Exhibit 4.4
Amended and Restated Facility Lease
Dated December 27, 2001
Between
WILMINGTON TRUST COMPANY
not in its individual capacity but solely as Owner Trustee,
Lessor
and
XXXX & XXXXXX, INC.,
Lessee
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This Facility Lease and the rentals and other sums due and to become due
hereunder have been assigned for security to and are subject to a security
interest in favor of Xxxxx Fargo Bank Northwest, National Association (formerly
known as First Security Bank, National Association), as Indenture Trustee under
an Amended and Restated Trust Indenture and Security Agreement dated as of
September 15, 1999 between said Indenture Trustee and the Owner Trustee, as
Debtor, as amended and restated on the date hereof. Information concerning such
security interest may be obtained from the Indenture Trustee at its address set
forth in Section 20 of this Facility Lease.
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Table of Contents
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Page
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Section 1. Interpretation of this Lease. ...............................................1
Section 2. Acceptance of Leased Property. ..............................................1
Section 3. Term of Lease. ..............................................................1
Section 4. Rent Payments. ..............................................................2
Section 5. Indemnities. ................................................................4
Section 6. Lessee's Covenants. .........................................................4
Section 6.1 Nature of Business ..........................................................4
Section 6.2 Mergers and Consolidations ..................................................5
Section 6.3 Lessee Financial Covenants ..................................................5
Section 6.4 Pension Plans. ..............................................................6
Section 6.5 Certain Notices. ............................................................6
Section 6.6 Facility Operations .........................................................8
Section 6.7 Compliance with Law .........................................................8
Section 7. Insurance. ..................................................................9
Section 8. Maintenance; Maintenance Costs and Warranties; Replacement of
Parts; Alterations; Modifications and Additions. ...........................12
Section 9. Location and Use; No Assignment by Lessee. .................................17
Section 10. Liens. .....................................................................20
Section 11. Ownership and Marking. .....................................................20
Section 12. Disclaimer of Warranties; Net Lease. .......................................21
Section 13. Casualty Occurrences; Condemnation; Early Termination; Etc. ................24
Section 14. Assignment by Owner Trustee. ...............................................27
Section 15. Defaults. ..................................................................28
Section 16. Return of Facility to Owner Trustee. .......................................33
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Section 17. [Intentionally Left Blank] .................................................36
Section 18. Financial Statements and Reports; Inspection and Certificates. .............36
Section 19. Options to Renew and Purchase. .............................................40
Section 20. Miscellaneous. .............................................................44
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Attachments to Facility Lease:
Schedule 1 - Schedule of Periodic Rent Percentages
Schedule 1A - Schedule of Periodic Rent Allocations
Schedule 2 - Schedule of Casualty Value
Schedule 3 - Schedule of Termination Value
Schedule 4 - Schedule of the Early Purchase Date, Early Purchase Price and
Installment Amounts and Dates
Exhibit A - Description of Major Components of the Facility
Exhibit B - Description of the Facility
Exhibit C - Description of the Site
Exhibit D - Pricing Assumptions
Exhibit E - Form of Lease Supplement
Annex I - Definitions
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FACILITY LEASE
This Amended and Restated Facility Lease, dated December 27, 2001 (this
"Lease"), is between Wilmington Trust Company, a Delaware banking corporation,
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not in its individual capacity but solely as owner trustee (the "Owner Trustee")
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under the Trust Agreement, as lessor hereunder, and Xxxx & Xxxxxx, Inc., a
Delaware corporation (the "Lessee").
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WHEREAS, the parties hereto entered into that certain Facility Lease dated
as of September 30, 1999 (the "Existing Facility Lease"); and
WHEREAS, the parties hereto desire to amend and restate the Existing
Facility Lease, on the terms and conditions set forth herein, it being
understood that this Agreement is an amendment and restatement of the Existing
Facility Lease, which shall remain in full force and effect, as amended and
restated hereby.
NOW, THEREFORE, in consideration of the promises and the mutual agreements
contained herein, the Owner Trustee and the Lessee hereby agree that the
Existing Facility Lease shall be amended and restated as follows:
Section 1. Interpretation of this Lease.
(a) Definitions. The capitalized terms used in this Lease shall have the
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respective meanings indicated in Annex I hereto unless elsewhere defined herein
or the context hereof shall otherwise require.
(b) Accounting Principles. Where the character or amount of any asset or
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liability or item of income or expense is required to be determined or any
consolidation or other accounting computation is required to be made for the
purposes of this Lease, this shall be done in accordance with generally accepted
accounting principles at the time in effect, to the extent applicable, except
where such principles are inconsistent with the requirements of this Lease.
(c) Directly or Indirectly. Where any provision in this Lease refers to
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action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
Section 2. ACCEPTANCE OF LEASED PROPERTY.
The Owner Trustee does hereby lease and let the Leased Property to the
Lessee and the Leased Property is hereby accepted by the Lessee hereunder and
declared to be and constitute the property leased hereunder, all for the Rent
and the Term hereinafter stipulated and upon the terms and conditions herein set
forth.
Section 3. TERM OF LEASE.
The basic term of this Lease (the "Basic Term") shall commence on the
Closing Date and shall expire January 2, 2012, subject to earlier termination
pursuant to Sections 13, 15 and 19.
Section 4. RENT PAYMENTS.
The Lessee agrees to pay the Owner Trustee the following hereunder:
(a) Rent for Facility. The Lessee hereby agrees to pay to the Owner Trustee
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Rent for the Facility (the "Periodic Rent") on each semiannual Rent Payment Date
during the Facility Lease Term, unless the Facility Lease is earlier terminated
in accordance with the express provisions hereof, in an amount equal to the
percentage set forth under the column entitled "Total Periodic Rent Percentage"
opposite such Rent Payment Date on Schedule 1 multiplied by the Facility Cost.
The Periodic Rent payable on each Rent Payment Date pursuant to this Section
4(a) shall be in satisfaction of the Lessee's obligation to pay the Periodic
Rent allocated to each full or partial calendar year during the Facility Lease
Term as set forth on Schedule 1A.
(b) Rent for Site Lease Property. The Lessee agrees to pay the Owner
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Trustee Rent for the Site Lease Property (the "Periodic Site Rent") payable for
the Term in consecutive semiannual installments (other than the first Site Lease
Rent payment, which shall be in respect of the period from the Closing Date to
the first Rent Payment Date), each in an amount equal to the Periodic Site Rent
Amount, payable in arrears on each Rent Payment Date; provided that, so long as
the Lessee shall be the landlord under the Site Lease, the Lessee's obligation
to make Periodic Site Rent payments shall be satisfied by its concurrent right
to receive Site Rent under the Site Lease.
(c) Supplemental Rent. The Lessee agrees to pay to the Owner Trustee, or to
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whosoever shall be entitled thereto, any and all Supplemental Rent promptly as
the same shall become due and owing, and in the event of any failure on the part
of the Lessee to pay any Supplemental Rent, the Owner Trustee shall have all
rights, powers and remedies provided for herein or by law or equity or otherwise
in the case of nonpayment of Periodic Rent. Lessee will, in addition to any
other Rent due and payable hereunder, also pay, as Supplemental Rent, (i) in the
case of the termination of this Lease pursuant to Section 13(d), on the
Termination Date, an amount equal to the Make-Whole Amount, if any, with respect
to the principal amount of each Note to be prepaid as a result of such
termination, (ii) in the case of the purchase of the Facility pursuant to
Section 19(f), unless Lessee shall have assumed the Notes as provided in the
Participation Agreement, on such date of purchase, an amount equal to the
Make-Whole Amount, if any, with respect to the principal amount of each Note to
be prepaid as a result of such purchase, and (iii) in the case of any
refinancing of the Notes pursuant to Section 13 of the Participation Agreement,
on the Refunding Date, an amount equal to the Make-Whole Amount, if any, with
respect to the aggregate principal amount of the Notes being prepaid.
(d) Place and Manner of Payment. All payments to be made by the Lessee
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under this Lease shall be made as follows:
(i) Each installment of Periodic Rent shall be paid to the Owner
Trustee by wire transfer to the principal office of the Owner Trustee at
the address thereof provided for payments in Section 20(c); provided that
until the Lessee shall have received notice from the Indenture Trustee that
all Secured Indebtedness has been fully
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paid and satisfied, all such payments shall be made by wire transfer to the
office of the Indenture Trustee designated in Section 20(c) or as otherwise
designated from time to time in writing by the Indenture Trustee;
(ii) The entire amount of any payment of Casualty Value or Termination
Value pursuant to Section 13, of any payment of the purchase price of the
Facility pursuant to Section 19(b), Early Purchase Price pursuant to
Section 19(f), and any payment pursuant to Section 15 hereof shall be paid
to the Owner Trustee by wire transfer to the principal office of the Owner
Trustee at the address thereof provided for payments in Section 20(c);
provided that until the Lessee shall have received notice from the
Indenture Trustee that all Secured Indebtedness has been fully paid and
satisfied, all such payments shall be made by wire transfer to the office
of the Indenture Trustee designated in Section 20(c) or as otherwise
designated from time to time in writing by the Indenture Trustee;
(iii) The amount of any payment owing to the Owner Trustee or the
Owner Participant pursuant to Section 7 or 9 of the Participation Agreement
(and by incorporation by reference herein, Section 5 hereof) and Section 7
hereof (but, in the case of Section 7 hereof, only with respect to public
liability insurance) shall be made directly to the party to receive the
same without regard to the assignment of this Lease pursuant to Section 14
hereof; and
(iv) All payments other than those above specified shall be made by
the Lessee directly to the party entitled to receive the same.
The Lessee agrees that it will make payments due hereunder by wire transfer
where specified above in immediately available funds consisting of lawful
currency of the United States of America no later than 10:00 A.M. Portland,
Oregon time on the date due to the party to whom such payment is to be made to
such account in any United States bank as such party may from time to time
direct in writing, and where not so specified, such payment shall be made by
check of the Lessee drawn on a bank located in the continental United States and
mailed to the party to receive the same at the address herein provided or at
such other address as the Lessee shall have been previously advised in writing.
(e) Overdue Payments. The amount of any installment of Periodic Rent or
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Periodic Site Rent or any payment of Supplemental Rent remaining unpaid after
the due date thereof shall bear interest at the Late Rate from and after the due
date of such installment or payment and such interest shall be paid by the
Lessee, on demand as Supplemental Rent.
(f) Adjustment of Rent. The Periodic Rent percentage, Casualty Value,
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Termination Value and Early Purchase Date and Early Purchase Price tables
attached hereto as Schedules 1, 2, 3 and 4 respectively, have been calculated on
the assumptions (the "Pricing Assumptions") set forth in Exhibit D hereto.
If for any reason the Closing Date or the Transaction Costs related to the
Facility set forth in Exhibit D hereto shall prove to be incorrect, then the
Owner Participant acting in
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good faith shall, prior to the first Rent Payment Date, recompute the factors
for Periodic Rent, the Casualty Value and Termination Value tables and the Early
Purchase Date and Early Purchase Price in order to provide the Owner Participant
with the same Net Economic Return as if such assumptions were accurate;
provided, that such adjustments shall comply with the Guidelines and all
provisions of the Code and the Treasury Regulations thereunder, in each case as
in effect on the date of such adjustment, including, without limitation, Section
467 of the Code and the Treasury Regulations thereunder, in each case as in
effect on the date of such adjustment; and provided, further, that in such
recomputation (i) each installment of Periodic Rent shall be in an amount
sufficient to pay on each installment date the principal of, and interest on,
the Notes due on such date without acceleration, (ii) the Casualty Value and
Termination Value as of any date shall be sufficient to pay the aggregate unpaid
principal amount of, and interest on, the Notes outstanding as of such date and
(iii) the Early Purchase Price shall at all times exceed the appraiser's
estimated fair market value for the Early Purchase Date. Such recomputation
shall be based upon the assumptions and methods of calculation utilized by the
Owner Participant in computing the amounts thereof originally set forth in this
Lease. On or before the first Rent Payment Date, the Owner Trustee and the
Lessee shall execute and deliver a Lease Supplement, substantially in the form
of Exhibit E hereto, reflecting any revisions to Schedules 1, 2, 3 and 4 hereto,
and the adjustments shall be effective as of said first Rent Payment Date.
(g) Verification of Rental Adjustments. Each notice to the Lessee from the
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Owner Participant setting forth the results of any calculation or recalculation
pursuant to paragraph (f) above shall be accompanied by a letter from the Owner
Participant setting forth the reasons for such calculation or recalculation and
stating that such calculation or recalculation was made using the same methods
and, except as to the change or changes in circumstance giving rise to such
adjustment, the same assumptions as were used in computing the factors for
Periodic Rent, Casualty Values and Termination Values and the Early Purchase
Date and Early Purchase Price in effect prior to such adjustment.
Section 5. INDEMNITIES.
The Lessee's indemnity obligations are set forth in Sections 7 and 9 of the
Participation Agreement, which Sections are incorporated herein by reference as
though fully set forth in this Section 5. The Lessee's indemnity obligations
contained in Sections 7 and 9 of the Participation Agreement shall survive the
termination of any of this Lease and the other Operative Agreements and shall
survive the transfer of any Note or the Beneficial Interest and payment of any
or all Notes and the extinguishment of the Beneficial Interest.
Section 6. LESSEE'S COVENANTS.
Section 6.1 Nature of Business. Neither the Lessee nor any Subsidiary will
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engage in any business if, as a result, the general nature of the business,
taken on a consolidated basis, which would then be engaged in by the Lessee and
its Subsidiaries would be substantially changed from the growing and harvesting
of timber and manufacture and sale of wood products and related businesses
engaged in by the Lessee and its Subsidiaries on the date of this Lease and
described in the Private Placement Memorandum and other businesses incidental or
reasonably related thereto.
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Section 6.2 Mergers and Consolidations. The Lessee will not consolidate
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with, or be a party to a merger with, or sell, lease or otherwise dispose of all
or substantially all of its assets to, any other Person; provided, however, that
the Lessee may consolidate or merge with, or sell all or substantially all of
its assets to, any business entity if:
(i) the surviving or continuing entity or the entity to which all or
substantially all of the Lessee's assets are sold (the "Surviving Entity")
shall be either the Lessee or an entity organized under the laws of the
United States or any state thereof which conducts at least a majority of
its business and has at least a majority of its assets within the United
States, and in the case of any such consolidation or merger in which the
Lessee is not the Surviving Entity or in the case of any such sale, the
Surviving Entity shall (A) expressly assume in writing the due and punctual
performance and observance of all of the covenants in the Operative
Agreements to be performed or observed by the Lessee, and (B) furnish to
the Owner Trustee, the Indenture Trustee and each Participant an opinion of
independent counsel to the effect that the instrument of assumption has
been duly authorized, executed and delivered and constitutes the legal,
valid and binding contract and agreement of the Surviving Entity
enforceable in accordance with its terms (subject to customary limitations
relating to bankruptcy and the enforcement of equitable remedies), which
counsel and opinion shall be reasonably satisfactory to the Owner Trustee
and the Indenture Trustee; and
(ii) at the time of such consolidation or merger or such sale and
after giving effect thereto (A) no Default or Event of Default shall have
occurred and be continuing and (B) the Adjusted Net Worth of the Surviving
Entity shall not be less than the Adjusted Net Worth of the Lessee
immediately prior to such consolidation or merger or such sale.
Section 6.3 Lessee Financial Covenants. Lessee covenants and agrees that it
shall: --------------------------
(a) maintain a Fixed Charge Coverage Ratio of at least 1.05 to 1, as
measured by reference to the amounts reported for Lessee's immediately
preceding four fiscal quarters on a rolling basis; provided, however, that
if as of the end of any fiscal quarter Lessee does not meet the Fixed
Charge Coverage Ratio, then Lessee must maintain, until such time as Lessee
regains compliance with such Fixed Charge Coverage Ratio, on a consolidated
basis, a minimum balance of $25,000,000 (denominated in United States
Dollars), consisting of one or more of the following: (i) United States
cash or cash equivalents; (ii) Canadian cash or cash equivalents; or (iii)
immediately available and unused loan commitments from one or more lenders.
For purposes of denominating in United States Dollars any Canadian cash,
cash equivalents or loan commitments and availability, the parties will use
the "Exchange Rates" in the "Currency Trading" table appearing from time to
time in the Wall Street Journal;
(b) maintain a ratio of Total Funded Debt to Total Adjusted
Capitalization of no more than (i) 62.5% for the fiscal years ending
December 31, 1999, December 31, 2001 and December 31, 2002 and (ii) 55.0%
thereafter; and
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(c) maintain a minimum Adjusted Net Worth as of the end of each fiscal
quarter of not less than the sum of (i) U.S.$123,807,000, (ii) 50% of
cumulative consolidated positive net income for each fiscal quarter ending
after March 31, 1999 and (iii) 100% of the value (net of underwriters'
discounts and customary out-of-pocket costs and expenses of issuance) of
any Equity Interests issued by Lessee since March 31, 1999.
Section 6.4 Pension Plans.
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(a) The Lessee will not and will not permit any ERISA Affiliate to withdraw
from any Multiemployer Plan if such withdrawal would result in withdrawal
liability (as described in Part 1 of Subtitle E of Title IV of ERISA) that could
reasonably be expected to have a Material Adverse Effect. The Lessee will not
and will not permit any ERISA Affiliate (i) to permit any employee benefit plan
maintained by it to be terminated in a manner which could result in the
imposition of a Lien on any Property of the Lessee or any Subsidiary pursuant to
Section 4068 of ERISA or (ii) to fail to make a required contribution to any
Plan pursuant to Section 412(m) of the Code or Section 302(e) of ERISA which
could result in a Lien or any Property of the Lessee or any Subsidiary of the
Lessee pursuant to Section 412(a) of the Code or Section 302(f) of ERISA.
(b) The Lessee agrees that all contributions required to be made to the
Canadian Pension Plans to make them fully funded under the Income Tax Act
(Canada) and other applicable Canadian pension legislation will continue to be
made at the time required under applicable Canadian pension legislation.
(c) The Lessee agrees that 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 will continue to be
remitted at the time required under applicable Canadian pension legislation.
Section 6.5 Certain Notices.
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(a) Liens. Upon the attachment of an aggregate amount of U.S. $250,000 or
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more of Liens on the Leased Property or any part thereof (in either case
excluding any Liens constituting Permitted Encumbrances), the Lessee shall
promptly (and in no event later than ten (10) Business Days after it shall have
obtained knowledge thereof) notify the Owner Trustee and the Indenture Trustee
of the attachment of all such Liens and the full particulars thereof unless the
same shall have been removed or discharged by the Lessee.
(b) Notices of Noncompliance with Applicable Laws. The Lessee shall furnish
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to the Owner Trustee, the ClO2 Indenture Trustee, and the Indenture Trustee,
within five (5) Business Days after receipt thereof, a copy of any notice or
order of any Governmental Authority asserting that the Lessee is not in
compliance with, or in violation of, or may be liable for contamination
originating from or on the Site or the Facility under, any Applicable Law, if
such non-compliance, violation or liability could reasonably be expected to have
a Material Adverse Effect.
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(c) Plans and Specifications; Operating Manuals. The Lessee shall maintain
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or cause its Affiliates to maintain throughout the Site Lease Term, and keep on
file at its office, a complete set of plans and specifications, including
"as-built" plans and specifications as and when available, with respect to the
Facility (which shall reflect all material Parts incorporated or installed in or
attached to the Facility and all material Alterations made pursuant to Section 8
hereof; provided, however, that such plans and specifications shall as of any
date not be required to reflect any such Parts so incorporated, installed or
attached or any such Alteration made within forty-five (45) days prior to such
date). Upon the expiration of the Term, unless the Lessee has exercised its
option to purchase the Facility and has paid all amounts due and owing in
connection therewith, the Lessee shall deliver to the Owner Trustee and the
Indenture Trustee or to the Owner Trustee's designee or the Indenture Trustee's
designee, as the case may be, a complete set of such plans and specifications
and all work drawings and similar documents with respect to the Leased Property
maintained pursuant to the requirements of this Section 6.5(c).
(d) Environmental Event. The Lessee shall promptly, but in any case within
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five (5) Business Days, notify each Participant, each holder of the ClO2 Notes,
the Owner Trustee and the Indenture Trustee if (i) any event has occurred or any
condition is discovered in, on, from or involving the Leased Property or any
part thereof involving the presence or Release of Hazardous Materials or the
violation, or noncompliance with, any applicable Environmental Law that could
reasonably be anticipated to result in penalties, Remedial Action or other
liabilities in an aggregate amount in excess of U.S.$1,000,000, or (ii) the
Lessee has received notification that it, the Leased Property or any part
thereof is the subject of an Environmental Claim or has knowledge of any
conditions or occurrences at the Leased Property that could reasonably form the
basis of a material Environmental Claim, in either case that could reasonably be
expected to result in any ordered Remedial Action or other liability related to
an event or condition with respect to the Leased Property or any part thereof
the cost of which liability is reasonably expected to exceed U.S.$1,000,000, or
(iii) any material and actual or imminent restriction on the ownership,
occupancy, use, productivity or transferability of the Leased Property arising
in connection with any Release, threatened Release or disposal of a Hazardous
Material or any breach or violation of, or noncompliance with, any Environmental
Law, or (iv) any other environmental, natural resource, health or safety
condition which could reasonably be expected to materially and adversely affect
the ability of the Lessee to perform its obligations under the Operative
Agreements (each of (i) through (iv) an "Environmental Event").
Following the receipt of a notice pursuant to the immediately preceding
paragraph, the Owner Trustee may require the Lessee to conduct, or cause to be
conducted, an environmental study by an environmental consultant reasonably
satisfactory to the Owner Trustee (the cost and expenses of such environmental
consultant to be borne by the Lessee) of the Leased Property or any applicable
part thereof on which such Environmental Event or Release shall have occurred,
the scope of which study shall be limited to confirming the magnitude and
anticipated cost of the liability resulting in the Environmental Event and to
provide a copy of the environmental consultant's report on its study to the
Owner Trustee. Notwithstanding the foregoing, if a pattern, in the reasonable
opinion of the Owner Trustee, of such Environmental Events exists, the Owner
Trustee may conduct or require the Lessee to conduct a more comprehensive
environmental study (the cost and expense of such study to be borne by the
Lessee) of the Leased Property or the applicable part thereof to determine the
scope
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and nature of such pattern. If it is the reasonable opinion of the Owner Trustee
that (i) an Environmental Event has occurred or exists and a Permitted
Remediation (as defined below) is not available or the Environmental Event
cannot be cured through a Permitted Remediation or (ii) the Environmental Event
will result in the cessation of operation of the Facility or the applicable part
thereof for 30 days or more such Environmental Event shall, at the option of the
Owner Trustee, be deemed a Casualty Occurrence with respect to the Leased
Property or the applicable part thereof (an "Environmental Trigger"). A
"Permitted Remediation" means any remediation of an Environmental Event (a) the
cost of which remediation is not anticipated, in the reasonable opinion of the
Owner Trustee, to exceed U.S.$5,000,000; provided that such amount shall be
increased to $15,000,000 if either (1) the Adjusted Net Worth of the Lessee at
the time of determination is not less than the amount set forth in Section
6.3(c)(i), or (2) the Lessee then carries environmental insurance with respect
to the Leased Property and shall demonstrate to the reasonable satisfaction of
the Owner Trustee and the Indenture Trustee that the insurers thereunder have
confirmed coverage of such remediation under such insurance; provided further
that if such insurance coverage is less than $15,000,000 (at a time when clause
(1) is not applicable), the applicable amount for purposes of determining a
Permitted Remediation shall be the greater of $5,000,000 and the amount of such
coverage (but in no event greater than $15,000,000), (b) during and after which
such Environmental Event it could not be expected to result in any additional
environmental liability incurred by the Owner Trustee for which the Owner
Trustee has not received additional indemnification in an amount and from a
Person satisfactory to the Owner Trustee in its sole discretion and (c)
permitted and effected in material compliance with all applicable Environmental
Laws.
Irrespective of whether an Environmental Trigger has occurred, the Lessee
shall promptly initiate, at its sole cost and expense (provided that, without
derogating from any of the Lessee's obligations hereunder or under of the other
Operative Agreements, nothing herein contained shall be deemed to release or
waive any of the Lessee's rights against any other Person liable to the Lessee
with respect to any Environmental Event or condition), such actions as may be
necessary to comply in all material respects with all applicable Environmental
Laws and to alleviate any significant risk to human health or the environment if
the same arises from an Environmental Event or a condition on or in respect of
the Leased Property or any part thereof, whether existing prior to, on or after
the date of this Lease. Once the Lessee commences such actions, the Lessee shall
thereafter diligently and expeditiously proceed to comply materially and in a
timely manner with all Environmental Laws and to so alleviate any significant
risk to human health or the environment.
Section 6.6 Facility Operations. The Lessee will cause the Site and the
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Facility to comply with all restrictive covenants and applicable zoning and
subdivision ordinances and building codes, except where a failure so to comply
could not reasonably be expected to have a Material Adverse Effect.
Section 6.7 Compliance with Law. The Lessee covenants and agrees to comply
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with, and to cause the Facility, the Site and the operations of the Lessee at
the Facility and the Site to comply with, all Applicable Law and all judgments,
injunctions, decrees or awards to which the Lessee, the Facility or the Site may
be subject, except where the failure so to comply could not reasonably be
expected to have a Material Adverse Effect.
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Section 7. INSURANCE.
(a) Required Insurance Coverages and Limits. The Lessee agrees that it will
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at its own cost and expense at all times during the Term:
(i) Keep the Leased Property insured against physical loss including
by fire, windstorm, explosion, flood, subsidence, earthquake, earth
movement and collapse and with all-risk coverage and against all such other
risks as are insured against by the Lessee with respect to property of a
similar character owned or leased by the Lessee, in an amount not less than
the greater of (A) the replacement value of the Facility and (B) the
Casualty Value of the Facility as of the next preceding Rent Payment Date,
which insurance shall (v) cover all materials, equipment, tools and
supplies stored on the Site and to become part of the Leased Property, (w)
cover all portions of the Leased Property while in transit, (x) include
boiler and machinery insurance, (y) include coverage against loss caused by
explosion and breakdown and (z) waive any condition requiring that the
Leased Property be in use or ready for use,
(ii) Maintain commercial general liability insurance with respect to
the Leased Property including liability coverage for premise-operations,
contractual liability, product liability, builder's risk, workmen's
compensation, and owned, non-owned and hired car auto liability, which
coverage shall be against damage because of bodily injury, including death,
or damage to property of others, such insurance to afford protection to the
limit of not less than U.S.$1,000,000 combined single limit per occurrence
in respect of bodily injury or property damage liability and U.S.$2,000,000
in the aggregate and a U.S.$35,000,000 umbrella liability for liabilities
in excess of the single limit amounts, and
(iii) Maintain such other insurance covering such risks and in such
amounts as is customary by corporations owning, operating or leasing
property or engaged in the same or similar business, similarly situated
with the Leased Property and/or the Lessee, to the extent available on
commercially reasonable terms.
The Lessee agrees to maintain all insurance provided for under this Section
7 with good and responsible insurance companies of recognized national
reputation reasonably acceptable to the Owner Trustee, the holders of the ClO2
Notes and the Participants. Any policies of insurance carried in accordance with
this Section 7 and any policies taken out in substitution or replacement for any
of such policies (1) shall name the Insured Parties as additional insureds, (2)
shall provide that in respect of the interest of the Insured Parties in such
policies the insurance shall not be invalidated by any action or inaction of the
Lessee or any other Person and shall insure the Insured Parties' interests as
they appear, regardless of any breach or violation of any warranty, declaration
or condition contained in such policies by the Lessee or any other Person, (3)
shall provide that, if such insurance is cancelled for any reason whatsoever, or
any substantial change is made in the coverage which adversely affects the
interest of any Insured Party or if such insurance is allowed to lapse for
nonpayment of premium, such cancellation, change or lapse shall not be effective
as to such Insured Party for 30 days after receipt by such Insured Party of
written notice from such insurers of such cancellation, change or
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lapse, (4) shall provide that no Insured Party shall have any obligation or
liability for premiums in connection with such insurance, (5) shall provide that
such insurance shall be primary without right of contribution from any other
insurance which may be carried by any Insured Party with respect to its interest
as such in the Leased Property, (6) shall provide that the insurers shall waive
any rights of subrogation against the Insured Parties, except for claims as
shall arise from the willful misconduct or gross negligence of any such Insured
Party, and (7) shall provide that such insurers shall waive any right of setoff,
counterclaim or any other deduction, whether by attachment or otherwise, in
respect of any liability of any Insured Party. Each liability policy shall
expressly provide that all of the provisions thereof, except the limits of
liability, shall operate in the same manner as if there were a separate policy
covering each insured. Each policy covering casualty insurance required to be
carried by paragraph (a)(i) of this Section 7 shall provide either (y) that any
payments for any loss or damage to the Leased Property shall be paid to the
Indenture Trustee (or, if the Secured Indebtedness shall have been fully paid
and satisfied, to the Owner Trustee), as loss payee, or (z) that (i) any
payments for any loss or damage to the Leased Property constituting a total or
constructive loss or a Casualty Occurrence shall be paid to the Indenture
Trustee (or, if the Secured Indebtedness shall have been fully paid and
satisfied, to the Owner Trustee), as loss payee, (ii) any payments for any loss
or damage to the Leased Property which do not constitute a total or constructive
loss or a Casualty Occurrence and are not in excess of U.S.$2,500,000 shall be
paid to the Lessee (unless the insurer shall have received notice of a Default
or Event of Default, in which case such payments shall be paid to the Indenture
Trustee (or, if the Secured Indebtedness shall have been fully paid and
satisfied, to the Owner Trustee), as loss payee, and (iii) any payments for any
loss or damage to the Leased Property which do not constitute a total or
constructive loss or a Casualty Occurrence and are in excess of U.S.$2,500,000
shall be paid to the Indenture Trustee (or, if the Secured Indebtedness shall
have been fully paid and satisfied, to the Owner Trustee), as loss payee), in
each case under a standard mortgage loss payable clause (which clause specifies
payment solely to the Indenture Trustee or, if the Secured Indebtedness shall
have been fully paid and satisfied, solely to the Owner Trustee, and which
clause acknowledges that the loss payee shall have no obligation for unpaid
premiums) reasonably satisfactory to the Indenture Trustee. Any such insurance
may be carried under blanket policies maintained by the Lessee so long as such
policies otherwise comply with the provisions of this Section 7(a). If general
public liability insurance shall be carried under any blanket policy which is
subject to aggregate annual claim limitations, the Lessee shall keep the Owner
Trustee advised from time to time of the amount of any such limitations and the
amounts of claims which reduce the available policy limits.
(b) Adjustment and Payment of Losses. The loss, if any, under any casualty
--------------------------------
insurance required to be carried by paragraph (a)(i) of this Section 7 shall be
adjusted with the insurance companies by the Lessee, or otherwise collected,
including the filing of proceedings deemed advisable by the Lessee, subject to
the reasonable approval of the Owner Trustee (and the Indenture Trustee unless
the Secured Indebtedness shall have been fully paid and satisfied) if the loss
exceeds U.S.$2,500,000. The loss so adjusted shall be paid in accordance with
the antepenultimate sentence of Section 7(a). Losses covered by liability
insurance shall be adjusted by and paid to the Person suffering such loss. The
loss, if any, under such insurance shall be adjusted and paid as provided in
this Lease.
10
(c) Evidence of Insurance. The Lessee shall, on or before the Closing Date,
---------------------
furnish the Owner Trustee, the ClO2 Indenture Trustee and the Indenture Trustee
with certificates or other satisfactory evidence of maintenance of the insurance
required hereunder and shall with respect to any renewal policy or policies,
furnish certificates evidencing such renewal not less than ten days prior to the
expiration date of the original policy or policies. Each such certificate or
other evidence of insurance shall identify the insurance carrier, the type of
insurance, the coverage limits, annual aggregate limits, if any, and the policy
term. Upon the reasonable request of the Owner Trustee, the Indenture Trustee,
any holder of the ClO2 Notes or any Participant, the Lessee shall provide, or
cause to be provided, a report by AON Risk Services of Oregon, Inc. or another
firm of independent insurance brokers (which may be the Lessee's regular
insurance agency) chosen by the Lessee and satisfactory to the Owner Trustee and
the Indenture Trustee setting forth the insurance obtained by the Lessee
pursuant to this Section 7 and then in effect (or to be in effect, in the case
of renewals) and stating whether, in the opinion of such firm, such insurance
complies with the requirements of this Section 7. The Lessee will cause such
firm to advise each Insured Party in writing promptly of any default in the
payment of any premium and of any other act or omission on the part of the
Lessee of which such firm has knowledge and which might invalidate or render
unenforceable, in whole or in part, any insurance on the Leased Property. The
Lessee will also cause such firm to advise each Insured Party in writing
promptly upon such firm acquiring knowledge that an interruption or reduction of
any insurance carried and maintained on the Leased Property pursuant to this
Section 7 will occur.
(d) Application of Insurance Proceeds. All insurance proceeds from policies
---------------------------------
required to be maintained hereunder received by or payable to the Owner Trustee
on account of any damage to or destruction of the Leased Property or any part
thereof (less the actual costs, fees and expenses incurred in the collection
thereof) shall be applied or dealt with as follows:
(i) All such proceeds actually received on account of any such damage
or destruction other than a Casualty Occurrence shall be paid over to the
Lessee or as it may direct from time to time as restoration, replacement
and rebuilding of the Leased Property ("Restoration") progresses to pay (or
reimburse the Lessee for) the cost of Restoration, if the amount of such
proceeds received by the Owner Trustee, together with such additional
amounts, if any, theretofore expended by the Lessee out of its own funds
for Restoration are sufficient to pay the estimated cost of completing
Restoration, but only upon a written application of the Lessee accompanied
by an Officer's Certificate of the Lessee stating that no Default or Event
of Default has occurred and is continuing under this Lease and showing, in
reasonable detail, (A) the nature of Restoration, (B) that such Restoration
is intended to restore the Facility to Design Capacity (normal wear and
tear excepted), (C) the actual cash expenditures made to date for
Restoration, and (D) the estimated cost (which, if requested by the Owner
Trustee, shall be verified by an accompanying certificate of an engineer or
architect not an employee of the Lessee) to complete Restoration. Upon the
written request of the Lessee, accompanied by evidence reasonably
satisfactory to the Owner Trustee that Restoration has been completed and
the costs thereof paid in full, that the Facility is capable of operating
at Design Capacity (normal wear and tear excepted) and that the Leased
Property is not subject to mechanics'
11
or similar Liens for labor or materials supplied in connection therewith,
the balance, if any, of such proceeds shall be paid over or assigned to the
Lessee or as it may direct.
(ii) All such proceeds received or payable on account of a Casualty
Occurrence shall be paid over or assigned to the Lessee or as it may direct
in either case after receipt by the Owner Trustee (or, so long as the
Secured Indebtedness shall not have been fully paid and satisfied, the
Indenture Trustee) of the Casualty Value of the Facility and payment of all
other amounts due hereunder.
(iii) Pending application pursuant to subparagraph (i) or (ii) above,
all such proceeds held from time to time by the Owner Trustee (or, so long
as the Secured Indebtedness shall not have been fully paid and satisfied,
the Indenture Trustee) shall be invested and reinvested by the Owner
Trustee or the Indenture Trustee, as the case may be, in accordance with
the provisions of Section 20(i).
(e) Insurance for Own Account. Nothing in this Section 7 shall limit or
-------------------------
prohibit the Owner Trustee, any Participant, the Owner Participant Guarantor or
the Lessee from obtaining, at its own expense, additional insurance for its own
account and any proceeds payable thereunder shall be payable in accordance with
the insurance policy relating thereto, provided that no such insurance may be
obtained which would limit or otherwise adversely affect the coverage of any
insurance required to be maintained pursuant to this Section 7, and provided,
further, that nothing in this clause (e) shall impose any obligation on the
Owner Trustee, any Participant, the Owner Participant Guarantor or the Lessee to
obtain any such additional insurance.
(f) Application of Payments During Existence of an Event of Default. Any
---------------------------------------------------------------
amount referred to in this Section 7 which is payable to or retainable by the
Lessee shall not be paid to or retained by the Lessee if at the time of such
payment or retention a Default or Event of Default shall have occurred and be
continuing, but shall be held by or paid over to the Owner Trustee (or, so long
as the Secured Indebtedness shall not have been fully paid and satisfied, the
Indenture Trustee) as security for the obligations of the Lessee under this
Lease and, if a Default or Event of Default shall have occurred and be
continuing, applied against the Lessee's obligations hereunder as and when due.
At such time as there shall not be continuing any such Default or Event of
Default, such amount shall be paid to the Lessee in accordance with the
foregoing provisions of this Section 7 to the extent not previously applied in
accordance with the preceding sentence.
Section 8. MAINTENANCE; MAINTENANCE COSTS AND WARRANTIES; REPLACEMENT OF PARTS;
ALTERATIONS; MODIFICATIONS AND ADDITIONS.
(a) Maintenance. The Lessee at its sole cost and expense shall maintain,
-----------
service and repair the Leased Property to keep it (i) in as good operating
condition and capable of operating at Design Capacity, (ii) in such condition so
as to have the capacity and functional ability to perform, on a daily basis in
commercial operation, the functions for which it was designed, in accordance
with the Plans, and (iii) in such condition as the Lessee would, in the
12
prudent management of its own properties, maintain, service and repair
similar property owned by the Lessee and in any event, to the extent required to
maintain the Leased Property in good repair in a manner consistent with prudent
industry practice and in compliance in all material respects with all Applicable
Laws, rules and regulations, noncompliance with which might result in the
imposition of a penalty on any Indemnified Party or materially adversely affect
the Leased Property or the operation thereof. The Lessee shall comply with such
repair and maintenance standards and schedules as are required to enforce
warranty claims against the manufacturers and suppliers of the Leased Property
or which are otherwise established by such manufacturers and suppliers as
recommended operating procedures and any standards imposed by any insurance
policies in effect with respect to the Leased Property. The Lessee shall
maintain at the Facility, in accordance with the Lessee's practices existing on
the date of this Lease, a maintenance log with respect to the Leased Property,
which shall include the details of all material maintenance and repairs
performed on the Leased Property. In the event of any damage to or destruction
of the Leased Property, or any part thereof, by fire or other casualty, unless
this Lease shall be terminated pursuant to Section 13, the Lessee shall, at its
own expense, with reasonable promptness, repair, restore or rebuild the same so
that upon the completion of such repair, restoration or rebuilding the Leased
Property shall be in the condition required by the provisions of this Section
8(a) and so that the current and residual value and utility of the Leased
Property shall be at least equal to the current and residual value and utility
of the Leased Property immediately prior to the occurrence of such casualty
assuming that the Leased Property was then in the condition required to be
maintained by the terms of this Lease.
(b) Maintenance Costs and Warranties. The Lessee agrees to pay all costs,
--------------------------------
expenses, fees and charges incurred in connection with (i) the use and operation
of the Leased Property by the Lessee during the Term hereof, including but not
limited to repairs, maintenance, storage and servicing as provided in this
Section 8 and (ii) the preserving and protecting of the Leased Property, and the
repairing, maintaining and servicing of the Leased Property as provided in this
Section 8, during the period after a termination of the Lessee's right of
possession of the Facility and the Site pursuant to Section 15 and prior to the
interest of the Owner Trustee in the Leased Property being leased or sold to a
third person (not the Owner Trustee, the Indenture Trustee, or any Participant,
or any Affiliate of any thereof, in connection with the exercise of their rights
in the Leased Property under the Operative Agreements) by the Owner Trustee (or
the Indenture Trustee or any Participant, or any Affiliate thereof, in
connection with the exercise of their rights under the Operative Agreements). So
long as no Event of Default has occurred and is continuing, the Owner Trustee
hereby constitutes the Lessee the agent and attorney-in-fact of the Owner
Trustee for the purpose of exercising and enforcing, and with full right, power
and authority to exercise and to enforce, all of the right, title and interest
of the Owner Trustee in, under and to the warranties and obligations of any
supplier of goods or services in respect of the Leased Property and agrees to
execute and deliver such further instruments as may be necessary to enable the
Lessee to obtain goods or services furnished for the Leased Property by said
suppliers. The Owner Trustee shall have no other obligation or duty with respect
to any of such matters. Any proceeds obtained by the Lessee from the enforcement
of the warranties and obligations of any supplier of goods or services in
respect of the Facility shall be held by the Lessee and applied from time to
time to the repair and maintenance of the Facility, and any balance thereof
remaining at the expiration of the Term shall be paid over to the Owner Trustee
or as it may direct, unless the Lessee has exercised its option to purchase the
Facility and all
13
amounts due and owing by the Lessee under this Lease or any of the other
Operative Agreements have been paid in full, in which case the balance remaining
shall be paid to the Lessee.
(c) Replacement of Parts and Components. The Lessee at its sole cost and
-----------------------------------
expense, will, with reasonable promptness, replace all appliances, parts,
instruments, appurtenances, accessories, furnishings and other equipment of
whatever nature:
(i) which may from time to time constitute a part of the Facility
(herein for the purpose of this Section 8 collectively called "Parts"), and
(ii) which may from time to time be incorporated or installed in or
attached to the Site Lease Property (herein for the purpose of this Section
8 collectively called "Components")
and which may from time to time become worn out, lost, stolen, destroyed,
seized, confiscated, damaged beyond repair or permanently rendered unfit for use
for any reason whatsoever. All replacement Parts and Components shall be free
and clear of all Liens and rights of others except Permitted Encumbrances and
shall be in as good operating condition as, and shall have a current and
residual value, useful life and utility at least equal to, the Parts or
Components replaced, assuming that such replaced Parts or Components were in the
condition required to be maintained by the terms hereof, and shall be in the
condition and repair required to be maintained by the terms hereof.
All Parts owned by the Owner Trustee at any time removed from the Facility
shall remain the property of the Owner Trustee, no matter where located, until
such time as such Parts shall be replaced by Parts which have been incorporated
or installed in or attached to the Facility and which meet the requirements for
replacement Parts specified above. Immediately upon any such replacement Part
becoming incorporated or installed in or attached to the Facility as above
provided, without further act, (A) title to the removed Part shall thereupon
vest in the Lessee or such person as shall be designated by the Lessee, free and
clear of all rights of the Owner Trustee, and shall no longer be deemed a Part
hereunder, (B) title to such replacement Part shall thereupon vest in the Owner
Trustee, free and clear of all Liens (other than Permitted Encumbrances) and (C)
such replacement Part shall become subject to this Lease and be deemed part of
the Facility for all purposes to the same extent as the Parts originally
incorporated or installed in or attached to such Facility.
(d) Required Alterations. The Lessee, at its sole cost and expense, shall,
--------------------
with reasonable promptness, make such repairs, alterations, modifications,
reconfigurations, improvements and additions (herein for the purpose of this
Section 8 collectively called "Alterations") to the Leased Property, and shall
obtain and maintain all applicable Permits necessary for the construction and
operation of such Alterations, as may be required from time to time to meet the
requirements of Applicable Law or of any insurance policies in effect with
respect to the Leased Property unless prior to the time at which such
Alterations became required pursuant to such Applicable Law or insurance
policies the Lessee shall have given the Owner Trustee notice of the termination
of this Lease pursuant to Section 13(d). If the Lessee determines in good faith
that the cost of any Alteration (required under this Section 8(d)) is
14
greater than $1,000,000 or if it determines in good faith that the cost of
any Alteration (required under 8(d) of the ClO2 Lease) is greater than
$1,000,000, the Lessee may request a determination of the Fair Market Sales
Value of the Facility pursuant to Section 19(a) of this Lease and may, upon not
less than 90 days' prior written notice to the Owner Trustee, elect to close the
Facility and either purchase the Facility or terminate this Facility Lease
pursuant to the next succeeding paragraph.
Such written notice shall be accompanied by an Officer's Certificate of the
Lessee specifying the required Alteration, the Lessee's good faith determination
of the cost of such Alteration and that, as a result of such cost, the Lessee
has elected to close the Facility and the ClO2 Facility. Such written notice
shall specify either (i) that the Lessee has elected to and shall purchase the
Facility pursuant to Section 19(f), provided that the Early Purchase Date for
purposes of Section 19(f) shall be the next succeeding Rent Payment Date that is
at least 90 days after the date of such written notice and the Early Purchase
Price for purposes of Section 19(f) shall be the greater of Fair Market Sales
Value of the Facility, as determined in accordance with Section 19(a) hereof and
the Termination Value on such Early Purchase Date; provided that Lessee may not
elect to purchase the Facility unless Xxxx & Xxxxxx has elected to purchase the
ClO2 Facility pursuant to Section 14(c) of the ClO2 Participation Agreement, or
(ii) that the Lessee has elected to and shall terminate this Lease pursuant to
Section 13(d) as of the next succeeding Rent Payment Date that is at least 180
days after the date of such written notice; provided that the Lessee may not
elect to terminate this Lease pursuant to Section 13(d) unless the ClO2 Lessee
has elected to terminate the ClO2 Lease under Section 13(d) of the ClO2 Lease.
(e) Optional Alterations.
--------------------
(i) The Lessee, at its sole cost and expense, may from time to time
make such Alterations to the Facility as the Lessee may deem desirable in
the proper conduct of its business and which are not inconsistent with, and
would not impair, the continuing operation of the Facility in accordance
with its original functional purpose; provided, that any such Alteration
made by the Lessee pursuant to this paragraph shall not diminish 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 such Alteration assuming
that the Facility was then in the condition required to be maintained by
the terms of this Lease. Unless the Lessee has exercised its option to
purchase the Facility pursuant to Section 19 of this Lease and has paid all
amounts due and owing under this Lease or any of the other Operative
Agreements, at the Owner Trustee's request, the Lessee will remove any
readily removable Alterations under this paragraph prior to the end of the
Term at the Lessee's sole cost and expense.
(ii) The Lessee, at its own expense, shall have the right to erect,
alter or abandon structures, improvements, personal property, ramps,
ditches, roadways, drainage and sanitary systems, supply lines for
materials and utilities on the Site Lease Property, to grant licenses,
rights, and easements respecting the same and otherwise to affect the Site
Lease Property in any manner which the Lessee shall deem necessary or
advisable for the operation of the Facility or the Site Lease Property as
originally erected
15
or from time to time altered by the Lessee; provided that there shall be no
material interference with or impairment of the operation of the Leased Property
and no adverse effect on the current or residual value, useful life or utility
of the Leased Property resulting therefrom, and that all such licenses, rights
and easements granted pursuant to this sentence shall be subject and subordinate
to this Lease and the Site Lease. Provided that the foregoing conditions have
been met and subject to all other provisions of this Lease, including, without
limitation, maintenance requirements, the Owner Trustee agrees to accept such
structures, improvements, personal property, ramps, ditches, roadways, drainage
and sanitary systems, supply lines for materials and utilities thereon, in an
"as-is" condition at the time the Lessee's rights under this Lease of possession
and use of the Facility and the Site shall cease.
(f) Title to Parts.
(i) Title to all Parts and Alterations incorporated or installed in or
attached to the Facility shall without further act vest in the Owner
Trustee free and clear of all Liens (other than Permitted Encumbrances) and
shall be deemed to constitute a part of the Facility and be subject to this
Lease in the following cases:
(A) such Part or Alteration is in replacement of or in
substitution for, and not in addition to, any Part constituting a part
of the Facility at the time of the acceptance thereof hereunder or any
such original part;
(B) such Part or Alteration is required to be incorporated or
installed in or attached to the Facility pursuant to the terms of
paragraphs (a), (c) or (d) of this Section 8; or
(C) such Part or Alteration cannot be readily removed from the
Facility without (1) impairing the continuing operation of the
Facility in accordance with its original functional purpose, (2)
materially damaging the Facility, or (3) materially diminishing the
value of the Facility or diminishing the utility, condition, remaining
economic useful life or estimated residual value, below the value,
utility, condition, remaining economic useful life and estimated
residual value thereof immediately prior to such removal, assuming
that the Facility was then in the condition required to be maintained
by the terms of this Lease and (except in the case of a Part or
Alteration referred to in clause (A) or (B) above) such Part had not
been added, or such Alteration made, to the Facility.
(ii) Title to any other Parts and Alterations shall remain with the
Lessee and such Parts and Alterations shall not be deemed to constitute
part of the Facility in determining either the Fair Market Sales Value or
the Fair Market Rental Value of the Facility; provided, however, that any
such part which is not removed by the Lessee prior to the termination of
this Lease shall become the property of the Owner Trustee.
16
(g) Option to Purchase Additional Parts and Optional Alterations. Unless
------------------------------------------------------------
the Lessee shall have purchased the Facility pursuant to the exercise of its
option to purchase, the Owner Trustee shall have the option upon the expiry or
earlier termination of the Term hereunder to purchase any right, title or
interest of the Lessee (to the extent that such right, title or interest is
transferable) in and to any Part that remains the property of the Lessee
pursuant to Section 8(f)(ii) for the Fair Market Sales Value thereof as of such
date. The Owner Trustee shall give the Lessee written notice at least 60 days
prior to the expiry or earlier termination of the Term as to its election to
exercise the purchase option provided for in the preceding sentence; provided
however, that if this Lease is terminated due to the occurrence of an Event of
Default hereunder, only 15 days prior written notice prior to the return of the
Leased Property shall be required.
(h) Other Parties Not Obligated to Maintain or Repair. The Owner Trustee,
-------------------------------------------------
the Indenture Trustee and each Participant shall not under any circumstances be
required to make any repairs, replacements, Alterations or renewals of any
nature or description to the Leased Property, make any expenditure whatsoever in
connection with this Lease or maintain the Leased Property in any way. The
Lessee waives any right to (i) require the Owner Trustee, the Indenture Trustee
or any Participant to maintain or repair all or any part of the Facility or (ii)
make repairs at the expense of the Owner Trustee, the Indenture Trustee or any
Participant pursuant to any Applicable Law, contract, agreement, or covenant,
condition or restriction in effect at any time during the Term.
Section 9. LOCATION AND USE; NO ASSIGNMENT BY LESSEE.
(a) Location and Use.
----------------
(i) The Lessee agrees that the Facility will be used solely in the
conduct of its business and solely by qualified personnel and will at all
times be and remain in the exclusive possession and control of the Lessee
at the Site, provided that the Lessee may deliver possession of any part or
portion of the Facility to any manufacturer, contractor, supplier or
mechanic designated by the Lessee for purposes of realizing the benefits of
any warranty or in order to comply with the obligations and rights of the
Lessee under Section 8, but the rights of any such party in possession of
such part or portion of the Facility shall be subject and subordinate to
the terms of this Lease, including without limitation, the right of the
Owner Trustee to take possession of the Facility pursuant to Section 15. In
the event that pursuant to the foregoing sentence hereof any part or
portion of the Facility having a value in excess of 1% of the then Casualty
Value is removed from Linn County, Oregon, the Lessee shall give the Owner
Trustee, the ClO2 Indenture Trustee and the Indenture Trustee not less than
30 days' prior written notice of such removal and shall deliver to the
Owner Trustee, the ClO2 Indenture Trustee and the Indenture Trustee
promptly after such removal, and in any event within 10 days thereafter,
the opinion of the Lessee's counsel that such removal shall not impair or
adversely affect the ownership of such part or portion of the Facility by
the Owner Trustee, that all necessary recordings and filings under
Applicable Law have been duly made in the public offices wherein such
recordings or filings are necessary to protect the validity and
effectiveness of this Lease and the Indenture (including the maintenance of
17
the perfection of security interest thereof in the removed part or portion) and
that all fees, taxes and charges payable in connection therewith have been paid
in full by the Lessee. The Lessee shall not change the use of the Leased
Property as a pulp mill without the Owner Trustee's prior written consent. The
Lessee will not do or permit any act or thing that may impair the value of the
Leased Property or any part thereof (provided that actions by the Lessee
expressly required by Section 8 of this Lease shall not be deemed to impair the
value of the Leased Property) or that materially increases the dangers, or poses
an unreasonable risk of harm, to third parties (on or off the Leased Property)
arising from activities thereon, or that constitutes a public or private
nuisance or waste to the Leased Property or any part thereof. The Lessee agrees
that it will not use the Leased Property if it has failed to procure or maintain
insurance to the extent required by Section 7 herein.
(ii) The Lessee agrees that the Leased Property will at all times be
maintained, used and operated under and in compliance in all material respects
with all Applicable Laws; provided, however, that the Lessee may contest the
application of any such rule, regulation or order in good faith and by
appropriate proceedings, but only so long as such proceedings do not involve any
danger of criminal liability or a material danger of civil liability of the
Owner Trustee, the Indenture Trustee, any holder of the ClO2 Notes, or any
Participant, or a material danger of the sale, forfeiture or loss of the Leased
Property, any portion thereof or any interest of the Owner Trustee, the
Indenture Trustee, any holder of the ClO2 Notes, or any Participant therein. The
Lessee and the Leased Property shall comply in all material respects with all
applicable Environmental Laws and the Lessee shall obtain and maintain in good
standing all Governmental Approvals required for the operations of the Facility
by any applicable Environmental Law. The Lessee shall not (A) own or operate on
the Site (1) except in compliance in all material respects with Environmental
Laws, any underground storage tank, (2) except in compliance in all material
respects with Environmental Laws, material amounts of asbestos containing
building material, or (3) landfill or dump, (B) use, generate, treat, store or
dispose of Hazardous Materials at or on the Site in quantities materially
greater than that which is customary for operations similar to those of the
Lessee at the Site, or (C) conduct any activity on the Site or use the Leased
Property in any manner (1) which would cause the Leased Property to become a
hazardous waste treatment, storage or disposal facility within the meaning of
RCRA or any similar state law or local ordinance, (2) so as to cause a material
Release or threat of Release of any Hazardous Material from or at the Site, to
cause the Site to become a site on or nominated for the National Priority List
promulgated pursuant to CERCLA or any state priority list promulgated pursuant
to any similar state law, or (3) so as to cause a discharge of pollutants or
effluents into any water source or system, or the discharge into the air of any
emissions, which would require a permit under the Federal Water Pollution
Control Act, 33 U.S.C. ss.ss.1251 et seq., or the Clean Air Act, 42 U.S.C.
ss.ss.741, et seq., or any similar state law or local ordinance, unless such a
permit shall be in full force and effect and such discharge shall be in full
compliance therewith. At its sole expense (but without thereby waiving any
claims it may have against third parties), the Lessee will conduct any
investigation, study, sampling and testing, and undertake any Remedial Action or
other response action necessary to remove, clean up or xxxxx any Hazardous
Material which is Released or disposed of at or on the Site in accordance with
any applicable Environmental Law and
18
any order or directive from a Governmental Authority having jurisdiction,
except to the extent the Lessee is diligently contesting any applicable
Environmental Law or any order or directive from a Governmental Authority,
so long as such contest is in good faith and by appropriate proceedings,
but only so long as reserves deemed by the Lessee to be adequate are
maintained and such proceedings do not involve any danger of criminal
liability or a material danger of civil liability of the Owner Trustee, the
Indenture Trustee, any holder of the ClO2 Notes or any Participant, or a
material danger of the sale, forfeiture or loss of the Leased Property, any
portion thereof or any interest of the Owner Trustee, the Indenture Trustee
or any Participant therein.
(b) No Assignment by Lessee; Permitted Subleases. The Lessee agrees that,
--------------------------------------------
without the prior written consent of the Owner Trustee and the Indenture
Trustee, the Lessee will not assign, transfer (except a transfer in accordance
with Section 6.2) or sublease its right in respect of the Leased Property under
this Lease, or permit its rights or interest hereunder to be subject to any Lien
other than Permitted Encumbrances except with respect to subleases as provided
in this Section 9(b); provided that no such assignment, transfer or sublease
shall be in effect unless an assignment, transfer or sublease relating to the
ClO2 Lease in favor of the same parties and otherwise identical in all respects
to such assignment, transfer or sublease hereunder is in effect; further
provided that the Lessee may, without the consent of the Owner Trustee or the
Indenture Trustee, enter into (i) year-to-year subleases of a portion or
portions of the Site for agricultural purposes on terms consistent with the
Lessee's practice with respect to such subleases as of the Closing Date and not
interfering with the use and operation of the Facility, and (ii) any other
sublease of the Leased Property subject to the following conditions: (A) the
sublessee shall agree in writing to comply with all of the terms and provisions
of this Facility Lease during the period of said sublease, (B) the rights of any
person who receives possession of the Leased Property shall be subject and
subordinate to all the terms of this Lease, (C) such sublease shall expressly
state that it is subject and subordinate to the terms of this Facility Lease and
all rights of the Owner Trustee hereunder, including, without limitation, the
right of the Owner Trustee to repossess the Leased Property pursuant to Section
15 hereof and to avoid such sublease upon termination of this Facility Lease
notwithstanding the fact that no default may have occurred and be continuing
under such sublease, (D) no such sublease shall extend beyond the remaining Term
of this Lease, (E) such sublease shall expressly prohibit by its terms any
sub-sublease by the sublessee thereunder and shall not contain any option for
the sublessee to purchase the Leased Property or any part thereof except that
Lessee may grant to any such sublessee an option to purchase the Leased
Property, or assign to a sublessee its option to purchase the Leased Property
under Sections 19(b) or (f), provided that (i) the sublessee's purchase price
payable to the Lessee with respect to its options shall exceed the price payable
under the Lessee's corresponding options under Sections 19(b) or (f), and (ii)
the sublessee's purchase option is exercisable only on the same dates and
subject to the same notices as the Lessee's options under Sections 19(b) or(f),
as the case may be, and (iii) only if the same such option is granted to the
same sublessee under Section 14 of the ClO2 Participation Agreement and only if
the options under this Lease and the ClO2 Participation Agreement are
exercisable simultaneously, (F) the sublessee shall not at the date of execution
of such sublease be subject of any bankruptcy, liquidation or similar proceeding
or have a negative net worth (as set forth in such sublessee's most recent
available financial statements), and (G) such sublease shall be assigned to the
Owner Trustee as security for the Lessee's obligations hereunder and under the
19
other Operative Agreements and further assigned by the Owner Trustee to the
Indenture Trustee as additional collateral under the Indenture, in each case
pursuant to agreements in form and substance reasonably satisfactory to the
Owner Trustee and the Indenture Trustee, and the Lessee shall cause such
agreements (or financing statements or other notices with respect thereto) to be
filed in all public offices necessary to perfect the rights of the Owner Trustee
and the Indenture Trustee in such sublease; provided that no such sublease shall
be in effect unless the same or substantially identical sublease is in effect
with regard to the ClO2 Lease in favor of the same parties and under the same
terms and conditions.
No assignment or sublease of any of the rights of the Lessee hereunder
shall relieve the Lessee of any of its obligations, liabilities or duties
hereunder which shall be and remain those of a principal and not a guarantor.
Section 10. LIENS.
The Lessee agrees that it will keep the Leased Property free and clear of
any and all Liens other than Permitted Encumbrances. Lessee shall promptly, at
its own expense, take such action as may be necessary to duly discharge any such
Lien if the same shall arise at any time.
Section 11. OWNERSHIP AND MARKING.
(a) Ownership. The Lessee acknowledges and agrees that it does not and will
---------
not have or obtain any title to the Facility, nor any property right or
interest, legal or equitable, therein except its right and interest as lessee
hereunder and subject to all the terms hereof. The Lessee understands and
acknowledges that the Facility is owned by the Owner Trustee, and mortgaged to
the Indenture Trustee pursuant to the Indenture.
(b) Facility Personal Property. It is the intent of the parties hereto that
--------------------------
the Facility shall be and remain personal property notwithstanding the manner in
which the Facility may be attached or affixed to realty. Further, the Lessee and
the Owner Trustee agree that the Facility shall for purposes of the laws of the
State of Oregon be personal property and not real property. In the event that,
notwithstanding the foregoing, a court of competent jurisdiction shall make a
final determination that some part or portion of the Facility constitutes real
property under Applicable Law, then this Lease shall be deemed to be and shall
be construed as a divisible and severable contract between the Owner Trustee and
the Lessee for the leasing of, respectively, (i) the part or portion of the
Facility so determined to constitute real property under Applicable Law and (ii)
the remainder of the Facility, all to the same extent and with the same force
and effect as though a separate lease had been entered into by the Owner Trustee
and the Lessee in respect of the part or portion of the Facility so determined
to constitute real property and the remainder of the Facility, and the amount of
each installment of Rent payable in respect of the part or portion of the
Facility so determined to constitute real property shall bear the same
relationship to the aggregate amount of such installment of Rent as the cost to
the Owner Trustee of such part or portion of the Facility so determined to
constitute real property shall bear to the Facility Cost.
20
There shall be no merger of this Facility Lease nor of the leasehold estate
created hereby with any other estate in the Facility or the Site, or any part
thereof, by reason of the fact that the same Person may acquire or own such
estates, directly or indirectly.
(c) Marking. The Lessee shall promptly cause each component of the Facility
-------
identified in Exhibit A hereto to be plainly, permanently and conspicuously
marked by stenciling or by a metal tag or plate affixed thereto, setting forth
the following legend:
THIS FACILITY IS OWNED BY WILMINGTON TRUST COMPANY AS OWNER
TRUSTEE, IS LEASED BY SAID OWNER TRUSTEE TO XXXX & XXXXXX,
INC. AND IS SUBJECT TO A SECURITY INTEREST GRANTED TO XXXXX
FARGO BANK NORTHWEST , NATIONAL ASSOCIATION (FORMERLY KNOWN
AS FIRST SECURITY BANK, NATIONAL ASSOCIATION), AS INDENTURE
TRUSTEE.
The Lessee covenants and agrees to replace any stenciling, tag or plate and sign
or marker which may be removed or destroyed or become illegible and to indemnify
each Indemnified Party against any liability, loss or expense incurred by any of
them as a result of the failure to maintain such markings.
Section 12. DISCLAIMER OF WARRANTIES; NET LEASE.
(a) Disclaimer of Warranties. Without waiving any claim the Lessee or the
Owner Trustee may have against any seller, supplier or manufacturer, the Lessee
acknowledges and agrees that (i) the Leased Property is of a design, capacity
and manufacture selected by the Lessee, (ii) the Lessee is satisfied that the
Leased Property is suitable for its purposes, (iii) the Owner Trustee is not a
manufacturer nor a dealer in property of such kind, (iv) the Leased Property is
leased hereunder subject to the rights of any parties in possession of the Site
and the state of the title to the Site and the rights of ownership in the Site
at the time the Leased Property becomes subject to this Lease and to all
applicable zoning regulations, restrictions, laws and ordinances, building
restrictions, and other laws and governmental regulations now in effect or
hereafter adopted and in the state and condition of every part thereof when the
same first becomes subject to this Lease, without representation or warranty of
any kind by the Owner Trustee, and (v) THE OWNER TRUSTEE LEASES THE LEASED
PROPERTY AS-IS WITHOUT WARRANTY OR REPRESENTATION EITHER EXPRESS OR IMPLIED AS
TO (A) THE FITNESS FOR ANY PARTICULAR PURPOSE OR MERCHANTABILITY OR DESIGN OR
QUALITY OF THE LEASED PROPERTY, (B) THE ABSENCE OF ANY INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT, (C) THE OWNER TRUSTEE'S TITLE THERETO OR
INTEREST THEREIN, (D) THE LESSEE'S RIGHT TO THE QUIET ENJOYMENT THEREOF, OR (E)
ANY OTHER MATTER WHATSOEVER. It is agreed that, as between the Indemnified
Parties and the Lessee, all risks incident to the matters discussed in the
preceding sentence are to be borne by the Lessee. The provisions of this Section
12 have been negotiated by the Owner Trustee and the Lessee and are intended to
be a complete exclusion and negation of any representations or warranties of the
Indemnified Parties,
21
express or implied, with respect to the Leased Property that may arise pursuant
to any law now or hereafter in effect, or otherwise.
(b) Net Lease; Non-Terminability.
----------------------------
(i) This Lease is a net lease, and it is intended that the Lessee
shall pay all costs and expenses of every character, whether seen or
unforeseen, ordinary or extraordinary or structural or non-structural, in
connection with the use, operation, maintenance, repair and reconstruction
of the Leased Property by the Lessee, including the costs and expenses
particularly set forth in this Lease. The Rent which the Lessee is
obligated to pay shall be paid without notice or demand and without set-off
(other than with respect to Periodic Site Rent as expressly provided in
Section 4(b)), counterclaim, abatement, suspension, deduction or defense.
(ii) Except as otherwise expressly provided, this Lease shall neither
terminate nor shall the Lessee have any right to terminate this Lease or be
entitled to abatement, suspension, deferment or reduction of any Rent which
the Lessee is obligated to pay hereunder, nor shall the obligations
hereunder of the Lessee be affected, by reason of (A) any defect in the
condition, merchantability, design, construction, operation, durability,
quality or fitness for use of the Leased Property or any portion thereof or
the failure of the Leased Property to comply with all Applicable Laws,
including any inability to use the Leased Property by reason of such
non-compliance; (B) any defect in title or rights to the Leased Property,
or the existence of any Liens with respect to the Leased Property or any
part thereof; (C) any damage to, removal, abandonment, salvage, loss,
theft, contamination of, scrapping or destruction of the Leased Property or
any portion thereof; (D) the taking of the Leased Property or any portion
thereof by condemnation, confiscation, requisition, eminent domain or
otherwise; (E) any prohibition, limitation, restriction, prevention,
interruption, cessation or curtailment of or interference with any use or
possession of the Leased Property or any portion thereof, or any eviction
by paramount title or otherwise; (F) the termination or loss of the Owner
Trustee's interest under the Site Lease or any other lease, sublease,
right-of-way, easement or other interest in personal or real property upon
or to which any portion of the Leased Property is located, attached or
appurtenant or in connection with which any portion of the Leased Property
is used or which otherwise affects or may affect the Owner Trustee's
ownership of or right to use the Leased Property or any portion thereof;
(G) the inadequacy or incorrectness of the description of any portion of
the Leased Property or the failure of this Lease to demise to the Lessee
the Leased Property or any portion thereof; (H) the Lessee's acquisition or
ownership of all or any part of the Leased Property otherwise than pursuant
to an express provision of this Lease; (I) any change, waiver, extension,
indulgence or other action or omission or breach in respect of any
obligation or liability of or by the Owner Trustee, the Indenture Trustee
or any Participant; (J) any bankruptcy, insolvency, reorganization,
composition, adjustment, dissolution, liquidation or other like proceedings
relating to the Lessee, the Owner Trustee, the Indenture Trustee, any
Participant or any other Person, or any action taken with respect to this
Lease by any trustee or receiver of the Lessee, the Owner Trustee, the
Indenture Trustee, any Participant or any other Person, or by any court in
any such
22
proceeding; (K) any setoff, counterclaim, recoupment, defense or other
right or claim that the Lessee has or might have against any Person,
including without limitation the Owner Trustee, the Indenture Trustee, any
Participant or any vendor, manufacturer, contractor of or for the Leased
Property for any reason whatsoever; (L) any failure on the part of the
Owner Trustee or any other Person to perform or comply with any of the
terms of this Lease, of any other Operative Agreement or of any other
agreement or any breach of any representation or warranty of, or any act or
omission of the Lessee, the Owner Trustee, the Indenture Trustee or any
Participant under this Lease or any of the other Operative Agreements, or
any claims, rights or remedies occurring or arising as a result of any
other business dealings between or among the Lessee and any of the Owner
Trustee, the Indenture Trustee and any Participant; (M) any invalidity or
unenforceability or illegality or disaffirmance of this Lease against or by
the Lessee or any provision hereof or any of the other Operative Agreements
or any provision of any thereof or any lack of right, power or authority of
the Lessee, the Owner Trustee, the Indenture Trustee or any Participant to
enter into any Operative Agreement or any of the transactions contemplated
thereby; (N) the impossibility or illegality of performance by the Lessee,
the Owner Trustee, the Indenture Trustee, any Participant or any of them;
(O) any action by any court, administrative agency or other Governmental
Authority; or (P) any other cause or circumstances whether similar or
dissimilar to the foregoing and whether or not the Lessee shall have notice
or knowledge of any of the foregoing, it being the intention of the parties
hereto that the obligations of the Lessee shall be absolute and
unconditional and shall be separate and independent covenants and
agreements and shall continue unaffected unless and until the covenants
have been terminated pursuant to an express provision of this Lease.
Each Rent payment made pursuant to this Lease by Lessee shall be final and
the Lessee will not seek to recover all or any part of such payment from the
Owner Trustee, the Indenture Trustee, any holder of the ClO2 Notes or any
Participant for any reason whatsoever. If for any reason whatsoever this Lease
shall be terminated in whole or in part by operation of law or otherwise except
as specifically provided herein or as otherwise agreed, the Lessee nonetheless
agrees to pay to the Owner Trustee or to whomsoever shall be entitled thereto,
an amount equal to each Rent payment at the time such payment would have become
due and payable in accordance with the terms hereof had this Lease not been
terminated in whole or in part. The obligation of the Lessee in the immediately
preceding sentence shall survive the expiration or termination of this Lease
other than in accordance with its terms. Nothing contained in this Section 12(b)
shall be construed to otherwise limit the right of the Lessee to make any claim
it might have against the Owner Trustee or any other Person or to pursue such
claim in such manner as the Lessee shall deem appropriate.
The Lessee covenants that it will remain obligated under this Lease in
accordance with its terms and will take no action to terminate, rescind or avoid
this Lease, notwithstanding the bankruptcy, insolvency, reorganization,
composition, readjustment, liquidation, dissolution, winding-up or other
proceeding affecting the Owner Trustee or the Owner Participant or any assignee
of the Owner Trustee or the Owner Participant or any other action with respect
to this Lease which may be taken in any such proceeding by any trustee or
receiver of the Owner Trustee or of any assignee of the Owner Trustee or by any
court or any of the foregoing actions
23
which may be taken by or against any of the Owner Trustee's predecessors in
interest in the Facility.
Except as expressly provided herein, the Lessee waives all rights now or
hereafter conferred by law (y) to quit, terminate, rescind or surrender this
Lease or the Leased Property or any part thereof, or (z) to any abatement,
suspension, deferment, return or reduction of the Rent.
Section 13. CASUALTY OCCURRENCES; CONDEMNATION; EARLY TERMINATION; ETC.
(a) Casualty Occurrence. In the event of a Casualty Occurrence, the Lessee
-------------------
shall promptly and fully inform the Owner Trustee, the ClO2 Indenture Trustee
and the Indenture Trustee in writing in regard thereto and shall, on the
Casualty Termination Date, pay to the Owner Trustee (or, so long as the Secured
Indebtedness shall not have been fully paid and satisfied, the Indenture
Trustee) an amount equal to the sum of (i) the Casualty Value of the Facility
determined as of the Casualty Termination Date, (ii) if the Casualty Termination
Date is a Rent Payment Date, any Periodic Rent (other than Periodic Rent payable
"in advance" on such date) and the Periodic Site Rent due on the Casualty
Termination Date, and (iii) all other Supplemental Rent then due.
Notwithstanding such Casualty Occurrence, the Lessee's obligation to pay Rent
hereunder due and payable as to the Facility on or prior to the payment date of
such Casualty Value shall continue. Upon receipt by the Owner Trustee (or, so
long as the Secured Indebtedness shall not have been fully paid and satisfied,
the Indenture Trustee) of such payments and all other sums then due and payable
by the Lessee under this Lease and the other Operative Agreements and release of
the Lien of the Indenture pursuant to Section 9.01 thereof, this Lease shall
terminate, and the Owner Trustee will transfer to the Lessee all the Owner
Trustee's right, title and interest, if any, in and to the Leased Property on an
"as-is", "where-is" basis, without recourse or warranty, express or implied,
except for a warranty against Lessor's Liens attributable to the Owner Trustee
or Wilmington Trust Company.
(b) Certain Government Requisitions. In the event that during the Term the
-------------------------------
use of the Leased Property is requisitioned or taken by any Governmental
Authority under the power of eminent domain or otherwise under circumstances
which do not constitute a Casualty Occurrence in respect thereof, the Lessee's
duty to pay Periodic Rent, Periodic Site Rent and Supplemental Rent shall
continue for the duration of such requisition or taking. Unless a Default or
Event of Default shall have occurred and be continuing, the Lessee shall be
entitled to receive and retain for its own account all sums payable for any such
period by such Governmental Authority as compensation for requisition or taking
of possession. If a Default or Event of Default shall have occurred and be
continuing, the Lessee shall be deemed to the extent of any such compensation so
received to be the agent of the Owner Trustee in collecting and receiving the
same and shall segregate and hold in trust and promptly remit any such
compensation so received to the Owner Trustee for crediting against any sums
then due and owing hereunder to the Owner Trustee, its successors and assigns.
(c) Application of Payments with Respect to a Casualty Occurrence. The
-------------------------------------------------------------
Owner Trustee shall receive the entire amount payable by any Governmental
Authority or instrumentality or agency thereof or other Person with respect to a
Casualty Occurrence (other
24
than proceeds of insurance maintained by the Lessee, the application of which
shall be governed by Section 7 hereof). Such amount, after deducting all
expenses, including attorneys' fees, incurred by the Owner Trustee in or as a
result of such condemnation proceedings shall be applied promptly as follows: so
much of such payments as shall not exceed the Casualty Value required to be paid
by the Lessee pursuant to Section 13 shall be applied in reduction of the
Lessee's obligation to pay such Casualty Value, if not already paid by the
Lessee, or, if already paid by the Lessee and no Default or Event of Default
exists, shall be applied to reimburse the Lessee for its payment of such
Casualty Value. The balance, if any, of such payments shall be retained by the
Owner Trustee, unless, prior to the Casualty Occurrence, the Lessee shall have
irrevocably exercised (subject to Section 19(e)) its option to purchase the
Facility, the Casualty Value for the Facility shall have been determined
pursuant to Section 19(e) and the Lessee shall have paid in full all sums due
and owing by the Lessee under this Lease or any of the other Operative
Agreements, in which event the balance shall be paid to the Lessee.
(d) Early Termination. So long as no Default or Event of Default shall have
-----------------
occurred and be continuing, the Lessee may, upon not less than 180 days' prior
written notice to the Owner Trustee (which notice shall not be revocable without
the consent of the Owner Participant), terminate this Lease on or after
September 30, 2006 (or, if earlier, the date referred to in clause (ii) of the
second paragraph of Section 8(d)) or as of any succeeding Rent Payment Date if
the Facility, in the good faith judgment of the Lessee as determined by the
Board of Directors, shall have become uneconomic, obsolete or surplus to the
needs of the Lessee so as to be no longer useful in the conduct of Lessee's
business; provided that such notice shall be deemed to be invalid unless similar
notice has been given under the corresponding provision of the ClO2 Lease Such
written notice shall designate the date on which termination is to become
effective, which shall be a date set forth on Schedule 3 hereto (the
"Termination Date") and shall be accompanied by a certified copy of the
resolutions of the Board of Directors making such determination and by an
Officer's Certificate of the Lessee setting forth the determination that the
Facility has become uneconomic, obsolete or surplus to the needs of Lessee and a
statement in reasonable detail of the basis for such determination. For the
purposes of this Section 13(d), interest rates payable by the Lessee on its
indebtedness for borrowed money or finance charges payable by the Lessee in
connection with the acquisition of its equipment under conditional sale
contracts, leases or other arrangements for deferred payment shall be
disregarded in the determination of any right of termination provided herein.
Following the giving of such notice, the Lessee, as agent for the Owner Trustee,
shall dispose of the Facility and transfer all of the Owner Trustee's right,
title and interest in and to the Site Lease on the Termination Date for the best
price obtainable unless the Owner Participant shall notify the Lessee that it
elects to retain ownership of the Facility in accordance with and to the extent
permitted by the last paragraph of this Section 13(d), provided that no such
disposition shall be to the Lessee or any Affiliate of the Lessee; provided
further that such disposition shall not be permitted unless a disposition of the
ClO2 Facility in accordance with the corresponding provisions of the ClO2 Lease
shall be made simultaneously under the same terms and conditions to the same
parties The Lessee shall certify to the Owner Trustee in writing the amount of
each bid so received and the name and address of the party submitting such bid
promptly upon receipt thereof. The Owner Trustee may obtain bids, but shall be
under no duty to solicit bids, inquire into the efforts of the Lessee to obtain
bids or otherwise take any action in connection with arranging such
dispositions. Prior to such
25
disposition and after such termination, the Facility shall not be used by the
Lessee or any Affiliate of the Lessee.
Any disposition pursuant to this Section 13(d) shall be on an "as-is",
"where-is" basis, without recourse, representation or warranty, express or
implied, except for a warranty against Lessor's Liens attributable to the Owner
Trustee or Wilmington Trust Company. At such time as the Secured Indebtedness
shall have been fully paid and satisfied, the Indenture Trustee shall release
the Lien of the Indenture pursuant to Section 9.01 thereof. In disposing of the
Facility, the Lessee shall take such action as the Owner Trustee shall
reasonably request to terminate any contingent liability which the Owner Trustee
or the Owner Participant might have arising out of such disposition. The Lessee
shall remain liable under all provisions of this Lease (other than its
obligation to pay Periodic Rent and Periodic Site Rent for the period after the
Termination Date as of which Termination Value is determined) as if this Lease
were in full force and effect, until such time as the Facility shall have been
disposed of in accordance with the provisions of this Section 13(d). If, on the
Termination Date, (w) the ClO2 Facility shall not have been sold pursuant to and
in accordance with the provisions of Section 13(d) of the ClO2 Lease, (x) the
Owner Participant shall not have elected to retain the Facility, (y) the
Facility shall have not been sold pursuant to and in accordance with the
provisions of this Section 13(d) or (z) the Lessee does not make all payments
required pursuant to and in accordance with the provisions of this Section
13(d), Lessee's notice of termination shall be deemed to be withdrawn as of such
date and this Lease shall continue in full force and effect with respect to the
Facility and the Lessee shall pay the reasonable costs, expenses and liabilities
incurred by the Owner Trustee, the Indenture Trustee and the Participants as a
result of Lessee's having given such notice of termination.
Any proceeds from the disposition of the Facility pursuant to this Section
13(d) shall be paid to and retained by the Owner Trustee (or, so long as the
Secured Indebtedness shall not have been fully paid and satisfied, the Indenture
Trustee). In the case of a disposition of the Facility pursuant to this Section
13(d), on the Termination Date, the Lessee shall pay to the Owner Trustee (or,
so long as the Secured Indebtedness shall not have been fully paid and
satisfied, the Indenture Trustee) (i) all payments of any Periodic Rent (other
than Periodic Rent payable "in advance" on the Termination Date) and Periodic
Site Rent through and including the Termination Date, (ii) the excess, if any,
of (A) the Termination Value of the Facility as of the Termination Date, over
(B) the net cash proceeds from the disposition of the Facility pursuant to this
Section 13(d) (after the deduction of all costs and expenses of the Lessee, the
Owner Trustee, the Indenture Trustee and the Participants that have not been
previously paid by the Lessee in connection with such disposition) received by
the Owner Trustee (or, so long as the Secured Indebtedness shall not have been
fully paid and satisfied, the Indenture Trustee) and the Persons entitled
thereto, (iii) an amount equal to the Make-Whole Amount, if any, in respect of
the principal amount of the Notes to be prepaid in accordance with Section
2.10(b) of the Indenture and (iv) all other sums then due and payable by the
Lessee under this Lease and the other Operative Agreements. Any amount of such
net proceeds in excess of such payments by the Lessee shall be retained by the
Owner Trustee or the Indenture Trustee, as the case may be.
The Owner Trustee may, at any time prior to 15 days prior to the
Termination Date, give written notice to Lessee and the Indenture Trustee that
the Owner Trustee elects
26
irrevocably to terminate this Lease with respect to the Facility on the
Termination Date. On the Termination Date the Owner Participant shall pay to the
Indenture Trustee sufficient funds to enable the Owner Trustee to pay in full
the aggregate unpaid principal amount of all Notes then outstanding, together
with accrued interest thereon to such Termination Date, plus the Make-Whole
Amount, if any, thereon and all other Secured Indebtedness due and payable on
such Termination Date to the holders of the Notes under the Operative Agreements
(but without relieving the Lessee of its obligations to make all payments of
Supplemental Rent owed by the Lessee in connection therewith under the last
sentence of Section 4(c)). Effective on full payment to the Indenture Trustee of
all the foregoing amounts and on the Lessee's full payment of the installment of
Periodic Rent (other than Periodic Rent payable "in advance" on the Termination
Date) and Periodic Site Rent due on such Termination Date plus all other amounts
of Rent due on or prior to such Termination Date including, without limitation,
Supplemental Rent in the amount of the Make-Whole Amount, if any, due to the
Indenture Trustee under the preceding sentence, this Lease shall terminate;
provided that this Lease, notwithstanding anything else to the contrary
contained herein, shall continue in full force and effect unless such amounts
are paid in full. If, after giving an irrevocable notice, the Owner Participant
fails to make the required payment on the Termination Date, the Owner Trustee
shall have no further rights to make the election provided for under this
paragraph.
Section 14. ASSIGNMENT BY OWNER TRUSTEE.
(a) Right to Assign. This Lease and all Rent and all other sums
----------------
due or to become due hereunder may be assigned as collateral security for the
Secured Indebtedness in whole or in part by the Owner Trustee without the
consent of the Lessee, but the Lessee shall be under no obligation to any
assignee of the Owner Trustee (other than the Indenture Trustee) except upon
written notice of such assignment from the Owner Trustee. Upon notice to the
Lessee of any such assignment, the Rent and other sums payable by the Lessee
which are the subject matter of the assignment shall be paid to or upon the
written order of the assignee. Such notice is hereby given of the assignment of
this Lease and all the Rent and other sums due and to become due under this
Lease (other than Excepted Property) to the Indenture Trustee under and pursuant
to the Indenture, and the Lessee agrees to make all payments of Rent hereunder
(including, without limitation, Rent constituting Excepted Property) in
accordance with the provisions of Section 4.
(b) Obligation and Right of Assignee. Any assignee pursuant to
---------------------------------
this Section 14 shall not be obligated to perform any duty, covenant or
condition required to be performed by the Owner Trustee under any of the terms
hereof, but on the contrary, the Lessee and the Owner Trustee by their
respective executions hereof each acknowledge and agree that notwithstanding any
such assignment each and all of such duties, covenants or conditions required to
be performed by the Owner Trustee shall survive any such assignment and shall be
and remain the sole liability of the Owner Trustee. Without limiting the
foregoing, the Lessee acknowledges and agrees that the rights of such assignee
in and to the Rent shall not be subject to any abatement whatsoever, and shall
not be subject to any defense, setoff, counterclaim or recoupment or reduction
of any kind for any reason whatsoever whether by reason of failure of or defect
in the Owner Trustee's title or any interruption from whatsoever cause in the
use, operation or possession of the Leased Property or any part thereof or any
damage to or loss or
27
destruction of the Leased Property or any part thereof or by reason of any
other indebtedness or liability, howsoever and whenever arising, of the Owner
Trustee or of any other Person to the Lessee or to any other Person, or for any
cause whatsoever, it being the intent hereof that the Lessee shall be
unconditionally and absolutely obligated to pay such assignee all of the Rent,
subject only to the provisions of the Indenture relating to Excepted Property.
(c) Amendments; Exercise of Remedies. Unless and until the Lessee
---------------------------------
shall have received written notice from the Indenture Trustee that the Lien of
the Indenture has been released (i) no amendment or modification of, or waiver
by or consent or approval of the Owner Trustee in respect of, any of the
provisions of this Lease shall be effective unless the Indenture Trustee shall
have joined in such amendment, modification, waiver or consent or shall have
given its prior written consent thereto, and (ii) except as otherwise provided
in the Indenture, the Indenture Trustee shall have the sole right to exercise
all rights, privileges and remedies and to make elections, demands or the like
and to take any other discretionary action (either in its own name or in the
name of the Owner Trustee for the use and benefit of the Indenture Trustee)
which by the terms of this Lease or by Applicable Law are permitted or provided
to be exercised by the Owner Trustee.
Section 15. DEFAULTS.
(a) Events of Default. The following events shall constitute
------------------
Events of Default (whether any such event shall be voluntary or involuntary or
come about or be effected by operation of law or pursuant to or in compliance
with any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(i) The Lessee shall default in the payment when due of any
installment of Periodic Rent or of Periodic Site Rent or of any Casualty Value
or Termination Value payable pursuant to Section 13 or Early Purchase Price
payable pursuant to Section 19 and such default shall continue for a period of
five Business Days; or
(ii) The Lessee shall default in the payment of any Supplemental
Rent (other than Casualty Value, Termination Value or Early Purchase Price) and
such default shall continue for a period of five Business Days after written
notice thereof shall have been received by the Lessee; or
(iii) The Lessee shall default in the observance or performance
of any covenant required to be observed or performed by the Lessee under Section
6.2, Section 6.3 or Section 10 (which in the case of a default under Section 10
shall have been continuing for a period of five Business Days) or shall default
in the maintenance of the insurance coverage required by Section 7 or shall make
or permit any unauthorized assignment or transfer of this Lease, or of the
Lessee's interest in the Leased Property, or any portion thereof; or
(iv) The Lessee shall default in the observance or performance
of any other covenant required to be observed or performed by the Lessee
hereunder or under
28
any other Lessee Agreement and such default shall continue for more than 30 days
after the earlier of (A) the day on which a Responsible Officer of the Lessee
first obtains knowledge of such default, or (B) the day on which written notice
thereof shall have been received by the Lessee, or such longer period, not to
exceed 90 days, as may be necessary to cure any such default that can be cured
within such period, so long as the Lessee is diligently proceeding to cure such
default and such default does not involve any material danger of the sale,
forfeiture or loss of any part of the Leased Property; or
(v) Any representation or warranty made by the Lessee herein or
in any other Lessee Agreement (except the Tax Indemnity Agreement) or in any
statement or certificate furnished by the Lessee to the Owner Trustee or the
Indenture Trustee or any Participant in connection with the transactions
contemplated by the Operative Agreements or furnished by the Lessee pursuant
hereto proves untrue in any material respect as of the date of issuance or
making thereof; or
(vi) A custodian, liquidator, trustee, receiver or similar
official is appointed for the Lessee or any Subsidiary or for the major part of
the Property of either and is not discharged within 60 days after such
appointment; or
(vii) The Lessee or any Material Subsidiary becomes insolvent or
bankrupt, is generally not paying its debts as they become due or makes an
assignment for the benefit of creditors, or the Lessee or any Subsidiary applies
for or consents to the appointment of a custodian, liquidator, trustee, receiver
or similar official for the Lessee, such Subsidiary or for the major part of the
Property of any of them; or (viii) Bankruptcy, reorganization, arrangement or
insolvency proceedings, or other proceedings for relief under any bankruptcy or
similar law or laws for the relief of debtors, are instituted by or against the
Lessee or any Subsidiary and, if instituted against the Lessee or any
Subsidiary, are consented to or are not dismissed within 60 days after such
institution; or
(ix) The Lessee, or any Person on behalf of the Lessee, shall
contest or deny the validity or enforceability of this Lease or the other Lessee
Agreements or its obligations hereunder or thereunder; or
(x) An order or decree requiring a split-up or divestiture of
the Lessee is outstanding against the Lessee and such order or decree remains
unstayed and in effect for more than 30 consecutive days.
(xi) An Event of Default, as defined under the terms and
conditions of the ClO2 Lease, has occurred and is continuing;
(b) Remedies. Upon the occurrence of any Event of Default and at any
time thereafter so long as the same shall be continuing, the Owner Trustee (or,
so long as the Secured Indebtedness shall not have been fully paid and
satisfied, the Indenture Trustee) may, at its option, declare this Lease to be
in default by a written notice to the Lessee (provided that no such written
notice shall be required with respect to any Event of Default under Section
15(a)(vi), (vii)
29
or (viii) or if the ClO2 Lease has been declared or deemed declared to be in
default) and at any time thereafter, so long as the Lessee shall not have
remedied all outstanding Events of Default, the Owner Trustee (or, so long as
the Secured Indebtedness shall not have been fully paid and satisfied, the
Indenture Trustee) may do one or more of the following as the Owner Trustee or
the Indenture Trustee, as the case may be, in its sole discretion shall elect,
to the extent permitted by, and subject to compliance with any mandatory
requirements of, Applicable Law then in effect:
(i) the Owner Trustee or the Indenture Trustee, as the case may
be, may proceed by appropriate court action or actions, either at law or in
equity, to enforce performance by the Lessee of the applicable covenants and
terms of this Lease or to recover damages for the breach thereof;
(ii) the Owner Trustee or the Indenture Trustee, as the case
may be, may, upon 10 days prior written notice to the Lessee, (provided that no
such written notice shall be required with respect to any Event of Default under
Section 15(a)(vi), (vii) or (viii)) terminate this Lease, and, whether or not
this Lease has been so terminated, enter upon the Site and take immediate
possession of the Facility and the Site and remove all or any part of the
Facility by summary proceedings or otherwise, all without liability to the
Lessee for or by reason of such entry or taking of possession, whether for the
restoration of damage to property caused by such taking or otherwise;
(iii) the Owner Trustee or the Indenture Trustee, as the case
may be, may sell the Facility and its interest in the Site Lease Property or any
part thereof at public or private sale, as the Owner Trustee or the Indenture
Trustee, as the case may be, may determine, free and clear of any rights of the
Lessee and without any duty to account to the Lessee with respect to such sale
or for the proceeds thereof (except to the extent required by paragraph (vi)
below if the Owner Trustee or the Indenture Trustee, as the case may be, elects
to exercise its rights under said paragraph), in which event the Lessee's
obligation to pay Periodic Rent and Periodic Site Rent hereunder for the period
commencing on the date of such sale shall terminate (except to the extent that
Periodic Rent or Periodic Site Rent, as the case may be, is to be included in
computations under paragraph (v) or paragraph (vi) below if the Owner Trustee
or the Indenture Trustee, as the case may be, elects to exercise its rights
under either of said paragraphs);
(iv) the Owner Trustee or the Indenture Trustee, as the case
may be, may hold, keep idle or lease to others the Leased Property or any part
thereof, as the Owner Trustee or the Indenture Trustee, as the case may be, in
its sole discretion may determine, free and clear of any rights of the Lessee
and without any duty to account to the Lessee with respect to such action or
inaction or for any proceeds with respect thereto, except that the Lessee's
obligation to pay Periodic Rent and Periodic Site Rent for the period
commencing when the Lessee shall have been deprived of possession pursuant to
this Section 15 shall be reduced by the net proceeds, if any, received by the
Owner Trustee or the Indenture Trustee, as the case may be, from leasing the
Leased Property or such part to any person other than the Lessee for any period
during the Term;
30
(v) whether or not the Owner Trustee or the Indenture Trustee, as
the case may be, shall have exercised, or shall thereafter at any time exercise,
any of its rights under paragraph (i), (ii), (iii) or (iv) above, the Owner
Trustee or the Indenture Trustee, as the case may be, by written notice to the
Lessee specifying a payment date which shall be not earlier than 10 days after
the date of such notice, may demand that the Lessee pay to the Owner Trustee or
the Indenture Trustee, as the case may be, and the Lessee shall pay to the Owner
Trustee or the Indenture Trustee, as the case may be, on the payment date
specified in such notice, as liquidated damages for loss of a bargain and not as
a penalty (in lieu of the Periodic Rent and Periodic Site Rent due after the
Rent Payment Date coinciding with or immediately preceding the payment date
specified in such notice), any unpaid Periodic Rent and Periodic Site Rent due
for all periods up to and including the Rent Payment Date next succeeding the
date of such notice and any and all unpaid Supplemental Rent due hereunder
before or during the exercise of remedies hereunder, including, without
limitation, all legal fees and other costs and expenses incurred by the Owner
Trustee or the Indenture Trustee, as the case may be, the Indenture Trustee or
any Participant by reason of the occurrence of any Event of Default or the
exercise of remedies with respect thereto, plus whichever of the following
amounts the Owner Trustee or the Indenture Trustee, as the case may be, in its
sole discretion, shall specify in such notice (together with interest on such
amount at the Late Rate from the payment date specified in such notice to the
date of actual payment): (A) an amount equal to the excess, if any, of the
Casualty Value (plus interest at the Late Rate on such Casualty Value from the
Rent Payment Date as of which such Casualty Value was calculated to the payment
date specified in such notice) computed as of the Rent Payment Date coinciding
with or immediately preceding the payment date specified in such notice, over
the fair market rental value (computed as hereafter in this Section 15(b)
provided) of the Facility for the remainder of the then current Term after
discounting such fair market rental value to present worth as of the payment
date specified in such notice at a discount rate equal to the Specified Rate in
effect on the date of such notice, compounded semiannually on the Rent Payment
Dates; or (B) an amount equal to the excess, if any, of the Casualty Value (plus
interest at the Late Rate on such Casualty Value from the Rent Payment Date as
of which such Casualty Value was calculated) computed as of the payment date
specified in such notice over the fair market sales value of the Facility
(computed as hereafter in this Section 15(b) provided) as of the payment date
specified in such notice;
(vi) if the Owner Trustee or the Indenture Trustee, as the case
may be, shall have sold the Facility and its interest in the Site Lease Property
pursuant to paragraph (iii) above, the Owner Trustee or the Indenture Trustee,
as the case may be, in lieu of exercising its rights under paragraph (v) above,
may, if it shall so elect, demand that the Lessee pay to the Owner Trustee or
the Indenture Trustee, as the case may be, and the Lessee shall pay to the Owner
Trustee or the Indenture Trustee, as the case may be, as liquidated damages for
loss of a bargain and not as a penalty, any unpaid Periodic Rent and Periodic
Site Rent due for periods up to and including the Rent Payment Date next
following the date of such sale and any and all unpaid Supplemental Rent due
hereunder before or during the exercise of remedies hereunder, including,
without limitation, all legal fees and other costs and expenses incurred by the
Owner Trustee, the
31
Indenture Trustee or any Participant by reason of the occurrence of any
Event of Default or the exercise of remedies with respect thereto, plus
the amount of any deficiency between the net after tax cash
out-of-pocket proceeds of such sale and the Casualty Value of the
Facility, computed as of the Rent Payment Date next following the date
of such sale, together with interest at the Late Rate on the amount of
such deficiency from the Rent Payment Date as of which such Casualty
Value is computed until the date of actual payment;
(vii) in lieu of exercising its rights under paragraph (v) above,
the Owner Trustee or the Indenture Trustee, as the case may be, may by
notice to the Lessee require the Lessee to pay on demand to the Owner
Trustee or the Indenture Trustee, as the case may be, and the Lessee
hereby agrees that it will so pay to the Owner Trustee or the Indenture
Trustee, as the case may be, as liquidated damages for loss of a
bargain and not as a penalty (in lieu of the Periodic Rent and Periodic
Site Rent due after the Rent Payment Date next succeeding the date of
such notice) any unpaid Periodic Rent and Periodic Site Rent due for
all periods up to and including the Rent Payment Date next succeeding
the date of such notice and any and all unpaid Supplemental Rent due
hereunder before or during the exercise of remedies hereunder,
including, without limitation, all legal fees and other costs and
expenses incurred by the Owner Trustee, the Indenture Trustee or any
Participant by reason of the occurrence of any Event of Default or the
exercise of remedies with respect thereto, plus an amount equal to
Casualty Value computed as of the Rent Payment Date next succeeding the
date of such notice (or if such date is a Rent Payment Date, then
computed as of such Rent Payment Date), together with interest, to the
extent permitted by law, at the Late Rate on such amount of Casualty
Value from the date as of which such Casualty Value was computed to the
date of actual payment; and upon such payment of liquidated damages and
the payment of all other Rent then due hereunder, the Owner Trustee or
the Indenture Trustee, as the case may be, shall assign and transfer
the Facility and its interest in the Site Lease Property to Lessee,
as-is, where-is, without recourse or warranty, express or implied,
except for a warranty against Lessor's Liens attributable to the Owner
Trustee or Wilmington Trust Company, and the Owner Trustee or the
Indenture Trustee, as the case may be, shall execute and deliver such
documents evidencing such assignment and transfer as the Lessee, at its
sole cost and expense, shall reasonably request. In addition, promptly
after the Lessee makes the payment of Casualty Value as aforesaid, the
fair market sales value of the Facility as of the date of which
Casualty Value was determined will be determined. If the fair market
sales value of the Facility as of such date is determined to exceed the
Casualty Value paid pursuant to the first sentence of this paragraph
(vii), the Lessee shall, within 30 days after such determination, pay
the amount of such excess to the Owner Trustee or the Indenture
Trustee, as the case may be; and
(viii) the Owner Trustee may exercise any other right or remedy
which may be available to it under Applicable Law.
In addition, the Lessee shall be liable, except as otherwise provided
above, for any and all unpaid Rent due hereunder before or during the exercise
of any of the foregoing remedies and for all legal fees and other costs and
expenses incurred by the Owner Trustee, the Indenture
32
Trustee or any Participant by reason of the occurrence of any Event of Default
or the exercise of the remedies with respect thereto, including all costs and
expenses incurred in connection with the surrender of the Leased Property or
redelivery of the Facility in accordance with Section 16 hereof or in placing
the Leased Property in the condition required by said Section 16 and any premium
payable on the Notes. For the purpose of paragraphs (v) and (vii) above, the
"fair market rental value" or the "fair market sales value" of the Leased
Property shall mean such value as determined by the Owner Trustee or the
Indenture Trustee, as the case may be. Such fair market sales value and such
fair market rental value shall be determined on the basis specified in Section
19, except that the assumptions set forth in clause (i) of Section 19(a) shall
not be made (unless the Facility is still located at the Site, in which case the
then remaining Site Lease Term shall be considered), but such determination
shall instead be made on an "as-is, where-is" basis, taking into account the
actual condition and location of the Facility. At any sale pursuant to this
Section 15, any Participant may bid for and purchase the Facility and the Owner
Trustee's interest in the Site Lease Property. To the extent permitted by
Applicable Law, the Lessee hereby waives any rights now or hereafter conferred
by statute or otherwise which may require the Owner Trustee or the Indenture
Trustee, as the case may be, to sell, lease or otherwise use the Leased Property
in mitigation of the Lessee's damages as set forth in this Section 15 or which
may otherwise limit or modify any of the Owner Trustee's or the Indenture
Trustee's, as the case may be, rights and remedies in this Section 15.
(c) Simultaneous Exercise of Remedies. Pursuant to the terms of
---------------------------------
the Intercreditor Agreement, Owner Trustee or the Indenture Trustee, as the case
may be, shall not exercise any of its rights or remedies as provided in Section
15(b) unless the same rights and remedies are simultaneously being exercised
under the ClO2 Lease. If such rights or remedies under the ClO2 Lease are not
being exercised, any such exercise under this Agreement shall be deemed to be of
no force or effect.
Section 16. RETURN OF FACILITY TO OWNER TRUSTEE.
(a) Surrender at Site. In the event that the Facility has neither
-----------------
been sold to a third party pursuant to Section 13 nor purchased by the Lessee
pursuant to Section 19, the Lessee will at its own expense surrender possession
of the Leased Property to the Owner Trustee or (if the Secured Indebtedness has
not been fully paid and satisfied) the Indenture Trustee, at the Site at the end
of the Term hereof, including, for the avoidance of doubt, a return of the
Facility on account of the exercise of remedies pursuant to Section 15(b)
hereof.
At the time of such surrender,
(i) the Lessee shall also surrender to the Owner Trustee one copy
of the Plans and all other logs, catalogs, software, documents,
instruments, plans, maps, surveys, blueprints, diagrams, schematics,
property casualty inspection reports, fire and boiler inspection
reports, as built diagrams, specifications, manuals, technical drawings
and other materials relating to the Leased Property and the Technology;
(ii) all equipment which is leased under this Facility Lease
shall be in such condition that it is capable of performing the task
for which it was originally
33
intended at its design rating or capacity; furthermore, it shall be
capable of immediately being used by a second user without the need for
major overhaul, refurbishment or replacement for a period of not less
than ten (10) years from the expiration of the Basic Term, normal
routine maintenance procedures and associated expenses excepted;
(iii) all equipment which is part of the Facility shall be
properly lubricated and all surfaces and components shall be properly
coated with a protective coating from the elements;
(iv) the Leased Property shall be free from all Liens except
those for which the Owner Trustee or the Owner Participant is
responsible under Section 8 of the Participation Agreement, Liens
described in clauses (f), (g) and (h) of the definition of "Permitted
Encumbrances" and the exceptions to title described in Schedule B to
the Title Policy issued on the Closing Date to the Owner Trustee;
(v) the Facility shall be immediately capable of being
operated at the Site by an operator other than the Lessee or any
Affiliate of the Lessee without the need for any Alterations;
(vi) the Facility shall be in compliance in all material
respects with all then existing Applicable Laws governing its use,
operation and sale;
(vii) any Hazardous Materials, other than those used in the
normal operation of the Facility and used and stored in compliance with
Environmental Laws, shall have been removed from the Leased Property by
a licensed waste disposal firm, provided that upon the written request
of the Owner Trustee, the Lessee shall also remove Hazardous Materials
used in the normal operation of the Facility which have been used and
stored in compliance with Environmental Laws to the extent that such
Hazardous Materials are not useable in the normal operation of the
Facility or salable; and
(viii) the Leased Property shall be in at least the
operating condition required by the terms hereof, including, without
limitation, the provisions of Section 8(a).
(b)Engineer's Report. Unless the Lessee has exercised its option
-----------------
to purchase the Facility and has paid all amounts due and owing in connection
therewith, not less than 90 days and not more than 180 days prior to the last
day of the Term (or the date on which the Facility is otherwise returned to the
Owner Trustee or the Indenture Trustee in the event that the Secured
Indebtedness has not been fully paid and satisfied), the Lessee shall provide to
the Owner Trustee, the Owner Participant, the ClO//2// Indenture Trustee and the
Indenture Trustee (in the event that the Secured Indebtedness has not been fully
paid and satisfied) an inspection report prepared by a qualified independent
engineer selected by the Lessee and reasonably satisfactory to the Owner
Trustee, the Owner Participant, and the Indenture Trustee (in the event that the
Secured Indebtedness has not been fully paid and satisfied) certifying whether
or not the Facility is (i) in good working order, (ii) capable of performing
substantially at the original manufacturer's performance specifications at the
time the Facility was originally designed and (iii) capable of performing at its
Design Capacity. In the event that such report or the report to
34
be given pursuant 16(b) of the ClO//2// Lease indicates that the Facility or the
ClO//2// Facility, as the case may be, does not satisfy the requirements of
clause (i), (ii) or (iii) of the preceding sentence or the corresponding clauses
in Section 16(b) of the ClO//2// Lease, the Owner Trustee or the Indenture
Trustee (in the event that the Secured Indebtedness has not been fully paid and
satisfied) may elect either (A) to deem that the Leased Property is not returned
until the earlier of (1) the date on which the Facility is properly repaired to
satisfy such requirements and (2) one year after the last day of the Term, in
which case the Lessee shall continue to be obligated under all the terms and
conditions of this Lease (including without limitation the provisions relating
to insurance, indemnification and risk of loss), except that the Lessee shall
not be required to pay Periodic Rent and Periodic Site Rent after the expiration
of the Basic Term or any Renewal Term, as the case may be, but the Lessee shall
pay to the Owner Trustee or the Indenture Trustee, as the case may be, as
liquidated damages, and not as a penalty, for the failure of the Lessee to
return the Leased Property to the Owner Trustee or the Indenture Trustee, as the
case may be, at the expiration of the Term as required by the provisions of this
Section 16, an amount equal to 120% of the daily equivalent of (y) the
arithmetic average of the Periodic Rent during the Basic Term, or (z) if the
failure to return occurs after a Renewal Term, the arithmetic average of the
Periodic Rent during such Renewal Term, or (B) to terminate this Lease, in which
case the Lessee shall pay to the Owner Trustee or the Indenture Trustee, as the
case may be, the Termination Value; provided that any such election by the Owner
Trustee or Indenture Trustee, as applicable, under this Section shall be deemed
to be null and void unless the same election is made the ClO//2// Owner Trustee
or ClO//2// Indenture Trustee, as applicable, under Section 16(b) of the
ClO//2// Lease. If the Owner Trustee or the Indenture Trustee, as the case may
be, elects the option specified in clause (A) above and the Facility or ClO//2//
Facility under the ClO//2// Lease, if applicable, has not been properly repaired
one year after the last day of the Term, the Lessee shall pay to the Owner
Trustee or the Indenture Trustee, as the case may be, the Termination Value for
the Facility and title to the Facility shall vest in the Lessee upon such
payment.
(c) Environmental Report. Unless the Lessee has exercised its option
--------------------- to purchase the Facility and has paid all amounts due and
owing in connection therewith, not less than 90 days and not more than 180 days
prior to the last day of the Term (or the date on which the Facility is
otherwise returned to the Owner Trustee or the Indenture Trustee, as the case
may be), the Lessee shall provide to the Owner Trustee, the Owner Participant,
the ClO//2// Indenture Trustee and the Indenture Trustee (in the event that the
Secured Indebtedness has not been fully paid and satisfied) an inspection report
prepared by a reputable environmental consulting firm selected by the Owner
Trustee and reasonably satisfactory to the Owner Participant or the Indenture
Trustee, as the case may be, certifying whether or not the Site and the Facility
are in compliance with CERCLA, RCRA and in all material respects with all other
then existing Environmental Laws. In the event that such report or the report to
be given under Section 16(c) of the ClO//2// Lease indicates that either the
Site, the Facility, the ClO//2// Site or the ClO//2// Facility, as the case may
be, is not in compliance with all then existing Environmental Laws or that
Remedial Action could be required at the Leased Property, the Owner Trustee or
the Indenture Trustee, as the case may be, may elect either (A) to deem that the
Leased Property is not returned until the earlier of (1) the date on which the
Site and the Facility are in compliance with all then existing Environmental
Laws and (2) one year after the last day of the Term, in which case the Lessee
shall continue to be obligated under all the terms and conditions of this Lease
(including without limitation the provisions relating to insurance,
indemnification and risk of loss), except
(c)
35
that the Lessee shall not be required to pay Periodic Rent and Periodic Site
Rent after the expiration of the Basic Term or any Renewal Term, as the case may
be, but the Lessee shall pay to the Owner Trustee or the Indenture Trustee, as
the case may be, as liquidated damages, and not as a penalty, for the failure of
the Lessee to return the Leased Property to the Owner Trustee or the Indenture
Trustee, as the case may be, at the expiration of the Term as required by the
provisions of this Section 16, an amount equal to 120% of the daily equivalent
of (y) the arithmetic average of the Periodic Rent during the Basic Term, or (z)
if the failure to return occurs after a Renewal Term, the arithmetic average of
the Periodic Rent during such Renewal Term, or (B) to terminate this Lease, in
which case the Lessee shall pay to the Owner Trustee or the Indenture Trustee,
as the case may be, the Termination Value for the Facility and title to this
Facility shall vest in the Lessee upon such payment; provided that any such
election by the Owner Trustee or Indenture Trustee, as applicable, under this
Section shall be deemed to be null and void unless the same election is made by
ClO//2// Owner Trustee or ClO//2// Indenture Trustee, as applicable under
Section 16(c) of the ClO//2// Lease. If the Owner Trustee or the Indenture
Trustee, as the case may be, elects the option specified in clause (A) above and
the Facility or the ClO//2// Facility under the ClO//2// Lease, if applicable,
has not been properly repaired one year after the last day of the Term, the
Lessee shall pay to the Owner Trustee or the Indenture Trustee, as the case may
be, the Termination Value for the Facility.
(d) Storage. Following the surrender of the Facility as
--------
provided in Section 16(a) above, upon the written request of the Owner Trustee
or the Indenture Trustee, as the case may be, the Lessee agrees to store the
Facility at the Site in the condition requested by the Owner Trustee or the
Indenture Trustee, as the case may be, at the expense of the Lessee for a period
of one year. The Owner Trustee or the Indenture Trustee, as the case may be, may
during the storage period obtain bids for purchase of the Facility on an
"as-is", "where is" basis, and at its sole option, may elect to accept or reject
any such bids for the Facility. The Lessee shall continue to be obligated under
all the terms and conditions of this Lease (including without limitation the
provisions relating to insurance (to the extent such insurance is commercially
reasonably available to the Lessee), indemnification and risk of loss (to the
extent the insurance is commercially reasonably available to the Lessee)) during
the storage period set forth above, except that, the Lessee shall not be
required to pay Periodic Rent and Periodic Site Rent after the expiration of the
Basic Term or any Renewal Term, as the case may be. Neither the Lessee nor any
Affiliate shall be entitled to operate on a commercial basis the Facility during
such period. The Lessee shall have such access to the Leased Property as shall
be reasonably necessary to enable the Lessee to comply with its obligations
under this Section 16(d).
Section 17. [INTENTIONALLY LEFT BLANK]
Section 18. FINANCIAL STATEMENTS AND REPORTS; INSPECTION AND
CERTIFICATES.
(a) Reports and Rights of Inspection. The Lessee will keep,
---------------------------------
and will cause each Subsidiary to keep, proper books of record and account in
which full and correct entries will be made of all dealings or transactions of
or in relation to the business and affairs of the Lessee or such Subsidiary, in
accordance with generally accepted accounting principles applicable to the
Lessee or such Subsidiary, as the case may be, in any such case consistently
36
applied (except for changes disclosed in the financial statements furnished to
the Owner Trustee, the Indenture Trustee, each holder of the ClO//2// Notes and
each Participant pursuant to this Section 18(a) and concurred in by the
independent public accountants referred to in Section 18(a)(ii) hereof), and
will furnish to the Owner Trustee, the Indenture Trustee, each holder of the
ClO//2// Notes and each Participant (in duplicate if so specified below or
otherwise requested):
(i) Quarterly Statements. As soon as available and in any event
---------------------
within 60 days after the end of each quarterly fiscal period(except the last) of
each fiscal year, duplicate copies of:
(A) consolidated balance sheets of the Lessee as of the close of
such quarter setting forth in comparative form the amount as of the close of the
corresponding period of the preceding fiscal year and the amount as of the close
of said preceding fiscal year, and
(B) consolidated statements of income and cash flows of the
Lessee for such quarterly period and the year to date period setting forth in
comparative form the amount for the corresponding periods of the preceding
fiscal year,
all in reasonable detail and certified as complete and correct, by an authorized
financial officer of the Lessee;
(ii) Annual Statements. As soon as available and in any event within
------------------
120 days after the close of each fiscal year of the Lessee,duplicate copies of:
(A) consolidated balance sheets of the Lessee as of the close of
such fiscal year, and
(B) consolidated statements of income and cash flows of the
Lessee for such fiscal year,
in each case setting forth in comparative form the consolidated figures for the
preceding fiscal year, all in reasonable detail and accompanied by an opinion
thereon of a firm of independent public accountants of recognized national
standing selected by the Lessee to the effect that the consolidated financial
statements have been prepared in accordance with GAAP consistently applied
(except for changes in application in which such accountants concur) and present
fairly the financial condition and results of operations of the Lessee and that
the examination of such accountants in connection with such financial statements
has been made in accordance with generally accepted auditing standards and
accordingly, includes such tests of the accounting records and such other
auditing procedures as were considered necessary in connection therewith;
(iii) SEC and Other Reports. Promptly upon their becoming available,
----------------------
one copy of each financial statement, report, notice or proxy statement sent by
the Lessee to all holders of Equity Interests in the Lessee generally and of
each regular or periodic
37
report, and any registration statement or prospectus filed by the Lessee or any
Subsidiary with any securities exchange or the Securities and Exchange
Commission or any successor agency, and copies of any orders in any proceedings
to which the Lessee or any of its Subsidiaries is a party, issued by any
Governmental Authority, Federal or state, having jurisdiction over the Lessee or
any of its Subsidiaries, other than reports or licenses granted by any such
Governmental Authority with respect to the timber;
(iv) Notice of Default or Claimed Default. Immediately upon a Responsible
-------------------------------------
Officer of the Lessee becoming aware of the existence of a Default or an
Event of Default or that the Owner Trustee has given notice or taken any other
action with respect to an Event of Default or a claimed default under this
Lease, or a default in the payment of the principal, premium, if any, sinking
fund or interest with respect to indebtedness for borrowed money, or an event of
default with respect to any indebtedness for borrowed money or in the instrument
under which such indebtedness is outstanding permitting the holders thereof to
accelerate the maturity thereof, a written notice specifying the nature of the
Default, Event of Default, default or claimed default and any such notice given
or action taken by the Owner Trustee and what action the Lessee is taking or
proposes to take with respect thereto;
(v) ERISA Reporting. Prompt written notice, and in any event within ten
----------------
days after a Responsible Officer of the Lessee learns of its occurrence, of the
following and the action the Lessee has taken, is taking or proposes to take
with respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, Department of Labor or the PBGC with respect thereto:
(A) a Reportable Event with respect to any employee benefit plan; (B) the
institution of any steps by the Lessee, any ERISA Affiliate, the PBGC or any
other Person to terminate any employee benefit plan pursuant to Sections 4041(c)
or 4042 of ERISA; (C) the institution of any steps by the Lessee or any ERISA
Affiliate to withdraw from any Multiemployer Plan, within the meaning of ERISA
which would result in a material adverse effect on the business, profits or
financial condition of the Lessee and its Subsidiaries taken as a whole; (D) a
"prohibited transaction" within the meaning of Section 406 of ERISA in
connection with any employee benefit plan which would result in a material
adverse effect on the business or financial condition of the Lessee; or (E) any
increase in the liability of the Lessee with respect to any post-retirement
welfare benefits which would result in a material adverse effect on the business
or financial condition of the Lessee; and
(vi) Notice of Litigation. Prompt written notice, and in any event within
---------------------
five Business Days after a Responsible Officer of the Lessee first obtains
knowledge thereof, with respect to the institution of any suit or proceeding or
Environmental Claim against the Lessee or any Subsidiary thereof which if
determined adversely could, individually or in the aggregate with other suits
and proceedings, reasonably be expected to have a material adverse effect on the
business, profits, Properties or financial condition of the Lessee.
(vii) Information in Respect of Damages and Taxes. Such information and
-------------------------------------------
data as the Owner Trustee, the Indenture Trustee, any holder of the ClO//2//
Notes or
38
any Participant may from time to time reasonably request as to location and the
existence and status of any claims for damages (whether against the Leased
Property or against the Owner Trustee or the Lessee) arising out of the use,
operation or condition of the Leased Property, the taxes of the nature provided
to be paid by the Lessee under Section 7 of the Participation Agreement which
have been assessed and the amount of such taxes paid, and such other data
pertinent to the Leased Property and the condition, use, repair and operation
thereof as any such party from time to time may reasonably request. Without
limiting the foregoing, the Lessee agrees that, without any such request, it
will furnish the Owner Trustee, the Indenture Trustee, each holder of the
ClO//2// Notes and each Participant with prompt written notice of (A) any claim
for damages arising out of the use, operation or condition of the Leased
Property if the amount of such claim exceeds U.S.$1,000,000 and (B) any damage,
loss, theft or destruction, partial or complete, of any of the Leased Property,
if the amount thereof exceeds U.S.$2,500,000;
(viii) Eau Claire Facility. The Lessee shall promptly, but in
--------------------
any case within five (5) Business Days, after a Responsible Officer of the
Lessee receives written notice of any failure of Plainwell Paper Company to
fulfill its obligation to make ongoing contributions with respect to its
obligations for the Eau Claire Facility under the Paper Industry
Union-Management Pension Fund resulting from the sale of the Tissue Business to
Plainwell Paper Company (which failure has not been corrected within the
applicable grace period), notify the Owner Trustee and the Indenture Trustee in
writing of the receipt of any such notice; and
(ix) Requested Information. With reasonable promptness, such
----------------------
other data and information as the Owner Trustee, the Indenture Trustee, any
holder of the ClO//2// Notes or any Participant may reasonably request
including, without limitation, any information required to be provided to such
Note Purchaser or a prospective purchaser of the Notes by Rule 144A(d)(4) under
the Securities Act.
(b) Officer's Certificates. Within the periods provided
-----------------------
in Sections 18(a) (i) and 18(a)(ii), the Lessee shall deliver to the Owner
Trustee, the Indenture Trustee and each Participant a certificate signed by the
chief financial officer of the Lessee stating that such officer has reviewed the
provisions of this Lease and the other Operative Agreements and setting forth:
(i) the information and computations (in sufficient detail) required in order to
establish whether the Lessee was in compliance with the requirements of Section
6.3, at the end of the period covered by the financial statements then being
furnished and (ii) whether there existed as of the date of such financial
statements and whether, to the best of his knowledge, there exists on the date
of the certificate or existed at any time during the period covered by such
financial statements any Default or Event of Default and, if any such condition
or event exists on the date of the certificate, specifying the nature and period
of existence thereof and the action the Lessee is taking and proposes to take
with respect thereto.
(c) [Intentionally Omitted].
---------------------
(d) Property Report. Each set of financial statements
---------------
of the Lessee delivered pursuant to Section 18(a)(ii) will be accompanied by a
report of an officer of the Lessee familiar
39
with the status and condition of the Leased Property which describes the
status, condition and location of the Leased Property, describing any Alteration
or repair to the Facility having a cost exceeding U.S.$1,000,000, any warranty
claim in an amount exceeding U.S.$1,000,000 against any supplier of goods or
services in connection with the Leased Property, any period of 45 or more
consecutive days during which the Facility was not in operation and any
violation of governmental rules or regulations involving the Facility or the
operation thereof which could reasonably be expected to have a Material Adverse
Effect, in each case during the period since the previous report (or, in the
case of the first such report, since the date of this Lease), and describing the
circumstances thereof, and stating whether any Leased Property is then in the
condition required by this Lease and, if not, what the Lessee is doing or
intends to do in connection therewith.
(e) Inspection. Without limiting the foregoing, the Lessee will permit the
-----------
Owner Trustee, the Indenture Trustee, any holder of the ClO//2// Notes and each
Participant (or such Persons as the Owner Trustee, the Indenture Trustee, such
holder or such Participant may designate) to visit and inspect the Leased
Property, to examine all their books of account, records, reports and other
papers, to make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers, employees, and
independent public accountants (and by this provision the Lessee authorizes said
accountants to discuss with the Owner Trustee, the Indenture Trustee, such
holder such Participant or such Person so designated the finances and affairs of
the Lessee and its Subsidiaries with or without an officer or employee of the
Lessee or any of its Subsidiaries being present) all at such reasonable times
and as often as may be reasonably requested; provided that unless a Default or
Event of Default shall have occurred and shall be continuing, the Owner Trustee,
the Indenture Trustee, such holder and such Participant shall give the Lessee at
least 10 days' prior written notice of any such visit, examination or proposed
discussion. The Lessee shall not be required to pay or reimburse the Owner
Trustee, the Indenture Trustee, such holder or such Participant for expenses
which it may incur in connection with any such visitation or inspection except
in the case of any such visitation or inspection which shall occur while a
Default or Event of Default shall have occurred and shall be continuing.
Section 19. OPTIONS TO RENEW AND PURCHASE.
(a) Determination of Fair Market Sales Value and Fair Market Rental Value.
----------------------------------------------------------------------
Not more than 24 months nor less than 14 months prior to the expiration
of the Basic Term and any Renewal Term, the Lessee may notify the Owner Trustee
in writing that the Lessee desires a determination of the Fair Market Sales
Value of the Facility as of the end of such Term and/or the Fair Market Rental
Value of the Facility for a permitted Renewal Term, as specified in Section
19(c), commencing upon the expiration of the then current Term and the Fair
Market Sales Value of the Facility as of the end of such Renewal Term.
Thereafter, the Owner Trustee and the Lessee shall consult for the purpose of
determining such Fair Market Sales Value and Fair Market Rental Value, and any
values agreed upon in writing shall constitute such Fair Market Sales Values and
Fair Market Rental Value. If the Owner Trustee and the Lessee fail to agree upon
such values within 45 days after the Lessee's notice pursuant to the first
sentence of this paragraph, the Lessee may request that such values be
determined by the Appraisal Procedure. The Lessee's request for a determination
of Fair Market Value shall not obligate the
40
Lessee to exercise any of the options provided in this Section 19. All costs
and expenses of any Appraisal Procedure pursuant to this Section 19 shall be
borne by the Lessee.
(b) End of Term Options to Purchase. So long as no Default
--------------------------------
under clause (vi), (vii) or (viii) of Section 15(a) or Event of Default and no
Default under clause (vii), (viii) or (ix) of Section 15(a) of the ClO//2//
Lease or Event of Default as defined under the ClO//2// Lease has occurred and
is continuing, the Lessee shall have the right on the date of the expiration of
the Basic Term to purchase the Facility at a price equal to the Fair Market
Sales Value determined as of the end of such Basic Term pursuant to Section
19(a); provided that that such right may not be exercised unless the
corresponding right is being exercised simultaneously by it under Section 14(b)
of the ClO//2// Participation Agreement. The Lessee shall give to the Owner
Trustee irrevocable written notice not more than two years and at least one year
prior to the end of the Basic Term of its election to exercise the purchase
option provided for in the preceding sentence. Payment of the purchase price
shall be made on the date of purchase at the place of payment specified in
Section 4(d) hereof in immediately available funds to the Owner Trustee (or, so
long as the Secured Indebtedness shall not have been fully paid and satisfied,
the Indenture Trustee), against delivery of a quitclaim deed and xxxx of sale
transferring and assigning to the Lessee all right, title and interest of the
Owner Trustee in and to the Facility on an "as-is" "where-is" basis without
recourse or warranty, express or implied, except for a warranty against Lessor's
Liens attributable to the Owner Trustee or Wilmington Trust Company. Such
purchase shall be deemed to be null and void unless the purchase by it of the
ClO//2// Facility has simultaneously occurred under Section 14(b) of the
ClO//2// Participation Agreement. The Owner Trustee shall not otherwise be
required to make any representation or warranty as to the condition of the
Leased Property or any other matters. At such time as the Secured Indebtedness
shall have been fully paid and satisfied, the Indenture Trustee shall release
the Lien of the Indenture pursuant to Section 9.01 thereof.
Upon expiration of each Renewal Term, so long as no Default
under clause (vi), (vii) or (viii) of Section 15(a) or Event of Default and no
Default under clause (vii), (viii) or (ix) of Section 15(a) of the ClO//2//
Lease or Event of Default under the ClO//2// Lease has occurred and is
continuing, the Lessee shall have the right to purchase the Facility at a price
equal to the Fair Market Sales Value thereof determined as of the end of such
Renewal Term pursuant to Section 19(a); provided, however, that such right may
not be exercised unless the corresponding right is being exercised
simultaneously by it under Scetion 14(b) of the ClO//2// Participation
Agreement. The Lessee shall give the Owner Trustee irrevocable written notice at
least one year prior to the end of such Renewal Term of its election to exercise
the purchase option provided for in the preceding sentence. Following such
notice, the Lessee shall purchase the Facility on the terms and conditions set
forth in this Section 19(b). In the event of any purchase of the Facility by the
Lessee pursuant to this Section 19(b) and payment of all Rent and other sums due
and owing by the Lessee pursuant to this Lease or any of the other Operative
Agreements (with payment and application of the amount thereof necessary to
fully pay and satisfy the Secured Indebtedness and discharge of the Lien of the
Indenture to be made pursuant to Section 9.01 thereof), the Owner Trustee shall,
concurrently with such purchase, transfer its right, title and interest in and
to the Site Lease to the Lessee on an "as-is" "where-is" basis without recourse
or warranty, express or implied, except for a warranty against Lessor's Liens
attributable to the Owner Trustee or Wilmington Trust Company. Such purchase
shall be deemed to be null and
41
void unless the purchase by it of the ClO//2// Facility has simultaneously
occurred under Section 14(b) of the ClO//2// Participation Agreement. At such
time as the Secured Indebtedness shall have been fully paid and satisfied, the
Indenture Trustee shall release the Lien of the Indenture pursuant to Section
9.01 thereof.
(c) End of Term Options to Renew. So long as no Default or Event
-----------------------------
of Default shall have occurred and be continuing, and no Default or Event of
Default as defined under the ClO//2// Lease shall have occurred and is
continuing, and assuming that this Lease and the ClO//2// Lease have not been
earlier terminated, the Lessee shall have the right to renew this Lease for no
more than two Renewal Terms of one year each, commencing at the expiration of
the Basic Term or the preceding Renewal Term, as the case may be; provided
however that such right may not be exercised unless the corresponding right is
being simultaneously exercised by the ClO//2// Lessee under 19(b) of the
ClO//2// Lease. All of the provisions of this Lease shall be applicable during
each Renewal Term except that the Casualty Values shall be determined in
accordance with Section 19(d) and Periodic Rent shall be the product of (x) the
Fair Market Rental Value of the Facility for such Renewal Term, determined in
accordance with Section 19(a) and (y) 105%; provided that if prior to the time
such renewal option is exercisable the IRS has clarified that fair market
renewal term options are not includible in the "lease term" as defined by
Section 467 of the Code and the Treasury Regulations thereunder, the number in
clause (y) shall be 100%. The Lessee shall give to the Owner Trustee irrevocable
written notice at least one year prior to the end of the Basic Term or the
current Renewal Term, as the case may be, of its election to exercise the
renewal option provided for in this Section 19 for a Renewal Term or an
additional Renewal Term commencing upon the expiration of such Term. A Renewal
Term shall not be in effect unless a Renewal Term is in effect under the terms
of the ClO//2// Lease.
(d) Casualty Value During Renewal Term. The Casualty Value as of
-----------------------------------
the commencement of each Renewal Term shall be the Fair Market Sales Value of
the Facility as of the end of the Basic Term or the preceding Renewal Term, as
the case may be (determined in accordance with Section 19(a)), and on each
Casualty Termination Date during such Renewal Term shall decline on a
straight-line basis to a value for the final Casualty Termination Date for such
Renewal Term equal to the Fair Market Sales Value of the Facility as of the end
of such Renewal Term (determined in accordance with Section 19(a)).
(e) Casualty Occurrence. Notwithstanding any request by the Lessee
--------------------
for a determination of Fair Market Sales Value pursuant to this Section 19, the
provisions of Section 13 shall continue in full force and effect until the date
of purchase and the passage of ownership of the Facility unless the Lessee shall
have exercised the option by irrevocable written notice to purchase pursuant to
Section 19(b) or 19(f), in which event the amount of "Casualty Value" shall
equal the greater of (i) the option purchase price or Early Purchase Price , as
applicable, (plus any other amounts payable in connection therewith) and (ii)
the Casualty Value which would have applied but for the exercise of such
purchase option. If the Lessee has exercised any of its options to purchase or
renew under this Section 19 and a Casualty Occurrence occurs before the closing
of such purchase or commencement of the Renewal Term, as applicable, the Lessee
may, by written notice to the Owner Trustee (and, so long as the Secured
Indebtedness has not been fully paid and satisfied, the Indenture Trustee and
the ClO//2//
42
Indenture Trustee) given promptly upon such Casualty Occurrence, elect to
rescind the exercise of such option.
(f) Early Purchase Option. So long as no Default under clause (vi), (vii)
---------------------
or (viii) of Section 15(a) or Event of Default shall have occurred and be
continuing and no Default under clause (vii), (viii) or (ix) of Section 15(a) of
the ClO//2// Lease or Event of Default as defined under the ClO//2// Lease shall
have occurred and is continuing, the Lessee may, upon not less than 90 days'
prior written notice to the Owner Trustee (and so long as the Secured
Indebtedness has not been fully paid and satisfied, to the ClO//2// Indenture
Trustee and the Indenture Trustee) elect to purchase the Facility on the Early
Purchase Date at a price equal to the Early Purchase Price; provided that such
right may not be exercised unless the corresponding right is being exercised by
it under Section 14(c) of the ClO//2// Participation Agreement. Such written
notice shall be irrevocable. On the Early Purchase Date, the Lessee shall pay to
the Owner Trustee (or, so long as the Secured Indebtedness shall not have been
fully paid and satisfied, the Indenture Trustee) at the place of payment
specified in Section 4(d) hereof in immediately available funds (i) all payments
of Periodic Rent (other than Periodic Rent payable "in advance" on the Early
Purchase Date) and Periodic Site Rent through and including such Early Purchase
Date whether or not due and payable at the time, (ii) the Early Purchase Price,
(iii) an amount equal to the Make-Whole Amount, if any, in respect of the
principal amount of the Notes to be prepaid in accordance with Section 2.10(d)
of the Indenture and (iv) all other Rent and sums then due and payable by the
Lessee under this Facility Lease and the other Lessee Agreements. Upon
application of all such sums to the payment in full and satisfaction of the
Secured Indebtedness pursuant to the Indenture and release of the Lien thereof
pursuant to Section 9.01 of the Indenture or the assumption of the Notes in
accordance with Section 12 of the Participation Agreement, as the case may be,
the Owner Trustee shall then and thereupon deliver a quitclaim deed and xxxx of
sale transferring and assigning to the Lessee all right, title and interest of
the Owner Trustee in and to the Facility on an "as-is" "where-is" basis without
recourse or warranty, express or implied, except for a warranty against Lessor's
Liens attributable to the Owner Trustee or Wilmington Trust Company. Such
purchase shall be deemed to be null and void unless the purchase by it of the
ClO//2// Facility has occurred under Section 14(c) of the ClO//2// Participation
Agreement. The Owner Trustee shall not otherwise be required to make any
representation or warranty as to the condition of the Leased Property or any
other matters. In the event of any such purchase and receipt by the Owner
Trustee (or, so long as the Secured Indebtedness has not been fully paid and
satisfied, the Indenture Trustee) of all of the amounts provided in this Section
19(f) the obligation of the Lessee to pay Periodic Rent and Periodic Site Rent
hereunder shall cease and the Term shall end. In the event the Lessee exercises
its option to assume the Notes in accordance with Section 12 of the
Participation Agreement, the principal amount of such Notes so assumed shall be
deducted from the Early Purchase Price and no Make-Whole Amount shall be payable
under this Section 19(f). If, on the Early Purchase Date, the Lessee shall fail
to pay all amounts required to be paid pursuant to this Section 19(f) and
Section 14(c) of the ClO//2// Participation Agreement, Lessee's notice of early
purchase shall be deemed to be withdrawn as of such date, this Lease shall
continue in full force and effect with respect to the Facility and the Lessee
shall pay the reasonable costs, expenses and liabilities incurred by the Owner
Trustee, the Indenture Trustee and the Participants as a result of the Lessee's
having given such notice. The Lessee may elect to pay the Early Purchase Price
in installments in the amounts (subject to reduction in the case of the first
installment if the Lessee elects to assume the Notes in
43
accordance with Section 12 of the Participation Agreement) and on the dates
set forth in Schedule 4; provided however, if the Lessee does not elect to
assume the Notes in accordance with Section 12 of the Participation Agreement,
after giving effect to the payment and application of the first installment of
the Early Purchase Price the Notes shall have been paid in full; provided
finally, that if the Lessee so elects to pay the Early Purchase Price in
installments, the Lessee (a) shall grant the Owner Trustee a Lien and security
interest in the Leased Property pursuant to agreements reasonably satisfactory
in scope, form and substance to the Owner Participant, securing the unpaid
amount of the Early Purchase Price (provided that Lessee may not elect this
option (a) if Lessee shall have assumed the Notes in accordance with Section of
the Participation Agreement), (b) shall provide a letter of credit in the amount
of the unpaid Early Purchase Price, in scope, form and substance reasonably
satisfactory to the Owner Participant, issued by a bank or trust company
organized under the laws of the United States or any State thereof, the long
term debt of which bank or trust company is rated A2, by Standard & Poor's
Ratings Group, a division of McGraw Hill, Inc., and A by Xxxxx'x Investors
Service, Inc., or (c) shall grant the Owner Trustee a Lien and security interest
in Property (other than the Leased Property) of the Lessee reasonably acceptable
to Owner Participant pursuant to agreements reasonably satisfactory in scope,
form and substance to the Owner Participant, securing the unpaid amount of the
Early Purchase Price.
(g) Site Reduction. If Lessee shall not have exercised any of its options
to purchase the Leased Property pursuant to this Section 19, as of the date
which is one year prior to the expiration of the Term of this Facility Lease,
the Lessee and the Lessor agree to effect a subdivision of the Site so that for
any period of time after the end of the Basic Term hereof, the "Site" shall
consist solely of the area sufficient and appropriate to operate the Facility
and the ClO//2// Facility and all easements necessary for the operation thereof.
Section 20. MISCELLANEOUS.
(a) No Waiver. No delay or omission to exercise any right, power or
---------
remedy accruing to the Owner Trustee upon any breach or default by the Lessee
under this Lease shall impair any such right, power or remedy of the Owner
Trustee, nor shall any such delay or omission be construed as a waiver of any
breach or default, or of any similar breach or default hereafter occurring; nor
shall any waiver of a single breach or default be deemed a waiver of any
subsequent breach or default. All waivers under this Lease must be in writing,
but any breach or default, once waived in writing, shall not be deemed to be
continuing for any purpose of the Operative Agreements. All remedies either
under this Lease or by law afforded to the Owner Trustee shall be cumulative and
not alternative. Any provision of this Lease prohibited by any law now or
hereafter in effect shall be ineffective to the extent of such provision without
invalidating the remaining provisions hereof.
(b) Right of Owner Trustee to Perform. If the Lessee shall fail to comply
---------------------------------
with the covenants herein contained, the Owner Trustee may, but shall not be
obligated to, (i) make advances to perform the same, and (ii) enter upon the
Leased Property to perform any and all acts required by the Lessee's covenants
herein contained and to take all such action thereon as in the Owner Trustee's
opinion may be necessary or appropriate therefor. All payments so made by the
Owner Trustee and all costs and expenses (including without limitation,
reasonable attorneys'
44
fees and expenses) incurred in connection therewith shall be payable by the
Lessee upon demand as additional rent hereunder, with interest at the Late Rate.
No entry shall be deemed an eviction of the Lessee or a repossession of the
Leased Property, and no such advance, performance or other act shall be deemed
to relieve the Lessee from any default hereunder.
(c) Notices. All communications under this Lease shall be in writing or by
-------
facsimile and any such notice shall become effective (i) upon personal delivery
thereof, including, 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 the following addresses as follows:
If to the Owner Trustee: Wilmington Trust Company,
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Corporate Trust Administration
with a copy to the Owner Participant
If to the Lessee: Xxxx & Talbot, Inc.
0000 XX Xxxxx Xxxxxx
Xxxxx 000
P.O. Box 8171
Xxxxxxxx, Xxxxxx 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
If to the Owner Participant: SELCO Service Corporation
c/o Key Equipment Finance
00 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000
Attn: Leveraged Lease Administrator
Ph. 000-000-0000
Fax 000-000-0000
Tax ID #: 00-0000000
with a copy to Guarantor
45
with a copy to OP Guarantor
If to the Noteholders: At their respective addresses
for notices set forth in the
Register referred to in the
Indenture
If to the Indenture Trustee: Xxxxx Fargo Bank Northwest, National Association
00 Xxxxx Xxxx Xxxxxx
Xxxx Xxxx Xxxx, Xxxx 00000
Attention: Corporate Trust Services
Fax: (000) 000-0000
or at such other place as any such party may designate by notice given in
accordance with this Section.
(d) Further Assurances. The Lessee will at its own expense, do, execute,
------------------
acknowledge and deliver all and every such further acts, deeds, conveyances,
transfers and assurances as the Owner Trustee or the Indenture Trustee may
reasonably request in order to protect the right, title and interest of the
Owner Trustee hereunder or under the Site Lease or the perfection or protection
of the Lien granted by the Indenture and the Deed of Trust. Without limiting
theforegoing, the Lessee agrees at its own expense to cause this Lease and all
supplements and amendments hereto, the Site Lease and all supplements and
amendments thereto, the Indenture and all supplements and amendments thereto,
the Deed of Trust and all supplements and amendments thereto and all financing
and continuation statements and similar notices required by Applicable Law at
all times to be kept recorded and filed in such manner and in such places as
theOwner Trustee or the Indenture Trustee may reasonably request in order to
protect the right, title and interest of the Owner Trustee hereunder or under
the Site Lease or to protect the rights of the Indenture Trustee under the
Indenture and the Deed of Trust. No such recording or filing shall constitute
an acknowledgment or implication by the Lessee that this Lease constitutes a
chattel mortgage or security agreement or creates a lien or security interest
under Applicable Law.
(e) Opinions of Counsel. The Lessee agrees at its own expense to furnish to the
-------------------
Owner Trustee, the ClO//2// Indenture Trustee and the Indenture Trustee
promptlyafter the execution and delivery of any supplement and amendment here
to,promptly after the execution and delivery of any supplement and amendment to
the Site Lease and promptly after the execution and delivery of any supplement
andamendment to the Indenture or the Deed of Trust, an opinion of counsel
reasonably satisfactory to the Owner Trustee and the Indenture Trustee (who may
be independent counsel to the Lessee) stating that in the opinion of such
counsel, such supplement or amendment to this Lease or such supplement or
amendment to the Site Lease or such supplement or amendment to the Indenture or
the Deed of Trust (or a financing statement, continuation statement or similar
notice thereof if and to the extent required by Applicable Law) has been
properly recorded or filed for record in all public offices in which such
recording or filing is necessary to protect the right, title and interest of
the Owner Trustee hereunder or under
46
the Site Lease or, as the case may be, to perfect (or continue the perfection
of) the Liens provided by the Indenture and the Deed of Trust as a valid Lien
and security interest in the Collateral.
(f) Successors and Assigns. This Lease shall be binding upon and shall
----------------------
inure to the benefit of, and shall be enforceable by, the Owner Trustee and the
Lessee and their respective successors and permitted assigns.
(g) Counterparts; Uniform Commercial Code. This Lease may be executed in
-------------------------------------
any number of counterparts, each counterpart constituting an original but all
together one Lease; provided, however, that to the extent that this Lease
constitutes chattel paper (as such term is defined in the Uniform Commercial
Code) no security interest in this Lease may be created through the transfer or
possession of any counterpart hereof other than the counterpart bearing the
receipt therefor executed by the Indenture Trustee on the signature page hereof,
which counterpart shall constitute the only "original" hereof for purposes of
the Uniform Commercial Code.
(h) Governing Law. THIS LEASE 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.
(i) Investment of Funds. The Owner Trustee (or if the Secured Indebtedness
-------------------
has not been fully satisfied and discharged, the Indenture Trustee) shall, upon
the written direction of the Lessee, invest and reinvest any funds from time to
time held by the Owner Trustee or the Indenture Trustee, as the case may be,
which constitute proceeds of insurance held by the Owner Trustee or the
Indenture Trustee, as the case may be, pursuant to Section 7 (referred to in
this paragraph as "Funds") in such direct obligations of the United States of
America or obligations for which the full faith and credit of the United States
is pledged to provide for the payment of principal and interest, maturing not
more than 90 days from the date of such investment, as may be specified in any
such direction. Upon any sale or payment of any such investment, the proceeds
thereof, plus any interest received by the Owner Trustee or the Indenture
Trustee, as the case may be, thereon shall be held by the Owner Trustee (or if
the Secured Indebtedness has not been fully satisfied and discharged, the
(Indenture Trustee) as part of the Fund from which such investment was made or
application as a part of such Fund. If such proceeds (plus such interest and
earned discount) shall be less than the cost of such investment, the Owner
Trustee or the Indenture Trustee, as the case may be, will not more than three
Business Days thereafter notify the Lessee of the amount of such deficiency and
the Lessee will promptly pay to the Owner Trustee an amount equal to such
deficiency. Any payment in respect of such deficiency shall be held and applied
by the Owner Trustee or the Indenture Trustee, as the case may be, as part of
the Fund from which such investment was made. The Lessee will pay all expenses
incurred by the Owner Trustee or the Indenture Trustee, as the case may be, in
connection with the purchase and sale of such investments
[signature page follows]
47
IN WITNESS WHEREOF, the Owner Trustee and the Lessee have
caused this Lease to be executed and delivered by their respective duly
authorized officers, all as of the date first above written.
WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner Trustee
By: s/s Xxxxx Xxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxx
Title: Financial Services Officer
XXXX & TALBOT, INC., as Lessee
By: s/s Xxxxxxx Xxxxxxxx
--------------------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President and Chief Executive Officer
By: s/s Xxxxx X. Xxxx
--------------------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President and Chief Financial Officer
This Facility Lease and the rentals and other sums due and to become due
hereunder have been assigned for security to and are subject to a security
interest in favor of Xxxxx Fargo Bank Northwest, National Association, as
Indenture Trustee under a Trust Indenture and Security Agreement dated as of
December 27, 2001 between said Indenture Trustee and the Owner Trustee
hereunder, as debtor. Information concerning such security interest may be
obtained from the Indenture Trustee at its address set forth in Section 20 of
this Facility Lease.
Receipt of this original counterpart of the foregoing Lease is hereby
acknowledged this 27th day of December, 2001.
XXXXX FARGO BANK NORTHWEST, NATIONAL
ASSOCIATION, as Indenture Trustee
By: s/s Xxxxx X. Xxxx
------------------------------
Name: Xxxxx X Xxxx
Title: Vice President
Schedule of Periodic Rent Percentages
Gross Net
Rent Periodic Periodic
Payment Rent Interest Rent
Date Payable* Credit Payable
9/30/99 2.573104 - 2.573104
1/2/00 5.034333 - 5.034333
7/2/00 5.034333 - 5.034333
1/2/01 5.034333 - 5.034333
7/2/01 5.034333 - 5.034333
1/2/02 5.034333 - 5.034333
7/2/02 5.034333 - 5.034333
1/2/03 5.034333 - 5.034333
7/2/03 5.034333 - 5.034333
1/2/04 5.034333 - 5.034333
7/2/04 5.034333 - 5.034333
1/2/05 5.173801 - 5.173801
7/2/05 5.173801 - 5.173801
1/2/06 6.149447 - 6.149447
7/2/06 6.149447 - 6.149447
1/2/07 17.707719 - 17.707719
7/2/07 18.260846 0.486077 17.774769
1/2/08 2.221823 0.837000 1.384824
7/2/08 1.521961 0.747651 0.774310
1/2/09 1.394788 0.620478 0.774310
7/2/09 7.894042 0.489814 7.404228
1/2/10 8.537606 0.537606 8.000000
7/2/10 0.603065 0.603065 -
1/2/11 0.450720 0.450720 -
7/2/11 0.294193 0.294193 -
1/2/12 0.149088 0.149088 -
--------------------------------------------------------------------------------
Total 134.598778 5.215691 129.383087
* Prepaid rents accrue interest at the December, 2001
110% Long-term AFR (5.49% semi-annual)
Schedule 1 to Facility Lease
Schedule of Periodic Rent Allocations
Allocated Rent
(Expressed as a percentage of Lessor's Cost)
From To and Including Allocated Rent*
9/30/99 1/1/00 2.573104
1/2/00 7/1/00 5.034333
7/2/00 1/1/01 5.034333
1/2/01 7/1/01 5.034333
7/2/01 1/1/02 5.034333
1/2/02 7/1/02 5.034333
7/2/02 1/1/03 5.034333
1/2/03 7/1/03 5.034333
7/2/03 1/1/04 5.034333
1/2/04 7/1/04 5.034333
7/2/04 1/1/05 5.034333
1/2/05 7/1/05 5.173801
7/2/05 1/1/06 5.173801
1/2/06 7/1/06 6.149447
7/2/06 1/1/07 6.149447
1/2/07 7/1/07 5.476779
7/2/07 1/1/08 5.476779
1/2/08 7/1/08 6.154859
7/2/08 1/1/09 6.154859
1/2/09 7/1/09 6.152970
7/2/09 1/1/10 6.152970
1/2/10 7/1/10 6.152975
7/2/10 1/1/11 6.152975
1/2/11 7/1/11 5.580342
7/2/11 1/2/12 5.580342
--------------------------------------------------------------------------------
Total 134.598778
* Stated as a percentage of Equipment Cost
Schedule 1A to Facility Lease
Schedule of Casualty Value
Determination Basic Casualty Prepaid Rent Amount of
Date Value* Rebate* Casualty Value*
--------------- ---------------- -------------- -----------------
10/2/1999 100.380263% 0.000000% 100.380263%
11/2/1999 101.193411% 0.000000% 101.193411%
12/2/1999 101.973541% 0.000000% 101.973541%
1/2/2000 102.756140% 0.000000% 102.756140%
2/2/2000 98.482403% 0.000000% 98.482403%
3/2/2000 99.245914% 0.000000% 99.245914%
4/2/2000 99.982995% 0.000000% 99.982995%
5/2/2000 100.722779% 0.000000% 100.722779%
6/2/2000 101.435919% 0.000000% 101.435919%
7/2/2000 102.151545% 0.000000% 102.151545%
8/2/2000 97.821081% 0.000000% 97.821081%
9/2/2000 98.498110% 0.000000% 98.498110%
10/2/2000 99.177429% 0.000000% 99.177429%
11/2/2000 99.859058% 0.000000% 99.859058%
12/2/2000 100.513647% 0.000000% 100.513647%
1/2/2001 101.170323% 0.000000% 101.170323%
2/2/2001 96.779866% 0.000000% 96.779866%
3/2/2001 97.425866% 0.000000% 97.425866%
4/2/2001 98.054259% 0.000000% 98.054259%
5/2/2001 98.684636% 0.000000% 98.684636%
6/2/2001 99.297265% 0.000000% 99.297265%
7/2/2001 99.911737% 0.000000% 99.911737%
8/2/2001 95.478161% 0.000000% 95.478161%
9/2/2001 96.061042% 0.000000% 96.061042%
10/2/2001 96.645639% 0.000000% 96.645639%
11/2/2001 97.231965% 0.000000% 97.231965%
12/2/2001 97.800286% 0.000000% 97.800286%
------------------------------------------------------------------------------------------------------
1/2/2002 97.688015% 0.000000% 97.688015%
2/2/2002 93.123368% 0.000000% 93.123368%
3/2/2002 93.594640% 0.000000% 93.594640%
4/2/2002 94.067512% 0.000000% 94.067512%
5/2/2002 94.526963% 0.000000% 94.526963%
6/2/2002 94.987907% 0.000000% 94.987907%
7/2/2002 95.435320% 0.000000% 95.435320%
8/2/2002 90.832783% 0.000000% 90.832783%
9/2/2002 91.265975% 0.000000% 91.265975%
10/2/2002 91.685538% 0.000000% 91.685538%
11/2/2002 92.106386% 0.000000% 92.106386%
12/2/2002 92.528530% 0.000000% 92.528530%
1/2/2003 92.936945% 0.000000% 92.936945%
2/2/2003 88.182444% 0.000000% 88.182444%
3/2/2003 88.463469% 0.000000% 88.463469%
4/2/2003 88.745700% 0.000000% 88.745700%
5/2/2003 89.016327% 0.000000% 89.016327%
6/2/2003 89.288064% 0.000000% 89.288064%
*Stated as a percentage of C1O2 Facility Cost
Schedule 2
(to Facility Lease) 1 of 4
Schedule of Casualty Value
Determination Basic Casualty Prepaid Rent Amount of
Date Value* Rebate* Casualty Value*
--------------- ---------------- -------------- -----------------
7/2/2003 89.548102% 0.000000% 89.548102%
8/2/2003 84.756263% 0.000000% 84.756263%
9/2/2003 84.999779% 0.000000% 84.999779%
10/2/2003 85.231509% 0.000000% 85.231509%
11/2/2003 85.464163% 0.000000% 85.464163%
12/2/2003 85.697751% 0.000000% 85.697751%
1/2/2004 85.919461% 0.000000% 85.919461%
2/2/2004 81.191140% 0.000000% 81.191140%
3/2/2004 81.497993% 0.000000% 81.497993%
4/2/2004 81.805695% 0.000000% 81.805695%
5/2/2004 82.104866% 0.000000% 82.104866%
6/2/2004 82.404816% 0.000000% 82.404816%
7/2/2004 82.696165% 0.000000% 82.696165%
8/2/2004 77.933630% 0.000000% 77.933630%
9/2/2004 78.206143% 0.000000% 78.206143%
10/2/2004 78.469988% 0.000000% 78.469988%
11/2/2004 78.734475% 0.000000% 78.734475%
12/2/2004 78.999609% 0.000000% 78.999609%
1/2/2005 79.256010% 0.000000% 79.256010%
2/2/2005 74.482631% 0.000000% 74.482631%
3/2/2005 74.883631% 0.000000% 74.883631%
4/2/2005 75.285216% 0.000000% 75.285216%
5/2/2005 75.683605% 0.000000% 75.683605%
6/2/2005 76.082555% 0.000000% 76.082555%
7/2/2005 76.478285% 0.000000% 76.478285%
8/2/2005 71.677550% 0.000000% 71.677550%
9/2/2005 72.051156% 0.000000% 72.051156%
10/2/2005 72.421523% 0.000000% 72.421523%
11/2/2005 72.792407% 0.000000% 72.792407%
12/2/2005 73.163812% 0.000000% 73.163812%
1/2/2006 73.531959% 0.000000% 73.531959%
2/2/2006 67.719629% 0.000000% 67.719629%
3/2/2006 68.057246% 0.000000% 68.057246%
4/2/2006 68.395369% 0.000000% 68.395369%
5/2/2006 68.739662% 0.000000% 68.739662%
6/2/2006 69.084522% 0.000000% 69.084522%
7/2/2006 69.435613% 0.000000% 69.435613%
8/2/2006 63.604948% 0.000000% 63.604948%
9/2/2006 63.924363% 0.000000% 63.924363%
10/2/2006 64.250078% 0.000000% 64.250078%
11/2/2006 64.576490% 0.000000% 64.576490%
12/2/2006 64.903605% 0.000000% 64.903605%
1/2/2007 60.423188% 0.000000% 60.423188%
2/2/2007 64.626761% 16.883852% 47.742909%
3/2/2007 64.017207% 16.059985% 47.957222%
*Stated as a percentage of C1O2 Facility Cost
Schedule 2
(to Facility Lease)
2 of 4
Schedule of Casualty Value
Determination Basic Casualty Prepaid Rent Amount of
Date Value* Rebate* Casualty Value*
------------- -------------- ------------ ---------------
4/2/2007 63.408434% 51.236118% 48.172316%
5/2/2007 62.811475% 14.412250% 48.399225%
6/2/2007 62.215414% 13.588383% 48.627031%
7/2/2007 61.631282% 12.764516% 48.866766%
8/2/2007 60.980438% 29.706766% 31.273672%
9/2/2007 60.330616% 28.941296% 31.389320%
10/2/2007 59.692852% 28.175826% 31.517026%
11/2/2007 59.056230% 27.410357% 31.645873%
12/2/2007 58.420760% 26.644887% 31.775873%
1/2/2008 57.797478% 25.879418% 31.918061%
2/2/2008 57.030557% 26.363755% 30.666802%
3/2/2008 56.264920% 25.463268% 30.801652%
4/2/2008 55.500581% 24.562781% 30.937800%
5/2/2008 54.751646% 23.662294% 31.089352%
6/2/2008 54.004161% 22.761808% 31.242353%
7/2/2008 53.272233% 21.861321% 31.410912%
8/2/2008 52.509548% 21.713968% 30.795580%
9/2/2008 51.748379% 20.792305% 30.956073%
10/2/2008 51.002836% 19.870643% 31.132194%
11/2/2008 50.258967% 18.948980% 31.309987%
12/2/2008 49.516786% 18.027318% 31.489468%
1/2/2009 48.790404% 17.105655% 31.684749%
2/2/2009 48.033261% 16.968800% 31.096381%
3/2/2009 47.277880% 15.993795% 31.284085%
4/2/2009 46.524279% 15.050711% 31.473568%
5/2/2009 45.787020% 14.107626% 31.679394%
6/2/2009 45.051705% 13.164542% 31.887164%
7/2/2009 44.332901% 12.221457% 32.111444%
8/2/2009 43.516562% 18.757944% 24.758619%
9/2/2009 42.701372% 17.823153% 24.878219%
10/2/2009 41.901888% 16.888361% 25.013527%
11/2/2009 41.103706% 15.953570% 25.150136%
12/2/2009 40.306837% 15.018779% 25.288058%
1/2/2010 39.525841% 14.083988% 25.441853%
2/2/2010 38.641677% 21.160136% 17.481542%
3/2/2010 37.757944% 20.236284% 17.521660%
4/2/2010 36.874644% 19.312432% 17.562213%
5/2/2010 36.006293% 18.388580% 17.617714%
6/2/2010 35.138516% 17.464727% 17.673789%
7/2/2010 34.285829% 16.540875% 17.744954%
8/2/2010 33.408500% 15.591664% 17.816836%
9/2/2010 32.531893% 14.642452% 17.889441%
10/2/2010 31.670527% 13.693240% 17.977287%
11/2/2010 30.810030% 12.744028% 18.066002%
12/2/2010 29.950409% 11.794816% 18.155593%
*Stated as a percentage of C102 Facility Cost
Schedule 2
(to Facility Lease)
3 of 4
Schedule of Casualty Value
Determination Basic Casualty Prepaid Rent Amount of
Date Value* Rebate* Casualty Value*
------------- -------------- ------------ ---------------
1/2/2011 29.106184% 10.845604% 18.260580%
2/2/2011 28.328176% 9.954041% 18.374135%
3/2/2011 27.551202% 9.062477% 18.488725%
4/2/2011 26.775272% 8.170913% 18.604358%
5/2/2011 26.014589% 7.279350% 18.735239%
6/2/2011 25.255099% 6.387786% 18.867312%
7/2/2011 24.511005% 5.496222% 19.014783%
8/2/2011 23.743782% 4.580185% 19.163597%
9/2/2011 22.977915% 3.664148% 19.313766%
10/2/2011 22.227609% 2.748111% 19.479498%
11/2/2011 21.478813% 1.832074% 19.646739%
12/2/2011 20.731541% 0.916037% 19.815504%
1/2/2012 20.000000% 0.000000% 20.000000%
*Stated as percentage of ClO2 Facility Cost
Schedule 2
(to Facility Lease)
4 of 4
Schedule of Termination Value
Termination Basic Termination Prepaid Rent Amount of
Date Value* Rebate* Termination Value*
----------- ----------------- ------------ ------------------
10/2/1999 100.380263% 0.000000% 100.380263%
11/2/1999 101.193411% 0.000000% 101.193411%
12/2/1999 101.973541% 0.000000% 101.973541%
1/2/2000 102.756140% 0.000000% 102.756140%
2/2/2000 98.482403% 0.000000% 98.482403%
3/2/2000 99.245914% 0.000000% 99.245914%
4/2/2000 99.982995% 0.000000% 99.982995%
5/2/2000 100.722779% 0.000000% 100.722779%
6/2/2000 101.435919% 0.000000% 101.435919%
7/2/2000 102.151545% 0.000000% 102.151545%
8/2/2000 97.821081% 0.000000% 97.821081%
9/2/2000 98.498110% 0.000000% 98.498110%
10/2/2000 99.177429% 0.000000% 99.177429%
11/2/2000 99.859058% 0.000000% 99.859058%
12/2/2000 100.513647% 0.000000% 100.513647%
1/2/2001 101.170323% 0.000000% 101.170323%
2/2/2001 96.779866% 0.000000% 96.779866%
3/2/2001 97.425866% 0.000000% 97.425866%
4/2/2001 98.054259% 0.000000% 98.054259%
5/2/2001 98.684636% 0.000000% 98.684636%
6/2/2001 99.297265% 0.000000% 99.297265%
7/2/2001 99.911737% 0.000000% 99.911737%
8/2/2001 95.478161% 0.000000% 95.478161%
9/2/2001 96.061042% 0.000000% 96.061042%
10/2/2001 96.645639% 0.000000% 96.645639%
11/2/2001 97.231965% 0.000000% 97.231965%
12/2/2001 97.800286% 0.000000% 97.800286%
------------------------------------------------------------------
1/2/2002 97.688015% 0.000000% 97.688015%
2/2/2002 93.123368% 0.000000% 93.123368%
3/2/2002 93.594640% 0.000000% 93.594640%
4/2/2002 94.067512% 0.000000% 94.067512%
5/2/2002 94.526963% 0.000000% 94.526963%
6/2/2002 94.987907% 0.000000% 94.987907%
7/2/2002 95.435320% 0.000000% 95.435320%
8/2/2002 90.832783% 0.000000% 90.832783%
9/2/2002 91.265975% 0.000000% 91.265975%
10/2/2002 91.685538% 0.000000% 91.685538%
11/2/2002 92.106386% 0.000000% 92.106386%
12/2/2002 92.528530% 0.000000% 92.528530%
1/2/2003 92.936945% 0.000000% 92.936945%
2/2/2003 88.182444% 0.000000% 88.182444%
3/2/2003 88.463469% 0.000000% 88.463469%
4/2/2003 88.745700% 0.000000% 88.745700%
5/2/2003 89.016327% 0.000000% 89.016327%
6/2/2003 89.288064% 0.000000% 89.288064%
*Stated as a percentage of C1O2 Facility Cost
Schedule 3
(to Facility Lease)
1 of 4
Schedule of Termination Value
Termination Basic Termination Prepaid Rent Amount of
Date Value* Rebate* Termination Value*
----------- ----------------- ------------ ------------------
7/2/2003 89.548102% 0.000000% 89.548102%
8/2/2003 84.756263% 0.000000% 84.756263%
9/2/2003 84.999779% 0.000000% 84.999779%
10/2/2003 85.231509% 0.000000% 85.231509%
11/2/2003 85.464163% 0.000000% 85.464163%
12/2/2003 85.697751% 0.000000% 85.697751%
1/2/2004 85.919461% 0.000000% 85.919461%
2/2/2004 81.191140% 0.000000% 81.191140%
3/2/2004 81.497993% 0.000000% 81.497993%
4/2/2004 81.805695% 0.000000% 81.805695%
5/2/2004 82.104866% 0.000000% 82.104866%
6/2/2004 82.404816% 0.000000% 82.404816%
7/2/2004 82.696165% 0.000000% 82.696165%
8/2/2004 77.933630% 0.000000% 77.933630%
9/2/2004 78.206143% 0.000000% 78.206143%
10/2/2004 78.469988% 0.000000% 78.469988%
11/2/2004 78.734475% 0.000000% 78.734475%
12/2/2004 78.999609% 0.000000% 78.999609%
1/2/2005 79.256010% 0.000000% 79.256010%
2/2/2005 74.482631% 0.000000% 74.482631%
3/2/2005 74.883631% 0.000000% 74.883631%
4/2/2005 75.285216% 0.000000% 75.285216%
5/2/2005 75.683605% 0.000000% 75.683605%
6/2/2005 76.082555% 0.000000% 76.082555%
7/2/2005 76.478285% 0.000000% 76.478285%
8/2/2005 71.677550% 0.000000% 71.677550%
9/2/2005 72.051156% 0.000000% 72.051156%
10/2/2005 72.421523% 0.000000% 72.421523%
11/2/2005 72.792407% 0.000000% 72.792407%
12/2/2005 73.163812% 0.000000% 73.163812%
1/2/2006 73.531959% 0.000000% 73.531959%
2/2/2006 67.719629% 0.000000% 67.719629%
3/2/2006 68.057246% 0.000000% 68.057246%
4/2/2006 68.395369% 0.000000% 68.395369%
5/2/2006 68.739662% 0.000000% 68.739662%
6/2/2006 69.084522% 0.000000% 69.084522%
7/2/2006 69.435613% 0.000000% 69.435613%
8/2/2006 63.604948% 0.000000% 63.604948%
9/2/2006 63.924363% 0.000000% 63.924363%
10/2/2006 64.250078% 0.000000% 64.250078%
11/2/2006 64.576490% 0.000000% 64.576490%
12/2/2006 64.903605% 0.000000% 64.903605%
1/2/2007 60.423188% 0.000000% 60.423188%
2/2/2007 64.626761% 16.883852% 47.742909%
3/2/2007 64.017207% 16.059985% 47.957222%
*Stated as a percentage of C1O2 Facility Cost
Schedule 3
(to Facility Lease)
2 of 4
Schedule of Termination Value
Termination Basic Termination Prepaid Rent Amount of
Date Value* Rebate* Termination Value*
---------- ----------------- ------------ ------------------
4/2/2007 63.408434% 15.236118% 48.172316%
5/2/2007 62.811475% 14.412250% 48.399225%
6/2/2007 62.215414% 13.588383% 48.627031%
7/2/2007 61.631282% 12.764516% 48.866766%
8/2/2007 60.980438% 29.706766% 31.273672%
9/2/2007 60.330616% 28.941296% 31.389320%
10/2/2007 59.692852% 28.175826% 31.517026%
11/2/2007 59.056230% 27.410357% 31.645873%
12/2/2007 58.420760% 26.644887% 31.775873%
1/2/2008 57.797478% 25.879418% 31.918061%
2/2/2008 57.030557% 26.363755% 30.666802%
3/2/2008 56.264920% 25.463268% 30.801652%
4/2/2008 55.500581% 24.562781% 30.937800%
5/2/2008 54.751646% 23.662294% 31.089352%
6/2/2008 54.004161% 22.761808% 31.242353%
7/2/2008 53.272233% 21.861321% 31.410912%
8/2/2008 52.509548% 21.713968% 30.795580%
9/2/2008 51.748379% 20.792305% 30.956073%
10/2/2008 51.002836% 19.870643% 31.132194%
11/2/2008 50.258967% 18.948980% 31.309987%
12/2/2008 49.516786% 18.027318% 31.489468%
1/2/2009 48.790404% 17.105655% 31.684749%
2/2/2009 48.033261% 16.936880% 31.096381%
3/2/2009 47.277880% 15.993795% 31.284085%
4/2/2009 46.524279% 15.050711% 31.473568%
5/2/2009 45.787020% 14.107626% 31.679394%
6/2/2009 45.051705% 13.164542% 31.887164%
7/2/2009 44.332901% 12.221457% 32.111444%
8/2/2009 43.516562% 18.757944% 24.758619%
9/2/2009 42.701372% 17.823153% 24.878219%
10/2/2009 41.901888% 16.888361% 25.013527%
11/2/2009 41.103706% 15.953570% 25.150136%
12/2/2009 40.306837% 15.018779% 25.288058%
1/2/2010 39.525841% 14.083988% 25.441853%
2/2/2010 38.641677% 21.160136% 17.481542%
3/2/2010 37.757944% 20.236284% 17.521660%
4/2/2010 36.874644% 19.312432% 17.562213%
5/2/2010 36.006293% 18.388580% 17.617714%
6/2/2010 35.138516% 17.464727% 17.673789%
7/2/2010 34.285829% 16.540875% 17.744954%
8/2/2010 33.408500% 15.591664% 17.816836%
9/2/2010 32.531893% 14.642452% 17.889441%
10/2/2010 31.670527% 13.693240% 17.977287%
11/2/2010 30.810030% 12.744028% 18.066002%
12/2/2010 29.950409% 11.794816% 18.155593%
*Stated as a percentage of C102 Facility Cost
Schedule 3
(to Facility Lease)
3 of 4
Schedule of Termination Value
Termination Basic Termination Prepaid Rent Amount of
Date Value* Rebate* Termination Value*
---------- ----------------- ------------ ------------------
1/2/2011 29.106184% 10.845604% 18.260580%
2/2/2011 28.328176% 9.954041% 18.374135%
3/2/2011 27.551202% 9.062477% 18.488725%
4/2/2011 26.775272% 8.170913% 18.604358%
5/2/2011 26.014589% 7.279350% 18.735239%
6/2/2011 25.255099% 6.387786% 18.867312%
7/2/2011 24.511005% 5.496222% 19.014783%
8/2/2011 23.743782% 4.580185% 19.163597%
9/2/2011 22.977915% 3.664148% 19.313766%
10/2/2011 22.227609% 2.748111% 19.479498%
11/2/2011 21.478813% 1.832074% 19.646739%
12/2/2011 20.731541% 0.916037% 19.815504%
1/2/2012 20.000000% 0.000000% 20.000000%
*Stated as a percentage of C102 Facility Cost
Schedule 3
(to Facility Lease)
4 of 4
Schedule of Early Purchase Date,
Early Purchase Price and Installment Amounts and Dates
Early Purchase Date 1/2/2007
Early Purchase Amount $38,959,002.49
Early
Installment Purchase Price
Dates Installments
----------- --------------
1/2/2007 $25,077,548.41
4/15/2007 $ 3,470,363.52
6/15/2007 $ 3,470,363.52
9/15/2007 $ 3,470,363.52
12/15/2007 $ 3,470,363.52
Schedule 4
(to Facility Lease)
Description of
Major Components of the Facility
--------------------------------
o PULP DRYER: The Flakt pulp dryer machine was originally built in 1970,
purchased in 1993, and rebuilt and installed in Xxxxxx in 1994. The pulp
dryer has the capability of drying 650 air-dried metric tons per day of
bleached kraft market pulp.
o RECOVERY BOILER: Xxxxxxx & Xxxxxx XX-125, 400 ton per day recovery boiler
was installed in 1968. It was designed for 223,000 pounds per hour steam
output. Design pressure of the boiler is 400 psi; design pressure for the
economizer is 425 psi; steam condition at the outlet of 350 psi; solids
throughput per day of 1,230,000 pounds. Currently operating at 1,900,000
pounds of dry solid per day.
o LIME KILN: Xxxxx-Xxxxxxxx 9 feet diameter by 250 feet long rotary kiln, SN
96441, installed in 1968.
o EVAPORATORS: Six-Effect Evaporator system capable of processing 2,400,000
pounds of solids per day. Xxxxxxxx three body concentrator with liquor heat
treatment system allowing 75% solids liquor to be delivered to the recovery
boiler for burning.
o DIGESTERS: Complete pulp digesting system including structure consisting of
three M&D continuous wood digesters capable of producing 600 tons per day
of unbleached wood pulp.
o OXYGEN DELIGNIFICATION SYSTEM: Complete oxygen delignification system
capable of processing 600 tons per day of unbleached kraft pulp. Consisting
of a medium consistency oxygen reactor and two post oxygen wash presses.
o BLEACH PLANT: Complete pulp bleaching system, including structure, four
pulp washers, tankage, and pumps, capable of producing 500 tons per day of
bleach kraft pulp.
o AIR COMPRESSORS: Complete compressed air center consisting of three Joy
rotary air compressors, and all appropriate equipment, capable of producing
approximately 4,500 CFM of compressed air at 90 psi operating pressure.
o SERVICE BUILDING: Complete three story reinforced concrete service
building, approximately 49,000 square feet of working area, housing
administrative offices and complete maintenance shop facilities with
machine shop, electrical shop, instrument shop, auto shop and parts
storage.
Exhibit A
(to Facility Lease)
Description of the Facility
---------------------------
The pulp mill in Halsey, Oregon, including the Major Components described on
Exhibit A to this Facility Lease and all other equipment and improvements, if
any, constructed or installed or to be constructed or installed on the Site for
use as or in connection with such pulp mill, and any and all appliances, parts,
instruments, appurtenances, accessories and other equipment and improvements of
whatever nature from time to time incorporated in or installed as part of such
pulp mill which are the property of the Owner Trustee pursuant to the terms of
this Facility Lease, but excluding, however, (i) spare parts and (ii) any
Alterations to the Facility as to which title remains with the Lessee pursuant
to and within the limitations of Section 8(f)(ii) of this Facility Lease and
(iii) for the avoidance of doubt, all tax benefits and tax attributes of any
Alterations on which work is started after December 27, 2001.
Exhibit B
(to Facility Lease)
Legal Description
PARCEL I:
TRACT I: A parcel of land located in Sections 2 and 3 of Township 14 South,
Range 4 West, and in Sections 34 and 35 of Township 13 South, Range 4 West of
the Willamette Meridian, in the County of Linn, State of Oregon, more
particularly described as follows: Beginning at the East Quarter Corner of
Section 2 in Township 14 South, Range 4 West of the Willamette Meridian in Linn
County, Oregon; thence run North 00 degrees 20'58" East, along the East line of
said Section 2, a distance of 988.19 feet to a point marked by a 1-1/2 inch iron
pipe; thence leaving said section line and run West, parallel with the South
line of the Northeast Quarter of said Section 2, a distance of 2637.67 feet to a
point in the center of Muddy Creek; thence run downstream, along the centerline
of said Muddy Creek, to a point that is 19.50 chains South of the North line of
said Section 2, (said point bears North 43 degrees 40'44" West 698.38 feet from
the last mentioned point in the center of Muddy Creek), said point being
referenced by a 5/8 inch iron rod which bears North 88 degrees 25'57" West
161.90 feet; from said point in the center of Muddy Creek run North 88 degrees
35'57" West, parallel with and 19.50 chains Southerly of (when measured at right
angles) the North line of said Section 2, a distance of 1087.0 feet to a point
that is 1131.90 feet South 88 degrees 35'57" East of a point on the West line of
said Section 2 that is 19.50 chains South of the Northwest corner of said
Section 2; thence run North 00 degrees 36'36" West, parallel with the West line
of said Section 2, a distance of 1670.42 feet to a point on the South bank of
Muddy Creek; thence run Westerly, along the South bank of said Muddy Creek, to a
point on the East line of Xxxxx Xxxx Donation Land Claim No. 53; thence run
North 00 degrees 25'07" West, along said claim line, 982.45 feet to the
Northeast corner of said Xxxxx Xxxx Donation Land Claim No. 53; thence North 89
degrees 58'28" West, along the North line of said Xxxxx Xxxx Donation Land Claim
No. 53, a distance of 3795.63 feet to the Northwest corner of said Claim No. 53;
thence continuing North 89 degrees 58'28" West 190.24 feet; thence South 00
degrees 22'09" East 40.0 feet to a point marked by a railroad spike marking the
Southerly right of way of Market Road No. 3 and the center of an asphalt roadway
to the American Can Company plant; from said railroad spike run South 00 degrees
22' 09" east, along the center of an asphalt roadway to the American Can Company
plant; from said railroad spike run South 00 degrees 22'09" East, along the
center of said asphalt roadway, a distance of 3155.50 feet to a point referenced
by a railroad spike; thence along the arc of an 897.25 foot radius curve right,
(the long chord of which bears South 14 degrees 36' 21" West 463.70 feet), a
distance of 469.02 feet; thence continuing along said roadway center, South 29
degrees 34'52" West 42.04 feet; thence along the arc of a 554.81 foot radius
curve left, (the long chord of which bears South 14 degrees 56'03" West 280.58
feet), a distance of 283.66 feet to a point referenced by a railroad spike;
thence South 00 degrees 17'15" West 175.39 feet to a point referenced by a
railroad spike; thence along the arc of a 177.99 foot
(Continued)
Exhibit C-1
Legal Description
radius curve left, (the long chord of which bears South 45 degrees 02'03"
East 253.13 feet), a distance of 281.58 feet to a point referenced by a railroad
spike, (said point bears South 57 degrees 29'04" West 267.90 feet from the
Southwest corner of the Xxxxx Xxxx Donation Land Claim No. 50); thence run North
89 degrees 38'39" East 1157.19 feet to a point referenced by a 5/8 inch iron
rod; thence South 00 degrees 25'33" East 294.29 feet to a point; thence North 89
degrees 39'48" East 600.0 feet to a point marked by a 5/8 inch iron rod; thence
South 45 degrees 20'12" East 565.69 feet to a point marked by a 5/8 inch iron
rod; thence South 00 degrees 20'12" East 185.75 feet to a point marked by a 5/8
inch iron rod; thence North 89 degrees 39'48" West 585.75 feet to a point
referenced by a 5/8 inch iron rod; thence North 89 degrees 39'48" East 4345.91
feet to a point on the East line of Section 2 that is 377.33 feet South 00
degrees 03'26" East of the East Quarter Corner of said Section 2; thence run
North 00 degrees 03'26" West 377.33 feet to the point of beginning, in Linn
County, Oregon. EXCEPTING THEREFROM, those portions lying within Powerline Road
and Market Road No. 3.
TRACT II:
A parcel of land located in Xxxxxxx 0, Xxxxxxxx 00 Xxxxx, Xxxxx 4
West of the Willamette Meridian, in the County of Linn, State of Oregon, more
particularly described as follows:
Commencing at the East Quarter Corner of Section 2 in Township 14 South,
Range 4 West of the Willamette Meridian; thence South 00 degrees 03'26" East,
along the East line of said Section 2, a distance of 377.33 feet to a point;
thence South 89 degrees 39'48" West 4345.91 feet to a point referenced by a 5/8
inch iron rod; thence South 00 degrees 20'12" East 585.75 feet to a point
referenced by a 5/8 inch iron rod; thence South 89 degrees 39'48" West 2187.85
feet to a point marked by a 5/8 inch iron rod, being the true point of beginning
of the herein described tract; thence North 00 degrees 20'12" West 185.75 feet
to a point marked by a 5/8 inch iron rod; thence North 45 degrees 20'12" West
565.69 feet to a point; thence South 89 degrees 39'48" West 435.00 feet; thence
South 00 degrees 25'38" East 585.76 feet; thence North 89 degrees 39'48" East
834.09 feet to the true point of beginning.
PARCEL II:
TRACT I:
A parcel of land located Xxxxxxx 00, Xxxxxxxx 00 Xxxxx, Xxxxx 0 Xxxx Xxxxxxxxxx
Xxxxxxxx, Xxxx Xxxxxx, Xxxxxx described as follows: Commencingat a stone marking
the Northeast corner of the Xxxxxxx Xxxxxx Donation LandClaim No. 37 in Section
34, Township 13 South, Range 4 West of the Willamette Meridian, Linn County,
Oregon; thence North 89 degrees 53'30" West along the North line of said Claim
No. 37 a distance of 282.66 feet to its intersection with the Westerly right
(Continued)
Exhibit C-2
Legal Description
of way line of the Oregon Electric Railroad property; thence North 1 degree
22' East along the Westerly right of way line of said Oregon Electric Railroad
property 1698.37 feet to a point on the South right of way line of County Road
No. 217, said point being 30.0 feet distant Southerly from the South line of the
Xxxx X. Xxxxx Donation Land Claim No. 55 in said Township and Range, said point
being marked by a 5/8 inch iron rod; thence run North 89 degrees 46'22" West
along the South line of County Road 217 a distance of 2034.46 feet to a point on
the South right of way line of County Road No. 217, said point being 30.00 feet
distant Southerly from the Northwest corner of the X.X. Xxxxxxxxx Donation Land
Claim No. 54 in said Township and Range; thence North 89 degrees 32'55" West
364.96 feet to the point of beginning of the herein described tract; thence
North 89 degrees 32' 55" West 428.00 feet; thence North 00 degrees 06'42" East
along the West line of said County Road No. 217, a distance of 753.40 feet;
thence Northwesterly along the arc of a 161.00 foot radius curve to the left
(the chord of which bears North 44 degrees 53'42" West 227.65 feet) to the end
of said curve; thence North 89 degrees 54'04" West along the South line of said
County Road No. 217 a distance of 1843.50 feet to a point on the South right of
way line of County Road No. 217, said point being 30.00 feet distant Southerly
from the Northeast corner of the Xxxxxxx X. Xxxxxxxxx Donation Land Claim No. 40
in said Township and Range; thence North 89 degrees 54'48" West along the South
of said County Road No. 217 a distance of 151.08 feet; thence leaving the South
line of said County Road No. 217; thence continuing South 806.50 feet to a point
on the Easterly right of way of the relocated portion of Market Road No. 3 (an
80.00 foot right of way), said point being referenced by a 5/8 inch iron rod;
thence Southerly along the Easterly right of way of said relocated Xxxxxx Xxxx
Xx. 0 along the arc of a 1185.92 foot radius curve to the right (the chord of
which bears South 7 degrees 28'59" East 310.76 feet) to the end of said curve;
thence continuing along the Easterly right of way line of said relocated Xxxxxx
Xxxx Xx. 0 Xxxxx 00 degrees 02'44" West 1455.56 feet to the beginning of a
1105.92 foot radius curve to the left; thence Southeasterly along the arc of a
1105.92 foot radius curve to the left (the chord of which bears South 44 degrees
57'31" East 1564.02 feet) to the end of said curve; thence South 89 degrees
57'26" East along the Northerly right of way of said relocated Xxxxxx Xxxx Xx. 0
a distance of 1432.04 feet to a point; thence North 00 degrees 06'42" East
2756.52 feet to the point of beginning.
(Continued)
Exhibit C - 3
Legal Description
TRACT II:
Beginning at the Southeast corner of the Xxxxxxx Xxxxxx Donation Land Claim
No. 40 in Township 14 South, Range 4 West of the Willamette Meridian and Claim
No. 37 in Township 13 South, Range 4 West of the willamette Meridian thence run
north 89 degrees 51'47" West 4717.0 feet to the Northeast corner of the Xxxxx
Xxxxx Donation Land Claim No. 41; thence continue North 89 degrees 51'47" West
along the South line of said Xxxxxxx Xxxxxx Donation Land Claim No. 40 a
distance of 522.76 feet; thence run North 00 degrees 23'07" East 1366.02 feet to
a point marked by a 3/4 inch pipe marking the true point of beginning of the
herein described tract; thence North 00 degrees 23'07" East 1077.72 feet to a
point on the Southerly right of way of the relocated portion of Market Road No.
3 (an 80 foot right of way); thence run Southeasterly along said right of way
line of an 1185.92 foot radius curve left (the chord of which bears South 52
degrees 21'28" East 1447.12 feet to a point marking the end of curve; thence
South 89 degrees 57'26" East along said right of way line 3659.40 feet to a
point marked by an iron rod, said iron rod being 160 feet West of (when measured
at right angles) the centerline of the Oregon Electric Railroad; thence run
South 1 degree 22' West parallel with said Oregon Electric Railroad centerline
202.69 feet to a point marked by a 5/8 inch iron rod, said point being 1366.0
feet North of the South line of the said Xxxxxxx Xxxxxx Donation Land Claim No.
40; thence run North 89degree 51' 47" West 4807.75 feet to the true point of
beginning in Linn County, Oregon.
PARCEL III:
Beginning at the Northwest corner of the Xxxxxxx Xxxxxxxx Donation Land Claim
No. 39; Notification No. 2562 in Township 13 South, Range 0 Xxxx xx xxx
Xxxxxxxxxx Xxxxxxxx, Xxxx xxxxxx, Xxxxxx; run thence South 89 degrees 38'53"
East along the North line of said Xxxxxxx Xxxxxxxx Claim 561.0 feet to a point
marked by a 5/8 inch iron rod, said point being 334.62 feet North 89 degrees
38'53" West of a stone found on the North line of said Xxxxxxx Xxxxxxxx Claim
which is marking the Southwest corner of the Xxxx XxXxxx Donation Land Claim No.
41 in said township and range; thence South 100.0 feet to a 5/8 inch iron rod;
thence South 89 degrees 38'53" East parallel to the north line of said Claim No.
39, a distance of 435.60 feet to a point marked by a 5/8 inch iron rod; thence
North 100.0 feet to a point on the North line of said Claim No. 39, said point
being 100.98 feet South 89 degrees 38'53" East of the forementioned stone
marking the Southwest corner of the Xxxx XxXxxx Claim No. 41; thence South 89
degrees 38'53" East along the north line of said Claim No. 39, a distance of
1676.40 feet to a point that is 2673.0 feet South 89 degrees 38'53" East of the
forementioned Northwest corner of the Xxxxxxx Xxxxxxxx Claim; thence South 00
degrees 19'29" West parallel to the East line of said Xxxxxxx Xxxxxxxx Donation
Land Claim 1856.58 feet to a point marked by 5/8 inch iron rod; thence North 89
degrees 38'53" West parallel to the North line of said Xxxxxxx
(Continued)
Exhibit C - 4
Legal Description
Shepherd Claim a distance of 186.72 feet to a point marked by a 5/8 inch
iron rod; thence South 00 degree 20'21" West along a line fence 2098.38 feet to
a point marked by a 5/8 inch iron rod; said iron rod being 242.63 feet North 00
degree 20'21" East of a stone found marking the South line of the forementioned
Xxxxxxx Xxxxxxxx Donation Land Claim; thence South 89 degrees 51'02" East
1406.38 feet to a 1 1/2 inch iron pipe found marking Southerly Southwest corner
of that certain tract of land conveyed to Xxxxxx Xxx Xxxxx and Xxxxxxx Xxxxxxx
Xxxxx in Deed Recorded November 5, 1958 in Book 262, page 450, Linn County,
Oregon deed Records; continuing South 89 degrees 51'02" East along the South
boundary of said Xxxxx property 2111.55 feet to a point on the West line of the
Xxxxxxx Xxxxxx Donation Land Claim No. 37 in said township and range, said point
being 1292.28 feet South 00 degrees 16'41" West of the Northwest corner of said
Xxxxxxx Xxxxxx Donation Land Claim; run thence South 00 degrees 16'41" West
along the West line of said claim 100.0 feet, said point being marked by 5/8
inch iron rod; thence North 89 degrees 51'02" West 3518.02 feet to a point
marked by 5/8 inch iron rod, said iron rod being 142.63 feet North 00 degrees
20'21" East of the aforementioned Stone marking the South line of the Xxxxxxx
Xxxxxxxx Donation Land Claim; thence South 00 degrees 28'21" West 142.63 feet to
the said stone; thence run South 89 degrees 53'16" West along the South line of
said Donation Land Claim No. 39, a distance of 1233.53 feet to the Southwest
corner thereof; thence following the meanders of the Willamette River downstream
on the following courses and distances; North 5 degrees 30' West 1018.38 feet,
North 21 degrees West 495.0 feet, North 30 degrees 45'West 844.80 feet, North 67
degrees West 462.0 feet, North 44 degree 30' West 184.80 feet to a point that
bears South from the point of beginning; thence run North along the West line of
said Claim No. 39 a distance of 1687.62 feet to the point of beginning in Linn
county, Oregon.
(continued)
Exhibit C - 5
Legal Description
PARCEL IV:
An easement, created by Easement dated November 16, 1968, recorded January 14,
1969 in Book 336, page 74, Linn County Deed Records, for a right-of-way, 100
feet in width; for pipelines, communication lines, and all appurtenances
thereto, upon, under, over and across the following described real property:
Beginning at a point on the South boundary of and 5239.76 feet North 89 degrees
51'47" West of the Southeast corner of the Xxxxxxx X.X. Xxxxxx Donation Land
Claim Xx. 00 Xx Xxxxxxxx 00 Xxxxx, Xxxxx 4 West of the Willamette Meridian, in
Linn county, Oregon; thence North 00 degrees 23'07" East 1366.02 feet to a point
marked by an 3/4 inch iron pipe, said iron pipe being 1329.57 feet South 00
degrees 23'07" West of a point on the North line of said Xxxxxxx X.X. Xxxxxx
Donation Land Claim, thence continuing North 00 degrees 23'07" East from said
3/4 inch iron pipe a distance of 10.0 feet to the True point of beginning, run
thence North 00 degree 23'07" East 100.0 feet, thence South 89 degrees 17'49"
West 5135.18 feet to a point on the West line of said Xxxxxxx X.X. Xxxxxx
Donation Land Claim that is 1292.28 feet South 00 degrees 16'41" West of the
Northwest corner of said Xxxxxxx Xxxxxx Donation Land Claim, run thence South 00
degrees 16'41" West along the West line of said Donation Land Claim 100.0 feet,
thence leaving the West line of said Donation Land Claim and run North 89
degrees 17' 49" East 5134.99 feet to the true point of beginning, in Linn
county, Oregon.
PARCEL V:
Beginning at a point on the West line of Market Road No. 2 being South 4 degrees
08' West 535.38 feet from a 3/4 inch rod on the North line of the Xxxxxxx
XxXxxxx Donation Land Claim No. 46 in Township 12 South, Range 4 West of the
Willamette Meridian in Linn County, Oregon and running thence South 4 degree 08'
West, along the West line of said road, 12.03 feet; thence West 210.13 feet;
thence South 16 degrees 56' West 24.04 feet; thence West 62.70 feet to the bank
of the Willamette River; thence Northerly, along the East bank of said river, to
a point xxx Xxxx of the place of beginning; thence East 276.66 feet to the place
of beginning.
PARCEL VI:
Those easements set forth in agreement of Easements and Covenants dated August
22, 1991, amended June 14, 1993, recorded June 29, 1993 in MF Vol. 646, page
627, records of Linn County, Oregon, as appurtenant to the land set forth in
Schedule B of said agreement.
Exhibit C - 6
Pricing Assumptions
Facility Cost 64,573,650.00
Lender's Commitment 47,175,205.94
Investor's Commitment 17,398,444.06
Transaction Expenses 468,158.96
Debt Rate 8.96%
Lease Closing Date 09/30/1999
Lease Termination Date 01/02/2012
Early Purchase Date 01/02/2007
Exhibit D
(to Facility Lease)
Lease Supplement No. 1
----------------------
THIS LEASE SUPPLEMENT NO. 1, dated as of December 27, 2001, between WILMINGTON
TRUST COMPANY, a Delaware banking corporation, not individually but solely as
owner trustee (the "Owner Trustee") under the Trust Agreement (the "Owner
Trustee"), and XXXX & XXXXXX, INC., a Delaware corporation (the "Lessee");
Witnesseth:
The Owner Trustee and the Lessee have heretofore entered into that certain
Amended and Restated Facility Lease dated December 27, 2001 (the "Facility
Lease"). The terms used herein are used with the meanings specified in the
Facility Lease.
The Facility Lease provides for the execution and delivery of a Lease Supplement
substantially in the form hereof for, among other things, the purpose of
confirming any change in Periodic Rent, Casualty Value and Termination Value.
NOW, THEREFORE, in consideration of the premises and other good and sufficient
consideration, the Owner Trustee and the Lessee hereby agree that: [Schedules 1,
2, 3 and 4 to the Facility Lease, showing Periodic Rent percentages, Casualty
Values, Termination Values and Early Purchase Price,] are hereby amended to read
in full as attached hereto.
Any and all notices, requests, certificates and other instruments executed and
delivered after the execution and delivery of this Lease Supplement may refer to
the "Facility Lease dated September 15, 1999" or the "Lease dated September 15,
1999" without making specific reference to this Lease Supplement, but
nevertheless all such references shall be deemed to include this Lease
Supplement unless the context shall otherwise require.
This Lease Supplement shall be construed in connection with and as part of the
Facility Lease, and all terms, conditions and covenants contained in the
Facility Lease, except as herein modified, shall be and remain in full force and
effect. This Lease Supplement may be executed in any number of counterparts,
each executed counterpart constituting an original but all together one and the
same instrument.
THE OWNER TRUSTEE AND THE LESSEE AGREE THAT THE FACILITY SHALL FOR PURPOSES OF
THE LAW OF THE STATE OF OREGON BE PERSONAL PROPERTY.
Exhibit E-1
IN WITNESS WHEREOF, the Owner Trustee and the Lessee have caused this Lease
Supplement to be duly executed as of the day and year first above written and to
be delivered as of the date first above written.
WILMINGTON TRUST COMPANY,
not in its individual capacity but
solely as Owner Trustee
By:
-----------------------------------------
Name:
Title:
XXXX & TALBOT, INC.
By:
-----------------------------------------
Name:
Title:
Consented to as of the date first above written.
XXXXX FARGO BANK NORTHWEST, NATIONAL ASSOCIATION (formerly known as First
Security Bank, National Association),
as Indenture Trustee
By:
------------------------------------------
Name:
Title:
Exhibit E-2
ANNEX I - DEFINITIONS
GENERAL PROVISIONS
The following terms shall have the following meanings for all purposes of
the Operative Agreements referred to below, unless otherwise defined therein or
the context thereof shall otherwise require and such meanings shall be equally
applicable to both the singular and the plural forms of the terms herein
defined. In the case of any conflict between the provisions of this Definition
Annex and the provisions of the main body of the applicable Operative Agreement,
the provisions of the main body of such Agreement shall control the construction
of such Agreement.
References to agreements shall, unless the context otherwise requires, be
deemed to mean and include such agreements as the same may be amended and
supplemented from time to time; and references to parties shall be deemed to
include the permitted successors and assigns of such parties.
DEFINED TERMS
"Adjusted Net Worth" shall mean consolidated shareholders' equity plus (i)
any negative cumulative translation adjustment at fiscal quarter end less (ii)
any positive cumulative translation adjustment at fiscal quarter end.
"Affiliate" shall mean any Person (a) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under common
control with, the Lessee, (b) which beneficially owns or holds 5% or more of the
Voting Stock of the Lessee or (c) 5% or more of the Voting Stock of which is
beneficially owned or held by the Lessee or a Subsidiary. The term "control"
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether through the
ownership of Voting Stock, by contract or otherwise; provided, however, that
under no circumstance shall Wilmington Trust Company be considered to be an
Affiliate of either the Owner Trustee or the Owner Participant nor shall either
the Owner Trustee or the Owner Participant be considered to be an Affiliate of
Wilmington Trust Company.
"Alterations" shall have the meaning specified in Section 8(d) of the
Facility Lease.
"Applicable Law" means all applicable laws, treaties, judgments, decrees,
injunctions, writs and orders of any court, governmental agency or authority and
rules, regulations, orders, directives, licenses and permits of any governmental
body, instrumentality, agency or authority.
"Applicable Permits" shall mean any Permit that is necessary
to develop, build, improve, own, operate or use all or any part of the Leased
Property or any part thereof in accordance with the Facility Lease and the other
Operative Agreements.
"Appraisal" shall mean the appraisal issued to the Owner
Participant by the Appraiser, in form and substance satisfactory to it, on the
Closing Date.
"Appraisal Procedure" shall mean the following procedure for
determining the fair market sales value or the fair market rental value, as the
case may be, of any property or the termination amount under Section 15 of the
Facility Lease: If either party to the Facility Lease shall have given written
notice to the other party requesting determination of such value by the
Appraisal Procedure, the parties shall consult for the purpose of appointing a
qualified independent appraiser by mutual agreement. If no such appraiser is so
appointed within 15 days after such notice is given, each party shall appoint a
qualified independent appraiser certified by the American Society of Appraisers
within 20 days after such notice is given. If one party appoints an appraiser
pursuant to the preceding sentence, the appraisal shall be made by such
appraiser if the other party fails to appoint a second appraiser within the
applicable time limit. If both parties appoint appraisers, the two appraisers so
appointed shall within 30 days after such notice is given, appoint a third
independent appraiser. If no such third appraiser is appointed within 30 days
after such notice is given, either party may apply to the American Arbitration
Association to make such appointment, such appointment shall be made within 30
days after such application, and the appraiser so appointed shall be certified
by the American Society of Appraisers, and both parties shall be bound by any
such appointment. Any appraiser or appraisers appointed pursuant to the
foregoing procedure shall be instructed to determine one or more of the fair
market sales value or the fair market rental value of such property or the
termination amount within 60 days after such appointment. If the parties shall
have appointed a single appraiser, such appraiser's determination of values
shall be final. If three appraisers shall be appointed, the values determined by
the three appraisers shall be averaged, but if any determinations differ by more
than 10% from such average, the determination which is most different from such
average shall be excluded, the remaining two determinations shall be averaged
and such average shall be final.
"Appraiser" shall mean Independent Equipment Company.
"Assigned Agreements" shall mean the Facility Lease, the Site
Lease and all the other agreements referred to in clause (C) of paragraph (I) of
the Granting Clause in the Indenture.
"Bankruptcy Code" shall mean the United States Bankruptcy
Code, as amended from time to time, 11 U.S.C. ss. 101 et seq.
"Bankruptcy Proceeding" shall meaning any case or other
proceeding under the Bankruptcy Code or any successor or similar statute.
"Basic Term" is defined in Section 3 of the Facility Lease.
Annex I - 2
"Beneficial Interest" shall mean the interest of the Owner
Participant under the Trust Agreement.
"Board of Directors" shall mean the Board of Directors of the
Lesssee.
"Business Day" shall mean any day other than a Saturday,
Sunday or a day on which banks in the States of New York, Delaware, Oregon or
Utah (or in the event the Indenture Trustee receives and disburses funds in a
location other than Utah, such other location) are authorized or permitted to be
closed.
"Canadian Pension Plan" shall mean each pension plan subject
to the Income Tax Act (Canada) which the Lessee or any Subsidiary sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions at any time during the immediately preceding five (5) years other
than any negotiated cost plan, or substantially similar plan, under applicable
Canadian law, and that provides, or within the immediately preceding five (5)
years has provided, retirement benefits primarily for the benefit of individuals
substantially all of whom are or were "nonresident aliens," as defined in
Section 7701(b) of the Code.
"Casualty Occurrence" shall mean any of the following events:
(a) the destruction of all or substantially all of the Facility; (b) damage to
the Facility to such an extent that, in the good faith determination of the
Board of Directors of the Lessee (which determination shall be made as soon as
practicable after the occurrence of such damage, but in no event later than 90
days after such occurrence), the repair of the Facility is impractical or
uneconomic; (c) the condemnation, confiscation or seizure of, or requisition of
title to or use of, the Facility by an act of the United States government or
any state or local authority or any instrumentality or agency of any thereof for
a definite term which extends beyond the end of the Basic Term or for an
indefinite term if such requisition in fact continues beyond the end of the
Basic Term (in the event of such requisition for an indefinite term, the
Casualty Occurrence shall be deemed to have taken place on the penultimate day
of the Basic Term); or (d) a Casualty Occurrence as defined in the ClO//2//
Lease.
"Casualty Termination Date" shall mean the date which is the
earliest to occur of (i) the first Determination Date set forth on Schedule 2 to
the Facility Lease which is at least 10 days after the payment of insurance
proceeds by the insurer in respect of a Casualty Occurrence, (ii) the first
Determination Date set forth on Schedule 2 to the Facility Lease which is at
least 90 days after a Casualty Occurrence, and (iii) the last day of the then
Basic Term or Renewal Term, as the case may be.
"Casualty Value" shall mean, as of any Casualty Termination
Date during the Basic Term of the Facility Lease, the amount determined by
multiplying the percentage set forth under the column entitled "Amount of
Casualty Value" for such Casualty Termination Date on Schedule 2 to the Facility
Lease by the Facility Cost, and as of any Casualty Termination Date during any
Renewal Term, the amount determined in accordance with Section 19 of the
Facility Lease.
Annex I - 3
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 X.X.X.xx.xx. 9601 et seq., and any future
amendments.
"ClO//2// Facility" shall mean the Facility as defined under
the ClO//2// Lease.
"ClO//2// Indenture" shall mean the Trust Indenture and
Security Agreement dated as of December 27, 2001 between the ClO//2// Owner
Trustee, as debtor, and the ClO//2// Indenture Trustee, as secured party.
"ClO//2// Indenture Trustee" shall mean Xxxxx Fargo Bank
Northwest, National Association, and its successors in trust as indenture
trustee under the ClO//2// Indenture.
"ClO//2// Lease" shall mean the Facility Lease between
Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee, and Xxxxxx ClO//2// Limited Partnership, as Lessee, dated December
27, 2001, in connection with a certain pulp bleaching facility in Halsey,
Oregon, and any amendment thereto.
"ClO//2// Lease Property" shall mean the Leased Property
under the ClO//2// Lease. "ClO//2// Lessee" shall mean the Lessee under the
ClO//2// Lease.
"ClO//2// Note Purchasers" shall mean the Note Purchasers
named in Schedule I to the ClO//2// Participation Agreement as the same may be
amended from time to time and their respective successors and permitted assigns,
including successive holders of the Series A Notes under the ClO//2// Trust
Indenture.
"ClO//2// Notes" shall mean the Series A Notes issued under
the ClO//2// Indenture.
"ClO//2// Operative Agreements" shall mean the Operative
Agreements as defined pursuant to the ClO//2// Lease.
"ClO//2// Owner Participant" means SELCO Service
Corporation, an Ohio corporation.
"ClO//2// Owner Trustee" shall mean Wilmington Trust Company
in its capacity as trustee under the ClO//2// Trust Agreement and its
successors in trust thereunder.
"ClO//2// Participation Agreement" shall mean the
Participation Agreement dated as of December 27, 2001 among Xxxxxx ClO//2//
Limited Partnership as Lessee, Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee, the participant parties thereto, Xxxx &
Talbot, Inc. and Xxxxx Fargo Bank Northwest, National Association, as Indenture
Trustee, and any amendment thereto.
"ClO//2// Site" shall mean the ClO//2// Site as defined in
the ClO//2// Lease.
Annex I - 4
"ClO//2// Site Lease" shall mean the Site Lease as defined in the
ClO//2// Lease.
"ClO//2// Trust Agreement" shall mean the Trust Agreement dated as of
December 27, 2001 between the ClO//2// Owner Participant and Wilmington Trust
Company.
"Closing" is defined in Section 1.3 of the Participation
Agreement.
"Closing Date" shall have the meaning specified in Section 1
of the Participation Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Collateral" shall mean the property from time to time
securing the Secured Indebtedness.
"Commitment" shall mean, with respect to each Note Purchaser,
such Note Purchaser's commitment for the purchase of the Series A Notes as
specified in Schedule I to the Participation Agreement.
"Components " shall have the meaning set forth in Section 8(c)
of the Facility Lease.
"County Road Documents" means the Petition in the County Court
of the State of Oregon for Linn County entitled "In the Matter of the
Application of American Can Company, a corporation for the right, privilege and
franchise to cross under Market Roads No. 2 and 3 with a 30 inch water pipe line
and a 42 inch effluent pipe line, and to lay, maintain and operate the same in
certain portions of Linn County, Oregon as hereinafter set forth outside the
corporate limits of the City of Xxxxxx" filed May 26, 1968 and the subsequent
Acceptance of Order Granting Franchise dated May 24, 1968 and the Order Granting
Franchise filed July 9, 1968.
"Deed of Trust" shall mean the Deed of Trust dated as of the
Closing Date, between the Owner Trustee, as grantor, the deed of trust trustee
named therein and the Indenture Trustee, as beneficiary, pursuant to the
Participation Agreement, securing the Secured Indebtedness.
"Default" under the Facility Lease shall mean any event which
would constitute an Event of Default under the Facility Lease if any requirement
in connection therewith for the giving of notice or the lapse of time, or the
happening of any further condition, event or act, had been satisfied.
"Design Capacity" shall mean the capacity of the Facility to
produce, in commercial operation, 500 air dry metric tons of pulp per day.
Annex I - 5
"Determination Date" shall mean any date specified as such on
Schedule 2 to the Facility Lease.
"Early Purchase Date" shall mean (a) the date specified on
Schedule 4 to the Facility Lease and (b) the date, if any, specified by the
Lessee as an Early Purchase Date pursuant to Section 8(d) of the Facility Lease.
"Early Purchase Price" with respect to an Early Purchase Date
shall mean (a) the amount set forth in Schedule 4 to the Facility Lease with
respect to such Early Purchase Date or (b) if such Early Purchase Date has been
specified pursuant to Section 8(d), the price determined in accordance with the
terms and provisions of said Section 8(d) for such Early Purchase Date.
"EBITDA" shall mean consolidated net income plus (a) the sum
of amounts for such period included in determining such consolidated net income
of (i) consolidated interest expense, (ii) consolidated income tax expense,
(iii) amortization or write-off of deferred financing costs, (iv) consolidated
depreciation expense, (v) consolidated amortization expense, (vi) extraordinary
non-cash losses and charges and other non-recurring non-cash losses and charges;
less (b) gains on sales of assets (excluding sales in the ordinary course of
business) and other extraordinary gains and non-recurring non-cash gains on a
consolidated basis in accordance with GAAP.
"Employee benefit plan" shall have the meaning specified in
Section 3(3) of ERISA.
"Environmental Consultant" shall mean Xxxxx International,
Inc.
"Environmental Claim" shall mean any administrative,
regulatory or judicial action, judgment, order, consent decree, consent
agreement, suit, demand, demand letter, claim, Lien, notice of non-compliance or
violation, notice of liability or potential liability, investigation or other
proceeding arising (a) pursuant to any Environmental Law or Governmental
Approval issued under any such Environmental Law, (b) from the presence, use,
generation, storage, treatment, Release, threatened Release, disposal,
remediation or other existence of any Hazardous Material, (c) from any Remedial
Action or damages pursuant to an Environmental Law or the order or action of a
Governmental Authority, (d) from any third party seeking damages, contribution,
indemnification, cost recovery, compensation, injunctive or other relief in
connection with a Hazardous Material or arising from alleged injury or threat of
injury to health, safety, property, natural resources or the environment, or (e)
from any Lien against the Leased Property in favor of a Governmental Authority
in connection with a Release, threatened Release or disposal of a Hazardous
Material.
"Environmental Event" shall have the meaning set forth in
Section 6.5(d) of the Facility Lease.
Annex I - 6
"Environmental Law" shall mean any statute, law, regulation,
rule, ordinance, order, consent decree, consent agreement, judgment, Permit,
Governmental Approval, code, common law, treaty, convention or other requirement
of a Governmental Authority, pertaining to protection of the environment, health
or safety of persons, natural resources, forestry, conservation, wildlife, waste
management, Hazardous Materials, and pollution (including, without limitation,
Releases and disposals to air, land, water, groundwater and substrate), now or
hereafter enacted, and includes, without limitation, Endangered Species Act of
1973, 16 X.X.X.xx.xx. 1531 et seq., CERCLA, RCRA, Federal Water Pollution
Control Act, as amended by the Clean Water Act of 1977, .33 U.S.C. xx.xx. 1251
et seq., Clean Air Act of 1966, as amended, 42 X.X.X.xx.xx. 740l et seq., Toxic
Substances Control Act of 1976, 15 X.X.X.xx.xx. 2601 et seq., Occupational
Safety and Health Act of 1970, as amended, 29 X.X.X.xx.xx. 651 et seq., Oil
Pollution Act of 1990, 33 U.S.C. xx.xx. 270l et seq., Emergency Planning and
Community Right-to-Know Act of 1986, 42 X.X.X.xx.xx. 1 1001 et seq., National
Environmental Policy Act of 1975, 42 X.X.X.xx.xx. 432l et seq., Safe Drinking
Water Act of 1974, as amended, 42 X.X.X.xx.xx. 300(t) et seq., and all similar
or implementing laws, rules, regulations, approvals, guidance documents and
amendments promulgated thereunder.
"Environmental Permits" shall mean all Permits required under
Environmental Laws.
"Environmental Trigger" shall have the meaning set forth in
Section 6.5(d) of the Facility Lease.
"Equity Interests" shall mean in the case of a corporation,
stock of any class, and in the case of a partnership or a limited partnership, a
General Partnership Interest or Limited Partnership Interest.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute of similar import, together with
the regulations thereunder, in each case as in effect from time to time.
References to sections of ERISA shall be construed to also refer to any
successor sections.
"ERISA Affiliate" shall mean any corporation, trade or
business that is, along with the Lessee, a member of a controlled group of
corporations or a controlled group of trades or businesses, as described in
Section 414(b) and 414(c), respectively, of the Code or Section 4001(b) of
ERISA.
"ERISA Event" shall mean (a) a Reportable Event with respect
to a Pension Plan; (b) a withdrawal by the Lessee or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) the filing of a notice of intent to terminate or the
treatment of a plan amendment as a termination under Section 4041 or 404lA of
ERISA or the commencement of proceedings by the PBGC to terminate a Pension Plan
subject to Title IV of ERISA; (d) a failure by the Lessee or any ERISA Affiliate
to make required
Annex I - 7
contributions to a Pension Plan or other Plan defined in Section 3(2) of ERISA,
including contributions required pursuant to Section 412(m) of the Code or
Section 302(e) of ERISA; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan; (f) the
imposition of any liability under Title IV of ERISA, other than PBGC premiums
due but not delinquent under Section 4007 of ERISA, upon the Lessee; or (g) an
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code with respect to any Pension Plan or other
Plan defined in Section 3(2) of ERISA.
"Event of Default" under the Facility Lease shall have the
meaning specified in Section 15(a) thereof
"Excepted Property" shall mean (a)all indemnity payments
(including, without limitation, payments pursuant to Sections 7 and 9 of the
Participation Agreement and payments under the Tax Indemnity Agreement) to which
the Owner Participant, the Owner Trustee, Wilmington Trust Company or any of
their respective successors, permitted assigns, directors, officers, employees,
servants and agents is entitled pursuant to the Operative Agreements, (b) any
insurance proceeds payable under insurance maintained by the Owner Trustee,
Wilmington Trust Company or the Owner Participant pursuant to Section 7(e) of
the Facility Lease, (c) any insurance proceeds payable to or on behalf of the
Owner Trustee, Wilmington Trust Company or to the Owner Participant under any
public liability insurance maintained by Lessee pursuant to Section 7 of the
Facility Lease, (d) Transaction Costs paid or payable to, or for the benefit of
Owner Trustee, Wilmington Trust Company or Owner Participant pursuant to the
Participation Agreement, (e) any rights of the Owner Participant, Wilmington
Trust Company or the Owner Trustee to demand, collect, xxx for, or otherwise
receive and enforce payment of the foregoing amounts; provided such rights shall
not include the exercise of any remedies under the Facility Lease other than the
right to proceed by appropriate court action or actions, either at law or in
equity, to enforce performance by the Lessee of the applicable covenants of the
Facility Lease or to recover damages for the breach thereof, (f) any amount
payable by any Transferee as the purchase price of the Owner Participant's
interest in the Trust Estate in compliance with the terms of the Participation
Agreement and the Trust Agreement and (g) proceeds of and interest on the
foregoing.
"Facility" shall mean the pulp mill in Xxxxxx, Oregon leased
under the Facility Lease, as the same shall be more fully described in Exhibit B
to the Facility Lease, including all other equipment and improvements, if any,
constructed or installed or to be constructed or installed on the ClO2 Site
(including, without limitation, the Pond Improvements) for use as or in
connection with such pulp mill, and any and all appliances, parts, instruments,
appurtenances, accessories and other equipment and improvements of whatever
nature from time to time incorporated in or installed as part of such pulp mill
which are the property of the Owner Trustee pursuant to the terms of the
Facility Lease, but excluding, however, (i) spare parts, (ii) any Alterations to
the Facility as to which title remains with the Lessee pursuant to and within
the limitations of Section 8(f)(ii) of the Facility Lease, and (iii) for the
avoidance
Annex I - 8
of doubt, all tax benefits and tax attributes of any Alterations on which work
will start following December 27, 2001.
"Facility Cost" shall mean U.S$64,573,650.
"Facility Lease" shall mean the Facility Lease dated the
Closing Date, between the Owner Trustee, as lessor, and the Lessee, as lessee,
pursuant to the Participation Agreement, dated the Closing Date.
"Fair Market Rental Value" shall mean the Fair Market Value
calculated for a lease.
"Fair Market Sales Value" shall mean the Fair Market Value
calculated for a sale of the Facility.
"Fair Market Value" shall mean the value which would obtain in
an arm's-length transaction between an informed and willing buyer-user or lessee
(other than a lessee currently in possession) and an informed and willing seller
or lessor under no compulsion to sell, buy or lease. Any such determination
shall be made (i) on the assumption that the Facility has been installed at the
site of the purchaser or lessee with no expense being borne by such purchaser or
lessee for costs of removal, storage, transportation or reinstallation of the
Facility at such site, and that the Facility is in the condition and state of
repair required by the Facility Lease, and, in the case of Fair Market Sales
Value, shall give effect to the then remaining Site Lease Term, (ii) as respects
Fair Market Rental Value, on the basis of a lease having terms and conditions
(other than Rent) similar to the terms and conditions of the Facility Lease, and
(iii) giving effect to the removal of any Parts and Alterations which remain the
property of the Lessee under the provisions of Section 8 of the Facility Lease.
"Fixed Charge Coverage Ratio" shall mean the ratio of EBITDA
to the sum of (i) consolidated interest expense, (ii) current maturities of long
term debt, (iii) income taxes paid in cash and (iv) the Maintenance Capital
Expense Constant.
"GAAP" shall mean generally accepted accounting principles at
the time in the United States.
"General Partnership Interest" shall mean the interest of a
general partner in a general partnership and the interest of a general partner
in a limited partnership.
"Governmental Approval" shall mean any written Permit,
variance, no-action letter, clearance, exemption or other approval granted by a
Governmental Authority.
"Governmental Authority" shall mean any international,
foreign, federal, state, regional, county, local or other body, instrumentality,
agency, department, court, commission, board or authority of a governmental
entity.
Annex I - 9
"Guidelines" shall mean the guidelines set forth in Revenue
Procedure 2001-28, 2001-19 IRB 1156, as further set forth in Revenue Procedure
2001-29, 2001-19 IRB 1160, that are applied by the Internal Revenue Service in
determining, for advance ruling purposes, whether leveraged lease transactions
are leases for Federal income tax purposes.
"Hazardous Material" shall mean any hazardous or toxic
chemical, waste, byproduct, pollutant, contaminant, compound, product or
substance, including, without limitation, asbestos, polychlorinated biphenyls,
petroleum (including crude oil or any fraction thereof), and any material the
exposure to, or manufacture, possession, presence, use, generation, storage,
transportation, treatment, release, disposal, abatement, cleanup, removal,
remediation or handling of which, is prohibited, controlled or regulated by any
Environmental Law.
"Indemnified Parties" shall mean the Participants, each holder
of the ClO2 Notes, the Owner Participant Guarantor, the Owner Trustee,
Wilmington Trust Company, the Trust Estate and the Indenture Trustee, and
successors, permitted assigns, agents, servants, officers and employees of each
of the foregoing.
"Indenture" shall mean the Trust Indenture and Security
Agreement dated as of September 15, 1999 between the Owner Trustee, as debtor,
and the Indenture Trustee, as secured party.
"Indenture Default" shall mean any event which would
constitute an Indenture Event of Default if any requirement in connection
therewith for the giving of notice, or the lapse of time, or the happening of
any further condition, event or act, had been satisfied.
"Indenture Estate" is defined in the Granting Clause of the
Indenture.
"Indenture Event of Default" is defined in Section 4.01 of the
Indenture.
"Indenture Investments" shall mean (i) direct obligations of
the United States of America, and (ii) obligations fully guaranteed by the
United States of America; provided that, any such obligations shall not have a
maturity in excess of 90 days; provided further, that any such obligations may
be made through a repurchase agreement in commercially reasonable form with a
bank or other financial institution (which may be the Indenture Trustee) having
capital, surplus and undivided profits of at least U.S.$250,000,000 so long as
title to the underlying obligations shall pass to the Indenture Trustee and that
such underlying obligations shall be segregated in a custodial or trust account
of or for the benefit of the Indenture Trustee.
"Indenture Trustee" shall mean Xxxxx Fargo Bank Northwest,
National Association (formerly known as First Security Bank, National
Association), and its successors in trust as indenture trustee under the
Indenture.
Annex I - 10
"Indenture Trustee Agreements" shall mean the Operative
Agreements to which the Indenture Trustee is a party.
"Insolvency Proceeding" shall mean a Bankruptcy Proceeding,
and an assignment for the benefit of the creditors, a general receivership or
any other proceeding for the adjustment of debts, liquidation of assets or
winding-up of the affairs of the Person.
"Insured Parties" shall mean the Owner Trustee, ClO//2// Owner
Trustee, Wilmington Trust Company, the Owner Participant, the Owner Participant
Guarantor, each Indenture Trustee and each holder of the ClO//2// Notes and each
holder of the Notes.
"Intercreditor Agreement" shall mean the Intercreditor
Agreement dated as of December 27, 2001 between the several ClO//2// Note
Purchasers, the Note Purchasers, the Owner Participant, the ClO//2// Indenture
Trustee, the Indenture Trustee, the Owner Trustee, the ClO//2// Owner Trustee,
the Lessee, the ClO//2// Lessee and Xxxx & Talbot.
"IRS" shall mean the Internal Revenue Service of the United
States or any successor agency thereto.
"Xxxxx River Agreement" means the Settlement and Operating
Agreement dated as of August 9, 1991 by and among Xxxx & Talbot, Inc., Xxxxx
River Paper Company, Inc. and Xxxxx River Corporation of Virginia as amended by
an Amendment dated February 7, 1996.
"Xxxxx River Easement" means the Easement Agreement dated
August 22, 1991 between Xxxxx River Paper Company, Inc. and Xxxx & Xxxxxx, Inc.,
as amended by the Amendment dated June 14, 1993, and as further amended by a
Second Amendment dated September 29, 1999.
"Late Rate" shall mean interest at the annual rate equal to
the lesser of (a) the highest rate permitted by applicable law and (b) the
Specified Rate plus 2%.
"Lease Default" shall mean a Default under the Facility Lease.
"Lease Event of Default" shall mean an Event of Default under
the Facility Lease.
"Lease Supplement" shall mean a Lease Supplement,
substantially in the form of Exhibit E to the Facility Lease, entered into
pursuant to Section 4(f) of the Facility Lease.
"Leased Property" shall mean the Facility and the Site Lease
Property.
"Lessee" shall mean Xxxx & Talbot, Inc., a Delaware
corporation, and any corporation which succeeds thereto by merger or
consolidation or which acquires all or substantially all of the assets thereof
Annex I - 11
"Lessee Agreements" shall mean the Operative Agreements to
which the Lessee is a party.
"Lessor's Liens" means any Liens arising as a result of (a)
claims against or affecting the Owner Trustee, Wilmington Trust Company or the
Owner Participant not related to the transactions contemplated by the Operative
Agreements, or (b) acts or omissions of the Owner Trustee, Wilmington Trust
Company or the Owner Participant not related to the transactions contemplated by
the Operative Agreements or not contemplated by the Operative Agreements, or (c)
taxes imposed against the Owner Trustee, Wilmington Trust Company or the Owner
Participant which the Lessee has not agreed to indemnify against pursuant to the
Participation Agreement, the Facility Lease or the Tax Indemnity Agreement, or
(d) claims against the Owner Trustee, Wilmington Trust Company or the Owner
Participant arising out of the voluntary transfer (which transfer shall be made
without the consent, whether or not required, of Lessee and, if the Indenture
has not been discharged, the Indenture Trustee) of all or any part of its
interest in the Leased Property, other than a transfer pursuant to Section 13,
15 or 19 of the Facility Lease, provided, however, that no Lien which is being
contested pursuant to a Permitted Contest shall constitute a Lessor's Lien.
"Lien" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on the common law, statute or contract,
and including but not limited to the security interest lien arising from a
mortgage, encumbrance, pledge, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall include
reservations, exceptions, encroachments, easements, rights-of-way, covenants,
conditions, restrictions, leases and other title exceptions and encumbrances
(including, with respect to stock, stockholder agreements, voting trust
agreements, buy-back agreements and all similar arrangements) affecting
Property. For the purposes of the Operative Agreements, the Lessee shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement, capitalized lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some other Person
for security purposes, and such retention or vesting shall constitute a Lien.
"Limited Partnership Interest" shall mean the interest of a
limited partner in a limited partnership.
"Maintenance Capital Expense Constant" shall mean
U.S.$7,500,000.00.
"Majority in Interest" as of a particular date of
determination shall mean with respect to any action or decision of the holders
of the Notes. The holders of more than 50% in aggregate unpaid principal amount
of the Notes then outstanding, excluding any Notes held by the Owner Participant
or the Lessee or an Affiliate of the Owner Participant or the Lessee unless all
Notes are so held.
"Make-Whole Amount" shall mean in connection with any
prepayment of any series of Notes the excess, if any, of (i) the aggregate
present value as of the date of such
Annex I - 12
prepayment of each dollar of principal being prepaid of such Notes and the
amount of interest (exclusive of interest accrued to the date of prepayment)
that would have been payable in respect of such dollar if such prepayment had
not been made, determined by discounting on a semiannually compounded basis such
amounts at the Reinvestment Rate from the respective dates on which they would
have been payable, over (ii) 100% of the principal amount of the outstanding
Notes of such series being prepaid. The Make-Whole Amount shall not be less than
zero. For purposes of any determination of the Make-Whole Amount:
"Reinvestment Rate" shall mean (a) the sum of 0.50%, plus the
yield reported at 10:00 A.M. (New York time) on the date of
determination of the Make-Whole Amount by the Dow Xxxxx Markets, a
Division of Dow Xxxxx & Company (formerly known as Telerate Access
Service) on the display designated "Page 5" for United States
government Securities having a maturity (rounded to the nearest month)
corresponding to the remaining Weighted Average Life to Maturity of the
principal of such series being prepaid, or (b) in the event that such
Dow Xxxxx Markets is no longer available or such yield is not reported
as of such time, "Reinvestment Rate" shall mean the sum of 0.50%, plus
the arithmetic mean of the two yields under the heading "Week Ending"
published in the Statistical Release under the caption "Treasury
Constant Maturities" for the maturity (rounded to the nearest month)
corresponding to the Weighted Average Life to Maturity of the principal
of such series being prepaid. If no maturity exactly corresponds to
such Weighted Average Life to Maturity, yields for the maturity next
longer than the Weighted Average Life to Maturity and for the maturity
next shorter than the Weighted Average Life to Maturity shall be
calculated and the Reinvestment Rate shall be interpolated from such
yields on a straight-line basis, rounding in each of such relevant
periods to the nearest month. For the purposes of calculating the
Reinvestment Rate pursuant to clause (b), the most recent Statistical
Release published prior to the date of determination of the Make-Whole
Amount shall be used.
"Statistical Release" shall mean the statistical release
designated "H.15(519)" or any successor publication which is published
weekly by the Federal Reserve System and which establishes yields on
actively traded United States government Securities adjusted to
constant maturities or, if such statistical release is not published at
the time of any determination hereunder, then such other reasonably
comparable index which shall be designated by the holders of a majority
in aggregate principal amount of the applicable series of Notes then
outstanding.
"Weighted Average Life to Maturity" of the principal amount of
the series of Notes being prepaid or accelerated shall mean, as of the
time of any determination thereof the number of years obtained by
dividing the then Remaining Dollar-Years of such principal by the
aggregate amount of such principal. The term "Remaining Dollar-Years"
of such principal shall mean the amount obtained by (i) multiplying (x)
the remainder of (1) the amount of principal of such series that would
have become due on each scheduled payment date if such prepayment had
not been made, less (2)
Annex I - 13
the amount of principal on such Notes being prepaid scheduled to become
due on such date after giving effect to such prepayment or
acceleration, by (y) the number of years (calculated to the nearest
one-twelfth) which will elapse between the date of determination and
such scheduled payment date, and (ii) totaling the products obtained in
(i).
"Material Adverse Effect" shall mean (a) a material adverse
change in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of the Lessee; (b) a
material impairment of the ability of the Lessee to perform under any Lessee
Agreement and to avoid any Event of Default; (c) a material adverse effect upon
the legality, validity, binding effect or enforceability against the Lessee of
any Lessee Agreement; or (d) a material adverse effect on the continued economic
operation of the Leased Property.
"Material Subsidiary" means any Subsidiary of the Lessee
having either (a) 5% or more of the revenue of the Lessee and each of its
Subsidiaries on a consolidated basis or (b) 5% or more of the assets of the
Lessee and each of its Subsidiaries on a consolidated basis.
"Memorandum of Facility Lease" shall mean, with respect to the
Facility, a Memorandum of Facility Lease dated the Closing Date.
"Memorandum of Site Lease" shall mean, with respect to the
Facility, a Memorandum of Site Lease dated the Closing Date.
"Multiemployer Plan" shall have the meaning as in Section 400
l(a)(3) of ERISA, but shall not include a plan for which Title IV of ERISA is
made inapplicable pursuant to Section 402 l(b)(7) of ERISA.
"Net Economic Return" means the Owner Participant's (i) net
after-tax yield (computed using the multiple investment sinking fund method),
and (ii) aggregate aftertax cash flow; each of clauses (i) and (ii) being
calculated both for the period from the Closing Date to the Early Purchase Date
and for the period from the Closing Date to the end of the Basic Term, and each
as computed on the basis of the same economic and tax assumptions originally
utilized by the Owner Participant in calculating the Periodic Rent, Early
Purchase Price, Casualty Values and Termination Values.
"Non-U.S. Person" shall mean any individual who is not a
citizen of the United States, or any partnership, corporation, joint venture,
trust, unincorporated association or other entity that is not either a citizen
of the United States or organized under the laws of the United States or any
State thereof.
"Note Purchasers" shall mean the Note Purchasers named in
Schedule 1 to the Participation Agreement and their respective successors and
permitted assigns, including successive holders of the Series A Notes.
Annex I - 14
"Notes" shall mean the Series A Notes.
"Officers' Certificate" shall, with respect to any Person,
mean a certificate signed by a Responsible Officer of such Person.
"Operative Agreements" shall mean and include the Trust
Agreement, the Participation Agreement, the Site Lease, the Memorandum of Site
Lease, the Facility Lease, the Memorandum of Facility Lease, the Notes
outstanding at the time of reference, the Indenture, the Deed of Trust, the
Intercreditor Agreement and the Tax Indemnity Agreement.
"Ordinary Wear Part" shall mean any mechanical or structural
component of equipment subject to wear due to use or utilization.
"Owner Participant" means SELCO Service Corporation, an Ohio
corporation, and its successors and permitted assigns of its Beneficial
Interest.
"Owner Participant Agreements" shall mean the Operative
Agreements to which the Owner Participant is a party.
"Owner Participant Guarantor" shall mean KeyBank, National
Association or any other Person guarantying the obligations of the Owner
Participant.
"Owner Participant Guaranty" shall mean that certain Owner
Participant Guaranty dated as of September 15, 1999 entered into by the Owner
Participant Guarantor.
"Owner Trustee" shall mean Wilmington Trust Company in its
capacity as trustee under the Trust Agreement and its successors in trust
thereunder.
"Owner Trustee Agreements" shall mean the Operative Agreements
to which Wilmington Trust Company, either in its individual or trustee capacity,
is a party.
"Participants" shall mean the Note Purchasers and the Owner
Participant.
"Participation Agreement" shall mean the Participation
Agreement dated as of September 15, 1999, among the Lessee, the Owner Trustee,
the Participants and the Indenture Trustee.
"Parts" shall have the meaning specified in Section 8(c) of
the Facility Lease.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
referred to and defined in ERISA or any successor thereto.
"Pension Plan" shall mean a pension plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA which the Lessee or any
ERISA Affiliate sponsors, maintains, or to which it makes, is making, or is
obligated to make contributions, or in the
Annex I - 15
case of a multiple employer plan (as described in Section 4064(a) of ERISA) has
made contributions at any time during the immediately preceding five (5) plan
years.
"Periodic Rent" shall mean all rent payable pursuant to
Section 4(a) of the Facility Lease for the Basic Term and all rent payable
pursuant to Section 19 of the Facility Lease for any Renewal Term.
"Periodic Site Rent" is defined in Section 4(b) of the
Facility Lease.
"Periodic Site Rent Amount" shall mean (i) with respect to
each Periodic Site Rent Payment Date on or prior to the later of (a) the
expiration or earlier termination of the Basic Term of the Facility Lease in
accordance with its terms or otherwise and (b) the full payment and discharge of
the Secured Indebtedness, U.S.$l00 and (ii) for any Periodic Site Rent Payment
Date occurring after the later of the periods described in subclauses (a) and
(b) of clause (i) of this definition (the "Post-Facility Lease Date "), the Fair
Market Rental Value for the Site, provided that notwithstanding the foregoing,
if an Event of Default under the Facility Lease shall have occurred and the
Owner Trustee or the Indenture Trustee, as the case may be, shall be exercising
or shall have exercised remedies pursuant to Section 15 of the Facility Lease
(including, without limitation, the re-letting or sale of the Facility),
Periodic Site Rent Amount shall then and thereafter mean U.S.$l00 with respect
to each Periodic Site Rent Payment Date.
"Periodic Site Rent Payment Date" shall mean each January 2
and July 2 after the Closing Date during the Site Lease Term.
"Permit" shall mean any order, authorization, consent,
approval, license, ruling, permit, certification, exemption, waiver, filing or
registration by or with any Governmental Authority.
"Permitted Contest" shall mean a good faith contest in a
manner which each Indemnified Party and, in the case of the Lessor's Liens, the
Lessee, determines will be conducted in a manner so as to prevent the imposition
of any criminal penalty on, or adverse effect on the title, property or right
of, such Indemnified Party or the Lessee, as the case may be, of the legality or
validity of any taxes, assessments, levies, fees or other governmental charges,
or other claims, Liens or impositions which under the terms of the Facility
Lease or the Site Lease, are required to be paid or discharged by the Lessee,
the Owner Trustee, Wilmington Trust Company, or the Owner Participant, as the
case may be, but for such contest.
"Permitted Encumbrances" with respect to the Leased Property
shall mean (a) the interests of the Lessee and the Owner Trustee, respectively,
under the Facility Lease and under the Site Lease; (b) any Liens thereon for
taxes, assessments, levies, fees and other governmental and similar charges
either not yet due and payable or the amount or validity of which is being
contested by a Permitted Contest (and for the payment of which adequate reserves
have been provided); (c) any Liens of mechanics, suppliers, materialmen and
Annex I - 16
laborers for work or services performed or materials furnished in connection
with the Leased Property arising in the ordinary course of business and for
amounts which are either not yet due and payable or the amount or validity of
which is being contested by a Permitted Contest (and for the payment of which
adequate reserves have been provided); (d) the Lien and security interest Liens
granted to the Indenture Trustee under and pursuant to the Indenture; (e)
Lessor's Liens; (f) Liens described in Schedule B to the Title Policy issued to
the Owner Trustee on the Closing Date; (g) minor encumbrances, easements,
covenants 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 (i) are
necessary or appropriate for the conduct of the activities of the Lessee on the
Leased Property or customarily exist on properties of business entities engaged
in similar activities and similarly situated and (ii) do not in any event impair
the use or value of the Leased Property; and (h) leases described in Schedule
3.2(w) to the Participation Agreement and subleases that do not impair the
operation of the Facility and which are permitted in accordance with the terms
and provisions of Section 9(b) of the Facility Lease.
"Person" shall mean an individual, partnership, corporation,
trust or limited liability company or other unincorporated organization, and a
government or agency or political subdivision thereof.
"Plan" shall mean an employee benefit plan (as defined in
Section 3(3) of ERISA) which the Lessee or any ERISA Affiliate sponsors or
maintains or to which the Lessee makes, is making, or is obligated to make
contributions and includes any Pension Plan.
"Plans" shall mean the engineering drawings for the Facility.
"Pond Improvements" shall mean the condensate piping to the
effluent pond and six aerators.
"Post-Facility Lease Date" is defined in the definition of
Periodic Site Rent Amount set forth in this Annex I. "Private Placement
Memorandum" shall mean the Debt Participation Memorandum, dated July 1999,
prepared by Key Global Finance and received by the Lessee.
"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Railway License" means the Permit from Oregon Electric
Railway Company to American Can Company dated August 27, 1968.
"RCRA" shall mean the Solid Waste Disposal Act, as amended by
the Resource Conservation and Recovery Act of 1976 and Hazardous and Solid Waste
Amendments of 1984, 42 U.S.C. xx.xx. 690l et seq., and any future amendments.
Annex I - 17
"Refunding Date" is defined in Section 13(a) of the
Participation Agreement.
"Register" shall mean the register kept at the principal
office of the Indenture Trustee for the purpose of recording the registration
and transfer of the Notes.
"Release" shall mean any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping, or
disposing into the environment, including, without limitation, the abandonment
or discarding of barrels, drums, containers, tanks and other receptacles
containing or previously containing any Hazardous Material, whether occurring
before or after the date of the Lease.
"Remedial Action" shall mean actions required to (i) clean up,
remove, remediate, treat, take corrective action, or in any other way address
Hazardous Materials in the environment, (ii) prevent the Release or further
Release or minimize the further Release of Hazardous Materials, or (iii)
investigate and determine if a remedial response is needed, to design such a
response and postremedial investigation, monitoring, operation, maintenance and
care.
"Renewal Term" shall mean any term in respect of which the
Lessee shall have exercised its option to renew the Facility Lease pursuant to
Section 19 thereof.
"Rent" shall mean all Periodic Rent, Periodic Site Rent and
Supplemental Rent.
"Rent Payment Dates" shall mean the Closing Date and the
second day of each January and July thereafter during the Term of the Facility
Lease.
"Reportable Event" shall mean a "reportable event" as
described in Section 4043 of ERISA for which the notice requirement to the PBGC
has not been waived, provided that the loss of qualification of a pension plan
(as such term is defined in ERISA and which is covered by Title IV of ERISA),
other than a Multiemployer Plan, established or maintained by the Lessee or any
ERISA Affiliate or as to which the Lessee or any ERISA Affiliate contributed or
is a member or otherwise may have any liability, and the failure to meet the
minimum funding standard of Section 412 of the Internal Revenue Code of 1986, as
amended, or Section 302 of ERISA shall be a Reportable Event regardless of the
issuance of any waiver of the reporting requirement by the PBGC.
"Required Lenders" shall have the meaning set forth in the
Intercreditor Agreement.
"Responsible Officer" shall, with respect to the Owner
Participant, mean the President, any Vice President, the Secretary, any
Assistant Secretary, the Treasurer or any Assistant Treasurer; shall, with
respect to the Lessee, mean the President, the Vice President-Finance, chief
financial officer, the manager of the Facility or persons fulfilling
substantially the same responsibilities or functions as the aforesaid persons or
which have direct responsibility for the administration of the Facility Lease
and the other Lessee Agreements;
Annex I - 18
and shall, with respect to the Owner Trustee or the Indenture Trustee, mean any
officer in the Corporate Trust Administration department thereof.
"Secured Indebtedness" shall mean the outstanding Notes and
all principal thereof (and premium, if any) and interest thereon and all
additional amounts and other sums at any time due and owing from or required to
be paid by the Owner Trustee under the terms of the outstanding Notes or the
Indenture or by the Lessee to the holders of the Notes under the Operative
Agreements.
"Securities Act" shall mean the Securities Act of 1933, as
amended from time t o time.
"Security" shall have the same meaning as in Section 2(a)(l)
of the Securities Act of 1933, as amended.
"Seller" shall mean Xxxx & Xxxxxx, Inc.
"Separate Account" shall have the meaning specified in Section
3(17) of ERISA.
"Series A Notes" shall mean the 8.96% Secured Notes, Series A,
Due January 2, 2008 of the Owner Trustee substantially in the form attached as
Exhibit A to the Indenture.
"Site" shall mean the property described in Exhibit A to the
Site Lease; provided that no part of the Facility shall be part of the "Site";
and provided further that upon subdivision or other reduction pursuant to
Section 19(h) of the Facility Lease, "Site" shall refer to the Site following
such subdivision or other reduction.
"Site Lease" shall mean the Site Lease dated the Closing Date
between the Lessee, as landlord, and the Owner Trustee, as tenant.
"Site Lease Property" shall mean the Site and the easements
and rights granted to the Owner Trustee under the Site Lease.
"Site Lease Term" shall mean the period beginning on the
Closing Date and ending ninety-nine (99) years less one day from such date.
"Specified Investment" shall mean (a) direct obligations of
the United States of America and agencies thereof for which the full faith and
credit of the United States is pledged, (b) obligations fully guaranteed by the
United States of America, (c) certificates of deposit issued by, or bankers'
acceptances of, or time deposits with, any bank, trust company or national
banking association incorporated or doing business under the laws of the United
States of America or one of the States thereof having combined capital and
surplus and retained earnings of at least U.S.$500,000,000 (including the
Indenture Trustee or Owner Trustee if such conditions are met), (d) repurchase
agreements with any financial institution
Annex I - 19
having a combined capital and surplus of at least U.S.$500,000,000 fully
collateralized by obligations of the type described in clauses (a) and (c) above
and (e) any money market fund investing solely in investments of the type
described in clause (a), (b) or (c) above (which shall not include any hedge,
future or other contract relating thereto); provided that if all of the above
investments are unavailable, the entire amount to be invested may be used to
purchase Federal funds from an entity described in (c) above; and provided
further that no investment shall be eligible as a "Specified Investment" unless
the final maturity or date of return of such investment is 91 days or less from
the date of purchase thereof.
"Specified Rate" shall mean 8.96% (computed on the basis of a
360 day year of 12 30-day months).
"Subsidiary" shall mean, as to any particular parent business
entity, any business entity of which such parent business entity and/or one or
more business entities which are themselves subsidiaries of such parent business
entity, (a) in the case of any corporation, own more than 50% of the Voting
Stock, or (b) in the case of any partnership, own 50% or more of the Limited
Partnership Interests or General Partnership Interests, as that case may be.
Unless the context otherwise clearly requires, any reference to a "Subsidiary"
is a reference to a subsidiary of the Lessee.
"Supplemental Rent" shall mean all amounts, liabilities and
obligations (other than Periodic Rent) which the Lessee is obligated to pay
under the Facility Lease to the Owner Trustee or others, including, without
limitation, Termination Value and Casualty Value payments.
"Tax Indemnity Agreement" shall mean the Tax Indemnity
Agreement dated as of September 15, 1999 between the Lessee and the Owner
Participant.
"Taxes" is defined in Section 7 of the Participation
Agreement.
"Technology" shall mean, with respect to the Facility and the
Site Lease Property and the operation, maintenance, repair, replacement,
inspection and removal thereof, (a) all patents, know-how, computer programs and
other industrial property rights, and all licenses and rights to use the same,
and (b) all information and data with respect thereto, in each case at any time
owned or held by or available to the Lessee and necessary to operate the
Facility at Design Capacity.
"Term" shall mean the full term of the Facility Lease,
including the Basic Term and any Renewal Term, unless the Facility Lease shall
be terminated earlier pursuant to the terms thereof.
"Termination Date" shall have the meaning set forth in Section
13(d) of the Facility Lease.
Annex I - 20
"Termination Value" of the Facility as of any Termination Date
during the Basic Term shall mean the amount determined by multiplying the
percentage set forth under the column entitled "Net Termination Value" for such
Determination Date on Schedule 3 of the Facility Lease by the Facility Cost.
"Title Policy" shall mean the title policy issued with respect
to the Site Lease.
"Total Adjusted Capitalization" shall mean Adjusted Net Worth
plus Total Funded Debt.
"Total Funded Debt" shall mean all indebtedness for borrowed
money of the Lessee, excluding (a) contingent obligations with respect to
undrawn letters of credit, (b) liabilities in respect of hedging agreements, and
(c) customary trade credit.
"Transaction Costs" shall mean all amounts paid or payable by
the Owner Trustee pursuant to Section 2 of the Participation Agreement.
"Transferee" is defined in clause (a) of Section 11 of the
Participation Agreement.
"Trust" shall mean the trust established under the Trust
Agreement.
"Trust Agreement" shall mean the Trust Agreement dated as of
September 15, 1999 between the Owner Participant and Wilmington Trust Company.
"Trust Estate" shall mean all the estate, right, title and'
interest of the Owner Trustee in, to and under the Leased Property and the
Operative Agreements including, without limitation, all out-of-pocket funds
advanced to the Owner Trustee by the Owner Participant, all proceeds from the
sale of the Notes, all installments and other payments of rent, insurance
proceeds, Casualty Values, condemnation awards, Termination Values, purchase
price and sale proceeds, and all other proceeds of any kind for or with respect
to the Leased Property and the Operative Agreements.
"Unfunded Pension Liability" shall mean the excess of a
Pension Plan's benefit liabilities under Section 400l(a)(16) of ERISA, over the
current value of that Pension Plan's assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412 of the
Code for the applicable plan year.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect from time to time in any applicable jurisdiction.
"U.S. Person" shall have the meaning given such term in
Section 7701(a)(30) of the Code.
Annex I - 21
"Voting Stock" of any Person shall mean Securities of any
class or classes, the holders of which are entitled at such time to elect a
majority of the corporate directors of such Person (or Persons performing
similar functions).
Annex I - 22
