Exhibit 10.4
HCHO/UFC PLANT "A"- LEASE
This lease made this 30th day of September, 1997, by and between D.B.
WESTERN, INC., hereinafter called "LESSOR" (and sometimes lessor), and XXXXXXXX
ADHESIVES INC., hereinafter called "LESSEE" (and sometimes lessee). This lease
shall herein be called "Plant "A" Lease". This lease is a part of a transaction
involving other work as identified in a separate documents contained in the
volume entitled Main contract Part A which includes exhibits and specifications
referred to at places herein.
WITNESSETH:
For and in consideration of the mutual covenants and promises
hereinafter set forth, the parties hereto agree as follows:
1. LEASE. LESSOR hereby leases plant equipment and facilities to
LESSEE as follows:
(a) The process equipment and facilities installed and supplied
by LESSOR for LESSEE listed in Plant "A" - Equipment List-for Process
Battery Limit (Exhibit XIV) and shown in Drawings Xx. 0-0-0 xxxx Xxxx
Xxxx Xxxxxx xxx Xxxxxxx Xx. 00000 Process PID - Plant "A" (PID)
(sometimes hereinafter referred to as the Equipment, or Plant).
(b) The equipment and facilities are located on property owned
and controlled by LESSEE. Said property is located at and described as
follows (sometimes hereinafter referred to as the Property):
All that tract or parcel of land situate in the Town of
Xxxxxx, County of Saratoga and State of New York more
fully described as Lot Numbers 2 & 3 as shown on
subdivision maps of Xxxxxx Industrial Park prepared by
the Saratoga Associates and filed in the Saratoga
County Clerk's Office on March 18, 1992 in drawer
#M-348 A-Z and AA-DD; and as modified by revised
subdivision maps of Xxxxxx Industrial Park prepared by
the Saratoga Associates and filed in the Saratoga
County Clerk's Office on February 16, 1994 and drawer
#M-398, A-S.
2. TERM. The term of this lease shall be a period of ten (10)
years which shall commence, without regard to any other provisions of this
lease, upon the tenth day after the date the plant is mechanically complete and
ready for start up, in accordance with a notification to that effect to be given
to LESSEE by LESSOR. As used in this paragraph, "ready for start up" means ready
to load catalyst. The lease shall end at midnight on a date the day before the
tenth anniversary date of the commencement of the lease, subject to renewal of
this lease as hereinafter provided.
3. RENT. The rent for the "Plant "A" Lease" shall be a monthly
rent payable in advance on the first day of each month during the lease term, as
follows:
The lease payment for Plant A-Equipment and facilities, per month is
... US $46,139.00
If the lease commences on any day of the month other than the first day
of a month, LESSEE shall pay to LESSOR, as the rent for the portion of the first
month, an amount equal to
US $ 1,55082.00 per day for each day remaining between the date of commencement
of the lease and the first day of the next month.
The lease payment above is based on the purchase option price, as set
forth herein below, which is subject to adjustment for change orders and
otherwise as expressly set forth herein and in Main contract part "A." In the
event of a change or adjustment to the purchase option price all future rents
shall be proportionately increased or decreased, as the case may be, to reflect
such change or adjustment in the purchase option price.
4. USE. LESSEE shall use the items in "Plant "A" Lease" in a
careful and proper manner and shall in all material respects comply with and
conform to all national, state, municipal, police and other laws, ordinances and
regulations in any way relating to the possession, use or maintenance of the
Plant A- Equipment, including without limitation, the Environmental Protection
Act, the Clean Air Act, the Clean Water Act, the Occupational, Safety & Health
Act, and any state laws of the State of New York, relating to protection of the
environment and worker safety. Any upgrade of items in "Plant "A" Lease" to meet
new regulations shall be at LESSEE's expense.
5. LESSEE'S INSPECTION; CONCLUSIVE PRESUMPTIONS. LESSEE shall
inspect the HCHO/UFC Plant A-Equipment throughout the plant construction and
acceptance test period, and shall exercise good faith in notifying LESSOR of any
defects or problems observed.. LESSOR shall notify LESSEE when the Plant is
mechanically complete and ready for start-up. Unless LESSEE gives written notice
during construction or pursuant to section 16 during the acceptance test period
to LESSOR specifying any defect in or other objection to HCHO/UFC Plant
A-Equipment LESSEE agrees that it shall be conclusively presumed, as between
LESSOR and LESSEE, that LESSEE has fully inspected and acknowledged that the
HCHO/UFC Plant A-Equipment is in good condition and repair, and that LESSEE is
satisfied with and has accepted the HCHO/UFC Plant A- Equipment in such good
condition and repair.
6. COMPLETION OF LESSOR'S SUPPLY OBLIGATIONS. The plant shall be
considered complete when items listed in 16. Acceptance Test and 17. Guarantees
and Warranties are completed.
7. LESSOR'S INSPECTION - LOCATION OF EQUIPMENT. LESSOR shall,
upon giving not less than forty-eight (48) hours notice, have the right to enter
upon the premises where the HCHO/UFC Plant A- Equipment may be located for the
purpose of inspecting the same, observing its use, and for the purpose of
showing or displaying the Plant to prospective customers of LESSOR who may be
interested in purchasing or leasing similar Equipment. LESSEE shall give LESSOR
immediate notice of any attachment or other judicial process affecting the
HCHO/UFC Plant A-Equipment. LESSEE shall not remove any part of the Equipment
from the Property without the prior written consent of LESSOR.
8. ALTERATIONS. Without the prior written consent of LESSOR,
LESSEE shall not make any alterations, additions or improvements to the HCHO/UFC
Plant A-Equipment. Such permitted alterations, additions or improvements shall
become a part of the plant and shall be deemed owned by LESSOR unless otherwise
agreed in writing by LESSOR and LESSEE at the time LESSOR consents to the
installation of such alterations, additions or improvements.
9. REPAIRS. LESSEE, at its own cost and expense, shall keep the
Equipment in good repair, condition and working order and shall furnish any and
all parts, mechanisms and devices required to keep the Equipment in good
mechanical and working order and to see to it that the Equipment at all times
complies in all material respects with the requirements of the
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Environmental Protection Agency, the Occupational, Safety & Health Act, and all
other federal and state environmental and workers safety standards.
10. LOSS AND DAMAGES; STIPULATED LOSS VALUE. From the date of
commencement of this lease until its delivery of any equipment to the Property,
until termination of this lease, LESSEE hereby assumes and shall bear the entire
risk of loss and damage to the HCHO/ UFC Plant A- Equipment from any and every
cause whatsoever. No loss or damage to the Property or the Equipment or any part
thereof shall impair any obligation of LESSEE under this lease, which shall
continue in full force and effect.
In the event of loss or damage of any kind whatsoever to any item of
Equipment, LESSEE shall:
(a) Place the Equipment in good repair, condition and working
order, or replace the same with like Equipment in good repair,
condition and working order; or
(b) If in the reasonable judgment of LESSOR equipment is
determined by LESSOR to be lost, stolen, destroyed or damaged beyond
repair and it is not economically feasible to repair or replace the
equipment, pay LESSOR therefore in cash the full replacement value
thereof which sums may be paid by the insurer as set forth in paragraph
12 below, but in no event less than the purchase price as set forth in
paragraph 343 below.
11. SURRENDER. Upon the expiration or earlier termination of this
lease, LESSEE shall surrender the HCHO the HCHO/UFC Plant A-Equipment to LESSOR
in good repair, condition and working order, ordinary wear and tear resulting
from proper use thereof alone excepted, which Equipment shall be delivered to
LESSOR at the location installed by LESSOR.
12. INSURANCE. LESSEE shall keep the Equipment insured against all
risks of loss or damage by fire and such other risks as are covered by an
endorsement commonly known as supplemental or extended coverage for not less
than the full insurable value on a replacement cost basis; and shall carry
public liability and property damage insurance covering the HCHO/UFC Plant
A-Equipment in amounts of not less than $1,000,000.00 in respect of bodily
injury or death to any one person, not less than $1,000,000.00 in respect of any
one accident, and not less than $1,000,000.00 in respect of property damage, and
products liability insurance of not less than $1,000,000.00. All such insurance
shall insure both LESSOR and LESSEE. The LESSEE may effect such coverage under
its blanket policies. All such policies shall be written by companies presently
insuring the LESSEE or other companies reasonably satisfactory to the LESSOR and
certificates showing such coverage to be in effect shall be furnished to the
LESSOR within ninety (90) days from Lease Contract being signed. Each insurer
shall agree, by endorsement upon the certificate or certificates issued by it or
by independent instrument furnished to LESSOR, that it will give LESSOR thirty
(30) days written notice before the policy in question shall be altered or
canceled and that any proceeds shall be paid jointly to the LESSOR and LESSEE as
their interests may appear. The proceeds of such insurance, at the option of
LESSOR, shall be applied (a) toward the replacement, restoration or repair of
the Equipment or (b) if the replacement, restoration, or repair of the Equipment
is not economical(b) toward payment of the obligations of LESSEE hereunder.
13. TAXES. LESSOR shall pay the personal property taxes on the
Equipment covered by this lease, promptly when such taxes are due and payable.
LESSEE shall reimburse LESSOR for all taxes on Equipment that LESSOR is required
to pay within thirty (30) days of invoice by LESSOR. LESSEE shall keep the
HCHO/UFC Plant A-Equipment free and clear of
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all other levies, liens and encumbrances (other than those being contested which
as a result of such contest do not adversely threaten LESSOR's title to the
Equipment) and shall pay when due all other license fees, registration fees,
assessments, charges and taxes (municipal, state and federal) which may now or
hereafter be imposed upon the lesseeship, leasing, renting, sale, possession or
use of the Equipment, excluding, however, all taxes on or measured by LESSOR's
income.
14. LESSOR'S PAYMENT. In case of failure of LESSEE to procure or
maintain said insurance or to pay said fees, assessments, charges and taxes, all
as herein before specified, LESSOR shall have the right; but shall not be
obligated, to effect such insurance, or pay said fees, assessments, charges and
taxes, as the case may be. In that event, the cost thereof shall be repayable to
LESSOR with the next installment of rent, and failure to repay the same shall
carry with it the same consequence, including interest at twelve percent (12%)
per annum, as failure to pay any installment of rent.
15. COMPLIANCE WITH LAWS AND PERMITS.
15.1 LESSOR will design the Plant and Equipment to meet the
requirements as of the date of this lease, of the
Occupational Safety and Health Act of 1970, the NAPA, the
NEC for Class 1, Division II, the uniform building code,
and the rules and regulations which have been adopted by
the Environmental Protection Agency. Any costs incurred
because of modifications of the Plant or Equipment
required because of any requirements adopted or enacted
by any of such agencies after the date of this lease
shall be the responsibility of LESSEE.
15.2 LESSEE is responsible for obtaining all environmental
permits and other permits required to complete the work.
LESSEE shall bear the cost of all permits and shall
reimburse LESSOR for the cost of any such permits that it
may be required to pay.
16. ACCEPTANCE TEST.
16.1 LESSOR shall have completed its duties with respect to
the furnishing of the Equipment under this contract, with
the exception of the warranties, once LESSOR has
successfully completed the Acceptance Test as defined
herein. LESSEE will schedule and run the Acceptance Test
within Twenty days of notice from LESSOR that the plant
is ready for the Acceptance test. Within five days after
receipt of the Acceptance Test results, LESSEE shall
signify in writing its acceptance of the "HCHO and UFC
Plant guarantees Plant "A" along with Footnotes in
Exhibit IX" or specify in what respect the guarantees
have not been met. In the event LESSOR has not received a
letter of acceptance or rejection within 10 days after
receipt of the Acceptance Test results, all guarantees
shall be considered to have been met.
16.2 The Acceptance Test will be based on the following
conditions:
(a) LESSEE will provide qualified mechanical,
maintenance, instrument, electrical, lab, and operating
personnel to enable the Plant to operate satisfactorily and
permit evaluation of the Acceptance Test results. If LESSEE does
not have employees who can provide responsible support in these
areas, then
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LESSEE shall employee sub-contractors or other agencies to
provide this support during startup and continuing support after
startup.
(b) LESSEE shall provide all bulk feedstock chemicals.
(c) LESSEE is responsible to provide an acceptable
accounting method to monitor bulk feedstock chemicals coming
into the plant and the finished product leaving the plant in
order to assist in establishing yields and capacities. Metering
shall be based on certified scales and/or calibrated meters.
LESSOR will initially calibrate all meters, scales and truck
scales; however, LESSEE shall recalibrate product transfer
meters or scales in the event there is any doubt as to the
accuracy of any such meter or scale.
(d) Official samples of feedstock and finished
products shall be collected during the Acceptance Test period.
Each sample shall be divided into two equal portions, one for
LESSEE and one for LESSOR for purpose of analytical testing.
Analytical procedures for testing product quality are provided
in Contract Specification Part B Exhibits.
16.3 The HCHO Acceptance Test will be conducted by LESSEE'S
operating personnel at design methanol feed rates shown
in Guarantees (Exhibit IX) according to the instructions
set forth by LESSOR and under the supervision of LESSOR's
Start-Up representative. Acceptance Test of the plant
shall be conducted in a test run of four (4) consecutive
days, out of which LESSOR shall select any continuous
seventy-two (72) hour period as representative of the
performance of the Plant, using the average daily rates
for the period selected.
16.4 The UFC Acceptance Test will be conducted by LESSEE'S
operating personnel at design methanol feed rates in the
Guarantees (Exhibit IX) according to the instructions set
forth by LESSOR and under the supervision of LESSOR's
Start-Up representative. LESSOR will determine plant
readiness for the Acceptance Test. The Acceptance Test of
the plant shall be conducted in a test run of four (4)
consecutive days, out of which LESSOR shall select any
continuous seventy-two (72) hour period as representative
of the performance of the Plant, using the average daily
rates for the period selected.
16.5 If LESSEE, for any reason, does not run the Acceptance
Tests during such 20 day period, and LESSOR considers
Plant to be ready for the test and provided the Plant is
ready for startup, which is defined as mechanically
complete including installation, pressure testing piping
systems, and ready for loading of catalyst (miscellaneous
tough up painting and other punch list items that do not
affect plant operations will not constitute failure to be
ready for start up), and provided all other conditions
for the lease to commence have been met, the initial term
of the lease will begin at the end of the 20 day period.
If LESSEE, for any reason, does not run the Acceptance
Tests during such 20 day period, LESSEE can reschedule
the Acceptance Test within the next 60 days for purpose
of satisfying the guarantees. If the Acceptance Test has
not been rescheduled during such 60 day period all
guarantees will be deemed to have been met. LESSOR's
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cost for rescheduling Acceptance run is shown in the Main
Contract Part A under Labor & Material Rates (Exhibit X).
16.6 In the event the initial Acceptance Test on the Plant is
not completed successfully, LESSOR will be further
obligated to carry out additional Acceptance Tests. If
the test fails to demonstrate that the product and Plant
meet the process guarantees, then LESSOR shall conduct a
reasonable number of tests within thirty (30) days, to
determine whether the process guarantees can be met. If
LESSOR fails to demonstrate that the process guarantees
are met, then unless it is determined that the cause of
such failure is not an error or deficiency in the
technology and/or equipment furnished by LESSOR, then
LESSOR shall initiate necessary actions to correct the
deficiencies causing such failure. Upon completion of
such corrections, tests shall again be made and shall be
repeated together with needed corrections until the
process guarantees are met or it is established that such
guarantees cannot be met. If the guarantees cannot be
met, the purchase option price as set forth in section
3334 shall be reduced by the amount shown in Guarantees
(Exhibit IX) in the Main Contract Part A, and the rent
shall be proportionately decreased to reflect such change
or adjustment in the purchase option price, both of which
shall be the limit of LESSOR liability for failure to
meet such guarantees.
16.7 If any test shall be interrupted by power failure, the
existence of a safety hazard, interruptions of work
schedule, interruption of feed supply, or any other
circumstances beyond the control of LESSOR and/or LESSEE,
the test shall be recommenced promptly after correction
of the interruption. If any test is interrupted by causes
within the control of LESSOR, then the test shall be
recommenced promptly after correction of the interruption
by LESSOR.
16.8 Before the start of an Acceptance Test, LESSOR will
specify operating data to be recorded and the manner in
which data are to be taken. LESSOR shall have complete
access to the Plant and operating log to observe
operations, review data and make recommendations through
completion of the Acceptance Test.
17. GUARANTEES AND WARRANTIES.
17.1 LESSOR warranties all equipment whether fabricated by
LESSOR or procured from third parties, against all
defects for one (1) year from the earlier of (a) the
completion date, except where such warranty is not
furnished by supplier, or (b) the date the Work is first
suspended or terminated by LESSEE pursuant to the
provisions of Article XI of a separate agreement between
the parties identified as HCHO/UFC Turnkey Plant "B" Sale
Contract.
17.2 LESSOR does not warrant the Work, the design and
engineering work or the Equipment against failure due to
faulty operation or which results from service under
conditions more severe that those contemplated by the
specifications shown in Main Contract Part A and
specification sheets provided by LESSOR. If any warranty
provided by an equipment supplier
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exceeds one year from completion date, LESSOR shall
assign such rights to LESSEE.
17.3 If the equipment fails or the Plant does not produce at
the guaranteed rate and efficiency, and LESSOR is
responsible for the deficiency, LESSOR shall immediately
initiate work to correct the deficiency by repairing the
equipment or furnishing replacement equipment or by
adjusting plant operations. In the event 45 days after
LESSOR first asserts the plant is ready for start up the
deficiency has not been corrected, the start up date will
be redefined. If after six (6) months the start up
guarantees have not been met, LESSOR's Purchase Option
Contract Price shall be reduced by the amount specified
in Guarantees (Exhibit IX) in Main Contract Part A.
Defective items must be held for LESSOR's inspection for
a reasonable period of time. If LESSOR is not responsible
for the deficiency, LESSOR shall adjust the guarantees
or, at LESSEE'S request, LESSOR will provide a bid to
correct the deficiency and LESSEE will pay the reasonable
cost of evaluation and correction.
17.4 Except as set forth in this Agreement, LESSOR MAKES NO
WARRANTY, EXPRESS OR IMPLIED, REGARDING THE EQUIPMENT OR
THE PRODUCT TO BE MADE BY THE EQUIPMENT, OR THE
MERCHANTABILITY OR FITNESS FOR PARTICULAR PURPOSE OF
EITHER. In no event shall LESSOR or LESSEE be liable for
incidental or consequential damages to the other
including any claims for lost profits, delay, or
disruption damages.
17.5 The Guarantees contained in Main Contract Part A Exhibit
IX are the only guarantees offered by LESSOR. Once the
guarantees have been met by successful completion of the
Acceptance Test, such guarantees shall be deemed to have
been fulfilled and LESSOR's obligations with respect to
the guarantees shall have been terminated.
17.6 LESSOR is not responsible for the validity and accuracy
of any written engineering data furnished by or through
LESSEE and used by LESSOR in the design of the Plant. If
LESSOR is aware of any errors or inaccuracies in such
data, LESSOR shall immediately notify LESSEE and LESSOR
is relieved of its obligations to the extent so affected.
LESSOR is not responsible for the performance of any
process equipment furnished by or through LESSEE and used
by LESSOR in the Plant. LESSOR will be relieved of its
obligations to the extent that operation or performance
of the Plant is affected by the equipment supplied by
LESSEE
18. DEFAULT. The following events shall be events of default:
(a) If LESSEE fails to pay any rent or other amount due herein
provided within ten thirty (1030) days after LESSOR makes written demand for
such payment, or within ten (10) days after LESSOR makes written demand for such
payment if LESSOR has made written demand for any delinquent payment within the
preceding 12 months; or if LESSEE fails to observe, keep or perform any other
provision of this lease required to be observed, kept or performed by LESSEE,
and if LESSEE fails to remedy, cure or remove such failure in payment or such
other failure in observing, keeping or performing the provisions of this lease
within thirty
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(30) days after receipt of written notice thereof from LESSOR, or to commence
within thirty (30) days.
(b) Failure by LESSEE to make any payment or material failure to
render any performance owed by LESSEE under the provisions of a separate
agreement between the parties entitled HCHO/UFC Turnkey Plant "B" Sale Contract
(the "Sale Plant Agreement") dated October 1, 1996, as amended by a subsequent
agreement dealing with the same subject dated September 30, 1997.
(c) The exercise by LESSEE of its rights under sections 11.2 and
11.3 of the Sale Plant Agreement to suspend or terminate the contract under the
provisions of sections 11.2 and 11.3 of the original agreement dated October 1,
1996, including any similar provisions in any amended form of said agreement.
19. REMEDIES. In the event of any default of any provision of
section 18 above, LESSOR, at it option, may pursue any one or more of the
following actions:
(a) To Declare immediately due and payable all of the rent and
other obligations then unpaid for the full remaining term of this lease
agreement with or without terminating the lease or LESSOR'S right to recover
possession of the Equipment.
(b) To xxx for and recover all rents, and other payments, then
accrued or thereafter accruing, or to enforce any other obligation of LESSEE.
(c) To take peaceful possession of the items in "Plant "A"
Lease", and any product and raw material in process therein, without demand or
notice, wherever same may be located, without any court order or other process
of law. In so doing, LESSOR shall have all rights to enter and have full right
of access to Plant A-Equipment and LESSEE'S Property and to dismantle disconnect
and remove all such items. LESSEE EXPRESSLY WAIVES ANY RIGHT IT HAS TO NOTICE OR
A JUDICIAL HEARING PRIOR TO LESSOR'S RETAKING POSSESSION OF THE EQUIPMENT OR
RENDERING IT UNUSABLE, AND SPECIFICALLY ACKNOWLEDGES THAT ITS AGREEMENT TO WAIVE
SUCH RIGHTS, IF ANY, IS MADE IN CONSIDERATION OF LESSOR'S AGREEMENT TO ENTER
INTO THIS LEASE AGREEMENT. Unless LESSOR gives written notice to the contrary,
this lease agreement shall not be terminated by LESSOR's taking possession of,
or rendering unusable, the Equipment, and LESSEE shall remain liable for the
performance of all of its obligations under this agreement. On retaking
possession of the Equipment, LESSOR may retain possession of the Equipment, may
lease the equipment for any period (including a period beyond the expiration
term of this lease agreement) on such terms and conditions as LESSOR selects, or
may sell the equipment at public or private sale on such notice and after
solicitation of such bids as LESSOR deems commercially reasonable. LESSOR may be
the purchaser at any such sale.
LESSOR shall apply the net proceeds (the proceeds of any renting
or sale pursuant to this section, minus all costs and expenses incurred with the
recovery, repair, storage, renting, or sale) of any such rental or sale to the
payment of LESSEE's obligations, LESSEE remaining liable for any deficiency.
LESSEE hereby waives any and all damages occasioned by such
taking of possession unless caused by LESSOR's gross negligence or willful
misconduct. Any said taking of possession shall not constitute a termination of
this lease as to any or all items of Equipment unless LESSOR expressly so
notifies LESSEE in writing.
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(d) To terminate this lease agreement and recover from LESSEE
the excess, if any, of the amount of rent and value of other obligations of
LESSEE, valued at the time of termination, for the balance of the term or any
shorter period of time, over the then reasonable rental value of the equipment
for the same period.
(e) To pursue any other remedy at law or in equity that LESSOR
may have
No right or remedy conferred on or reserved by LESSOR in this agreement
is exclusive, and each remedy is cumulative and may be enforced separately or
concurrently. Regardless of the remedy or remedies pursued by LESSOR, LESSEE
agrees to be liable for, and, on demand, to pay to LESSOR, in addition to all
other sums due, the full amount of any costs or expenses, including attorney
fees, incurred by LESSOR in connection with any default by LESSEE.
Notwithstanding any said repossession, or any other action which LESSOR
may take, LESSEE shall be and remain liable for the full performance of all
obligations on the part of LESSEE to be performed under this lease.
20. BANKRUPTCY. Neither this lease nor any interest therein is
assignable or transferable by operation of law. If any proceeding under the
Bankruptcy Act, as amended, is commenced by LESSEE, or such an action is
commenced against LESSEE and is not dismissed within sixty (60) days after the
commencement thereof, or if the LESSEE is adjudged insolvent, or if the LESSEE
makes any assignment for the benefit of his creditors, or if a writ of
attachment or execution is levied on any item or items of the Equipment and is
not released or satisfied within ten (10) days thereafter, or if a receiver is
appointed in any proceeding or action to which the LESSEE is a party with
authority to take possession or control of any item or items of the Equipment,
LESSOR shall have and may exercise any one or more of the remedies upon default
as set forth in this agreement; and this lease shall, at the option of LESSOR on
notice to LESSEE, immediately terminate and shall not be treated as an asset of
LESSEE after the exercise of said option.
21. CONCURRENT REMEDIES. No right or remedy herein conferred upon
or reserve to LESSOR is exclusive of any other right or remedy herein or by law
or equity provided or permitted; but each shall be cumulative of every other
right or remedy given hereunder or now or hereafter existing at law or in equity
or by statute or otherwise, and may be enforced concurrently therewith or from
time to time.
22. LESSOR'S EXPENSES. LESSEE shall pay LESSOR all costs and
expenses, including reasonable attorney's fees, incurred by LESSOR in exercising
any of its rights or remedies hereunder of enforcing any of the terms,
conditions, or provisions hereof.
23. ASSIGNMENT.
23.1 Without the prior written consent of LESSOR, LESSEE shall
not:
(a) assign, transfer, pledge or hypothecate this lease,
the Property, the Equipment, or any part thereof, or any
interest therein, or
(b) sublet or lend the Property or the Equipment or any
part thereof, or permit the Property or the Equipment or any
part thereof to be used by anyone other than LESSEE or LESSEE's
employees. Consent to any of the foregoing prohibited acts
applies only in the given instance; and is not a consent to any
subsequent like act by LESSEE or any other person.
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23.2 So long as no default pursuant to Section 18 has occurred
and is continuing LESSOR shall not, without the prior
written consent of LESSEE, assign, or transfer this lease
to any entity other than an entity affiliated with,
related to, or managed by D. B. Western or Xxxxxx
Xxxxxxx.
Subject always to the foregoing, this lease inures to the benefit of,
and is binding upon, the heirs, legatees, personal representatives, successors
and assigns of the parties hereto.
The foregoing of this Section 23 notwithstanding, LESSOR understands
that the LESSEE shall transfer and encumber the Property pursuant to financing
arrangements with the county of Saratoga Industrial Development Agency, Key Bank
National Association, and National Canada Finance Corporation, to which
transaction (including the transfer and encumbrance of the Property) the LESSOR
hereby consents. Any such transfer or encumbrance shall be subject to LESSOR's
prior rights hereunder.
24. LESSEESHIP. The Equipment is, and shall at all times be and
remain, the sole and exclusive property of LESSOR; and the LESSEE shall have no
right, title or interest therein or thereto except as expressly set forth in
this lease.
25. PERSONAL PROPERTY. The Equipment is, and shall at all times be
and remain, personal property notwithstanding that the Equipment or any part
thereof may now be, or hereafter become, in any manner affixed or attached to,
or imbedded in, or permanently resting upon, real property or any building
thereon, or attached in any manner to what is permanent as by means of cement,
plaster, nails, bolts, screws or otherwise.
26. INTEREST. Should LESSEE fail to pay any part of the rent herein
reserved or any other sum required by LESSEE to be paid to LESSOR, within ten
(10) days after the due date thereof, LESSEE shall pay unto the LESSOR interest
on such delinquent payment from the expiration of said due date until paid at
the rate of twelve percent (12%) per annum.
27. OFFSET. LESSEE hereby waives any and all existing and future
claims, and offsets, against any rent or other payment due hereunder and agrees
to pay the rent and other amounts hereunder regardless of any offset or claim
which may be asserted by LESSEE or on its behalf.
28. NONWAIVER. No covenant or condition of this lease can be waived
except by the written consent of LESSOR. Forbearance or indulgence by LESSOR in
any regard whatsoever shall not constitute a waiver of the covenant or condition
to be performed by LESSEE to which the same may apply, and, until complete
performance by LESSEE of said covenant or condition, LESSOR shall be entitled to
invoke any remedy available to LESSOR under lease or by law or in equity despite
said forbearance or indulgence.
29. ENTIRE AGREEMENT. This instrument constitutes the entire
agreement between LESSOR and LESSEE; and it shall not be amended, altered or
changed except by a written agreement signed by the parties hereto.
30. NOTICES. Service of all notices under this agreement shall be
sufficient if given personally, or mailed via certified mail, or sent by
overnight mail (which may include a non-government carrier, such as Federal
Express), to the party involved at its respective address hereinafter set forth,
or at such address as such party may provide in writing from time to time.
Page 10 of 14
Any such notice mailed to such address shall be effective as of when (i) the
date delivered if delivered in person, (ii) the day after deposited in overnight
mail, if mailed by overnight mail, or (iii) four days after the deposit in
certified mail, if mailed by certified mail, so long as such notice is duly and
properly adressed and with postage prepaid. deposited in the United States mail,
duly addressed and with postage prepaid.
Any notices to be sent by either party to the other shall be sent to
the following addresses as indicated:
LESSOR: D.B. Western, Inc.
0000 Xxxxxxx Xxxx
Xxxxx Xxxx, Xxxxxx 00000
LESSEE: Xxxxxxxx Adhesives, Inc.
Xxxx Xxxxxx Xxx 0
Xxxxxxx XX 00000
31. TITLES. The titles to the paragraphs of this lease are solely
for the convenience of the parties, and are not an aid in the interpretation of
the instrument.
32. TIME. Time is of the essence to this lease and each and all of
its provisions.
33. RENEWAL OPTION. LESSEE shall have the option to renew this lease
at the expiration of the first 10-year period of this lease at a rental to be
negotiated by the parties which shall take into account the then "fair market
value" of the Equipment in place as defined in paragraph 343, and the fair
rental value thereof. LESSEE shall exercise such option by giving notice to
LESSOR of LESSEE's desire to exercise the same which notice shall be given not
later than six (6) months prior to the expiration of the first 10-year term of
the lease. The renewal shall be for such term as the parties shall agree.
34. PURCHASE OPTION. Provided that LESSEE is not at such time in
default in performing any term or provision of this lease, LESSEE shall have the
right during the initial 10-year period of this lease to purchase the Equipment
covered hereby , all on an AS-IS, WHERE-IS basis, for cash at a price equal to
the greater of US $ 3,603,660.00 or the "fair market value" as hereinafter
defined of the Equipment. Further, at any time after the expiration of the
initial 10-year period of this lease provided that LESSEE is not at such time in
default in performing any term or provision of this lease, LESSEE shall have the
right to purchase the Equipment and to acquire LESSOR's rights under the
aforesaid ground lease, on an AS-IS WHERE-IS basis, for cash at a price equal to
the "fair market value" of the Equipment in place.
The "fair market value" of the Equipment in place shall be such amount
as is mutually agreed upon by LESSOR and LESSEE; provided, however, if LESSOR
and LESSEE are unable to agree upon the fair market value of the Equipment
within thirty (30) days after receipt by LESSOR of the notice of LESSEE's
election to exercise the purchase option, the fair market value shall be
determined by an appraiser selected by mutual agreement of LESSOR and LESSEE.
The Machinery and Equipment Committee of The American Society of Appraisers has
adopted the term "fair market value-in-place" (in use) as being the "fair market
value" of an item, including installation and the contribution of the item to
the operating facility and presupposes the continued utilization of the item in
conjunction with all other installed items, which shall be the definition for
valuation. This definition represents the value of an asset that is installed,
operating, and contributing to the business in which it is employed. The
valuation of the equipment will not take into account LESSEE's business
profitability, but may take into account
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the business profitability that could be developed by a new LESSEE or owner of
the plant. If LESSOR and LESSEE are not able to agree upon an appraiser, the
fair market value shall be determined by American Appraisal Company. LESSEE
shall, within sixty (60) days after such fair market value has been determined,
pay the full purchase price to LESSOR in cash. All rights of LESSEE under this
paragraph shall terminate upon the expiration or earlier termination of this
lease.
LESSOR agrees that upon exercise of the above purchase option and upon
full payment therefor, LESSOR shall deliver marketable title, free of
encumbrances for the said Equipment.
35. LESSOR'S CONSENT. Whenever the consent or approval of the LESSOR
is required hereunder, LESSOR agrees that same will not be unreasonably
withheld.
36. CONFIDENTIALITY OF LESSOR'S PROPRIETARY INFORMATION. As used
herein the term "proprietary information" shall include, but shall not be
limited to, LESSOR's confidential information and trade secrets. Trade secrets,
with respect to LESSOR, mean the whole or any portion of any scientific or
technical information, design, process, procedure, formula, pattern,
compilation, program, method, technique, or improvement which is secret and of
value to LESSOR. LESSOR's formaldehyde/UFC trade secrets include, but are not
limited to the supply, use or application of Equipment by LESSOR for the
formaldehyde/UFC process, emission and effluent systems, control of the plant
and product storage to accomplish a process or economic objective or advantage.
Trade secrets also include related drawings, prints, manuals or other
documentation provided by LESSOR to explain or communicate LESSOR's process
technology or Equipment.
Equipment designed and built by LESSOR or to LESSOR's specifications
are proprietary trade secrets in their design, application and ability to
achieve a process or economic objective or advantage. Generic type Equipment
that can be purchased "off the shelf" are proprietary trade secrets in their
application or ability to achieve a process or economic objective or advantage.
The combination of components or features in LESSOR's plant design are
proprietary trade secrets even though the individual components or features are
in the public domain, in the possession of LESSEE or received from a third party
unless the combination itself and the process or economic objectives or
advantages achieved by the features or the combinations of features are in the
public domain, in the possession of LESSEE or received from a third party.
Information shall be deemed to be treated as confidential if it:
(a) has been reduced to writing and marked clearly and
conspicuously with a legend identifying its confidential nature; or
(b) with respect to any oral presentation or communication, is
described as being confidential immediately before the oral
presentation or communication; or
(c) is known by the receiving party as being treated by the
disclosing party as confidential, whether or not it is in written form
and whether or not it is designated as confidential.
LESSEE agrees to exercise reasonable care to prevent disclosure to a
third party of LESSOR's proprietary information and will not use for its own
benefit or that of others such information except as may be authorized in
writing, except to the extent of that portion thereof which:
Page 12 of 14
(a) at the time of disclosure is in the public domain;
(b) after disclosure under this lease become part of the public
domain by publication or otherwise through no fault of LESSEE;
(c) LESSEE can show LESSOR's proprietary information was in its
possession at the time of disclosure and was not acquired in
confidence, directly or indirectly, from LESSOR;
(d) is independently disclosed without obligation of
confidentiality to LESSEE by a third party which third party did not
obtain such information directly or indirectly from LESSOR. LESSEE
agrees to limit disclosure of proprietary information within its own
organization to those necessary to carry out the purpose of this lease.
Furthermore, LESSEE agrees that all such personnel have executed or
will be required to execute confidentiality and non-use agreements with
obligations at least as coextensive in scope as those in this lease.
37. PATENT FEES AND ROYALTIES
37.1 LESSOR shall pay all license fees and assumes all costs
incident to its use of any invention, design, process, or device
supplied by LESSOR hereunder which is the subject of patent rights or
copyrights held by others.
37.2 LESSOR represents to LESSEE that all design and
technical information which it is providing hereunder is its own
proprietary information which it has independently developed and has
full right to use in connection with the Equipment. LESSOR agrees to be
responsible for and to defend LESSEE against liability of any nature or
kind for or on account of any design information, patented or
unpatented process, invention, article, or appliance manufactured or
used in the performance of the Lease, which LESSOR has supplied, and
LESSOR shall, at its own expense, defend any and all actions based
thereon, but LESSEE shall have the right, at its option, to participate
at its own expense in the defense of any such suit.
38. INDEMNITY. LESSEE shall indemnify, defend and hold harmless
LESSOR from and against any claim, demand, suit, proceeding, liability, damage,
fine or loss and all related costs (including the cost of complying with any
judicial or governmental order) or expense (including reasonable attorneys fees
at trial, on appeal and in connection with any petition for review) arising in
any manner out of (i) LESSEE's breach of any representation, warranty or
covenant in this lease, (ii) the possession, use or condition of the HCHO/ UFC
Plant A-Equipment, Property and Facilities during the term of this lease, (iii)
the operations of LESSEE, (iv) any products produced by or at the Property, (v)
the Equipment during the term of the lease, and the Property and the Equipment,
including without limitation the LESSEEship, possession, use of operation
thereof, or (vi) the migration or other release of hazardous substances onto or
under the Property from any other property owned, leased or controlled by LESSEE
or any of its affiliates. LESSOR shall have no liability to LESSEE for any
condition of the Property or any acts by third parties. The covenants and
indemnities set forth in this paragraph and the next preceding paragraph shall
survive the expiration or termination of this lease for any reason, but shall
not apply to any claim, demand, suit, proceeding, liability, damage, fine, loss
or costs caused by LESSOR or its subcontractors during the period prior to the
date the plant is mechanically complete, or caused by LESSOR's own negligence,
or misconduct.
Page 13 of 14
39. GOVERNING LAW. This lease agreement shall be interpreted and
applied in accordance with the laws of the State of Oregon.
40. LEASE INTENDED AS TRUE LEASE. This lease is intended as a "true
lease" between the parties. The provisions hereof are not intended to constitute
a sale of the Equipment from the LESSOR to LESSEE; and LESSEE has no rights to
use or acquire the Equipment or any part thereof except as set forth herein. The
parties agree that each of them, will report that the LESSOR is the owner of the
Equipment for federal income tax purposes (unless and until the LESSEE completes
a purchase of the Equipment in accordance with the option to purchase set forth
in paragraph 343) and that neither of the parties will ever take an inconsistent
position.
41. FILING AND RECORDING OF NOTICES AND MEMORANDUMS. LESSEE agrees
to join with LESSOR in executing and recording and filling all notices,
financing statements, memorandums and other instruments and documents that
LESSOR deems necessary to give notice of LESSOR's rights hereunder, in the
appropriate offices of any county or state where any part of the Equipment be
located.
IN WITNESS WHEREOF the parties hereto have executed these presents the
day and year first above written.
D.B. WESTERN, INC. XXXXXXXX ADHESIVES, INC.
By: /s/ Xxxxxx X. Xxxxxxx By: /s/ Irvine X. Xxxxxxxx
------------------------------ ------------------------------
President President
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
------------------------------
Exec. V.P.
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