Draft dated as of September 30, 1999
================================================================================
PARTICIPATION AGREEMENT
Dated as of September 15, 1999
AMONG
XXXX & XXXXXX, INC.,
as Lessee
SELCO SERVICE CORPORATION,
as Owner Participant
NOTE PURCHASERS NAMED HEREIN,
as Note Purchasers
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly provided herein,
but solely as Owner Trustee
And
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
as Indenture Trustee
================================================================================
TABLE OF CONTENTS
SECTION HEADING PAGE
SECTION 1. COMMITMENTS OF THE PARTICIPANTS............................ 2
Section 1.1. Issue and Sale of Series A Notes........................... 2
Section 1.2. Investments by the Owner Participant....................... 2
Section 1.3. The Closing Date........................................... 3
Section 1.4. Expiration of Commitments.................................. 3
SECTION 2. TRANSACTIONAL EXPENSES..................................... 3
Section 2.1. Transactional Expenses to be Borne by Owner Trustee........ 3
Section 2.2. Transactional Expenses to be Borne by Lessee............... 4
SECTION 3. WARRANTIES AND REPRESENTATIONS............................. 4
Section 3.1. Warranties and Representations of the Owner Trustee........ 4
Section 3.2. Warranties and Representations of the Lessee............... 6
Section 3.3. Warranties and Representations of the Indenture Trustee....15
Section 3.4. Private Offering...........................................16
Section 3.5. Representations and Covenants of the Participants..........17
SECTION 4. CLOSING CONDITIONS.........................................19
Section 4.1. Conditions Precedent to Investment by each Participant.....19
Section 4.2. Additional Conditions Precedent to Investments by
Owner Participant..........................................22
Section 4.3. Additional Conditions Precedent to Series A Note
Purchases..................................................23
SECTION 5. SPECIAL RIGHTS OF NOTE PURCHASERS..........................23
SECTION 6. CL02 SYSTEM................................................24
Section 6.1. Lessee Rights Relating to CLO2 System......................24
Section 6.2. Financing of CLO2 System...................................25
Section 6.3. Special Purchase Option Date...............................27
SECTION 7. GENERAL TAX INDEMNITY......................................28
Section 7.1. Tax Indemnitee Defined.....................................28
Section 7.2. Taxes Indemnified..........................................28
Section 7.3. Taxes Excluded.............................................29
Section 7.4. All Tax Obligations in this Section, Etc...................31
Section 7.5. Payments to Lessee.........................................31
Section 7.6. Procedures.................................................31
Section 7.7. Contest....................................................32
Section 7.8. Reports....................................................34
Section 7.9. Survival...................................................34
SECTION 8. INDEMNITIES OF THE OWNER TRUSTEE AND THE
OWNER PARTICIPANT..........................................34
SECTION 9. INDEMNIFICATION............................................35
Section 9.1. General Indemnity..........................................35
Section 9.2. Payments, Survival and other Provisions....................36
Section 9.3. No Guarantee of Residual Value or Notes....................36
SECTION 10. TRANSACTION ECONOMICS......................................36
SECTION 11. RESTRICTIONS ON TRANSFER OF BENEFICIAL INTEREST............36
SECTION 12. LESSEE ASSUMPTION OF NOTES.................................39
Section 12.1. Assumption.................................................39
Section 12.2. No Other Assumption; Payment of Expenses...................41
SECTION 13. REFINANCING OF NOTES.......................................41
SECTION 14. MISCELLANEOUS..............................................44
Section 14.1. Amendments.................................................44
Section 14.2. Notices....................................................44
Section 14.3. Survival...................................................44
Section 14.4. Successors and Assigns.....................................44
Section 14.5. Governing Law..............................................45
Section 14.6. Counterparts...............................................45
Section 14.7. Headings and Table of Contents.............................45
Section 14.8. Limitations of Liability...................................45
Section 14.9. Purchase of Beneficial Interest by Lessee;
Termination of Trust by Owner Participant..................46
Section 14.10. Certain Limitations in Reorganization......................46
Section 14.11. Amendment of Indenture, Deed of Trust and Trust Agreement..47
Section 14.12. Submission to Jurisdiction.................................47
Section 14.13. Waiver of Jury Trial.......................................47
Section 14.14. Complete Facility..........................................48
-ii-
ATTACHMENTS TO PARTICIPATION AGREEMENT:
Schedule 1 -- Note Purchaser Information
Schedule 3.2(r) -- ERISA Matters
Schedule 3.2(s) -- Environmental Matters
Schedule 3.2(w) -- Existing Leases
Annex I -- Definitions
Annex II -- Forms of Opinions of Counsel
Exhibit A -- Form of Trust Agreement
Exhibit B -- Form of Site Lease
Exhibit C -- Form of Facility Lease
Exhibit D -- Form of Trust Indenture and Security Agreement
Exhibit E -- Form of Deed of Trust
Exhibit F -- Description of CLO2 System
-iii-
PARTICIPATION AGREEMENT
THIS PARTICIPATION AGREEMENT dated as of September 15, 1999 is among XXXX &
TALBOT, INC., a Delaware corporation (herein, together with its successors and
assigns, the "Lessee"), SELCO SERVICE CORPORATION, an Ohio corporation (herein,
together with its successors and assigns, the "Owner Participant"), the Note
Purchasers named in Schedule 1 hereto (the "Note Purchasers"), WILMINGTON TRUST
COMPANY, not in its individual capacity except as expressly stated herein, but
solely as trustee (herein in such capacity, together with its successors and
assigns, called the "Owner Trustee") under the Trust Agreement referred to
below, and FIRST SECURITY BANK, NATIONAL ASSOCIATION (herein in such capacity,
together with its successors and assigns, called the "Indenture Trustee"). The
Owner Participant and the Note Purchasers are herein sometimes referred to
collectively as the "Participants" and individually as a "Participant".
Recitals
A. The capitalized terms used in this Participation Agreement shall have
the respective meanings specified in Annex I attached hereto, unless otherwise
herein defined or the context hereof shall otherwise require.
B. The Owner Trustee and the Owner Participant have entered into a Trust
Agreement dated as of September 15, 1999, substantially in the form attached
hereto as Exhibit A, and pursuant to the authorities and directions contained in
the Trust Agreement, the Owner Trustee agrees to enter into:
(1) a Site Lease substantially in the form attached hereto as Exhibit
B between the Lessee, as landlord, and the Owner Trustee, as tenant,
providing for the grant by the Lessee to the Owner Trustee of a leasehold
estate in the Site for the Facility and certain other rights, licenses and
easements relating to the Facility, but which shall not, during the Term of
the Facility Lease, in any event require the Owner Trustee, as tenant, to
pay Rent under the Site Lease which is not fully offset by the obligation
of the Lessee to pay Periodic Site Rent on a dollar-for-dollar basis
pursuant to the Facility Lease;
(2) a Facility Lease substantially in the form attached hereto as
Exhibit C between the Owner Trustee, as lessor, and the Lessee, as lessee,
for the Facility, providing for the lease of the Facility and the sublease
of the Site for the Facility to the Lessee;
(3) a Trust Indenture and Security Agreement substantially in the form
attached hereto as Exhibit D between the Owner Trustee and the Indenture
Trustee, under which the Notes will be issued and secured, and providing
for particular description of certain Collateral;
(4) a Deed of Trust substantially in the form of Exhibit E between the
Owner Trustee, as grantor, the deed of trust trustee thereunder, and the
Indenture Trustee, as beneficiary, providing for the grant of a mortgage on
the Facility, the Owner Trustee's
leasehold interest in the Site and the Owner Trustee's interests under the
Site Lease and the Facility Lease; and
(5) a Tax Indemnity Agreement between the Lessee and the Owner
Participant.
SECTION 1. COMMITMENTS OF THE PARTICIPANTS.
Section 1.1. Issue and Sale of Series A Notes.
(a) The Series A Notes. In order to finance a portion of the Facility Cost,
the Trust Agreement authorizes the Owner Trustee to issue and sell its 8.96%
Secured Notes, Series A, due January 2, 2008 (the "Series A Notes") in an
aggregate principal amount not to exceed the aggregate amount of the commitments
of the Note Purchasers set forth below. The Series A Notes are issued under and
secured by the Indenture, will be dated the date of issue and will mature on
January 2, 2008. The Series A Notes will bear interest at the rate of 8.96% per
annum prior to maturity payable semiannually on each Rent Payment Date, and are
to be otherwise substantially in the form attached to the Indenture as Exhibit
A.
(b) Commitment of Note Purchasers. Subject to the terms and conditions
hereof and on the basis of the representations and warranties hereinafter set
forth, the Owner Trustee agrees to issue and sell to each Note Purchaser, and
each Note Purchaser agrees to purchase from the Owner Trustee, on the Closing
Date, Series A Notes of the Owner Trustee at a price of 100% of the principal
amount thereof and in an aggregate principal amount equal to such Note
Purchaser's Commitment as set forth in Schedule 1 hereto. The Series A Notes
delivered to each Note Purchaser on the Closing Date will, unless otherwise
indicated on Schedule 1 hereto, be in the form of a single Series A Note
registered in the name of such Note Purchaser.
(c) Failure to Deliver. If at the Closing the Owner Trustee fails to tender
to any Series A Note Purchaser the Notes to be purchased by such Note Purchaser
at the Closing or if the conditions to the obligation of such Note Purchaser
specified in Section 4 for the Closing have not been fulfilled, each Note
Purchaser may thereupon elect to be relieved of all further obligations under
this Agreement. Nothing in this Section shall operate to relieve the Owner
Trustee, the Owner Participant or the Lessee from their respective obligations
hereunder or to waive any of any Note Purchaser's rights against the Owner
Trustee, the Owner Participant or the Lessee.
Section 1.2. Investments by the Owner Participant. (a) Subject to the terms
and conditions hereof and on the basis of the representations and warranties
hereinafter set forth and set forth in the other Operative Agreements, on the
Closing Date the Owner Participant will pay to the Owner Trustee, an amount
equal to the Facility Cost for the Facility less the proceeds of the Series A
Notes issued on the Closing Date. The aggregate investment required to be made
by the Owner Participant pursuant to this Section 1.2(a) shall not exceed
$17,398,444.06.
-2-
(b) In addition, the Owner Participant will make such further payments as
may be necessary from time to time to permit the Owner Trustee to satisfy its
obligations under Section 2.
(c) If at the Closing the conditions to the obligations of the Owner
Participant specified in Section 4 for the Closing have not been fulfilled, the
Owner Participant may thereupon elect to be relieved of all further obligations
under this Agreement. Nothing in this Section shall operate to relieve the
Lessee from its obligations hereunder or to waive any of the Owner Participant's
rights against the Lessee.
Section 1.3. The Closing Date. The closing of the transactions contemplated
hereby (the "Closing") shall take place after 10:00 a.m., New York City Time, on
September 30, 1999 or such other date as the parties hereto shall mutually agree
(the "Closing Date"), at the offices of Xxxxxxx and Xxxxxx, 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000. On the Closing Date, the payment by the Owner
Participant to be made pursuant to Section 1.2(a) and payment for the Series A
Notes to be issued on the Closing Date shall be made not later than 11:00 a.m.,
New York City Time, by transferring or delivering such amounts, in funds
immediately available on the Closing Date, to the Owner Trustee. Subject to the
applicable conditions set forth in Section 4, the Owner Trustee hereby directs
the Indenture Trustee, and the Indenture Trustee hereby agrees, to apply for the
account of the Owner Trustee on the Closing Date the proceeds of the sale of the
Series A Notes to the account of the Seller, and the Owner Participant will
cause to be paid to the Seller for the account of the Owner Trustee, the amounts
to be invested and paid by the Owner Participant pursuant to Section 1.2 on the
Closing Date.
Section 1.4. Expiration of Commitments. The commitment of the Owner
Participant under Section 1.2(a) and the several commitments of the Note
Purchasers hereunder shall expire on September 30, 1999.
Section 1.5. Several Commitments. The obligations hereunder of the
Participants shall be several and not joint and no Participant shall be liable
or responsible for the acts or defaults of any other Participant.
SECTION 2. TRANSACTIONAL EXPENSES.
Section 2.1. Transactional Expenses to be Borne by Owner Trustee. If the
Owner Participant shall have made its investment provided for in Section 1.2(a)
with respect to the Closing and the Facility shall have been purchased, the
Owner Trustee will, subject to the final clause of the last sentence of Section
2.2, pay all expenses relating to the transactions contemplated by this
Agreement (other than any expenses incurred by the Lessee, including without
limitation the fees and expenses of Stoel Rives LLP, its counsel), including but
not limited to: (i) the cost of reproducing the Operative Agreements; (ii) the
reasonable fees and expenses of Xxxxxxxxxx & Xxxxx LLP, special counsel for the
Owner Participant; (iii) the reasonable fees and expenses of Xxxxxxxx, Xxxx &
Xxxxx, special Ohio counsel to the Owner Participant; (iv) the reasonable fees
and expenses of Xxxxxxx and Xxxxxx, special counsel for the Note Purchasers; (v)
the reasonable out-of-pocket expenses of the Participants; (vi) the cost of
delivering to the main office of each Note Purchaser, insured to the reasonable
satisfaction of such Note Purchaser, the
-3-
Series A Notes purchased by such Note Purchaser on the Closing Date; (vii) the
initial fees and expenses of the Owner Trustee under the Trust Agreement
(including the reasonable fees and expenses of Morris, James, Hitchens &
Xxxxxxxx, its counsel, incurred in connection with the negotiation and delivery
of the Operative Agreements); (viii) the initial fees and expenses of the
Indenture Trustee under the Indenture (including the reasonable fees and
expenses of Xxx Xxxxxxx & Xxxxxxx, its counsel, incurred in connection with the
negotiation and delivery of the Operative Agreements); (ix) the reasonable fees
and expenses of Xxxxx Xxxxxx Xxxxxxxx, local counsel for the Participants; and
(x) the fees and expenses of Independent Equipment Company.
Section 2.2. Transactional Expenses to be Borne by Lessee. If the
transactions contemplated by this Agreement with respect to the Closing are not
consummated, the Lessee will pay all expenses relating to the transactions
contemplated by this Agreement, including without limitation those referred to
in Section 2.1. If the transactions contemplated by this Agreement with respect
to the Closing are consummated, the Lessee shall in any event pay: (i) the fees
and expenses of counsel for the Lessee; (ii) the cost of delivering to or from
the home office of any Note Purchaser from or to the Indenture Trustee, insured
to the reasonable satisfaction of such Note Purchaser, any Notes surrendered
pursuant to the Indenture and any Note issued in substitution or replacement for
the surrendered Notes; (iii) the expenses of the Owner Trustee, the Indenture
Trustee and the Participants, including reasonable fees and expenses of their
counsel, in connection with any amendments, waivers or consents requested by any
party in connection with any of the Operative Agreements and all recording and
filing fees, stamp taxes and other recording or filing taxes in connection with
the recordation or filing of any such amendments, waivers and consents and in
connection with any continuation statements or other documents filed to maintain
and protect the rights of the parties under the Operative Agreements; (iv) the
ongoing fees and expenses of the Owner Trustee under the Trust Agreement,
including fees and expenses incurred in connection with the enforcement of the
obligations of the Lessee under the Operative Agreements; (v) the ongoing fees
and expenses of the Indenture Trustee under the Indenture, including fees and
expenses incurred in connection with the enforcement of the obligations of the
Lessee under the Operative Agreements; (vi) the premiums for the title insurance
and the cost of surveys required by Section 4 and (vii) any costs set forth in
Section 2.1 hereof to the extent that the total of all such costs exceeds 0.725%
of the Facility Cost.
SECTION 3. WARRANTIES AND REPRESENTATIONS.
Section 3.1. Warranties and Representations of the Owner Trustee. (a)
Wilmington Trust Company warrants and represents in its individual capacity
notwithstanding the provisions of Section 14.8(b) or any similar provision of
any other Operative Agreement, that as of the Closing Date:
(i) Wilmington Trust Company
(A) is a banking corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware;
(B) has the corporate power and authority to enter into and
perform its obligations under the Trust Agreement and this Agreement;
and
-4-
(C) has full right, power and authority under the Trust Agreement
to enter into and perform its obligations, as Owner Trustee, under the
Owner Trustee Agreements other than the Trust Agreement.
(ii) There are no proceedings pending or, to the knowledge of
Wilmington Trust Company, threatened and to the knowledge of Wilmington
Trust Company, there is no existing basis for any such proceedings, against
or affecting Wilmington Trust Company in any court or before any
governmental authority or arbitration board or tribunal which, if adversely
determined, might materially and adversely affect the Trust Estate or would
call into question the right, power and authority of Wilmington Trust
Company to enter into or perform the Owner Trustee Agreements.
(iii) The Trust Estate is free and clear of any liens and encumbrances
which result from claims against Wilmington Trust Company in its individual
capacity; and Wilmington Trust Company has not by affirmative act, in its
individual capacity, conveyed any interest in the Trust Estate to any
Person or subjected the Trust Estate to any Lien except pursuant to the
Operative Agreements.
(iv) The Trust Agreement and (insofar as it is entering into this
Agreement in its individual capacity) this Agreement have been duly
authorized by all necessary corporate action on the part of Wilmington
Trust Company in its individual capacity, have been duly executed and
delivered by Wilmington Trust Company in its individual capacity, and
constitute the valid and binding obligations of Wilmington Trust Company in
its individual capacity.
(v) Neither the nature of the Trust Estate, nor any relationship
between Wilmington Trust Company and any other Person, nor any circumstance
in connection with the execution and delivery of the Trust Agreement or
this Agreement, is such as to require a consent, approval or authorization
of, or filing, registration or qualification with, any governmental
authority of the State of Delaware or the federal government of the United
States of America governing the banking or trust powers of Wilmington Trust
Company on the part of Wilmington Trust Company in connection with the
execution and delivery of the Trust Agreement or this Agreement.
(vi) The execution and delivery of the Trust Agreement and this
Agreement and compliance by Wilmington Trust Company with all of the
provisions thereof do not and will not contravene any law regulating the
banking or trust activities or business of Wilmington Trust Company, or any
order of any court or governmental authority or agency applicable to or
binding on Wilmington Trust Company or its certificate of incorporation or
its by-laws.
(b) The Owner Trustee warrants and represents as Owner Trustee that:
(i) The other Owner Trustee Agreements are duly authorized by the
Trust Agreement and the Owner Trustee Agreements have been duly executed
and delivered by the Owner Trustee, as trustee under the Trust Agreement.
-5-
(ii) The Owner Trustee is not in violation of any term of any of the
Owner Trustee Agreements.
(iii) Neither the nature of the Trust Estate, nor any relationship
between the Owner Trustee and any other Person, nor any circumstance in
connection with the offer, issue, sale or delivery of the Beneficial
Interest or the Series A Notes or the execution and delivery of the Owner
Trustee Agreements is such as to require a consent, approval or
authorization of, or filing, registration or qualification with, any
governmental authority of the State of Delaware or the federal government
of the United States of America governing the banking or trust powers of
Wilmington Trust Company on the part of the Owner Trustee in connection
with the execution and delivery of the Owner Trustee Agreements or the
offer, issue, sale or delivery of the Beneficial Interest or the Series A
Notes.
(iv) The Owner Trustee has not by affirmative act conveyed any
interest in the Trust Estate to any Person or subjected the Trust Estate to
any Lien except pursuant to the Operative Agreements.
Section 3.2. Warranties and Representations of the Lessee. The Lessee
warrants and represents that as of Closing on the Closing Date:
(a) Organization and Authority. The Lessee (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware; (ii) has all requisite power and authority to own or
hold under lease its assets and properties, conduct its business as now
conducted and as presently proposed to be conducted and enter into and
perform its obligations under this Agreement and each of the other
Operative Agreements to which it is or will be a party; and (iii) is duly
licensed or qualified and is in good standing as a foreign corporation in
each jurisdiction wherein the failure to be so qualified would have a
Material Adverse Effect.
(b) Due Authorization, Enforceability, etc. The execution, delivery
and performance of the Lessee Agreements and the compliance by the Lessee
with the terms and provisions thereof have been duly authorized by all
necessary corporate action of the Lessee. Each of the Lessee Agreements has
been duly executed and delivered by the Lessee. Assuming the due
authorization, execution and delivery by each other party thereto, each of
the Lessee Agreements constitutes the legal, valid and binding obligations
of the Lessee, enforceable against the Lessee in accordance with their
respective terms, except as the same may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, arrangement, moratorium
or other laws relating to or affecting the rights of creditors generally
and by general principles of equity.
(c) No Conflicts. The execution, delivery and performance by the
Lessee of each of the Lessee Agreements, the consummation by the Lessee of
the transactions contemplated thereby, and compliance by the Lessee with
the terms and provisions thereof, do not and will not (i) conflict with or
result in any breach of any agreement to which the Lessee is a party, (ii)
conflict with any Applicable Law which could reasonably
-6-
be expected to result in a Material Adverse Effect, (iii) conflict with the
certificate of incorporation or by-laws of the Lessee, or (iv) result in
the creation of any Lien (except Permitted Encumbrances) upon any of the
property or assets of the Lessee pursuant to the terms of any indenture,
mortgage, deed of trust, credit agreement or any other agreement, contact
or instrument to which the Lessee is a party or by which its property or
assets are bound.
(d) Governmental Consent. Neither the nature of the Lessee or any of
its business or properties, nor any relationship between the Lessee and any
other Person, nor any circumstance in connection with the execution and
delivery of the Lessee Agreements is such as to require a consent, approval
or authorization of, or filing, registration or qualification with, any
regulatory body, state, Federal or local, on the part of the Lessee as a
condition to the execution and delivery of the Lessee Agreements.
(e) Litigation. Except as described in the Lessee's Annual Report on
SEC Form 10-K dated March 24, 1999, there are no proceedings pending, or to
the knowledge of the Lessee threatened, against or affecting the Lessee in
any court or before any governmental authority or arbitration board or
tribunal which if adversely determined would have a Material Adverse
Effect, nor are there any other circumstances which, to the knowledge of
the Lessee, would lead to or result in any such proceedings. The Lessee is
not in default with respect to any order of any court, governmental
authority or arbitration board or tribunal.
(f) No Defaults. No Lease Default or Lease Event of Default has
occurred and is continuing. The Lessee is not in default in the payment of
principal or interest on any indebtedness for borrowed money and no event
of default has occurred under any instrument or instruments or agreements
to which the Lessee or any Person acting at the instruction of the Lessee
with respect to the Lessee's obligations thereunder is a party (i) under
and subject to which any indebtedness for borrowed money has been issued or
(ii) pursuant to which the Lessee has any obligations the non-performance
of which could reasonably be expected to have a Material Adverse Effect;
and no event has occurred and is continuing under the provisions of any
such instrument or agreement which with the lapse of time or the giving of
notice, or both, would constitute such an event of default thereunder.
(g) No Materially Adverse Contracts. The Lessee is not a party to, or
bound or affected by, any contract or agreement or subject to any judgment,
order, writ, injunction, rule or regulation or decree or other action of
any court or other governmental authority or agency, or the award of any
arbitrator, or any charter or contractual restriction that materially
adversely affects or in the future may (so far as the Lessee can now
reasonably foresee based on facts known to the Lessee) materially adversely
affect the business, Properties, or financial condition of the Lessee or
impair the ability of the Lessee to perform its obligations under the
Lessee Agreements.
(h) Location of Chief Place of Business and Chief Executive Office.
The chief executive office and principal place of business of the Lessee
and the office where the
-7-
Lessee keeps its corporate records concerning the Facility, the Site and
the Operative Agreements is located at Xxxxx 000, 0000 XX Xxxxx Xxxxxx,
Xxxxxxxx, Xxxxxx 00000.
(i) Title. The Owner Trustee has good and marketable title to the
Facility, free and clear of all Liens other than (i) any Liens thereon for
taxes, assessments, levies, fees and other governmental and similar charges
not due and payable, (ii) any Liens of mechanics, suppliers, materialmen
and laborers for work or service performed or materials furnished in
connection with the Facility which are not due and payable and are insured
over by the Title Policy relating to the Facility issued at Closing, and
(iii) those exceptions to title set forth on Schedule B to the Title Policy
relating to the Facility issued at Closing.
(j) Financial Statements. The audited consolidated balance sheet and
consolidated statements of income and retained earnings and cash flows of
the Lessee for the fiscal years ended December 31, 1998, December 31, 1997,
December 31, 1996 and December 31, 1995 fairly present, in conformity with
generally accepted accounting principles, the consolidated financial
position of the Lessee as of such dates and the results of its operations
for the periods then ended. The unaudited consolidated balance sheet and
consolidated statements of income and retained earnings and cash flows of
the Lessee for the fiscal quarter ended June 30, 1999, fairly present, in
conformity with generally accepted accounting principles, the consolidated
financial position of the Lessee as of such date and the results of its
operations for the period then ended, subject to normal year-end
adjustments. Since June 30, 1999, there has been no change in such
financial condition or results of operations which could reasonably be
expected to have a Material Adverse Effect.
(k) Full Disclosure. The Private Placement Memorandum, the financial
statements referred to in clause (j) above, the Lessee Agreements and all
other written statements furnished by or on behalf of the Lessee to the
Participants in connection with the transactions contemplated by this
Agreement, do not, taken as a whole, contain any untrue statement of a
material fact or omit a material fact necessary to make the statements
contained therein or herein not misleading. There is no fact peculiar to
the Lessee which the Lessee has not disclosed to the Participants in
writing which has a Material Adverse Effect on nor, so far as the Lessee
can now foresee, will have a Material Adverse Effect on the business,
Properties or financial condition of the Lessee or impair the ability of
the Lessee to perform its obligations under the Lessee Agreements.
(l) Use of Proceeds. The net proceeds from the sale of the Series A
Notes will be applied to the payment of a portion of the Facility Cost.
None of the transactions contemplated in the Operative Agreements
(including, without limitation thereof, the use of the proceeds from the
sale of the Series A Notes) or any direct or indirect use or application of
the proceeds of the Notes will violate or result in a violation of Section
7 of the Securities Exchange Act of 1934, as amended, or any regulations
issued pursuant thereto including, without limitation, Regulation T, U or X
of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter
II.
-8-
(m) Investment Company Act. The Lessee is not an "investment company"
or a company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940, as amended.
(n) Holding Company. The Lessee is not subject to regulation as a
"holding company," an "affiliate" of a "holding company," or a "subsidiary
company" of a " holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
(o) Compliance with Law. The Lessee:
(i) is not, to the knowledge of the Lessee after reasonable
inquiry, in violation of any laws, ordinances, governmental rules or
regulations to which it is subject, and
(ii) has not failed to obtain any license, permit, franchise or
other governmental authorization (and in the case of any temporary
permits, application for permanent permits have been made and are
pending) necessary to the ownership or operation of its property or to
the conduct of its business,
which violation or failure to obtain would materially adversely affect the
business, properties or financial condition of the Lessee or impair the
ability of the Lessee to perform its obligations under the Lessee
Agreements.
(p) Taxes. All tax returns required to be filed by the Lessee in any
jurisdiction (other than those for which the failure to file would not have
a Material Adverse Effect) have, in fact, been filed, and all taxes,
assessments, fees and other governmental charges upon the Lessee or upon
any of its properties, income or franchises, which are shown to be due and
payable in such returns have been paid. Except as described in the Lessee's
Annual Report on SEC Form 10-K dated March 24, 1999, the Lessee does not
know of any material proposed additional tax assessment against it for
which adequate provision has not been made on its accounts and no
controversy in respect of additional income taxes due is pending or to the
knowledge of the Lessee threatened which, if adversely determined, could
reasonably be expected to have a Material Adverse Effect. The provisions
for taxes on the books of the Lessee are adequate for all open years, and
for its current fiscal period.
(q) Restrictions on Lessee. The Lessee is not a party to or bound by
any security, contract, indenture, agreement, instrument, order of any
court or governmental agency, law or rule or regulation which restricts the
right or ability of the Lessee to enter into leases of the type of the
Facility Lease or the Site Lease.
(r) Employee Retirement Income Security Act of 1974. (i) The
consummation of the transactions provided for in the Operative Agreements
and compliance by the Lessee with the provisions thereof will not involve
any prohibited transaction within the meaning of Section 406 of ERISA or
Section 4975 of the Code. The representation of the
-9-
Lessee in the preceding sentence is made in reliance upon and subject to
the accuracy of the representation of each Participant in Section 3.5(c) as
to the source of funds to be used by such Participant in financing the
acquisition of the Facility.
(ii) Each Plan is in compliance with the applicable provisions of
ERISA, the Code and other federal or state law, except for such
non-compliance which would not reasonably be expected to have a
Material Adverse Effect. Each Plan intended to qualify under Section
401(a) of the Code has received a favorable determination letter from
the IRS and to the Lessee's knowledge, nothing has occurred which
would cause the loss of such qualification.
(iii) There are no pending, or to the Lessee's knowledge,
threatened claims by any Governmental Authority, with respect to any
Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect. There has been no prohibited transaction or
other violation of the fiduciary responsibility rule with respect to
any Plan which could reasonably be expected to result in a Material
Adverse Effect.
(iv) No ERISA Event has occurred or is reasonably expected to
occur with respect to any Pension Plan, other than as specified in
Schedule 3.2(r) hereto.
(v) No Pension Plan (other than the Multiemployer Plans) has any
Unfunded Pension Liability.
(vi) Neither the Lessee nor any ERISA Affiliate has incurred, nor
does it reasonably expect to incure, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due and
not delinquent under Section 4007 of ERISA), other than as specified
in Schedule 3.2(r) hereto.
(vii) Neither the Lessee nor any ERISA Affiliate has transferred
any Unfunded Pension Liability to any Person or otherwise engaged in a
transaction that could be subject to Section 4069 of ERISA.
(viii) A complete list of all the Lessee's affiliates (within the
meaning specified in Section V(a)(1) of Prohibited Transaction
Exemption 95-60 (issued July 12, 1995)) and each Pension Plan
currently in effect is set forth on Schedule 3.2(r).
(s) Environmental Matters. To the knowledge of the Lessee after
reasonable inquiry:
(i) neither the Lessee nor the Leased Property is in material
violation of any applicable Environmental Law;
(ii) the Lessee has obtained all material Governmental Approvals
required for the operations of the Facility by any applicable
Environmental Law;
-10-
(iii) there is no and has never been a material Release or
threatened material Release or disposal of any Hazardous Material at
the Site and the Site is not adversely affected by any material
Release or threatened material Release originating or emanating from
any other property;
(iv) except as disclosed in the reports on Schedule 3.2(s), none
of which disclosures, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect, the Site
does not contain and has not contained any: (v) underground storage
tank, (w) material amounts of asbestos containing building material,
(x) any landfills or dumps, (y) hazardous waste treatment, storage or
disposal facility as defined pursuant to RCRA or any comparable state
law, or (z) site on or nominated for the National Priority List
promulgated pursuant to CERCLA or any state priority list promulgated
pursuant to any comparable state law;
(v) no circumstances exist that could be reasonably expected to
(A) form the basis of any Environmental Claims against the Leased
Property that individually or in the aggregate could reasonably be
expected to have a Material Adverse Effect or (B) cause the Leased
Property to be subject to any restrictions on ownership, occupancy,
use or transferability under any Environmental Law;
(vi) to the Lessee's knowledge, no Hazardous Materials that have
been generated at or transported from the Leased Property or any part
thereof have been disposed at any location that is listed or proposed
for listing on the National Priority List promulgated pursuant to
CERCLA or any state priority list promulgated pursuant to any
comparable state law, or any location that is or has been the subject
of a CERCLA response action, and all Hazardous Materials generated,
used, treated, handled or stored at or transported to or from the
Leased Property or any part thereof and any property currently or
formerly owned or operated by the Lessee have been disposed of in
compliance in all material respects with all Environmental Laws and
applicable Environmental Permits;
(vii) the Lessee has not received any written or other notice,
mandate, order, Lien or request which remains pending under an
Environmental Law concerning any of the Leased Property or any part
thereof or relating to an alleged violation of an Environmental Law
concerning the Leased Property or any part thereof or relating to any
potential adverse action in any way involving environmental, health or
safety matters affecting the Leased Property or any part thereof;
(viii) there is no proceeding pending or, to Lessee's knowledge,
threatened against the Lessee by any Federal, state, or local court,
tribunal, administrative agency, department, commission, board or
other authority or instrumentality with respect to the presence or
Release of any Hazardous Material from the Leased Property or any part
thereof; and
-11-
(ix) no Hazardous Materials have been Released from or on the
Leased Property or any part thereof for which Remedial Action could be
required under any Environmental Law or may be necessary to prevent or
eliminate an imminent and substantial endangerment to human health or
the environment.
(t) Security Interests. The Indenture and the Deed of Trust create a
valid and perfected first priority lien and security interest in the
Collateral described therein, subject to Permitted Encumbrances, securing
the payment of all Secured Indebtedness, and all filings and other actions
necessary or desirable to perfect and protect such lien and security
interest have been duly taken at or prior to the Closing.
(u) Insurance. The Leased Property (including the Facility) is covered
by the insurance required by Section 7 of the Facility Lease covering such
Leased Property and all premiums due in respect of such insurance have been
paid.
(v) Coverage. The amount of the installment of Periodic Rent payable
under the Facility Lease on each Rent Payment Date during the Basic Term
thereof will equal or exceed the sum of the interest payments and the
payments or prepayments of principal due on such Rent Payment Date on the
Series A Notes. The amount of Casualty Value and Termination Value under
the Facility Lease payable on any date will equal or exceed the sum of the
principal amount of the Series A Notes which will remain unpaid on such
date plus accrued interest thereon.
(w) Leasehold Interest. The Lessee has good and marketable title to
the Site for the Facility, free and clear of all Liens other than (i) the
interest of the Owner Trustee under the Site Lease covering the Site and
the interest of the Lessee under the Facility Lease in the Site; (ii) any
Liens thereon for taxes, assessments, levies, fees and other governmental
and similar charges not due and payable; (iii) any Liens of mechanics,
suppliers, materialmen and laborers for work or service performed or
materials furnished in connection with the Facility which are not due and
payable and are insured over by the Title Policy relating to the Facility
issued at Closing; (iv) any exceptions to title set forth on Schedule B to
the Title Policy relating to the Site issued at Closing; (v) the leases set
forth on Schedule 3.2(w) hereto; and (vi) minor encumbrances, easements or
reservations, rights of others for rights-of-way, utilities and other
similar purposes, zoning or other restrictions as to the use of real
properties, and leases and subleases thereof, in each case, which (A) are
necessary or appropriate for the conduct of the activities of the Lessee on
the Site or customarily exist on properties of business entities engaged in
similar activities and similarly situated and (B) do not in any event
materially impair the use or value of the Site.
(x) Complete Facility. (i) Exhibit B to the Facility Lease contains a
complete description of the entire Facility, which is located on the Site.
Such items, together with the Site Lease Property for the Facility,
constitute an integrated and self-contained pulp mill. The Owner Trustee's
title and interest in the Leased Property under the Facility Lease is
sufficient to permit during the Term of the Site Lease for the Site of the
Facility (i) the locating, occupying, owning, selling, leasing, connecting,
operating, maintaining,
-12-
replacing, renewing, repairing and removing of the Facility, (ii) ingress
to and egress from the Leased Property leased under the Facility Lease,
(iii) the operating of the Leased Property leased under the Facility Lease
in such a manner as to cause the Facility to perform on a daily basis, in
commercial operation, the functions for which it was specifically designed
at Design Capacity in accordance with the Plans therefor, and (iv) the
preservation and enforcement by the Owner Trustee of its rights in and to
the Leased Property leased under the Facility Lease and the easements and
other rights in respect of the Site Lease Property described or referred to
in the Site Lease for the Site of the Facility.
(ii) There is presently no default by the Lessee or, to the
Lessee's knowledge, by any other party with respect to (1) any
easements, rights-of-way, licenses, utilities and other services which
would materially and adversely affect the services relating to the
Facility or (2) the Xxxxx River Agreement, the Xxxxx River Easement,
the Railway License or, except with respect to the matters addressed
in Section 14.14, the County Road Documents.
(iii) All utility services necessary for the operation for its
intended purposes of the Facility are installed and operational.
(iv) None of the Permitted Encumbrances will interfere in any
material respect with the use or possession of the Leased Property or
any part thereof or any other asset used in connection therewith or
the use of or the exercise by the Owner Trustee of its rights either
under any Operative Agreement or to the Leased Property.
(v) The Facility is situated wholly within the boundary lines of
the Site and does not encroach upon any contiguous or adjoining
property; except as disclosed in writing, neither the Site nor any
part thereof is considered part of a larger tax lot; the Facility does
not violate any rights granted under any easements or rights of way or
any covenants or restrictions affecting the Site or any part thereof,
and any future violation will not result in a reversion or forfeiture
of title, right of re-entry or power of termination; and the
easements, rights-of-way, covenants and restrictions affecting the
Site or any part thereof do not and will not interfere in any material
respect with the use or occupancy of the Leased Property or any part
thereof, or any asset owned or used in connection therewith, nor will
the exercise of rights or remedies thereunder result in any damage to
the Leased Property or any part thereof or diminution of value of the
Leased Property or any part thereof.
(vi) Except as addressed in Section 14.14, all Permits that are
or will become Applicable Permits shall have been obtained, except
Applicable Permits customarily obtained or which are permitted by
Applicable Law to be obtained after the Closing Date (and the Lessee,
having completed all appropriate due diligence in connection
therewith, has no reason to believe that such Permits
-13-
will not be granted in the usual course of business prior to the date
that such Permits are required by Applicable Law). All such obtained
Permits are in proper form, in full force and effect and are not
subject to any further appeal, consent or contest or to any
unsatisfied condition that may allow modification or revocation.
(y) Casualty Occurrence. No Casualty Occurrence has occurred, and the
Leased Property may be used for the purposes contemplated by the Lessee in
accordance with the Facility Lease and the other Operative Agreements.
(z) Recordation and Filing. The Memorandum of Facility Lease and
Memorandum of Site Lease have been duly recorded and are in a form
sufficient to provide notice of the interests purported to be created by
the Facility Lease and Site Lease, respectively. Upon the recordation of
the Memorandum of Site Lease in the county in which the Site is located,
the Memorandum of Site Lease will have been recorded or filed in such place
in which recording or filing is required to provide notice, under
Applicable Law, of the interests created by the Site Lease and to protect
the validity and effectiveness thereof, and all Taxes, fees and other
public charges payable in connection with the filing and recordation of the
Memorandum of Site Lease have been paid. Upon the recordation of the
Memorandum of Facility Lease in the county where the Facility is located,
the Memorandum of Facility Lease will have been recorded or filed in such
place in which recording or filing is required to provide notice, under
Applicable Law, of the interests created by such Facility Lease and to
protect the validity and effectiveness thereof, and all Taxes, fees and
other public charges payable in connection with the filing and recordation
of the Memorandum of Facility Lease have been paid.
(aa) Trade Secrets and Patents. (i) The leasing of the Site by the
Owner Trustee, the ownership of the Facility by the Owner Trustee and the
leasing and operation of the Facility by the Lessee, do not and will not
conflict with, infringe on, or otherwise violate any copyright, trademark,
trade name, trade secret or patent rights of any other Person.
(ii) The Lessee has all rights to all patents, patent
applications, trademarks (whether registered or not), trademark
applications, trade names, proprietary computer software, "know-how"
and copyrights used or to be used in the ordinary course of the
operation of the Facility (the "Intellectual Property Rights") that
are necessary for the operation thereof, including the right to assign
the Intellectual Property Rights. There is no judicial proceeding
pending or, to the knowledge of the Lessee, threatened, involving any
claim of any infringement, misuse or misappropriation by the Lessee or
any Affiliate thereof of any patent, trademark, trade name, copyright,
license or similar intellectual property right owned by any third
party related to the Intellectual Property Rights.
(bb) (i) All Canadian Pension Plans have been registered under the
Income Tax Act (Canada) and other applicable Canadian pension legislation.
To the Lessee's knowledge, nothing has occurred which would cause the loss
of such registration.
-14-
(ii) All contributions required to make the Canadian Pension
Plans fully funded under the Income Tax Act (Canada) and
other applicable Canadian pension legislation have been
made.
(iii) All Canadian Pension Plans are in compliance with the
Income Tax Act (Canada) and other applicable Canadian
pension legislation, except for such noncompliance which
would not reasonably be expected to have a Material Adverse
Effect.
(cc) The Lessee is not and has not been within the immediately
preceding five (5) years a participating employer in any negotiated cost
plan or substantially similar plan under applicable Canadian law. The
required contributions from any Subsidiary of the Lessee which is a
participating employer in any negotiated cost plan, or substantially
similar plan, under applicable Canadian law have been remitted. Each
Subsidiary of the Lessee which is a participating employer in any
negotiated cost plan, or substantially similar plan, under applicable
Canadian law has complied with all of its obligations under such a plan,
except such noncompliance which would not reasonably be expected to have a
Material Adverse Effect.
Section 3.3. Warranties and Representations of the Indenture Trustee. The
Indenture Trustee warrants and represents that as of the Closing Date:
(a) The Indenture Trustee is a national association duly organized,
validly existing and in good standing under the laws of the United States
of America and has the corporate power and authority to enter into and
perform its obligations under the Indenture Trustee Agreements.
(b) The Indenture Trustee Agreements have been duly authorized, have
been executed and delivered by the Indenture Trustee and constitute valid
and binding obligations of the Indenture Trustee enforceable against the
Indenture Trustee in accordance with the terms hereof and thereof, except
as such terms may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting the rights of creditors generally and except as
equitable remedies such as specific performance may be in the discretion of
the courts.
(c) The execution and delivery of the Indenture Trustee Agreements and
compliance by the Indenture Trustee with all of the provisions thereof do
not and will not contravene any law governing its banking or trust powers,
or any order of any court or governmental authority or agency applicable to
or binding on the Indenture Trustee or its articles of association or its
by-laws.
(d) There are no proceedings pending or, to the knowledge of the
Indenture Trustee, threatened, and to the knowledge of the Indenture
Trustee there is no existing basis for any such proceedings, against or
affecting the Indenture Trustee in or before any court or before any
governmental authority or arbitration board or tribunal which, if adversely
determined, might impair the ability of the Indenture Trustee to perform
its obligations under the Indenture Trustee Agreements.
-15-
(e) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body governing its
banking or trust powers is required for the due execution, delivery and
performance by the Indenture Trustee of the Indenture Trustee Agreements.
Section 3.4. Private Offering. (a) The Owner Trustee warrants and
represents to the Lessee, the Participants and the Indenture Trustee that
neither the Owner Trustee nor any Person authorized or employed by the Owner
Trustee as agent, broker, dealer or otherwise in connection with the placement
of the Beneficial Interest or any similar Security or the Series A Notes or any
similar Security has offered any of the Beneficial Interest or any similar
Security or the Series A Notes or any similar Security for sale to, or solicited
offers to buy any thereof from, or otherwise approached or negotiated with
respect thereto with, any prospective purchaser.
(b) The Lessee warrants and represents to the Owner Trustee, the
Participants and the Indenture Trustee that:
(i) neither the Lessee nor any Person authorized or employed by
the Lessee as agent, broker or otherwise in connection with the
offering or sale of the Beneficial Interest or any similar Security
has offered any of the Beneficial Interest or any similar Security for
sale to, or solicited offers to buy any thereof from, or otherwise
approached or negotiated with respect thereto with, any prospective
purchaser, other than the Owner Participant, which was offered the
Beneficial Interest at private sale for investment and which the
Lessee or such agent had reasonable grounds to believe, and did
believe, and, as to the Owner Participant, after reasonable inquiry
does believe, has such knowledge and experience in financial and
business matters that it is capable of evaluating the merits and risks
of investment in the Beneficial Interest; and
(ii) neither the Lessee nor any Person authorized or employed by
the Lessee as agent, broker, dealer or otherwise in connection with
the offering or sale of the Series A Notes or any similar Security has
offered any of the Series A Notes or any similar Security for sale to,
or solicited offers to buy any thereof from, or otherwise approached
or negotiated with respect thereto with, any prospective purchaser,
other than the Note Purchasers and 60 other institutional investors,
each of which was offered a portion of the Series A Notes at private
sale for investment and each of which the Lessee or such agent had
reasonable grounds to believe, and did believe, and, as to the Note
Purchasers, after reasonable inquiry does believe, has such knowledge
and experience in financial and business matters that it is capable of
evaluating the merits and risks of investment in the Series A Notes.
(c) The Owner Trustee and the Lessee agree that neither the Owner
Trustee nor the Lessee nor anyone acting on the behalf of either or both of
the Owner Trustee and the Lessee will offer
(i) the Beneficial Interest or any part thereof or any similar
Security for issue or sale to, or solicit any offer to acquire any of
the Beneficial Interest from anyone so as to
-16-
bring the issuance and sale of the Beneficial Interest within the
provisions of Section 5 of the Securities Act of 1933, as amended, or
(ii) the Notes or any part thereof or any similar Security for
issue or sale to, or solicit any offer to acquire any of the Notes
from, anyone so as to bring the issuance and sale of the Notes within
the provisions of Section 5 of the Securities Act of 1933, as amended.
Section 3.5. Representations and Covenants of the Participants.
(a) Representations and Covenants of the Owner Participant. The Owner
Participant warrants and represents to the Note Purchasers, the Owner Trustee
and the Lessee that as of the Closing Date:
(i) The Owner Participant is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to carry on its
present business and operations, to own or lease its Properties and to
enter into and perform its obligations under the Owner Participant
Agreements.
(ii) The Owner Participant Agreements have been duly authorized,
executed and delivered by the Owner Participant and constitute valid and
binding obligations of the Owner Participant enforceable against the Owner
Participant in accordance with the terms hereof and thereof, except as such
terms may be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting the rights of creditors generally and except as equitable
remedies such as specific performance may be in the discretion of the
courts.
(iii) The execution and delivery by the Owner Participant of the Owner
Participant Agreements and compliance by the Owner Participant with all of
the provisions thereof do not and will not contravene any law or any order
of any court or governmental authority or agency applicable to or binding
on the Owner Participant or contravene the provisions of, or constitute a
default under, its articles of association or by-laws or any indenture,
mortgage, contract or any agreement or instrument to which the Owner
Participant is a party or by which it or any of its property may be bound
or affected.
(iv) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
for the due execution, delivery or performance by the Owner Participant of
the Owner Participant Agreements.
(v) The Trust Estate is free of liens and rights of others resulting
from claims against the Owner Participant not related to the transactions
contemplated by the Operative Agreements.
(b) Purchase for Investment. Each Participant represents to each other
Participant, the Owner Trustee and the Lessee that such Participant is
purchasing the Interest (as hereinafter defined) to be acquired by it for the
account of such Participant or for the account of one or more
-17-
pension or trust funds of which it is trustee, in each case for investment and
with no present intention of distributing or reselling such Interest or any part
thereof, but without prejudice, however, to the right of such Participant at all
times to sell or otherwise dispose of all or any part of such Interest under a
registration under the Securities Act of 1933, as amended, or under an exemption
from such registration available under such Act; provided that the disposition
of such Interest shall at all times be within its control, subject, in the case
of the Beneficial Interest, to compliance with the provisions of Section 11. If
any Participant is purchasing for the account of one or more pension or trust
funds, such Participant represents that it is acting as sole trustee and has
sole investment discretion with respect to the acquisition of the Interest to be
acquired by it pursuant to this Agreement.
The Beneficial Interest and the Series A Notes are sometimes referred to in
this Section 3.5 collectively as the "Interests" and individually as an
"Interest".
(c) Source of Funds. Each Participant represents that at least one of the
following statements is an accurate representation as to the source of funds to
be used by such Participant to make its investment pursuant to Section 1 (the
"Source"):
(i) the Source is an "insurance company general account" within the
meaning of United States Department of Labor Prohibited Transaction Class
Exemption ("PTCE") 95-60 (issued July 12, 1995) and there is no employee
benefit plan, treating as a single plan, all plans maintained by the same
employer or employee organization, with respect to which the amount of the
general account reserves and liabilities for all contracts held by or on
behalf of such plan, exceed ten percent (10%) of the total reserves and
liabilities of such general account (exclusive of separate account
liabilities) plus surplus, as set forth in the NAIC Annual Statement filed
with the Source's State of domicile; or
(ii) the Source is either (A) an insurance company pooled separate
account, within the meaning of XXXX 00-0 (xxxxxx Xxxxxxx 00, 0000), xx (X)
a bank collective investment fund, within the meaning of the PTCE 91-38
(issued July 12, 1991) and, (except as disclosed to each other Participant,
the Owner Trustee and the Lessee in writing pursuant to this paragraph
(ii)), no employee benefit plan or group of plans maintained by the same
employer or employee organization beneficially owns more than 10% of all
assets allocated to such pooled separate account or collective investment
fund; or
(iii) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of PTCE
84-14 issued March 13, 1984 (the "QPAM Exemption")), no employee benefit
plan's assets that are included in such investment fund, when combined with
the assets of all other employee benefit plans established or maintained by
the same employer or by an affiliate (within the meaning of Section V(c)(1)
of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part 1(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a Person controlling or
controlled by the QPAM (applying the
-18-
definition of "control" in Section V(e) of the QPAM Exemption) owns a 5% or
more interest in such Participant and (A) the identity of such QPAM and (B)
the names of all employee benefit plans whose assets are included in such
investment fund have been disclosed to each other Participant, the Owner
Trustee and the Lessee in writing pursuant to this paragraph (iii); or
(iv) the Source is a governmental plan; or
(v) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each
of which has been identified to each other Participant, the Owner Trustee
and the Lessee in writing pursuant to this paragraph (v); or
(vi) the Source does not include assets of any employee benefit plan
(other than a plan exempt from the coverage of ERISA) and does not include
assets of any entity whose underlying assets include "plan assets" as
determined under United States Department of Labor Regulation Section
2510.3-101.
SECTION 4. CLOSING CONDITIONS.
Section 4.1. Conditions Precedent to Investment by each Participant. The
obligations of each Participant to make its investment pursuant hereto on the
Closing Date shall be subject to the following conditions:
(a) Execution of Operative Agreements. At or before the Closing, the
Operative Agreements shall have been duly executed and delivered by the
parties thereto and shall be in full force and effect, and no default shall
exist in the performance by any party thereto (other than such Participant)
of any of its obligations thereunder.
(b) Transfer of Title, Etc. The Seller shall have executed and
delivered to the Owner Trustee a warranty deed and xxxx of sale, in form
and substance satisfactory to such Participant, covering the Facility,
without representation or warranty (except as to Liens arising by, through
or under the Seller) and there shall have been delivered to such
Participant's special counsel such instruments as may be necessary or
desirable to terminate all interests of the Seller, whether as secured
party or otherwise, in the Facility and the Leased Property, other than the
interests of the Lessee under the Facility Lease.
(c) Intentionally omitted.
(d) Survey. Not less than three Business Days prior to the Closing
Date, there shall have been delivered to such Participant a survey of the
Site and the Facility located on such Site prepared as of a current date by
a registered civil engineer or surveyor licensed in the State where such
Site is located in accordance with the standard detail requirements for
"Class A" land title surveys adopted by the American Land Title Association
and the American Congress on Surveying & Mapping, as revised and in effect
on the date thereof, showing in reasonable detail the locations and
dimensions of such Site
-19-
and the Facility located on such Site, showing no encroachments upon such
Site by adjacent buildings or structures and no encroachments upon adjacent
property showing the location of surveyable Schedule B Exceptions to said
title policies, and showing no other defects except Permitted Encumbrances.
(e) Title Insurance. At the Closing, there shall have been delivered,
with respect to the Facility, to the Owner Trustee an American Land Title
Association Leasehold Owners--1992 title insurance policy with extended
coverage and to the Indenture Trustee an American Land Title Association
Leasehold Loan Policy--1992 of title insurance, both issued by a title
insurance company qualified to do business in the State where the Site for
the Facility is located designated by the Lessee and not objected to by any
Participant, with respect to such Site, satisfactory in substance and form
to special counsel to such Participant, insuring the leasehold interest of
the Owner Trustee under the Site Lease for such Site for an amount equal to
the Facility Cost of the Facility located on such Site and insuring the
lien of the Indenture Trustee under the Deed of Trust covering such Site as
a holder of a first lien of record on the leasehold interest of the Owner
Trustee under the Site Lease for such Site, against loss or damage by
reason of the failure of the Deed of Trust covering such Site to create the
lien it purports to create upon the leasehold interest of the Owner Trustee
in such Site, such lender's policy to be in an amount equal to the original
principal amount of the Series A Notes issued on the Closing Date and such
policies to have no exceptions to the coverage thereof other than Permitted
Encumbrances and such other exceptions as shall be acceptable to such
Participant in its sole discretion. Such policies shall contain all
endorsements required by the Participants including, without limitation, a
comprehensive endorsement and mechanics lien coverage.
(f) Opinions of Counsel. At the Closing, such Participant shall have
received the favorable written opinions of Stoel Rives LLP, counsel for the
Lessee, Squadron, Ellenoff, Plesent & Xxxxxxxxxx LLP, special New York
counsel for the Lessee, Xxxxx Xxxxxx Xxxxxxxx, local counsel for the
Participants, Morris, James, Hitchens & Xxxxxxxx, counsel for the Owner
Trustee, Xxx Xxxxxxx & Xxxxxxx, counsel for the Indenture Trustee, and
Xxxxxxxxxx & Xxxxx LLP, special counsel to the Owner Participant,
substantially in the respective forms set forth in Annex II hereto.
(g) Insurance Certificate. At or before the Closing, such Participant
shall have received certificates or other satisfactory evidence of the
maintenance of the insurance required pursuant to Section 7 of the Facility
Lease covering the Facility in the form contemplated by Section 7(c) of
such Facility Lease.
(h) Intentionally omitted.
(i) Recording of Leases. At or before the Closing, the Site Lease
covering the Site of the Facility and the Facility Lease covering the
Facility (or notices or memoranda thereof) and such other documents as are
deemed necessary or appropriate by such Participant shall have each been
recorded or filed for record in such public offices as may be necessary or
appropriate in order to protect the rights of the Owner Trustee thereunder
-20-
and (if such Participant is a Note Purchaser) to perfect the right, title
and interest of the Indenture Trustee in and to the Collateral.
(j) Secretary's Certificates; Good Standing Certificates; Etc. The
Participants shall have received on or before the Closing Date the
following, each dated the Closing Date (unless otherwise specified) and in
form and substance satisfactory to the Participants:
(i) copies of the resolutions of the board of directors of the
Lessee, approving the execution, delivery and performance by the
Lessee of the Lessee Agreements and the transactions contemplated
thereby, certified as of such Closing Date by the Secretary or an
Assistant Secretary of the Lessee;
(ii) a certificate of the Secretary or Assistant Secretary of the
Lessee certifying the names and true signatures of the officers of the
Lessee authorized to execute, deliver and perform, as applicable, the
Lessee Agreements on behalf of the Lessee;
(iii) the certificate of incorporation of the Lessee as in effect
on the Closing Date, certified by the Secretary of State of the state
of formation, and the Lessee's by-laws as in effect on the Closing
Date, certified by the Secretary or Assistant Secretary of the Lessee
as of the Closing Date; and
(iv) a good standing certificate for the Lessee from the
Secretary of State of its state of incorporation, dated such Closing
Date;
(k) Intentionally Omitted.
(l) Documents Relating to the Site. The Lessee shall deliver, or cause
to be delivered, to the Participants documentation with respect to the
condition of the Site, the real estate Taxes applicable to such Site and
such other documents and agreements relating to the operation of the
Facility or any part thereof as the Participants may reasonably request, in
form and substance reasonably acceptable to the Participants.
(m) Environmental Matters. A Phase I environmental site assessment of
the Site by the Environmental Consultant shall have been conducted, at the
sole cost and expense of the Lessee, and the Participants shall have
received a copy of the Environmental Consultant's report on its Phase I
environmental site assessment, which shall be in form and substance
satisfactory to the Participants (in their sole discretion).
(n) Illegality. No change shall have occurred in Applicable Law which,
in the opinion of the Participants, would make it illegal for such
Participant, and no change in circumstances shall have occurred which would
otherwise make it illegal or otherwise in contravention of guidance issued
by regulatory authorities for such Participant, to participate in the
transactions to be contemplated on the Closing Date; and no action or
proceeding shall have been instituted nor shall action before any court or
Governmental
-21-
Authority be threatened which in the opinion of counsel for such
Participant is not frivolous, nor shall any order have been issued or
proposed to be issued by any court or Governmental Authority, as of the
Closing Date, to set aside, restrain, enjoin or prevent the consummation of
any of the transactions contemplated by this Agreement or any of the other
Operative Agreements.
(o) Proceedings Satisfactory. All proceedings taken in connection with
the transactions contemplated hereby and all documents and papers relating
thereto shall be satisfactory to such Participant and its special counsel,
and such Participant and such special counsel shall have received copies of
such documents and papers as such Participant or such special counsel may
reasonably request in connection therewith or as a basis for such special
counsel's closing opinion, all in form and substance reasonably
satisfactory to such Participant and such special counsel.
Section 4.2. Additional Conditions Precedent to Investments by Owner
Participant. The obligation of the Owner Participant to make its investment
pursuant hereto on the Closing Date shall be subject to the conditions specified
in Section 4.1 and the following additional conditions:
(a) Tax Opinion. At or before the Closing, the Owner Participant shall
have received from Xxxxxxxxxx & Xxxxx LLP, its special counsel, a favorable
opinion in form and substance satisfactory to the Owner Participant as to
the Federal income tax consequences of the transactions contemplated
hereby.
(b) Independent Appraisal. At or before the Closing, the Owner
Participant shall have received the Appraisal.
(c) No Change in Law. On the Closing Date, there shall not have
occurred a change or proposed change in the Code or the treasury
regulations thereunder, no administrative pronouncement shall have been
issued and no Supreme Court decision shall have been rendered, in each
case, which is applicable to the transactions contemplated by the Operative
Agreements and which could be adverse to the Owner Participant and for
which there has not been an adjustment to Periodic Rent.
Section 4.3. Additional Conditions Precedent to Series A Note Purchases.
The obligation of each Note Purchaser to purchase and pay for Series A Notes
pursuant hereto on the Closing Date shall be subject to the conditions specified
in Section 4.1 and the following additional conditions:
(a) Recording of Indenture. At or before the Closing, the Indenture
(or a notice or memorandum with respect thereto) and the Deed of Trust
shall have been recorded or filed in all public offices as may be necessary
or appropriate in order to perfect the lien and security interest granted
thereby as against creditors of and purchasers from the Owner Trustee.
(b) Legal Investment. The Series A Notes to be issued on the Closing
Date shall on such Closing Date qualify as a legal investment for such Note
Purchaser under any
-22-
laws regulating investments to which it may be subject, and such Note
Purchaser shall have received such evidence as it may reasonably request to
establish compliance with this condition.
(c) Opinion of Counsel. On the Closing Date, such Note Purchaser shall
have received the favorable written opinion of Xxxxxxx and Xxxxxx, special
counsel for the Note Purchasers, substantially in the form set forth in
Annex II hereto.
SECTION 5. SPECIAL RIGHTS OF NOTE PURCHASERS.
Notwithstanding any provision to the contrary in this Agreement, the
Indenture or the Notes relating to the manner and place of payment, all amounts
payable to each Note Purchaser with respect to any Notes held by such Note
Purchaser or a nominee for such Note Purchaser shall be paid to the Indenture
Trustee and shall be paid by the Indenture Trustee to such Note Purchaser
(without any presentment thereof and without any notation of such payment being
made thereon) by check, duly mailed, by first class mail, postage prepaid, or
delivered to such Note Purchaser at the address for payments for such Note
Purchaser set forth in Schedule 1 hereto or, if wire transfer to a bank account
is designated for such Note Purchaser in said Schedule 1 or in a written notice
from such Note Purchaser to the Owner Trustee and the Indenture Trustee, by wire
transfer of immediately available Federal Reserve funds to the bank so
designated for credit to the account and marked for attention as so designated,
provided that such bank has facilities for the receipt of a wire transfer, or in
such other manner or to such other address in the United States as may be
designated by such Note Purchaser in a written notice from such Note Purchaser
to the Owner Trustee and the Indenture Trustee. In the case of any wire
transfer, the Indenture Trustee will transfer from the office of the Indenture
Trustee not later than 9:00 A.M., New York City Time, on each date any payment
or prepayment of principal or interest on the Notes or any other payment due to
the Note Purchasers is received, provided funds therefor have been received by
the Indenture Trustee in cash or in solvent credits acceptable to it. Each Note
Purchaser agrees that if such Note Purchaser shall sell or transfer any Note
such Note Purchaser will notify the Indenture Trustee of the name and address of
the transferee and such Note Purchaser will, prior to the delivery of such Note,
make a notation on such Note of the date to which interest has been paid thereon
and of the amount of any prepayments made on account of the principal thereof.
SECTION 6. CLO2 SYSTEM.
Section 6.1. Lessee Rights Relating to CLO2 System. Each party hereto
agrees that the Lessee shall have the right to consummate permanent financing of
the CLO2 System (including, without limitation, through a leveraged lease or
single-investor true lease) ("CLO2 Financing") upon completion of construction
of the CLO2 System; provided, that such right shall be conditioned upon
fulfillment of the following conditions:
(a) the Lessee shall have paid to each of the Owner Participant, the
Owner Trustee, the Indenture Trustee and each holder of a Note, on an
after-tax basis, an amount equal to all out-of-pocket costs and expenses
(including reasonable attorney's fees and expenses) reasonably incurred by
such Person with respect to the CL02 Financing;
-23-
(b) in the opinion of the Owner Participant's tax counsel, the CL02
Financing should not affect the status of the Facility Lease as a "true
lease" for income tax purposes or result in any non-de minimis risk of any
other material adverse income tax consequences to the Owner Participant,
the Owner Trustee or any Affiliate of either thereof;
(c) the representations and warranties of the Lessee set forth herein
shall be true and correct in all material respects on and as of the date of
the consummation of the CLO2 Financing with the same effect as though made
on and as of the date thereof and each of the Owner Trustee and the
Indenture Trustee shall have received an Officer's Certificate of the
Lessee to such effect and to the effect that no Lease Default or Lease
Event of Default is in existence, or will exist after taking into account
the CLO2 Financing;
(d) all Governmental Approvals related to the Lessee and the CLO2
System shall have been obtained, other than such approvals the absence of
which could not reasonably be expected to result in a Material Adverse
Effect;
(e) the Lessee shall have (i) represented that neither the CLO2 System
nor any financing thereof impairs the continuing operation of the Facility
in accordance with its original function and purpose and that neither the
CL02 System nor any financing thereof diminishes the value, utility,
condition or remaining economic useful life and estimated residual value of
the Facility to the Owner Trustee below the value, utility, condition,
remaining economic useful life and estimated residual value thereof to the
Owner Trustee immediately prior to the installation of the CL02 System
assuming that the Facility was then in the condition required to be
maintained by the terms of the Facility Lease and (ii) covenanted to ensure
the continuing accuracy of the foregoing representation; and
(f) Documentation of the CLO2 Financing and any amendment to the
Operative Agreements shall be in form and substance satisfactory to the
Owner Trustee, each Participant and the Indenture Trustee and shall address
the respective ownership, Lien and security interests and intercreditor
rights of the Owner Trustee, the Indenture Trustee, the Participants and
the lenders and equity participants in the CL02 Financing (including
without limitation, the disposition of the CL02 System upon any termination
of the Facility Lease) which interests and rights shall be based upon the
relative cost of the Facility and the CL02 System; provided that, in no
event shall the obligations of the Lessee under the Facility Lease be
junior to the obligations of the Lessee with respect to any lender or
equity participant under any CL02 Financing documentation; and provided
further that (i) the Owner Participant may, but has no obligation to,
submit bids with respect to participation in the CL02 Financing on the same
basis as any other prospective lender or equity participant, and (ii) each
Note Purchaser may, but has no obligation to, submit bids with respect to
participation in the CL02 Financing on the same basis as any other
prospective lender.
Section 6.2. Financing of CLO2 System.
-24-
(a) Lessor. The Owner Participant agrees to consider in its sole discretion
(i) making an equity investment in respect of the CLO2 System proposed by the
Lessee and not in violation of the Facility Lease and/or (ii) permitting an
additional equity investor or investors to become additional beneficiaries of
the Trust Estate. In addition, the Owner Trustee will, subject to the Owner
Participant's agreement pursuant to the immediately preceding sentence, or
pursuant to the exercise by the Lessee of its rights and fulfillment of its
obligations under Section 19(g) of the Facility Lease, permit, at the Lessee's
expense, the issuance of Improvement Notes in order to finance the CLO2 System
as contemplated by Section 6.1; provided that, as a condition to such issuance
the Owner Trustee shall first make a written offer to sell to the Note
Purchasers such Improvement Notes, which offer shall not expire or be revoked
for a period (to be specified in such offer) of not less than 60 days, and if
the Note Purchasers shall reject or fail to accept such offer within such offer
period, the Owner Trustee may issue such Improvement Notes to any other Person
upon terms substantially similar to those offered to the Note Purchasers.
Whether one or more of the Note Purchasers agrees to purchase all or any part of
the Improvement Notes, the Improvement Notes shall be issued in accordance with
the provisions of Section 2.02 of the Indenture and in accordance with the
following additional conditions:
(i) the aggregate principal amount of the Improvement Notes shall not
exceed (A) U.S. $35,200,000 and (B) 80% of the CLO2 System Cost;
(ii) the Improvement Notes shall have a final maturity date not later
than the final maturity date of the Series A Notes;
(iii) the weighted average remaining life to maturity of the
Improvement Notes as of the date of such issuance shall not be longer than
the weighted average remaining life to maturity of the Series A Notes;
(iv) the Owner Participant shall have received an opinion satisfactory
to it from Owner Participant's tax counsel to the effect that completion of
the CLO2 System and the issuance of the Improvement Notes should not affect
the status of the Facility Lease as a "true lease" for income tax purposes
or cause or create any non-de minimis risk of any other material adverse
tax consequences to the Owner Participant; and
(v) no Lease Default, Lease Event of Default, Indenture Event of
Default or, Casualty Occurrence or purchase of the Facility pursuant to
Sections 13(d), 19(f) or 19(g) of the Facility Lease shall have occurred as
of the date of the issuance of the Improvement Notes.
The Owner Participant will use its reasonable best efforts to cooperate
with such financing and to permit an additional equity investor or investors to
become additional beneficiaries of the Trust Estate. The Improvement Notes will
be issued under the Indenture and will be secured pari passu with the Series A
Notes. If the Owner Participant does not agree to make an equity investment in
the CLO2 System (unless the Lessee has exercised its option to cause the Owner
Participant to transfer the Beneficial Interest pursuant to Section 19(g) of the
Facility Lease) and the Owner Trustee does not issue the Improvement Notes, then
the Lessee shall have the right to arrange separate financing thereof; provided,
however, that such separate financing shall not be
-25-
secured by the CLO2 System. Except as otherwise provided in any CLO2 Financing
documentation, including any waiver, or consent in connection therewith, which
Owner Participant may execute, neither the Owner Participant nor any of its
Affiliates shall claim any tax benefits or attributes associated with the CLO2
System, shall not take any actions which are inconsistent with the Lessee's
ownership thereof, and shall, if requested by Lessee and subject to receipt of
indemnifications reasonably acceptable to the Owner Participant and payment by
the Lessee of all of the Owner Participant's reasonable expenses in connection
therewith, take such action as may be requested by Lessee to confirm Lessee's
ownership thereof.
(b) Documentation. (i) At any time or from time to time, the Owner Trustee
may execute and deliver the Improvement Notes in an aggregate principal amount
not exceeding the amount permitted by Section 6.2(a)(i) after (1) satisfaction
of the conditions set forth in Sections 6.1 and 6.2(a) hereof and Section 2.02
of the Indenture, (2) receipt by the Owner Trustee of an amount in immediately
available funds equal to 100% of the aggregate principal amount of the
Improvement Notes, (3) all of the reasonable fees and expenses (including,
without limitation, all legal fees and expenses) of the Owner Trustee that were
incurred in connection with the financing of the CLO2 System and the issuance of
the Improvement Notes or any proposed or actual amendment to the Operative
Agreements in connection therewith, and the Indenture Trustee, the Owner
Participant and the Note Purchasers that were incurred in connection with the
issuance of the Improvement Notes or any proposed or actual amendment to the
Operative Agreements in connection therewith, shall have been paid by the Lessee
and (4) receipt by the Owner Trustee of the documents referred to below (in form
and substance reasonably satisfactory to the Owner Trustee and the Owner
Participant):
(A) an Indenture Supplement containing the text of the Improvement
Notes (which, except for the term of payment thereof, shall be of
substantially the same effect as the text of the Series A Notes); the date
of maturity of the Improvement Notes, which shall not extend beyond the
final maturity of the Series A Notes; the date from which and the date or
dates on which, interest is payable; the terms for the repayment of the
principal amount of the Improvement Notes;
(B) a Lease Supplement, duly authorized, executed and delivered by the
Lessee and the Owner Trustee, providing for adjustments in Rent, Casualty
Value, Termination Value, and the Early Purchase Price under the Facility
Lease required to ensure that payments of such amounts will be adequate to
provide for all payments when due required under the Series A Notes and the
Improvement Notes, together with such instruments of conveyance, assignment
and transfer, if any, necessary to subject such Lease Supplement to the
Lien of the Indenture and the other Operative Agreements, and evidence as
to the due recording or filing of each thereof and of financing or similar
statements with respect thereto;
(C) such instruments of conveyance, assignment and transfer duly
executed and delivered by the respective parties thereto, and such evidence
of the due filing thereof or of financing statements with respect thereto,
as may be reasonably requested to convey to the Lessor all property
included in the CLO2 System, if any, and to subject such property
-26-
to the Lien of the Indenture and the Deed of Trust, subject to no Liens
except Permitted Encumbrances;
(D) originals or certified copies of all corporate actions and
governmental approvals and permits necessary for the due and valid issue of
the Improvement Notes, the due and valid authorization, execution, delivery
and performance by the Lessor of the Improvement Note documentation, and
the due and valid authorization, execution, delivery and performance by the
Lessee and the Owner Trustee of the Lease Supplement and the creation of
the Lien thereof referred to above, all of which corporate actions and
governmental approvals and permits shall have been duly obtained and shall
be in full force and effect; together with evidence as to the due
occurrence of such authorization, execution, delivery and performance;
(E) an appraisal and environmental phase I downdate as and to the
extent reasonably deemed necessary by any Participant;
(F) such other instruments, certificates, opinions of counsel, surveys
and title endorsements as may be reasonably requested by the Owner Trustee
or any Participant; and
(G) such modifications, amendments, waivers or supplements to the
Operative Agreements as may be reasonably requested by the Owner Trustee,
the Lessee or the prospective holders of the Improvement Notes in order to
effectuate the financing contemplated by this Section 6.2.
Section 6.3. Burdensome Buyout Date. Each party hereto further agrees that
if the CLO2 Financing shall not have been consummated on the Burdensome Buyout
Trigger Date (a "Burdensome Buyout Event"), the Lessee shall have a right to
purchase the Facility in accordance with the terms set forth in Section 19(g) of
the Facility Lease.
SECTION 7. GENERAL TAX INDEMNITY.
Section 7.1. Tax Indemnitee Defined. For purposes of this Section 7, "Tax
Indemnitee" means each Participant, the Owner Participant Guarantor, the Owner
Trustee, Wilmington Trust Company, the Trust Estate, the Indenture Trustee both
in its individual capacity and as trustee, each of their respective Affiliates
and each of their respective successors or assigns permitted under the terms of
the Operative Agreements, including successive holders of the Notes.
Section 7.2. Taxes Indemnified.
(a) Withholding. All payments by the Lessee to any Tax Indemnitee in
connection with the transactions contemplated by the Operative Agreements shall
be free and clear of, and without deduction for, withholdings of any nature
whatsoever (and at the time that the Lessee is required to make any payment upon
which any withholding is required the Lessee shall pay an additional amount such
that the net amount actually received will, after such withholding and any
incremental taxes on such amounts, equal the full amount of the payment then
due) and shall be
-27-
free of expense to each Tax Indemnitee for collection or other charges,
provided, however, that no such additional amounts shall be paid by the Lessee
and the Lessee assumes no responsibility regarding any withholdings imposed (1)
on the Lessor or the Owner Participant by reason of any transfer of the Leased
Property or any interest in the Operative Agreements by the Lessor or the Owner
Participant other than a transfer pursuant to Section 13 or 19 of the Facility
Lease or any transfer which occurs in connection with the occurrence or
continuance of a Lease Default or Lease Event of Default or (2) on the Indenture
Trustee or any holder by reason of a transfer of the Notes to a holder who is
not a U.S. Person, provided that, for the avoidance of doubt, neither the Lessor
nor the Owner Participant shall be responsible for any Taxes incurred by reason
of an event described in this clause (2) and shall receive any amounts owed to
it from the Indenture Trustee without diminution for any such Taxes. If, for any
reason, the Lessee is required to make any payment to a taxing authority with
respect to, or as a result of, any withholding tax imposed on any Tax Indemnitee
in respect of the transactions contemplated by the Operative Agreements which
withholding tax is not the responsibility of the Lessee under this Section 7
then such Tax Indemnitee shall pay to the Lessee within 30 days of receiving
written notice thereof an amount which equals the amount paid by the Lessee with
respect to, or as a result of, such withholding tax.
(b) In General. Subject to the exclusions stated in Section 7.3, whether or
not the Facility is accepted under a Facility Lease the Lessee agrees to
indemnify and hold harmless each Tax Indemnitee, on an after-tax basis, against
all fees (including, without limitation, license fees and registration fees),
taxes (including, without limitation, income, gross receipts, franchise, excise,
conduct of business, ad valorem, sales, rental, use, value added, property,
transfer and stamp taxes), levies, assessments, imports, duties, charges or
withholdings of any nature, together with any and all penalties, additions to
tax, fines or interest thereon ("Taxes") imposed upon any Tax Indemnitee, the
Lessee or all or any part of the Leased Property by any federal, state or local
government, political subdivision, or taxing authority in the United States or
its possessions, by any government or taxing authority of or in a foreign
country or by any international authority, upon, with respect to or in
connection with:
(a) the Leased Property or any part thereof or interest therein;
(b) the acquisition, financing, ownership, leasing, possession,
purchase, acceptance, rejection, condition, registration, return, use,
storage, operation, return, transfer of title, maintenance, repair,
improvement, replacement, substitution, delivery, redelivery, non-delivery,
construction, manufacture, insuring, modification, transfer, control,
occupancy, servicing, mortgaging, location, refinancing, disposition,
subleasing, repossession, abandonment, shut-down, sale or other application
or disposition of or with respect to the Leased Property or any part
thereof or interest therein;
(c) the rental payments, receipts or earnings arising from the Leased
Property or payable pursuant to the Facility Lease;
(d) the Operative Agreements or otherwise in connection with the
transactions contemplated thereby;
-28-
(e) the payment of principal or interest or premium on or other
amounts payable with respect to the Notes or as a result of the purchase,
holding, refinancing or transfer thereof or otherwise relating to any
transaction contemplated hereby; and
(f) without limitation of the foregoing and for the avoidance of
doubt, the Xxxxx River Easement, the Xxxxx River Agreement, the Railway
License and the County Road Documents.
Section 7.3. Taxes Excluded. The indemnity provided for in Section 7.2
shall not extend to any of the following:
(a) as to any Tax Indemnitee, Taxes imposed by any taxing authority of
or in the United States on, based on, or measured by or with respect to the
gross or net income or receipts of such Tax Indemnitee or any Affiliate
thereof (including any minimum or alternative minimum Taxes and any Taxes
on or measured by items of tax preference but excluding any sales, use,
license, property, value added (subject to clause (c) below) or rental
Taxes) ("Income Taxes");
(b) as to any Tax Indemnitee, Taxes imposed by any taxing authority of
or in the United States on, based on, measured by or with respect to
capital or net worth or similar Taxes to the extent that such Taxes do not
exceed the Taxes that would have been imposed had the Tax Indemnitee not
entered into the Operative Agreements;
(c) as to any Participant, United States Federal valued added taxes in
the nature of or in lieu of any income tax;
(d) as to any Tax Indemnitee, Taxes imposed with respect to the
Facility after the earliest of (1) the return of possession of the Facility
to the Owner Participant or the placement of such Facility in storage at
the request of the Owner Participant, in either case pursuant to Section 16
of the Facility Lease covering the Facility, (2) the termination of the
Term pursuant to Section 19(f) or 19(g) of the Facility Lease with respect
to the Facility, or (3) the discharge in full of the Lessee's obligation to
pay the Termination Value or the Casualty Value and all other amounts due,
if any, under Section 13 of the Facility Lease; provided that the exclusion
set forth in this clause (d) shall not apply to Taxes to the extent such
Taxes relate to events occurring or matters arising prior to or
simultaneously with such time;
(e) as to any Tax Indemnitee, Taxes which arise directly out of or are
directly caused by any breach by such Tax Indemnitee of any of its
representations, warranties or covenants in any of the Operative
Agreements, or the gross negligence or willful misconduct of such Tax
Indemnitee;
(f) as to any Tax Indemnitee, any Taxes to the extent such Taxes
result from the failure of such Tax Indemnitee to file tax returns, reports
or statements properly and on a timely basis (unless such failure is
related to the failure of the Lessee to perform properly and on a timely
basis its obligations under Section 7.8);
-29-
(g) as to any Tax Indemnitee, Taxes which become payable as a result
of a sale, assignment, transfer or other disposition (whether voluntary or
involuntary) by such Tax Indemnitee of all or any portion of its interest
in the Leased Property or any part thereof, the Trust Estate or any of the
Operative Agreements or rights created thereunder, including, without
limitation, a revocation of the Trust Agreement, other than a disposition
which occurs as the result of the exercise of remedies for a Lease Event of
Default, any disposition which occurs in connection with the occurrence and
continuance of a Lease Event of Default or a purchase of the Facility
pursuant to the Facility Lease;
(h) as to any Tax Indemnitee, Taxes imposed by any jurisdiction that
would not have been imposed on such Tax Indemnitee but for activities of
such Tax Indemnitee in such jurisdiction unrelated to the transactions
contemplated by the Operative Agreements;
(i) as to the Indenture Trustee or the holder of a Note (or any
successor indebtedness), any Tax in the nature of an intangible or similar
Tax imposed upon or with respect to the value of its interest in the Notes
(or any successor indebtedness) by any taxing authority;
(j) as to the Owner Trustee or the Indenture Trustee, Taxes which are
based on or measured by its fees or compensation;
(k) as to any Tax Indemnitee, penalties, interest or additions to tax
to the extent imposed as a result of Taxes which are excluded from
indemnification hereunder; and
(l) as to any Tax Indemnitee, any foreign Taxes imposed with respect
to the Facility or any portion or part thereof, or the transactions
contemplated by the Operative Agreements, unless such Taxes result for the
use, registration, or location of the Facility or any portion or part
thereof, or the incorporation, organization or location of a user, lessee
or assignee (whether or not in possession) of the Facility or any portion
or part thereof (other than the Lessor, the Owner Participant or any
Affiliate thereof), in, or any payment in respect thereof being made by the
Lessee or any Affiliate thereof from, the foreign jurisdiction imposing
such Taxes.
Section 7.4. All Tax Obligations in this Section, Etc. Notwithstanding any
other provision anywhere contained in the Operative Agreements, it is understood
that all of the Lessee's obligations with respect to Taxes are set forth in this
Section 7 and in the Tax Indemnity Agreement.
Section 7.5. Payments to Lessee. (a) If any Tax Indemnitee shall realize a
Tax benefit (net of any Tax detriment not otherwise paid or indemnified against
by the Lessee hereunder) as a result of any Taxes paid or indemnified against by
the Lessee under this Section 7 (whether by way of deduction, credit, allocation
or apportionment or otherwise), such Tax Indemnitee shall pay to the Lessee an
amount equal to the amount of such Tax benefit, increased by the Tax
-30-
Indemnitee's additional saved Taxes attributable to the payment being made to
the Lessee hereunder.
(b) Upon receipt by a Tax Indemnitee of a refund or credit of all or part
of any Taxes paid or indemnified against by the Lessee, such Tax Indemnitee
shall pay to the Lessee an amount equal to the amount of such refund plus any
interest received by or credited to such Tax Indemnitee with respect to such
refund increased or decreased, as the case may be, by the Tax Indemnitee's net
additional or saved taxes attributable to the receipt of such amounts from the
taxing authority and the payment being made to the Lessee hereunder.
(c) If at the time a payment described in Section 7.5(a) or (b) shall be
due to the Lessee a Lease Default or Lease Event of Default shall have occurred
and be continuing, such amount shall not be payable until such Lease Default or
Lease Event of Default shall have been cured.
(d) The aggregate of all amounts paid by a Tax Indemnitee to the Lessee
pursuant to this Section 7.5 shall in no case exceed the sum of all amounts paid
to such Tax Indemnitee by the Lessee, other than contest costs, plus amounts
payable to the Lessee under Section 7.5(b).
Section 7.6. Procedures. Lessee will endeavor in good faith to determine
and timely pay to the applicable authority all Taxes which it will be obligated
to indemnify under this Section 7 except those that the Lessee intends to
contest pursuant to Section 7.7. Any amount payable to a Tax Indemnitee pursuant
to Section 7.2 shall be paid within 30 days after receipt of a written demand
therefor from such Tax Indemnitee accompanied by a written statement describing
in reasonable detail the basis for such indemnity and the computation of the
amount so payable, provided that such amount need not be paid prior to the later
of (i) the date on which such Taxes are paid or payable (including without
limitation by a reduction of a refund with respect to unindemnified Taxes), or
(ii) in the case of amounts which are being contested pursuant to Section 7.7
hereof, the time such contest (including all appeals) is finally resolved. Any
amount payable to the Lessee pursuant to Section 7.5 shall be paid promptly
after a Tax Indemnitee realizes a net tax benefit or receives a refund giving
rise to a payment under Section 7.5, and shall be accompanied by a written
statement by such Tax Indemnitee setting forth in reasonable detail the basis
for computing the amount of such payment. Such statement shall be final, binding
and conclusive upon the parties unless within 15 days following the Lessee's
receipt of any computation from such Tax Indemnitee, the Lessee requests that an
independent nationally recognized accounting firm selected by such Tax
Indemnitee and reasonably acceptable to the Lessee determine whether such
computations of such Tax Indemnitee are correct. Such accounting firm shall be
requested to make the determination contemplated by this Section 7.6 within 30
days of its selection. In the event such accounting firm shall determine that
such computations are incorrect, then such firm shall determine what it believes
to be the correct computations. The Tax Indemnitee shall cooperate with such
accounting firm and supply it with all information necessary to permit it to
accomplish such determination (other than income tax returns). The computations
of such accounting firm shall be final, binding and conclusive upon the parties,
and the Lessee shall have no right to inspect the books, records or tax returns
of any Tax Indemnitee to verify such computation or for any other purpose. All
fees and expenses of the accounting firm payable under this Section 7.6 shall be
borne by the Lessee; provided, however, that such fees and expenses will be paid
by the Tax Indemnitee if the verification results in an
-31-
adjustment in the Lessee's favor of ten percent or more of the indemnity payment
or payments computed by the Tax Indemnitee.
Section 7.7. Contest. If a written claim is made against a Tax Indemnitee
for Taxes with respect to which the Lessee may be liable for indemnity
hereunder, the Tax Indemnitee shall give the Lessee prompt notice in writing of
such claim (and in any event within 30 days after its receipt) and shall
promptly furnish the Lessee with copies of the claim and all other writings
received from the taxing authority relating to the claim; provided however, that
the failure of such Tax Indemnitee timely to provide such written notice shall
not affect the Lessee's obligations under this Section 7.7 except to the extent
that the same precludes the Lessee from contesting such Taxes. The Tax
Indemnitee shall not pay such claim prior to the 30 days after providing the
Lessee with such written notice, unless required to do so by law or unless
deferral of payment would cause adverse consequences to the Tax Indemnitee. The
Tax Indemnitee shall in good faith, with due diligence and at the Lessee's
expense, if requested in writing by the Lessee, contest (including pursuing all
appeals permitted hereby) in the name of the Tax Indemnitee (or, if requested by
the Lessee and permissible as a matter of law, in the name of the Lessee or an
Affiliate), or shall permit or, at such Tax Indemnitee's election, require the
Lessee to contest in either the name of the Lessee or an Affiliate or with the
Tax Indemnitee's consent (not to be unreasonably withheld), in the name of the
Tax Indemnitee the validity, applicability or amount of such Taxes by,
(a) resisting payment thereof if practical;
(b) not paying the same except under protest if protest is necessary
and proper;
(c) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings; or
(d) taking such other reasonable action as is reasonably requested by
the Lessee from time to time.
provided, however, that if the contest is carried on in the name of the Lessee
or an Affiliate, or is being brought by the Lessee in the name of the Tax
Indemnitee, such contest shall be undertaken by the Lessee, at the Lessee's
expense and at no after-tax cost to the Tax Indemnitee, unless at such time the
Tax Indemnitee determines in its reasonable good faith judgment that either (x)
such claim is not severable from other Taxes in dispute before the same taxing
authority without adversely affecting the Tax Indemnitee with respect to such
other Taxes or the resolution of the dispute or (y) based upon the Lessee's
conduct of such contest, the Lessee's continued control of such contest is
reasonably likely to have a material adverse impact on the Tax Indemnitee in
which case the Tax Indemnitee shall conduct such contest.
In no event shall any Tax Indemnitee be required or the Lessee be permitted
to contest any Taxes for which the Lessee is obligated to indemnify pursuant to
this Section 7 unless: (1) such Lessee shall have acknowledged its liability to
such Tax Indemnitee for an indemnity payment pursuant to this Section 7 as a
result of such claim if and to the extent such Tax Indemnitee or the Lessee, as
the case may be, shall not prevail in the contest of such claim provided,
however, that
-32-
such acknowledgment shall be of no force or effect to the extent that such
contest is resolved on a basis that clearly demonstrates that, without such
acknowledgment pursuant the terms of this Agreement, the Lessee would not
otherwise be liable to the Tax Indemnitee for the Tax so contested; (2) such Tax
Indemnitee shall have received the opinion of independent tax counsel selected
by such Tax Indemnitee and satisfactory to the Lessee furnished at Lessee's sole
expense, to the effect that a reasonable basis exists for contesting such claim
or, in the event of an appeal, that it is more likely than not that an appellate
court will reverse or substantially modify the adverse determination (and
provided that no appeal shall be required to the United States Supreme Court);
(3) the Lessee shall have agreed to pay such Tax Indemnitee on demand (and at no
after-tax costs to such Tax Indemnitee) all reasonable costs and expenses that
such Tax Indemnitee actually incurs in connection with contesting such claim
(including, without limitation, all costs, expenses, reasonable legal and
accounting fees, disbursements, penalties, interest and additions to the Taxes);
(4) no Lease Event of Default shall have occurred and shall have been
continuing; (5) such Tax Indemnitee shall have determined that the action to be
taken will not result in any substantial danger of sale, forfeiture or loss of,
or the creation of any Lien (except if such Lessee shall have adequately bonded
such Lien or otherwise made provision to protect the interests of such Tax
Indemnitee in a manner reasonably satisfactory to such Tax Indemnitee) on the
Leased Property or any portion thereof or any interest therein; (6) the amount
of such claims alone, or, if the subject matter thereof shall be of a continuing
or recurring nature, when aggregated with identical potential claims with
respect to this transaction shall be at least $25,000; (7) if such contest shall
be conducted in a manner requiring the payment of the claim, the Lessee shall
have paid the amount required (and at no after-tax costs to the Tax Indemnitee);
and (8) such claim or liability does not involve the possibility of criminal
sanctions or liability to such Tax Indemnitee. The Lessee shall cooperate with
the Tax Indemnitee with respect to any contest controlled and conducted by the
Tax Indemnitee and the Tax Indemnitee shall consult with the Lessee regarding
the conduct of such contest and in furtherance of the foregoing, the Lessee
shall have the right to attend any proceeding relating to matters for which it
is obligated to indemnify hereunder but shall not be permitted to actively
participate in any discussion. The Tax Indemnitee shall not discriminate against
any proposed adjustment due to its indemnified nature as compared with other
proposed adjustments involving potential tax liability of the Tax Indemnitee and
shall not, without the written consent of the Lessee, settle such proposed
adjustment. The Tax Indemnitee shall cooperate with the Lessee with respect to
any contest controlled and conducted by the Lessee and the Lessee shall consult
with the Tax Indemnitee regarding the conduct of such contest. The Tax
Indemnitee shall have the right to attend any proceeding relating to matters for
which it may be indemnified hereunder but shall not be permitted to actively
participate in any discussion.
Notwithstanding anything contained in this Section 7.7 to the contrary, no
Tax Indemnitee shall be required to contest any claim if the subject matter
thereof shall be of a continuing or recurring nature and shall have previously
been decided adversely to the Tax Indemnitee pursuant to the contest provisions
of this Section 7.7 unless there shall have been a change in the law (including,
without limitation, amendments to statutes or regulations, administrative
rulings or court decisions) enacted, promulgated or effective after such claim
shall have been so previously decided, and such Tax Indemnitee shall have
received an opinion of independent tax counsel selected by such Tax Indemnitee
and reasonably satisfactory to Lessee, furnished at the Lessee's sole expense,
to the effect that such change is favorable to the position which such Tax
-33-
Indemnitee or the Lessee, as the case may be, had asserted in such previous
contest and as a result of such change, there is a reasonable basis to contest
such claim.
Section 7.8. Reports. In the event any reports with respect to Taxes are
required to be made, the Lessee will either prepare and file such reports (and
in the case of reports which are required to be filed with respect to the
Facility, such reports shall be prepared and filed in such manner as to show as
required the interests of each Tax Indemnitee in such Facility) or, if it shall
not be permitted to file the same, it will notify each Tax Indemnitee of such
reporting requirements, prepare such reports in such manner as shall be
satisfactory to each Tax Indemnitee and deliver the same to each Tax Indemnitee
within a reasonable period prior to the date the same is to be filed. The
Lessee's obligations pursuant to the previous sentence shall be subject to
Lessee's knowledge (having made good faith and reasonable efforts to inform
itself) of the necessary reports; provided, however that a Tax Indemnitee's
failure to file any report as a result of the Lessee's failure to provide such
report shall not subject the Tax Indemnitee to the exclusion in Section 7.3 (f)
hereof. The Lessee shall provide such information as the Owner Participant or
the Owner Trustee may reasonably require from the Lessee to enable the Owner
Participant and the Owner Trustee to fulfill their respective tax filing, tax
audit, and tax litigation obligations.
Section 7.9. Survival. The provisions of this Section 7 shall continue in
full force and effect, notwithstanding the expiration or termination of any
Operative Agreement, until all obligations hereunder have been met and all
liabilities hereunder paid in full.
SECTION 8. INDEMNITIES OF THE OWNER TRUSTEE AND THE OWNER PARTICIPANT.
Each of Wilmington Trust Company and the Owner Participant (referred to in
this Section as the "Indemnitors") hereby severally agrees for the benefit of
the other Indemnitor, the Indenture Trustee and the Note Purchasers (referred to
in this Section as the "Indemnitees") that at all times the Trust Estate shall
be free of any Lien arising as a result of claims against such Indemnitor not
related to the transactions contemplated by the Operative Agreements and to such
Indemnitor's interest in the Trust Estate (except Permitted Encumbrances other
than Lessor's Liens attributable to such Indemnitor) and that such Indemnitor
will at its own cost and expense promptly take such action as may be necessary
duly to discharge any such Lien, provided that no such Lien need be discharged
so long as it is being contested by Permitted Contest. Each Indemnitor further
agrees to indemnify and hold harmless the Indemnitees from and against any costs
or expenses (including legal fees and expenses) incurred, in each case, as a
result of the imposition or enforcement of any such Lien.
Each Indemnitor hereby severally agrees for the benefit of the Lessee that
at all times the Leased Property under the Facility Lease shall be free of any
Lien which impairs the right, title or interest of the Lessee under the Facility
Lease and which arises as a result of claims against such Indemnitor not related
to the transactions contemplated by the Operative Agreements and to such
Indemnitor's interest in such Leased Property, except Permitted Encumbrances
(other than Lessor's Liens attributable to such Indemnitor), and that such
Indemnitor will at its own cost and expense promptly take such action as may be
necessary duly to discharge any such Lien, provided that no such Lien need be
discharged so long as it is being contested by Permitted Contest; and such
Indemnitor further agrees to indemnify and hold harmless the Lessee from and
against any
-34-
costs or expenses (including legal fees and expenses) incurred, in each case, as
a result of the imposition or enforcement of any such Lien which impairs the
right, title or interest of the Lessee under the Facility Lease, except
Permitted Encumbrances (other than Lessor's Liens attributable to such
Indemnitor).
The agreements of Wilmington Trust Company in this Section 8 are made in
its individual capacity and not as Owner Trustee, notwithstanding the provisions
of Section 14.8(b) or any similar provision of any other Operative Agreement.
SECTION 9. INDEMNIFICATION.
Section 9.1. General Indemnity. The Lessee hereby agrees, whether or not
any of the transactions contemplated hereby shall be consummated, to assume
liability for, and does hereby agree to indemnify, protect, defend, save and
keep harmless, on an after tax basis and at no after tax cost to the Indemnified
Party, each Indemnified Party from and against any and all liabilities,
obligations, losses, damages, Environmental Claims, penalties, claims (including
claims by any employee of the Lessee or the Seller or any of their respective
contractors), actions, suits and related costs, expenses and disbursements,
including reasonable legal fees and expenses, of whatsoever kind and nature (for
purposes of this Section 9 collectively called "Expenses"), imposed on, asserted
against or incurred by any Indemnified Party as a result of claims threatened or
asserted against such Indemnified Party in any way relating to or arising out of
(i) this Agreement and the other Operative Agreements, including the Notes and
the offering or sale thereof, (ii) the construction, installation, ownership,
delivery, lease, sublease, possession, use, operations or condition of the
Leased Property under the Facility Lease (including, without limitation, latent
and other defects, whether or not discoverable by the Indemnified Party or the
Lessee, and any claim for patent, trademark or copyright infringement and any
claim arising under the strict liability doctrine in tort), (iii) the sale or
other disposition of the Leased Property under the Facility Lease or any portion
thereof pursuant to Section 8, 13, 15 or 19 of such Facility Lease, or (iv)
without limitation of the foregoing and for the avoidance of doubt, the Xxxxx
River Easement, the Xxxxx River Agreement, the Railway License and the County
Road Documents, except only that the Lessee shall not be required to indemnify
any Indemnified Party pursuant to this Section 9 for (A) any Taxes or other
impositions, and (B) Expenses resulting from the willful misconduct, gross
negligence or willful breach of contract of such Indemnified Party. If any
Indemnified Party shall have knowledge of any claim or liability hereby
indemnified against it shall give prompt written notice thereof to the Lessee;
provided, however, that the failure of such Indemnified Party to give such
notice shall not relieve the Lessee of any of its obligations hereunder except
to the extent the same causes the Lessee's indemnification obligations to exceed
the obligations of the Lessee had the Lessee received such notice.
Section 9.2. Payments, Survival and other Provisions. All amounts payable
by the Lessee pursuant to this Section 9 shall be payable directly to the
parties entitled to indemnification. All the indemnities contained in this
Section 9 shall continue in full force and effect notwithstanding the expiration
or other termination of this Agreement, the Facility Lease or any other
Operative Agreement and are expressly made for the benefit of, and shall be
enforceable by, each Indemnified Party. The Lessee's obligations under this
Section 9 shall be that of primary
-35-
obligor irrespective of whether the Indemnified Party shall also be indemnified
with respect to the same matter under any other agreement by any other Person.
Section 9.3. No Guarantee of Residual Value or Notes. The indemnities and
assumptions of liabilities set forth in this Section 9 do not guarantee a
residual value of the Facility or guarantee the payment of the Notes; provided
that the foregoing shall not limit the provisions of Section 12(b) of the
Facility Lease.
SECTION 10. TRANSACTION ECONOMICS.
The Periodic Rent, Casualty Value, Termination Value and Early Purchase
Price for the Facility being purchased on the Closing Date shall be as set forth
in the form of Facility Lease attached hereto as Exhibit C.
SECTION 11. RESTRICTIONS ON TRANSFER OF BENEFICIAL INTEREST.
The Owner Participant agrees that it shall not sell, convey, assign,
pledge, mortgage encumber or otherwise transfer any of its Beneficial Interest
and further agrees that the obligations under the Owner Participant Guaranty
shall not be transferred, in each case prior to the expiration or earlier
termination of the Term of the Facility Lease, unless:
(a) The Person to whom such transfer is to be made (a "Transferee") is
not subject at the time of the transfer to an Insolvency Proceeding and is
an "affiliated company" or a "qualified investor" or any other Person
agreeable to each Note Purchaser and the Lessee as evidenced by their
respective prior written consents delivered to the Owner Participant or
Owner Participant Guarantor, as applicable. The term "affiliated company"
shall mean any company (the "Parent") owning, directly or indirectly, not
less than 80% of the Voting Stock of the Owner Participant or the Owner
Participant Guarantor, any company (the "Holding Company") owning, directly
or indirectly, not less than 80% of the Voting Stock of the Parent, and any
company not less than 80% of the Voting Stock of which is owned, directly
or indirectly, by the Holding Company, the Parent or such Owner Participant
or Owner Participant Guarantor or any entity with which such Owner
Participant or Owner Participant Guarantor merges or consolidates or which
acquires substantially all of its assets. The term "qualified investor"
means any Person existing under the laws of the United States of America or
any jurisdiction thereof which is an institutional investor, which, so long
as no Lease Default under clause (i), (ii), (vi), (vii) or (viii) of
Section 15(a) of the Facility Lease or any Lease Event of Default shall
have occurred and be continuing, is not a Disqualified Assignee (as defined
below), and which (in the case of any banking institution or insurance
company) has capital, surplus and undivided profits (or the equivalent) of
at least U.S.$50,000,000 or (in the case of any other transferee) has a net
worth of at least U.S.$50,000,000; provided that, such Transferee may have
a capital, surplus and undivided profits or net worth, as the case may be,
of less than U.S.$50,000,000 if all of the capital stock and other
Securities of such Transferee are owned by a Person that would constitute a
permitted transferee hereunder and such Person guarantees, or, in the case
of a transfer by the Owner Participant where the Owner Participant
Guarantor remains the same Person as before such transfer, such
-36-
Person continues to guaranty the obligations of such transferee of the
Owner Participant, under the Operative Agreements by instrument in
substantially the form of the Owner Participant Guaranty or otherwise
satisfactory to the Owner Trustee, each other Participant and the Lessee.
"Disqualified Assignee" means a Person engaged, as a material part of its
business, in activities in the forest products industry, excluding a Person
engaged in such activities solely as a result of passive investments
(including the temporary ownership of manufacturing facilities as a result
of the exercise of such Person's remedies in connection with such
investments).
(b) The Indenture Trustee, the Note Purchasers and the Lessee shall
have received 20 days' prior written notice of such transfer specifying the
name and address of any proposed transferee and such additional information
as shall be necessary to determine whether the proposed transfer satisfies
the requirements of this Section 11.
(c) Such Transferee enters into an agreement or agreements in form and
substance reasonably satisfactory to the Lessee, the Owner Trustee and the
Note Purchasers whereby, in the case of a transfer by the Owner
Participant, such Transferee confirms that it shall be deemed a party to
this Agreement, and each other Owner Participant Agreement, and in the case
of a transfer by the Owner Participant Guarantor, such Transferee confirms
that it is party to the Owner Participant Guaranty, and agrees to be bound
by all the terms of, and to undertake all of the obligations and
liabilities of the transferring Owner Participant or Owner Participant
Guarantor, as applicable, contained in, the Owner Participant Agreements or
the Owner Participant Guaranty, if applicable, to the extent of the
interest transferred and in which the Transferee shall make representations
and warranties comparable to those of the Owner Participant or Owner
Participant Guarantor contained herein and in the other Owner Participant
Agreements or, as applicable, in the Owner Participant Guaranty.
(d) An opinion of counsel of the Transferee (which counsel shall be
reasonably acceptable to the Lessee and the Note Purchasers), confirming
(i) the existence, power and authority of, and due authorization, execution
and delivery of all relevant documentation by, the Transferee (with
appropriate reliance on certificates of corporate officers or public
officials as to matters of fact), and (ii) that each agreement referred to
in subparagraph (c) above is the legal, valid and binding obligation of the
Transferee, enforceable against the Transferee in accordance with the terms
thereof (subject to customary qualifications as to bankruptcy and equitable
principles), shall be provided, prior to such transfer, to the Lessee, the
Note Purchasers and the Indenture Trustee, which opinion shall be in form
and substance reasonably satisfactory to each of them.
(e) After giving effect to such transfer, there shall not be more than
two Owner Participants in the aggregate.
(f) All fees, expenses and charges of the parties hereto (including,
without limitation, legal fees and expenses of special counsel) incurred in
connection with each transfer of such Beneficial Interest shall be paid by
the Owner Participant or the Owner Participant Guarantor, as applicable.
-37-
(g) Such transfer does not involve the use of an amount which
constitutes assets of an employee benefit plan (other than a governmental
plan exempt from the coverage of under ERISA) or such Transferee makes the
representation regarding the source of funds contained in Section 3.5(c)
hereof.
(h) After giving effect to such transfer, no Indenture Default
attributable to any Owner Participant, any Owner Participant Guarantor or
the Owner Trustee shall have occurred and be continuing.
(i) The Owner Participant or Owner Participant Guarantor, as
applicable, shall deliver to the Lessee, the Owner Trustee, the Note
Purchasers and the Indenture Trustee, an Officer's Certificate certifying
as to compliance with the transfer requirements contained herein.
Upon any such transfer, (i) except as the context otherwise requires, such
Transferee shall be deemed the "Owner Participant" or "Owner Participant
Guarantor", as the case may be, for all purposes, and shall enjoy the rights and
privileges and perform the obligations of the Owner Participant or Owner
Participant Guarantor, as applicable, to the extent of the interest transferred
hereunder and under each other Owner Participant Agreement, and, except as the
context otherwise requires, each reference in this Agreement and each other
Operative Agreement to the "Owner Participant" or "Owner Participant Guarantor",
as the case may be, shall thereafter be deemed to include such Transferee for
all purposes to the extent of the interest transferred, (ii) the transferor
shall be released from all obligations hereunder and under each other Owner
Participant Agreement and, if applicable, under the Owner Participant Guaranty,
or by which such transferor is bound to the extent such obligations are
expressly assumed by a Transferee, and (iii) in the event of a transfer by the
Owner Participant to a Transferee that is a qualified investor (whether or not
an affiliated company) having capital surplus and undivided profits or net
worth, as the case may be, of $50,000,000, any Owner Participant Guarantor prior
to such transfer shall be released from all obligations under the Owner
Participant Guaranty, and under the other Operative Agreements; and provided,
further, that in no event shall any such transfer or assignment waive or release
the transferor, or the Owner Participant Guarantor prior to transfer in the case
referred to in clause (iii) of this paragraph, from any liability on account of
any breach of any of its representations, warranties, covenants or obligations
set forth in the Owner Participant Agreements or the Owner Participant Guaranty,
if applicable, or for any fraudulent or willful misconduct. Any transfer or
assignment of the Beneficial Interest in violation of this Section 11 shall be
void and of no effect. No consent of the Lessee otherwise required hereunder
shall be required if any Lease Event of Default shall have occurred and be
continuing. Notwithstanding any transfer, the transferor Owner Participant or
Owner Participant Guarantor, as the case may be, shall be entitled to all
benefits accrued and all rights vested prior to such transfer, including,
without limitation, rights to indemnification under any Operative Agreements and
also shall remain liable to the extent provided in the Operative Agreements, for
facts, circumstances, acts or omissions that occurred prior to or
contemporaneously with such transfer.
Notwithstanding anything to the contrary contained herein, each of the
Owner Participant and Owner Participant Guarantor shall not mortgage, pledge,
assign or otherwise hypothecate the Beneficial Interest, or any portion thereof,
as collateral security.
-38-
SECTION 12. LESSEE ASSUMPTION OF NOTES.
Section 12.1. Assumption. (a) In the event that the Lessee shall have
elected to assume the rights and obligations of the Owner Trustee under the
Indenture and the Notes in connection with the purchase by the Lessee of the
Facility and termination of the Facility Lease pursuant to Section 19(f) or
19(g) thereof, the Lessee shall so notify the Indenture Trustee and each holder
of a Note and, so long as no Lease Default or Lease Event of Default shall have
occurred and be continuing on the purchase date and date of assumption (the
"Assumption Date") specified in such notice, which date shall be not less than
30 nor more than 60 days after the date of the Indenture Trustee's receipt of
such notice, upon delivery to the Indenture Trustee of the documents referred to
below, the Lessee shall assume all of the rights and obligations of the Owner
Trustee under the Indenture and under the Notes then outstanding and in
connection therewith (and as a condition thereto) Lessee shall satisfy, or cause
to be satisfied the following conditions precedent:
(i) (A) an instrument of assumption (the "Assumption Agreement")
pursuant to which the Lessee irrevocably and unconditionally assumes and
undertakes, with full recourse to the Lessee, the Owner Trustee's
obligations (the "Assumed Obligations") with respect to principal, interest
and all other amounts (including, without limitation, the Make-Whole
Amount) payable to the holders of the Notes or the Indenture Trustee under
the Notes, the Indenture and the Participation Agreement and which
incorporates therein events of default substantially similar in scope and
effect to those set forth in the Facility Lease (and eliminating those no
longer relevant with respect to the Owner Participant) and covenants
substantially similar to the covenants of the Lessee under the Facility
Lease, and (B) if requested by a Majority in Interest, the Lessee shall
also issue, and the Indenture Trustee shall also authenticate, new Notes
evidencing such assumption and the full recourse nature of the Lessee's
obligations thereunder;
(ii) a deed of trust, given by the Lessee, in form and substance
satisfactory to the holders of the Notes, covering the Site and the
Facility and such other instruments and documents (including, without
limitation, Uniform Commercial Code financing statements) as may be
necessary (or reasonably requested by a Majority in Interest or the
Indenture Trustee) for the security interest of the Indenture Trustee in
the Facility and in the other rights, property and interests included in
the Indenture Estate to continue to be (or in the case of such deed of
trust to be) perfected and duly recorded in all places necessary or, in the
reasonable opinion of a Majority in Interest, advisable;
(iii) an insurance report dated the Assumption Date of an independent
insurance broker and the certificates of insurance, each in form and
substance reasonably satisfactory to the holders of the Notes and the
Indenture Trustee as to the due compliance as of the Assumption Date with
the terms of Section 7 of the Facility Lease (as incorporated into the
Assumption Agreement and as relates to the holders of the Notes and the
Indenture Trustee);
(iv) evidence that as of the Assumption Date the Lessee has good title
to the Facility and the Site free and clear of all Liens other than the
Lien of, and the security
-39-
interest created by, the Indenture, the deed of trust referred to in clause
(ii) above and other Permitted Encumbrances (other than Lessor's Liens);
(v) a certificate from the Lessee that no Lease Default or Lease Event
of Default shall have occurred and be continuing as of the Assumption Date;
(vi) an opinion (or opinions) of counsel to the Lessee reasonably
satisfactory to the holders of the Notes and the Indenture Trustee in form
and substance reasonably satisfactory to the holders of the Notes and the
Indenture Trustee, addressed to the Note Purchasers and the Indenture
Trustee and dated the Assumption Date, with customary qualifications, to
the effect that (A) the execution, delivery and performance of the
Assumption Agreement, the deed of trust referred to in paragraph (ii) of
this Section 12.1 and all other instruments and documents executed and
delivered by the Lessee in connection with the assumption of the
obligations contemplated by this Section 12.1 or otherwise necessary for
the continued perfection of the security interests referred to in clause
(ii) above have, in each instance, been duly authorized by all necessary
action, and duly executed and delivered; (B) the Assumption Agreement, such
deed of trust and all such other documents and instruments referred to
above are legal, valid and binding obligations of the Lessee enforceable in
accordance with their terms (with customary qualifications); (C) execution
and delivery by the Lessee of the Assumption Agreement and all such other
documents and instruments referred to above do not and will not contravene
any provision of the Lessee's certificate of incorporation or by-laws or
any law or regulation applicable to the Lessee or any agreement, mortgage
or instrument known to such counsel to which the Lessee is a party or by
which the Lessee is bound; (D) after giving effect to the transactions
contemplated by the Assumption Agreement, the respective Liens of the
Indenture and each such deed of trust continue to constitute valid and duly
perfected Liens on the Collateral described therein; and (E) to such
further effect with respect to such other matters (including, without
limitation, any matters included in the opinion delivered on the Closing
Date pursuant to Section 4.1(f) of this Agreement, to the extent such
matters are relevant at the time of the assumption contemplated by this
Section 12.1) as a Majority in Interest may reasonably request;
(vii) such other documentation or evidence reasonably requested by a
Majority in Interest (in form and substance reasonably satisfactory to the
holders of the Notes and the Indenture Trustee), including amendments to
the Operative Agreements, to give effect to the foregoing and in order to
establish the authority of the Lessee, the Owner Trustee, the Indenture
Trustee and the Owner Participant to consummate the transactions
contemplated by the assumption and the taking of all corporate proceedings
in connection therewith.
(b) It shall be a condition of any transaction contemplated by Section
12.1(a) that such instruments as the Owner Trustee or the Owner Participant may
reasonably request, prepared at the sole cost and expense of the Lessee,
evidencing the release and discharge of the Owner Trustee from any liability on
or with respect to the Notes or the Indenture or the Deed of Trust (other than
liabilities accrued prior to the date of the assumption) and discharging the
Lien of the
-40-
Indenture Trustee upon the purchase price of the Facility being distributed to
the Owner Trustee, shall be delivered to the Owner Trustee.
Section 12.2. No Other Assumption; Payment of Expenses. Neither the Lessee
nor any other Person may assume the Notes except pursuant to and in accordance
with the provisions of Section 12.1. Lessee shall pay all reasonable costs and
expenses (including counsel's reasonable fees and disbursements) of the Owner
Trustee, the Participants and the Indenture Trustee in connection with the
consummation of the transactions contemplated by Section 12.1.
SECTION 13. REFINANCING OF NOTES.
So long as no Lease Default or Lease Event of Default shall be in
existence, the Lessee shall have the right not more than twice during the Term
of the Facility Lease to request the Owner Participant and the Owner Trustee to
effect an optional prepayment of all, and not less than all, of the Notes
pursuant to Section 2.10(e) of the Indenture as part of a refunding or
refinancing operation. As soon as practicable after receipt of such request, the
Owner Participant and the Lessee will enter into an agreement, in form and
substance reasonably satisfactory to the parties thereto, as to the terms of
such refunding or refinancing as follows:
(a) the Lessee, the Owner Participant, the Indenture Trustee, the
Owner Trustee, and any other appropriate parties will enter into a
financing or loan agreement (which may involve an underwriting agreement in
connection with a public offering), in form and substance reasonably
satisfactory to the parties thereto, providing for (i) the issuance and
sale by the Owner Trustee or such other party as may be appropriate on the
date specified in such agreement (for the purposes of this Section 13, the
"Refunding Date") of debt Securities in an aggregate principal amount (in
the lawful currency of the United States) equal to the principal amount of
the Notes outstanding on the Refunding Date plus, at the discretion of the
Lessee, but subject to the rights of Owner Participant set forth in the
provisions following clause (h) of this Section, the accrued and unpaid
interest thereon and underwriting fees, having the same maturity date as
said Notes and having a weighted average life to maturity which is not less
than or greater than the remaining weighted average life to maturity of
said Notes (in each case calculated in accordance with standard financial
practice) by more than three months, (ii) the application of the proceeds
of the sale of such debt Securities to the prepayment of all such Notes on
the Refunding Date, and (iii) payment by Lessee to the Person or Persons
entitled thereto of all other amounts, in respect of accrued interest, or
any Make-Whole Amount or other premium, if any, payable on such Refunding
Date;
(b) the Lessee and the Owner Trustee will amend the Facility Lease
such that (i) if the Refunding Date is not a Rent Payment Date and the
accrued and unpaid interest on the Notes is not otherwise paid pursuant to
clause (a) above, the Lessee shall on the Refunding Date prepay that
portion of the next succeeding installment of Periodic Rent as shall equal
the aggregate interest accrued on the Notes outstanding to the Refunding
Date, (ii) Periodic Rent payable in respect of the period from and after
the Refunding Date shall be recalculated to preserve the Net Economic
Return which the Owner Participant would have realized had such refunding
not occurred, provided that the net present value of
-41-
Periodic Rent shall be minimized to the extent consistent therewith, and
(iii) amounts payable in respect of Casualty Value and Termination Value
from and after the Refunding Date shall be appropriately recalculated to
preserve the Net Economic Return which the Owner Participant would have
realized had such refunding not occurred (it being agreed that any
recalculations pursuant to subclauses (ii) and (iii) of this clause (b)
shall be performed in accordance with the requirements for the adjustment
in Periodic Rent contained in Section 4(f) of the Facility Lease);
(c) the Owner Trustee will enter into an agreement to provide for the
securing thereunder of the debt Securities issued by the Owner Trustee
pursuant to clause (a) above in like manner as the Notes and/or will enter
into such amendments and supplements to the Indenture and the Deed of Trust
as may be necessary to effect such refunding or refinancing, which
agreements, amendments and/or supplements shall be reasonably satisfactory
in form and substance to the Owner Participant and the Lessee; provided
that, notwithstanding the foregoing (but subject to the provisions of
clause (a) above), the Lessee reserves the right to set the economic terms
and other terms not customarily negotiated between an Owner Participant and
a lender of the refunding or refinancing transaction to be so offered;
provided, further, that no such amendment or supplement will increase the
obligations or have any adverse impact on the rights of the Owner
Participant under the Operative Agreements without the consent of the Owner
Participant;
(d) in the case of a refunding or refinancing involving a public
offering of debt Securities, neither the Owner Trustee nor the Owner
Participant shall be the "issuer" for Securities law purposes, the offering
materials (including any registration statement) for the refunding or
refinancing transaction shall be reasonably satisfactory to the Owner
Participant and the Lessee shall provide satisfactory indemnity to the
Owner Trustee and the Owner Participant with respect thereto;
(e) unless otherwise agreed by the Owner Participant, the Lessee shall
pay to the Owner Trustee as Supplemental Rent an amount equal to the
Make-Whole Amount or other premium, if any, payable in respect of Notes
outstanding on the Refunding Date, and all reasonable fees, costs and
expenses of such refunding or refinancing;
(f) the Lessee shall give the Indenture Trustee not less than 25 days
prior written notice of the Refunding Date;
(g) the Owner Participant, the Owner Trustee and the Indenture Trustee
shall have received (i) such opinions of counsel as they may reasonably
request concerning compliance with the Securities Act of 1933, as amended,
and any other applicable law relating to the sale of Securities and (ii)
such other opinions of counsel and such certificates and other documents,
each in form and substance satisfactory to them, as they may reasonably
request in connection with compliance with the terms and conditions of this
Section 13; and
-42-
(h) all necessary authorizations, approvals and consents shall have
been obtained;
provided, however, that the Lessee will, to the extent then known, promptly
provide to the Owner Participant, the Owner Trustee and the Indenture
Trustee substantially final terms and conditions of any such refunding or
refinancing not less than 30 days prior to the execution and delivery of
the documents contemplated hereunder in connection therewith; and provided,
further, that (x) no refunding or refinancing of the Notes will be
permitted if within 30 days after receipt by the Owner Participant of a
request from the Lessee to effect a refunding or refinancing pursuant to
this Section 13 and of information regarding the terms of such refunding or
refinancing necessary to render the opinion referred to below, the Owner
Participant reasonably determines (which determination may, at the Owner
Participant's election but at the Lessee's expense, be supported by a
written opinion of independent tax counsel selected by the Owner
Participant) that there will be a risk of adverse tax or other consequences
(including, without limitation, a non-de minimis risk of materially adverse
tax consequences resulting from the application of Section 467 of the Code
and the Treasury Regulations thereunder or from the payment by the Lessee
of Supplemental Rent referred to in clause (e) above) to the Owner
Participant or the Owner Trustee resulting from the refunding or
refinancing and gives notice of such determination in reasonable detail to
the Lessee; (y) the Lessee shall pay to or reimburse the Participants, the
Owner Trustee and the Indenture Trustee for all costs and expenses
(including reasonable attorneys' fees) paid or incurred by them in
connection with such refunding or refinancing; and (z) no refunding or
refinancing of the Notes will be permitted if it shall cause the Owner
Participant to account for the transaction contemplated hereby as other
than a "leveraged lease" under the Financial Accounting Standards Board
("FASB") Statement No. 13, as amended (including any amendment effected by
means of the adoption by FASB of a new statement in lieu of FASB Statement
No. 13). The Owner Participant agrees to cooperate in good faith with the
Lessee in effecting any such refunding or refinancing; provided that in no
event, in connection with or after giving effect to, such refunding or
refinancing shall the Owner Participant be exposed to any unindemnified
non-de minimis risk (including tax risk) to which it is not exposed prior
to such refunding or refinancing.
Notwithstanding the foregoing, if the Lessee shall fail to effectuate a
refinancing pursuant to the requirements of this Section 13, including, without
limitation, the payment of all amounts due and owing pursuant to Section 2.10(e)
of the Indenture, the Facility Lease and the Indenture shall continue in full
force and effect.
SECTION 14. MISCELLANEOUS.
Section 14.1. Amendments. This Agreement may, from time to time and at any
time, be amended or supplemented, by an instrument or instruments in writing
executed by the parties hereto.
Section 14.2. Notices. All communications under this Agreement shall be in
writing or by facsimile and any such notice shall become effective (i) upon
personal delivery thereof, including,
-43-
without limitation, by overnight mail or courier service, (ii) upon receipt
thereof, in the case of notice by United States mail, certified or registered,
postage prepaid, return receipt requested, or (iii) upon confirmation of receipt
thereof, in the case of notice by facsimile, provided such transmission is
promptly further confirmed in writing by either of the methods set forth in
clause (i) or (ii) above, in each case addressed to the parties hereto at their
addresses set forth beneath their respective signatures below (or in the case of
the Note Purchasers on Schedule 1 hereto) or at such other place as any such
party may designate by notice given in accordance with this Section 14.2.
Section 14.3. Survival. All warranties, representations and covenants made
by any party herein or in any certificate or other instrument delivered by any
party to any other party under this Agreement shall be considered to have been
relied upon by such other party and shall survive the consummation of the
transactions contemplated hereby on the Closing Date regardless of any
investigation made by such other party or on behalf of such other party. All
statements in any such certificate or other instrument by the Owner Participant,
the Owner Trustee or the Lessee or on behalf of the Owner Participant, the Owner
Trustee or the Lessee under this Agreement shall constitute warranties and
representations by the Owner Participant, the Owner Trustee, or, as the case may
be, the Lessee hereunder.
Section 14.4. Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of, and shall be enforceable by, the parties
hereto and their respective successors and permitted assigns including each
successive holder of the Beneficial Interest and each successive holder of any
Note issued and delivered pursuant to this Agreement or the Indenture whether or
not an express assignment to any such holder of rights under this Agreement has
been made.
Section 14.5. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED BY, THE LAW
OF THE STATE OF NEW YORK EXCLUDING CHOICE-OF-LAW PRINCIPLES OF THE LAW OF SUCH
STATE THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF A JURISDICTION OTHER
THAN SUCH STATE BUT INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW.
Section 14.6. Counterparts. This Agreement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together only one Agreement.
Section 14.7. Headings and Table of Contents. The headings of the sections
of this Agreement and the Table of Contents are inserted for purposes of
convenience only and shall not be construed to affect the meaning or
construction of any of the provisions hereof.
Section 14.8. Limitations of Liability.
(a) Liabilities of the Participants. No Participant shall have any
obligation or duty to the Lessee, to any other Participant or to others with
respect to the transactions contemplated hereby except those obligations or
duties of such Participant expressly set forth in this Agreement
-44-
and the other Operative Agreements and no Participant shall be liable for
performance by any other party hereto of such other party's obligations or
duties hereunder. Without limitation of the generality of the foregoing, under
no circumstances whatsoever shall any Participant be liable to the Lessee, nor
shall any Participant be liable to any other Participant, for any action or
inaction on the part of the Owner Trustee or the Indenture Trustee in connection
with the transactions contemplated herein, whether or not such action or
inaction is caused by willful misconduct or gross negligence of the Owner
Trustee or the Indenture Trustee.
(b) No Recourse to Wilmington Trust Company. It is expressly understood and
agreed by and between the Owner Trustee, Wilmington Trust Company, the Lessee,
the Owner Participant, the Indenture Trustee, each Note Purchaser and any holder
of the Notes and their respective successors and assigns that, subject to the
proviso to this paragraph, this Agreement is executed by Wilmington Trust
Company, not individually or personally but solely as trustee under the Trust
Agreement in the exercise of the power and authority conferred and vested in it
as such trustee, that each and all of the representations, warranties,
undertakings and agreements herein made on the part of the Owner Trustee are
made and intended not as personal representations, warranties, undertakings and
agreements by Wilmington Trust Company or for the purpose or with the intention
of binding Wilmington Trust Company personally, but are made and intended for
the purpose of binding only the Trust Estate, that this Agreement is executed
and delivered by Wilmington Trust Company solely in the exercise of the powers
expressly conferred upon Wilmington Trust Company as trustee under the Trust
Agreement, that actions to be taken by the Owner Trustee pursuant to its
obligations hereunder may, in certain instances, be taken by the Owner Trustee
only upon specific authority of the Owner Participant, that, subject to the
proviso to this paragraph, nothing herein contained shall be construed as
creating any liability of Wilmington Trust Company, individually or personally,
or any incorporator or any past, present or future subscriber to the capital
stock of, or stockholder, officer or director of Wilmington Trust Company, to
perform any covenant either express or implied contained herein, all such
liability, if any, being expressly waived by the Lessee, the Indenture Trustee,
each Note Purchaser and any holder of the Notes and any person claiming by,
through or under such persons, and that so far as Wilmington Trust Company,
individually or personally is concerned, subject to the proviso to this
paragraph, the Lessee, the Indenture Trustee, each Note Purchaser and any holder
of the Notes and any person claiming by, through or under such persons shall
look solely to the Trust Estate for the performance of any obligation of
Wilmington Trust Company under this Agreement; provided, however, that nothing
in this Section 14.8 shall be construed to limit in scope or substance those
representations and warranties of Wilmington Trust Company made expressly in its
individual capacity set forth in Section 3.1 or the indemnities of Wilmington
Trust Company in its individual capacity set forth in Section 8. The term "Owner
Trustee" as used in this Participation Agreement shall include any trustee
succeeding Wilmington Trust Company as trustee under the Trust Agreement or the
Owner Participant if the trust created thereby is revoked. Any obligation of the
Owner Trustee hereunder may be performed by the Owner Participant, and any such
performance shall not be construed as revocation of the trust created by the
Trust Agreement. Nothing contained in this Agreement shall restrict the
operation of the provisions of the Trust Agreement with respect to its
revocation or the resignation or removal of the Owner Trustee thereunder.
-45-
(c) No Recourse to Owner Participant. All payments of principal and
interest and premium, if any, to be made under the Notes or the Indenture shall
be made only from the income and proceeds from the Indenture Estate and only to
the extent that the Indenture Trustee shall have sufficient income or proceeds
from the Indenture Estate to make such payments in accordance with the terms of
Article III of the Indenture. Each of the parties to this Agreement agrees that
neither the Owner Participant nor its permitted successors and assigns is or
shall be personally liable for any amount payable by the Owner Participant or
the Owner Trustee under any Operative Agreement, or for damages resulting from
the breach of its or the Owner Trustee's obligations under any Operative
Agreement, except as expressly provided in Section 8.
Section 14.9. Purchase of Beneficial Interest by Lessee; Termination of
Trust by Owner Participant. (a) Anything to the contrary herein or in the other
Operative Agreements notwithstanding, the Lessee shall not purchase or otherwise
acquire the Beneficial Interest or any part thereof.
(b) Anything to the contrary herein or in the other Operative Agreements
notwithstanding, the Owner Participant hereby acknowledges and agrees that the
Trust established under the Trust Agreement shall not be subject to revocation
or termination by the Owner Participant prior to the payment in full and
discharge of the Notes and all other indebtedness secured by the Indenture and
the release of the Indenture and the Deed of Trust and the liens and security
interests granted thereby.
Section 14.10. Certain Limitations in Reorganization. The holder of any
Note and the Indenture Trustee agree that, should the Trust Estate or the Trust
become a debtor subject to the reorganization provisions of the Bankruptcy
Reform Act of 1978 or any successor provision, they shall, upon the request of
the Owner Participant, make the election referred to in Section 1111(b)(1)(A)(i)
of Title I of such Act or any successor provision. Notwithstanding such
election, if (1) the Trust Estate or the Trust becomes a debtor subject to the
reorganization provisions of the Bankruptcy Reform Act of 1978 or any successor
provision, (2) pursuant to such reorganization provisions the Owner Participant
is held to have recourse liability to the debtor or the trustee of the debtor
directly or indirectly on account of any amount payable as principal, interest
or premium on the Notes, and (3) the holder of any Note or the Indenture Trustee
actually receives any Excess Amount which reflects any payment by the Owner
Participant on account of (2) above, then such Noteholder or the Indenture
Trustee, as the case may be, shall promptly refund to the Owner Participant such
Excess Amount. For purposes of this Section 14.10, "Excess Amount" means the
amount by which such payment exceeds the amount which would have been received
by any Noteholder or the Indenture Trustee if the Owner Participant had not
become subject to the recourse liability referred to in (2) above. Nothing
contained in this Section 14.10 shall prevent any Noteholder or the Indenture
Trustee from enforcing any personal obligation (and retaining the proceeds
thereof) of the Owner Participant under this Agreement to the extent herein
provided, for which the Owner Participant has agreed by the terms of this
Agreement to accept personal responsibility.
Section 14.11. Amendment of Indenture, Deed of Trust and Trust Agreement.
The Lessee hereby consents in all respects to the execution and delivery of the
Indenture, of the Deed of Trust and of the Trust Agreement and to all of the
terms of each; it being agreed that such consent shall
-46-
not be construed to require the Lessee's consent to any future supplement to, or
amendment, waiver or modification of the terms of the Indenture, the Deed of
Trust, the Trust Agreement or any Note.
Section 14.12. Submission to Jurisdiction. Each of the Lessee, the Owner
Participant, the Owner Trustee, the Note Purchasers and the Indenture Trustee
(i) hereby irrevocably submits to the nonexclusive jurisdiction of the Supreme
Court of the State of New York, New York County (without prejudice to the right
of any party to remove to the United States District Court for the Southern
District of New York) and to the nonexclusive jurisdiction of the United States
District Court for the Southern District of New York for the purposes of any
suit, action or other proceeding arising out of this Agreement, the other
Operative Agreements, or the subject matter hereof or thereof or any of the
transactions contemplated hereby or thereby brought by any of the parties hereto
or their successors or assigns; (ii) hereby irrevocably agrees that all claims
in respect of such action or proceeding may be heard and determined in such New
York State court, or in such federal court; and (iii) to the extent permitted by
Applicable Law, hereby irrevocably 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 is not personally subject to the jurisdiction of the above-named
courts, 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, the other Operative Agreements, or the subject matter hereof or
thereof may not be enforced in or by such court.
Section 14.13. Waiver of Jury Trial. The parties hereto waive any right to
have a jury participate in resolving any dispute, whether sounding in contract,
tort, or otherwise, between them arising out of, connected with, related to or
incidental to the relationship established between them in connection with this
Agreement or any other Operative Agreement or any other instrument, document or
agreement executed or delivered in connection herewith or therewith or the
transactions related hereto or thereto. The parties hereto hereby agree and
consent that any such claim, demand, action or cause of action shall be decided
by court trial without a jury and that any of them may file an original
counterpart or a copy of this Agreement with any court as written evidence of
the consent of the parties hereto the waiver of their right to a trial by jury.
Section 14.14. Complete Facility. The Lessee covenants and agrees, without
limiting its obligations under the Facility Lease and the other Operative
Agreements, that it shall obtain and maintain all licenses, rights and
easements, and provide access to such utility services, sufficient to permit
during the Term of the Site Lease (i) the locating, occupying, owning, selling,
leasing, connecting, operating, maintaining, replacing, renewing, repairing and
removing of the Facility, (ii) ingress to and egress from the Leased Property,
(iii) intake and discharge of water and other utilities necessary for the
operation of the Facility, (iv) the operating of the Leased Property in such a
manner as to cause the Facility to perform on a daily basis, in commercial
operation, the functions for which it was specifically designed at Design
Capacity in accordance with the Plans therefor, and (v) the preservation and
enforcement by the Owner Trustee of its rights in and to the Leased Property and
the easements and other rights with respect to the Site Lease Property described
or referred to in the Site Lease, except such licenses, rights and easements the
absence of which would not cause a Material Adverse Effect. The Lessee shall
have such access to the Leased Property as shall be reasonably necessary to
comply with its obligations under this Section.
-47-
The Lessee further covenants and agrees:
(a) that during the Site Lease Term, the Lessee shall not, without the
Owner Trustee's, the Indenture Trustee's and each Participant's prior
written consent, terminate the Railway License, the Xxxxx River Agreement,
the Xxxxx River Easement, or except in connection with the actions set
forth in clause (c) of this Section 14.14, the County Road Documents;
(b) that during the Site Lease Term, the Lessee shall send copies of
all notices (other than notices relating to pricing or other operations in
the ordinary course of business) given or received under the Railway
License, the Xxxxx River Agreement, the Xxxxx River Easement and the County
Road Documents to the Owner Trustee, the Indenture Trustee and each
Participant within five (5) Business Days after receipt thereof;
(c) that the Lessee shall, on or before the date which is 60 days
following the Closing Date, (i) use its best efforts to cause the railroad
which is the licensor under the Railway License to consent in writing to
the transfer and assignment of the rights under the Railway License from
American Can Company to the Lessee, and its successors and assigns
(including the Owner Trustee and the Indenture Trustee) and (ii) use its
best efforts to obtain the reinstatement, renewal or replacement with the
equivalent of any expired County Road Documents in the name of the Lessee,
and its successors and assigns (including the Owner Trustee and the
Indenture Trustee).
[signature page follows]
-48-
IN WITNESS WHEREOF, the parties hereto have caused this Participation
Agreement to be executed and delivered, all as of the date first above written.
XXXX & XXXXXX, INC.
By: XXXXXXX XXXXXXXX
-------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President and CEO
By: XXXXX X. XXXX
-------------------------------------
Name:
Title:
Xxxxx 000
0000 XX Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
WILMINGTON TRUST COMPANY, not
individually (except to the extent
expressly stated herein) but solely as
Owner Trustee
By: XXXXX X. XXXXXX
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: VP
Rodney Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration
Fax: (000) 000-0000
With a copy to Owner Participant
-49-
SELCO SERVICE CORPORATION
By: H. XXXXXXX XXXXX
-------------------------------------
Name: H. Xxxxxxx Xxxxx
Title: Vice President
SELCO Service Corporation
c/o Key Corp Leasing
00 Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Leveraged Lease Administrator
Fax: (000) 000-0000
-50-
FLEET CAPITAL CORPORATION
By: XXXXXX X. X'XXXXX
-------------------------------------
Name: Xxxxxx X. X'Xxxxx
Title: Vice President
-51-
XXXXXX FINANCIAL LEASING, INC.
By: XXXXXX X. XXXXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
-52-
THE CIT GROUP/EQUIPMENT FINANCING INC.
By: XXXXX XXXXXXXX
-------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Senior Credit Analyst
-53-
FIRST SECURITY BANK, NATIONAL
ASSOCIATION, not individually (except
to the extent expressly stated herein)
but solely as Indenture Trustee
By: XXXXX X. XXXX
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Corporate Trust Services
Fax: (000) 000-0000
-54-
