis,
6
<PAGE> 10
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
in each case after eliminating all intercompany transactions.
"Consolidated Working Capital" means the excess of
Consolidated Current Assets over Consolidated Current Liabilities.
"Credit Agreement" means each credit or loan agreement which
has been entered into between the Lessor and a lender or lenders related to the
financing of Property or Equipment, as the same may be amended, restated,
modified or supplemented from time to time.
"CRA Agreement" means the Cash Reserve Account Agreement dated
the date hereof among the Lessee, the Lessor and the CRA Bank.
"CRA Bank" means the bank party to the CRA Agreement.
"Effective Date" means, with respect to any Parcel of Property
or Unit of Equipment, the date on which such Parcel or Unit becomes subject to
this Lease, as evidenced by execution by the Lessor of an AFL Unit Leasing
Record or a Unit Leasing Record, as the case may be; provided, however, that the
Effective Date with respect to the Ammonia Project shall, as provided in the
Agreement for Lease, not be subsequent to the Designated Effective Date (as
defined in the Agreement for Lease) with respect to the Ammonia Project.
"Equipment" means personal property of any type leased or to
be leased hereunder and, when leased, evidenced by Unit Leasing Records or AFL
Unit Leasing Records, and all related appliances, appurtenances, accessions,
furnishings, materials and parts leased or to be leased by the Lessor to the
Lessee as provided herein and including all replacements and subsequent
replacements of such related appliances, appurtenances, accessions, furnishings,
materials and parts. "Unit", when referring to the personal property leased
under this Lease, means a particular item of Equipment, as the context may
require.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time and the regulations promulgated thereunder.
"ERISA Affiliate" means any Person that for purposes of Title
IV of ERISA is a member of the controlled group of the Lessee, or under common
control with the Lessee, within the meaning of Section 414 of the Internal
Revenue Code.
"ERISA Event" means (a)(i) the occurrence of a reportable
event, within the meaning of Section 4043 of ERISA, with respect to any Plan
unless the 30-day notice requirement with respect to such event has been waived
by the PBGC, or (ii) the requirements of subsection (1) of Section 4043(b) of
ERISA (without regard to subsection (2) of such Section) are met with respect to
a contributing sponsor, as defined in Section 4001(a)(13) of ERISA, of a Plan,
and an event described in paragraph (9), (10), (11), (12) or (13) of Section
4043(c) of ERISA is reasonably expected to occur with respect to such Plan
within the following 30 days; (b) the application for a minimum funding waiver
with respect to a Plan; (c) the provision by the administrator of any 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
Lessee or any ERISA Affiliate in the circumstances described in Section 4062(e)
of ERISA; (e) the withdrawal by the Lessee or any ERISA Affiliate from a
Multiple Employer Plan during a plan year for which it was a
7
<PAGE> 11
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
substantial employer, as defined in Section 4001(a)(2) of ERISA; (f) the
conditions for imposition of a lien under Section 302(f) of ERISA shall have
been met with respect to any Plan; (g) the adoption of an amendment to a 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 Plan
pursuant to Section 4042 of ERISA, or the occurrence of any event or condition
described in Section 4042 of ERISA that constitutes grounds for the termination
of, or the appointment of a trustee to administer, such Plan.
"Event of Default" has the meaning set forth in Section 18
hereof.
"Expiration Covenants" has the meaning set forth in paragraph
(b) of Section 13 hereof.
"Final Advance" has the meaning set forth for such term in the
Agreement for Lease.
"Funded Debt" means, as applied to any Person, all
Indebtedness (other than under the Revolving Loan Facility) of such Person which
by its terms or by the terms of any instrument or agreement relating thereto
matures one year or more from the date of the initial creation thereof, provided
that Funded Debt shall include any Indebtedness (other than under the Revolving
Loan Facility) which does not otherwise come within the foregoing definition but
which is directly or indirectly renewable or extendible at the option of the
debtor to a date one year or more (including an option of the debtor under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of one year or more) from the date of the initial creation
thereof.
"Gas Contract" means the gas contract or subcontract to be
entered into by an Affiliate of the Lessee with respect to the supply of natural
gas to the Ammonia Project.
"Governmental Action" has the meaning set forth in paragraph
(d) of Section 2 hereof.
"Ground Lease" has the meaning set forth in Section 28 hereof.
"Guaranty" means, as applied to any Person, any direct or
indirect liability, contingent or otherwise, of such Person with respect to any
indebtedness, lease, dividend or other obligation of another, including, without
limitation, any such obligation directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business) or
discounted or sold with recourse by such Person, or in respect of which such
Person is otherwise directly or indirectly liable or any other obligation under
any contract which, in economic effect, is substantially equivalent to a
guaranty, including, without limitation, any such obligation of a partnership in
which such person is a general partner or of a joint venture in which such
Person is a joint venturer, any such obligation in effect guaranteed by such
Person through any agreement (contingent or otherwise) to purchase, repurchase
or otherwise acquire such obligation or any security therefor, or to provide
funds for the payment or discharge of such obligations (whether in the form of
loans, advances, stock purchases, capital contributions or otherwise), or to
maintain the solvency or any balance sheet or other financial condition of the
obligor of transportation or services regardless of the non-delivery thereof, in
any such case if the purpose or intent of such agreement is to provide assurance
that such obligation will be paid or
8
<PAGE> 12
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected against loss in respect
thereof, provided that as applied to any Person, a Guaranty shall include
obligations in respect of tort or environmental liabilities only if such
obligations are contractually guaranteed or assumed by such Person. The amount
of any Guaranty shall be equal to the amount of the obligation guaranteed.
"Indebtedness" means, as applied to any Person (without
duplication):
(a) any indebtedness for borrowed money which such Person has
directly or indirectly created, incurred or assumed;
(b) any indebtedness, whether or not for borrowed money,
secured by any Lien in respect of property owned by such Person,
whether or not such Person has assumed or become liable for the payment
of such indebtedness, provided that the amount of such indebtedness if
not so assumed shall in no event be deemed to be greater than the fair
market value from time to time (as determined in good faith by such
Person) of the property subject to such Lien;
(c) any indebtedness (other than current accounts payable for
services or good provided in the ordinary course of business), whether
or not for borrowed money, with respect to which such Person has become
directly or indirectly liable and which represents the deferred
purchase price (or a portion thereof) or has been incurred to finance
the purchase price (or a portion thereof) of any property or service or
business acquired by such Person, whether by purchase, consolidation,
merger or otherwise;
(d) any obligations under capital leases to the extent such
obligations would, in accordance with generally accepted accounting
principles, appear on a balance sheet of such Person;
(e) any indebtedness of the character referred to in clause
(a), (b), (c) or (d) of this definition deemed to be extinguished under
generally accepted accounting principles but for which such Person
remains legally liable; and
(f) any indebtedness of any other Person of the character
referred to in clause (a), (b), (c), (d) or (e) of this definition with
respect to which the Person whose Indebtedness is being determined has
become liable by way of a Guaranty.
"Indemnified Person" has the meaning set forth in Section 11
hereof.
"Initial Advance" has the meaning set forth for such term in
the Agreement for Lease.
"Initial Term" has the meaning set forth in paragraph (a) of
Section 6 hereof.
"Insurance Requirements" means all terms of any insurance
policy covering or applicable to any Property or Equipment, all requirements of
the issuer of any such policy, all statutory requirements and all orders, rules,
regulations and other requirements of any governmental body related to insurance
applicable to any Property or Equipment.
9
<PAGE> 13
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
"Interest Expense" means, for any period, the sum (determined
without duplication) of the aggregate amount of interest accrued during such
period on Indebtedness of the Lessee.
"Lease Rate Date" has the meaning set forth in paragraph (b)
of Section 7 hereof.
"Lease Term" means, with respect to any Parcel of Property or
Unit of Equipment, the Initial Term plus the Renewal Term thereof, if any.
"Lease Termination Amount" shall mean, as to any Parcel of
Property or Unit of Equipment, an amount equal to (i) at any time during or at
the end of the Initial Term, 84.5% of the Acquisition Cost of such Parcel or
Unit or (ii) at any time during or at the end of the Renewal Term, a percentage
of the Acquisition Cost of such Parcel or Unit to be agreed to between the
Lessee and the Lessor prior to the commencement of such Renewal Term.
"Lease Termination Date" means for any Parcel of Property or
Unit of Equipment, the earlier of (i) the last day of the Initial Term of such
Parcel or Unit (unless the lease hereunder of such Parcel or Unit has been
renewed pursuant to Section 12 hereof), (ii) if the lease of such Parcel or Unit
has been renewed pursuant to Section 12 hereof, the last day of the Renewal Term
of such Parcel or Unit or (iii) the day on which Arcadian Corporation purchases
such Parcel or Unit pursuant to the terms of the Purchase Option.
"Legal Requirements" means all laws, judgments, decrees,
ordinances and regulations and any other governmental rules, orders and
determinations and all requirements having the force of law of governmental
entities or agencies, courts or arbitral panels which have jurisdiction over or
application to any Property or Equipment leased hereunder, the Lessee or the
Lessor, now or hereinafter enacted, made or issued, whether or not presently
contemplated, including, without limitation, compliance with all requirements of
labor laws and environmental statutes (including, without limitation, all
environmental laws and statutes of the Republic of Trinidad and Tobago),
compliance with which is required at any time from the date hereof through the
Lease Term, whether or not such compliance shall require structural, unforeseen
or extraordinary changes to any Property or Equipment or the operation,
occupancy or use thereof, except any thereof promulgated by a governmental
authority of the jurisdiction of organization of the Lessor with application
exclusively to the Lessor.
"Lessee" has the meaning set forth in the first paragraph of
this Lease.
"Lessor" means Nitrogen Leasing Company, Limited Partnership
or any successor or successors to all of its rights and obligations as the
Lessor hereunder.
"License Agreements" means, collectively, (i) the License
Agreement dated the date hereof among the Operator, ATAL and the Seller, and
(ii) the License Agreement dated the date hereof between Point Lisas and the
Seller.
"Lien" means any security interest, mortgage, pledge,
hypothecation, assignment, encumbrance, lien (statutory or other), or other
security agreement or charge or preferential arrangement having the same
economic effect as any of the foregoing of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same economic effect as
any of the foregoing, or the
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THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
filing of any financing statement or the recordation or registration of any
security interest or charge under the Uniform Commercial Code or Companies Act
or comparable law of any jurisdiction in respect of any of the foregoing).
"Merrill Leasing" means ML Leasing Equipment Corp., a Delaware
corporation.
"Merrill Lynch" means Merrill Lynch & Co., Inc., a Delaware
corporation.
"Mortgageable Ground Lease" means a Ground Lease for a Parcel
of Property to be subleased to the Lessee which is delivered to the Lessor for
execution by the Lessor, or assigned to the Lessor by an assignment in form and
substance satisfactory to the Lessor, and having such terms and characteristics
as may be required by the Lessor and any Assignee, which terms and
characteristics shall include, without limitation, the following: (a) free
assignability to any lender as security for a borrowed money obligation of the
Lessor and, upon foreclosure of such security, by such lender to any third
party; (b) a term of at least five years in excess of the Initial Term of the
Parcel of Property to which such Ground Lease relates; (c) no provisions for
percentage or variable rent; and (d) no provision for a security deposit. A
Mortgageable Ground Lease shall be delivered with such estoppel certificates,
recognition and attornment agreements, or confirmation of customary mortgagee
protection as are reasonably acceptable to the Lessor and any Assignee.
"Multiemployer Plan" means a multiemployer plan, as defined in
Section 4001(a)(3) of ERISA, to which the Lessee 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
the Lessee or any ERISA Affiliate and at least one Person other than the Lessee
and the ERISA Affiliates or (b) was so maintained and in respect of which the
Lessee or any ERISA Affiliate could have liability under Section 4064 or 4069 of
ERISA in the event such plan has been or were to be terminated.
"Note Agreement" means the various First Mortgage Note
Agreements, each dated as of April 23, 1992, between the Lessee and the
noteholders named therein, as the same may be amended, restated, modified or
supplemented from time to time.
"Operating Agreement" means that certain Operating Agreement,
dated as of the date hereof, between the Operator and the Lessor.
"Operative Documents" has the meaning specified therefor in
the Agreement for Lease.
"Operator" means Arcadian Trinidad Limited, a Trinidad and
Tobago private limited company.
"Permitted Contest" has the meaning set forth in paragraph (a)
of Section 27 hereof.
"Permitted Liens" means the following Liens and other matters
affecting the title of any Parcel of Property or Unit of Equipment: (a) Liens
securing the payment of taxes, assessments
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THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
and other governmental charges or levies which are either not delinquent or, if
delinquent, are being contested by the Lessee in good faith as a Permitted
Contest; (b) zoning and planning restrictions, subdivision and platting
restrictions, easements, rights-of-way, licenses, reservations, covenants,
conditions, waivers, restrictions on the use of any Parcel of Property, minor
encroachments or minor irregularities of title, none of which materially impairs
the intended use or value of such Parcel of Property by the Lessee; (c)
reservations of mineral interests; (d) any Lien created by an Operative
Document; (e) leases and licenses in effect with respect to any Parcel of
Property which are permitted by this Lease or which are delivered to and
accepted by the Lessor prior to such Parcel's Effective Date; (f) materialmen's,
mechanics', worker's, repairmen's, employees', or similar Liens incurred in good
faith and in the ordinary course of business which are not yet delinquent or
which are the subject of a Permitted Contest; (g) Liens arising out of any
judgment or award against the Lessee, unless there exists a material risk of the
sale, forfeiture or loss of such Parcel of Property or Unit of Equipment or any
interest therein or any use thereof or unless such judgment or award shall not
in any event, within 45 days after the entry thereof, have been discharged,
vacated, reversed or execution thereof stayed pending appeal or shall not have
been discharged, vacated or reversed within 45 days after the expiration of such
stay; (h) any Lien with respect to which the Lessee shall have provided a bond
or other security in an amount and under terms reasonably satisfactory to the
Lessor; and (i) such other or additional matters as may be approved in writing
by the Lessor, such approval not to be unreasonably withheld or delayed.
"Permitted Sublessee" means any entity within the Arcadian
Lease Group which becomes a sublessee in accordance with the terms hereof.
"Person" means any individual, corporation, partnership,
limited liability company, private limited company, joint venture, association,
joint-stock company, trust, unincorporated organization of government or any
agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in Section
3 of ERISA) which is or has been established or maintained, or to which
contributions are or have been made, by the Lessee or any Related Person or to
which the Lessee or any Related Person is or has been obligated to contribute,
or an employee benefit plan as to which the Lessee or any Related Person would
be treated as a contributory sponsor under Section 4069 or Section 4212 of ERISA
if such plan were terminated.
"Point Lisas" means the Point Lisas Industrial Port
Development Corporation.
"Potential Default" means any event which, but for the lapse
of time, or giving of notice, or both, would constitute an Event of Default.
"Property" means any and all parcels of land together with all
buildings and other improvements (including, without limitation, the
attachments, appliances, equipment, machinery and other affixed property which,
in each case, would constitute "fixtures" under Section 9- 313(1)(a) of the
Uniform Commercial Code) now or hereafter located on such parcels of land,
leased or to be leased hereunder and when leased, evidenced by Unit Leasing
Records or AFL Unit Leasing Records, and the respective easements, rights and
appurtenances relating to such parcels of land, buildings and improvements.
"Parcel" or "Parcel of Property" means a specific parcel or parcels of Property.
12
<PAGE> 16
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
"Purchase Agreement" means that certain Purchase Option
Agreement, dated as of the date hereof, between Arcadian Corporation and the
Lessor.
"Purchase Option" means the right of Arcadian Corporation to
purchase the Ammonia Project on the terms and subject to the conditions set
forth in the Purchase Agreement.
"Reconciliation Amount" has the meaning set forth in paragraph
(e) of Section 7 hereof.
"Related Person" means any trade or business, whether or not
incorporated, which, as of any date of determination, would be treated as a
single employer together with the Lessee, under Section 414 of the Code.
"Renewal Term" means the additional sixty (60) month term
during which, if the conditions set forth in Section 12 hereof are met, a Parcel
of Property or Unit of Equipment may be leased pursuant to the provisions of
this Lease, which term would commence on the day following the end of the
Initial Term with respect to such Parcel of Property or Unit of Equipment.
"Responsible Officer" shall mean the President, any Vice
President or any Treasurer of the general partner of the Lessee, or any other
officer or similar official of the general partner of the Lessee responsible for
the administration of the obligations of the Lessee with respect to this Lease.
"Revolving Loan Facility" means the Revolving Credit
Agreement, dated as of June 29, 1995, among the Lessee, the lenders party
thereto and Cooperatieve Centrale Raiffeisen - Boerenleenbank B.A., "Rabobank
Nederland", New York Branch, as agent for such lenders.
"Scheduled Reserve Payment Date" has the meaning set forth in
paragraph (q) of Section 2 hereof.
"Seller" means Arcadian Nitrogen Limited, a Trinidad and
Tobago private limited company.
"Site Lease" means the Lease Agreement, dated as of July 26,
1982 between Point Lisas and ATAL, as the same may be amended, restated,
modified or supplemented from time to time as permitted by and in accordance
with the Operative Documents.
"Sublease" means the Sublease Agreement, dated as of the date
hereof, between ATAL and the Lessor, as the same may be amended, restated,
modified or supplemented from time to time as permitted by and in accordance
with the Operative Documents.
"Subsidiary" means (i) a corporation a majority of whose
outstanding capital stock with voting power under ordinary circumstances to
elect directors is at the time, directly or indirectly, owned by the Lessee, by
the Lessee and one or more Subsidiaries or by one or more Subsidiaries or (ii)
any other Person (other than a corporation) in which the Lessee, the Lessee and
one or more Subsidiaries or one or more Subsidiaries, directly or indirectly, at
the date of determination thereof, has at least a majority beneficial ownership
interest.
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THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
"Surplus Earnings" means for each Surplus Earnings Period, the
lesser of
(a)(i) the after tax income of the Seller from ammonia sales
from the Ammonia Plant, as determined in accordance
with U.S. generally accepted accounting principles as
in effect on the date hereof, plus
(ii) income taxes, depreciation expenses, depletion
expenses and amortization expenses,
in each case determined in accordance with U.S. generally accepted accounting
principles as in effect on the date hereof, minus
(iii) cash spending during the Surplus Earnings Period for
capital expenditures, turnaround expenditures, income
taxes, and deposits into the Cash Reserve Account
pursuant to paragraph (q) of Section 2 hereof,
or
(b)(i) (A) the sum of the Average Ammonia Market Prices
during such Surplus Earnings Period, divided by six,
minus
(B) $160.00, multiplied by
(ii) the number of short tons of ammonia sold by the
Seller from the Ammonia Plant during such Surplus
Earnings Period.
"Surplus Earnings Period" means each whole six-month period
(but not including any period of less than six months) ending on June 30 or
December 31 during the Initial Term, beginning with the first whole six-month
period the first day of which occurs during the Initial Term and ending with the
last whole six-month period to occur in the Initial Term.
"Surplus Earnings Reduction Amount" means, with respect to any
payment pursuant to paragraph (r) of Section 2 hereof, an amount equal to (a)
the amount of such payment, divided by (b) the number of Scheduled Reserve
Payment Dates occurring after the date of such payment.
"Taking" has the meaning set forth in paragraph (a) of Section
16 hereof.
"Unit Leasing Record" means an instrument, substantially in
the form of Exhibit C hereto, evidencing, except in the case of any Parcel or
Parcels of Property acquired and built pursuant to the Agreement for Lease, the
lease of any Parcel or Parcels of Property or Unit or Units of Equipment under
this Lease.
"Withdrawal Liability" has the meaning specified in Part I of
Subtitle E of Title IV of ERISA.
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<PAGE> 18
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
SECTION 2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF
LESSEE.
The Lessee represents, warrants and covenants to the Lessor:
(a) Partnership Matters. The Lessee (i) has been duly
organized and is validly existing as a limited partnership in good standing
under the laws of the State of Delaware, (ii) has full power, authority and
legal right to own and operate its properties and to conduct its business as
presently conducted and to execute, deliver and perform its obligations under
this Lease and any other Operative Document to which it is or is to be a party
and to consummate the transactions contemplated hereby and by the other
Operative Documents, and (iii) is duly qualified to do business in good standing
in each jurisdiction in which its ownership or leasing of properties or the
conduct of its business or the consummation of the transactions contemplated
hereby and by the other Operative Documents requires such qualification, except
whether the failure to so qualify would not materially impair the ability of the
Lessee to perform its obligations hereunder or under the other Operative
Documents. The sole general partner of the Lessee is Arcadian Corporation.
(b) Binding Agreement. This Lease has been duly authorized,
executed and delivered by the Lessee and, assuming the due authorization,
execution and delivery of this Lease by the Lessor, this Lease is a legal, valid
and binding obligation of the Lessee, enforceable according to its terms,
subject, as to enforceability, to applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally, and to general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law).
(c) Compliance with Other Instruments. None of the execution,
delivery and performance by the Lessee of this Lease and any Consent will result
in any violation of any term of the certificate of limited partnership or the
partnership agreement of the Lessee or require the approval or consent of any
limited partner or general partner of the Lessee except such as have been
obtained prior to the date hereof and will not conflict with or result in a
breach in any material respect of any terms or provisions of, or constitute a
default under, or result in the creation or imposition of any Lien (other than a
Permitted Lien) upon any property or assets of the Lessee under, any indenture,
mortgage or other agreement or instrument to which the Lessee is a party or by
which it or any of its property is bound, or any existing applicable law, rule,
regulation, license, judgment, order or decree of any government, governmental
body or court having jurisdiction over the Lessee or any of its activities or
properties.
(d) Governmental Consents. There are no consents, licenses,
orders, authorizations, approvals, waivers, extensions or variances of, or
notices to or registrations or filings with (each a "Governmental Action"), any
governmental or public body or authority in any jurisdiction which are or will
be required in connection with or are necessary to the valid execution, delivery
and performance of this Lease and the Operating Agreement, or any Governmental
Action (i) which is or will be required in connection with any participation by
the Lessor in the transaction contemplated by, or the exercise of remedies or
the enforcement of rights by Lessor under, this Lease, the Site Lease, the
Sublease, any bill of sale, deed, assignment, assumption, ownership agreement,
operating agreement, or other agreement relating to any Property or Equipment or
(ii) which is or will be required to be obtained by the Lessor, the Lessee, any
Assignee or any Affiliate of the foregoing, during the term of this Lease, with
respect to any Property or Equipment except the Governmental Action of the Town
and Country
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THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
Planning Authority in the Republic of Trinidad and Tobago, which Governmental
Action the Lessee reasonably believes will be obtained in the normal course
prior to the completion of construction of the Ammonia Project, and such other
Governmental Actions, (A) as have been duly obtained, given or accomplished,
with true copies thereof delivered to the Lessor, (B) as may be required by
applicable law not now in effect, (C) which, individually or in the aggregate,
if not obtained or effected, (x) will not place either the Lessor or any
Assignee in any danger of any monetary civil liability for which the Lessor or
any Assignee is not adequately indemnified (the Lessee's obligations under
Section 11 of this Lease shall be deemed to be adequate indemnification if no
Event of Default exists) or any other material civil liability or penalty or
subject the Lessor or any Assignee to any criminal liability as a result of a
failure to comply therewith, (y) will not result in a material diminution in the
value of any Property or Equipment or in any material risk of the loss, sale or
forfeiture or loss of use of any thereof, and (z) will not materially impair the
ability of the Lessee to perform its obligations hereunder, (D) as may be
required for the construction or operation of the Ammonia Project and have been
or will be timely obtained, or (E) which may be required as a result of the
business, properties or activities of the Lessor, any Assignee or any Affiliate
of the foregoing and which are not solely dependent on the nature of the
Property or Equipment leased hereunder or the business of the Lessee.
(e) Financial Statements. The Lessee has furnished to the
Lessor copies of its audited consolidated financial statements for the year
ended December 31, 1994 and copies of its quarterly unaudited consolidated
financial statements (balance sheet, income statement and cash flow statement)
for the quarters ended September 30, 1995 and December 31, 1995. The financial
statements contained in such documents fairly present in all material respects
the financial position, results of operations and statements of cash flows of
the Lessee as of the dates and for the periods indicated therein and have been
prepared in accordance with generally accepted accounting principles applied on
a consistent basis.
(f) Changes. Since September 30, 1995, there has been no
material adverse change in the financial condition or business of the Lessee in
the aggregate nor any change which would materially impair the ability of the
Lessee to perform its obligations under this Lease.
(g) Litigation. Except as disclosed on Exhibit G hereto, there
is no action, suit, proceeding or investigation at law or in equity by or before
any court, governmental body, agency, commission or other tribunal now pending
or, to the knowledge of the Lessee, threatened against or affecting the Lessee
or any property or rights of the Lessee which questions the enforceability of
this Lease or which affects or relates to any Parcel of Property or Unit of
Equipment which, if adversely determined, would have a reasonable possibility of
causing a material adverse impact on the business of the Lessee in the aggregate
or would materially impair the ability of the Lessee to perform its obligations
hereunder.
(h) Delivery of Information. The Lessee shall deliver to the
Lessor from time to time, (i) promptly upon their becoming available (but in any
event, within 120 days after the end of each fiscal year with respect to annual
statements and within 90 days after the end of each fiscal quarter with respect
to quarterly statements), copies of its annual audited consolidated financial
statements and its quarterly unaudited consolidated financial statements
(balance sheet, income statement and cash flow statement), (ii) promptly upon
request, such other information with respect to the Lessee's operations,
business, properties, assets, financial condition or litigation as the Lessor
shall reasonably request, (iii) promptly after a Responsible Officer of the
Lessee obtains knowledge of any Event of Default or any Potential Default
hereunder, a certificate of a
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<PAGE> 20
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
Responsible Officer of the Lessee specifying to the extent known the nature and
period of existence of such Event of Default or Potential Default, and what
action, if any, the Lessee has taken, is taking, or proposes to take with
respect thereto and (iv) promptly after a Responsible Officer of the Lessee
obtains knowledge of any material adverse change in the financial condition or
business of the Lessee or of any litigation of the type described in paragraph
(g) of this Section 2, a certificate of a Responsible Officer of the Lessee
describing such change or litigation as the case may be.
(i) Compliance with Legal Requirements and Insurance
Requirements. The operation, use and physical condition of the Property and
Equipment are in full compliance with all Legal Requirements and Insurance
Requirements, except any Legal Requirements, the non-compliance with which,
individually or in the aggregate, (i) will not place either the Lessor or any
Assignee in any danger of any monetary civil liability for which the Lessor or
any Assignee is not adequately indemnified (the Lessee's obligations under
Section 11 of this Lease shall be deemed to be adequate indemnification if no
Event of Default exists) or any other material civil liability or penalty or
subject the Lessor or any Assignee to any criminal liability as a result of a
failure to comply therewith and (ii) will not result in a material diminution in
the value of any Property or Equipment or in any material risk of the loss, sale
or forfeiture or loss of use of any thereof.
(j) Liens. No Property or Equipment is subject to any Lien,
except Permitted Liens.
(k) Agreement for Lease. The Property and Equipment acquired
and built pursuant to the Agreement for Lease was acquired and built in
accordance with the terms of the Agreement for Lease. The representations and
warranties of the Lessee in the Agreement for Lease are true and correct in all
material respects.
(l) ERISA. (i) No ERISA Event has occurred or is reasonably
expected to occur with respect to any Plan.
(ii) As of the last annual actuarial valuation date, the
funded current liability percentage, as defined in Section 302(d)(8) of
ERISA, of each Plan exceeds 90 percent, other than with respect to
Plans whose unfunded current liability does not exceed $1,000,000 in
the aggregate, and there has been no material adverse change in the
funding status of any such Plan since such date.
(iii) The Lessee has not incurred or is reasonably expected to
incur any Withdrawal Liability to any Multiemployer Plan.
(iv) The Lessee has not 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.
(v) Except as set forth in the financial statements referred
to in paragraph (e) of Section (2) hereof, the Lessee 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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THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
(vi) The execution and delivery of this Lease will not involve
any non-exempt "prohibited transaction" within the meaning of Section
406 of ERISA or Section 4975 of the Code.
(m) Operating Agreement. The Operating Agreement has been duly
authorized, executed and delivered by the Operator and, assuming the due
authorization, execution and delivery of the Operating Agreement by the Lessor,
is a legal, valid and binding obligation of the Operator, enforceable according
to its terms.
(n) Gas Contract. The Gas Contract has been duly authorized
and will be duly executed and delivered by an Affiliate of the Lessee and,
assuming the due authorization, execution and delivery of the Gas Contract by
any party to the Gas Contract other than an Affiliate of the Lessee, when
executed and delivered will be a legal, valid and binding obligation of such
Affiliate of the Lessee, enforceable according to its terms.
(o) Ancillary Facility Agreements. Each Ancillary Facility
Agreement has been duly authorized and has been or will be duly executed and
delivered by the Lessee or an Affiliate of the Lessee and, assuming the due
authorization, execution and delivery of each Ancillary Facility Agreement by
the parties thereto other than the Lessee or an Affiliate of the Lessee, when
executed and delivered will be a legal, valid and binding obligation of the
Lessee or such Affiliate, enforceable according to its terms.
(p) Financial Covenants. The Lessee agrees (i) to have a
Consolidated Net Worth of at least $100,000,000 at the end of each fiscal
quarter of the Lessee; (ii) that its Consolidated Working Capital will be
positive as at the end of each fiscal quarter of the Lessee; (iii) that its
Consolidated EBITDA for the twelve month period ending on the last day of each
of its fiscal quarters will be equal to at least two times Interest Expense for
such period; and (iv) that it will comply with the covenants set forth in
Sections 5.01, 5.02, 5.04, 5.05, 5.06, 5.07 and 5.08, of the Revolving Loan
Facility, as the same may be amended, restated, modified or supplemented from
time to time; provided that the Lessee's obligation to comply with these
Sections of the Revolving Loan Facility shall survive the termination or ceasing
to be in effect for any reason whatsoever of the Revolving Loan Facility and the
Lessee agrees to comply with such covenants, notwithstanding any such
termination or ceasing to be in effect until such date as this Lease shall be
terminated in accordance with the terms hereof.
(q) Cash Reserve Account. The Lessee has entered into the CRA
Agreement, providing for the establishment and administration of an
interest-bearing account for the benefit of the Lessor (the "Cash Reserve
Account"). The Lessee agrees that it shall deposit or cause to be deposited with
the CRA Bank, commencing on the first day of the fourth month commencing after
the month in which falls the Cash Reserve Account Commencement Date and on the
first day of each sixth month period thereafter which is prior to the seventh
anniversary of the date of this Lease (each such date being a "Scheduled Reserve
Payment Date"), an amount in immediately available funds equal to the Cash
Reserve Requirement Amount, minus (ii) the aggregate amount of all Surplus
Earnings Reduction Amounts with respect to payments pursuant to paragraph (r) of
Section 2 hereof theretofore made, to be held and administered by the CRA Bank
pursuant to the CRA Agreement.
(r) Earnings Recapture. The Lessee agrees that in the event
the Average Ammonia Market Price for any Surplus Earnings Period exceeds
$160.00, then all Surplus
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THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
Earnings for such Surplus Earnings Period shall be paid into the Cash Reserve
Account as follows: (i) if such Surplus Earnings Period ends on June 30 of any
year, on July 31 of such year, and (ii) if such Surplus Earnings Period ends on
December 31 of any year, on January 31 of the following year. The Lessee will,
by the date on which any payment of Surplus Earnings in respect of any Surplus
Earnings Period is due hereunder (or would be due, if any Surplus Earnings had
existed in respect of such Surplus Earnings Period), deliver to the Lessor
reasonable detail as to the manner in which such Surplus Earnings were
calculated or in which it was determined that no Surplus Earnings existed.
(s) Site Lease. The Lessee agrees to pay or cause to be paid,
on or before the first Business Day of each calendar year throughout the Lease
Term, all rent to be due under the Site Lease for such calendar year.
SECTION 3. LEASE OF PROPERTY OR EQUIPMENT.
(a) Subject to the terms and conditions hereof, the Lessor
shall lease to the Lessee, and the Lessee may lease from the Lessor pursuant to
this Lease, any Property or Equipment of the type listed on Exhibit A hereto,
when and as the Lessee has need of such Property or Equipment; provided, that:
(i) such Property or Equipment is available for purchase;
(ii) except with respect to any Parcel of Property acquired and
built pursuant to the Agreement for Lease, the Lessor has
approved the purchase order or acquisition with respect to
such Equipment or the acquisition with respect to such
Property (which approval shall be in the reasonable discretion
of the Lessor, such approval not to be unreasonably withheld);
(iii) at the time any such Property or Equipment is to be ordered or
leased hereunder there exists no Event of Default or Potential
Default;
(iv) with respect to any Parcel of Property or Unit of Equipment
acquired and built pursuant to the Agreement for Lease, the
conditions for the Lessee to execute an AFL Unit Leasing
Record shall have been satisfied and the Lessor shall have
executed an AFL Unit Leasing Record with respect to such
Parcel of Property or Unit of Equipment; and
(v) the sum of (A) the Acquisition Cost of such Property or
Equipment and (B) the aggregate Acquisition Cost of all other
Property or Equipment leased hereunder would not, at the time
any such Property or Equipment is to be leased hereunder,
exceed such amount as the Lessor and the Lessee may from time
to time agree.
(b) The lease hereunder of Property and Equipment acquired and
built pursuant to the Agreement for Lease shall be evidenced by an AFL Unit
Leasing Record, including a revised AFL Unit Leasing Record, if any, delivered
pursuant to subsection 2.3(b) of the Agreement for Lease. Subject to the terms
of paragraph (a) of Section 3 hereof, upon Substantial Completion (as defined in
the Agreement for Lease) of a Parcel or Parcels of Property or a Unit or Units
of Equipment acquired and built pursuant to the Agreement for Lease, or, if
Substantial Completion will not occur prior to the Designated Effective Date (as
defined in the Agreement for Lease), at
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<PAGE> 23
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
least five (5) days prior to the Designated Effective Date, the Lessee shall
prepare an AFL Unit Leasing Record. The AFL Unit Leasing Record shall give a
full description of the Property and Equipment, its Acquisition Cost, its
Initial Term and Renewal Term, the Basic Rent with respect to such Property, and
such other details as the Lessor and the Lessee may from time to time agree. The
AFL Unit Leasing Record shall have an Effective Date as of the earlier of the
date of execution by the Lessor of the AFL Unit Leasing Record or the Designated
Effective Date, as the case may be. Execution and delivery by the Lessee of an
AFL Unit Leasing Record shall constitute (i) acknowledgment by the Lessee that
the Equipment and Property, if any, specified in such AFL Unit Leasing Record
has been delivered to the Lessee in condition in all respects satisfactory to
the Lessee and has been accepted for lease hereunder by the Lessee as of the
Effective Date of such AFL Unit Leasing Record, (ii) acknowledgment by the
Lessee that the Property and Equipment, if any, specified in such AFL Unit
Leasing Record is subject to all of the covenants, terms and conditions of this
Lease, and (iii) certification by the Lessee that the representations and
warranties contained in Section 2 of this Lease are true and correct in all
material respects on and as of the Effective Date of such AFL Unit Leasing
Record as though made on and as of such date and that there exists on such date
no Event of Default or Potential Default.
(c) The lease of each Parcel of Property, other than a Parcel
of Property acquired and built pursuant to the Agreement for Lease, or Unit of
Equipment, other than a Unit of Equipment appropriately included in an AFL Unit
Leasing Record, to the Lessee under this Lease shall be evidenced by a Unit
Leasing Record. The Lessee shall prepare and execute a Unit Leasing Record with
respect to each such Parcel of Property or Unit of Equipment (which Unit Leasing
Record may relate to more than one Unit of Equipment) and deliver it promptly to
the Lessor. Contemporaneously with the payment required by paragraph (b) of
Section 5 hereof, the Lessor shall execute the acceptance of such Unit Leasing
Record and promptly return one copy of such Unit Leasing Record to the Lessee.
(d) The Lessee shall prepare each Unit Leasing Record pursuant
to the procedures provided by the Lessor. Each Unit Leasing Record and AFL Unit
Leasing Record shall give a full description of the Parcel or Parcels of
Property or Unit or Units of Equipment covered thereby, the Acquisition Cost of
each such Parcel or Unit, the Initial Term and Renewal Term for each such Parcel
or Unit, its location and such other details as the Lessor and the Lessee may
from time to time agree.
(e) Execution by the Lessee of a Unit Leasing Record or AFL
Unit Leasing Record shall constitute (i) acknowledgment by the Lessee that the
Property or Equipment specified in such Unit Leasing Record or AFL Unit Leasing
Record has been delivered to the Lessee in good condition and has been accepted
for lease hereunder by the Lessee as of the Effective Date thereof, (ii)
acknowledgment by the Lessee that the Property or Equipment specified in such
Unit Leasing Record or AFL Unit Leasing Record is subject to all of the
covenants, terms and conditions of this Lease, and (iii) certification by the
Lessee that the representations and warranties contained in Section 2 of this
Lease and in Section 8 of the Agreement for Lease are true and correct in all
material respects on and as of such Effective Date as though made on and as of
such Effective Date and that there exists on such Effective Date no Event of
Default or Potential Default.
(f) In connection with any Parcel of Property or Unit of
Equipment acquired and built pursuant to the Agreement for Lease, within six (6)
months of the Effective Date of such Parcel or Unit, the Lessee may deliver to
the Lessor a Certificate of Increased Cost (as defined in
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THIS LEASE AGREEMENT IS
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the Agreement for Lease) pursuant to the Agreement for Lease setting forth the
actual amount expended by the Lessee for items included in the Unit Budget (as
defined in the Agreement for Lease) with respect to such Parcel or Unit. If,
based upon such Certificate of Increased Cost, a Completion Advance (as defined
in the Agreement for Lease) is to be made, the Lessor shall execute within five
(5) days of receipt of such Certificate of Increased Cost from the Lessee a
revised AFL Unit Leasing Record to amend the Acquisition Cost for such Parcel or
Unit to reflect the increase in the Acquisition Cost. In the event the Lessee
shall receive a Completion Advance with respect to the Ammonia Project, the
Lessee shall, on the Business Day immediately succeeding such Completion
Advance, deposit or cause to be deposited into the Cash Reserve Account an
amount equal to 40% of such Completion Advance, to be held by the CRA Bank
pursuant to the CRA Agreement.
SECTION 4. OPERATING LEASE.
The Lessor and the Lessee hereby declare that it is their
mutual intent that for accounting and regulatory purposes this Lease be treated
as an operating lease and not an instrument or evidence of indebtedness, and
that the relationship between the Lessor and the Lessee under this Lease shall
be that of lessor and lessee only. Title to and ownership of any Property or
Equipment shall at all times remain in the Lessor and at no time become vested
in the Lessee except in accordance with an express provision of this Lease. The
Lessee does not hereby acquire any right, equity, title or interest in or to any
Property or Equipment except pursuant to the terms hereof.
SECTION 5. DELIVERY.
(a) The Lessee shall acquire or order and accept Property or
Equipment, other than Property and Equipment acquired and built pursuant to the
Agreement for Lease, pursuant to the procedures, if any, provided by the Lessor.
(b) Upon acceptance for lease of a Parcel of Property, other
than Property acquired and built pursuant to the Agreement for Lease, or a Unit
of Equipment, other than a Unit of Equipment acquired and built pursuant to the
Agreement for Lease, by the Lessee and the Lessor and receipt by the Lessor of
(i) the vendor's invoice or invoices for such Unit of Equipment and a contract
of sale and deed with respect to each Parcel of Property, (ii) invoices or other
evidence satisfactory to the Lessor for any amounts included in the Acquisition
Cost of such Parcel or Unit payable to parties other than the vendor, (iii)
invoices or other evidence satisfactory to the Lessor (including an appraisal
with respect to a Parcel of Property or Unit of Equipment) for any amounts
included in the Acquisition Cost of such Parcel or Unit that have been paid to
the vendor or other parties by the Lessee and for any costs included in the
Acquisition Cost of such Parcel or Unit incurred by the Lessee, (iv) a Unit
Leasing Record with respect to such Parcel or Unit duly prepared and executed by
the Lessee and (v) such other documentation as the Lessor may reasonably
require, the Lessor shall (A) pay to such vendor the amount of the vendor's
invoice or invoices and/or contract of sale for such Parcel or Unit except to
the extent previously paid by the Lessee, (B) pay to such other parties such
amounts payable, except to the extent previously paid by the Lessee and (C)
reimburse or pay to the Lessee for such amounts paid to the vendor or other
parties by the Lessee, for such costs incurred by the Lessee and, if agreed
between the Lessor and the Lessee, for the appraised value of the Property or
Equipment; provided, however, that in no event shall the sum of all payments
made pursuant to clauses (A), (B) and (C) above exceed the Acquisition Cost of
such Property or Equipment.
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THIS LEASE AGREEMENT IS
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(c) The requirements for acceptance for lease hereunder of the
Property and Equipment acquired and built pursuant to the Agreement for Lease
shall be the requirements set forth in the Agreement for Lease.
(d) The obligations of the Lessee to pay all amounts payable
pursuant to this Lease (including specifically and without limitation amounts
payable under Sections 7 and 11 hereof) shall be absolute and unconditional
under any and all circumstances of any character (including, without limitation,
the circumstances set forth in clauses A through L below), and such amounts
shall be paid without notice, demand, defense (except the defense of prior
payment), set-off, deduction or counterclaim and without abatement, suspension,
deferment, diminution or reduction of any kind whatsoever, except as herein
expressly otherwise provided. Without limitation of the foregoing, the
obligation of the Lessee to lease and pay Basic Rent for any and all Property or
Equipment accepted for use pursuant to this Lease is without any warranty or
representation, express or implied, as to any matter whatsoever on the part of
the Lessor or any Assignee or any Affiliate of either, or anyone acting on
behalf of any of them.
THE LESSEE HAS SELECTED AND SHALL SELECT ALL PROPERTY OR
EQUIPMENT ACQUIRED OR ORDERED ON THE BASIS OF ITS OWN JUDGMENT. NEITHER THE
LESSOR NOR ANY ASSIGNEE NOR ANY AFFILIATE OF EITHER, NOR ANYONE ACTING ON BEHALF
OF ANY OF THEM MAKES ANY REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER,
EXPRESS OR IMPLIED, INCLUDING, WITHOUT LIMITATION, AS TO THE SAFETY, TITLE,
CONDITION, QUALITY, QUANTITY, FITNESS FOR USE, MERCHANTABILITY, CONFORMITY TO
SPECIFICATION, OR ANY OTHER CHARACTERISTIC, OF ANY PROPERTY OR EQUIPMENT, OR AS
TO WHETHER ANY PROPERTY OR EQUIPMENT OR THE OWNERSHIP, USE, OCCUPANCY OR
POSSESSION THEREOF COMPLIES WITH ANY LAWS, RULES, REGULATIONS OR REQUIREMENTS OF
ANY KIND.
AS BETWEEN THE LESSEE AND THE LESSOR, ANY ASSIGNEE OR ANY
INDEMNIFIED PERSON, THE LESSEE WAIVES ANY AND ALL DEFENSES (EXCEPT THE DEFENSE
OF FINAL AND INDEFEASIBLE PRIOR PAYMENT), SET-OFFS, DEDUCTIONS, COUNTERCLAIMS
(OTHER THAN COMPULSORY COUNTERCLAIMS) (OR OTHER RIGHTS), EXISTING OR FUTURE, AS
TO THE LESSEE'S OBLIGATION TO PAY BASIC RENT AND ALL OTHER AMOUNTS PAYABLE
HEREUNDER, INCLUDING, WITHOUT LIMITATION, ANY RELATING TO:
(A) THE SAFETY, TITLE, CONDITION, QUALITY, QUANTITY, FITNESS
FOR USE, MERCHANTABILITY, CONFORMITY TO SPECIFICATION, OR ANY OTHER QUALITY OR
CHARACTERISTIC OF ANY PROPERTY OR EQUIPMENT, LATENT OR NOT;
(B) ANY SET-OFF, COUNTERCLAIM (OTHER THAN COMPULSORY
COUNTERCLAIMS), RECOUPMENT, ABATEMENT, DEFENSE (EXCEPT THE DEFENSE OF FINAL AND
INDEFEASIBLE PRIOR PAYMENT) OR OTHER RIGHT WHICH THE LESSEE MAY HAVE AGAINST THE
LESSOR, ANY ASSIGNEE OR ANY INDEMNIFIED PERSON FOR ANY REASON WHATSOEVER ARISING
OUT OF THIS OR ANY OTHER TRANSACTION OR MATTER;
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THIS LEASE AGREEMENT IS
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(C) ANY DEFECT IN TITLE OR OWNERSHIP OF PROPERTY OR EQUIPMENT
OR ANY TITLE ENCUMBRANCE NOW OR HEREAFTER EXISTING WITH RESPECT TO THE PROPERTY
OR EQUIPMENT;
(D) ANY FAILURE OR DELAY IN DELIVERY OR ANY LOSS, THEFT OR
DESTRUCTION OF, OR DAMAGE TO, ANY PROPERTY OR EQUIPMENT, IN WHOLE OR IN PART, OR
CESSATION OF THE USE OR POSSESSION OF ANY PROPERTY OR EQUIPMENT BY THE LESSEE
FOR ANY REASON WHATSOEVER AND OF WHATEVER DURATION, OR ANY CONDEMNATION,
CONFISCATION, REQUISITION, SEIZURE, PURCHASE, TAKING OR FORFEITURE OF ANY
PROPERTY OR EQUIPMENT, IN WHOLE OR IN PART;
(E) ANY INABILITY OR ILLEGALITY WITH RESPECT TO THE USE,
OWNERSHIP, OCCUPANCY OR POSSESSION OF THE PROPERTY OR EQUIPMENT BY THE LESSEE;
(F) ANY INSOLVENCY, BANKRUPTCY, REORGANIZATION OR SIMILAR
PROCEEDING BY OR AGAINST THE LESSEE OR THE LESSOR OR ANY ASSIGNEE;
(G) ANY FAILURE TO OBTAIN, OR EXPIRATION, SUSPENSION OR OTHER
TERMINATION OF, OR INTERRUPTION TO, ANY REQUIRED LICENSES, PERMITS, CONSENTS,
AUTHORIZATIONS, APPROVALS OR OTHER LEGAL REQUIREMENTS RELATING TO THE
TRANSACTIONS CONTEMPLATED BY THIS LEASE;
(H) THE INVALIDITY OR UNENFORCEABILITY OF THIS LEASE OR ANY
OTHER INFIRMITY HEREIN OR ANY LACK OF POWER OR AUTHORITY OF THE LESSOR OR THE
LESSEE TO ENTER INTO THIS CONTRACT;
(I) THE INVALIDITY OR UNENFORCEABILITY OF ANY BILL OF SALE OF
ANY PROPERTY OR EQUIPMENT EXECUTED IN CONNECTION WITH THIS LEASE OR ANY OTHER
INFIRMITY THEREIN OR LACK OF POWER OR AUTHORITY OF ANY PARTY THERETO TO ENTER
INTO SUCH BILL OF SALE;
(J) ANY RESTRICTION ON THE EXCHANGE OF THE CURRENCY OF THE
REPUBLIC OF TRINIDAD AND TOBAGO INTO U.S. DOLLARS OR THE TRANSFER OF FUNDS TO
THE UNITED STATES;
(K) THE LESSEE OR ANY OTHER PERSON AT ANY TIME HAVING IMMUNITY
FROM SUIT, PREJUDGMENT, ATTACHMENT, ATTACHMENT IN AID OF EXECUTION OR EXECUTION
ON THE GROUNDS OF SOVEREIGNTY OR OTHERWISE; OR
(L) ANY OTHER CIRCUMSTANCES OR HAPPENING WHATSOEVER RELATING
TO THE TRANSACTIONS CONTEMPLATED BY THIS LEASE, WHETHER OR NOT SIMILAR TO ANY OF
THE FOREGOING.
THE LESSEE HEREBY WAIVES, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, ANY AND ALL RIGHTS WHICH IT MAY NOW HAVE OR WHICH AT ANY TIME
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THIS LEASE AGREEMENT IS
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HEREAFTER MAY BE CONFERRED UPON IT, BY STATUTE OR OTHERWISE, TO TERMINATE,
CANCEL, QUIT, RESCIND OR SURRENDER THIS LEASE EXCEPT IN ACCORDANCE WITH THE
EXPRESS TERMS HEREOF. Each payment of Basic Rent, Additional Rent and any other
amount due hereunder made by the Lessee shall be final, and the Lessee, without
waiving any other remedies it may have, will not seek or have any right to
recover all or any part of such payment from the Lessor or any Assignee for any
reason whatsoever. The making of payments under this Lease by the Lessee
(including without limitation payments pursuant to Section 11 hereof) shall not
be deemed to be a waiver of any claim or claims that the Lessee may assert in a
separate action against the Lessor or any other Person. The Lessor agrees to
repay the Lessee amounts paid to the Lessor to the extent such payments were in
error and are not required by any of the terms and provisions of this Lease.
(e) Notwithstanding any other provision contained in this
Lease, it is specifically understood and agreed that neither the Lessor nor any
Assignee nor any Affiliate of either, nor anyone acting on behalf of any of them
makes any warranties or representations, nor, except as set forth in Section 22
of this Lease, has the Lessor or any Assignee or any Affiliate of either, or
anyone acting on behalf of any of them made any covenants or undertakings, as to
the accounting treatment to be accorded the Lessee or as to the U.S. Federal or
any state income or any other tax consequences, if any, to the Lessee as a
result of or by virtue of the transactions contemplated by this Lease.
SECTION 6. INITIAL TERM; RENEWAL TERM.
(a) The "Initial Term" with respect to any Parcel of Property
or Unit of Equipment leased hereunder shall commence on the Effective Date set
forth in the Unit Leasing Record or the AFL Unit Leasing Record for such Parcel
of Property or Unit of Equipment and shall continue for the period agreed in
writing between the Lessee and the Lessor, unless terminated earlier pursuant to
the provisions of this Lease. The Initial Term applicable to the Ammonia Project
shall be the period from the Effective Date therefor until the seventh
anniversary of the date of this Lease.
(b) In the event this Lease is renewed pursuant to the terms
of Section 12 hereof, the Renewal Term with respect to any Parcel of Property or
Unit of Equipment shall commence on the first day of the calendar month
following the last day of the Initial Term of such Parcel or Unit and shall
continue for sixty (60) calendar months, unless terminated earlier pursuant to
the provisions of this Lease.
(c) With respect to each Unit of Equipment or Parcel of
Property, it is understood and agreed that the Initial Term of each Parcel of
Property or Unit of Equipment shall in no event exceed 75% of its economic
useful life remaining after the Effective Date for such Parcel or Unit.
(d) Notwithstanding anything contained in this Section 6, the
provisions of Sections 10 and 11 hereof and paragraph (a) of Section 15 hereof
shall apply with respect to any Property or Equipment from the time such
Property or Equipment is acquired by the Lessor, and from the date hereof as to
all property and equipment acquired, constructed, assembled or improved in
connection with the Ammonia Project.
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THIS LEASE AGREEMENT IS
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SECTION 7. RENT AND OTHER PAYMENTS.
(a) The Lessee hereby agrees to pay the Lessor on each Basic
Rent Payment Date, the amount of Basic Rent due and payable on such Basic Rent
Payment Date.
(b) The Lessor shall provide notice to the Lessee on the
fourth (4th) day prior to each Basic Rent Payment Date of the amount of Basic
Rent due and payable from the Lessee to the Lessor on such Basic Rent Payment
Date (the "Lease Rate Date"). Subject to paragraph (e) of Section 7 hereof, the
Lessor's determination of Basic Rent shall be conclusive and binding absent
manifest error. At least two (2) Business Days prior to each Basic Rent Payment
Date the Lessor shall furnish the Lessee with a summary of the calculations of
Basic Rent payable on such Basic Rent Payment Date, which calculations shall be
consistent with the Minimum Lease Payment Calculations attached as Exhibit F
hereto.
(c) Without prejudice to the full exercise by the Lessor of
its rights under Sections 18 and 19 hereof, the Lessee shall pay to the Lessor
from time to time, on the Lessor's written demand, as additional rent
("Additional Rent") (i) amounts required to reimburse the Lessor for its
obligations, costs and expenses (not previously included in Basic Rent) incurred
in leasing the Property or Equipment (including, without limitation, all
obligations of the Lessor under or in respect of any interest rate swap, cap,
collar or other financial hedging arrangement and any amounts payable by the
Lessor under any such arrangement to reduce the notional amount thereof by the
amount of any prepayment of any borrowing to which such interest rate swap, cap,
collar or other financial hedging arrangement relates), and (ii) to the extent
legally enforceable, an amount computed by multiplying (A) all sums not paid by
the Lessee to the Lessor as provided in this Lease on or before the date such
payments are due, by (B) the decimal equivalent of the percentage referred to in
paragraph (a)(iii) of the definition of "Basic Rent" used in the calculation of
the most recent Basic Rent amount, and by (C) a fraction having a numerator
equal to the number of days in the period from but excluding such due date to
and including the date of payment thereof and a denominator of 365, or in a leap
year, 366. The Lessee shall also pay to the Lessor on the Lessor's written
demand an amount equal to any expenses (including the reasonable fees and
disbursements of counsel) incurred by the Lessor in collecting such unpaid sums.
Prior to the payment of any Additional Rent, the Lessor shall supply to the
Lessee a statement which describes the obligations, costs and expenses incurred,
and, if appropriate, a calculation of the amount of such Additional Rent. Such
statement shall be conclusive and binding absent manifest error.
(d) Basic Rent and Additional Rent and any other amount
payable by the Lessee to the Lessor shall be paid such that immediately
available funds in the full amount due are available on the date due, to the
account of the Lessor at such bank, or to such account of such other Person at
such bank, or otherwise as the Lessor may from time to time designate.
(e) During the Lease Term of any Parcel of Property or Unit of
Equipment, the Lessor shall calculate, on or before each Lease Rate Date (except
the first Lease Rate Date hereunder), the difference, if any, between (i) the
Basic Rent paid by the Lessee for the previous calendar month and (ii) an amount
equal to what the Basic Rent would have been for such calendar month had the
Basic Rent been calculated using the weighted average percentage cost per annum
of the borrowings outstanding at any time (as specified in subparagraph (a)(iii)
of the definition of Basic Rent) during the entirety of the previous calendar
month; provided, that with respect to the Basic Rent for the last month of the
Lease Term, such calculation shall occur on the
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THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
last day of the Lease Term. On each Lease Rate Date (except the first Lease Rate
Date hereunder) and on the last day of the Lease Term, the Lessor shall furnish
to the Lessee a calculation of the difference between the amounts determined
under clause (i) above and the correlating amounts determined under clause (ii)
above (the "Reconciliation Amount") for the previous calendar month. The Lessor
and the Lessee agree that if the Reconciliation Amount is a positive number,
then such amount shall be credited against the amount of Basic Rent that the
Lessee is required to pay on the next Basic Rent Payment Date (or Basic Rent
Payment Dates, if such amount shall exceed the amount of Basic Rent payable in
the next succeeding month), and if the Reconciliation Amount is a negative
number, then such amount shall be payable by the Lessee on the next Basic Rent
Payment Date in addition to the amount of Basic Rent due and payable on such
Basic Rent Payment Date, except that with respect to the Reconciliation Amount
computed on the last day of the Lease Term, such amount shall be paid by the
Lessor to the Lessee (in the case of a positive number) or by the Lessee to the
Lessor (in the case of a negative number) on the last day of the Lease Term. Any
notices required by this paragraph (e) which are furnished to the Lessee by the
Lessor shall be conclusive, absent manifest error, as to the contents thereof.
SECTION 8. RESTRICTED USE; COMPLIANCE WITH LAWS.
(a) So long as no Event of Default shall have occurred and be
continuing, the Lessee may use the Property or Equipment in the course of its
business for any lawful purpose. Without limitation of any of its other
obligations hereunder or under any other Operative Document, the Lessee agrees
that the Lessee will not do or permit any act or thing which could reasonably be
expected to materially impair the value or utility of any Property or Equipment.
(b) The Lessee shall promptly and duly execute, deliver, file
and record, at the Lessee's expense, all such documents, statements, filings and
registrations, and take such further action as the Lessor or any Assignee shall
from time to time reasonably request and shall install such signs or other
markings as shall be required by any applicable Legal Requirement in order to
establish, perfect and maintain the Lessor's or any Assignee's title to and
interest in the Property or Equipment and any Assignee's interest in this Lease
or any Property or Equipment as against the Lessee or any third party in any
applicable jurisdiction. The Lessor agrees that it will not change the location
of the Ammonia Project. At the reasonable request of the Lessor, but, so long as
no Event of Default has occurred and is continuing no more than once each year,
the Lessee shall advise the Lessor in writing where all Equipment leased
hereunder as of such date is principally located.
(c) The Lessee shall use every commercially reasonable
precaution to prevent loss or damage to Property or Equipment and to prevent
injury to third persons or property of third persons. The Lessee shall cooperate
fully with the Lessor and any additional insured or loss payee and all insurance
companies providing insurance pursuant to Section 10 hereof in the investigation
and defense of any claims or suits arising from the ownership, operation or use
of any Equipment or ownership, use, or occupancy of the Property and the Lessor
and any Indemnified Person shall comply, at the expense of the Lessee, with all
reasonable requests for assistance of the Lessee and any insurance companies in
connection therewith; provided, that nothing contained in this paragraph (c)
shall be construed as imposing on the Lessor any duty to investigate or defend
any such claims or suits. The Lessee shall comply and shall use reasonable
efforts to cause all Persons using or operating Equipment or using or occupying
Property to comply with all Insurance Requirements and Legal Requirements
applicable to such Property or Equipment and to the acquiring, titling,
registering, leasing, insuring, using, occupying, operating and disposing of
Property
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THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
or Equipment, and the licensing of operators thereof; except any Legal
Requirements, the non-compliance with which, individually or in the aggregate,
(i) will not place either the Lessor or any Assignee in any danger of monetary
civil liability for which the Lessor or any Assignee is not adequately
indemnified (the Lessee's obligations under Section 11 of this Lease shall be
deemed to be adequate indemnification if no Event of Default exists) or any
other material civil liability or penalty or subject the Lessor or any Assignee
to any criminal liability as a result of a failure to comply therewith and (ii)
will not result in a material diminution in the value of any Property or
Equipment or in any material risk of the loss, sale or forfeiture or loss of use
of any thereof.
(d) Upon at least five (5) Business Days written notice (or
upon two (2) Business Days written notice if an Event of Default shall have
occurred and be continuing), the Lessor or any Assignee or any authorized
representative of either may during reasonable business hours from time to time
inspect Property or Equipment and deeds, registration certificates, certificates
of title and related documents covering Property or Equipment wherever the same
may be located, but neither the Lessor nor any Assignee shall have any duty to
make any such inspection; provided that the Lessee shall be permitted to
withhold from the Lessor or any Assignee any information with respect to its
business or work products not related to any Property or Equipment. The Lessor
may recover from Lessee as Additional Rent (i) the reasonable costs and expenses
associated with any inspection of the Ammonia Project, in an amount not to
exceed, when aggregated with (A) the expenses referred to in clause (i) of
subsection 9.4 of the Agreement for Lease, and (B) the fees and expenses of the
Lessor and any Assignee for engineering and legal services, $650,000 in the
aggregate, (ii) the reasonable costs and expenses associated with any such
inspection, and the fees and expenses of the Lessor and any Assignee for legal
and engineering services which are incurred following the occurrence and during
the continuation of any Event of Default throughout the Lease Term of the
Ammonia Project and (iii) all of the Lessor's and any Assignee's mortgage
recordation, liens and filing fees, and all out-of-pocket expenses of the
Lessor's legal counsel and any Assignee's legal counsel, and all out-of-pocket
expenses of any Assignee.
(e) The Lessee shall not, without the prior written consent of
the Lessor, permit, or suffer to exist, any Lien on, other than Permitted Liens
or those Liens placed thereon by, or arising from, the Lessor's own actions or
which are subject to a Permitted Contest, nor may it assign any right or
interest herein or in, any Property or Equipment. The Lessee shall not, without
the prior written consent of the Lessor, sublease or otherwise relinquish
possession of any Property or Equipment, except that (i) the Lessee may
relinquish possession of Property or Equipment to any contractor for use in
performing work for the Lessee on such Property or Equipment; provided, that
such relinquishment of possession shall in no way affect the obligations of the
Lessee or the rights of the Lessor hereunder and with respect to the Property or
Equipment and (ii) the Lessee may sublease any Parcel of Property or Unit of
Equipment to a Person within the Arcadian Lease Group; provided that (A) the
terms of the instrument of sublease shall be subject to the prior written
approval of the Lessor which approval shall not be unreasonably withheld or
delayed, (B) each such sublease shall expressly be made subject and subordinate
to the provisions hereof, shall not permit any act or omission not permitted
hereby and shall, at the sole option of the Lessor, by its terms be subject to
termination upon the termination for any reason of this Lease, (C) no such
sublease 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 shall continue in full force and effect as obligations of a
principal and not of a guarantor or surety, as though no such subletting had
been made, and (D) any such sublease made otherwise than as expressly permitted
by this paragraph (e) shall be void ab initio and of no force and effect. As
additional security to
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THIS LEASE AGREEMENT IS
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the Lessor for the performance of the Lessee's obligations under this Lease, the
Lessee hereby assigns to the Lessor all of its right, title and interest in and
to all subleases permitted hereby and agrees to cause any sublessee to enter
into attornment agreements with the Lessor as the Lessor shall request. The
Lessor shall have the present and continuing right to collect and enjoy all
rents and other sums of money payable under any such sublease, and the Lessee
hereby irrevocably assigns such rents and other sums to the Lessor for the
benefit and protection of the Lessor; provided, that unless an Event of Default
shall have occurred and be continuing hereunder, the Lessee shall be entitled to
collect and enjoy such rents and other sums. The Lessee shall, within thirty
(30) days after the execution of any such sublease, deliver a conformed copy
thereof to the Lessor. Nothing contained in this Lease shall be construed 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 any Property or Equipment or
any part thereof. Notice is hereby given that the Lessor will not be liable for
any labor, services or materials furnished or to be furnished to the Lessee, or
to anyone holding any Property or Equipment or any part thereof through or under
the Lessee, and that no mechanics' or other liens for any such labor, services
or materials shall attach to or affect the interest of the Lessor in and to the
Property or Equipment.
(f) The Lessee shall register and title all automotive
Equipment in the name of the Lessor except that, where required or permitted by
law or regulation, Equipment may, with the written approval of the Lessor be
registered (but not titled) in the name of the Lessee. If requested by the
Lessor, the Lessee shall cause one of its officers to hold in his custody and
control all registration certificates and certificates of title covering
automotive Equipment, as custodian for the Lessor. The Lessee agrees to cause
such officer to furnish to the Lessor, upon reasonable request, a certificate to
the effect that all registration certificates and certificates of title pursuant
to any Legal Requirement have been obtained and are being held on behalf of the
Lessor.
(g) The Lessee shall comply with all Legal Requirements
pursuant to which it is necessary that a Unit of Equipment or any component
thereof be labeled to provide notice of the Lessor's or any Assignee's interest
in such Unit of Equipment.
(h) If any Lien or charge of any kind or any judgment, decree
or order of any court or other governmental authority (including, without
limitation, any state or local tax lien affecting the Property or Equipment),
whether or not valid, shall be asserted or entered which might interfere with
the due and timely payment of any sum payable or the exercise of any of the
rights or the performance of any of the duties or responsibilities under this
Lease, the Lessee shall (and without limiting any other obligation of the Lessee
hereunder), upon a Responsible Officer's obtaining knowledge thereof or upon
receipt of notice to that effect from the Lessor, promptly take such action as
may be necessary to prevent or terminate such interference.
SECTION 9. MAINTENANCE, IMPROVEMENT AND REPAIR OF PROPERTY
OR EQUIPMENT.
(a) The Lessor, so long as no Event of Default shall have
occurred and be continuing, hereby assigns and agrees to make available to the
Lessee any and all rights the Lessor may have under any vendor's or
manufacturer's warranties or undertakings with respect to any Property or
Equipment. If any Event of Default shall have occurred and be continuing, the
assignment of such rights from the Lessor to the Lessee shall be deemed to be
suspended.
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(b) The Lessee shall pay all costs, expenses, fees and charges
incurred in connection with the Lessor's ownership, and the Lessee's use or
occupancy of any Parcel of Property or the Lessor's ownership, and the Lessee's
use and operation of any Unit of Equipment. Except as otherwise provided in
Section 15 hereof, the Lessee shall at all times, at its own expense, and
subject to reasonable wear and tear, keep Property or Equipment in good
operating order, repair, condition and appearance. The foregoing undertaking to
maintain Property or Equipment in good repair shall apply regardless of the
cause necessitating repair and regardless of whether the Lessee has possession
of the Property or Equipment, and as between the Lessor and the Lessee all risks
of damage to Property or Equipment are assumed by the Lessee.
(c) With respect to any Parcel of Property, the Lessee shall
pay: (i) all taxes, assessments, levies, fees, water and sewer rents and
charges, and all other governmental charges, general and special, ordinary and
extraordinary, foreseen and unforeseen, which are, at any time, imposed or
levied upon or assessed against (A) the Parcel, (B) any Basic Rent, any
Additional Rent or other sum payable hereunder or (C) this Lease, the leasehold
estate hereby created, or which arises in respect of the ownership, operation,
occupancy, possession or use of the Parcel; (ii) all gross receipts or similar
taxes (i.e., taxes based upon gross income which fail to take into account all
customary deductions (e.g., ordinary operating expenses, depreciation and
interest) relating to the Parcel) imposed or levied upon, assessed against or
measured by any Basic Rent, or any Additional Rent or other sum payable
hereunder; (iii) all sales, value added, use and similar taxes at any time
levied, assessed or payable on account of the acquisition, leasing or use of the
Parcel; and (iv) all charges of utilities and communications services serving
the Parcel. The Lessee shall not be required to pay any franchise, estate,
inheritance, transfer, income or similar tax of the Lessor (other than any tax
referred to in clause (ii) above) unless such tax is imposed, levied or assessed
in substitution for any other tax, assessment, charge or levy which the Lessee
is required to pay pursuant to this paragraph (c); provided, however, that if at
any time during the term of this Lease, the method of taxation shall be such
that there shall be levied, assessed or imposed on the Lessor a capital levy or
other tax directly on the rents received therefrom, or upon the value of any
Parcel or any present or any future improvement or improvements on any Parcel,
then all such taxes, assessments, levies or charges or the part thereof so
measured or based, shall be payable by the Lessee, but only to the extent that
such taxes would be payable if the Property affected were the only property of
the Lessor, and the Lessee shall pay and discharge the same as herein provided.
The Lessee will furnish to the Lessor, promptly after demand therefor, proof of
payment of all items referred to above which are payable by the Lessee. If any
such assessments may legally be paid in installments, the Lessee may pay such
assessment in installments; in such event, the Lessee shall be liable only for
installments which become due and payable during the Lease Term and any Renewal
Term.
(d) The Lessee may make alterations to any Equipment, provided
such alterations do not materially impair the value or utility of such Equipment
and shall make, at its expense, all modifications and improvements which are
necessary pursuant to any Legal Requirement or Insurance Requirement. Any
improvements or additions to any Equipment shall become and remain the property
of the Lessor, except that any addition to Equipment made by the Lessee, if it
can be removed from such Equipment without impairing the value or utility
thereof or without violating Legal Requirements or Insurance Requirements, may
be removed by the Lessee, and if removed title thereto shall pass to the Lessee.
Any improvements or additions shall be covered by a revised Unit Leasing Record
or AFL Unit Leasing Record which the Lessee agrees to furnish promptly.
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(e) So long as no Event of Default shall have occurred and be
continuing, the Lessee may, at its expense, make additions to and alterations to
any Parcel of Property; provided, that upon completion of such additions or
alterations (i) neither the fair market value or utility of the Parcel of
Property shall be materially impaired, (ii) such additions or alterations shall
not result in a change of use of such Parcel of Property and (iii) no exterior
walls of any building or other improvement constituting a part of a Parcel of
Property shall be demolished unless the Lessee has made adequate provision
according to sound and prudent engineering and architectural standards to
preserve and maintain the structural integrity of the Parcel of Property and for
the restoration of such Parcel of Property to a structurally sound architectural
whole. Any and all such additions and alterations shall be and remain part of
the Parcel of Property and shall be subject to this Lease. Notwithstanding
anything contained herein, the Lessee shall not perform any addition or
alteration to any Parcel of Property which would have an estimated cost in
excess of $5,000,000, without the Lessor's prior written consent, which consent
shall not be unreasonably withheld.
(f) The Equipment constituting or included in the Ammonia
Project and leased by the Lessee shall be maintained, repaired, refurbished or
replaced by the Lessee when necessary in order to ensure that all Equipment
located at the Ammonia Project will include the Equipment listed on the AFL Unit
Leasing Record with respect to the Ammonia Project or replacements for such
Equipment of the kind, quality and in the quantities included in the AFL Unit
Leasing Record with respect to the Ammonia Project (provided that the Lessee
may, subject to compliance with other requirements of this Section 9, replace
Equipment at the Ammonia Project with equipment of different kind, quality and
in different quantities if such replacement equipment is of equal or greater
value and serviceability) and will be in such condition and sufficient to allow
the Ammonia Project to be operated in accordance with industry standards as an
ammonia production plant. As equipment is substituted at the Ammonia Project for
Equipment at the Ammonia Project and subject to this Lease, title to such
substitute equipment shall automatically vest in the Lessor and such equipment
shall be subject to this Lease and title to the existing Equipment at the
Ammonia Project for which such equipment is being substituted shall be
transferred by the Lessor at the direction of the Lessee.
(g) The Lessee shall (i) maintain the Ammonia Project in a
condition (ordinary wear and tear excepted) such that Ammonia Project will have
the capacity and functional ability to perform, in normal commercial operation,
the functions for which it was designed at the operational levels contemplated
therefor and (ii) operate, service, maintain and repair the Ammonia Project and
replace all necessary components thereof (A) so that the condition and operating
efficiency will be maintained and preserved (ordinary wear and tear excepted) in
accordance with industry standards for an ammonia production plant, (B) in
accordance with such operating standards as shall be required to take economic
advantage of and enforce all available warranties to the extent such warranties
are material to the value or operation of the Ammonia Project, (C) in accordance
with all Insurance Requirements applicable to the Ammonia Project and (D) in
accordance with all Governmental Actions relating thereto.
(h) The Lessee has obtained or will obtain prior to the time
required and shall maintain in full force and effect all operating licenses, if
any, relating to the Ammonia Project which are required for the operation of the
Ammonia Project.
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SECTION 10. INSURANCE.
(a) General Liability Insurance with Respect to Equipment. The
Lessee will carry at its own expense general liability insurance and property
damage insurance with respect to all Equipment (i) in amounts which are not less
than the general liability and property damage insurance applicable to similar
equipment owned, leased or held by the Lessee; provided, that in no event shall
such amounts in respect of the Ammonia Project be less than $5,000,000 per
occurrence, (ii) of the types usually carried by Persons engaged in the same or
a similar business, similarly situated with the Lessee, and owning or operating
similar equipment and which cover risk of the kind customarily insured against
by such Persons, and (iii) which are maintained in effect with insurers of
recognized responsibility and reputation satisfactory to the Lessor and any
Assignee. The insurance required by this paragraph (a) may be subject to such
deductibles and the Lessee may self-insure with respect to the required coverage
to the extent consistent with the Lessee's customary practice with respect to
similar property owned by the Lessee.
(b) Insurance Against Loss or Damage to Equipment. The Lessee
will maintain in effect with insurers of recognized responsibility and
reputation satisfactory to the Lessor and any Assignee , at its own expense,
all-risk physical damage insurance with respect to all Equipment, which is of
the type usually carried by Persons engaged in the same or similar business,
similarly situated with the Lessee, and owning or operating similar equipment
and which cover risk of the kind customarily insured against by such Persons,
and in substantially the amount applicable to similar equipment owned, leased or
held by the Lessee; provided, that such insurance shall at all times be in an
amount not less than the aggregate Acquisition Cost of such Unit of Equipment.
The insurance required by this paragraph (b) may be subject to reasonable
deductibles and the Lessee may self-insure with respect to the required coverage
to the extent consistent with the Lessee's customary practice with respect to
similar property owned by the Lessee.
(c) Insurance with respect to Property. The Lessee will
maintain or cause to be maintained insurance of the following character, on each
Parcel of Property:
(i) All risk insurance coverage against losses by fire
and lightning and other risks for the full insurable
replacement value of each Parcel of Property or
portion or component thereof, with agreed amount
endorsement or endorsements providing equivalent
protection, including loss by windstorm, flood, hail,
explosion, riot (including riot attending a strike),
civil commotion, aircraft, vehicles, smoke damage,
and vandalism and malicious mischief, in amounts not
less than the full insurable replacement value of all
buildings and other improvements on each Parcel of
Property, but in no event less than the Acquisition
Cost of each Parcel of Property. The term "full
insurable replacement value" as used herein means the
actual replacement cost, including the costs of
debris removal, but excluding the cost of
constructing foundation and footings.
(ii) Comprehensive general public liability insurance
covering the legal liability of the Lessor and the
Lessee against claims for bodily injury, death or
property damage, occurring on, in or about each
Parcel of Property or occurring as a result of
ownership of facilities located on each Parcel of
Property or as a result of the use of products or
materials manufactured, stored, processed,
constructed or sold, or services rendered, on each
Parcel
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of Property, in the minimum amount of $5,000,000 with
respect to any one occurrence, accident or disaster
or incidence of negligence.
(iii) The Lessee shall comply with applicable workers'
compensation laws of the jurisdiction where each
Parcel of Property is located, and shall maintain
such insurance if and to the extent necessary for
such compliance.
(iv) Such other insurance, in such amounts and against
such risks, as is customarily maintained by operators
of similar properties.
The insurance required under this paragraph (c) shall be maintained in effect
with insurers of recognized responsibility and reputation satisfactory to the
Lessor and any Assignee. Such insurance may provide for such deductibles and the
Lessee may self-insure with respect to the required coverage to the extent
consistent with the Lessee's customary practice with respect to similar property
owned by the Lessee.
Insurance claims by reason of damage or destruction to any
Parcel of Property shall be adjusted by the Lessee, subject to the approval of
the Lessor, which approval the Lessor agrees not to unreasonably withhold or
delay; provided, that if the amount claimed exceeds $5,000,000, the Lessor may
participate in such adjustment, at the Lessee's expense.
(d) Political Risk Insurance. Commencing on or before the date
which is one hundred twenty (120) days from the date hereof, the Lessee shall,
as agent for the Lessor, procure or cause to be procured and maintain or cause
to be maintained in respect of Property or Equipment not located in the United
States, for the Lessor, with the Multilateral Investment Guaranty Agency or such
other insurance company as shall be reasonably acceptable to the Lessor, a
policy of political risk insurance covering (i) transfer restrictions, (ii)
expropriation and (iii) to the extent reasonably available from public or
private market insurers or any combination thereof, war and civil disturbance;
provided, that the amount of such political risk insurance in respect of the
Ammonia Project shall equal or exceed the Acquisition Cost of the Ammonia
Project less the sum of (A) the cash on deposit in the Cash Reserve Account and
(B) the value of all investments of such cash and investments of earnings on
investments of such cash (as determined pursuant to the CRA Agreement). Upon
obtaining such policy of political risk insurance, the Lessee will furnish to
the Lessor evidence reasonably satisfactory to the Lessor that such insurance
complies with the terms of this paragraph (d).
(e) Additional Insureds; Notice. Any policies of insurance
carried in accordance with this Section 10 and any policies taken out in
substitution or replacement for any such policies (i) shall name the Lessor, the
general partner of the Lessor and its shareholders, officers and directors, the
limited partners of the Lessor, and each Assignee as additional insureds (the
"Additional Insureds"), as their respective interests may appear in relation to
the Property and Equipment (but without imposing upon any such Person any
obligation imposed on the insured, including, without limitation, the liability
to pay the premium for any such policy), (ii) with respect to insurance carried
in accordance with the preceding paragraphs (b), (c)(i) and (c)(iv) shall name
the Assignee, if any, or the Lessor, if no Assignment has been made, as loss
payee, (iii) with respect to insurance carried in accordance with the preceding
paragraphs (b) and (c), shall provide that as against the Lessor the insurers
shall waive any rights of subrogation; provided, that the exercise by insurers
of rights of subrogation derived from rights retained by the Lessee shall not in
any way delay payment of a claim that would otherwise be paid by such
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insurers, (iv) shall provide that if the insurers cancel such insurance for any
reason whatsoever, or any substantial change is made in the coverage or the same
is allowed to lapse for nonpayment of premium or such insurance coverage is
reduced, such cancellation, change, lapse or reduction shall not be effective as
to the Additional Insureds or any loss payee for ten (10) days after receipt by
the Lessor and any Assignee of written notice by such insurers of such
cancellation, change, lapse or reduction, and (v) shall provide that in respect
of the interest of the Additional Insureds or any loss payee in such policies
the insurance shall not be invalidated by any action or inaction of the Lessee
or any other Person (other than an Additional Insured in respect of its own
interest) and shall insure the interests of the Additional Insureds or any loss
payee as they appear, regardless of any breach or violation of any warranties,
declarations or conditions contained in such policies by the Lessee or any other
Person; provided that, subject to the specific requirements of this Section 10,
the coverage afforded the Additional Insureds shall not be broader than the
coverage afforded the named insured. Each liability policy (A) shall be primary
without right of contribution from any other insurance which is carried by the
Lessor with respect to its interest as such in the Property or Equipment and (B)
shall expressly provide that all of the provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate policy
covering each insured.
(f) Application of Insurance Proceeds for Loss or Taking. As
between the Lessor and the Lessee it is agreed that any insurance payments
received as the result of the occurrence of (i) any event of loss described in
paragraph (c) of Section 15 hereof with respect to any Parcel of Property or
Unit of Equipment, or (ii) any event of Taking described in Section 16 hereof
shall be paid to an account of the Lessor and disposed of, as set forth in
paragraph (c) of Section 15 hereof.
(g) Application of Insurance Proceeds for Other than Loss or
Taking. As between the Lessor and the Lessee, the insurance proceeds of any
property damage loss to any Property or Equipment will be held in an account of
the Lessor and applied in payment (or to reimburse the Lessee) for repairs or
replacement in accordance with the terms of paragraph (b) of Section 15 hereof;
provided that in the event that any insurance payments received pursuant to this
paragraph (g) are less than $2,000,000, such payments shall be paid to, or
retained by, the Lessee. The Lessee shall be entitled (i) to receive the amounts
so deposited against certificates, invoices or bills satisfactory to the Lessor,
delivered to the Lessor from time to time as such work or repair progresses, and
(ii) to direct the investment of the amounts so deposited as provided in
paragraph (h) of this Section 10. To the extent that the cost of such work or
repair shall exceed the amount of proceeds, the Lessee shall make payment
thereof. Any moneys remaining in the aforesaid account after final payment for
repairs has been made shall be paid to the Lessee.
(h) Investment. The Lessor, at the Lessee's instruction and
risk, may invest the amounts deposited with the Lessor pursuant to paragraph (g)
of this Section 10 in any investments permitted under a Credit Agreement. Such
investments shall mature in such amounts and on such dates so as to provide that
amounts shall be available on the draw dates sufficient to pay the amounts
requested by and due to the Lessee. Any interest earned on investments of such
funds shall be paid to the Lessee. The Lessor shall not be liable for any loss
resulting from the liquidation of any such investment and the Lessee shall bear
the risk of such loss, if any.
(i) Application in Default. Any amount referred to in
paragraphs (e), (f), (g) or (h) of this Section 10 which is payable to the
Lessee shall not be paid to the Lessee or, if it has been previously paid to the
Lessee, shall not be retained by the Lessee, if at the time of such
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payment an Event of Default shall have occurred and be continuing. In such
event, all such amounts shall be paid to and held by the Lessor as security for
the obligations of the Lessee hereunder or, at the Lessor's option, applied by
the Lessor toward payment of any of such obligations of the Lessee at the time
due hereunder as the Lessor may elect. At such time as there shall not be
continuing any Event of Default, all such amounts at the time held by the Lessor
in excess of the amount, if any, which the Lessor shall have elected to apply as
above provided shall be paid to the Lessee.
(j) Certificates, etc. On or before the execution of this
Lease, on the Effective Date with respect to any Parcel of Property or Unit of
Equipment, and annually on or before the anniversary of the date of this Lease,
the Lessee will furnish to the Lessor certificates of an independent insurance
broker reasonably satisfactory to the Lessor or other evidence reasonably
acceptable to the Lessor certifying that the insurance then carried and
maintained on each Parcel of Property or Unit of Equipment complies with the
terms hereof. In addition, on or prior to the date that is one year from the
date of this Lease, the Lessee will furnish to the Lessor the insurance policies
with respect to the insurance required by this Section 10.
(k) Use or Operation of Property and Equipment. The Lessee
covenants that it will not use or operate any Equipment or use or occupy any
Property or permit the use or occupancy of any Property or the use or operation
of any Equipment at a time when the insurance required by this Section 10 is not
in force with respect to such Property or Equipment.
(l) Prosecution of Claims. The Lessee may, so long as no Event
of Default shall have occurred and be continuing, at its cost and expense,
prosecute any claim against any insurer or contest any settlement proposed by
any insurer, and the Lessee may, so long as no Event of Default shall have
occurred and be continuing, bring any such prosecution or contest in the name of
the Lessor, the Lessee, or both, and the Lessor will join therein at the
Lessee's request; provided, that the Lessee shall indemnify the Lessor against
any losses, costs or expenses (including reasonable attorneys' fees) which the
Lessor may incur in connection with such prosecution or contest whether or not
it is at the request of the Lessee.
SECTION 11. INDEMNITIES.
The Lessee shall, and hereby does, indemnify and hold harmless
the Lessor, Merrill Lynch, Merrill Leasing, any Assignee, any successor or
successors, and any Affiliate of each of them, and their respective officers,
directors, incorporators, shareholders, partners (general and limited,
including, without limitation, the general and limited partners of the Lessor),
employees, agents and servants (each of the foregoing an "Indemnified Person")
from and against all liabilities (including, without limitation, strict
liability in tort), taxes, losses, obligations, claims (including, without
limitation, strict liability in tort), damages, penalties, causes of action,
suits, costs and expenses (including, without limitation, attorneys' and
accountants' fees and expenses) or judgments of any nature relating to or in any
way arising out of:
(a) The Operative Documents and the transactions contemplated
thereby and the ordering, delivery, acquisition, construction, assembly,
installation, title on acquisition, rejection, installation, possession,
titling, retitling, registration, reregistration, custody by the Lessee of title
and registration documents, ownership, use, non-use, misuse, financing
(including, without limitation, all obligations of the Lessor under or in
respect of any interest rate swap, cap, collar or other financial hedging
arrangement and any amounts payable by the Lessor under any such
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arrangement to reduce the notional amount thereof by the amount of any
prepayment of any borrowing to which such interest rate swap, cap, collar or
other financial hedging arrangement relates), operation, transportation, repair,
return, delivery or control of any Property or Equipment or the past, present or
future presence or the release of hazardous substances on, under, to or from, or
the generation or transportation of hazardous substances to or from, or the
failure to report, disclose or remediate the foregoing with respect to any
Property or Equipment, leased or to be leased hereunder or any Operative
Document or any transaction contemplated by any thereof, including any failure
by the Lessee to comply with any provision of any thereof, (i) except to the
extent that such costs are included in the Acquisition Cost of such Property or
Equipment within the limitations provided in paragraph (a)(v) of Section 3
hereof (or within any change of such limitations agreed to in writing by the
Lessor and the Lessee), (ii) except for any general administrative expenses of
the Lessor, (iii) except the income taxes with respect to which indemnification
is excluded under paragraph (c) of this Section 11 and (iv) except that this
indemnity shall not increase any payment required to be made by the Lessee
pursuant to Section 13 of this Lease;
(b) The assertion of any claim or demand based upon any
infringement or alleged infringement of any patent or other right, by or in
respect of any Property or Equipment; provided, however, the Lessor will make
available to the Lessee the Lessor's rights under any similar indemnification
arising from any manufacturer's or vendor's warranties or undertakings with
respect to any Property or Equipment;
(c) All U.S. Federal, state, county, municipal, foreign
(including, without limitation, the Republic of Trinidad and Tobago) or other
fees and taxes of whatsoever nature, including but not limited to license,
qualification, franchise, sales, use, withholding, gross income, gross receipts,
ad valorem, business, personal property, real estate, value added, excise, motor
vehicle, occupation fees and stamp or other taxes or tolls of any nature
whatsoever, and penalties and interest thereon, whether assessed, levied against
or payable by the Lessor or otherwise, with respect to any Property or Equipment
or the acquisition, purchase, sale, rental, use, operation, control, ownership
or disposition of any Property or Equipment (including, without limitation, any
claim by any Governmental Authority for transfer tax, transfer gains tax,
mortgage recording tax, filing or other similar taxes or fees in connection with
the acquisition of any Property by the Lessor or otherwise in connection with
this Lease) or measured in any way by the value thereof or by the business of,
investment in, or ownership by the Lessor with respect thereto; provided, that
this indemnity shall not apply to Federal net income taxes, or to state and
local net income taxes, except that such indemnity shall apply to state and
local net income taxes (A) to the extent imposed by reason in whole or in part
of (1) a relation or asserted relation of any such taxing jurisdiction to the
Property or Equipment or to the transactions contemplated herein or (2) the
actual or deemed use by any Person of the Property or Equipment in such taxing
jurisdiction, other than in the case of both clauses (1) and (2), taxes to the
extent such taxes would have been imposed by a taxing jurisdiction because of a
relationship between the Lessor and such taxing jurisdiction without regard to
the circumstances described in clauses (1) and (2), and (B) to the extent
imposed as a result of the inability to claim, disallowance or other loss by
Nitrogen Leasing Company, Limited Partnership of deductions customarily allowed
in computing net income (e.g., interest expense, financing, administrative,
ordinary operating expenses and other fees and expenses, but not including
depreciation in respect of Property or Equipment); or
(d) Any violation, or alleged violation by the Lessee, of this
Lease or any other Operative Document or of any contracts or agreements to which
the Lessee is a party or by which
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it is bound or of any laws, rules, regulations, orders, writs, injunctions,
decrees, consents, approvals, exemptions, authorizations, licenses and
withholdings of objection, of any governmental or public body or authority and
all other Legal Requirements.
The Lessee shall forthwith upon demand reimburse any
Indemnified Person for any sum or sums expended with respect to any of the
foregoing or, upon request from any Indemnified Person, shall pay such amounts
directly. Any amount payable to any Indemnified Person pursuant to this Section
11 shall be paid promptly upon receipt of a written demand therefor from such
Indemnified Person accompanied by a written statement describing in reasonable
detail the claims which are the subject of and basis for such indemnity and the
computation of the amount so payable. Any payment made to or on behalf of any
Indemnified Person pursuant to this Section 11 shall be increased to such amount
as will, after taking into account all taxes imposed with respect to the accrual
or receipt of such payment (as the same may be increased pursuant to this
sentence), equal the amount of the payment, reduced by the amount of any savings
in such taxes actually realized by the Indemnified Person as a result of the
payment or accrual of the amounts in respect of which the payment to or on
behalf of the Indemnified Person hereunder is made. To the extent that the
Lessee in fact indemnifies any Indemnified Person under the indemnity provisions
of this Lease, the Lessee shall be subrogated to such Indemnified Person's
rights in the affected transaction and shall have a right to determine the
settlement of claims therein.
The indemnities contained in this Section 11 shall survive and
shall not be affected by any termination of this Lease as a whole or in respect
of any Parcel of Property or Unit of Equipment leased hereunder or any failure
or refusal of the Lessee to accept any Property or Equipment acquired or ordered
pursuant to the terms hereof.
Notwithstanding any provisions of this Section 11 to the
contrary, the Lessee shall not indemnify and hold harmless any Indemnified
Person against any claims and liabilities arising solely from the gross
negligence or willful misconduct of such Indemnified Person. Each Indemnified
Person shall give prompt notice to the Lessee by telephone confirmed in writing
of any event or circumstance which will give rise to a claim for indemnification
but delay or failure in giving such notice shall not affect the Lessee's
obligations hereunder except to the extent that any increase in liability is a
direct result of such failure or delay.
In the event any Indemnified Person shall be a party defendant
to any litigation in respect of which indemnification is applicable under this
Section 11, such Indemnified Party shall give prompt notice thereof to the
Lessee by telephone and in writing. No failure or delay of such Indemnified
Person to give the notice required by this Section 11 shall excuse the
obligation of the Lessee to indemnify each Person with respect to such
litigation except to the extent that any increase in liability is a direct
result of such failure or delay. In the event any claim, action, proceeding or
suit is brought against an Indemnified Person with respect to which the Lessee
has acknowledged its obligation to indemnify such Indemnified Person (provided
that such acknowledgement shall not be binding upon the Lessee in the event of a
final determination in a judicial proceeding that the Lessee was not liable in
such claim, action, proceeding or suit), the Lessee shall have the right to
assume the defense thereof, including the employment at its expense of counsel;
provided that the Lessee shall not have such right, to the extent that such
Indemnified Person shall deliver to the Lessee a written notice waiving the
benefits of the indemnification of such Indemnified Person provided by this
Section 11 in connection with such claim, action, proceeding or suit.
Notwithstanding the foregoing, if (i) any criminal proceeding is brought
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against an Indemnified Person, (ii) the claim, action, proceeding or suit seeks
damages of more than $10,000,000 or material non-monetary civil liability or
penalty, or (iii) independent counsel to an Indemnified Person shall advise such
Indemnified Person in writing that there may be a conflict of interest or
defenses available to the Indemnified Person which are different from, or
additional to, and may conflict with those available to the Lessee, the Lessee
shall not have the right to assume the defense of any such action on behalf of
the Indemnified Person if such Indemnified Person chooses to defend such action,
and all reasonable costs, expenses and attorneys' fees incurred by the
Indemnified Person in defending such action, including any damages or any
settlement amount, shall be borne by the Lessee. Notwithstanding the assumption
of its defense by the Lessee pursuant to this paragraph, any Indemnified Person
shall have the right to employ separate counsel and to participate in its
defense, but the fees and expenses of such counsel shall be borne by the
Indemnified Person. In addition, the Lessee will not be liable for any
settlement of any claim, action, proceeding or suit unless the Lessee has
consented thereto in writing (which consent shall not be unreasonably withheld
or delayed). Any decision by an Indemnified Person to employ its own counsel
rather than counsel selected by the Lessee (whether or not at the Lessee's
expense) shall in no way affect any rights of such Indemnified Person otherwise
arising under this Section 11.
SECTION 12. LEASE RENEWAL.
(a) Provided that no Event of Default has occurred and is
continuing as at the date of such request, if the Lessee shall, not earlier than
450 days and not later than one year prior to the last day of the Initial Term,
request in writing that the Lessor obtain bank borrowings on terms acceptable to
it and the Lessee in order to finance the Lessor's ownership of the Property and
Equipment during the Renewal Term, the Lessor shall make reasonable efforts to
arrange for bank commitments to provide such financing.
(b) The Lessor will advise the Lessee and Arcadian Corporation
in writing not later than 300 days prior to the last day of the Initial Term as
to whether it has been able to obtain bank commitments on terms and conditions
acceptable to it to finance the Property and Equipment for the period of Renewal
Term. In such notice, the Lessor shall identify such terms and conditions. In
order to renew the lease of the Property and Equipment for the Renewal Term, the
Lessee must notify the Lessor in writing within thirty (30) days of its receipt
of the foregoing notice of the Lessor, indicating (i) whether the terms and
conditions of such financing are acceptable to it and (ii) whether, if Arcadian
Corporation does not exercise its Purchase Option or, having exercised such
option, Arcadian Corporation fails to effect the purchase contemplated thereby,
the Lessee agrees to lease the Property and Equipment for the Renewal Term. The
notice of the Lessee contemplated by the preceding sentence shall be
irrevocable.
(c) The lease of the Property and Equipment shall not be
renewed for the Renewal Term if (i) the Lessor shall not obtain bank commitments
to finance the Property and Equipment on terms and conditions acceptable to it
and the Lessee, (ii) the Lessee shall not give the notice of renewal set forth
in paragraph (b) above, (iii) Arcadian Corporation shall purchase the Property
and Equipment pursuant to the exercise of the Purchase Option or (iv) the Lessor
and the Lessee shall not have agreed on the Lease Termination Amount for the
Renewal Term.
(d) The Lessor shall schedule the closing of the financing
contemplated by the bank commitments on or before the date which is six (6)
months prior to the end of the Initial Term. The Lessor shall notify the Lessee
in writing promptly of the closing of such financing or
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that such financing shall have failed to close on such scheduled date. Upon the
date of such closing the Property and Equipment shall, subject to the terms and
conditions of this Lease, be leased hereunder for the Renewal Term. If the
closing shall not occur on or before the date which is six (6) months prior to
the last day of the Initial Term, then the lease of the Property and Equipment
shall terminate on the last day of the Initial Term and the Lessee shall comply
with its obligations with respect to such termination as set forth in paragraph
(b) of Section 13 hereof.
SECTION 13. LEASE EXPIRATION.
(a) In the event Arcadian Corporation has not purchased all
Property and Equipment under this Lease pursuant to the Purchase Option and the
Lessee desires to terminate this Lease with respect to such Property and
Equipment, the Lessee shall provide notice to Lessor of such intention at least
five (5) months prior to the expiration of the Lease Term.
(b) In the event (x) the Lessee provides the termination
notice contemplated in paragraph (a) above or (y) the circumstances referred to
in the last sentence of paragraph (d) of Section 12 shall be applicable, the
Lessee hereby covenants to the Lessor (the "Expiration Covenants") as follows:
(A) on the Lease Termination Date, (i) no Event of Default or Potential Default
shall have occurred and be continuing, (ii) no Parcel of Property shall be
undergoing any repairs, additions or alterations that would have a material
adverse effect on the fair market value of such Parcel of Property, (iii) each
Parcel of Property and Unit of Equipment shall be in compliance with all Legal
Requirements, except any Legal Requirements, the non-compliance with which,
individually or in the aggregate, (1) will not place either the Lessor or any
Assignee in any danger of any monetary civil liability for which the Lessor or
any Assignee is not adequately indemnified (the Lessee's obligations under
Section 11 of this Lease shall be deemed to be adequate indemnification if no
Event of Default exists) or any other material civil liability or penalty or
subject the Lessor or any Assignee to any criminal liability as a result of a
failure to comply therewith and (2) will not result in a material diminution in
the value of any Property or Equipment or in any material risk of the loss, sale
or forfeiture or loss of use of any thereof, (B) five (5) months prior to the
Lease Termination Date, the Lessee shall at its expense deliver to the Lessor an
environmental audit satisfactory in form and substance to the Lessor in its
reasonable discretion, the conclusion of which shall be satisfactory to the
Lessor in its reasonable discretion, and prepared by an independent
environmental consultant or engineer satisfactory to the Lessor in its sole
discretion, addressing the environmental hazards or liabilities associated with
any Parcel of Property or Unit of Equipment under this Lease and (C) on or prior
to the Lease Termination Date, the Lessee shall deliver to the Lessor a report
of an independent engineer (selected by the Lessor and at the expense of the
Lessee), to the effect that the Property and Equipment under this Lease (i) have
been maintained in accordance with the terms and conditions of Section 9 of this
Lease and (ii) are currently operating in accordance with the design
specifications listed in the appraisal provided to the Lessor pursuant to
Section 4 of the Agreement for Lease.
(c) In the event the Lessee has complied with each of the
Expiration Covenants, the Lessee shall on the Lease Termination Date applicable
to a Parcel of Property or Unit of Equipment, terminate this Lease with respect
to such Property and Equipment, surrender such Property and Equipment to the
Lessor and pay to the Lessor the Lease Termination Amount with respect to such
Property and Equipment and all other amounts owing by the Lessee hereunder and
under the other Operative Documents. Upon such surrender, the Lessor shall have
the right to sell such Property and Equipment to a third party and the Lessee
shall have no further right, claim or interest in such Property and Equipment
(it being understood that the Lessor shall
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be entitled to commence the marketing of such Property and Equipment at any time
subsequent to the first day of the fifth month prior to the Lease Termination
Date, and the Lessee agrees that it shall cooperate in connection therewith). If
the Lessor shall fail to sell the Ammonia Project within seven (7) days of the
surrender thereof by the Lessee, the Assignee shall have the right, but not the
obligation, acting on behalf of the Lessor to sell the Ammonia Project to a
third party. The proceeds of sale received by the Lessor or such Assignee, as
the case may be, from any sale of such Property and Equipment shall be retained
by the Lessor or any Assignee, as the case may be, provided that if the proceeds
of sale, together with the Lease Termination Amount paid by the Lessee, exceed
the Acquisition Cost of such Property and Equipment and all other amounts
payable by the Lessee hereunder and under the other Operative Documents, such
excess shall be paid by the Lessor or such Assignee, as the case may be, to the
Lessee. The Lessee shall use reasonable efforts during the last five (5) months
of the Initial Term with respect to such Property and Equipment (unless this
Lease has been renewed pursuant to Section 12 hereof), and during the last five
(5) months of the Renewal Term, if any, to seek on behalf of the Lessor bona
fide arms-length bids for not less than all such Property and Equipment from
prospective purchasers who are financially capable of purchasing such Property
and Equipment for cash, on an as-is, non-installment sale basis, without
warranty by, or recourse to, the Lessor. The Lessee shall assign to any
purchaser, at such purchaser's request and for no additional consideration, any
and all assignable agreements in the Lessee's name for the acquisition,
construction, storage or transportation of the Property and the Equipment. The
Lessee shall notify the Lessor of the amount of each such bid, and the name and
address of the Person submitting such bid.
(d) In the event the Lessee shall surrender such Property and
Equipment to the Lessor or to a purchaser of such Property and Equipment from
the Lessor pursuant to the provisions of this Section 13, on the Lease
Termination Date applicable to such Property and Equipment, the Lessee shall pay
to the Lessor all Basic Rent payable with respect to such Property and Equipment
and any Additional Rent and other amounts owing hereunder and under the other
Operative Documents. Upon payment by the Lessee to the Lessor of all amounts
owing under this Section 13 and delivery of all Property and Equipment under
this Lease to the Lessor or such purchaser, this Lease shall terminate with
respect to such Property and Equipment, except to the extent provided in Section
11 hereof.
SECTION 14. CHARACTER OF AMMONIA PROJECT.
It is the intention of the Lessor and the Lessee that the
components of the Ammonia Project identified as personal property components in
Exhibit D hereto maintain their character as personal property for commercial
law purposes. The Lessee shall take all such reasonable action to maintain such
character and shall obtain and record such instruments and take such steps as
may be necessary to prevent any Person from acquiring any rights in such
components by reason of such components being deemed to be real property.
SECTION 15. LOSS OF OR DAMAGE TO PROPERTY OR EQUIPMENT.
(a) The Lessee hereby assumes all risk of loss of or damage to
Property or Equipment, however caused. No loss of or damage to any Property or
Equipment shall impair any obligation of the Lessee under this Lease, which
shall continue in full force and effect with respect to any lost or damaged
Property or Equipment.
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(b) In the event of damage of any kind whatsoever to any
Property or Equipment (unless the same is determined by the Lessee in its
reasonable judgment to be damaged beyond repair) the Lessee, at its own cost and
expense, shall place the same in good operating order, repair, condition and
appearance. The Lessee's right to any proceeds paid under any insurance policy
or policies required under Section 10 of this Lease with respect to any such
damage to any Property or Equipment which has been so placed by the Lessee in
good operating order, repair, condition and appearance is governed by paragraph
(f) of Section 10 hereof.
(c) If (A) all, or a substantial portion of the Ammonia
Project or any other Property or Equipment is lost, stolen, destroyed, seized,
confiscated, rendered unfit for use or damaged beyond repair (in the reasonable
judgment of the Lessee), (B) the use thereof by the Lessee in the ordinary
course of business is prevented by the act of any third Person or Persons or
governmental instrumentality for a period exceeding one hundred eighty (180)
days or, if shorter, the period ending on the last day of the Initial Term or
the Renewal Term of the Ammonia Project or of such other Property or Equipment,
as applicable, (C) the Ammonia Project or any other Property or Equipment is
attached (other than on a claim against the Lessor as to which the Lessee is not
obligated to indemnify the Lessor) and the attachment is not removed within a
period of one hundred eighty (180) days or, if shorter, the period ending on the
last day of the Initial Term or the Renewal Term of the Ammonia Project or of
such other Property or Equipment, as applicable, (D) a Taking as described in
Section 16 shall occur, or (E) the Ammonia Project or any other Property or
Equipment is damaged and the Lessee elects not to rebuild or repair the Ammonia
Project or such Property or Equipment or such rebuilding or repairs would exceed
twenty-five (25%) of the replacement cost of the Ammonia Project or such
Property or Equipment where such rebuilding or repairs could not, in the
reasonable judgment of the Lessee, restore the Ammonia Project or such Property
or Equipment to its previous working order prior to the expiration of the
Initial Term, or if the Lessee has renewed this Lease pursuant to Section 12
hereof, prior to the expiration of the Renewal Term, then in any such event, (a)
the Lessee shall replace such Property or Equipment with real property or
equipment of a similar like and kind, and of a value not less than the Property
or Equipment being replaced (assuming that the replaced Equipment or Property
was maintained in accordance with the provisions hereof), and the Lessee and the
Lessor shall execute a revised Unit Leasing Record or AFL Unit Leasing Record,
as the case may be, to amend, among other things, the description of such
Property or Equipment, provided that the replacement of any Property with other
real property shall be subject to the prior written consent of the Lessor, which
consent shall not be unreasonably withheld, and to receipt by the Lessor and the
Assignee of all documentation required with respect to the acquisition of
Property and Equipment by the Lessor under the terms of any Credit Agreement or
(b) (i) the Lessee shall promptly notify the Lessor in writing of such event,
(ii) on the Basic Rent Payment Date designated by the Lessee, which shall be a
date within ninety (90) days following such event but not later than the last
day of the Lease Term, the Lessee shall pay to the Lessor an amount equal to
84.5% of the Acquisition Cost of the Ammonia Project or such Property or
Equipment, (iii) the Initial Term or Renewal Term of the Ammonia Project or such
Property or Equipment shall continue until the Basic Rent Payment Date on which
the Lessor receives payment from the Lessee of the amount payable pursuant to
this paragraph (c) and of Basic Rent payable with respect to the Ammonia Project
or such Property or Equipment and any Additional Rent and other amounts owing
hereunder and under the other Operative Documents, and shall thereupon
terminate. Insurance and condemnation proceeds, if any, received by the Lessor
that, together with the amounts paid by the Lessee to the Lessor pursuant to
clause (ii) of the preceding sentence, exceed the aggregate of the Acquisition
Cost of the Ammonia Project or the affected Property or Equipment and all other
amounts payable hereunder and under the other
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Operative Documents, shall be paid by the Lessor to the Lessee. For purposes of
this paragraph (c), loss of or damage to a "substantial portion of the Ammonia
Project or any other Property or Equipment" shall be deemed to occur if the
Ammonia Project or such Property or Equipment is unusable for the Lessee's
ordinary business purposes in the reasonable judgment of the Lessee.
SECTION 16. CONDEMNATION AND DEDICATION OF PROPERTY;
EASEMENTS.
(a) If the use, occupancy or title to all or a substantial
portion of the Ammonia Project or any other Parcel of Property is taken,
requisitioned or sold in, by or on account of actual or threatened eminent
domain or confiscation or similar proceedings or other action by any
governmental authority (such events collectively referred to as a "Taking"),
then the Initial Term or Renewal Term shall terminate as provided in paragraph
(c) of Section 15 hereof. Upon receipt of proceeds from any award or sale made
in connection with such Taking, if the Lessee has paid all amounts owing under
paragraph (c) of Section 15 hereof, so long as no Event of Default has occurred
and is continuing, the Lessor shall remit to the Lessee the net amount of such
proceeds remaining after reimbursement for all costs and expenses (including,
without limitation, reasonable attorneys' fees) incurred by the Lessor in
connection with the negotiation and settlement of any proceedings related to
such Taking. A Taking shall be deemed to affect a "substantial portion" of the
Ammonia Project or a Parcel of Property if, after such Taking, the Ammonia
Project or such Parcel of Property is unusable for the Lessee's ordinary
business purposes in the reasonable judgment of the Lessee.
(b) If less than a substantial portion of the Ammonia Project
or any other Parcel of Property is subject to a Taking, then this Lease shall
continue in effect as to the portion of the Ammonia Project or such Parcel not
taken and any net proceeds, so long as no Event of Default has occurred and is
continuing, shall be paid to the Lessee; provided that if as a result of a
Taking or Takings of less than substantially all of a Parcel of Property the
aggregate proceeds with respect to any Parcel of Property received is equal to
or greater than $2,000,000, at the Lessee's option, (A) the Lessee shall replace
such Property as provided in clause (a) in the first sentence of paragraph (c)
of Section 15 hereof, or (B) such proceeds shall be paid to the Lessor and the
Acquisition Cost of the affected Parcel shall be reduced by the amount of such
proceeds (such reduction to be evidenced by a revised Unit Leasing Record or AFL
Unit Leasing Record, as the case may be). In the event of a reduction in the
Acquisition Cost of the Ammonia Project, the Lessor shall cause the CRA Bank to
remit to the Lessee an amount equal to 40% of the proceeds paid to the Lessor
pursuant to clause (B) of the immediately preceding sentence.
(c) So long as no Event of Default hereunder has occurred and
is continuing, the Lessee shall have the right (i) to grant, obtain or enter
into easements for the benefit of any Parcel of Property, (ii) to voluntarily
dedicate or convey, as required, portions of any Parcel of Property for road,
highway and other public purposes and (iii) to voluntarily execute petitions to
have any Parcel of Property or a portion thereof annexed to any municipality or
included within any utility, highway or other improvement or service district,
provided such annexation has no material adverse effect on the value of such
Parcel of Property. In connection with the Lessee's development of the Property
in accordance with the terms of this Lease, the Lessee shall at all times be
free to enter into and/or execute such agreements, dedications, easements,
conditions, covenants and restrictions in favor of other property owners,
lessees or local agencies as are necessary for the conduct of the Lessee's
operations on the Property. If any monetary
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consideration is paid for such easement or dedication, the Lessee shall be
entitled to receive or retain such consideration.
Subject to the foregoing provisions of this Section 16(c), the
Lessor will cooperate, without unreasonable delay and at the Lessee's expense,
as necessary and join in the execution of any appropriate instrument or shall
execute any separate instrument as necessary. As a condition precedent to the
Lessee's exercise of any of the Lessee's powers under this Section 16, (i) the
Lessee shall give the Lessor five (5) Business Days' prior written notice of the
proposed action and (ii) the Lessee shall provide to the Lessor a certificate of
the Lessee stating that such action will not in any material respect adversely
affect either the fair market value of such Property or the use of such Property
for its intended purpose, will not affect the Lessor's ability to exercise its
rights and remedies under this Lease and that the Lessee undertakes to remain
obligated under this Lease to the same extent as if the Lessee had not exercised
its powers under this Section 16 and the Lessee will perform all obligations
under such instrument and shall prepare all required documents and provide all
other instruments and certificates as the Lessor may reasonably request. If
requested by the Lessee, the Lessor shall appoint the Lessee as the Lessor's
attorney-in-fact pursuant to a power of attorney for the foregoing purposes.
SECTION 17. SURRENDER OF PROPERTY OR EQUIPMENT.
(a) Upon termination of the lease of any Property or Equipment
under circumstances in which such Property or Equipment is to be returned to the
Lessor, the Lessee shall surrender and deliver such Property or Equipment to the
Lessor or a designee of the Lessor at the location where such Property or
Equipment is required to be located pursuant to the provisions hereof.
(b) Upon the surrender of the Property and Equipment, the
Lessee shall deliver to the Lessor or its designee, all logs, manuals,
inspection data, books and records in the English language, if available, or
with translations in the English language or copies thereof which are applicable
to the Property and Equipment that are in accordance with sound industry
practice customarily retained (or that the Lessee actually did retain) or are
required by law to be retained with respect to similar property and equipment,
including, without limitation, all software and manuals necessary for the
operation of the Ammonia Project in accordance with the design specifications
set forth in the appraisal provided to the Lessor pursuant to Section 4 of the
Agreement for Lease.
(c) The Lessee shall be obligated to obtain all Governmental
Actions necessary for the surrender of Property and Equipment hereunder and
permitting the Lessor (without the Lessor being required to change its business
structure or otherwise to suffer any real or potential adverse effect on its
business or that of its Affiliates as a result of such surrender and receipt of
possession) to possess the Ammonia Project with or without the continued
involvement of the Lessee, which Governmental Actions shall be in full force and
effect. In connection with the Lessee's surrender of possession of the Ammonia
Project to the Lessor, the Lessee shall furnish to the Lessor copies certified
by a Responsible Officer of the Lessee of all Governmental Actions necessary to
effect such surrender and receipt of possession.
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SECTION 18. EVENTS OF DEFAULT.
Any of the following events of default shall constitute an
"Event of Default" and shall give rise to the rights on the part of the Lessor
described in Section 19 hereof:
(a) Failure of the Lessee (x) to make any payment required by
paragraph (e) of Section 19, paragraph (c) of Section 15, paragraph (q) of
Section 2, paragraph (r) of Section 2 or paragraph (l) of Section 29 hereof when
due or to pay amounts due to the Lessor on the Lease Termination Date, (y) to
pay Basic Rent on or prior to the earlier of (i) ten (10) days after such
payment is due and (ii) the Lease Termination Date, or (z) to pay any other
amount payable by the Lessee hereunder on or prior to the earlier of (i) fifteen
(15) days after written demand for such other payment and (ii) the Lease
Termination Date; or
(b) Failure to maintain the insurance required by Section 10
hereof, or default in the performance of the covenant contained in paragraph (k)
of Section 10 hereof; or
(c) Failure to comply with any of the Expiration Covenants
described in paragraph (b) to Section 13 hereof or with Section 26 hereof; or
(d) Default in the performance of any other obligation or
covenant of the Lessee pursuant to this Lease or any other Operative Document
(except a Ground Lease) and, if such default is capable of cure, the continuance
of such default for 30 days after written notice to the Lessee by the Lessor or
any Assignee; provided that, if such default is of a nature that it is capable
of being cured but not within such 30 day period and the Lessee shall have
diligently commenced curing such default within such 30 day period and the
Lessee shall have proceeded diligently and in good faith thereafter to complete
curing such default, such 30-day period shall be extended to one hundred eighty
(180) days but not to a date later than the Lease Termination Date; or
(e) The entry of a decree or order for relief in respect of
the Lessee by a court having jurisdiction in the premises, or the appointment of
a receiver, liquidator, assignee, custodian, trustee, sequestrator (or other
similar official) of the Lessee or of any substantial part of its property, or
ordering the winding up or liquidation of its affairs, in an involuntary case
under the Federal Bankruptcy Code, as now or hereafter constituted, or any other
applicable Federal or state bankruptcy, insolvency reorganization, composition
or other similar law of any jurisdiction; or the commencement against the Lessee
of an involuntary case under the Federal Bankruptcy Code, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency
reorganization, composition or other similar law of any jurisdiction, and the
continuance of any such case unstayed and in effect for a period of 60
consecutive days; or
(f) The entry or deemed entry of an order for relief in any
case under the Federal Bankruptcy Code involving the Lessee or the suspension or
discontinuance of the Lessee's business operations, the Lessee's insolvency
(however evidenced) or the Lessee's admission of insolvency or bankruptcy, or
the commencement by the Lessee of a voluntary case under the Federal Bankruptcy
Code, as now or hereafter constituted, or any other applicable Federal or state
bankruptcy, insolvency reorganization, composition or other similar law of any
jurisdiction, or the consent by the Lessee to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
(or other similar official) of the Lessee or of any substantial part of the
Lessee's, or the making by the Lessee of an assignment for the benefit of
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creditors, or the failure of the Lessee generally to pay its debts as such debts
become due, or the taking of partnership or other action by or on behalf of the
Lessee in furtherance of any such action; or
(g) There shall be an "Event of Default" under the Revolving
Loan Facility or the Lessee or any Subsidiary (as principal or guarantor or
other surety) shall default in the payment when due or within any applicable
period of grace of any amount of principal of or premium or interest on any
Indebtedness other than under the Revolving Loan Facility which is outstanding
in a principal amount of at least $10,000,000 in the aggregate; or any event
shall occur or condition shall exist in respect of any such other Indebtedness
which is outstanding in a principal amount of at least $10,000,000, or under any
evidence of any such Indebtedness or of any mortgage, indenture or other
agreement relating thereto, the effect of which is to cause (or to permit one or
more Persons to cause) such Indebtedness to become due before its stated
maturity or before its regularly scheduled dates of payment or to permit the
holders thereof to cause the Lessee or any Subsidiary to repurchase or repay
such Indebtedness, and such default, event or condition shall continue for more
than the period of grace, if any, specified therein and in the case where such
Indebtedness has not been declared due and payable such event or condition shall
not have been cured or waived within the later of fifteen (15) days of such
occurrence pursuant thereto and the expiration of any applicable period of
grace; or
(h) Any representation or warranty made or deemed made or
certified to by the Lessee in this Lease or any Operative Document, any Consent
or any document contemplated hereby or thereby proves to be false or inaccurate
in any material respect on or as of the date made or deemed made; or
(i) The Lessee shall fail to observe or perform, after the
expiration of any applicable grace period, any material term, covenant or
condition of any Ground Lease relating to a Parcel of Property, to be observed
or performed, unless any such observance or performance shall have been waived
or not required by the landlord under such Ground Lease, or if any one or more
of the events referred to in the Site Lease, the Sublease or any Ground Lease
shall occur which would cause the Site Lease, the Sublease or such Ground Lease
to terminate without notice or action by the landlord thereunder or which would
entitle the landlord under the Site Lease, the Sublease or such Ground Lease to
terminate the Site Lease, the Sublease or such Ground Lease and the term thereof
by the giving of notice to the Lessor without opportunity to cure, as tenant
thereunder, or if any of the terms, covenants or conditions of the Site Lease,
the Sublease or any Ground Lease shall in any manner be modified, changed,
terminated, supplemented, altered or amended in any material respect without the
consent of the Lessor and Assignee; or
(j) An Event of Default (as defined in the Agreement for
Lease) shall exist under the Agreement for Lease; or
(k) The Gas Contract or any Ancillary Facility Agreement or
any other Operative Document shall be modified, changed, terminated,
supplemented, altered or amended in any material respect without the consent of
the Lessor and the Assignee; or
(l) Arcadian Corporation shall cease to be the general partner
of the Lessee without the prior written consent of the Lessor.
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SECTION 19. RIGHTS UPON DEFAULT.
(a) Upon the occurrence and continuation of any Event of
Default the Lessor may, in addition to exercising any other rights and remedies
available to it under applicable law, do any one or more of the following (if,
within fifteen (15) Business Days of receipt by the Lessee of an Event of
Default Notice (as defined in Section 29(l)), the Lessee has not made a request
to purchase all Parcels of Property and Units of Equipment under Section 29(l)
or, if the Lessee has so made such a request but has not consummated within
thirty (30) Business Days of receipt of the Event of Default Notice such
purchase in full compliance with Section 29(l)):
(i) Terminate the lease of any or all Property or
Equipment leased hereunder by written notice to the
Lessee, subject to the maximum amount the Lessor
shall be entitled to recover from the Lessee, as
described in paragraph (f) of this Section 19;
(ii) Whether or not the lease of any Property or Equipment
is terminated, take immediate possession of and
remove any or all Equipment and other equipment or
property of the Lessor in the possession of the
Lessee, wherever situated, and for such purpose,
enter upon any premises without liability to the
Lessee for so doing; provided that the taking of
possession of any Property or Equipment shall take
place in a commercially reasonable manner;
(iii) Whether or not any action has been taken under
paragraph (i) or (ii) above, sell any Property or
Equipment (free of or subject to the rights of the
Lessee or any other person under this Lease and with
or without the concurrence or request of the Lessee);
(iv) Hold, use, occupy, operate, remove, lease or keep
idle any or all Property or Equipment as the Lessor
in its sole discretion may determine, without any
duty to account to the Lessee with respect to any
such action or inaction, except that the Lessor
agrees that any profit it derives from the occupation
or use of any Property or Equipment while exercising
its rights under this Section 19 will be applied to
reduce the Accrued Default Obligations; and
(v) Exercise any other right or remedy which may be
available under applicable law and in general proceed
by appropriate judicial proceedings, either at law or
in equity, to enforce the terms hereof or to recover
damages for the breach hereof.
(b) Suit or suits for the recovery of any default in the
payment of any sum due hereunder or for damages may be brought by the Lessor
from time to time at the Lessor's election, and nothing herein contained shall
be deemed to require the Lessor to await the date whereon this Lease or the term
hereof would have expired by limitation had there been no such default by the
Lessee or no such termination or cancellation.
(c) The receipt of any payments under this Lease by the Lessor
with knowledge of any breach of this Lease by the Lessee or of any default by
the Lessee in the performance of
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any of the terms, covenants or conditions of this Lease, shall not be deemed to
be a waiver of any provision of this Lease.
(d) No receipt of moneys by the Lessor from the Lessee after
the termination or cancellation hereof in any lawful manner shall reinstate,
continue or extend the Initial Term or the Renewal Term, or affect any notice
theretofore given to the Lessee, or operate as a waiver of the right of the
Lessor to enforce the payment of Basic Rent or Additional Rent or other charges
payable hereunder, or operate as a waiver of the right of the Lessor to recover
possession of any Unit of Equipment or Parcel of Property by proper suit,
action, proceedings or remedy; it being agreed that, after the service of notice
to terminate or cancel this Lease, and the expiration of the time therein
specified, if the default has not been cured in the meantime, or after the
commencement of any suit, action or summary proceedings or of any other remedy,
or after a final order, warrant or judgment for the possession of any Unit of
Equipment or Parcel of Property, the Lessor may demand, receive and collect any
moneys payable hereunder, without in any manner affecting such notice,
proceedings, suit, action, order, warrant or judgment; and any and all such
moneys so collected shall be deemed to be payments on account for the use and
operation of any Unit of Equipment or the use, operation and occupation of any
Parcel of Property, or at the election of the Lessor, on account of the Lessee's
liability hereunder and will be applied to reduce the Accrued Default
Obligations. Acceptance of the keys to any Parcel of Property, or any similar
act, by the Lessor, or any agent or employee of the Lessor, during the term
hereof, shall not be deemed to be an acceptance of a surrender of any Parcel of
Property unless the Lessor shall consent thereto in writing.
(e) The Lessee hereby expressly confirms that, in any event,
including after any Event of Default, and notwithstanding any termination of
this Lease or reentry or repossession by the Lessor, the Lessee shall continue
to be liable for, and the Lessor may recover from the Lessee, (i) all Basic Rent
accrued to the date of payment, (ii) any Additional Rent owing with respect to
all Property or Equipment leased by the Lessee, (iii) all amounts payable
hereunder or under any other Operative Document and (iv) all losses, damages,
costs and expenses incurred (including, without limitation, reasonable
attorneys' fees and expenses, commissions, filing fees and sales or transfer
taxes) sustained by the Lessor by reason of such Event of Default and the
exercise of the Lessor's remedies with respect thereto, including, in the event
of a sale by the Lessor of any Property or Equipment pursuant to this Section
19, all costs and expenses associated with such sale. The amounts payable in
clauses (i) through (iv) above are hereinafter sometimes referred to as the
"Accrued Default Obligations". Accrued Default Obligations shall not include any
damages for loss of profits arising from the prospective use, operation and
occupancy by parties other than the Lessee of any Property or Equipment or the
anticipated receipt of income therefrom subsequent to the Lessee's possession of
such Property and Equipment.
(f) After an Event of Default, the Lessor may sell its
interest in any Property and Equipment in any commercially reasonable manner
upon any terms that the Lessor deems satisfactory, free of any rights of the
Lessee or any Person claiming through or under the Lessee. In the event of any
such sale or in the event the Lessor elects not to sell any Property or
Equipment, in addition to the Accrued Default Obligations, the Lessor shall be
entitled to recover from the Lessee, as liquidated damages, and not as a
penalty, an amount equal to 84.5% of the Acquisition Cost of any Property or
Equipment under this Lease. Proceeds of any such sale received by the Lessor,
or, in the event the Lessor elects not to sell, proceeds at any time thereafter
received by the Lessor from any sale, occupation, operation, use or lease of any
Property or Equipment (net of all reasonable costs and expenses incurred by the
Lessor in
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connection with any sale, occupation, operation, use or lease of any Property or
Equipment) in excess of 15.5% of the Acquisition Cost of such Property or
Equipment, shall be credited against the Accrued Default Obligations the Lessee
is required to pay under this Section 19. If such excess proceeds exceed the
Accrued Default Obligations, or, if the Lessee has paid all amounts required to
be paid under this Section 19, such excess shall be paid by the Lessor to the
Lessee. If the Lessee converts any such Property or Equipment after an Event of
Default, or if such Property or Equipment is lost or destroyed, in addition to
the Accrued Default Obligations, the Lessor may cause the Lessee to pay to the
Lessor, and the Lessee shall pay to the Lessor, as liquidated damages and not as
a penalty, an amount equal to 84.5% of the Acquisition Cost of such Property or
Equipment.
(g) In the event of a sale pursuant to this Section 19, upon
receipt by the Lessor of the amounts payable hereunder, the Lessor shall
transfer all of the Lessor's right, title and interest in and to the Property
and Equipment to the purchaser thereof.
(h) In addition to its other rights in this Section 19, the
Lessor may exercise its various rights under the Operating Agreement, the
Ancillary Facility Agreements and the Gas Contract or transfer such rights to
the purchaser in a sale.
(i) No remedy referred to in this Section 19 is intended to be
exclusive, but each shall be cumulative and in addition to any other remedy
referred to above or otherwise available to the Lessor at law or in equity, and
the exercise in whole or in part by the Lessor of any one or more of such
remedies shall not preclude the simultaneous or later exercise by the Lessor of
any or all such other remedies. No waiver by the Lessor of any Event of Default
hereunder shall in any way be, or be construed to be, a waiver of any future or
subsequent Event of Default.
SECTION 20. EQUIPMENT TO BE PERSONAL PROPERTY.
It is the intention and understanding of the Lessor and the
Lessee that all Equipment shall be and at all times remain personal property.
The Lessee shall obtain and record such instruments and take such steps as may
be necessary to prevent any Person from acquiring any rights in Equipment
paramount to the rights of the Lessor by reason of such Equipment being deemed
to be real property.
SECTION 21. SALE OR ASSIGNMENT BY LESSOR.
(a) The Lessor shall have the right to obtain equity and debt
financing for the acquisition and ownership of the Property or Equipment by
selling or assigning its right, title and interest in any or all amounts due
from the Lessee or any third party under this Lease; provided, that any such
sale or assignment shall be subject to the rights and interests of the Lessee
under this Lease.
(b) Any Assignee shall, except as otherwise agreed by the
Lessor and such Assignee, have (to the exclusion of the Lessor) all the rights,
powers, privileges and remedies of the Lessor hereunder, and the Lessee's
obligations as between itself and such Assignee hereunder shall not be subject
to any claims or defense that the Lessee may have against the Lessor, other than
the defense of payment or satisfaction of the obligation; provided that the
foregoing shall not be deemed to be a waiver of any claims the Lessee may have
against the Lessor. Upon written
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notice to the Lessee of any such assignment, the Lessee shall thereafter make
payments of Basic Rent, Additional Rent and other sums due hereunder to the
Assignee, to the extent specified in such written notice, and only such payments
to the applicable Assignee shall discharge the obligation of the Lessee to the
Lessor hereunder and only to the extent of such payments. Anything contained
herein to the contrary notwithstanding, no Assignee shall be obligated to
perform any duty, covenant or condition required to be performed by the Lessor
hereunder, and any such duty, covenant or condition shall be and remain the sole
obligation of the Lessor.
SECTION 22. INCOME TAXES.
(a) The Lessor agrees that it will not file any Federal, state
or local income tax returns during the Lease Term with respect to any Property
or Equipment that are inconsistent with the treatment of the Lessee as tax owner
of such Property or Equipment for Federal, state and local income tax purposes.
(b) Paragraph (a) of Section 22 above notwithstanding, the
Lessor agrees that, at the written request of the Lessee, it will take all such
action as may be required to be taken by a lessor to elect under any provision
of the Code substantially similar to section 48(d) of the Internal Revenue Code
of 1954, as amended prior to the enactment of the Tax Reform Act of 1986,
permitting a pass-through of an investment tax credit to a lessee, to treat the
Lessee as having acquired any Unit of Equipment or any qualifying appliances,
equipment and machinery attached to any Parcel of Property acquired by the
Lessor that would qualify for such a credit (within the meaning of section 48(b)
of the Code); provided, that such request is received by the Lessor reasonably
in advance of the date on which the Lessor is required to take such action, and
the Lessee provides the Lessor in a timely fashion with all information (other
than identifying information pertaining to the Lessor) required to take such
action. The Lessor does not represent or warrant to the Lessee that credits will
be allowable with respect to any Unit of Equipment or other property under the
Code or that any election will be effective to transfer any such credits that
are allowable to the Lessee. The Lessor shall have no liability to the Lessee
resulting from the disallowance to the Lessee of credits under the Code with
respect to any Unit of Equipment or other property unless such disallowance is
directly and primarily attributable to the failure of the Lessor to comply with
its obligations under the first sentence of this paragraph (b).
SECTION 23. NOTICES AND REQUESTS.
All notices, offers, acceptances, approvals, waivers,
requests, demands and other communications hereunder or under any other
instrument, certificate or other document delivered in connection with the
transactions described herein shall be in writing, shall be addressed as
provided below and shall be considered as properly given (a) if delivered in
person, (b) if sent by express courier service (including, without limitation,
Federal Express, Emery, DHL, Airborne Express, and other similar express
delivery services), (c) in the event overnight delivery services are not readily
available, if mailed by international airmail, postage prepaid, registered or
certified with return receipt requested, or (d) if sent by telecopy and
confirmed; provided, that in the case of a notice by telecopy, the sender shall
in addition confirm such notice by writing sent in the manner specified in
clauses (a), (b) or (c) of this Section 23. All notices shall be effective upon
receipt by the addressee; provided, however, that if any notice is tendered to
an addressee and the delivery thereof is refused by such addressee, such notice
shall be effective upon such tender. For the purposes of notice, the addresses
of the parties shall be as set forth below; provided, however, that any party
shall have the right to change its address for notice hereunder to any other
location
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by giving written notice to the other party in the manner set forth herein. The
initial addresses of the parties hereto are as follows:
If to the Lessor:
Nitrogen Leasing Company, Limited Partnership
c/o Nitrogen Leasing Capital, Inc.
North Tower-27th Floor
World Financial Center
250 Vesey Street
New York, NY 10281
Attention: Marjorie A. Hargrave
Telephone: (212) 449-6155
Telecopy: (212) 449-7298
If to the Lessee:
Arcadian Fertilizer, L. P.
6750 Poplar Avenue
Suite 600
Memphis, Tennessee 38138-7419
Attention: Vice President--Legal and General Counsel
Telephone: (901) 758-5233
Telecopy: (901) 758-5201
and
Arcadian Fertilizer, L. P.
6750 Poplar Avenue
Suite 600
Memphis, Tennessee 38138-7419
Attention: Treasurer
Telephone: (901) 758-5266
Telecopy: (901) 758-5202
With a copy of all notices under this Section 23 to Arcadian Corporation at the
same address as the Lessee and to any Assignee at such address as such Assignee
may specify by written notice to the Lessor and the Lessee.
SECTION 24. COVENANT OF QUIET ENJOYMENT.
During the Lease Term of any Property or Equipment hereunder
and so long as no Event of Default or Potential Default shall have occurred and
be continuing, the Lessor recognizes the Lessee's right to uninterrupted use and
quiet enjoyment of the Property or Equipment on the terms and conditions
provided in this Lease without any interference from the Lessor or anyone
claiming through or under the Lessor.
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SECTION 25. RIGHT TO PERFORM FOR LESSEE.
(a) If the Lessee fails to perform or comply with any of its
covenants or agreements contained in this Lease, the Lessor may, upon reasonable
notice to the Lessee but without waiving or releasing any obligations or
default, itself perform or comply with such covenant or agreement, and the
amount of the reasonable expenses of the Lessor incurred in connection with such
performance or compliance, shall be payable by the Lessee, not later than
fifteen (15) days after written notice by the Lessor.
(b) Without in any way limiting the obligations of the Lessee
hereunder, the Lessee hereby irrevocably appoints the Lessor as its agent and
attorney at the time at which the Lessee is obligated to deliver possession of
any Parcel of Property or Unit of Equipment to the Lessor, to demand and take
possession of such Parcel of Property or Unit of Equipment in the name and on
behalf of the Lessee from whomsoever shall be at the time in possession thereof.
SECTION 26. MERGER, CONSOLIDATION OR SALE OF ASSETS.
Except as provided in paragraph (o) of Section 29 of this
Lease, the Lessee may not consolidate with or merge into any other corporation
or sell or assign all or substantially all of its assets or its interest in the
Ammonia Project to any Person, unless the surviving corporation or transferee
Person shall assume, by execution and delivery of instruments satisfactory to
the Lessor prior to any such consolidation, merger, sale or assignment, the
obligations of the Lessee hereunder and become successor to the Lessee, but the
Lessee shall not thereby be released, without the consent of the Lessor, from
its obligations hereunder and; provided, further, that no Event of Default shall
have occurred and be continuing, both prior and after giving effect to any such
consolidation, merger, sale or assignment and such surviving corporation or
transferee Person will, on a pro forma basis, immediately after such
consolidation, merger or sale, possess a consolidated net worth and credit
rating substantially equivalent to or greater than that of the Lessee
immediately prior to such consolidation, merger or sale. The terms and
provisions of this Lease shall be binding upon and inure to the benefit of the
Lessee and its respective successors and assigns.
SECTION 27. PERMITTED CONTESTS.
(a) The Lessee shall not be required, nor shall the Lessor
have the right, to pay, discharge or remove any tax, assessment, levy, fee,
rent, charge or Lien, or to comply or cause any Parcel of Property or Unit of
Equipment to comply with any Legal Requirements applicable to any Parcel of
Property or Unit of Equipment or the occupancy, use or operation thereof, so
long as no Event of Default exists under this Lease with respect to any Parcel
of Property or Unit of Equipment, and, in the judgment of the Lessee's counsel,
the Lessee shall have reasonable grounds to contest the existence, amount,
applicability or validity thereof by appropriate proceedings, which proceedings
in the reasonable judgment of the Lessor, (i) shall not involve any material
danger that any Parcel of Property or Unit of Equipment or any Basic Rent or any
Additional Rent would be subject to sale, forfeiture or loss or loss of use as a
result of failure to comply therewith, (ii) shall not affect the payment of any
Basic Rent or any Additional Rent or other sums due and payable hereunder or
result in any such sums being payable to any Person other than the Lessor or any
Assignee, (iii) will not place the Lessor in any danger of any monetary civil
liability for which the Lessor is not adequately indemnified (the Lessee's
obligations under Section 11 of this Lease shall be deemed to be adequate
indemnification if no Event of Default exists) or any other material
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civil penalty, or to any criminal liability, (iv) if involving taxes, shall
suspend the collection of taxes, and (v) shall be permitted under and be
conducted in accordance with the provisions of any other instrument to which the
Lessee or the Parcel of Property or Unit of Equipment is subject and shall not
constitute a default thereunder (the "Permitted Contest"). The Lessee shall
conduct all Permitted Contests in good faith and with due diligence and shall
promptly after the final determination (including appeals) of any Permitted
Contest pay and discharge all amounts which shall be determined to be payable
therein. The Lessor shall at the Lessee's expense cooperate in good faith with
the Lessee with respect to all Permitted Contests conducted by the Lessee
pursuant to this Section 27, including, without limitation, in assisting in the
preparation of, and participating in, filings related to such Permitted
Contests.
(b) At least ten (10) days prior to the commencement of any
Permitted Contest, the Lessee shall notify the Lessor in writing thereof if the
amount in contest exceeds $1,000,000 and shall describe such proceeding in
reasonable detail. In the event that a taxing authority or subdivision thereof
proposes an additional assessment or levy of any tax for which the Lessee is
obligated to reimburse the Lessor under this Lease, or in the event that the
Lessor is notified of the commencement of an audit or similar proceeding which
could result in such an additional assessment, then the Lessor shall in a timely
manner notify the Lessee in writing of such proposed levy or proceeding.
(c) The Lessor and the Lessee agree that no Event of Default
or Potential Default shall be deemed to have occurred if the existence of the
event causing such Event of Default or Potential Default, as the case may be, is
being contested by the Lessee as a Permitted Contest in accordance with the
terms of this Section 27.
SECTION 28. LEASEHOLD INTERESTS.
The following provisions relate to the Site Lease, the
Sublease and each additional lease under which a leasehold interest in a Parcel
of Property is subleased to the Lessee or a Permitted Sublessee hereunder (each,
a "Ground Lease"):
(a) The Lessee hereunder covenants and agrees to perform and
to observe and to cause each Permitted Sublessee to perform and observe all of
the terms, covenants, provisions, conditions and agreements of the underlying
Ground Leases on the Lessor's part as lessee or sublessee thereunder to be
performed and observed (including, without limitation, payment of all rent,
additional rent and other amounts payable by the Lessor as lessee under any
Ground Lease) to the end that all things shall be done which are necessary to
keep unimpaired the rights of the Lessor as lessee under any Ground Lease. The
Lessee further covenants that it shall cause to be exercised any renewal option
contained in the Ground Lease which relates to renewal occurring in whole or in
part during the term of this Lease. The Lessee agrees to cooperate fully with
the Lessor to enforce the Lessor's rights as the lessee under any Ground Lease
as against the lessor under such Ground Lease.
(b) The Lessee covenants and agrees pursuant to Section 11
hereof to indemnify and hold harmless the Lessor and any Assignee from and
against any and all liability, loss, damage, suits, penalties, claims and
demands of every kind and nature (including, without limitation, reasonable
attorneys' fees and expenses) by reason of the Lessee's or any Permitted
Sublessee's failure to comply with any Ground Lease or the provisions of this
Section 28.
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(c) The Lessor and the Lessee agree that the Lessor shall have
no obligation or responsibility to provide services or equipment required to be
provided or repairs or restorations required to be made in accordance with the
provisions of any Ground Lease by the lessor thereunder. The Lessor shall in no
event be liable to the Lessee nor shall the obligations of the Lessee hereunder
be impaired or the performance thereof excused because of any failure or delay
on the part of the lessor under any Ground Lease in providing such services or
equipment or making such restorations or repairs and such failure or delay shall
not constitute a basis for any claim against the Lessor or any offset against
any amount payable to the Lessor under this Lease.
(d) The Lessor's interest under any Ground Lease shall not
expire, terminate or otherwise be extinguished without the prior written consent
of the Lessor.
(e) The Lessee shall ensure that the Site Lease and the
Sublease shall each be a Mortgageable Ground Lease.
SECTION 29. MISCELLANEOUS.
(a) All indemnities, representations and warranties, and the
obligation to pay Additional Rent contained in this Lease shall survive the
expiration or other termination hereof.
(b) This Lease, the Unit Leasing Records and the AFL Unit
Leasing Records covering Property or Equipment leased pursuant hereto, the other
Operative Documents and the instruments, documents or agreements referred to
herein and therein constitute the entire agreement between the parties and no
representations, warranties, promises, guarantees or agreements, oral or
written, express or implied, have been made by any party hereto with respect to
this Lease or the Property or Equipment, except as provided herein or therein.
(c) This Lease may not be amended, modified or terminated, nor
may any obligation hereunder be waived orally, and no such amendment,
modification, termination or waiver shall be effective for any purpose unless it
is in writing, signed by the party against whom enforcement thereof is sought. A
waiver on one occasion shall not be construed to be a waiver with respect to any
other occasion.
(d) The captions in this Lease are for convenience of
reference only and shall not be deemed to affect the meaning or construction of
any of the provisions hereof. Any provision of this Lease which is prohibited by
law or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and the parties hereto shall
negotiate in good faith appropriate modifications to reflect such changes as may
be required by law, and, as nearly as possible, to produce the same economic,
financial and tax effects as the provision which is prohibited or unenforceable;
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction. To
the extent permitted by applicable law, the Lessee and the Lessor hereby waive
any provision of law which renders any provision hereof prohibited or
unenforceable in any respect. THIS LEASE HAS BEEN EXECUTED AND DELIVERED IN THE
STATE OF NEW YORK. THE LESSEE AND THE LESSOR AGREE THAT, TO THE MAXIMUM EXTENT
PERMITTED BY THE LAW OF THE STATE OF NEW YORK, THIS LEASE, AND THE RIGHTS AND
DUTIES OF THE LESSEE AND THE LESSOR HEREUNDER, SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING
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THIS LEASE AGREEMENT IS
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WITHOUT LIMITATION SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL
OBLIGATIONS LAW) IN ALL RESPECTS, INCLUDING WITHOUT LIMITATION IN RESPECT OF ALL
MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. THE LESSEE HEREBY IRREVOCABLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND THE SUPREME COURT OF
THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK IN ANY ACTION, SUIT OR
PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN CONNECTION WITH THIS LEASE OR
THE TRANSACTIONS CONTEMPLATED HEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE LESSEE HEREBY WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A
DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT
IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF SUCH COURT, THAT THE SUIT,
ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE
SUIT, ACTION OR PROCEEDING IS IMPROPER, OR THAT THIS LEASE OR ANY DOCUMENT OR
ANY INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE
LITIGATED IN OR BY SUCH COURT. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
LESSEE AGREES NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE
JUDGMENT OF ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION
WHICH MAY BE CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT. THE LESSEE
AGREES THAT SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED
MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN THIS LEASE OR ANY METHOD AUTHORIZED
BY THE LAWS OF NEW YORK. THE LESSOR AND THE LESSEE EXPRESSLY WAIVE ALL RIGHT TO
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER IN TORT OR
CONTRACT OR OTHERWISE) IN ANY WAY RELATED TO THIS LEASE OR THE TRANSACTIONS
CONTEMPLATED HEREBY. THE LESSOR AND THE LESSEE ACKNOWLEDGE THAT THE PROVISIONS
OF THIS PARAGRAPH (D) OF SECTION 29 HAVE BEEN BARGAINED FOR AND THAT THEY HAVE
BEEN REPRESENTED BY COUNSEL IN CONNECTION THEREWITH.
(e) In connection with any sale of Property or Equipment
pursuant to Section 15 or 19 of this Lease, when the Lessor transfers title,
such transfer shall be on an as-is, non-installment sale basis, without warranty
by, or recourse to, the Lessor, except that such title shall be free of any
Liens resulting from the Lessor's willful or knowing act or omission.
(f) In connection with the sale or purchase of Property or
Equipment pursuant to Section 15 or 19 of this Lease, the Lessee shall, without
limitation of any of its obligations hereunder or under any other Operative
Document, pay all transfer taxes, transfer gains taxes, mortgage recording tax,
if any, recording and filing fees and all other similar taxes, fees, expenses
and closing costs (including reasonable attorneys' fees) in connection with the
conveyance of such Property or Equipment to the Lessee or any purchaser.
(g) If any costs of the Lessor related to the Agreement for
Lease which were not included in the Acquisition Cost of a Parcel of Property or
a Unit of Equipment are allocated to such Parcel of Property or such Unit of
Equipment pursuant to the definition of Unit Acquisition Cost in the Agreement
for Lease, the Lessee and the Lessor shall execute a revised AFL Unit Leasing
Record to amend the Acquisition Cost for such Parcel or such Unit of Equipment
to reflect such increase.
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(h) The Lessee and the Lessor agree to treat information
concerning the structure and documentation of the Agreement for Lease and this
Lease confidentially, except to the extent that disclosure is required by law
(in which circumstance such party will use reasonable efforts to notify the
other party prior to such disclosure of any information). The foregoing
constraint shall not include information: (i) that is now in the public domain
or subsequently enters the public domain without fault on the part of the party
proposing to disclose the same; (ii) currently known to the Lessee or the Lessor
from its own sources as evidenced by its prior written records; (iii) that the
Lessee or the Lessor receives from a third party not under any obligation to
keep such information confidential or (iv) that is provided by Lessee or Lessor
to counsel, consultants, other advisors and regulatory authorities, or lenders
under the Revolving Loan Facility, and Assignees or proposed Assignees, provided
such parties agree (including in writing if so requested by the non-providing
party) to treat any information so provided as similarly confidential.
(i) The Lessor recognizes the Lessee's right to call any
Property by such name or designation as the Lessee may deem appropriate or
reliable in the ordinary course of the Lessee's business and to place such
signs, labels, plates or other markings on any Property or Equipment as the
Lessee may desire in exercising such rights, subject to the provisions of
paragraph (b) of Section 8 hereof.
(j) The Lessor shall provide to Lessee on the date hereof and
hereafter upon the reasonable request of the Lessee, a balance sheet of the
Lessor certified by the Lessor and showing that the Lessor's capitalization is
such that at least 3.9% of its capitalization consists of contributions from the
Lessor's general partner and limited partners.
(k) In connection with the sale of any Property or Equipment
pursuant to the provisions of this Lease or the Purchase Option, the Lessor
shall convey, and the purchaser shall accept a conveyance of, the Lessor's
interest in the Operating Agreement, the Gas Contract, all easements, licenses,
Ground Leases, Ancillary Facility Agreements and similar agreements for the
benefit of such Property, adjacent property or Equipment, such conveyance to be
without warranty by, or recourse to, the Lessor, except that such interest shall
be free of any Liens resulting from the Lessor's willful or knowing act or
omission unrelated to an occurrence of an Event of Default.
(l) Upon the occurrence of an Event of Default and upon the
written request of the Lessee, which shall be received by the Lessor and any
Assignee not later than fifteen (15) Business Days subsequent to receipt by the
Lessee of notice (an "Event of Default Notice") from the Lessor or any Assignee
pursuant to this Lease that an Event of Default has occurred, the Lessee shall
have the right but not the obligation, not later than thirty (30) Business Days
after the Lessee received the notice of the Event of Default from the Lessor or
any Assignee, to purchase all Property and Equipment at a price equal to the
Acquisition Cost for such Property and Equipment; provided that the purchase
option contained in this paragraph shall not be available to the Lessee if the
purchase price and all other amounts paid by the Lessee would in the
circumstances in which such payment is made constitute a preferential payment or
a voidable transfer pursuant to the provisions of the Federal Bankruptcy Code in
a bankruptcy proceeding by or against the Lessee or would otherwise result in
the payment being subject to recapture from the Lessor. In connection with, and
as a condition to, the purchase of any Property and Equipment pursuant hereto,
(i) the Lessee shall pay at the time of purchase, in addition to the Acquisition
Cost of the Property and Equipment, all other amounts payable by the Lessee
under this Lease, including, without limitation, all Accrued Default
Obligations, and all transfer taxes, transfer gains
54
<PAGE> 58
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
taxes, mortgage recording tax, if any, recording and filing fees and all other
similar taxes, fees, expenses and closing costs (including reasonable attorneys'
fees) in connection with the conveyance of such Property and Equipment to the
Lessee and all other amounts owing hereunder, and (ii) when the Lessor transfers
title, such transfer shall be on an as-is, non-installment sale basis, without
warranty by, or recourse to, the Lessor, except that such title shall be free of
any Liens resulting from the Lessor's willful or knowing act or omission.
(m) Notwithstanding any provision of this Lease to the
contrary, for purposes of any Parcel of Property for which Substantial
Completion (as defined in the Agreement for Lease) has not yet been effected,
such Parcel shall continue to be subject to the provisions of the Agreement for
Lease, and the provisions of the first sentence of paragraph (a) of Section 8 of
this Lease, the final two sentences of paragraph (e) of Section 8 of this Lease,
the second and third sentences of paragraph (b) of Section 9 of this Lease,
paragraph (e) of Section 9 of this Lease, paragraph (f) of Section 9 of this
Lease, paragraph (g) of Section 9 of this Lease and clause (i) of paragraph (c)
of Section 10 of this Lease shall not be applicable to such Parcel.
(n) Subject to the terms and conditions contained in each
Assignment Agreement and Consent, the Lessor hereby assigns to the Lessee all of
the Lessor's right, title and interest in, to and under the Gas Contract, the
Operating Agreement and each Ancillary Facility Agreement from the date hereof
until the termination of the Initial Term and the Renewal Term, if any, with
respect to the Ammonia Project.
(o) Upon obtaining the prior written consent of the Lessor,
which consent shall not be unreasonably withheld or denied, the Lessee shall not
be obligated to preserve its status as a partnership not taxable as a
corporation, and the Lessee shall be permitted to change its status as a
partnership.
SECTION 30. NO RECOURSE.
(a) The Lessor's obligations hereunder are intended to be the
obligations of a limited partnership and of the corporation which is the general
partner thereof only and no recourse for the payment of any amount due under
this Lease or any other Operative Document or for any claim based thereon or
otherwise in respect thereof, shall be had against any limited partner of the
Lessor or any incorporator, shareholder, officer, director or Affiliate, as
such, past, present or future of such corporate general partner or of any
corporate limited partner or of any successor corporation to such corporate
general partner or any corporate limited partner of the Lessor, or against any
direct or indirect parent corporation of such corporate general partner or of
any limited partner of the Lessor or any other subsidiary or Affiliate of any
such direct or indirect parent corporation or any incorporator, shareholder,
officer or director, as such, past, present or future, of any such parent or
other subsidiary or Affiliate, it being understood that the Lessor is a limited
partnership formed for the purpose of the transactions involved in and relating
to this Lease and the Operative Documents on the express understanding
aforesaid. Nothing contained in this paragraph (a) of Section 30 shall be
construed to limit the exercise or enforcement, in accordance with the terms of
this Lease and the Operative Documents and any other documents referred to
herein, of rights and remedies against the limited partnership or the corporate
general partner of the Lessor or the assets of the limited partnership or the
corporate general partner of the Lessor.
55
<PAGE> 59
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
(b) The Lessee's obligations hereunder are intended to be the
obligations of a limited partnership and of the corporation which is the general
partner thereof only and no recourse for any obligation of the Lessee hereunder,
or for any claim based thereon or otherwise in respect thereof, shall be had
against any limited partner of the Lessee or any incorporator, shareholder,
officer or director, or Affiliate, as such, past, present or future of such
corporate general partner or limited partner or of any successor corporation to
such corporate general partner or any corporate limited partner of the Lessee,
or against any direct or indirect parent corporation of such corporate general
partner or of any limited partner of the Lessee or any other subsidiary or
Affiliate of any such direct or indirect parent corporation or any incorporator,
shareholder, officer or director, as such, past, present or future, of any such
parent or other subsidiary or Affiliate. Nothing contained in this paragraph (b)
of Section 30 shall be construed to limit the exercise or enforcement, in
accordance with the terms of this Lease and the Operative Documents and any
other documents referred to herein, of rights and remedies against the limited
partnership or the corporate general partner of the Lessee or the assets of the
limited partnership or the corporate general partner of the Lessee.
SECTION 31. NO MERGER.
There shall be no merger of this Lease or of the leasehold
estate hereby created with the fee estate in any Parcel of Property by reason of
the fact that the same person acquires or holds, directly or indirectly, this
Lease or the leasehold estate hereby created or any interest herein or in such
leasehold estate as well as the fee estate in any Parcel of Property or any
interest in such fee estate.
56
<PAGE> 60
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this
Lease to be executed and delivered as of the day and year first above written.
Nitrogen Leasing Company, Limited Partnership, by
Nitrogen Leasing Capital, Inc., its
General Partner
By /s/ Marjorie A. Hargrave
----------------------------------------------------
Name: Marjorie A. Hargrave
Title: Vice President and
Assistance Secretary
Arcadian Fertilizer, L.P., by Arcadian Corporation, its
General Partner
By /s/ John H. Gheens
----------------------------------------------------
Name: John H. Gheens
Title: Treasurer
<PAGE> 61
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT A
Type of Equipment or Property
1. Ammonia Project
2. Other*
- ----------------------------------
* To be determined by agreement of the Lessee and the Lessor.
<PAGE> 62
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT B
AFL UNIT LEASING RECORD to Lessor: Nitrogen Leasing Company,
the Lease Agreement, dated Limited Partnership
as of March 27, 1996, Lessee: Arcadian Fertilizer, L.P.
between Nitrogen Leasing Company,
Limited Partnership, as lessor,
and Arcadian Fertilizer, L.P.,
as lessee (the "Lease Agreement").
A. AFL ULR No.: ____
Effective Date of this AFL
Unit Leasing Record ("AFL ULR") ________ __, 19__.
B. PLEASE COMPLETE THE FOLLOWING STATEMENTS, IF APPLICABLE:
1. This AFL ULR relates to [Deed/Ground Lease] dated ________ __
19__.
PROPERTY DESCRIPTION AND RENTAL INFORMATION.
C. Type of Property (use category specified in Exhibit A to the Lease
Agreement)
D. Specific Description: (See Schedule A hereto if more space needed)
------------------------------------------------------------------------
------------------------------------------------------------------------
E. Location of
Property
-----------------------------------------------------------
State County City Country
F. Unit Acquisition Cost under the Agreement for Lease as at the date
hereof is $_____________.
G. If the Effective Date of this AFL ULR is after the first day of the
month and prior to the Lease Rate Date in such month, the partial first
month's Basic Rent for Property placed under lease by this AFL ULR will
be paid from the date of this AFL ULR until the end of the month on the
Basic Rent Payment Date in such month. If the Effective Date of the AFL
ULR falls on or after the Lease Rate Date, the partial first month's
Basic Rent will be paid from the date of this AFL ULR until the end of
the month on the next succeeding Basic Rent Payment Date.
H. The Initial Term and Renewal Term for the Property placed under lease
pursuant to this AFL ULR will be in accordance with the Lease Agreement.
I. The Basic Rent is as defined in the Lease Agreement.
J. Termination of the lease of the Property leased pursuant to this AFL ULR
will be in accordance with the Lease Agreement.
<PAGE> 63
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
K. ACKNOWLEDGMENT AND EXECUTION
The undersigned Lessor hereby leases to the undersigned Lessee, and the
Lessee acknowledges delivery to it in good condition of the Property
described on this AFL ULR. The Lessee agrees to pay the Basic Rent,
Additional Rent and additional payments set forth in the Lease
Agreement. The covenants, terms and conditions of this lease are those
appearing in the Lease Agreement, as it may from time to time be
amended, which covenants, terms and conditions are hereby incorporated
by reference. The terms used herein have the meaning assigned to them
in the Lease Agreement.
Arcadian Fertilizer, L.P., Nitrogen Leasing Company,
Lessee Limited Partnership, Lessor
By Arcadian Corporation, By Nitrogen Leasing Capital, Inc.,
its General Partner its General Partner
By By
-------------------------- ---------------------------------
Name: Name:
Title: Title:
<PAGE> 64
EXHIBIT C
UNIT LEASING RECORD to Lessor: Nitrogen Leasing Company,
the Lease Agreement, dated Limited Partnership
as of March 27, 1996, Lessee: Arcadian Fertilizer, L.P.
between Nitrogen Leasing Company,
Limited Partnership, as lessor,
and Arcadian Fertilizer, L.P.,
as lessee (the "Lease Agreement").
A. ULR No.: ____
Effective Date of this
Unit Leasing Record ("ULR") ______________ __, 19__.
B. PLEASE COMPLETE THE FOLLOWING STATEMENTS, IF APPLICABLE:
1. This ULR relates to [Deed/Ground Lease/Bill of Sale/Invoice]
dated _____________________ __, 19__.
PROPERTY OR EQUIPMENT DESCRIPTION AND RENTAL INFORMATION
C. Type of Property or Equipment (use category specified in Exhibit A to
the Lease Agreement)
--------------------------------------
D. Specific Description (See Schedule A hereto if more space needed)
------------------------------------------------------------------------
------------------------------------------------------------------------
E. Location of Property
or Equipment
---------------------------------------------------
State County City Country
<TABLE>
F. Basic Cost Additional Charges Sale & Use Tax Acquisition Cost
<S> <C> <C> <C>
$ + $ + $ = $
---------------- ----------------------- ------------------- ---------------------
</TABLE>
G. If the Effective Date of this ULR is after the first day of the month
and prior to the Lease Rate Date in such month, the partial first
month's Basic Rent for Property or Equipment placed under lease by this
ULR will be paid from the date of this ULR until the end of the month on
the Basic Rent Payment Date in such month. If the Effective Date of
this ULR falls on or after the Lease Rate Date, the partial first
month's Basic Rent will be paid from the date of this ULR until the end
of the month on the next succeeding Basic Rent Payment Date.
<PAGE> 65
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
H. The Initial Term and Renewal Term for the Property or Equipment placed
under lease pursuant to this ULR will be in accordance with the Lease
Agreement.
I. The Basic Rent is as defined in the Lease Agreement.
J. Termination of the lease of the Property or Equipment leased pursuant to
this ULR will be in accordance with the Lease Agreement.
K. ACKNOWLEDGMENT AND EXECUTION
The undersigned Lessor hereby leases to the undersigned Lessee, and the
Lessee acknowledges delivery to it in good condition of the Property or
Equipment described on this ULR. The Lessee agrees to pay the Basic
Rent, Additional Rent and additional payments set forth in the Lease
Agreement. The covenants, terms and conditions of this lease are those
appearing in the Lease Agreement, as it may from time to time be
amended, which covenants, terms and conditions are hereby incorporated
by reference. The terms used herein have the meaning assigned to them
in the Lease Agreement.
Arcadian Fertilizer, L.P., Nitrogen Leasing Company,
Lessee Limited Partnership, Lessor
By Arcadian Corporation, By Nitrogen Leasing Capital, Inc.,
its General Partner its General Partner
By By
-------------------------- ---------------------------------
Name: Name:
Title: Title:
2
<PAGE> 66
THIS LEASE AGREEMENT IS
CONFIDENTIAL AND PROPRIETARY
EXHIBIT G
Description of OSHA Litigation
In January 1993, OSHA issued citations to the Lessee and proposed
a total civil penalty of $5.1 million as a result of the failure of the urea
unit at the Lake Charles plant in 1992. In December 1993, the judge in the
ensuing administrative law proceeding reduced the proposed penalty for the
principal citation from $4.4 million to $50,000 in granting the Lessee's motion
for partial summary judgment and severance. OSHA has appealed this decision to
the Occupational Safety and Health Review Commission ("Review Commission"), and
on September 15, 1995, the Review Commission affirmed the judge's decision.
The Review Commission also remanded the case to the judge and ordered the
consolidation of the previously severed citations in order to allow OSHA to
seek the judge's permission to amend the citation. OSHA chose not to seek an
amendment, and the judge again severed the citations. OSHA has again appealed
the decision reducing the penalty to the Review Commission as a procedural
prerequisite to seeking judicial review of the decision in the United States
Court of Appeals. In the meantime, the trial on the merits of the underlying
citation has been concluded, but a decision is not expected for several months.
In October 1994, the Lessee paid $.4 million to OSHA to settle
the remaining citations. The Lessee did not admit to violating any law,
regulation or safety standard and entered into the partial settlement solely to
avoid the substantial cost and burden of litigating these issues. The Lessee
maintains that it operated the Lake Charles plant in accordance with applicable
health and safety regulations and industry standards, and continues to believe
emphatically that OSHA's claims are without merit.
While management and legal counsel believe that any civil penalty
ultimately paid by the Lessee will be substantially less than the remaining
$4.4 million penalty proposed by OSHA, they cannot predict with certainty the
outcome of this proceeding.
The Lessee received a large number of claims for personal injury
and property damage as a result of the Lake Charles incident. Most of the
claims were settled through a claims adjuster retained by the Lessee and its
liability insurance carriers. A number of suits arising from the incident also
were filed against the Lessee. There are currently 11 suits pending in the
United States District Court for the Western District of Louisiana, Lake
Charles Division, which have been consolidated for joint administration, and 13
cases (including one suit that has been certified as a class action) pending in
the 14th Judicial District Court of Calcasieu Parish, Louisiana, which also
have been consolidated for joint administration. The plaintiffs in these suits
generally are seeking damages for alleged physical, mental and emotional
suffering and other personal injuries, and/or property damage, lost earnings
and other economic losses as a result of the failure. Most of the suits also
include claims for punitive damages. All but three of the suits are being
defended by the Lessee's liability insurance carriers on its behalf, and the
damages alleged in such suits are believed to be within the maximum coverage
limit of the liability insurance. The remaining three actions, in which the
plaintiffs are substantially identical and assert substantially the same claims
of economic and other injuries, are being defended by the Lessee and may not be
covered by its liability insurance. The Lessee believes that many of the
unsettled claims and the suits are frivolous and/or insubstantial and is
vigorously defending against the same.
<PAGE> 67
EXHIBIT D
DESCRIPTION OF THE PROPERTY TO BE LEASED
Ammonia Plant Project
The project is to build at the existing Arcadian complex in Trinidad a
1,850 metric tonne per day ("MTPD") ammonia plant. Ammonia will be produced as
refrigerated product going to the new atmospheric refrigerated storage tankage.
The plant will be operated by Arcadian Trinidad Limited (ATL) and will be
engineered, procured, and constructed by The M. W. Kellogg Company ("MWK').
The project will utilize MWKs 1,850 MTPD ammonia process based on the low
energy natural gas reforming process offered and licensed by MWK.
The ammonia plant will be designed to produce 1,850 MTPD ammonia at -28
degrees F for storage in non-pressurized tanks. Processing steps consist of
the following:
1. Raw Synthesis Gas Preparation - Raw synthesis gas is produced from
natural gas as follows: compression, preheating and desulfurization
is followed by steam reforming of the hydrocarbons in the natural
gas in the primary reformer furnace. Auto thermal reforming in the
secondary reformer where the remainder of the natural gas is
converted to hydrogen, carbon monoxide and carbon dioxide while
introducing sufficient process air to provide the nitrogen required
for ammonia synthesis. The carbon
<PAGE> 68
monoxide is further reformed to carbon dioxide and hydrogen in shift
reactor utilizing steam.
2. Synthesis Gas Purification - In this section, the raw synthesis gas
is processed to remove carbon dioxide and carbon monoxide yielding a
highly pure hydrogen-nitrogen rich synthesis gas. The carbon
dioxide removal is accomplished by use of an improved Benfield
Low-Heat process (licensed by VOP). Final removal of residual
carbon dioxide and carbon monoxide is accomplished by methanation.
3. Purified Synthesis Gas Compression and Ammonia Synthesis - The above
gas along with a recycled hydrogen stream is then compressed in a
single case centrifugal compressor, a recycle wheel also compresses
the loop circulating gases. The combined gases are then preheated
before going to the ammonia reactor for conversion to ammonia.
After heat recovery, the reactor effluent is cooled with cooling
water and then ammonia refrigerant to condense the ammonia from the
gases. The liquid ammonia formed is depressurized and sent to
refrigerated ammonia storage.
The plant will contain a new control room and motor control center located
at its battery limits. No new administration buildings or offices will be
required. There will be no changes to the existing urea facility or the ship
loading dock.
<PAGE> 69
All normal plant utilities, including fresh water, potable water, cooling
water, main and emergency power, and fire water will be provided as part of
this project. Such services will also involve an operating agreement with ATL.
<PAGE> 70
EXHIBIT E
Tab 1
Legal Description
<PAGE> 71
FIRST SCHEDULE
DESCRIPTION OF INDUSTRIAL ESTATE
ALL AND SINGULAR that certain niece or parcel of land situate in the Ward of
Couva in the Island of Trinidad comprising ELEVEN HUNDRED AND FIFTY SIX ACRES
AND TWENTY THREE PERCHES be the same more or less and which said parcel of
land. is delineated and coloured Pink on the Plan annexed to and marked "A" on
the Deed of Conveyance dated 1Oth day of April, 1978 a.-Id registered as number
8301 of 1978.
ALL AND SINGULAR those four pieces or parcels of land situate in the Ward of
Couva in the Island of Trinidad the First Thereof comprising ONE HUNDRED SIXTY
AND SIXTY ACRES more or less and bounded on the North partly by lands of United
Molasses Company Limited partly by parcel 2 secondly herein described and
partly
<PAGE> 72
- 22 -
as are herein contained.
(c) This Lease shall be construed interpreted and performed in accordance with
the laws of the Republic of Trinidad and Tobago.
(d) Headings are inserted for convenience only and shall be ignored in the
construction and interpretation of this lease.
(e) No amendment, alterations, change or addition to this lease shall be
effective unless it is in writing and signed by the duly authorised
representatives of both parties.
IN WITNESS WHEREOF the Common Seal of POINT LISAS INDUSTRIAL PORT DEVELOPMENT
CORPORATION LIMITED was hereunto affixed the 26th day of July 1982 and the
Common Seal of FERTILIZERS OF TRINIDAD AND TOBAGO LIMITED was hereunto affixed
the 26th day of July 1982.
FIRST SCHEDULE - DESCRIPTION OF INDUSTRIAL ESTATE
ALL AND SINGULAR that certain piece or parcel of land situate in the Ward of
Couva in the Island of Trinidad comprising ELEVEN HUNDRED AND FIFTY SIX ACRES
AND TWENTY THREE PERCHES be the same more or less and which said parcel of
land is delineated and coloured Pink on the Plan annexed to and marked "A" on
the Deed of Conveyance dated 1Oth day of April, 1978 and registered as number
8301 of 1978.
ALL AND SINGULAR those four pieces or parcels of land situate in the Ward of
Couva in the Island of Trinidad the First Thereof compromising ONE HUNDRED AND
SIXTY ACRES More or less and bounded on the North partly by lands of United
Molasses Company Limited partly by parcel 2 secondly herein described and
partly
<PAGE> 73
- 23 -
by the Gulf of Paria and partly by State Lands on the East part by parcel 2
secondly herein described and partly by (Abandoned) Trinidad Government Railway
reserve and on the West partly lands of United Molasses Company limited partly
by a Mangrove being the lands fourthly herein described and partly by the
Gulf of Paria. The Second Thereof comprising ONE HUNDRED AND SEVENTY-ONE
ACRES AND TWO PERCHES more or less and bounded on the North partly by lands
formerly of Caroni Limited but now of Caroni (1975) Limited partly by an
existing road partly by lands of Federation Chemicals Limited partly by lands
of the Lessor and partly by (Abandoned) Trinidad Government Railway Reserve on
the South partly by parcel 1 hereinabove described partly by lands formerly of
Caroni Limited but now of Caroni (1975) Limited and partly by lands of Liquid
Carbonic or the East partly by (Abandoned) Trinidad Government Railway Reserve
partly by lands of Liquid Carbonic and partly by lands of the Lessor and on the
West partly by lands of Federation Chemicals Limited partly by lands formerly
of Caroni Limited but now of Caroni (1975) and partly by lands of Liquid
Carbonic or the (East partly by (Abandoned) Trinidad Government Railway
Reserve partly by lands of Liquid Carbonic and partly by lands of the. Lessor
and on the West partly by lands of Federation Chemicals Limited partly by lands
formerly of Caroni Limited but now of Caroni (1975) Limited by lands of United
Molasses Company Limited and partly by parcel 1 hereinabove described.) The
Third Thereof comprising ACRES AND THREE ROODS more or less and bounded on the
North part by (Abandoned) Trinidad Government Railway Reserve and partly by the
Southern Main Road on the South partly by (Abandoned) Trinidad Government
Railway Reserve partly by lands now or formerly of the Phoenix Park Estate and
partly by Southern Main Road on East by the Southern Main Road and on the
West by
<PAGE> 74
- 24 -
(Abandoned) Trinidad Government Railway Reserve and The Fourth Thereof
comprising ELEVEN ACRES TWO ROODS AND TWENTY SEVEN PERCHES more or less and
bounded on the North partly by, lands of Federation Chemicals Limited and
partly by a Road on the South partly by lands of United Molasses Limited and
partly by the Gulf of Paria on the East partly by the said Road partly by lands
of United Molasses Limited and partly by parcel 1 hereinabove firstly described
and on the West partly by lands of Federation Chemicals Limited and partly by
the Gulf of Paria.
The four above-mentioned pieces or parcels of land are shown on the plan
annexed to and described in the Deed of Conveyance dated 20th day of February,
1980 and registered as number 5756 of 1980.
<PAGE> 75
EXHIBIT F
MINIMUM LEASE PAYMENT CALCULATION
--------------------------------------------------------------------
NPV over the 5-year Lease Term(1) $254,329,915
NPV as a % of the Construction Cost 89.239%
Arcadian Risidual Risk Assumption 84.500%
BEY LIBIOR Rate (as of 3/19/96) 5.513%
Weighted Average Financing Cost 7.284%
Lease Rate 7.319659%
--------------------------------------------------------------------
<TABLE>
<CAPTION>
Variable Monthly Rent Admin. LOC Total
Year Month Beginning AAC Component Component Fee Fee Lease Payment
- ---- ----- ------------- ---------- --------- ----- ----- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
1 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
2 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
3 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
4 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
5 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
6 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
7 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
8 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
9 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
10 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
11 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
1 12 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
13 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
14 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
15 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
16 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
17 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
18 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
19 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
20 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
21 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
22 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
23 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
2 24 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
25 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
26 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
27 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
28 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
29 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
30 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
31 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
32 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
33 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
34 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
35 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
3 36 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
37 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
38 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
39 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
40 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
41 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
42 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
43 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
44 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
45 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
46 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
47 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
4 48 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
49 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
50 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
51 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
52 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
53 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
54 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
55 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
56 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
57 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
58 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
59 $285,000,000 $1,725,294 $0 $6,250 $6,875 $1,738,419
5 60 $44,175,000 $1,725,294 $240,825,000 $6,250 $6,875 $242,563,419
- ---------------------------------------------------------------------------------------------------------------
NPV's $103,517,641 $375,000 $412,500 $345,130,149
- ---------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Calculated off the stream of Lease Payments discounted at the 7.32% the
Lease rate for the Lessee.
<PAGE> 76
AMENDMENT NO. 1
Dated as of August 26, 1996
to
LEASE AGREEMENT
Dated as of March 27, 1996
between
Nitrogen Leasing Company, Limited Partnership
as Lessor
and
Arcadian Fertilizer, L.P.
as Lessee
This Amendment has been manually executed in 8 counterparts, numbered
consecutively from 1 through 8, of which this is No. 2. To the extent,
if any, that this Amendment constitutes chattel paper (as such term is
defined in the Uniform Commercial Code as in effect in any
jurisdiction), no security interest in this Amendment may be created or
perfected through the transfer or possession of any counterpart other
than the original executed counterpart which shall be the counterpart
identified as counterpart No. 1.
<PAGE> 77
Amendment No. 1 dated as of August 26, 1996 to Lease Agreement
("Amendment No. 1"), dated as of March 27, 1996, between Nitrogen Leasing
Company, Limited Partnership, a Delaware limited partnership ("Lessor"), and
Arcadian Fertilizer, L.P., a Delaware limited partnership ("Lessee"), amending
the Lease Agreement referred to below.
WHEREAS, Lessor and Lessee have heretofore entered into an Lease
Agreement, dated as of March 27, 1996 (the "Lease Agreement"); and
WHEREAS, Lessor and Lessee wish to amend the Lease Agreement as
hereinafter provided;
NOW, THEREFORE, Lessor and Lessee hereby agree that the Lease
Agreement is amended as follows:
1. Section 1 of the Lease Agreement is hereby amended by
adding the following definition thereto:
"'Appraisal Procedure' means the following procedure
whereby an independent appraiser shall be appointed by the Lessor
and the Lessee, with the consent of the Assignee, to determine
the amount, if any, by which the sales price of the Ammonia
Project has been reduced as the direct result of wear and tear in
excess of the wear and tear that would have occurred if the
Lessee's obligations contained in the second sentence of
paragraph (b) of Section 9 of this Lease had been satisfied, if
such determination is required under Section 19 of this Lease.
If no such appraiser is appointed by the Lessor and the Lessee
within thirty (30) days after the written request of either the
Lessor or the Lessee that an appraiser be appointed, the Lessor
and the Lessee shall each appoint an independent appraiser within
thirty (30) days thereafter, and the two appraisers so appointed
shall appoint a third independent appraiser. Each appraiser
appointed pursuant to the foregoing procedure shall, within
thirty (30) days after appointment of the last appraiser,
independently determine the amount, if any, by which the sales
price of the Ammonia Project has been reduced as the direct
result of wear and tear in excess of the wear and tear that would
have occurred if the Lessee's obligations contained in the second
sentence of paragraph (b) of Section 9 of this Lease had been
satisfied. If the Lessor or the Lessee shall fail to appoint an
independent appraiser within the above-mentioned thirty (30) day
period, the appraiser appointed by the other party shall
determine such amount. If a single appraiser is appointed, such
appraiser's determination shall be final. If three appraisers
are appointed, the amounts determined by the three appraisers
shall be averaged, the amount which differs the most from such
average shall be excluded, the remaining two amounts shall then
be averaged and such average shall be final. The expenses of all
appraisers shall be paid by the Lessee. Each appraiser appointed
pursuant to this "Appraisal Procedure" shall be an independent
engineering firm of recognized standing and shall have experience
in the construction, maintenance and operation of ammonia
production plants."
2. Section 19 of the Lease Agreement is hereby amended by
adding the following paragraph (j) to such Section, to read in its entirety as
follows:
<PAGE> 78
"(j) If (i) an Event of Default arising solely as a result
of the Lessee's failure to comply with its obligations contained
in the second sentence of paragraph (b) of Section 9 of this
Lease shall have occurred and be continuing, (ii) the Lessor
shall terminate this Lease or the Lessee's right to the use and
possession of the Ammonia Project, and (iii) the Lessor shall
sell the Ammonia Project, then if the proceeds of such sale are
less than 15.5% of the Acquisition Cost of the Ammonia Project,
the Lessee shall pay to the Lessor the amount by which the sales
price of the Ammonia Project has been reduced as the direct
result of wear and tear in excess of the wear and tear that would
have occurred if the Lessee's obligations contained in the second
sentence of paragraph (b) of Section 9 of this Lease had been
satisfied (the amount by which the sales price of the Ammonia
Project has been reduced as the direct result of wear and tear in
excess of the wear and tear that would have occurred if the
Lessee's obligations contained in the second sentence of
paragraph (b) of Section 9 of this Lease had been satisfied, to
be such amount, if any, as the Lessor and the Lessee agree, or if
no agreement is reached, the amount, if any, determined pursuant
to the Appraisal Procedure); provided that, in no event shall the
Lessee be required to pay an amount that, when combined with the
proceeds received by the Lessor from the purchaser of the Ammonia
Project, exceeds 15.5% of the Acquisition Cost of the Ammonia
Project."
3. This Amendment No. 1 may be executed in several
counterparts, each of which when executed and delivered shall be deemed an
original and all of which counterparts, taken together, shall constitute but
one and the same Amendment No. 1.
4. This Amendment No. 1 shall in all respects be governed by,
and construed in accordance with, the laws of the State of New York, including
all matters of construction, validity and performance.
5. Except as provided herein, all provisions, terms and
conditions of the Lease Agreement shall remain in full force and effect. As
amended hereby, the Lease Agreement is ratified and confirmed in all respects.
2
<PAGE> 79
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
No. 1 to be duly executed as of the date first above written.
Nitrogen Leasing Company, Limited Partnership
By: Nitrogen Leasing Capital, Inc., its General Partner
By: /s/ JAMES A. BROWN
-----------------------------------
Name: JAMES A. BROWN
Title: Vice President-Finance
and Assistant Secretary
Arcadian Fertilizer, L.P.
By: Arcadian Corporation, its General Partner
By: /S/ JOHN H. GHEENS
-----------------------------------
Name: John H. Gheens
Title: Treasurer
3
<PAGE> 1
Exhibit 10.5
PURCHASE OPTION AGREEMENT
THIS PURCHASE OPTION AGREEMENT (the "Agreement"), dated as of
the 27th day of March, 1996, between NITROGEN LEASING COMPANY, LIMITED
PARTNERSHIP (the "Owner") and ARCADIAN CORPORATION (the "General Partner").
PRELIMINARY STATEMENTS
1. The parties hereto desire to consummate the transactions
contemplated by the Lease Agreement, dated as of March 27, 1996 between
Arcadian Fertilizer, L.P. and the Owner (the "Lease"), the Agreement for Lease
and certain related documents.
2. The Lease contemplates that the General Partner shall be
granted the Purchase Option (as hereinafter defined), pursuant to which the
Owner shall be obligated, under certain circumstances, to sell to the General
Partner all Property and Equipment subject to the Lease (the "Property and
Equipment") for a total purchase price equal to (i) in the case of a purchase
during the Initial Term, the Acquisition Cost of the Property and Equipment on
the Exercise Date (as hereinafter defined) and (ii) in the case of a purchase
during the Renewal Term, the fair market value of the Property and Equipment on
the Exercise Date.
3. The parties hereto are entering into this Agreement in
order to more fully set forth the Purchase Option contemplated by the Lease and
certain related documents.
W I T N E S S E T H :
NOW, THEREFORE, in consideration of the foregoing, the
covenants and conditions hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged by
each of the parties hereto, said parties hereby agree as follows:
ARTICLE 1
PURCHASE OPTION
SECTION 1.01. Exercise of Purchase Option. Pursuant to the
terms of paragraph (a) of Section 12 of the Lease, the Lessee shall, not
earlier than 450 days and not
<PAGE> 2
later than one (1) year prior to the end of the Initial Term, request in
writing that the Owner obtain bank commitments acceptable to the Owner and the
Lessee in order to finance the Owner's ownership of the Property and Equipment
under the Lease during a Renewal Term. Upon such request, the Owner shall
advise the Lessee and the General Partner in writing not later than 300 days
prior to the end of the Initial Term, indicating whether the Owner has been
able to obtain such binding bank commitments for a Renewal Term. If the Owner
has advised the Lessee and the General Partner that it has been able to obtain
such binding bank commitments, the General Partner shall have the right, during
the Initial Term and during the Renewal Term, if any, upon written notice (the
"Option Notice") to the Owner and the Lessee not later than 270 days prior to
the Lease Termination Date, to purchase the Property and Equipment for the sale
price described in Section 1.02 hereof, on the date which is six (6) months
prior to the Lease Termination Date (the "Exercise Date").
SECTION 1.02. Purchase Price for Property and Equipment. The
purchase price for the Property and Equipment shall be (i) in the case of a
purchase during the Initial Term, the Acquisition Cost of the Property and
Equipment on the Exercise Date and (ii) in the case of a purchase during the
Renewal Term, the fair market value of the Property and Equipment on the
Exercise Date (the "Sale Price") and shall be payable by the General Partner to
the Owner on the Exercise Date; provided, that, the Lessee shall have no
obligation whatsoever to pay any portion of said purchase price, it being
understood that all parties hereto shall look only to the General Partner for
payment of said purchase price. In addition to the Sale Price, the General
Partner shall pay all transfer taxes, transfer gains taxes, mortgage recording
tax, if any, recording and filing fees and all other similar taxes, fees,
expenses and closing costs (including reasonable attorneys' fees) in connection
with the conveyance of such Property or Equipment from the Owner to the General
Partner.
SECTION 1.03. Transfer of Property and Equipment. Upon
payment by the General Partner of all amounts owing to the Owner pursuant to
Section 1.02 hereof, the Owner shall transfer title to the Property and
Equipment to the General Partner by a bill of sale, quitclaim deed and such
other conveyance instruments as the General Partner may reasonably require to
convey all such Property and Equipment, which bill of sale, quitclaim deed and
other conveyance instruments shall be satisfactory in all respects to the
General Partner in its sole discretion. The transfer of the Owner's interest
in the Property and Equipment shall be on an as-is, non-installment sale basis,
without warranty by,
2
<PAGE> 3
or recourse to, the Owner, except that such title shall be free of any Liens
resulting from the Owner's willful or knowing act or omission. Upon the sale
of the Property and Equipment, as set forth herein, the Owner's interest in the
Property and Equipment shall thereupon vest in the General Partner, free and
clear of any Lien in favor of the Owner or any Assignee.
SECTION 1.04. Assignment of Contracts. Upon payment by the
General Partner of all amounts owing to the Owner pursuant to Section 1.02
hereof, (i) the Owner shall convey, and the General Partner shall accept a
conveyance of, the Owner's interest in all contracts, easements, licenses,
operating agreements, and similar agreements relating to the construction,
equipping, use and operation of the Property and Equipment, including without
limitation the Gas Contract, the Operating Agreement and the Ancillary Facility
Agreements, (ii) the General Partner shall execute such agreements and
acknowledgements as shall in the Owner's reasonable judgment be required to
reflect such conveyance, (iii) such conveyance shall be made without warranty
by, or recourse to, the Owner, except that such interest shall be free of any
Liens resulting from the Owner's willful or knowing act or omission, and (iv)
the General Partner shall assume any and all liabilities and obligations of the
Owner, of whatever kind or nature, whether absolute or contingent, direct or
indirect, fixed or contingent, or known or unknown, arising from or based upon
any act, omission, event, condition or circumstance arising from the Property
and Equipment.
ARTICLE 2
FAILURE OF THE GENERAL PARTNER
TO PURCHASE
In the event the General Partner has provided written notice
to the Owner and the Lessee pursuant to Section 1.01 of this Agreement of its
intent to purchase the Property and Equipment on the date which is six (6)
months prior to the end of the Initial Term, and the General Partner fails to
effect such purchase on such date, the General Partner shall have no further
right to purchase any Property or Equipment during the Initial Term. In the
event the General Partner has provided written notice to the Owner and the
Lessee pursuant to Section 1.01 of this Agreement of its intent to purchase the
Property and Equipment on the date which is six (6) months prior to the end of
the Renewal Term, and the General Partner fails to effect such purchase on such
date, the General Partner shall have no further right to purchase the Property
or Equipment under this Agreement. If the General Partner has not provided
written notice to the Owner and the Lessee pursuant to Section 1.01
3
<PAGE> 4
of this Agreement of its intent to purchase the Property and Equipment on the
date which is six (6) months prior to the end of the Initial Term or the
Renewal Term, as the case may be, the General Partner shall have no further
right to purchase the Property and Equipment during such Initial Term or
Renewal Term, as the case may be.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS
SECTION 3.01. The General Partner hereby represents and
warrants to the Owner that:
(a) the General Partner (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, (ii) has the requisite corporate power and legal right to own and
operate its properties and to carry on its business as presently conducted, and
(iii) to the best of its knowledge after due inquiry, is duly qualified to do
business as a foreign corporation in good standing in each jurisdiction in
which its ownership or leasing of properties or the conduct of its business
requires such qualification, except where the failure to so qualify would not
materially impair the ability of the General Partner to perform its obligations
hereunder;
(b) the General Partner has full power and authority
to execute and deliver this Agreement and any documents referred to herein and
to perform its obligations in accordance herewith and therewith;
(c) all acts, consents, licenses, orders,
authorizations, approvals, waivers, extensions, and variances of, and notices
to or filings with any governmental or public body and other proceedings to be
taken by or on the part of the General Partner to authorize the General Partner
to perform hereunder and under any documents referred to herein or contemplated
hereby have been duly and properly taken;
(d) this Agreement has been duly authorized,
executed and delivered by the General Partner and, assuming the due
authorization, execution and delivery of this Agreement by the Owner, this
Agreement constitutes the legal, valid and binding obligation of the General
Partner, enforceable in accordance with its terms, subject, as to
enforceability, to applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally, and to general principles of equity (regardless of
whether enforcement is sought in a proceeding in equity or at law); and
4
<PAGE> 5
(e) the execution, delivery and performance hereof
by the General Partner and any obligations contemplated herein will not result
in any violation of any term of the articles of incorporation or the by-laws of
the General Partner, do not require stockholder approval or the approval or
consent of any trustee or holders of indebtedness of the General Partner except
such as have been obtained prior to the date hereof and will not conflict with
or result in a breach in any material respect of any terms or provisions of, or
constitute a default under, or result in the creation or imposition of any Lien
(other than a Permitted Lien) upon any property or assets of the General
Partner under, any indenture, mortgage or other agreement or instrument to
which the General Partner is a party or by which it or any of its property is
bound, or any existing applicable law, rule, regulation, license, judgment,
order or decree of any government, governmental body or court having
jurisdiction over the General Partner or any of its activities or properties.
SECTION 3.02. The Owner hereby represents and warrants to the
General Partner that:
(a) the Owner (i) is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware, (ii) has the requisite power and legal right to own and operate its
properties and to carry on its business as presently conducted and (iii) to the
best of its knowledge after due inquiry, is duly qualified to do business as a
foreign limited partnership in good standing in each jurisdiction in which its
ownership or leasing of properties or the conduct of its business requires such
qualification, except where the failure to so qualify would not materially
impair the ability of the Owner to perform its obligations hereunder;
(b) the Owner has full power and authority to
execute and deliver this Agreement and any documents referred to herein and to
perform its obligations in accordance herewith and therewith;
(c) all acts, consents, licenses, orders,
authorizations, approvals, waivers, extensions and variances of, and notices to
or filings with any governmental or public body and other proceedings to be
taken by or on the part of the Owner to authorize the Owner to perform
hereunder and under any documents referred to herein or contemplated hereby
have been duly and properly taken;
(d) this Agreement has been duly authorized,
executed and delivered by the Owner and, assuming the due authorization,
execution and delivery of this Agreement by the General Partner, this Agreement
constitutes the legal,
5
<PAGE> 6
valid and binding obligation of the Owner, enforceable in accordance with its
terms, subject, as to enforceability, to applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally, and to general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law);
(e) the execution, delivery and performance hereof
by the Owner and any obligations contemplated herein will not result in any
violation of any term of the certificate of limited partnership or the
partnership agreement of the Lessee, do not require the approval or consent of
any limited partner or general partner of the Owner except such as have been
obtained prior to the date hereof and will not conflict with or result in a
breach in any material respect of any terms or provisions of, or constitute a
default under, or result in the creation or imposition of any Lien (other than
a Permitted Lien) upon any property or assets of the Owner under, any
indenture, mortgage or other agreement or instrument to which the Lessee is a
party or by which it or any of its property is bound, or any existing
applicable law, rule, regulation, license, judgment, order or decree of any
government, governmental body or court having jurisdiction over the Lessee or
any of its activities or properties; and
(f) upon the sale of the Property and Equipment, as
contemplated hereby, the Owner's interest in the Property and Equipment will
vest in the General Partner, free and clear of all Liens (other then Permitted
Liens).
ARTICLE 4
MISCELLANEOUS
SECTION 4.01. Assignment. No party to this Agreement may
assign any of its rights or delegate any of its obligations hereunder without
the prior written consent of the other party hereto; provided that, the Owner
shall be permitted to assign its right, title and interest in this Agreement to
the Assignee without the prior written consent of the General Partner.
SECTION 4.02. Indemnification. The General Partner hereby
agrees to indemnify the Owner, any Assignee, any successor or successors, and
any Affiliate of each of them and their respective officers, directors,
incorporators, shareholders, partners (general and limited, including without
limitation the general and limited partners of the Owner), employees, agents
and servants from, and holds each of them harmless against, any and all
liabilities, taxes, losses, obligations, claims, damages, penalties, causes of
action, suits, costs and expenses
6
<PAGE> 7
(including, without limitation, attorneys' and accountants' fees) to which any
of them may become subject, insofar as such liabilities, taxes, losses,
obligations, claims, damages, penalties, causes of action, suits, costs and
expenses arise out of this Agreement, including without limitation the failure
of the General Partner to purchase the Property and Equipment after notice to
the Owner and the Lessee of its intent to purchase the Property and Equipment
on the Exercise Date.
SECTION 4.03. Amendments and Waivers. Any term, covenant,
agreement or condition of this Agreement may be amended, or compliance
therewith may be waived, only by an instrument or instruments in writing
executed by each of the parties hereto. A waiver on one occasion shall not be
construed to be a waiver with respect to any other occasion.
SECTION 4.04. Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall be, as to such
jurisdiction, ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 4.05. Headings. The headings of sections contained
in this Agreement are inserted for purposes of convenience only and shall not
be construed to affect the meaning or construction of any of the provisions
hereof.
SECTION 4.06. Entire Agreement. This Agreement sets forth
the entire agreement among the parties hereto with respect to the subject
matter hereof and no representations, warranties, promises, guaranties or
agreements, oral or written, express or implied, have been made by any party
hereto with respect to this Agreement or the Property or Equipment, except as
provided herein.
SECTION 4.07. Governing Law. This Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of New York.
SECTION 4.08. Definitions. Unless otherwise indicated,
capitalized terms used herein and not defined herein shall have the respective
meanings given to them in the Lease.
SECTION 4.09. Counterparts. This Agreement may be executed
in several counterparts, each of which so executed shall be deemed to be an
original; provided, that all such counterparts, taken together, shall
constitute but one and the same agreement.
7
<PAGE> 8
SECTION 4.10 Specific Performance. The Owner and the General
Partner acknowledge that the Purchase Option is a unique and valuable right,
without which the parties hereto would lose substantial benefits. The parties
hereto have concluded that, upon breach of this Agreement by any of the parties
hereto, legal remedies would be inadequate and impracticable to enforce, in
that, among other things, it would be difficult to calculate with reasonable
certainty the legal damages payable as a result of such breach; therefore, the
obligations of each of the parties hereto shall be enforceable by means of a
suit for specific performance brought by any one or more of the other parties
hereto.
SECTION 4.11. WAIVER OF JURY TRIAL. THE PARTIES HERETO
EXPRESSLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
THE PARTIES HERETO ACKNOWLEDGE THAT THE PROVISIONS OF THIS SECTION 4.11 HAVE
BEEN BARGAINED FOR AND THAT THEY HAVE BEEN REPRESENTED BY COUNSEL IN CONNECTION
THEREWITH.
SECTION 4.12. Notices. All notices, requests, demands and
other communications hereunder shall be governed by, and given in accordance
with and at the addresses determined pursuant to, Section 23 of the Lease.
SECTION 4.13. Term. This Agreement shall terminate upon the
earlier of (a) the expiration or termination of the Lease, or (b) the exercise
of the Purchase Option and the consummation of all transactions contemplated in
such event hereunder; provided however, that the obligations of the General
Partner contained in Section 4.02 of this Agreement shall survive the
expiration or termination of this Agreement and shall continue in full force
and effect.
SECTION 4.14. Limitation of Liability. (a) The Owner's
obligations hereunder are intended to be the obligations of the limited
partnership and of the corporation which is the general partner thereof only
and no recourse for any obligation of the Owner hereunder, or for any claim
based thereon or otherwise in respect thereof, shall be had against any limited
partner of the Owner or any incorporator, shareholder, officer or director, or
affiliate, as such, past, present or future of such corporate general partner
or limited partner or of any successor corporation to such corporate general
partner or any corporate limited partner of the Owner, or against any direct or
indirect parent corporation of such corporate general partner or of any limited
partner of the Owner or any other subsidiary or affiliate of any such direct or
indirect parent corporation or any incorporator,
8
<PAGE> 9
shareholder, officer or director, as such, past, present or future, of any such
parent or other subsidiary or affiliate, it being understood that the Owner and
the general partner thereof are a limited partnership and a corporation,
respectively, formed for the purpose of the transactions involved in and
relating to this Agreement on the express understanding aforesaid. Nothing
contained in this Section shall be construed to limit the exercise or
enforcement, in accordance with the terms of this Agreement and any other
documents referred to herein, of rights and remedies against the limited
partnership or the corporate general partner of the Owner or the assets of the
limited partnership or the corporate general partner of the Owner.
(b) The General Partner's obligations hereunder are
intended to be the corporate obligations of the General Partner only and no
recourse for any obligation of the General Partner hereunder, or for any claim
based thereon or otherwise in respect thereof, shall be had against any
incorporator, shareholder, officer or director, or affiliate, as such, past,
present or future of the General Partner or of any successor corporation, or
against any direct or indirect parent corporation of the General Partner or any
other subsidiary or affiliate of any such direct or indirect parent corporation
or any incorporator, shareholder, officer or director, as such, past, present
or future, of any such parent or other subsidiary or affiliate. Nothing
contained in this Section shall be construed to limit the exercise or
enforcement, in accordance with the terms of this Agreement and any other
documents referred to herein, of rights and remedies against the General
Partner or the assets of the General Partner.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
ARCADIAN CORPORATION
By /s/ JOHN H. GHEENS
------------------------------------
Name: John H. Gheens
Title: Treasurer
NITROGEN LEASING COMPANY,
LIMITED PARTNERSHIP
By: NITROGEN LEASING CAPITAL,
INC., its General Partner
By /s/ MARJORIE A. ??
-----------------------------------
Name: Marjorie A. ??
Title: Vice President and
Assistant Secretary
10
<PAGE> 11
EXHIBIT O
PROJECT APPLICATION AND PROJECT CERTIFICATE FOR PAYMENT
FORM OF AIA DC ENT G722
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
TO OWNER: NITROGEN LEASING COMPANY PROJECT: TRINIDAD TRAIN 04 APPLICATION NO: __________
LIMITED PARTNERSHIP AMMONIA PROJECT
WORLD FINANCIAL CENTER PROJECT NO. JOB #7710
NORTH TOWER - 27771 FLOOR CONTRACTORS: THE M.W. KELLOGG COMPANY
NEW YORK, NY 10281-1327 KELLOGG PAN AMERICAN CORPORATION
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PROJECT APPLICATION FOR PAYMENT PROJECT CERTIFICATE FOR PAYMENT
Application is made for Payment as In accordance with the Contract Documents, based
shown below in connection with the on on-site observations and the Invoice attached
Project. to this application, the Project Manager
certifies to the Owner that to the best of his
1. TOTAL CONTRACT SUM $ knowledge, information and belief the work has
---------------- progressed as indicated, the quality of the work
2. Total net changes by Change Orders $ is in accordance with the Contract Documents and
---------------- the Contractors are entitled to payment of the
3. TOTAL CONTRACT SUM TO DATE $ AMOUNTS CERTIFIED.
----------------
- -------------------------------------------------------------
4. TOTAL COMPLETED TO DATE $
----------------
5. RETAINAGE $
----------------
6. LESS PREVIOUS TOTAL PAYMENTS $
----------------
7. CURRENT PAYMENT DATE $ [ ] TOTAL OF AMOUNTS CERTIFIED
----------------
The undersigned Project Manager certifies that to the best of PROJECT MANAGER:
Project Manager's knowledge, information and belief this
Project Application for Payment is an accurate computation By:_________________________ Date: _____________
of the Contractor's Applications for Payment.
PROJECT MANAGER:
BY:_________________________ DATE: _____________
State of: )
)
County of: )
Subscribed and sworn to before me this This Certificate is not negotiable. The Amounts
day of Certified are payable only to the Contractors named
in this document. Issuance, payment and acceptance
of payment are without prejudice to any rights of
the Owner or the Contractors under their contract.
Notary Public:
My Commission Expires:
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 1
EXHIBIT 10.6
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement") is effective as of
_________________________, 1996 (the "Effective Date"), by and between ARCADIAN
CORPORATION, a Delaware corporation (the "Company"), and _____________________
("Executive").
W I T N E S S E T H :
WHEREAS, the Company is engaged in the business of producing,
marketing, selling and distributing nitrogen fertilizers and chemicals
("Business");
WHEREAS, Executive is recognized as having experience in the
management and operation of companies that are in the Business;
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that it is in the best interests of the Company and its stockholders
to assure that the Company will have the continued dedication of Executive,
notwithstanding the possibility, threat or occurrence of a Change in Control
(as defined in Section 4.7 hereof);
WHEREAS, the Board believes it is imperative (i) to diminish the
inevitable and significant distractions of Executive and dilution of the time
of Executive, by virtue of the personal uncertainties and risks created by a
pending or threatened Change in Control, (ii) to encourage Executive's full
attention and dedication to the Company currently and in the event of any
threatened or pending Change in Control, and (iii) to provide Executive with
compensation arrangements in the event of a Change in Control which provide
Executive with financial security, which are competitive with those of other
corporations, and which ensure that Executive receives the compensation and
benefits intended to be provided to Executive by the Company through this
Agreement and the Company's various employee benefit and compensation plans and
arrangements without regard to any Excise Tax (as defined in Section 4.11(a)
hereof); and
WHEREAS, in order to accomplish the objectives described in the two
immediately preceding recitals, the Board desires to cause the Company to enter
into this Agreement as set forth herein.
NOW, THEREFORE, in consideration of the premises, the mutual covenants
and agreements contained in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the Company and Executive hereby agree as follows:
ARTICLE I
EMPLOYMENT, REPORTING AND DUTIES
1.1 Employment. On the terms and subject to the conditions of
this Agreement, the Company hereby employs and engages the services of
Executive to serve as, and Executive agrees to diligently and competently serve
as and perform the functions of, _________________________________________ (the
"Office") of the Company for the term and for the compensation and benefits
stated herein.
<PAGE> 2
1.2 Major Responsibilities; Authority. Executive shall have the
authorities, duties, responsibilities and status (including offices, titles and
reporting requirements) usually associated with the Office of companies having
operations and assets similar in nature and value to the operations and assets
of the Company and at least commensurate in all material respects with the most
significant of those held, exercised and assigned at any time during the 90-day
period immediately preceding the Effective Date, and such other duties as the
Board shall determine and Executive shall accept from time to time.
1.3 Extent of Service. During the Term (as defined in Section
4.1), and excluding any periods of vacation and sick leave to which Executive
is entitled, Executive agrees to devote reasonable time and energies to the
Business consistent with past practice and shall not, during the Term, be
engaged in any business activity which would interfere or prevent Executive
from carrying out his duties under this Agreement; provided, however, that this
Section 1.3 shall not be construed as preventing Executive from investing his
assets in such form or manner as will not require services on the part of
Executive in the operation of the affairs of any company in which such
investments are made.
1.4 Location. Executive shall not be required to move from
Executive's home in Shelby County, Tennessee.
ARTICLE II
COMPENSATION AND RELATED ITEMS
2.1 Compensation.
(a) Base Salary. As compensation and consideration for
the services to be rendered by Executive under this Agreement and for
the performance by Executive of the usual obligations of such
employment, the Company agrees to pay Executive, and Executive agrees
to accept, a base salary ("Base Salary") of $____________ _____ per
annum which shall be paid in accordance with Company's standard
payroll practice. Executive's Base Salary may increase from time to
time, and after any such change, Executive's new level of Base Salary
shall be Executive's Base Salary for purposes of this Agreement until
the effective date of any subsequent change.
(b) Additional Compensation. In addition to the Base
Salary provided for in Section 2.1(a), Executive and/or Executive's
family, as the case may be, shall be entitled to:
(i) participate in, and shall receive all
benefits under:
(A) any and all welfare benefit and
similar employee benefit plans, programs,
arrangements, or policies that are generally made
available by the Company and its affiliates (as
defined in Section 4.11(l)) now or at any time in the
future to other key employees or retired key
employees, including, but not limited to, any
hospitalization, medical, prescription, dental,
disability, salary continuance, individual life
insurance, executive life insurance, group
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life insurance, accidental death insurance, and
travel accident insurance plans, programs,
arrangements, and policies; and
(B) any and all bonus, incentive,
savings, retirement, profit sharing, pension, stock
option, restricted stock, employee stock ownership,
supplemental executive retirement and other employee
benefit plans, programs, arrangements, and policies
that are generally made available by the Company and
its affiliates now or at any time in the future to
officers and other key employees; and
(ii) annual vacations and sick leave in accordance
with the vacation and sick leave policies of the Company and
its affiliates that are now or at any time in the future in
effect with respect to officers and other key employees,
during which time Executive's compensation shall be paid in
full; and
(iii) fringe benefits in accordance with the fringe
benefit policies of the Company and its affiliates that are
now or at any time in the future in effect with respect to
officers and other key employees.
2.2 Expenses. The Company agrees that, during the Term, Executive
shall be allowed reasonable and necessary business expenses in connection with
the performance of his duties hereunder within guidelines established by the
Board as in effect at any time with respect to key employees ("Business
Expenses"), including, but not limited to, reasonable and necessary expenses
for food, travel, lodging, entertainment and other items in the promotion of
the Business within such guidelines. The Company shall promptly reimburse
Executive for all Business Expenses incurred by Executive upon Executive's
presentation to the Company of an itemized account thereof, together with
receipts, vouchers, or other supporting documentation. After termination or
expiration of this Agreement, however such termination or expiration may come
about, Executive shall have ninety (90) days after the date of such termination
or expiration to submit Business Expenses incurred during the Term to the
Company for reimbursement.
2.3 Working Facilities. Executive shall be furnished with offices
of a size and with other furnishings and appointments, administrative staff,
secretarial and other assistants, stenographic help, and such other facilities
and services as are suitable to Executive's position and adequate for the
performance of Executive's duties.
ARTICLE III
EXCULPATION
The Company agrees that Executive will not be liable for any losses,
expenses, costs or damages caused by or resulting from the recommendations,
suggestions, actions, errors, omissions or mistakes of Executive undertaken or
proposed by Executive if Executive acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Company. Executive's rights under this Article III shall not be deemed
exclusive of, but shall be cumulative with, any and all other rights
(including, but not limited to, rights of indemnification and advancement of
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expenses) to which Executive may now or at any time in the future be entitled
under applicable law, the Company's certificate of incorporation, the Company's
bylaws, any agreement (including, but not limited to, this Agreement), any vote
of stockholders, any resolution of directors, or otherwise.
ARTICLE IV
TERM AND TERMINATION
4.1 Term. The term of this Agreement shall be for three years
commencing on the Effective Date ("Term"); provided however, that if a Change
in Control occurs within the first twelve (12) months after the Effective Date,
the Term shall be extended to end on the third anniversary of such Change in
Control.
4.2 Termination of Agreement. Except as may otherwise be provided
herein, this Agreement may terminate prior to the end of the Term upon the
occurrence of:
(a) Thirty (30) days after written notice of termination
is given by either party to the other; or
(b) Executive's death or, at the Company's option, upon
Executive's becoming Disabled (as defined in Section 4.9 hereof).
Any notice of termination given by the Company to Executive under Section
4.2(a) above shall specify whether such termination is with or without Cause
(as defined in Section 4.4 hereof). Any notice of termination given by
Executive to the Company under Section 4.2(a) above shall specify whether such
termination is made with or without Good Reason (as defined in Section 4.5
hereof) or Good Reason-Change in Control (as defined in Section 4.6 hereof).
4.3 Obligations of the Company Upon Termination.
(a) Cause; Without Good Reason; and Without Good
Reason-Change in Control. If the Company terminates this Agreement
with Cause pursuant to Section 4.2(a) hereof, or if Executive
terminates this Agreement without Good Reason or without Good
Reason-Change in Control pursuant to Section 4.2(a) hereof, this
Agreement shall terminate without further obligations to Executive,
other than those obligations owing or accrued to, vested in, or earned
by Executive through the date of termination, including, but not
limited to:
(i) to the extent not theretofore paid,
Executive's Base Salary in effect at the time of such
termination through the date of termination; and
(ii) in the case of compensation previously
deferred by Executive, all amounts previously deferred
(together with any accrued interest thereon) and not yet paid
by the Company, and any accrued vacation pay not yet paid by
the Company; and
(iii) all other amounts or benefits owing or
accrued to, vested in or earned by Executive through the date
of termination under the then existing or applicable
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<PAGE> 5
plans, programs, arrangements, and policies of the Company and
its affiliates, including, but not limited to, any such plans,
programs, arrangements, or policies described in Section
2.1(b) hereof;
such obligations owing or accrued to, vested in, or earned by
Executive through the date of termination, including, but not limited
to, such amounts and benefits specified in clauses (i), (ii), and
(iii) of this sentence, being hereinafter collectively referred to as
the "Accrued Obligations." The aggregate amount of such obligations
owing or accrued to, vested in, or earned by Executive through the
date of termination, including, but not limited to, the Accrued
Obligations, shall be paid by the Company to Executive in accordance
with the plans, programs or agreements under which the Accrued
Obligations were earned.
(b) Good Reason; Without Cause Before a Change in
Control. If Executive terminates this Agreement with Good Reason
pursuant to Section 4.2(a) hereof, or if the Company terminates this
Agreement without Cause before the occurrence of a Change in Control
pursuant to Section 4.2(a) hereof:
(1) the Company shall pay the aggregate of the
following amounts to Executive in one lump sum within thirty
(30) days after the date of such termination or in a manner
and at such later time as specified by Executive, provided
that all such payments must be made no later than the last day
of the twenty-four (24) month period commencing on the date of
such termination (the "24 Month Period"):
(i) to the extent not theretofore paid,
Executive's Base Salary in effect at the time of such
termination (but prior to giving effect to any
reduction therein which precipitated such
termination) through the date of termination; and
(ii) an amount equal to the sum of (A)
two (2) times Executive's Base Salary in effect at
the time of such termination (but prior to giving
effect to any reduction therein which precipitated
such termination), (B) two (2) times the average of
all bonus, profit sharing and other incentive
payments made by the Company to Executive in respect
of the two (2) calendar years immediately preceding
such termination, and (C) the pro-rata share of
Executive's target bonus, profit sharing and other
incentive payments for the calendar year in which
such termination occurred based upon the proportion
that the number of complete months in such calendar
year up to the date of termination bears to the
complete calendar year; and
(iii) in the case of compensation
previously deferred by Executive, all amounts
previously deferred (together with any accrued
interest thereon) and not yet paid by the Company,
and any accrued vacation pay not yet paid by the
Company; and
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<PAGE> 6
(iv) all other amounts or benefits owing
or accrued to, vested in, or earned by Executive
through the date of termination under the then
existing or applicable plans, programs, arrangements,
and policies of the Company and its affiliates,
including, but not limited to, any such plans,
programs, arrangements, or policies described in
Section 2.1(b) hereof; and
(v) any and all other Accrued
Obligations not otherwise described in clause (i),
(ii), (iii) or (iv) of this sentence; and
(2) Executive shall receive the following
additional benefits:
(i) for an eighteen (18) month period
commencing on the date of termination of this
Agreement (the "18 Month Period"), Executive shall
continue to be covered under each of the medical,
dental, life insurance, accident benefit and other
welfare benefit (exclusive of short- and long-term
disability benefit) programs of the Company in effect
and applicable to Executive immediately prior to such
termination, and the Company shall pay the costs
therefor except to the extent that Executive already
pays all or any portion thereof; provided however,
that if Executive obtains any of the welfare benefits
provided for under this sentence from another
employer, the Company's obligation to provide such
welfare benefits should be secondary to that of such
other employer. Executive's coverage under the
Company's medical and dental programs for the 18
Month Period shall be included in the calculation of
the "Period of Coverage" to be provided to Executive
pursuant to Section 4980B(f)(2)(B) of the Internal
Revenue Code of 1986, as amended ("Code"), and
Executive's right to "Continuation Coverage" under
Section 4980B(f)(2) of the Code. The amount of the
"Applicable Premium" to be charged Executive under
Section 4980B(f)(4) for Continuation Coverage shall
never be greater than the monthly amount charged
Executive for medical and dental coverage prior to
the termination of this Agreement; and
(ii) shall be fully vested in any and all
options, restricted stock, stock appreciation rights,
cash equivalent stock appreciation rights, or any
other similar rights based on the fair market value
of or otherwise relating to the Company's common
stock (collectively, "Stock Incentive Rights") which
are outstanding immediately prior to the termination
of this Agreement, and Executive may exercise any
such vested Stock Incentive Rights during the 24
Month Period, notwithstanding any provision otherwise
in any plan or agreement awarding or granting any
Stock Incentive Right to Executive; and
(iii) shall be fully vested in any and all
benefits accrued under any "employee pension benefit
plan," as defined in Section 3(2)(A) of the Employee
Retirement Income Security Act of 1974, as amended
("ERISA"), of the Company ("Retirement Plan"); and
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(iv) shall receive credit in the
calculation of the accrued benefit under the
Company's Pension Plan ("Pension Plan") for (A) the
compensation to be paid to Executive in clause (ii)
of paragraph (1) of this Section 4.3(b) and (B)
twenty-four (24) months of service in addition to the
service accrued by Executive through the date that
this Agreement is terminated. If the benefits set
forth in this clause would cause the Pension Plan to
lose its qualification under Section 401(a) of the
Code, then the benefits accrued hereunder shall
accrue to Executive under the Company's Supplemental
Executive Retirement Plan ("SERP"); and
(v) shall receive such individual
outplacement service as is appropriate for
Executive's position for the 24 Month Period.
(c) Good Reason-Change in Control; Without Cause On or
After a Change in Control. If Executive terminates this Agreement
with Good Reason-Change in Control pursuant to Section 4.2(a) hereof,
or if the Company terminates this Agreement without Cause on or after
the occurrence of a Change in Control pursuant to Section 4.2(a)
hereof:
(1) the Company shall pay the aggregate of the
following amounts to Executive in one lump sum within thirty
(30) days after the date of such termination or in a manner
and at such later time as specified by Executive, provided
that all such payments must be made no later than the last day
of the thirty-six (36) month period commencing on the date of
such termination (the "36 Month Period"):
(i) to the extent not theretofore paid,
Executive's Base Salary in effect at the time of such
termination (but prior to giving effect to any
reduction therein which precipitated such
termination) through the date of termination; and
(ii) an amount equal to the sum of (A)
three (3) times Executive's Base Salary in effect at
the time of such termination (but prior to giving
effect to any reduction therein which precipitated
such termination), (B) three (3) times the average of
all bonus, profit sharing and other incentive
payments made by the Company to Executive in respect
of the two (2) calendar years immediately preceding
such termination, and (C) the pro-rata share of
Executive's target bonus, profit sharing and other
incentive payments for the calendar year in which
such termination occurred based upon the proportion
that the number of complete months in such calendar
year up to the date of termination bears to the
complete calendar year; and
(iii) in the case of compensation
previously deferred by Executive, all amounts
previously deferred (together with any accrued
interest thereon) and not yet paid by the Company,
and any accrued vacation pay not yet paid by the
Company; and
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<PAGE> 8
(iv) all other amounts or benefits owing
or accrued to, vested in, or earned by Executive
through the date of termination under the then
existing or applicable plans, programs, arrangements,
and policies of the Company and its affiliates,
including, but not limited to, any such plans,
programs, arrangements, or policies described in
Section 2.1(b) hereof; and
(v) any and all other Accrued
Obligations not otherwise described in clause (i),
(ii), (iii) or (iv) of this sentence; and
(2) Executive shall receive the following
additional benefits:
(i) for the 36 Month Period, Executive
shall continue to be covered under each of the
medical, dental, life insurance, accident benefit and
other welfare benefit (exclusive of short- and
long-term disability benefit) programs of the Company
in effect and applicable to Executive immediately
prior to the time of such termination, and the
Company shall pay the costs therefor except to the
extent that Executive already pays all or any portion
thereof; provided however, that if Executive obtains
any of the welfare benefits provided for under this
sentence from another employer, the Company's
obligation to provide such welfare benefits shall be
secondary to that of such other employer.
Executive's coverage under the Company's medical and
dental programs for the 36 Month Period shall not be
included in the calculation of the "Period of
Coverage" to be provided to Executive pursuant to
Section 4980B(f)(2)(B) of the Code, and Executive's
right to "Continuation Coverage" under Section
4980B(f)(2) of the Code for medical and dental
benefits under the Company's medical and dental
programs shall commence on the first day following
the end of the 36 Month Period. The amount of the
"Applicable Premium" to be charged Executive under
Section 4980B(f)(4) for Continuation Coverage shall
never be greater than the monthly amount charged
Executive for medical and dental coverage during the
36 Month Period; and
(ii) shall be fully vested in any and all
benefits accrued under any Retirement Plan; and
(iii) shall receive credit in the
calculation of the accrued benefit under the Pension
Plan for (A) the compensation to be paid to Executive
in clause (ii) of paragraph (1) of this Section
4.3(c) and (B) thirty-six (36) months of service in
addition to the service accrued by Executive through
the date that this Agreement is terminated. If the
benefits set forth in this clause would cause the
Pension Plan to lose its qualification under Section
401(a) of the Code, then the benefits accrued
hereunder shall accrue to Executive under the SERP,
and if the Executive is not a participant in the
SERP, the actuarial lump sum equivalent of the
benefit described in this clause (iv) shall be paid
in accordance with paragraph (1) of Section 4.2(c);
and
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(iv) shall receive such individual
outplacement service as is appropriate for
Executive's position for the 36 Month Period.
(d) Death. If Executive's employment is terminated under
Section 4.2(b) hereof by reason of Executive's death, the Company
shall pay to Executive's legal representatives the full amount of the
obligations owing or accrued to, vested in, or earned by Executive
through the date of Executive's death, including, but not limited to,
the Accrued Obligations in accordance with the plans, programs, or
agreements under which the Accrued Obligations were earned. Anything
in this Agreement to the contrary notwithstanding, Executive's family
shall be entitled to receive benefits provided by the Company and any
of its affiliates to surviving families under the then existing or
applicable plans, programs, or arrangements and policies of the
Company and its affiliates.
(e) Disability. If Executive's employment is terminated
under Section 4.2(b) hereof by reason of Executive becoming Disabled,
the Company shall pay to Executive or Executive's legal representative
the full amount of the obligations owing or accrued to, vested in, or
earned by Executive through the date of termination, including, but
not limited to, the Accrued Obligations in accordance with the plans,
programs, or agreements under which the Accrued Obligations were
earned.
.
4.4 Cause. As used in this Agreement, the term "Cause" means (i)
willful misconduct by Executive or gross neglect by Executive of his duties as
an employee, officer or director of the Company which continues for more than
thirty (30) days after Executive's receipt of written notice from the Board to
Executive specifically identifying the willful misconduct or gross negligence
of Executive and directing Executive to discontinue the same, (ii) the
commission by Executive of a crime constituting a felony, or (iii) the
commission by Executive of an act, other than an act taken in good faith within
the course and scope of Executive's employment, which is directly detrimental
to the Company and exposes the Company to material liability.
4.5 Good Reason. As used in this Agreement, the term "Good
Reason" means the breach of any material provision of this Agreement by the
Company (including, but in no way limited to, any removal of Executive, without
Cause, from the position of the Office during the Term) which is not cured
within thirty (30) days after written notice from Executive to the Company
specifically identifying such breach; provided, however, that the term "Good
Reason" shall not include any breach of any provision of this Agreement that
occurs after the occurrence of a Change in Control.
4.6 Good Reason-Change in Control.
(a) Except as provided in Section 4.6(b) below, as used
in this Agreement, the term "Good Reason- Change in Control" means
after the occurrence of a Change in Control, a determination by
Executive that any one or more of the following events has occurred:
(i) a material change in the nature of
Executive's Office, including, but not limited to, his
authorities, duties, responsibilities or status (including
offices, titles
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or reporting requirements), from those in effect immediately
prior to the Change in Control; or
(ii) the relocation of Executive's place of
employment to a location in excess of fifty (50) miles from
the place of Executive's employment immediately prior to the
Change in Control, except for required travel on Company
business to an extent substantially equivalent to Executive's
business travel obligations immediately prior to the Change in
Control; or
(iii) any reduction by the Company of Executive's
Base Salary, or a material reduction in his bonus, profit
sharing or other incentive benefits, from those in effect
immediately prior to the Change in Control; or
(iv) the failure by the Company to increase
Executive's Base Salary in a manner consistent (both as to
frequency and percentage increase) with (A) the Company's
practices in effect immediately prior to the Change in Control
with respect to similarly positioned employees or (B) the
Company's practices implemented subsequent to the Change in
Control with respect to similarly positioned employees,
whichever is more favorable to Executive; or
(v) the failure of the Company to continue in
effect Executive's participation in (A) the Company's employee
benefit plans, programs, arrangements and policies, at a level
substantially equivalent in value to and on a basis consistent
with the relative levels of participation of other similarly
positioned employees, as in effect immediately prior to the
Change in Control or (B) the Company's employee benefit plans,
programs, arrangements and policies implemented subsequent to
the Change in Control with respect to similarly positioned
employees, whichever is more favorable to Executive; or
(vi) the failure of the Company to obtain from a
successor (including a successor to a material portion of the
business or assets of the Company) a satisfactory assumption
in writing of the Company's obligations under this Agreement;
or
(vii) the failure of the Company to continue to
provide Executive with office space, related facilities and
support personnel (including, but not limited to,
administrative and secretarial assistance) that are both
commensurate with the Office and Executive's responsibilities
to and position with the Company immediately prior to the
Change in Control and not materially dissimilar to the office
space, related facilities and support personnel provided to
other key executive officers of the Company; or
(viii) the Company notifies Executive of the
Company's intention not to observe or perform one or more of
the obligations of the Company under this Agreement; or
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(ix) the Company breaches any provision of this
Agreement and such breach is not cured within thirty (30) days
after the Company's receipt of notice thereof from Executive.
(b) If, after the occurrence of a Change in Control,
Executive receives a written description from the Company of the
nature of Executive's Office thereafter, stating Executive's
authorities, duties, responsibilities, status, salary, bonus and other
employee benefits, or job location, and Executive accepts such new
authorities, duties, responsibilities, status, salary, bonus and other
employee benefits, or job location ("New Office") with the Company
without determining that the New Office causes a Good Reason-Change in
Control as set forth in Section 4.6(a), then for the remaining Term
the New Office shall be the authorities, duties, responsibilities,
status, salary, bonus and other employee benefits, or job location to
be used by Executive in determining whether a Good Reason-Change in
Control occurs thereafter pursuant to Section 4.6(a).
4.7 Change in Control. As used herein, the term "Change in
Control" shall mean the occurrence with respect to the Company of any of the
following events:
(a) a report on Schedule 13D is filed with the Securities
and Exchange Commission (the "SEC") pursuant to Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"),
disclosing that any person, entity or group (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), other than the Company
(or one of its subsidiaries) or any employee benefit plan sponsored by
the Company (or one of its subsidiaries), is the beneficial owner (as
such term is defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of 30% or more of the outstanding shares
of common stock of the Company or the combined voting power of the
then outstanding securities of the Company;
(b) a report is filed by the Company disclosing a
response to either Item 6(e) of Schedule 14A of Regulation 14A
promulgated under the Exchange Act, Item 1 of Form 8-K promulgated
under the Exchange Act, or any similar reporting requirement hereafter
promulgated by the SEC;
(c) any person, entity or group (within the meaning of
Section 13(d) or 14(d) of the Exchange Act), other than the Company
(or one of its subsidiaries) or any employee benefit plan sponsored by
the Company (or one of its subsidiaries), shall purchase securities
pursuant to a tender offer or exchange offer to acquire any common
stock of the Company (or securities convertible into common stock) for
cash, securities or any other consideration, provided that after
consummation of the offer, the person, entity or group in question is
the beneficial owner (as such term is defined in Rule 13d-3
promulgated under the Exchange Act), directly or indirectly, of 30% or
more of the combined voting power of the then outstanding securities
of the Company (as determined under paragraph (d) of Rule 13d-3
promulgated under the Exchange Act, in the case of rights to acquire
common stock);
(d) the stockholders of the Company shall approve:
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(i) any merger, consolidation, or reorganization
of the Company:
(A) in which the Company is not the
continuing or surviving corporation,
(B) pursuant to which shares of common
stock of the Company would be converted into cash,
securities or other property,
(C) with a corporation which prior to
such merger, consolidation, or reorganization owned
20% or more of the combined voting power of the then
outstanding securities of the Company, or
(D) in which the Company will not
survive as an independent, publicly owned
corporation;
(ii) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of
all or substantially all the assets of the Company, or
(iii) any liquidation or dissolution of the
Company;
(e) the stockholders of the Company shall approve a
merger, consolidation, reorganization, recapitalization, exchange
offer, purchase of assets or other transaction after the consummation
of which any person, entity or group (within the meaning of Section
13(d) or 14(d) of the Exchange Act) would own beneficially in excess
of 30% of the outstanding shares of common stock of the Company or in
excess of 30% of the combined voting power of the then outstanding
securities of the Company;
(f) the Company's common stock ceases to be listed on the
New York Stock Exchange; or
(g) during any period of two consecutive years, the
individuals who at the beginning of such period constituted the Board
cease for any reason to constitute a majority of the Board, unless the
election or nomination for election by the Company's stockholders of
each new director during any such two-year period was approved by the
vote of two-thirds of the directors then still in office who were
directors at the beginning of such two-year period.
4.8 Executive Group. As used herein, "Executive Group" shall mean
the officers of the Company at the levels of Vice President and above; and each
of such officers shall be deemed members of the Executive Group.
4.9 Disabled. As used herein, "Disabled" shall mean a mental or
physical impairment which, in the reasonable opinion of a qualified doctor
selected by the Company, renders Executive unable to perform with reasonable
diligence the ordinary functions and duties of Executive on a
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full-time basis in accordance with the terms of this Agreement, which inability
continues for a period of not less than 180 consecutive days.
4.10 Return of Materials; Confidential Information. In the event
of any termination of this Agreement, Executive shall promptly deliver to the
Company all lists, books, records, literature, products and any other materials
owned or provided by the Company in connection with Executive's employment
hereunder. Executive shall not at any time during or after the Term hereof use
for himself or others, or divulge to others, any secret or confidential
information, knowledge or data of the Company obtained by Executive as a result
of his employment unless authorized by a majority of the Board.
4.11 Certain Additional Payments by the Company.
(a) Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment or
distribution by the Company or any of its affiliates to or for the benefit of
Executive, whether paid or payable or distributed or distributable pursuant to
the terms of this Agreement or otherwise (any such payments or distributions
being individually referred to herein as a "Payment," and any two or more of
such payments or distributions being referred to herein as "Payments"), would
be subject to the excise tax imposed by Section 4999 of the Code (such excise
tax, together with any interest thereon, any penalties, additions to tax, or
additional amounts with respect to such excise tax, and any interest in respect
of such penalties, additions to tax or additional amounts, being collectively
referred herein to as the "Excise Tax"), then Executive shall be entitled to
receive and the Company shall make an additional payment or payments
(individually referred to herein as a "Gross-Up Payment," and any two or more
of such additional payments being referred to herein as "Gross-Up Payments") in
an amount such that after payment by Executive of all taxes (as defined in
Section 4.11(k)) imposed upon the Gross-Up Payment, Executive retains an amount
of such Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 4.11(c) through
(i), any determination (individually, a "Determination") required to be made
under this Section 4.11(b), including whether a Gross-Up Payment is required
and the amount of such Gross-Up Payment, shall initially be made, at the
Company's expense, by nationally recognized tax counsel mutually acceptable to
the Company and Executive ("Tax Counsel"). Tax Counsel shall provide detailed
supporting legal authorities, calculations, and documentation both to the
Company and Executive within 15 business days of the termination of Executive's
employment, if applicable, or such other time or times as is reasonably
requested by the Company or Executive. If Tax Counsel makes the initial
Determination that no Excise Tax is payable by Executive with respect to a
Payment or Payments, it shall furnish Executive with an opinion reasonably
acceptable to Executive that no Excise Tax will be imposed with respect to any
such Payment or Payments. Executive shall have the right to dispute any
Determination (a "Dispute") within 15 business days after delivery of Tax
Counsel's opinion with respect to such Determination. The Gross-Up Payment, if
any, as determined pursuant to such Determination shall, at the Company's
expense, be paid by the Company to Executive within five business days of
Executive's receipt of such Determination. The existence of a Dispute shall
not in any way affect Executive's right to receive the Gross-Up Payment in
accordance with such Determination. If there is no Dispute, such Determination
shall be binding, final and conclusive upon the Company and
-13-
<PAGE> 14
Executive, subject in all respects, however, to the provisions of Section
4.11(c) through (i) below. As a result of the uncertainty in the application
of Sections 4999 and 280G of the Code, it is possible that Gross-Up Payments
(or portions thereof) which will not have been made by the Company should have
been made ("Underpayment"), and if upon any reasonable written request from
Executive or the Company to Tax Counsel, or upon Tax Counsel's own initiative,
Tax Counsel, at the Company's expense, thereafter determines that Executive is
required to make a payment of any Excise Tax or any additional Excise Tax, as
the case may be, Tax Counsel shall, at the Company's expense, determine the
amount of the Underpayment that has occurred and any such Underpayment shall be
promptly paid by the Company to Executive.
(c) The Company shall defend, hold harmless, and
indemnify Executive on a fully grossed-up after tax basis from and against any
and all claims, losses, liabilities, obligations, damages, impositions,
assessments, demands, judgements, settlements, costs and expenses (including
reasonable attorneys', accountants', and experts' fees and expenses) with
respect to any tax liability of Executive resulting from any Final
Determination (as defined in Section 4.11(j)) that any Payment is subject to
the Excise Tax.
(d) If a party hereto receives any written or oral
communication with respect to any question, adjustment, assessment or pending
or threatened audit, examination, investigation or administrative, court or
other proceeding which, if pursued successfully, could result in or give rise
to a claim by Executive against the Company under this Section 4.11(d)
("Claim"), including, but not limited to, a claim for indemnification of
Executive by the Company under Section 4.11(c), then such party shall promptly
notify the other party hereto in writing of such Claim ("Tax Claim Notice").
(e) If a Claim is asserted against Executive ("Executive
Claim"), Executive shall take or cause to be taken such action in connection
with contesting such Executive Claim as the Company shall reasonably request in
writing from time to time, including the retention of counsel and experts as
are reasonably designated by the Company (it being understood and agreed by the
parties hereto that the terms of any such retention shall expressly provide
that the Company shall be solely responsible for the payment of any and all
fees and disbursements of such counsel and any experts) and the execution of
powers of attorney, provided that:
(i) within 30 calendar days after the Company
receives or delivers, as the case may be, the Tax Claim Notice
relating to such Executive Claim (or such earlier date that any
payment of the taxes claimed is due from Executive, but in no event
sooner than five calendar days after the Company receives or delivers
such Tax Claim Notice), the Company shall have notified Executive in
writing ("Election Notice") that the Company does not dispute its
obligations (including, but not limited to, its indemnity obligations)
under this Agreement and that the Company elects to contest, and to
control the defense or prosecution of, such Executive Claim at the
Company's sole risk and sole cost and expense; and
(ii) the Company shall have advanced to Executive
on an interest-free basis, the total amount of the tax claimed in
order for Executive, at the Company's request, to pay or cause to be
paid the tax claimed, file a claim for refund of such tax and, subject
to the provisions of the last sentence of Section 4.11(g), sue for a
refund of such tax if such
-14-
<PAGE> 15
claim for refund is disallowed by the appropriate taxing authority (it
being understood and agreed by the parties hereto that the Company
shall only be entitled to sue for a refund and the Company shall not
be entitled to initiate any proceeding in, for example, United States
Tax Court) and shall indemnify and hold Executive harmless, on a fully
grossed-up after tax basis, from any tax imposed with respect to such
advance or with respect to any imputed income with respect to such
advance; and
(iii) the Company shall reimburse Executive for any
and all costs and expenses resulting from any such request by the
Company and shall indemnify and hold Executive harmless, on fully
grossed-up after-tax basis, from any tax imposed as a result of such
reimbursement.
(f) Subject to the provisions of Section 4.11(e) hereof,
the Company shall have the right to defend or prosecute, at the sole cost,
expense and risk of the Company, such Executive Claim by all appropriate
proceedings, which proceedings shall be defended or prosecuted diligently by
the Company to a Final Determination; provided, however, that (i) the Company
shall not, without Executive's prior written consent, enter into any compromise
or settlement of such Executive Claim that would adversely affect Executive,
(ii) any request from the Company to Executive regarding any extension of the
statute of limitations relating to assessment, payment, or collection of taxes
for the taxable year of Executive with respect to which the contested issues
involved in, and amount of, the Executive Claim relate is limited solely to
such contested issues and amount, and (iii) the Company's control of any
contest or proceeding shall be limited to issues with respect to the Executive
Claim and Executive shall be entitled to settle or contest, in his sole and
absolute discretion, any other issue raised by the Internal Revenue Service or
any other taxing authority. So long as the Company is diligently defending or
prosecuting such Executive Claim, Executive shall provide or cause to be
provided to the Company any information reasonably requested by the Company
that relates to such Executive Claim, and shall otherwise cooperate with the
Company and its representatives in good faith in order to contest effectively
such Executive Claim. The Company shall keep Executive informed of all
developments and events relating to any such Executive Claim (including,
without limitation, providing to Executive copies of all written materials
pertaining to any such Executive Claim), and Executive or his authorized
representatives shall be entitled, at Executive's expense, to participate in
all conferences, meetings and proceedings relating to any such Executive Claim.
(g) If, after actual receipt by Executive of an amount of
a tax claimed (pursuant to an Executive Claim) that has been advanced by the
Company pursuant to Section 4.11(e)(ii) hereof, the extent of the liability of
the Company hereunder with respect to such tax claimed has been established by
a Final Determination, Executive shall promptly pay or cause to be paid to the
Company any refund actually received by, or actually credited to, Executive
with respect to such tax (together with any interest paid or credited thereon
by the taxing authority and any recovery of legal fees from such taxing
authority related thereto), except to the extent that any amounts are then due
and payable by the Company to Executive, whether under the provisions of this
Agreement or otherwise. If, after the receipt by Executive of an amount
advanced by the Company pursuant to Section 4.11(e)(ii), a determination is
made by the Internal Revenue Service or other appropriate taxing authority that
Executive shall not be entitled to any refund with respect to such tax claimed
and the Company does not notify Executive in writing of its intent to contest
such denial of refund
-15-
<PAGE> 16
prior to the expiration of thirty days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and the amount
of such advance shall offset, to the extent thereof, the amount of any Gross-Up
Payments and other payments required to be paid hereunder.
(h) With respect to any Executive Claim, if the Company
fails to deliver an Election Notice to Executive within the period provided in
Section 4.11(e)(i) hereof or, after delivery of such Election Notice, the
Company fails to comply with the provisions of Section 4.11(e)(ii) and (iii)
and (f) hereof, then Executive shall at any time thereafter have the right (but
not the obligation), at his election and in his sole and absolute discretion,
to defend or prosecute, at the sole cost, expense and risk of the Company, such
Executive Claim. Executive shall have full control of such defense or
prosecution and such proceedings, including any settlement or compromise
thereof. If requested by Executive, the Company shall cooperate, and shall
cause its affiliates to cooperate, in good faith with Executive and his
authorized representatives in order to contest effectively such Executive
Claim. The Company may attend, but not participate in or control, any defense,
prosecution, settlement or compromise of any Executive Claim controlled by
Executive pursuant to this Section 4.11(h) and shall bear its own costs and
expenses with respect thereto. In the case of any Executive Claim that is
defended or prosecuted by Executive, Executive shall, from time to time, be
entitled to current payment, on a fully grossed-up after tax basis, from the
Company with respect to costs and expenses incurred by Executive in connection
with such defense or prosecution.
(i) In the case of any Executive Claim that is defended
or prosecuted to a Final Determination pursuant to the terms of this Section
4.11(i), the Company shall pay, on a fully grossed-up after tax basis, to
Executive in immediately available funds the full amount of any taxes arising
or resulting from or incurred in connection with such Executive Claim that have
not theretofore been paid by the Company to Executive, together with the costs
and expenses, on a fully grossed-up after tax basis, incurred in connection
therewith that have not theretofore been paid by the Company to Executive,
within ten calendar days after such Final Determination. In the case of any
Executive Claim not covered by the preceding sentence, the Company shall pay,
on a fully grossed-up after tax basis, to Executive in immediately available
funds the full amount of any taxes arising or resulting from or incurred in
connection with such Executive Claim at least ten calendar days before the date
payment of such taxes is due from Executive, except where payment of such taxes
is sooner required under the provisions of this Section 4.11(i), in which case
payment of such taxes (and payment, on a fully grossed-up after tax basis, of
any costs and expenses required to be paid under this Section 4.11(i) shall be
made within the time and in the manner otherwise provided in this Section
4.11(i).
(j) For purposes of this Agreement, the term "Final
Determination" shall mean (A) a decision, judgment, decree or other order by a
court or other tribunal with appropriate jurisdiction, which has become final
and non-appealable; (B) a final and binding settlement or compromise with an
administrative agency with appropriate jurisdiction, including, but not limited
to, a closing agreement under Section 7121 of the Code; (C) any disallowance of
a claim for refund or credit in respect to an overpayment of tax unless a suit
is filed on a timely basis; or (D) any final disposition by reason of the
expiration of all applicable statutes of limitations.
-16-
<PAGE> 17
(k) For purposes of this Agreement, the terms "tax" and
"taxes" mean any and all taxes of any kind whatsoever (including, but not
limited to, any and all Excise Taxes, income taxes, and employment taxes),
together with any interest thereon, any penalties, additions to tax, or
additional amounts with respect to such taxes and any interest in respect of
such penalties, additions to tax, or additional amounts.
(l) For purposes of this Agreement, the terms "affiliate"
and "affiliates" mean, when used with respect to any entity, individual, or
other person, any other entity, individual, or other person which, directly or
indirectly, through one or more intermediaries controls, or is controlled by,
or is under common control with such entity, individual or person. The term
"control" and derivations thereof when used in the immediately preceding
sentence means the ownership, directly or indirectly, of 50% or more of the
voting securities of an entity or other person or possessing the power to
direct or cause the direction of the management and policies of such entity or
other person, whether through the ownership of voting securities, by contract
or otherwise.
4.12 Legal Fees and Expenses. The Company shall defend, hold
harmless, and indemnify Executive on a fully grossed-up after tax basis from
and against any and all costs and expenses (including reasonable attorneys',
accountants' and experts' fees and expenses) incurred by Executive acting
reasonably from time to time as a result of any contest (regardless of the
outcome) by the Company or others contesting the validity or enforcement of, or
liability under, any term or provision of this Agreement, plus in each case
interest at the applicable federal rate provided for in Section 7872(f)(2)(B)
of the Code.
4.13 Non-exclusivity of Rights. Nothing in this Agreement shall
prevent or limit Executive's continuing or future participation in any benefit,
bonus, incentive or other plan, program, arrangement or policy provided by the
Company or any of its affiliates (including, but not limited to, any plan,
program, arrangement or policy described in Section 2.1(c) hereof) and for
which Executive and/or Executive's family may qualify, nor shall anything
herein limit or otherwise affect such rights as Executive and/or Executive's
family may have under any other agreements with the Company or any of its
affiliates. Amounts which are vested benefits or which Executive and/or
Executive's family is otherwise entitled to receive under any plan, program,
arrangement, or policy of the Company or any of its affiliates (including, but
not limited to, any plan, program, arrangement or policy described in Section
2.1(c) hereof) at or subsequent to the date of termination of this Agreement
shall be payable in accordance with such plan, program, arrangement or policy.
4.14 Full Settlement. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its
obligations hereunder shall not be affected by any set-off, counterclaim,
recoupment, defense or other claim, right or action which the Company may have
against Executive or others. In no event shall Executive be obligated to seek
other employment or take any other action by way of mitigation of the amounts
payable to Executive under any of the provisions of this Agreement.
-17-
<PAGE> 18
ARTICLE V
GENERAL PROVISIONS
5.1 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
5.2 Assignability. This Agreement is personal to Executive and
without the prior written consent of the Company shall not be assignable by
Executive other than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by Executive's legal
representatives and heirs. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company shall
require any corporation, entity, individual or other person who is the
successor (whether direct or indirect, by purchase, merger, consolidation,
reorganization, or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform, by a
written agreement in form and substance satisfactory to Executive, all of the
obligations of the Company under this Agreement. As used in this Agreement,
the term "Company" shall mean the Company as hereinbefore defined and any
successor to its business and/or assets as aforesaid which assumes and agrees
to perform this Agreement by operation of law, written agreement, or otherwise.
5.3 Withholding. The Company may withhold from any amounts
payable under this Agreement such federal, state or local taxes as shall be
required to be withheld pursuant to any applicable law or regulation.
5.4 Entire Agreement; Amendment. This Agreement constitutes the
entire agreement and understanding between Executive and the Company and
supersedes any prior agreements or understandings, whether written or oral,
with respect to the subject matter hereof. Except as may be otherwise provided
herein, this Agreement may not be amended or modified except by subsequent
written agreement executed by both parties hereto.
5.5 Multiple Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall constitute an original, but all of
which together shall constitute one Agreement.
5.6 Notices. Any notice provided for in this Agreement shall be
deemed delivered upon deposit in the United States mails, registered or
certified mail, addressed to the party to whom directed at the addresses set
forth below or at such other addresses as may be substituted therefor by notice
given hereunder. Notice given by any other means must be in writing and shall
be deemed delivered only upon actual receipt.
If to the Company:
Arcadian Corporation
6750 Poplar Avenue, Suite 600
Memphis, Tennessee 38138-7419
Attention: President
-18-
<PAGE> 19
If to Executive:
--------------------------------------------
--------------------------------------------
--------------------------------------------
5.7 Waiver. The waiver of any breach of any term or condition of
this Agreement shall not be deemed to constitute the waiver of any breach of
the same or any other term or condition of this Agreement.
5.8 Severability. In the event any provision of this Agreement is
found to be unenforceable or invalid, such provision shall be severable from
this Agreement and shall not effect the enforceability or validity of any other
provision of this Agreement.
5.9 Other Severance Benefits. This Agreement replaces and
supplants any and all provisions of and benefits under the Arcadian Corporation
Severance Program for Key Employees.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
ARCADIAN CORPORATION
By:
-----------------------------------
Name:
-----------------------------
Title:
----------------------------
---------------------------------------
Name:
---------------------------------
-19-
<PAGE> 1
EXHIBIT 11
<PAGE> 2
ARCADIAN CORPORATION AND SUBSIDIARIES
COMPUTATION OF NET INCOME PER COMMON SHARE
(DOLLARS IN THOUSANDS, EXCEPT SHARES AND PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------------- ---------------------------
1996 1995 1996 1995
($000) ($000) ($000) ($000)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Income (Applicable to Common
Shares)............................. $ 115,900 $ 55,050 $ 23,236 $ 19,774
Primary:
Weighted Average Common and Common
Equivalent Shares Outstanding:
Weighted Average Common Shares
Outstanding.................... 33,188,471 17,695,701 35,473,796 23,712,717
Dilution from Assumed Exercise of
Warrants and Options and
Assumed Conversion Of Preferred
Stock(a)....................... 13,312,908 4,826,765 10,205,926 10,125,099
----------- ----------- ----------- -----------
Weighted Average Common and
Common Equivalent Shares
Outstanding.................... 46,501,379 22,522,466 45,679,722 33,837,816
=========== =========== =========== ===========
Net Income Per Common
Share -- Primary.......... $ 2.49 $ 2.44 $ 0.51 $ 0.58
=========== =========== =========== ===========
Fully Diluted:
Weighted Average Common and Common
Equivalent Shares Outstanding:
Weighted Average Common Shares
Outstanding.................... 33,188,471 17,695,701 35,473,796 23,712,717
Dilution from Assumed Exercise of
Warrants and Options and
Assumed Conversion Of Preferred
Stock.......................... 13,369,449 5,186,650 10,247,270 10,291,053
----------- ----------- ----------- -----------
Weighted Average Common and
Common Equivalent Shares
Outstanding.................... 46,557,920 22,882,351 45,721,066 34,003,770
=========== =========== =========== ===========
Net Income Per Common
Share -- Fully Diluted.... $ 2.49 $ 2.41(b) $ 0.51 $ 0.58
=========== =========== =========== ===========
</TABLE>
- ---------------
(a) For purposes of computing net income per common share, the conversion of
12,073,108 and 2,630,952 shares of Preferred Stock for the nine months ended
September 30, 1996 and 1995, and 9,181,790 and 7,807,065 shares of Preferred
Stock for the three months ended September 30, 1996 and 1995, respectively,
which are Common Stock equivalents because of the mandatory conversion
feature, is assumed when such conversion is dilutive.
(b) Net income per common share -- fully diluted is set forth herein in
accordance with Item 601 of Regulation S-K. The additional dilution arising
in the fully diluted calculation is not material (less than 3%); therefore,
fully diluted net income per common share is not disclosed in the statements
of operations.
<PAGE> 1
EXHIBIT 15
<PAGE> 2
EXHIBIT 15
Arcadian Corporation
Memphis, Tennessee
Gentlemen:
Re: Registration Statement No. 33-40323 and No. 333-10361
With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated November 14, 1996 related to
our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is
not considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of Section 7 and 11 of the Act.
Very truly yours,
KPMG PEAT MARWICK LLP
Memphis, Tennessee
November 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS OF ARCADIAN CORPORATION INCLUDED IN FORM 10-Q FOR THE
QUARTERLY PERIOD ENDED SEPTEMBER 30, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 272,553<F1>
<SECURITIES> 0
<RECEIVABLES> 124,706
<ALLOWANCES> 1,534
<INVENTORY> 118,486
<CURRENT-ASSETS> 526,326
<PP&E> 853,634
<DEPRECIATION> 254,752
<TOTAL-ASSETS> 1,301,367
<CURRENT-LIABILITIES> 164,374
<BONDS> 510,000
0
85,999
<COMMON> 402
<OTHER-SE> 408,200
<TOTAL-LIABILITY-AND-EQUITY> 1,301,367
<SALES> 935,244
<TOTAL-REVENUES> 935,244
<CGS> 685,601
<TOTAL-COSTS> 685,601
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 247
<INTEREST-EXPENSE> 29,842
<INCOME-PRETAX> 177,715
<INCOME-TAX> 61,815
<INCOME-CONTINUING> 115,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 115,900
<EPS-PRIMARY> 2.49
<EPS-DILUTED> 2.49
<FN>
<F1>CASH INCLUDES $58 MILLION OF RESTRICTED RESERVES.
</FN>
</TABLE>