Exhibit 10.6
LEASE AGREEMENT
(EDNC Trust 1997)
Dated as of June 27, 1997
Between
BOATMEN'S TRUST COMPANY OF TEXAS,
not in its individual capacity, except
as expressly provided herein, but
solely as Owner Trustee,
as Lessor
and
EL DORADO NITROGEN COMPANY,
as Lessee
Nitric Acid Production Facility
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF THE LESSOR IN AND TO
THIS LEASE, THE UNITS COVERED HEREBY AND THE RENT DUE AND TO BECOME
DUE HEREUNDER HAVE BEEN ASSIGNED AS COLLATERAL SECURITY TO, AND ARE
SUBJECT TO A SECURITY INTEREST IN FAVOR OF, WILMINGTON TRUST COMPANY,
NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS INDENTURE TRUSTEE UNDER
A TRUST INDENTURE AND SECURITY AGREEMENT (EDNC TRUST 1997), DATED AS
OF JUNE 27, 1997, BETWEEN SUCH INDENTURE TRUSTEE, AS SECURED PARTY, AND
THE LESSOR, AS DEBTOR. INFORMATION CONCERNING SUCH SECURITY INTEREST
MAY BE OBTAINED FROM THE INDENTURE TRUSTEE AT ITS ADDRESS SET FORTH
IN SECTION 20 OF THIS LEASE. THIS LEASE HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS, BUT ONLY THE COUNTERPART TO BE DEEMED THE ORIGINAL
COUNTERPART FOR CHATTEL PAPER PURPOSES CONTAINS THE RECEIPT
THEREFOR EXECUTED BY WILMINGTON TRUST COMPANY, AS INDENTURE
TRUSTEE, ON THE SIGNATURE PAGES THEREOF. SEE SECTION 25.2 FOR
INFORMATION CONCERNING THE RIGHTS OF THE ORIGINAL HOLDER AND THE
HOLDERS OF THE VARIOUS COUNTERPARTS HEREOF.
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS LEASE. . . . . . . . . . .1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Directly or Indirectly.. . . . . . . . . . . . . . . . . . . . .1
SECTION 2. LEASE AND DELIVERY . . . . . . . . . . . . . . . . . . . . . .2
SECTION 3. TERM AND RENT. . . . . . . . . . . . . . . . . . . . . . . . .2
3.1 Lease Term.. . . . . . . . . . . . . . . . . . . . . . . . . . .2
3.2 Basic Rent . . . . . . . . . . . . . . . . . . . . . . . . . . .2
3.3 Sufficiency of Basic Rent. . . . . . . . . . . . . . . . . . . .3
3.4 Supplemental Rent. . . . . . . . . . . . . . . . . . . . . . . .3
3.5 Certain Adjustments. . . . . . . . . . . . . . . . . . . . . . .3
3.6 Manner of Payments . . . . . . . . . . . . . . . . . . . . . . .3
3.7 Net Lease, Etc . . . . . . . . . . . . . . . . . . . . . . . . .4
SECTION 4. OWNERSHIP AND MARKING OF UNITS; PERSONAL PROPERTY. . . . . . .5
4.1 Retention of Title . . . . . . . . . . . . . . . . . . . . . . .5
4.2 Duty to Mark Units . . . . . . . . . . . . . . . . . . . . . . .5
4.3 Prohibition Against Certain Designations . . . . . . . . . . . .5
4.4 Personal Property. . . . . . . . . . . . . . . . . . . . . . . .6
SECTION 5. DISCLAIMER OF WARRANTIES . . . . . . . . . . . . . . . . . . .6
SECTION 6. RETURN OF UNITS; CONDITION; STORAGE. . . . . . . . . . . . . .8
6.1 Return . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
6.2 Condition of Units . . . . . . . . . . . . . . . . . . . . . . .8
6.3 Storage. . . . . . . . . . . . . . . . . . . . . . . . . . . . .8
SECTION 7. LIENS. . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
SECTION 8. MAINTENANCE; OPERATION; POSSESSION; COMPLIANCE WITH
LAWS; SUBLEASE; REPLACEMENT OF PARTS; SUBSTITUTION9
8.1 Maintenance and Operation. . . . . . . . . . . . . . . . . . . .9
8.2 Possession and Use . . . . . . . . . . . . . . . . . . . . . . 10
8.3 Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
8.4 Replacement of Parts . . . . . . . . . . . . . . . . . . . . . 11
SECTION 9. MODIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . 12
9.1 Required Modifications . . . . . . . . . . . . . . . . . . . . 12
9.2 Optional Modifications . . . . . . . . . . . . . . . . . . . . 12
SECTION 10. VOLUNTARY TERMINATION . . . . . . . . . . . . . . . . . . . 13
10.1 Uneconomic or Surplus Condition Termination. . . . . . . . . . 13
10.2 Sale of Units. . . . . . . . . . . . . . . . . . . . . . . . . 13
10.3 Retention of Units by the Lessor . . . . . . . . . . . . . . . 14
10.4 Termination of Lease . . . . . . . . . . . . . . . . . . . . . 15
SECTION 11. LOSS, DESTRUCTION, REQUISITION, ETC.. . . . . . . . . . . . 15
11.1 Event of Loss. . . . . . . . . . . . . . . . . . . . . . . . . 15
11.2 Replacement or Payment upon Event of Loss. . . . . . . . . . . 15
11.3 Rent Termination . . . . . . . . . . . . . . . . . . . . . . . 16
11.4 Disposition of Units; Replacement of Units . . . . . . . . . . 16
11.5 Applications of Event of Loss Proceeds . . . . . . . . . . . . 17
11.6 Eminent Domain; Damage Not Constituting an Event of Loss . . . 18
11.7 Lease Event of Default . . . . . . . . . . . . . . . . . . . . 18
SECTION 12. INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . 20
12.1 Property Damage, Public Liability and Other Insurance. . . . . 20
12.2 Policy Provisions. . . . . . . . . . . . . . . . . . . . . . . 21
12.3 Proceeds of Insurance. . . . . . . . . . . . . . . . . . . . . 22
12.4 Notice, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . 23
12.5 Reports and Certificates . . . . . . . . . . . . . . . . . . . 23
12.6 Additional Insurance . . . . . . . . . . . . . . . . . . . . . 23
SECTION 13. INSPECTION. . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 14. LEASE EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . 24
SECTION 15. REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.1 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
15.2 Cumulative Remedies. . . . . . . . . . . . . . . . . . . . . . 28
15.3 No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
15.4 Notice of Lease Default. . . . . . . . . . . . . . . . . . . . 29
15.5 Specific Performance; the Lessor Appointed the Lessee's Agent. 29
SECTION 16. FURTHER ASSURANCES; REPORTS; OPINION. . . . . . . . . . . . 29
16.1 Further Assurances.. . . . . . . . . . . . . . . . . . . . . . 29
16.2 Reports. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
16.3 Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 17. THE LESSOR'S RIGHT TO PERFORM.. . . . . . . . . . . . . . . 30
SECTION 18. ASSIGNMENT BY THE LESSOR. . . . . . . . . . . . . . . . . . 30
SECTION 19. ASSIGNMENT BY THE LESSEE. . . . . . . . . . . . . . . . . . 31
SECTION 20. NOTICES.. . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 21. CONCERNING THE INDENTURE TRUSTEE. . . . . . . . . . . . . . 32
21.1 Rights and Immunities of Indenture Trustee . . . . . . . . . . 32
21.2 Amendments; Exercise of Remedies . . . . . . . . . . . . . . . 33
SECTION 22. END OF LEASE TERM PURCHASE OPTION. . . . . . . . . . . . . 33
SECTION 23. LIMITATION OF THE LESSOR'S LIABILITY. . . . . . . . . . . . 34
SECTION 24. INVESTMENT OF SECURITY FUNDS. . . . . . . . . . . . . . . . 34
SECTION 25. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . 34
25.1 Governing Law; Severability. . . . . . . . . . . . . . . . . . 34
25.2 Execution in Counterparts. . . . . . . . . . . . . . . . . . . 35
25.3 Headings and Table of Contents; Section References.. . . . . . 35
25.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 35
25.5 True Lease . . . . . . . . . . . . . . . . . . . . . . . . . . 35
25.6 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . 36
25.7 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
25.8 Business Days. . . . . . . . . . . . . . . . . . . . . . . . . 36
25.9 Incorporation by Reference.. . . . . . . . . . . . . . . . . . 36
25.10 Lessee's Right of Use and Enjoyment . . . . . . . . . . . 36
25.11 License to Enter Land . . . . . . . . . . . . . . . . . . 36
25.12 FORUM SELECTION AND CONSENT TO JURISDICTION . . . . . . . 36
SECTION 26. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . 37
SECTION 27. BAYER RIGHTS UPON DEFAULT OR LOSS . . . . . . . . . . . . . 37
Attachments:
Exhibit A Form of Lease Supplement
Exhibit B Description of Premises
Appendix A Definitions
LEASE AGREEMENT
(EDNC Trust 1997)
THIS LEASE AGREEMENT (EDNC Trust 1997), dated as of June 27,
1997 (as amended, supplemented or otherwise modified from time to
time, this "Lease"), is between BOATMEN'S TRUST COMPANY OF TEXAS,
a Texas state chartered trust company, not in its individual
capacity except as expressly provided herein, but solely as Owner
Trustee under the Trust Agreement (the "Lessor"), and EL DORADO
NITROGEN COMPANY, an Oklahoma corporation (the "Lessee").
W I T N E S S E T H:
WHEREAS, the Lessor and the Lessee each desire to enter into
this Lease on the terms and conditions set forth herein;
NOW THEREFORE, in consideration of the mutual agreements
herein contained and other good and valuable consideration,
receipt of which is hereby acknowledged, the Lessor and the
Lessee agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION OF THIS LEASE.
1.1 Definitions. For all purposes of this Lease, except as
otherwise defined herein or unless the context otherwise
requires:
(a) capitalized terms used herein (including the
foregoing recitals) shall have the meanings assigned to them
in Appendix A hereto;
(b) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Lease as a whole
and not to any particular Article, Section or other
subdivision; and
(c) all references in this Lease to Articles,
Sections, Exhibits and Schedules refer to Articles,
Sections, Exhibits and Schedules of this Lease unless
otherwise indicated.
1.2 Directly or Indirectly. Where any provision in this
Lease refers to 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. LEASE AND DELIVERY.
The Lessor hereby agrees (subject to satisfaction or waiver
of the conditions set forth in Sections 4.1 and 4.2 of the
Participation Agreement) on the date of execution and delivery
hereof to sublease (and does hereby sublease) the Premises (as
described in Exhibit B hereto) to the Lessee and the Lessee
agrees to sublease (and does hereby sublease) the Premises from
the Lessor. The Lessor hereby further agrees (subject to the
satisfaction or waiver of the conditions set forth in Sections
4.3, 4.4, 4.5 and 4.8 of the Participation Agreement) on the
Lease Term Commencement Date to subject to this Lease the Units,
described in Schedule 1 to the Lease Supplement dated the Lease
Term Commencement Date and covering such Units, by executing and
delivering on the Lease Term Commencement Date such Lease
Supplement. The Lessee hereby agrees (subject to satisfaction or
waiver of the conditions set forth in Section 4.6 of the
Participation Agreement) on the Lease Term Commencement Date to
lease from the Lessor on the terms and conditions set forth
herein the Units, as conclusively evidenced by the execution and
delivery by the Lessee and the Lessor of a Lease Supplement
covering such Units. The Lease Supplement executed and delivered
on the Lease Term Commencement Date shall describe the Units
subjected to this Lease on the Lease Term Commencement Date,
shall set forth the Total Equipment Cost thereof, shall confirm
that each Unit has been assembled and installed at the Premises,
and shall state and represent that such Units are free and clear
of all Liens, except the Lien of this Lease and the Indenture and
Permitted Liens of the type described in clauses (iii) and (iv)
of the definition thereof, and subject to the express rights of
Bayer under the Facility Documents. The Lessee hereby agrees
that execution and delivery of a Lease Supplement by the Lessee
shall, without further act, irrevocably constitute acceptance by
the Lessee of the Units identified in such Lease Supplement for
all purposes of this Lease. All risk of loss of the Premises
shall pass to the Lessee upon the execution and delivery hereof
and all risk of loss of a Unit shall pass to the Lessee upon the
acceptance of each such Unit.
SECTION 3. TERM AND RENT.
3.1 Lease Term. The Lease Term of this Lease (the "Lease
Term") shall commence, with respect to the Premises, on the
execution and delivery hereof, and, with respect to the Units, on
the Lease Term Commencement Date. Subject to earlier termination
pursuant to Sections 10, 11 and 15, the Lease Term shall expire
at 11:59 p.m. (New York City time) on the Lease Term Expiration
Date.
3.2 Basic Rent. The Lessee hereby agrees to pay the Lessor
Basic Rent for the Units throughout the Lease Term in consecutive
monthly installments payable on each Rent Payment Date in
arrears. Each such monthly payment of Basic Rent shall be in an
amount equal to the product of the Total Equipment Cost
multiplied by the Basic Rent percentage set forth opposite such
Rent Payment Date on Schedule 2 to the Participation Agreement
(as such Schedule 2 shall be adjusted in accordance with
Section 2.9 of the Participation Agreement). In addition, if the
Lease Term Commencement Date is other than the first day of a
calendar month, an additional amount equal to the product of (i)
the daily average of the Basic Rent payable during the Lease
Term, times (ii) the number of days from, and including, the
Lease Term Commencement Date to, but excluding, the first day of
the next calendar month, shall be paid by the Lessee to the
Lessor on the first day of such next calendar month.
3.3 Sufficiency of Basic Rent. Notwithstanding anything to
the contrary contained in this Lease or any other Operative
Agreement, (i) each installment of Basic Rent (both before and
after any adjustment in accordance with Section 2.9 of the
Participation Agreement) shall be in an amount at least
sufficient to pay in full the principal and interest on the Notes
due on the due date of such installment of Basic Rent; and (ii)
assuming prior performance of the Lease, all Stipulated Loss
Values and Termination Values shall be an amount at least
sufficient to pay in full as of the date of payment thereof,
together with any installment of Basic Rent payable in arrears,
as of the scheduled date of payment thereof, the aggregate unpaid
principal of and all unpaid interest on the Notes accrued to the
date on which Stipulated Loss Value or Termination Value, as the
case may be, is scheduled to be paid in accordance with the terms
hereof. The foregoing shall not constitute a guaranty of the
payment of the Notes.
3.4 Supplemental Rent. The Lessee also agrees to pay to
the Lessor, or to whomsoever shall be entitled thereto, any and
all Supplemental Rent, promptly as the same shall become due and
owing, or where no due date is specified, promptly after demand
by the Person entitled thereto, and in any event within ten
Business Days after such demand, and in the event of any failure
on the part of the Lessee to pay any Supplemental Rent, the
Lessor shall have all rights, powers and remedies provided for
herein or by law or equity or otherwise as in the case of
nonpayment of Basic Rent. The Lessee will also pay, as
Supplemental Rent, (i) on demand, to the extent permitted by
applicable law, an amount equal to interest at the applicable
Late Rate on any part of any installment of Basic Rent not paid
when due for any period for which the same shall be overdue and
on any payment of Supplemental Rent payable to any Indemnified
Person not paid when due or demanded, as the case may be, for the
period from such due date or demand, as the case may be, until
the same shall be paid, and (ii) in the case of any prepayment or
repayment of the Notes or in the case of any change in the
amortization schedule, in each case pursuant to the Indenture, on
the date such Notes are prepaid or repaid or on the date the
amortization schedule is to be adjusted, an amount equal to the
Premium, if any, payable in connection therewith. All
Supplemental Rent to be paid pursuant to this Section 3.4 shall
be payable in the type of funds and in the manner set forth in
Section 3.6 and, except in the case of payments designated as
interest or payments of Stipulated Loss Value, Termination Value,
Fixed Price Purchase Option Amount or Premium, Supplemental Rent
shall be payable on an After-Tax Basis.
3.5 Certain Adjustments. The Lessee and the Lessor agree
that Basic Rents, Stipulated Loss Values and Termination Values
shall be adjusted to the extent provided in Section 2.9 of the
Participation Agreement.
3.6 Manner of Payments. All Rent (other than Supplemental
Rent payable to Persons other than the Lessor, which shall be
payable to such other Persons in accordance with written
instructions furnished to the Lessee by such Persons, unless
otherwise provided in any of the Operative Agreements or required
by law) shall be paid by the Lessee to the Lessor by transferring
or delivering such amounts to the Lessor's account number 55-05-
300-4673100 at Boatmen's First National Bank of Amarillo, ABA No.
111-300-945, account name: Credit Trust Account, with a reference
to EDNC Trust-1997. All Rent shall be paid by the Lessee in
funds consisting of lawful currency of the United States of
America, which shall be immediately available to the recipient
not later than 1:00 p.m. (New York City time) on the date of such
payment; provided that unless and until the Lessee shall have
received written notice from the Indenture Trustee that the Lien
of the Indenture has been discharged pursuant to the terms
thereof, the Lessor hereby directs, and the Lessee agrees, that
all Rent (excluding Excepted Property) payable to the Lessor and
assigned to the Indenture Trustee shall be paid directly to the
Indenture Trustee at the times and in funds of the type specified
in this Section 3.6 at the office of the Indenture Trustee, or at
such other location in the United States of America as the
Indenture Trustee may otherwise direct.
3.7 Net Lease, Etc. This Lease is a net lease and the
Lessee's obligation to pay all Rent payable hereunder shall be
absolute, unconditional and irrevocable and shall not be affected
by any circumstance of any character whatsoever, including,
without limitation, (i) any set-off, abatement, counterclaim,
suspension, recoupment, reduction, rescission, defense or other
right that the Lessee may have against the Lessor, the Owner
Participant, Bayer, the Indenture Trustee or any holder of a
Note, any vendor or manufacturer of any Unit, or any other Person
for any reason whatsoever, (ii) any defect in or failure of
title, merchantability, condition, design, compliance with
specifications, operation or fitness for use of all or any part
of any Unit or the Premises, (iii) any damage to, or removal,
abandonment, requisition, taking, condemnation, loss, theft or
destruction of all or any part of any Unit or the Premises or any
interference, interruption, restriction, curtailment or cessation
in the use or possession of any Unit or the Premises by the
Lessee or any other Person for any reason whatsoever or of
whatever duration, (iv) to the maximum extent permitted by law,
any insolvency, bankruptcy, reorganization or similar proceeding
by or against the Lessee, the Lessor, the Owner Participant,
Bayer, the Indenture Trustee, any holder of a Note or any other
Person, (v) any Liens, security interest or rights of the Lessor,
the Owner Trustee, Bayer, the Indenture Trustee, any holder of a
Note or any other Person with respect to the Units, (vi) the
invalidity, illegality or unenforceability of this Lease, any
other Operative Agreement, or any other agreement, document or
instrument referred to herein or therein or any other infirmity
herein or therein or any lack of right, power or authority or
authorization of the Lessee, the Lessor, the Owner Participant,
Bayer, the Indenture Trustee, any holder of a Note or any other
Person to enter into this Lease or any other Operative Agreement
or to perform the obligations hereunder or thereunder or
consummate the transactions contemplated hereby or thereby or any
doctrine of force majeure, impossibility, frustration or failure
of consideration, (vii) the breach or failure of any warranty or
representation made in this Lease or any other Operative
Agreement by any Lessee, the Lessor, Bayer, the Owner
Participant, the Indenture Trustee, any holder of a Note or any
other Person, or (viii) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing, any
present or future law notwithstanding, it being the intention of
the parties hereto that all Rent being payable by the Lessee
shall continue to be payable in all events in the manner and at
the times provided herein. To the maximum extent permitted by
law, the Lessee hereby waives any and all rights which it may now
have or which at any time hereafter may be conferred upon it, by
statute or otherwise, to terminate, cancel, quit or surrender
this Lease, except in accordance with the express terms hereof.
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, the Lessee nonetheless agrees to
the maximum extent permitted by law, to pay to the Lessor and/or
to any other Person entitled thereto, amounts equal to each
installment of Basic Rent and all Supplemental Rent due and owing
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 obligations of the Lessee in
the immediately preceding sentence shall survive the expiration
or termination of this Lease other than in accordance with its
terms. Each payment of Rent made by the Lessee hereunder shall
be final and the Lessee shall not seek or have any right to
recover all or any part of such payment from the Lessor or any
Person for any reason whatsoever. All covenants, agreements and
undertakings of the Lessee under this Lease and under any other
Operative Agreement shall be performed, complied with and
satisfied at the Lessee s sole cost, expense and risk unless
otherwise expressly stated herein or therein. Nothing contained
herein shall be construed to waive any claim which the Lessee
might have under any of the Operative Agreements or otherwise, or
to limit the right of the Lessee to independently make any claim
it might have against the Lessor or any other Person or to
independently pursue such claim in such manner as the Lessee
shall deem appropriate.
SECTION 4. OWNERSHIP AND MARKING OF UNITS; PERSONAL PROPERTY.
4.1 Retention of Title. The Lessor shall and hereby does
retain, subject to the rights and interests of the Indenture
Trustee under the Indenture so long as the Indenture shall remain
in effect, full legal title to and ownership of the Units
notwithstanding the delivery to and possession and use of the
Units by the Lessee hereunder or any sublessee under any sublease
permitted hereby.
4.2 Duty to Mark Units. The Lessee will promptly, on or
prior to the date a Unit becomes subject to this Lease, cause
such Unit (and Replacement Unit or Substitute Unit) to be
plainly, distinctly, permanently and conspicuously marked by a
plate or stencil printed in contrasting colors upon such Unit,
with the following legend:
"LEASED FROM BOATMEN'S TRUST COMPANY OF TEXAS,
AS OWNER TRUSTEE, AND SUBJECT TO A SECURITY
INTEREST IN FAVOR OF WILMINGTON TRUST COMPANY"
with appropriate changes thereof and additions thereto as from
time to time may be required by law in order to protect the
Lessor's right, title and interest in and to such Unit, its
rights under this Lease and the rights of the Indenture Trustee;
provided, however, that the Lessee will not, under any
circumstances, be required to place more than five plates,
stencils or legends (in the aggregate) on the Units or otherwise
at the Premises. The Lessee will replace promptly any such
plates, stencils or legends which may be removed, defaced,
obliterated or destroyed.
4.3 Prohibition Against Certain Designations. Except as
above provided, the Lessee will not allow the name of any Person
to be placed on any Unit or at the Premises as a designation that
might reasonably be interpreted as a claim of ownership.
4.4 Personal Property. It is intended by the Lessor and
the Lessee that each Unit is and shall be and remain personal
property notwithstanding the manner in which such Unit may be
attached or affixed to realty, and that, upon termination of the
Lease Term, the Lessor shall have the right, to remove such Unit
from the premises whereon the same is located, whether or not
affixed or attached to the realty or any building, at the sole
cost and expense of the Lessee. The Lessor shall not be liable
for, and the Lessee hereby indemnifies each Indemnified Person
(which indemnification shall survive the termination of this
Lease), and agrees to hold each Indemnified Person harmless from
and against, any claim, loss or liability resulting from, any
damage caused to the realty or any building by the removal of
such Unit, other than those arising from the gross negligence or
willful misconduct of such Indemnified Person.
SECTION 5. DISCLAIMER OF WARRANTIES.
Without waiving any claim the Lessee may have against any
seller, supplier or manufacturer, THE LESSEE ACKNOWLEDGES AND
AGREES THAT, (i) EACH UNIT IS OF A SIZE, DESIGN, CAPACITY AND
MANUFACTURE SELECTED BY AND ACCEPTABLE TO THE LESSEE, AND THAT
THE LESSEE HAS EXAMINED AND APPROVED ALL SUPPLY AND PURCHASE
CONTRACTS RELATING TO ANY UNIT, (ii) THE LESSEE IS SATISFIED THAT
EACH UNIT AND THE PREMISES ARE SUITABLE FOR THEIR PURPOSES,
(iii) NEITHER THE LESSOR NOR THE OWNER PARTICIPANT IS A
MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND, (iv) EACH UNIT
AND THE PREMISES ARE LEASED HEREUNDER SUBJECT TO ALL APPLICABLE
LAWS AND GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER
ADOPTED AND IN THE STATE AND CONDITION OF EVERY PART THEREOF WHEN
THE SAME FIRST BECAME SUBJECT TO THIS LEASE, WITHOUT
REPRESENTATION OR WARRANTY OF ANY KIND BY THE LESSOR (IN ITS
INDIVIDUAL CAPACITY OR OTHERWISE) OR THE OWNER PARTICIPANT, AND
(v) THE LESSOR LEASES AND THE LESSEE TAKES EACH UNIT AND THE
PREMISES "AS-IS", "WHERE-IS" AND "WITH ALL FAULTS", IN WHATEVER
CONDITION THEY MAY BE, AND THE LESSEE ACKNOWLEDGES THAT NEITHER
THE LESSOR, AS THE LESSOR OR IN ITS INDIVIDUAL CAPACITY, NOR THE
OWNER PARTICIPANT MAKES, NOR SHALL BE DEEMED TO HAVE MADE, AND
EACH EXPRESSLY DISCLAIMS, ANY AND ALL RIGHTS, CLAIMS, WARRANTIES
OR REPRESENTATIONS, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE,
CONDITION, FITNESS FOR ANY PARTICULAR PURPOSE, DESIGN, OPERATION,
MERCHANTABILITY, OR TITLE, OF ANY UNIT OR THE PREMISES, THE
QUALITY OF THE MATERIAL THEREIN OR WORKMANSHIP THEREOF OR
CONFORMITY THEREOF TO SPECIFICATIONS, FREEDOM FROM PATENT,
COPYRIGHT OR TRADEMARK INFRINGEMENT, THE ABSENCE OF ANY LATENT OR
OTHER DEFECT, WHETHER OR NOT DISCOVERABLE, OR AS TO THE ABSENCE
OF ANY OBLIGATIONS BASED ON STRICT LIABILITY IN TORT OR ANY OTHER
EXPRESS OR IMPLIED REPRESENTATION OR WARRANTY WHATSOEVER WITH
RESPECT THERETO, IT BEING AGREED THAT ALL SUCH RISKS, AS AMONG
THE LESSOR, THE OWNER PARTICIPANT AND THE LESSEE, ARE TO BE BORNE
BY THE LESSEE, except that the Lessor hereby represents and
warrants that (i) the Lessor shall have received whatever title
to the Units that was conveyed to it by the seller thereof,
(ii) the Lessor shall have received whatever interest in the
Premises that was conveyed to it pursuant to the Ground Lease
Sublease and (iii) the Units and the Premises are free and clear
of Lessor's Liens attributable to it. It is also agreed that, as
between the Indemnified Persons 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 5 have
been negotiated, and except to the extent otherwise expressly
stated in the Operative Agreements, the foregoing provisions are
intended to be a complete exclusion and negation of any
representations or warranties by any Participant, the Lessor or
the Indenture Trustee, expressed or implied, with respect to the
Units, the Premises or any part of any thereof, that may arise
pursuant to any applicable law now or hereafter in effect, or
otherwise. The Lessee hereby sells, assigns, conveys and
transfers to the Lessor all of the Lessee's right, title and
interest in and to all warranty and indemnity provisions
contained in or to be provided pursuant to the purchase
agreements that relate to the Units and all claims thereunder in
respect of the Units arising as a result of any default by the
applicable manufacturer under a purchase agreement; provided
that, except as otherwise expressly stated in the Operative
Agreements, it is expressly agreed that the Lessor shall have no
obligation or liability under any such purchase agreement by
reason of, or arising out of, the foregoing assignment or be
obligated to perform any of the obligations of the Lessee under
any such purchase agreement. The Lessor hereby appoints and
constitutes the Lessee its agent and attorney-in-fact during the
Lease Term to assert and enforce, from time to time, in the name
and for the account of the Lessor and the Lessee, as their
interests may appear, but in all cases at the sole cost and
expense of the Lessee, whatever claims and rights the Lessor may
have as owner of the Units against the manufacturer, vendor or
subcontractor of any such Unit or any prior owner thereof;
provided, however, that if at any time a Lease Event of Default
shall have occurred and be continuing, at the Lessor's option,
such power of attorney shall terminate, and the Lessor may assert
and enforce, at the Lessee's sole cost and expense, such claims
and rights. None of the Owner Participant, the Indenture
Trustee, any holder of a Note, the Construction Loan Agent, any
Construction Lender or the Lessor shall have any responsibility
or liability to the Lessee or any other Person with respect to
any of the following: (w) any liability, loss or damage caused
or alleged to be caused directly or indirectly by any Unit or the
Premises or by any inadequacy thereof or deficiency or defect
therein or by any other circumstances in connection therewith,
other than, as to any such Person, that arising directly from the
gross negligence or willful misconduct of such Person during any
visit by such Person to the Premises; (x) the use, operation or
performance of any Unit or the Premises or any risks relating
thereto; (y) any interruption of service, loss of business or
anticipated profits or consequential damages; or (z) the
delivery, operation, servicing, maintenance, repair, improvement
or replacement of any Unit or the Premises. The Lessee's
delivery of a Lease Supplement shall be conclusive evidence as
between the Lessee and the Lessor that all Units described
therein are in good order and condition, appear to conform to
specifications applicable thereto and all governmental standards
and requirements reasonably interpreted as being applicable
thereto and are in all respects satisfactory to the Lessee, and
the Lessee will not assert any claim of any nature whatsoever
against the Lessor or the Owner Participant based on any of the
foregoing matters.
SECTION 6. RETURN OF UNITS; CONDITION; STORAGE.
6.1 Return. At the end of the Lease Term, unless the
Lessee has exercised the Fixed Price Purchase Option under
Section 22, the Lessee shall surrender each Unit which is subject
to the Lease at such time to Lessor at the Premises in accordance
with the terms of this Section 6, and the Lessee shall promptly
vacate the Premises.
6.2 Condition of Units. Each Unit when surrendered to the
Lessor pursuant to Section 6.1 shall be in the condition required
by Section 8.1 (as then currently tooled) and free and clear of
all Liens, other than Lessor's Liens, with all Severable
Modifications that are not Required Modifications to which title
was retained by the Lessee pursuant to Section 9.2 having been
removed from such Unit and with any damage caused by such removal
having been repaired. All logs, documents, instruments,
specifications, manuals, drawings, records, books, service
bulletins and other materials relating to such Unit and the use,
damage, repair and maintenance of such Unit shall be surrendered
to the Lessor or its designee upon the surrender of such Unit.
In addition, all licenses, patents and similar rights necessary
for the operation of each Unit by a third party shall be assigned
or conveyed to the Lessor or its designee upon surrender of such
Unit.
6.3 Storage. If requested by the Lessor, the Lessee will
provide for free storage of each Unit (i) so long as no Lease
Event of Default has occurred and is continuing, for a period not
exceeding 60 days or (ii) subject to the rights of Bayer under
the Facility Documents, if a Lease Event of Default has occurred
and is continuing, for a period not exceeding one year, in each
case on the Premises, during which time the Lessee will, at its
sole cost and expense, maintain and insure such Unit in
accordance with the provisions of this Lease. During such period
of storage, the Lessor or any Person designated by it and any
prospective purchaser or user, shall have the right to inspect,
at its sole cost, expense and risk (except that if a Lease
Default or a Lease Event of Default shall have occurred and be
continuing, any such inspection shall be at the cost, expense and
risk of the Lessee) any Unit that is surrendered pursuant to
Section 6.1. If the Lessee has not exercised the Fixed Price
Purchase Option, the Lessee will cause the Units to be kept in a
state where such Units can be demonstrated to a prospective
purchaser or user during the last 180 days of the Lease Term.
The Lessor agrees to indemnify, protect and keep harmless, on an
After-Tax Basis, the Lessee, its employees, agents, successors
and assigns from and against any and all liabilities,
obligations, losses, damages, injuries, claims, actions, costs
and expenses (including reasonable attorney's fees) for personal
injuries or property damage arising directly out of the gross
negligence or willful misconduct of the Lessor, or the acts or
omissions of any Person designated by it or any prospective
purchaser or user in connection with the inspection of the Units
pursuant to this Section 6.3, whether or not such acts or
omissions of such Person, prospective purchaser or user
constitute gross negligence or willful misconduct. The Lessee
will provide to the Lessor or any Person designated by it such
cooperation and assistance as the Lessor or such Person shall
reasonably request in connection with the remarketing of the
Units.
SECTION 7. LIENS.
The Lessee will not directly or indirectly create, incur,
assume, permit or suffer to exist any Lien on or with respect to
any Units or the Premises or the Lessee's leasehold interest
therein under this Lease, except Permitted Liens, Lessor's Liens
and Liens described in Section 6.4 of the Participation Agreement
and the Lessee shall promptly, at its own expense, take such
action or cause such action to be taken as may be necessary to
duly discharge (by bonding or otherwise) any such Lien not
excepted above if the same shall arise at any time. Without
limiting the foregoing and except for the Lien of this Lease and
the Indenture and Permitted Liens of the type described in
clauses (iii) and (iv) of the definition thereof, and subject to
the express rights of Bayer under the Facility Documents, the
Lessee covenants and agrees that it will keep each Unit and the
Premises free and clear of any Liens, rights of distraint,
charges, encumbrances or claims of the owner or owners of any
interest in the real estate on which any Unit may from time to
time be located and any purchaser of, or present or future
creditor obtaining a Lien on, such real estate, and will obtain
and deliver, promptly after delivery or change in location of any
Unit, such waivers of any of the foregoing in recordable form
reasonably satisfactory to the Lessor as are necessary to so
maintain each Unit free and clear as aforesaid.
SECTION 8. MAINTENANCE; OPERATION; POSSESSION; COMPLIANCE
WITH
LAWS; SUBLEASE; REPLACEMENT OF PARTS; SUBSTITUTION.
8.1 Maintenance and Operation. The Lessee, at its own cost
and expense, shall maintain, service, repair, protect and keep,
or shall cause to be maintained, serviced, repaired, protected
and kept, each Unit and the Premises, and shall operate and use
each Unit and the Premises, (i) in good operating order,
condition and repair, and in at least as good operating order,
condition and repair as on the date of the delivery by the
manufacturer of such Unit, ordinary wear and tear excepted, and
in a manner comparable to and no less favorable than maintenance
practices used by the Lessee in respect of equipment owned or
leased by the Lessee similar in type to such Unit, (ii) in
accordance with all manufacturer's standards and warranties and
in accordance with standards and procedures necessary to preserve
coverages under all insurance policies required to be maintained
pursuant to Section 12, if applicable, (iii) in material
compliance with all applicable laws, rules and regulations or as
required by any Governmental Authority, and (iv) in accordance
with sound engineering practice and standards which will enable
the Lessee to operate the Units at or above the contracted
capacity levels or otherwise fully perform its obligations under
the Operative Agreements. The Lessee shall at all times, at its
own expense, comply with such operating or repair standards and
periodic maintenance inspections as are required to enforce
warranty claims against manufacturers or subcontractors in
respect of each Unit or which are otherwise established by such
manufacturers or subcontractors as normal operating procedures.
The Lessee shall use each Unit and the Premises only in the
manner for which they were designed and intended; provided that
the Lessee may retool such Unit so long as the operation and
maintenance thereof otherwise complies with this Section 8. In
no event shall the Lessee adversely discriminate as to the use or
maintenance of any Unit (including the periodicity of maintenance
or record keeping in respect of such Unit) as compared to other
equipment of a similar nature which the Lessee owns or leases.
The Lessee will maintain all blueprints, operating manuals,
maintenance manuals, parts lists, service bulletins and other
technical documents and information necessary for the assembly
and operation of each Unit and all records, logs and other
materials for each Unit required by any Governmental Authority,
all as if the Lessee were the owner of such Unit, regardless of
whether any such requirements, by their terms, are nominally
imposed on the Lessee, the Lessor or the Owner Participant. The
Lessee, at its sole cost and expense, shall promptly repair,
restore, rebuild or replace any Units which from time to time
become damaged, destroyed, seized or confiscated so that at all
times the condition of such Unit shall be in compliance with this
Section 8.1, except to the extent such damage, destruction,
seizure or confiscation constitutes an Event of Loss, in which
case the provisions of Section 11 shall apply.
8.2 Possession and Use. Subject to Section 8.3, the Lessee
agrees that each Unit will be used solely in the conduct of its
business and will at all times remain in the possession and
control of the Lessee on the Premises. The Lessee warrants that
each Unit will at all times be used and operated under and in
material compliance with all contracts or agreements applicable
to use or operation of such Unit to which the Lessee is a party
or by which the Lessee is bound and under and in material
compliance with the laws of the jurisdiction in which the
Premises is situated, and in material compliance with all lawful
acts, rules, regulations and orders of any Governmental Authority
having power to regulate or supervise the use of the Units.
8.3 Sublease. The Lessee, but only with the prior written
consent of the Lessor (and, unless the Lien of the Indenture
shall have been discharged in accordance with the terms thereof,
the Indenture Trustee) (which consent shall not be unreasonably
withheld) and upon receipt by the Lessor of an Officer s
Certificate of Bayer addressed to the Lessor pursuant to which
Bayer expressly consents to the proposed sublease and the
sublessor, shall be entitled to sublease all or a portion of the
Units to a business entity (each a "Permitted Sublease") so long
as: (i) on the effective date of any such sublease, no Lease
Default or Lease Event of Default has occurred and is continuing
and such sublessee is not subject to any bankruptcy, insolvency
or similar proceedings; (ii) any sublease, and the rights and
interest of any sublessee thereunder, shall be in all events
subject and subordinate to this Lease and the rights and
interests of the Lessor and its respective successors and assigns
hereunder, and the Lessee shall remain primarily and directly
liable for the performance of its obligations hereunder;
(iii) any sublease shall not be for a term which extends beyond
the Lease Term; (iv) such sublease will prohibit further
subleasing by the sublessee; (v) all filings of any such sublease
necessary to protect the rights of the Lessor (including, without
limitation, filings necessary to comply with Section 7) and the
Lien of the Indenture shall have been made in a timely fashion;
(vi) without limiting the foregoing clause (ii), any such
sublease shall include appropriate provision (whether by
requiring such obligations to be performed by the sublessee, the
Lessee or both) for the operation, maintenance and insurance in
accordance with the terms hereof of the Units subleased thereby;
(vii) any sublease of any Unit shall require that each Unit
subject to such sublease shall at all times be located on the
Premises; and (viii) the Lessor (and, unless the Lien of the
Indenture shall have been discharged in accordance with the terms
thereof, the Indenture Trustee) shall be satisfied that the Bayer
Letter and, prior to the expiration thereof pursuant to its
terms, the Bayer Support Agreement, as the case may be, remain
fully in effect after giving effect to any such sublease. No
sublease shall permit the sublessee thereunder to take any action
inconsistent with the terms of this Lease or any other Operative
Agreement. The Lessee shall provide to the Lessor and the
Indenture Trustee not less than 30 days prior written notice of
such sublease, such notice to identify the sublessee and to
specify the term of the sublease and confirm that the location at
which any Unit or Units are to be used under the sublease is at
the Premises. In addition, if the term of any sublease exceeds
one year, the Lessee shall promptly, and in any event within 45
days of the execution and delivery of such sublease, deliver a
true, correct and complete copy of such sublease to the Lessor
and the Indenture Trustee. Throughout the term of any such
sublease, all of the terms and provisions of this Lease shall
continue to be applicable thereto and no such sublease shall
relieve the Lessee of any of its liabilities or obligations
hereunder, which shall be and remain those of a principal and not
a surety.
8.4 Replacement of Parts. The Lessee, at its sole cost and
expense, will promptly replace, or cause to be replaced at no
cost to the Lessor, the Owner Participant, the Indenture Trustee
or any holder of a Note, all tooling, appliances, parts,
instruments, appurtenances, accessories, furnishings and other
equipment of whatever nature (herein collectively called "Parts")
which are or may from time to time be incorporated or installed
in or attached to any Unit and which may from time to time become
worn out, lost, stolen, destroyed, seized, confiscated, damaged
beyond repair or permanently rendered unfit for use by damage or
obsolescence. All replacement Parts shall be free and clear of
all Liens and rights of others on the date they become subject to
this Lease (other than the Liens of the Lease and the Indenture
and Permitted Liens of the type described in clauses (iii) and
(iv) of the definition thereof) and shall be in as good operating
condition as, and shall have a fair market value, utility,
remaining economic useful life and estimated residual value at
least equal to, the Parts replaced, assuming such replaced Parts
were in at least the condition and repair required to be
maintained by the terms of this Lease.
All Parts at any time removed from such Unit shall remain
subject to the rights of the Lessor, 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 such Unit
and which meet the requirements for replacement Parts specified
above. Immediately upon any replacement Part becoming
incorporated or installed in or attached to any Unit as above
provided, without further act:
(i) Such replacement Part shall become subject to this
Lease and, unless the Lien of the Indenture shall have been
discharged, the Lien of the Indenture, and such replacement
Part shall be deemed part of such Unit, for all purposes
hereof to the same extent as the Parts originally
incorporated or installed in such Unit;
(ii) Title to such replacement Part shall thereupon
vest in the Lessor; and
(iii) Title to the removed Part shall thereupon
vest in the Lessee or in such Person as shall be designated
by the Lessee, free and clear of all rights of the Lessor,
the Owner Participant and the Indenture Trustee.
SECTION 9. MODIFICATIONS.
9.1 Required Modifications. The Lessee, at its own
expense, shall make such alterations, modifications and additions
to the Units as may be required from time to time to meet the
requirements of applicable law, insurance, or any Governmental
Authority, or to maintain manufacturer's warranties, or to enable
the Lessee to operate the Units at the contracted capacity levels
or otherwise fully perform its obligations under the Facility
Documents and the other Operative Agreements to which it is a
party (a "Required Modification"). Title to any Required
Modification (regardless of whether such Required Modification is
a Severable Modification or a Non-Severable Modification) shall
immediately vest in the Lessor.
9.2 Optional Modifications. The Lessee at any time may
modify, alter, improve, replace or substitute any Unit (an
"Optional Modification"; and each of an Optional Modification and
a Required Modification is a "Modification"); provided that no
Optional Modification shall (i) diminish the fair market value,
utility, condition, remaining economic useful life, or estimated
residual value of such Unit below the fair market value, utility,
condition, remaining economic useful life, or estimated residual
value thereof immediately prior to such Modification, assuming
such Unit was then in the condition required to be maintained by
the terms of this Lease, (ii) cause any Unit to become "limited
use property" within the meaning of Revenue Procedure 76-30,
(iii) otherwise result, in the opinion of Owner Participant's tax
counsel, in adverse tax consequences to the Owner Participant or
the Lessor which are not subject to indemnification under the Tax
Indemnity Agreement, or (iv) alter the essential function of such
Unit from that for which it was designed and intended. Title to
any Non-Severable Modification which is an Optional Modification
shall be immediately vested in the Lessor. Title to any
Severable Modification which is not a Required Modification
shall, as between the Lessor and the Lessee, remain with the
Lessee (subject to the rights, if any, of Bayer to such Severable
Modification arising under the terms of the Facility Documents).
During the Lease Term or at the return of such Unit, and so long
as no Lease Default or Lease Event of Default shall have occurred
and be continuing, the Lessee may remove and replace any
Severable Modification which is not a Required Modification;
provided, however, that the Lessee may remove in the ordinary
course of the operation of the Units precious metal catalysts,
commonly referred to as gauze changeouts (each, a "Gauze
Changeout"), provided that each Gauze Changeout which is removed
is simultaneously replaced with an operationally equivalent Gauze
Changeout of equal or greater utility. Upon the return of a
Unit, if the Lessee, at its cost, shall cause any Severable
Modifications which are not Required Modifications to be made to
such Unit, and such Severable Modifications theretofore made have
not been removed, the Lessor shall have the right to purchase
such Severable Modifications (other than Severable Modification
consisting of proprietary equipment of the Lessee) at their then
fair market value. If the Lessor does not elect to purchase such
Severable Modifications or such Severable Modification consists
of proprietary equipment of the Lessee and has not been removed,
it shall have the right to cause, at the Lessee's cost and
expense, such Severable Modifications to be removed upon return
of the Unit.
SECTION 10. VOLUNTARY TERMINATION.
10.1 Uneconomic or Surplus Condition Termination. So long
as no Lease Default or Lease Event of Default shall have occurred
and be continuing, the Lessee shall have the right, at its option
at any time (subject to the terms and conditions of this Section
10.1), during the Lease Term on any Rent Payment Date occurring
after the fifth anniversary of the Lease Term Commencement Date
to terminate the Lease Term with respect to all (and not less
than all) of the Units then subject to the Lease if the Lessee
determines in good faith (as evidenced by a certificate executed
by a Responsible Officer of the Lessee certifying that the Board
of Directors of EDNC has made a good faith determination that the
Units are uneconomic or surplus) that such Units (the "Proposed
Terminated Units") have become uneconomic or surplus to the
Lessee's needs. The Lessee shall deliver at least 180 days'
revocable prior notice to the Lessor and the Indenture Trustee,
specifying a proposed date of termination for the Proposed
Terminated Units (the "Termination Date"), which date shall be a
Rent Payment Date, and which notice (as an express condition
precedent to the exercise by the Lessee of its rights under this
Section 10.1) must be accompanied by an Officer s Certificate of
Bayer addressed to the Lessor and the Indenture Trustee pursuant
to which Bayer expressly consents to the termination of the Lease
Term by the Lessee pursuant to this Section 10.1. Any such
termination will be effective on the Termination Date after all
amounts payable under Section 10.2 or 10.3, as applicable, and
all other obligations thereunder, have been paid and performed in
full. So long as the Lessor shall not have given the Lessee a
notice of election to retain the Proposed Terminated Units in
accordance with Section 10.3, the Lessee may withdraw the
termination notice at any time prior to the thirtieth (30th)
Business Day preceding the Termination Date, whereupon this Lease
shall continue in full force and effect; provided that the Lessee
may not exercise its right to withdraw such a termination notice
more than once. Unless theretofore withdrawn, the termination
notice shall become irrevocable upon the thirtieth (30th)
Business Day preceding the Termination Date. The Lessee agrees
that, without limiting Section 2.8(b) of the Participation
Agreement, it will reimburse the Lessor, the Indenture Trustee,
the Owner Participant and each holder of a Note for all out-of-
pocket costs and expenses (including, without limitation,
reasonable legal fees and expenses) incurred by the Lessor, the
Owner Participant, the Indenture Trustee and each holder of a
Note in connection with the proposed termination of any Unit,
whether or not consummated, including, without limitation, costs,
if any, associated with an early termination of the Swap
Agreement.
10.2 Sale of Units. (a) With respect to the Proposed
Terminated Units, during the period from the date of such notice
given pursuant to Section 10.1 to the Termination Date, the
Lessee, as agent for the Lessor and at the Lessee's sole cost and
expense, shall use its reasonable efforts to obtain bids from
Persons other than the Lessee or Affiliates thereof for the cash
purchase of the Proposed Terminated Units on the Termination
Date, and it shall promptly, and in any event at least ten
Business Days prior to the proposed date of sale, certify to the
Lessor in writing the amount and terms of each such bid and the
name and address of the party submitting such bid. The Lessor
and the Owner Participant shall have the right, at its own
expense, to obtain bids for the purchase of the Proposed
Terminated Units, either directly or through agents other than
the Lessee, from the Owner Participant or other Persons, 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 sale. Unless the Lessor shall
have elected to retain the Proposed Terminated Units in
accordance with Section 10.3, subject to Section 10.2(b), on the
Termination Date: (i) the Lessee shall, subject to receipt
(x) by the Indenture Trustee or, if the Lien of the Indenture has
been discharged, the Lessor of all amounts owing to the Lessor
pursuant to the next sentence, and (y) by any other Persons
entitled thereto of all unpaid Supplemental Rent accrued on or
before the Termination Date, deliver the Proposed Terminated
Units to the bidder (which shall not be the Lessee or any
Affiliate thereof), if any, which shall have submitted the
highest cash bid prior to such date for such Proposed Terminated
Units (or to such other bidder as the Lessee and the Lessor shall
agree); and (ii) the Lessor shall, without recourse or warranty
(except as to the absence of any Lessor's Lien attributable to
the Lessor) simultaneously therewith (including with the receipt
of the amounts described in clause (i) above by the Persons
entitled to receive such amounts) sell such Proposed Terminated
Units "as-is, where-is" to such bidder. The cash selling price
realized at such sale shall be paid to and retained by the
Indenture Trustee or, if the Lien of the Indenture has been
discharged, the Lessor (after reimbursement to the Lessee of all
of its costs and expenses in connection with such sale) and, in
addition, on the Termination Date, the Lessee shall pay to (A)
the Indenture Trustee or, if the Lien of the Indenture has been
discharged, the Lessor (x) all unpaid Basic Rent due and payable
prior to, and in arrears on, the Termination Date, and (y) the
excess, if any, of (1) the Termination Value for all of the Units
computed as of the Termination Date, over (2) the net cash sales
proceeds (after the deduction of all costs and expenses of the
Lessee, the Lessor, the Indenture Trustee, each holder of a Note
and the Owner Participant in connection with such sale of the
Proposed Terminated Units), (B) the Persons entitled thereto, any
other unpaid Supplemental Rent accrued on or before the
Termination Date and (C) without limiting clause (B), an amount
equal to the Premium, if any, on the Notes payable on the
Termination Date. Neither the Lessee nor any Affiliate thereof
shall purchase, lease or otherwise acquire the Proposed
Terminated Units or any portion thereof from the purchasing
bidder or any Affiliate thereof for a period of three years from
the Termination Date relating to the Proposed Terminated Units,
such prohibition, notwithstanding any provision to the contrary
in Section 10.4 or otherwise, to survive the termination of this
Lease with respect to such Proposed Terminated Unit.
(b) If (x) the Lessor has not elected to retain the
Proposed Terminated Units in accordance with Section 10.3, (y)
the Lessee has not withdrawn its termination notice pursuant to
Section 10.1 and (z) on the Termination Date, no bidder described
in Section 10.2(a) shall exist, this Lease shall continue with
respect to such Proposed Terminated Units.
10.3 Retention of Units by the Lessor. Notwithstanding the
provisions of Sections 10.1 and 10.2, the Lessor may, with
respect to all Proposed Terminated Units, irrevocably elect by
written notice to the Lessee, no later than 60 days after receipt
of the Lessee's notice of termination, not to sell such Proposed
Terminated Units on the Termination Date, whereupon the Lessee
shall (i) deliver the Proposed Terminated Units to the Lessor in
the same manner and condition as if delivery were made to the
Lessor pursuant to Section 6, treating the Termination Date as
the last day of the Lease Term with respect to such Proposed
Terminated Units, (ii) pay to the Lessor, the Owner Participant,
the Indenture Trustee and each holder of a Note, all Basic Rent
and all Supplemental Rent due and owing on or before the
Termination Date and unpaid excluding any Termination Value and
(iii) pay to the Lessor an amount equal to the Premium, if any,
on the Notes paid pursuant to the next sentence of this Section
10.3. On such Termination Date, the Lessor shall pay, or cause
to be paid, to the Indenture Trustee in funds of the type
specified in Section 3.6 an amount equal to the outstanding
principal amount of the Notes issued in respect of such Proposed
Terminated Units, all accrued interest to the date of prepayment
of such Notes on such Termination Date and the Premium, if any,
on such Notes.
10.4 Termination of Lease. In the event of either (x) any
such sale and receipt by the Lessor and the Indenture Trustee of
all of the amounts provided in Section 10.2 or (y) retention of
the Proposed Terminated Units by the Lessor pursuant to
Section 10.3 and compliance by the Lessor with the provisions of
Section 10.3, and upon compliance by the Lessee with the
provisions of this Section 10, the obligation of the Lessee to
pay Basic Rent hereunder for such Proposed Terminated Units shall
cease with respect to any period after the Termination Date and
the Lease Term shall end.
SECTION 11. LOSS, DESTRUCTION, REQUISITION, ETC.
11.1 Event of Loss. The term "Event of Loss" shall mean
that (i) all Units shall suffer damage or destruction resulting
in an insurance settlement on the basis of an actual,
constructive or compromised total loss; (ii) all Units shall
suffer destruction or damage beyond repair; (iii) all Units
shall suffer damage which, in the Lessee's good faith judgment
(with the written concurrence of Bayer), makes repair uneconomic
or renders all Units unfit for commercial use; (iv) all Units
shall suffer theft, loss or disappearance for a period in excess
of 90 days or, if less, the remaining portion of the Lease Term
then in effect; (v) all Units shall have title thereto taken or
appropriated by any Governmental Authority under the power of
eminent domain or otherwise; or (vi) all Units shall be taken or
requisitioned for use by any Governmental Authority under the
power of eminent domain or otherwise, and such taking or
requisition for use pursuant to this clause (vi) is for an
indefinite period or a period that exceeds 180 days or, if less,
the remaining portion of the Lease Term then in effect.
11.2 Replacement or Payment upon Event of Loss. Upon the
occurrence of an Event of Loss, the Lessee shall, promptly after
a Responsible Officer of the Lessee shall have actual knowledge
of such occurrence (and in any event within 10 days after the
occurrence of such Event of Loss), give the Lessor and the
Indenture Trustee written notice of such Event of Loss and,
within 60 days after such notice, give the Lessor and the
Indenture Trustee further notice of its election to perform one
of the following options (it being agreed that if the Lessee
shall not have given notice of such election within 60 days after
giving notice of such occurrence, the Lessee shall be deemed to
have elected to perform the option set forth in the following
paragraph (ii)); provided that the Lessee shall not have the
right to select the option set forth in paragraph (i) (A) if a
Lease Default or Lease Event of Default shall have occurred and
be continuing or (B) after the seventh anniversary of the Lease
Term Commencement Date; and, provided, further, that the
selection of the option set forth in paragraph (i) shall be
subject to the provisions of the Tax Indemnity Agreement:
(i) as promptly as practicable (but no sooner than
ten days after giving of its notice of election to perform
the option set forth in this paragraph (i)), and in any
event on or before the 540th day following the date on which
the Event of Loss occurred, the Lessee shall comply with
Section 11.4(b) and shall convey or cause to be conveyed to
the Lessor Replacement Units to be leased to the Lessee
hereunder, such Replacement Units to be free and clear of
all Liens (other than the Liens of the Lease and the
Indenture and Permitted Liens of the type described in
clauses (iii) and (iv) of the definition thereof) and to
have a Fair Market Value, utility, condition, remaining
economic useful life and estimated residual value at least
equal to the Units so replaced (assuming such Units have not
suffered an Event of Loss and were in the condition required
to be maintained by the terms of this Lease); provided that,
if the Lessee shall not perform its obligation to effect
such replacement under this paragraph (i) during the period
of time provided herein, then the Lessee shall comply with
the following paragraph (ii) except that the related
Settlement Date may occur within 570 days following the
Event of Loss; or
(ii) on the next succeeding Determination Date
(the "Settlement Date") occurring at least 90 days after the
date on which the Event of Loss occurred, the Lessee shall
pay or cause to be paid to the Indenture Trustee or, if the
Lien of the Indenture has been discharged, the Lessor (or in
the case of Supplemental Rent, to the Persons entitled
thereto) in funds of the type specified in Section 3.6, the
sum of (x) an amount equal to the Stipulated Loss Value,
determined as of such Settlement Date, (y) to the extent not
theretofore paid, Basic Rent due and payable prior to, and
in arrears on, such Settlement Date, and (z) all other
accrued and unpaid Supplemental Rent. Notwithstanding the
foregoing, if the Event of Loss occurs prior to the Lease
Term Commencement Date, any amounts payable to the Indenture
Trustee pursuant to this Section 11.2(ii) shall be paid to
the Construction Loan Agent.
11.3 Rent Termination. Upon the payment of all sums
required to be paid pursuant to Section 11.2(ii) hereof, the
Lease and the obligation to pay Basic Rent due and accruing
subsequent to the date of payment of Stipulated Loss Value shall
terminate, without prejudice to the continuation of those
obligations which, by the express terms of the Operative
Agreements, survive termination of the Lease Term.
11.4 Disposition of Units; Replacement of Units.
(a) Upon satisfaction of all conditions in Section
11.2(ii), the Lessor will transfer to the Lessee "as-is, where-
is" all right, title and interest of the Lessor in and to all
Units having suffered the Event of Loss, without recourse or
warranty, except for the absence of Lessor's Liens attributable
to the Lessor.
(b) At the time of or prior to any replacement of the
Units, the Lessee, at its own expense, will (A) furnish the
Lessor with a full warranty (as to title) Bill of Sale (together
with an assignment of the manufacturer's warranties, if any such
warranties exist) with respect to the Replacement Units,
(B) cause a Lease Supplement substantially in the form of
Exhibit A hereto with appropriate modifications, subjecting such
Replacement Units to this Lease, and duly executed by the Lessee,
to be delivered to the Lessor for execution, (C) furnish the
Lessor and the Indenture Trustee with an opinion of the Lessee's
counsel, to the effect that (x) each of the Bill of Sale and
Lease Supplement referred to in clauses (A) and (B) above
constitutes a legal, valid, binding and enforceable obligation of
the Lessee (subject to customary qualifications as to bankruptcy
and equitable principles), (y) legal title and ownership of such
Replacement Units have been conveyed to the Lessor, free and
clear of all Liens (other than the Liens of the Lease and the
Indenture and Permitted Liens of the type described in clauses
(iii) and (iv) of the definition thereof), and (z) all filings,
recordings and other action necessary or appropriate to perfect
and protect the Lessor's and the Indenture Trustee's respective
interests in the Replacement Units have been accomplished, (D)
furnish the Lessor and the Indenture Trustee with an Officer's
Certificate of the Lessee certifying that as of said date, and
upon consummation of the replacement, no Lease Default or Lease
Event of Default exists, and the Replacement Units have a Fair
Market Value (as supported by an independent appraisal
satisfactory in form and substance to the Owner Participant from
an appraiser of recognized standing and knowledgeable in
equipment of the type being appraised and selected by the Lessee
and satisfactory to the Owner Participant), utility, condition,
remaining economic useful life and estimated value at least equal
to the Units replaced (assuming such Units have not suffered an
Event of Loss and were in the condition required to be maintained
by the terms of this Lease), (E) furnish to the Lessor and the
Indenture Trustee evidence of compliance with the provisions of
Section 12 with respect to the Replacement Units, and (F) furnish
such other documents and evidence as the Owner Participant, the
Lessor, Indenture Trustee, a Majority In Interest, or their
respective counsel, may reasonably request in order to establish
the consummation of the transactions contemplated by this
Section 11.4. For all purposes hereof, upon passage of title
thereto to the Lessor the Replacement Units shall be deemed part
of the property leased hereunder and each Replacement Unit shall
be deemed a "Unit" as defined herein. Upon such passage of
title, and upon payment in full of any indemnity due and payable
as a result of such replacement pursuant to Section 7 of the
Participation Agreement, the Lessor will transfer to the Lessee
"as-is, where-is" all the Lessor's right, title and interest in
and to the replaced Units, without recourse or warranty (except
as to the absence of Lessor's Liens attributable to the Lessor).
No Event of Loss under the circumstances contemplated by the
terms of Section 11.2(i) shall result in any reduction of Basic
Rent. The Lessee shall pay all reasonable costs and expenses
(including, without limitation, reasonable attorney s fees) of
the Lessor, the Owner Participant, the Indenture Trustee and the
holders of the Notes incurred in connection with such
replacement.
11.5 Applications of Event of Loss Proceeds. The Indenture
Trustee (or, after the Lien of the Indenture has been discharged,
the Lessor) shall be entitled to receive, and, subject to the
provisions of Section 12.2, the Lessee hereby irrevocably assigns
to the Indenture Trustee (and, after the Lien of the Indenture
has been discharged, the Lessor), all right, title and interest
of the Lessee in and to any proceeds of any claims for damage,
insurance or award received on account of an Event of Loss;
provided that the insurance proceeds and claims for damage, in
each case with respect to insurance carried by the Lessee, shall
be applied pursuant to and in the manner set forth in Section
12.3; and provided further that, with respect to an Event of Loss
described in clause (v) or (vi) of Section 11.1 hereof, so long
as no Lease Default or Lease Event of Default shall have occurred
and be continuing (i) the Lessee shall be entitled to a credit
for the amount of such proceeds or any award (other than
insurance) so received and retained by the Lessor against the
Lessee's obligation to pay Stipulated Loss Value and (ii)
following the payment of Stipulated Loss Value and all other
amounts payable under Section 11.2(ii), any such proceeds or
award shall be payable to the Lessor and the Lessee as their
interests may appear. Notwithstanding the foregoing, if the
Event of Loss occurs prior to the Lease Term Commencement Date,
any amounts payable to the Indenture Trustee pursuant to this
Section 11.5 shall be paid to the Construction Loan Agent.
11.6 Eminent Domain; Damage Not Constituting an Event of
Loss. In the event that during the Lease Term the use of any
Unit is requisitioned or taken by any Governmental Authority
under the power of eminent domain or otherwise for a period which
does not constitute an Event of Loss, this Lease and the Lessee's
obligation to pay all installments of Basic Rent, the
Supplemental Rent and any other amount payable hereunder shall
continue for the duration of such requisitioning or taking. 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; provided, however, that nothing herein contained
shall affect the obligations of the Lessee contained in Section 6
hereof with respect to the condition in which the Unit is to be
returned to the Lessor. A requisition or taking of use for an
indefinite period of time shall not be deemed to exceed the
remaining Lease Term with respect to any Unit unless and until
the period of such requisition or taking does, in fact, exceed
the remaining Lease Term. In such case, the Event of Loss shall
be deemed to have occurred on the 41st day preceding the last day
of the Lease Term, unless the Lessee has exercised its Fixed
Price Purchase Option pursuant to Section 22 hereof, and, all
payments received by the Lessor or the Lessee from any
Governmental Authority for the use of such Unit after the Lease
Term shall be applied in the manner set forth in the final
proviso to Section 11.5. If any damage or destruction, theft,
loss or disappearance shall occur, the occurrence of which does
not constitute an Event of Loss, the Lessee shall promptly, and
in any event within ten days after the occurrence of such event
give the Lessor and the Indenture Trustee notice thereof. The
Lessee shall make or cause to be made such repairs as are
necessary to ensure that the Units and the Premises are
maintained in the condition and state of repair required under
Section 8; provided that such repairs shall be commenced promptly
and shall be completed promptly, before the earlier of (i) 60
days after the occurrence of the event, except that in the event
such repairs cannot be reasonably commenced and completed during
such 60-day period, such longer period as is reasonably necessary
to commence and complete such repairs, provided that in no event
shall such period exceed, in the aggregate, 180 days, and (ii)
the last day of the Lease Term. If such repairs have not been
completed within the time period referred to in the foregoing
proviso, then an Event of Loss shall be deemed to have occurred
at the 41st day preceding the last day of the Lease Term, unless
the Lessee has exercised the Fixed Price Purchase Option pursuant
to Section 22 hereof. No such event shall result in any
reduction of Basic Rent.
11.7 Lease Event of Default. Any amount referred to in
Section 11.5, or any amount payable in connection with events
described in the first sentence of Section 11.6, or any amount
which is insurance proceeds received in connection with any
damage or destruction, theft, loss or disappearance which does
not constitute an Event of Loss, which is payable to the Lessee
shall not be paid to the Lessee, or if it has been previously
paid directly to the Lessee, shall not be retained by the Lessee,
if at the time of such payment a Lease Default or Lease Event of
Default shall have occurred and be continuing, but shall be paid
to and held by the Lessor (or, so long as the Lien of the
Indenture has not been discharged, the Indenture Trustee) as
security for the obligations of the Lessee under this Lease, and
at such time as there shall not be continuing any such Lease
Default or Lease Event of Default, such amount (unless
theretofore otherwise applied to the obligations of the Lessee
hereunder) shall be paid over to the Lessee.
11.8 Substitution of Units. So long as no Lease Default or
Lease Event of Default has occurred and is continuing, the Lessee
shall have the right, from time to time during the Lease Term, to
replace any Unit or a portion of any Unit that has become
uneconomic, obsolete or surplus to the Lessee s operating
requirements, as determined by the Lessee in its reasonable
business judgment (the Replaced Unit ), with equipment of
substantially like kind and of equal or greater Fair Market
Value, utility, condition, remaining economic useful life and
estimated residual value (the Substitute Unit ) (assuming that
such Replaced Unit has not suffered an Event of Loss and was then
in the condition and state of repair required to be maintained
under the terms of this Lease), so long as: (a) the Lessee gives
at least 90 days prior written notice to the Lessor, the Owner
Participant and the Indenture Trustee, which notice shall specify
and describe the Replaced Unit, the Substitute Unit and the date
of such substitution, and which notice shall also contain a
certification signed by a Responsible Officer of the Lessee on
behalf of the Lessee that the Replaced Unit has become
uneconomic, obsolete or surplus to the Lessee s operating
requirements, as determined by the Lessee in its reasonable
business judgment, other than as a result of damage or
destruction, (b) the Lessee complies with Section 11.4(b) (with
the Substitute Unit being treated as a Replacement Unit for the
purposes thereof) in connection with such substitution, and (c)
the Lessee indemnifies the Owner Participant, on an After Tax-
Basis, for any adverse tax consequences to the Lessor or Owner
Participant associated with such substitution. The Lessee s
right to substitute any Unit pursuant to this Section 11.8 shall
also be subject to the condition that the Replaced Unit be
promptly disposed of by the Lessee to a Person, other than the
Lessee, any Affiliate of the Lessee, Bayer or any Affiliate of
Bayer, and that none of the Lessee, any Affiliate of the Lessee,
Bayer or any Affiliate of Bayer may purchase, lease or otherwise
acquire the Replaced Unit for a period of not less than three
years from the substitution date thereof, such prohibition,
notwithstanding any provision herein or in any other Operative
Agreement to the contrary, to survive the termination of this
Lease with respect to such Replaced Unit. Upon satisfaction of
all of the conditions set forth in this Section 11.8, (i) the
Replaced Unit shall no longer be deemed part of the property
leased hereunder, (ii) the Substitute Unit shall be deemed part
of the property leased hereunder and shall be deemed a Unit
defined herein, and (iii) the Lessor shall convey the Replaced
Unit as is where is , without recourse or warranty (except as
to the ability and authority of the Lessor to transfer and convey
such Replaced Unit free and clear of Lessor s Liens) to the
transferee.
SECTION 12. INSURANCE.
12.1 Property Damage, Public Liability and Other Insurance.
(a) The Lessee will, at all times prior to the return of a Unit
to the Lessor or the exercise of the Fixed Price Purchase Option
pursuant to Section 22, and during any storage period for such
Unit hereunder, at its own expense, cause to be carried and
maintained with insurance companies reasonably acceptable to the
Owner Participant and, so long as the Indenture is in effect, the
Indenture Trustee (i) all risk property insurance in respect of
such Unit (including coverage for loss by fire, lightning,
windstorm, hail, explosion, riot, civil strife or commotion,
vandalism and malicious mischief, damage from aircraft, vehicles
and smoke, and with an extended coverage endorsement covering all
such other risks (including flood, hurricane and earthquake)
commonly used in the state where the Premises are located, and
against such other risks as are customarily insured against by
prudent Persons engaged in the same business as the Lessee) in an
amount not less than the Stipulated Loss Value of such Unit,
subject to a deductible provision not exceeding in the aggregate
for all Units suffering a loss, $1,000,000 per occurrence;
provided that such deductible provisions shall not be higher than
deductible provisions applicable to insurance coverage maintained
by the Lessee for property similar to such Unit; (ii) public
liability insurance, against loss or damage for personal injury,
death or property damage occurring as a result of the ownership,
use, maintenance or operation of the Units (whether in, on or
about the Premises, including adjoining areas), and in any event
assuring against such loss or damage from such risks and in such
amounts as is maintained by the Lessee in respect of similar
equipment owned or leased by it; provided, however, that such
general public liability insurance shall at least be in an amount
not less than that maintained by prudent companies operating
similar equipment (but in any event, not less than $1,000,000 per
occurrence), subject to a deductible provision not exceeding
$250,000 per occurrence; and provided further that such
deductible provisions shall not be higher than deductible
provisions applicable to insurance coverage maintained by the
Lessee in connection with property similar to the Units; and
(iii) such other insurance, including comprehensive motor
vehicle, workers compensation and business interruption
insurance, in each case as is generally carried by companies
operating similar equipment and in such amounts and against such
risks as are then customary for properties similar in use. Such
liability insurance may be carried under blanket policies
maintained by the Lessee so long as such policies otherwise
comply with the provisions of this Section 12. All such
insurance shall cover the interest of the Lessor (in its
individual capacity and as Owner Trustee), the Owner Participant,
the Indenture Trustee, the holders of Notes and the Lessee in the
Units or, as the case may be, shall protect the Lessor (in its
individual capacity and as Owner Trustee), the Owner Participant,
the Indenture Trustee, the holders of the Notes and the Lessee in
respect of risks arising out of the condition, maintenance, use,
ownership or operation of the Units. It is agreed that any
casualty insurance which the Lessee obtains in respect of the
Units in excess of any amount payable to the Lessor (in its
individual capacity and as Owner Trustee), the Owner Participant,
and/or the Indenture Trustee hereunder shall be obtained as
insurance of the Lessee's rights and interests under this Lease,
and shall be payable to the Lessee. All policies of insurance
required to be maintained pursuant to this Section 12 shall be
sufficient in amount, such that the Lessee will under no
circumstances be deemed to be a co-insurer with respect to any
such policy.
(b) The insurance companies providing the coverages
described in this Section 12 shall have a general policyholder
rating of A and a financial rating of at least XII by A.M.
Best s Insurance Guide (or a similar rating from another
insurance rating agency with a similar national reputation if
such insurance company is not rated in A.M. Best s Insurance
Guide), or be otherwise expressly acceptable to the Owner
Participant and a Majority In Interest.
12.2 Policy Provisions. All policies carried by the Lessee
which cover loss or damage to a Unit shall (i) name the Lessee as
insured and the Indenture Trustee (until the Lien of the
Indenture has been discharged in accordance with the terms
thereof), the Owner Participant, each holder of a Note and the
Lessor) as loss payees, (ii) provide that any payment thereunder
for any loss or damage shall (except as provided below) be made
to the Indenture Trustee under a standard mortgagee loss payable
clause or, if the Lien of the Indenture has been discharged in
accordance with the terms of the Indenture, to the Lessor, (iii)
provide that such insurance as to the interest of the Lessor (in
its individual capacity and as Owner Trustee), the Owner
Participant, each holder of a Note and the Indenture Trustee
therein shall not be invalidated as against such insured by any
act or neglect of the Lessee or of any other Person (other than,
with respect to such Person, the acts of such Person) or by any
breach or violation by the Lessee or by any other Person (other
than, with respect to such Person, breaches or violations by such
Person) of any warranties, declarations or conditions contained
in such policies or by any change in the title or ownership of
the Units or any interest therein or with respect thereto. Upon
the occurrence of any event giving rise to a payment to be made
under any policy of insurance required by the terms of the first
sentence of this Section 12, the Lessor (and, until the Lien of
the Indenture shall have been discharged in accordance with the
terms thereof, the Indenture Trustee) shall instruct the relevant
insurer in writing as to the Person(s) entitled to receive such
amounts pursuant to the terms of this Section 12. All liability
policies carried by the Lessee shall (A) name the Lessor (in its
individual capacity and as Owner Trustee), the Owner Participant,
each holder of a Note, the Indenture Trustee and the Lessee as
insureds and (B) insure the interests of the Lessor, the Owner
Participant, each holder of a Note and the Indenture Trustee
regardless of any action or inaction of the Lessee or of any
other Person (other than, with respect to such Person, the acts
of such Person) or any breach or violation by the Lessee or by
any other Person (other than, with respect to such Person,
breaches or violations by such Person) of any warranties,
declarations or conditions contained in such policies. So long
as no Lease Default or Lease Event of Default has occurred and is
continuing, the loss, if any, under any policy carried by the
Lessee covering the Units shall be adjusted with the insurance
companies by the Lessee (otherwise by the Lessor); provided,
however, that the Lessor may, at its option, participate in the
adjustment of any loss that exceeds $5,000,000. If a loss
relating to damage to a Unit or Units does not exceed $5,000,000,
then, so long as no Lease Default or Lease Event of Default has
occurred and is continuing, said loss shall be paid under such
policy directly to the Lessee and the Lessor shall receive notice
of such payment. All policies described in this Section 12 shall
provide: (i) that coverage thereunder shall not be canceled,
reduced or otherwise materially changed without at least 30 days'
prior written notice from the insurer to the Lessor, the Owner
Participant and the Indenture Trustee, (ii) that none of the loss
payees or additional insureds shall have any obligation or
liability for premiums, commissions, if any, additional premiums
or assessments in connection with such insurance, (iii) that the
insurers shall waive any rights of subrogation, setoff,
counterclaim or other deduction, whether by attachment or
otherwise, against Lessor (in its individual capacity and as
Owner Trustee), the Owner Participant, each holder of a Note and
the Indenture Trustee as the loss payees or additional insureds,
(iv) that such insurance shall be primary, without right of
contribution from any other insurance which is carried by any
loss payee or additional insured with respect to its interest in
the Units and shall expressly provide that all provisions except
the limits of liability shall operate in the same manner as if
there were a separate policy insuring each loss payee or insured,
and (v) the interests of the Lessor (in its individual capacity
and as Owner Trustee), the Owner Participant, each holder of a
Note and the Indenture Trustee shall not be invalidated by any
act or negligence or failure to act of, or breach or violation of
any warranties, declarations or conditions by, the Lessee or any
Person having an interest in the Premises or any of the Units.
12.3 Proceeds of Insurance. The Lessee shall promptly pay
to the Indenture Trustee (or, if the Lien of the Indenture has
been discharged in accordance with the terms thereof, to the
Lessor) any proceeds of insurance the Lessee receives (other than
pursuant to the next to last sentence of Section 12.2 hereof)
covering loss or damage to the Units which are payable under the
provisions of this Section 12. The proceeds of any insurance
carried by the Lessee which are received by the Indenture Trustee
or the Lessor on account of or for any loss or damage in respect
of any Unit shall be applied as follows:
(i) If such Unit is to be repaired or replaced, the
insurance proceeds shall be released to the Lessee or as it
may direct from time to time as restoration, replacement,
rebuilding, alterations and additions ("Restoration")
progresses to pay (or reimburse the Lessee for) the cost of
Restoration, but only upon receipt by the Lessor and the
Indenture Trustee of (A) an Officer's Certificate of the
Lessee in form and substance reasonably acceptable to the
Lessor and the Indenture Trustee showing in reasonable
detail the nature of the Restoration, the purpose for which
the expenditures were made, the actual cash expenditures
made for such purpose and the remaining proceeds held by the
Indenture Trustee or the Lessor after such release are not
less than 100% of the reasonably estimated remaining cost of
completing the Restoration, and stating that there is no
Lease Default or Lease Event of Default, and (B) if
necessary, a supplement to this Lease and the Indenture
sufficient to lease such Restoration and to grant a security
interest therein to the Indenture Trustee (and the Lessor
agrees to cooperate with the Lessee to effectuate the
requirements of this clause (B)); or
(ii) If this Lease is terminated in accordance
with the provisions of Section 11.2(ii) hereof and all
amounts payable by the Lessee under Section 11.2(ii) have
been paid, all insurance proceeds shall be released to the
Lessee;
provided that any amount referred to herein which is payable to
the Lessee shall not be paid to the Lessee if at the time of such
payment a Lease Default or Lease Event of Default shall have
occurred and be continuing, and in such event all such amounts
shall be paid to and held by the Indenture Trustee (or, after the
Lien of the Indenture has been discharged in accordance with the
terms thereof, the Lessor) as security for the obligations of the
Lessee to make payments under and perform this Lease. At such
time as there shall not be continuing any Lease Default or Lease
Event of Default, all such amounts at the time held by the
Indenture Trustee or the Lessor (unless theretofore otherwise
applied to the obligations of the Lessee hereunder) shall be paid
to the Lessee. Notwithstanding the foregoing, any amounts
payable to the Indenture Trustee pursuant to this Section 12.3 as
a result of a loss or casualty occurring prior to the Lease Term
Commencement Date shall be paid to the Construction Loan Agent.
12.4 Notice, Etc. The Lessee will advise the Lessor and
the Indenture Trustee 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 which might invalidate or render
unenforceable, in whole or in part, any insurance on any Unit.
The Lessee will advise the Lessor and the Indenture Trustee in
writing of the expiration or termination of any insurance carried
and maintained on any Unit pursuant to this Section 12 at least
thirty (30) days prior to the expiration or termination date
unless such insurance has been replaced. In the event that the
Lessee shall fail to maintain or renew insurance as herein
provided, the Lessor or the Owner Participant may at its sole
option provide such insurance and, in such event, the Lessee
shall thereupon reimburse the Lessor or the Owner Participant, as
appropriate, as Supplemental Rent, for the cost thereof;
provided, however, that no exercise by the Lessor or the Owner
Participant of said option shall affect the provision of this
Lease, including the provisions that failure by the Lessee to
maintain the prescribed insurance shall constitute a Lease Event
of Default.
12.5 Reports and Certificates. On the Lease Term
Commencement Date, and annually upon renewal of the insurance
policies carried by the Lessee pursuant to this Section 12, and
upon any material modification of the insurance policies required
by this Section 12, the Lessee will furnish to the Lessor, the
Owner Participant and the Indenture Trustee (a) all applicable
certificates of insurance and a report, including, without
limitation, a copy of the certificate of insurance signed by the
Lessee's broker, describing in reasonable detail the insurance
then maintained pursuant to this Section 12 and stating that no
premiums are then delinquent, (b) a certificate signed by a
Responsible Officer of the Lessee stating that such insurance is
in accordance with this Section 12 and (c) any other document
evidencing compliance by the Lessee with this Section 12 as may
be reasonably requested by the Lessor, the Owner Participant and
the Indenture Trustee.
12.6 Additional Insurance. At any time the Lessor (either
directly or in the name of the Owner Participant) or the Owner
Participant may at its own expense carry insurance with respect
to its interest in the Units and the Premises; provided that such
insurance does not interfere with the Lessee's ability to insure
the Units as required by this Section 12, or the Lessee's ability
to insure the Units for replacement cost, or the ability of the
Lessee to collect a claim under any such insurance policy. Any
insurance payments received from policies maintained by the
Lessor or the Owner Participant pursuant to the previous sentence
shall be retained by the Lessor or the Owner Participant, as the
case may be, without reducing or otherwise affecting the Lessee's
obligations hereunder.
SECTION 13. INSPECTION.
During the Lease Term, each of the Lessor, the Owner
Participant, the Indenture Trustee and each holder of a Note
(provided that the holders of the Notes shall in good faith
endeavor to coordinate the dates of inspection) shall have the
right, but not the obligation, at its sole cost, expense and risk
(except that if a Lease Default or Lease Event of Default shall
have occurred and be continuing such inspection shall be at the
cost, expense and risk of the Lessee) by its authorized
representatives to inspect the Units and the Premises and all
logs, records, books and other materials relating to the use,
damage, repair and maintenance of the Units, to make copies and
take extracts therefrom, and to discuss the affairs, finances and
accounts with respect to the Units and the Premises with the
Lessee's officers, in each case during the Lessee's normal
business hours, subject to the Lessee's and Bayer s standard
security and safety rules and procedures and, unless a Lease
Event of Default shall have occurred and be continuing, upon five
days' prior notice to the Lessee (such notice being waived by
Lessee during the continuance of a Lease Event of Default).
Without limiting the foregoing, the Lessee shall promptly furnish
to the Lessor, the Owner Participant and the Indenture Trustee
such information with respect to the Units and the Premises, this
Lease and the other Operative Agreements as the Lessor, the Owner
Participant or the Indenture Trustee may from time to time
reasonably request.
SECTION 14. LEASE EVENTS OF DEFAULT.
The following events shall constitute "Lease Events of
Default" hereunder (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) and each such Lease Event of
Default shall be deemed to exist and continue so long as, but
only as long as, it shall not have been remedied:
(a) the Lessee shall fail to make (x) any payment of
Basic Rent, within five Business Days after the same shall
have become due or (y) any payment under Section 10.2, 10.3,
11.2 or 22 when due; or
(b) the Lessee shall fail to make any other payment
under the Operative Agreements (provided that any failure to
pay any amount owed by the Lessee under the Tax Indemnity
Agreement or any failure of the Lessee to pay to the Lessor
(in its individual or trust capacity) or the Owner
Participant when due any amounts constituting Excepted
Property shall not constitute a Lease Event of Default prior
to the discharge of the Lien of the Indenture in accordance
with the terms thereof unless written notice is given by the
Owner Participant to the Lessee that such failure shall
constitute a Lease Event of Default), including, without
limitation, any payment of Supplemental Rent, other than
Supplemental Rent payable under Section 10.2, 10.3, 11.2 or
22 (which failure is covered by paragraph (a) above), after
the same shall have become due and such failure shall
continue unremedied for a period of 30 days after receipt by
the Lessee of written notice of such failure from the
Lessor, the Owner Participant or the Indenture Trustee; or
(c) the Lessee shall fail to maintain the insurance
coverages required of it by Section 12; or
(d) any representation or warranty made by the Lessee
in this Lease or in any other Operative Agreement or in any
other document or certificate furnished by the Lessee (or a
Responsible Officer of the Lessee) pursuant to the terms of
the Operative Agreements (other than representations set
forth in the Tax Indemnity Agreement) that was untrue or
incorrect in any material respect as of the date of making
thereof and such untruth or incorrectness shall continue to
be material and the facts or circumstances causing such
untruth or incorrectness are not modified to conform to such
representation or warranty after a period of 30 days
following receipt by the Lessee of written notice thereof
from the Lessor, the Owner Participant or the Indenture
Trustee; or
(e) the Lessee, LSB or Bayer shall (i) commence a
voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its
debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect, or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar
official of it or any substantial part of its property, or
(ii) consent to any such relief or to the appointment of or
taking possession by any such official in any voluntary case
or other proceeding commenced against it, or (iii) generally
fail to pay, or admit in writing its inability to pay, its
debts as they come due, or (iv) make a general assignment
for the benefit of creditors, or (v) take any corporate
action to authorize or in furtherance of any of the
foregoing; or
(f) an involuntary case or other proceeding shall be
commenced against the Lessee, LSB or Bayer seeking
liquidation, reorganization or other relief with respect to
it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect, or seeking the
appointment of a trustee, receiver, liquidator, custodian or
other similar official of it or any substantial part of its
property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 90
days; or
(g) the Lessee shall fail to observe or perform any of
its covenants or agreements (other than those described in
the foregoing clauses of this Section 14) to be observed or
performed by it under any Operative Agreement (other than
the Tax Indemnity Agreement) and such failure shall continue
unremedied for 30 days after notice from the Lessor, the
Owner Participant or the Indenture Trustee to the Lessee
specifying the failure and demanding the same to be
remedied; provided that, if such failure is capable of being
remedied and such remedy does not involve the payment of
money alone, no such failure shall constitute a Lease Event
of Default hereunder so long as the Lessee is diligently
proceeding to remedy such failure, but in no event shall
such failure continue unremedied for a period in excess of
the lesser of 180 days from the notice referred to above and
the remaining number of days in the Lease Term; or
(h) any of the Facility Documents shall be, or Bayer
or the Lessee shall assert that any of the Facility
Documents are, unenforceable, in whole or in part, for any
reason, or Bayer or the Lessee repudiates, seeks to
disaffirm or terminates its obligations under any of the
Facility Documents; or
(i) the Bayer Letter or the Bayer Support Agreement
shall be, or Bayer shall assert that either the Bayer Letter
or the Bayer Support Agreement is, unenforceable, in whole
or in part, for any reason, or Bayer repudiates, or seeks to
disaffirm, its obligations under either the Bayer Letter or
the Bayer Support Agreement, except pursuant to the express
terms of the Bayer Letter or the Bayer Support Agreement, as
applicable; or
(j) The Turnkey Construction Agreement shall not have
been duly executed and delivered by the parties thereto on
or before August 31, 1997 on terms materially consistent
with the Construction Letter of Intent.
SECTION 15. REMEDIES.
15.1 Remedies. Upon the occurrence of any Lease Event of
Default and at any time thereafter so long as the same shall be
continuing, the Lessor may, at its option, declare this Lease to
be in default by a written notice to the Lessee (a copy of which
notice Lessor shall provide to Bayer at or about the same time at
which the Lessor provides such notice to the Lessee) (but this
Lease shall be deemed to be in default in the event of the
occurrence of a Lease Event of Default under Section 14(e) or
14(f) without such declaration); and at any time thereafter, the
Lessor may do one or more of the following as the Lessor in its
sole discretion shall elect, to the extent permitted by, and
subject to compliance with any mandatory requirement of,
applicable law then in effect:
(a) proceed by appropriate court action or actions,
either at law or in equity, to enforce performance by the
Lessee of the applicable covenants of this Lease or the
other Operative Agreements or to recover damages for the
breach thereof, including, without limitation, as described
in Section 15.5;
(b) by notice in writing to the Lessee, the Lessor may
(x) rescind or terminate the Lease; and/or (y) demand of the
Lessee, and the Lessee shall, upon written demand of the
Lessor and at the Lessee's expense, forthwith return all of
the Units to the Lessor or its order in the manner and
condition required by, and otherwise in accordance with all
of the provisions of, this Lease; or the Lessor with or
without notice or judicial process, and without the
necessity for first instituting any proceedings, or by
summary proceedings or otherwise, may by its agents enter
upon the premises (including the Premises) of the Lessee
where any of the Units may be located, or are believed to be
located, and take immediate possession of and remove all or
any of the Units and thenceforth hold, possess and enjoy the
same free from any right of the Lessee, or its successor or
assigns, to use such Units for any purpose whatever, all
without liability of the Lessor or its agents for or by
reason of such entry or taking of possession, whether for
the restoration of damage to property caused by such action
or otherwise;
(c) with or without taking possession thereof, sell or
otherwise dispose of any Unit at public or private sale,
with or without advertisement or notice to the Lessee, as
the Lessor 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 (e) or (f) below
if the Lessor elects to exercise its rights under either of
said paragraphs), and the Lessor may hold the Lessee liable
for any installment of Basic Rent due on or before the date
of such sale or disposition (and, if payable in arrears, the
pro rata portion of the installment of Basic Rent due on the
next succeeding Rent Payment Date in respect of any period
commencing on the immediately preceding Rent Payment Date to
the date of such sale or disposition, in which event the
Lessee's obligation to pay Basic Rent with respect to such
Unit hereunder due for any periods subsequent to the date of
such sale shall terminate (except to the extent that Basic
Rent is to be included in computations under paragraph (e)
or (f) below if the Lessor elects to exercise its rights
under either of said paragraphs));
(d) hold, use, operate or lease to others or keep idle
any Unit as the Lessor 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 Basic Rent with respect
to such Unit due for any periods subsequent to the date upon
which the Lessee shall have been deprived of possession and
use of such Unit pursuant to this Section 15 shall be
reduced by the net proceeds, if any, received by the Lessor
from leasing such Unit to any Person other than the Lessee;
(e) whether or not the Lessor shall have exercised, or
shall thereafter at any time exercise, any of its rights
under paragraph (a), (b), (c) or (d) above with respect to
any Unit, the Lessor, by written notice to the Lessee
specifying a payment date (for purposes of this paragraph
(e), the "Default Payment Date") which shall be a
Determination Date not earlier than ten days after the date
of such notice, may demand that the Lessee pay to the
Lessor, and the Lessee shall pay to the Lessor, on account
of any Unit selected by the Lessor on the Default Payment
Date, as liquidated damages and not as a penalty (in lieu of
the Basic Rent for such Unit due after the Default Payment
Date), the sum of: (x) any unpaid Basic Rent on account of
such Unit due prior to, and payable in arrears on, the
Default Payment Date; plus (y)(A) an amount equal to the
excess, if any, of (1) the Stipulated Loss Value for such
Unit determined as of the Default Payment Date over (2) the
Fair Market Value of such Unit (and if such Unit has been
sold, the net sales proceeds (after deduction of all of the
Lessor's and the Owner Participant's costs and expenses of
such sale, including, without limitation, sales or transfer
taxes, costs of storage, overhaul, maintenance, preparation
and transportation of such Unit and brokers' and attorneys'
fees) shall be deemed to be equal to Fair Market Value) or
(B) if so specified in the notice, an amount equal to the
excess, if any, of (1) the present value as of the
Determination Date of all remaining installments (including
any installment of Basic Rent due on the Determination Date)
of Basic Rent for such Unit until the end of the Lease Term,
discounted back to the Determination Date at a rate per
annum equal to 7.0%, over (2) the Fair Market Rental Value
for such Unit, discounted back at a rate per annum equal to
11.5%; plus interest on such sum of (x) plus (y) at the Late
Rate from the Default Payment Date to the date of actual
payment; and upon payment in full of such amount, together
with payment of all other amounts of Supplemental Rent then
due, the Lease Term for such Unit, if not theretofore ended,
shall end;
(f) unless the Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under
Section 15.1(e) with respect to a Unit, the Lessor, by
written notice to the Lessee specifying a payment date which
shall be a Determination Date occurring not earlier than ten
days after the date of such notice (for purposes of this
paragraph (f), the "Default Payment Date"), may require that
the Lessee pay to the Lessor, and the Lessee shall pay to
the Lessor, on account of such Unit on the Default Payment
Date as liquidated damages and not as a penalty (in lieu of
scheduled Basic Rent due after the Default Payment Date),
the sum of: (x) any unpaid Basic Rent on account of such
Unit due prior to, and payable in arrears on, the Default
Payment Date; plus (y) the Stipulated Loss Value for such
Unit, computed as of the Default Payment Date; plus interest
on such sum of (x) and (y) at the Late Rate from the Default
Payment Date to the date of actual payment; and upon payment
in full of such amount, together with all other amounts of
Supplemental Rent then due, the Lessor shall transfer "as
is", "where is", without recourse or warranty (except as to
the absence of Lessor's Liens attributable to the Lessor)
all right, title, and interest of the Lessor to such Unit to
the Lessee or as it may direct, and the Lease Term for such
Unit, if not theretofore ended, shall end; and/or
(g) The Lessor may exercise any other right or remedy
that may be available to it at law, in equity or by statute,
including all rights or remedies available under Article 2A
of the Uniform Commercial Code.
In addition, the Lessee shall be liable, except as otherwise
provided above, for any and all unpaid Rent due hereunder before,
during and after the exercise of any of the foregoing remedies
(together with interest thereon at the Late Rate from the due
date thereof until paid), for all amounts payable by the Lessee
under the Participation Agreement and the other Operative
Agreements before and after any termination thereof, and for
reasonable legal fees and other costs and expenses incurred by
reason of the occurrence of any Lease Event of Default or the
exercise of the Lessor's remedies with respect thereto,
including, without limitation, all costs and expenses incurred in
connection with the return of such Unit in accordance with the
terms of this Lease or in placing such Unit in the condition
required by this Lease or in connection with any use, operation,
maintenance, storage or leasing carried out as part of such
exercise of remedies.
15.2 Cumulative Remedies. Except as otherwise provided in
this Section 15, each right, power and remedy in this Lease
provided in favor of the Lessor shall not be deemed exclusive,
but shall be cumulative and shall be in addition to all other
rights, powers and remedies in its favor existing at law, in
equity or by statute; and the exercise or beginning of exercise
by the Lessor of any one or more of such remedies shall not
preclude the simultaneous or later exercise by the Lessor of any
or all other remedies. Subject to Section 3.7, the Lessee hereby
waives any and all existing or future claims of any right to
assert any offset or counterclaim against the Rent payments due
hereunder, and agrees to make the Rent payments regardless of any
offset or counterclaim or claim which may be asserted by the
Lessee on its behalf in connection with the lease of the Units.
15.3 No Waiver. No delay or omission to exercise any
right, power or remedy accruing to the Lessor upon any breach or
default by the Lessee under this Lease shall impair any such
right, power or remedy of the Lessor, nor shall any such delay or
omission be construed as a waiver of any breach or default, or of
any similar breach or default, thereafter occurring; nor shall
any express or implied waiver of a single breach or default be
deemed a waiver of any subsequent breach or default.
15.4 Notice of Lease Default. The Lessee agrees to furnish
to the Lessor, the Owner Participant, the Indenture Trustee,
Bayer and each holder of a Note, promptly upon any Responsible
Officer becoming aware of any condition which constituted or
constitutes a Lease Default or Lease Event of Default, an
Officer's Certificate of the Lessee specifying such condition or
event and the nature, period of existence and status thereof and
what action the Lessee has taken or proposes to take with respect
thereto.
15.5 Specific Performance; the Lessor Appointed the
Lessee's Agent. The delivery of possession of the Units as
provided in Section 6.1 and/or Section 15.1 is of the essence of
this Lease and shall not be impaired, and upon application to any
court of competent jurisdiction in the premises, the Lessor shall
be entitled to a decree against the Lessee requiring specific
performance of the covenants of the Lessee so to deliver
possession of the Units. Without in any way limiting the
obligation of the Lessee under the provisions of Section 6.1 or
Section 15.1, the Lessee hereby irrevocably appoints the Lessor
as the agent and attorney of the Lessee, with full power and
authority, at any time while the Lessee is obligated to deliver
possession of any Units to the Lessor pursuant to this Section
15, to demand and take possession of such Unit in the name and on
behalf of the Lessee from whosoever shall be at the time in
possession of such Unit.
SECTION 16. FURTHER ASSURANCES; REPORTS; OPINION.
16.1 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
Lessor, the Owner Participant or the Indenture Trustee may
reasonably request in order to protect the right, title and
interest of the Lessor hereunder or the perfection or protection
of the Lien and first priority security interest granted by the
Indenture including, without limitation, ordering such searches
for Uniform Commercial Code financing statements (for both
personal property and fixtures) and preparing such "fixture
filings" and real estate recordings as the Lessor or the
Indenture Trustee may reasonably request. Without limiting the
foregoing, the Lessee, at its own expense, will take, or cause to
be taken, such action with respect to the recording, filing, re-
recording and re-filing of the Indenture, the Lease and any
financing statements and continuation statements or other
instruments as are necessary, or requested by the Lessor, the
Owner Participant or the Indenture Trustee, to maintain the
perfection of the Lien and first security interest created by the
Indenture and the protection of the Lessor's right and title to
and interest in the Units and the Premises and the Trust Estate
as against the Lessee and any third parties, or will furnish to
the Lessor and the Indenture Trustee timely notice of the
necessity of such action, together with such instruments, in
execution and recordable form, and such information as may be
required to enable the Lessor or the Indenture Trustee, as the
case may be, to take such action in a timely manner and at the
Lessee's expense.
16.2 Reports. The Lessee will, at its own expense,
promptly file any reports, or furnish to the Lessor and the Owner
Participant such information as may be required to enable the
Lessor and the Owner Participant, at the Lessee s cost and
expense, timely to file any reports, required to be filed by the
Lessor or the Owner Participant with any Governmental Authority.
16.3 Opinion. The Lessee will, at its own expense, furnish
to the Lessor, the Owner Participant, the Indenture Trustee and
each holder of a Note, on or prior to the fifth anniversary of
the Lease Term Commencement Date, an opinion, reasonably
satisfactory to the Owner Participant and the Indenture Trustee
of Lessee's counsel(i) stating either (x) that in the opinion of
such counsel all action has been taken with respect to the
recording, filing, re-recording, and re-filing of the Indenture,
the Lease and any supplements to any of them, and any financing
statements, continuation statements or other instruments, and all
other action has been taken, as is necessary to establish and
maintain the protection of the Lessor's interests and the
perfection of the Liens and security interests created by the
Operative Agreements, and reciting the details of such action, or
(y) that in the opinion of such counsel, no such action is
necessary to establish and maintain protection of the Lessor's
interest and the perfection of such security interests; and (ii)
specifying all action which needs to be taken in order to
establish and maintain the protection of the Lessor's interest
and the perfection of such security interests.
SECTION 17. THE LESSOR'S RIGHT TO PERFORM.
If the Lessee fails to make any payment required to be made
by it hereunder or fails to perform or comply with any of its
other agreements contained herein, the Lessor may itself, after
notice to and demand upon the Lessee (unless a Lease Event of
Default has occurred pursuant to Section 14(e), in which case no
such notice or demand shall be required), make such payment or
perform or comply with such agreement, but shall not be obligated
hereunder to do so, and the amount of such payment and of the
reasonable expenses of the Lessor incurred in connection with
such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at
the Late Rate from the date of such payment or incurrence of
expenditure until the Lessor has been fully reimbursed therefor,
to the extent permitted by applicable law, shall be deemed to be
Supplemental Rent, payable by the Lessee to the Lessor on demand.
SECTION 18. ASSIGNMENT BY THE LESSOR.
The Lessee and the Lessor hereby confirm that the Lessor
will execute and deliver on or prior to the Lease Term
Commencement Date to the Indenture Trustee the Indenture, which
assigns as collateral security and grants a security interest in
favor of the Indenture Trustee in and to the Units and the
Premises, this Lease and certain of the Rent payable hereunder
(excluding Excepted Property), to which assignment pursuant to
the Indenture the Lessee hereby consents. The Lessor agrees that
it shall not otherwise assign or convey its right, title and
interest in and to this Lease, the Units or any Unit and the
Premises, except as expressly permitted by and subject to the
provisions of the Participation Agreement, the Trust Agreement
and the Indenture.
SECTION 19. ASSIGNMENT BY THE LESSEE.
The Lessee will not, without the prior written consent of
the Lessor, assign any of its rights hereunder; nor will the
Lessee sublease any of the Units without the prior written
consent of the Lessor, except in accordance with Section 8.3,
provided that, in each case, the Lessor and the Owner Participant
shall be satisfied that the Bayer Letter and, prior to the
expiration thereof pursuant to its terms, the Bayer Support
Agreement, as the case may be, remains fully in effect after
giving effect to any such assignment or sublease.
Notwithstanding the foregoing, the rights and obligations of the
Lessee in respect of the Fixed Price Purchase Option may be
assigned in whole or in part to Bayer or any entity designated by
Bayer without the consent of the Lessor, provided that the Lessor
and the Owner Participant shall be satisfied that the Bayer
Letter and, prior to the expiration thereof pursuant to its
terms, the Bayer Support Agreement, as the case may be, remains
fully in effect.
SECTION 20. NOTICES.
Unless otherwise expressly specified or permitted by the
terms hereof, all communications and notices provided for herein
shall be in writing, and any such notice shall become effective
when delivered. Any written notice shall be by (a) personal
delivery thereof, including, without limitation, by overnight
mail and courier service, (b) United States mail, certified,
postage prepaid, return receipt requested or (c) facsimile
transmission, confirmed by the method set forth in clause (a) or
(b) above, in each case addressed to the addressee at its
respective address set forth below or at such other address as
such Person may from time to time designate by written notice to
the other Persons listed below:
If to the Lessor:
Boatmen's Trust Company of Texas
701 South Taylor Street
Amarillo, Texas 79101
Attention: Ms. Nancy Ward, Corporate Trust Department
Facsimile No: (806) 378-6621
Confirmation No.: (806) 378-1932
If to the Owner Participant:
To the address specified in Section 10.2 of the
Participation Agreement
If to the Indenture Trustee:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890-0001
Attention: Corporate Trust Administration
Facsimile No.: (302) 651-1000
Confirmation No.: (302) 651-8882
If to a holder of a Note:
To the address specified in Section 10.2 of the
Participation Agreement
If to the Lessee:
El Dorado Nitrogen Company
16 South Pennsylvania
P.O. Box 754
Oklahoma City, Oklahoma 73107
Attention: General Counsel
Facsimile No.: (405) 236-1209
Confirmation No.: (405) 235-4546
If to Bayer:
Bayer Corporation
100 Bayer Road
Pittsburgh, Pennsylvania 15205-9741
Attention: Controller - Polymers Division
Facsimile No.: (412) 777-7755
Confirmation No.: (412) 777-4802
SECTION 21. CONCERNING THE INDENTURE TRUSTEE.
21.1 Rights and Immunities of Indenture Trustee. The
Indenture Trustee shall not be obligated to perform any duty,
covenant or condition required to be performed by the Lessor
under any of the terms hereof, but, on the contrary, the Lessee
by its execution hereof acknowledges and agrees that,
notwithstanding any grant or assignment in the Indenture, each
and all such duties, covenants or conditions required to be
performed by the Lessor shall survive any such granting or
assignment and shall be and remain the sole liability of the
Lessor and of every Person succeeding (by merger, consolidation,
purchase of assets of otherwise) to all or substantially all of
the business assets or goodwill of the Lessor. Without limiting
the foregoing, the Lessee further acknowledges and agrees that
the rights of the Indenture Trustee in and to the Units and the
Premises or 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 or defect in the
Lessor's title to, or any interruption from whatsoever cause in
the use, operation or possession of, the Units or the Premises or
any part thereof, the taking of any affirmative act by the Lessor
or any party, other than the Indenture Trustee itself through its
gross negligence or willful misconduct, which would interfere
with the Lessee's use and enjoyment of the Units or the Premises,
or (except as provided elsewhere in this Lease) any damage to or
loss or destruction of the Units or the Premises or any part
thereof or by reason of any other indebtedness or liability,
howsoever and whenever arising, of the Lessor to the Lessee or to
any other Person or by reason of any cause whatsoever, it being
the intent hereof that the Lessee shall be unconditionally and
absolutely obligated to pay the Indenture Trustee all of the Rent
assigned under and pursuant to the Indenture.
21.2 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 discharged in
accordance with the terms thereof (i) no amendment or
modification of, or waiver by or consent of the Lessor 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; provided, however, that amendments,
modifications, waivers and consents with respect to matters which
constitute Excepted Property may be made without such consent,
and (ii) except as otherwise expressly provided in the Indenture,
the Indenture Trustee shall have the right to exercise all
rights, privileges and remedies (either in its own name or in the
name of the Lessor for the use of 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 Lessor.
SECTION 22. END OF LEASE TERM PURCHASE OPTION.
Provided that no Lease Default or Lease Event of Default
shall have occurred and be continuing at the scheduled expiration
of the Lease Term and the Lessee shall have duly given the notice
required by the next succeeding sentence of this Section 22, the
Lessee shall have the right (the Fixed Price Purchase Option )
to purchase all (but not less than all) of the Units then leased
hereunder at the scheduled expiration of the Lease Term at a
price equal to the Fixed Price Purchase Option Amount for such
Units. The Lessee shall give the Lessor irrevocable written
notice not less than 12 months (and not more than 18 months)
prior to the scheduled end of the Lease Term of its election to
exercise the Fixed Price Purchase Option provided for in this
Section 22. Payment of the Fixed Price Purchase Option Amount,
together with all other amounts due and owing by the Lessee under
the Operative Agreements, shall be made at the place of payment
specified in Section 3.6 hereof in immediately available funds
and the Lessor shall transfer to the Lessee all of its right,
title and interest in and to the Units on an "as-is, where-is"
basis upon payment of the Fixed Price Purchase Option Amount and
all such other amounts due and owing. The Lessor shall not be
required to make any representation or warranty as to the
condition of the Units or as to any other matters, except for the
absence of Lessor's Liens attributable to the Lessor, and may
specifically disclaim any such representations or warranties.
SECTION 23. LIMITATION OF THE LESSOR'S LIABILITY.
It is expressly agreed and understood that all representa-
tions, warranties and undertakings of the Lessor hereunder
(except as expressly provided herein) shall be binding upon the
Lessor only in its capacity as Owner Trustee under the Trust
Agreement and in no case shall Boatmen s be personally liable for
or on account of, any statements, representations, warranties,
covenants or obligations stated to be those of the Lessor
hereunder, except that the Lessor (or any successor Owner
Trustee) shall be personally liable (i) in the case of handling
funds, for its failure to act with the same care as Boatmen s
uses in handling its own funds and, in all other cases, for its
gross negligence or wilful misconduct and (ii) for its breach of
its covenants, representations and warranties contained in the
Operative Agreements to the extent covenanted or made in its
individual capacity.
SECTION 24. INVESTMENT OF SECURITY FUNDS.
Any moneys received by the Lessor or the Indenture Trustee
which are required to be paid to the Lessee pursuant to
Section 11.5, 11.6, or 12.3, as the case may be, until paid to
the Lessee as provided in Section 11.5, 11.6, or 12.3, or as
otherwise applied as provided herein or in the Trust Agreement
and Indenture, shall be invested in Permitted Investments by the
Lessor (unless the Lien of the Indenture shall not have been
discharged, in which case, by the Indenture Trustee as provided
in Section 9.3 of the Indenture) from time to time as directed in
writing by the Lessee, if such investments are reasonably
available for purchase. There shall be promptly remitted to the
Lessee, so long as no Lease Default or Lease Event of Default
shall have occurred and be continuing and unless applied as
provided herein or in the Trust Agreement and Indenture, any gain
(including interest received) realized as the result of any such
investment (net of any fees, commissions and other expenses, if
any, incurred in connection with such investment). The Lessee
will promptly pay to the Lessor or the Indenture Trustee, as the
case may be, on demand, the amount of any net loss realized as
the result of any such investment (together with any fees,
commissions and other expenses, if any, incurred in connection
with such investment), such amount to be held and disposed of in
accordance with the terms hereof and of the Trust Agreement and
the Indenture.
SECTION 25. MISCELLANEOUS.
25.1 Governing Law; Severability. THIS LEASE, AND ANY
EXTENSIONS, AMENDMENTS, MODIFICATIONS, RENEWALS OR SUPPLEMENTS
HERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS AND DECISIONS OF THE STATE OF NEW YORK APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY WITHIN SUCH STATE,
EXCEPT AS TO MATTERS RELATING TO REAL PROPERTY AND THE EXERCISE
OF REMEDIES WITH RESPECT THERETO, WHICH WILL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
Whenever possible, each provision of this Lease shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Lease shall be
prohibited by or invalid under the laws of any jurisdiction, such
provision, as to such jurisdiction, shall be ineffective to the
extent of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of
this Lease as to such jurisdiction or in any other jurisdiction.
25.2 Execution in Counterparts. This Lease may be executed
in any number of counterparts, each executed counterpart
constituting an original and all such counterparts constituting
but one and the same agreement; 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.
25.3 Headings and Table of Contents; Section References.
The headings of the sections of this Lease and the Table of
Contents are inserted for purposes of convenience only and shall
not be construed to affect the meaning or construction of any of
the provisions hereof. All references herein to numbered
sections, unless otherwise indicated, are to sections of this
Lease.
25.4 Successors and Assigns. This Lease shall be binding
upon the parties hereto and their respective successors and
assigns and shall inure to the benefit of, and shall be
enforceable by, the parties hereto and their respective
successors and permitted assigns. Except as expressly provided
herein, no party hereto may assign its interests herein without
the consent of the other parties hereto and the Indenture
Trustee.
25.5 True Lease. It is the intent of the parties to this
Lease that it will be a true lease and not a "conditional sale"
and will be a "finance lease" under Article 2A of the Uniform
Commercial Code, and that the Lessor shall at all times be
considered to be the owner of each Unit which is the subject of
this Lease for the purposes of all Federal, state, city and local
income taxes or for franchise taxes measured by income, and that
this Lease conveys to the Lessee no right, title or interest in
any Unit or the Premises except as lessee. Nothing contained in
this Section 25.5 shall be construed to limit the Lessee's use or
operation of any Unit or the Premises in accordance with the
terms hereof or to constitute a representation, warranty or
covenant by the Lessor as to tax consequences.
25.6 Amendments and Waivers. No term, covenant, agreement
or condition of this Lease may be terminated, amended or
compliance therewith waived (either generally or in a particular
instance, retroactively or prospectively) except by an instrument
or instruments in writing executed by each party hereto and, to
the extent required by Section 21.2, by the Indenture Trustee,
and except as may be permitted by the terms of the Indenture.
25.7 Survival. All warranties, representations,
indemnities and covenants made by either party hereto, herein or
in any certificate or other instrument delivered by such party or
on the behalf of any such party under this Lease, shall be
considered to have been relied upon by the other party hereto and
shall survive the consummation of the transactions contemplated
hereby regardless of any investigation made by either such party
or on behalf of either such party.
25.8 Business Days. If the date on which any payment is to
be made pursuant to this Lease is not a Business Day, the payment
otherwise payable on such date shall be payable on the next
succeeding Business Day.
25.9 Incorporation by Reference. The obligations set forth
in Sections 7.1 and 7.2 of the Participation Agreement are hereby
incorporated by reference.
25.10 Lessee's Right of Use and Enjoyment. The Lessor shall
not take, or cause to be taken, any action contrary to the
Lessee's rights under this Lease, including, without limitation,
the right to possession and use by the Lessee unless and until a
Lease Event of Default has occurred and is continuing or the term
of the Lease has expired (and the Lessee has not exercised its
option to purchase the Units) or has been terminated (and the
Lessee has not exercised its option to purchase the Units) in
accordance with the terms hereof.
25.11 License to Enter Land. Subject to the proviso hereto,
the Lessee hereby grants to the Lessor and the Indenture Trustee
(or such Persons as the Lessor or the Indenture Trustee may
designate) an irrevocable license to enter upon the land where
any Unit is located; provided, however, that neither the Lessor
nor the Indenture Trustee shall be entitled to exercise such
license unless a Lease Event of Default has occurred and is
continuing and this Lease or the Lessee's rights of possession
hereunder have been terminated or the Lease Term has expired and
the Lessee has failed or refused for any reason to surrender any
Unit in the manner provided in Section 6 hereof.
25.12 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER OR IN
CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE
OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF
ANY PARTY HERETO SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN
THE COURTS OF THE STATE OF NEW YORK OR IN THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, EXCEPT FOR
LITIGATION BROUGHT IN THE COURTS OF OTHER JURISDICTIONS TO
ENFORCE JUDGMENTS RENDERED BY SUCH COURTS OF THE STATE OF NEW
YORK OR FEDERAL COURTS LOCATED IN NEW YORK. EACH PARTY HERETO
HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK AND OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF THE
APPELLATE COURTS THEREFROM FOR THE PURPOSE OF ANY SUCH LITIGATION
AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO BE BOUND BY ANY
FINAL JUDGMENT RENDERED THEREIN FOR WHICH APPEALS OR THE TIME FOR
APPEAL HAVE EXPIRED IN CONNECTION WITH SUCH LITIGATION. EACH
PARTY HERETO FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF NEW YORK. EACH PARTY
HERETO HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY HAVE OR
HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT
ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO
THE EXTENT THAT ANY PARTY HERETO HAS OR HEREAFTER MAY ACQUIRE ANY
IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS
(WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT,
ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO
ITSELF OR ITS PROPERTY, SUCH PARTY HEREBY IRREVOCABLY WAIVES SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.
SECTION 26. WAIVER OF JURY TRIAL
THE PARTIES HERETO WAIVE ANY RIGHT TO TRIAL BY JURY WITH
RESPECT TO ANY MATTER ARISING HEREUNDER.
SECTION 27. BAYER RIGHTS UPON DEFAULT OR LOSS.
Upon the occurrence of (x) a Lease Event of Default (other
than a Lease Event of Default arising under Section 14(e) or
14(f) with respect to Bayer or under Section 14(h) or Section
14(i)) and receipt by Bayer of (1) a written determination by
the Indenture Trustee that the Indenture Trustee intends to
exercise the remedies available to it under Section 15 (other
than any remedy intended to cause performance and continuance of
this Lease) in respect of such Lease Event of Default or (2) a
written notice from the Owner Participant as contemplated by the
Bayer Letter in respect of such Lease Event of Default, or (y) an
Event of Loss and the receipt by Bayer of a written notice from
the Indenture Trustee or the Owner Participant as contemplated by
the Bayer Letter in respect of such Event of Loss, the parties
hereto acknowledge that Bayer shall have all of the rights,
duties and obligations set forth in the Bayer Letter and, to the
extent relevant, shall be entitled to exercise the rights it
obtains hereunder.
* * * * * * * * *
IN WITNESS WHEREOF, the Lessor and the Lessee have caused
this Lease to be duly executed and delivered in New York, New
York on the day and year first above written.
LESSOR:
BOATMEN'S TRUST COMPANY OF TEXAS, not
in its individual capacity except
as otherwise expressly provided
herein but solely as Owner Trustee
By:_______________________________
Name: ____________________________
Title: ___________________________
LESSEE:
EL DORADO NITROGEN COMPANY
By:_____________________________
Name: James L. Wewers
---------------------------
Title: President
--------------------------
Receipt of the original
counterpart of the foregoing
Lease is hereby acknowledged
this ____ day of __________, 199_.
WILMINGTON TRUST COMPANY,
as Indenture Trustee
By:_____________________________
Name:___________________________
Title:__________________________
EXHIBIT A
Lease Agreement
FORM OF
LEASE SUPPLEMENT (EDNC Trust 1997) NO.
Dated ___________________, 199_
between
BOATMEN'S TRUST COMPANY OF TEXAS,
not in its individual
capacity except as expressly provided
herein but solely as Owner Trustee,
as Lessor
and
EL DORADO NITROGEN COMPANY,
as Lessee
CERTAIN OF THE RIGHT, TITLE AND INTEREST OF THE LESSOR IN
AND TO THIS LEASE SUPPLEMENT, THE UNITS COVERED HEREBY AND THE
RENT DUE AND TO BECOME DUE UNDER THE LEASE HAVE BEEN ASSIGNED AS
COLLATERAL SECURITY TO, AND ARE SUBJECT TO A SECURITY INTEREST IN
FAVOR OF, WILMINGTON TRUST COMPANY, NOT IN ITS INDIVIDUAL CAPACITY,
BUT SOLELY AS INDENTURE TRUSTEE UNDER A TRUST INDENTURE AND
SECURITY AGREEMENT (EDNC TRUST 1997), DATED AS OF JUNE 27, 1997,
BETWEEN SUCH INDENTURE TRUSTEE, AS SECURED PARTY, AND THE LESSOR,
AS DEBTOR. INFORMATION CONCERNING SUCH SECURITY INTEREST MAY BE
OBTAINED FROM THE INDENTURE TRUSTEE AT ITS ADDRESS SET FORTH IN
SECTION 20 OF THE LEASE. THIS LEASE SUPPLEMENT HAS BEEN EXECUTED IN
SEVERAL COUNTERPARTS, BUT ONLY THE COUNTERPART TO BE DEEMED THE
ORIGINAL COUNTERPART FOR CHATTEL PAPER PURPOSES CONTAINS THE
RECEIPT THEREFOR EXECUTED BY WILMINGTON TRUST COMPANY, AS
INDENTURE TRUSTEE, ON THE SIGNATURE PAGES THEREOF. SEE SECTION 25.2
OF THE LEASE FOR INFORMATION CONCERNING THE RIGHTS OF THE ORIGINAL
HOLDER AND THE HOLDERS OF THE VARIOUS COUNTERPARTS HEREOF.
LEASE SUPPLEMENT (EDNC Trust 1997) NO. __
LEASE SUPPLEMENT (EDNC Trust 1997) NO. dated , 199_ (this
"Lease Supplement") is between BOATMEN'S TRUST COMPANY OF TEXAS, a Texas state
chartered trust company, not in its individual capacity but solely as Owner
Trustee (the "Lessor") under the Trust Agreement, and EL DORADO NITROGEN
COMPANY, an Oklahoma corporation (the "Lessee");
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have heretofore entered into that
certain Lease Agreement (EDNC Trust 1997) dated as of June 27, 1997 (as
amended, supplemented or otherwise modified from time to time, the "Lease";
unless otherwise defined herein, capitalized terms used herein shall have the
meanings specified in Appendix A to the Lease); and
WHEREAS, the Lease provides for the execution and delivery of a Lease
Supplement on the Lease Term Commencement Date substantially in the form hereof
for the purpose of confirming the acceptance and lease of the Units under the
Lease in accordance with the terms thereof;
NOW, THEREFORE, in consideration of the premises and other good and
sufficient consideration, the Lessor and the Lessee hereby agree as follows:
1. Inspection and Approval. The Lessee hereby acknowledges and confirms
that it has inspected and approved the Units set forth on Schedule 1 hereto
and, as between the Lessor and the Lessee, such Units comply in all material
respects with the specifications for such Units and are in good working order.
2. Delivery and Acceptance. The Lessor hereby confirms delivery and lease
to the Lessee, and the Lessee hereby confirms acceptance and lease from the
Lessor, under the Lease as hereby supplemented, of the Units listed on
Schedule 1 hereto.
3. Representations and Warranties. The Lessee hereby represents and
warrants that:
(a) No event which would constitute an Event of Loss under the Lease has
occurred with respect to the Units set forth on Schedule 1 hereto as
of the date hereof;
(b) The Total Equipment Cost for the Units listed on Schedule 1 hereto is
$[__________];
(c) Each Unit listed on Schedule 1 hereto has been assembled and installed
at the Premises;
(d) The Units listed on Schedule 1 hereto are free and clear of all Liens,
except the Liens of the Lease and the Indenture and Permitted Liens
described in clauses (iii) and (iv) of the definition thereof;
(e) The Units and the current operation thereof do not violate any law or
regulation, or any order of any Governmental Authority applicable to, or
binding on, the Units, including, without limitation, any such law,
regulation or order relating to matters of occupational safety and
health or the environment, other than violations that would
not, individually or in the aggregate, have a Material Adverse Effect; and
(f) As of the Lease Term Commencement Date (i) the Units, taken as a
whole, and each major component thereof, are substantially complete
such that they are ready and available to perform the function for which
they were designed; (ii) all material approvals of any Governmental
Authority necessary for the commercial operation of such Unit have been
received and are in full force and effect; (iii) the Units have been
maintained, serviced and repaired (A) in a manner consistent with sound
engineering practice and standards which will enable the Lessee to operate
the Units at or above the contracted capacity levels or otherwise fully
perform its obligation under the Operative Agreements and (B) in
compliance in all material respects with (1) applicable laws, rules,
regulations and orders of any Governmental Authority and (2)
all requirements of manufacturers of the Units for maintaining in full
force and effect any warranties of such manufacturers with
respect to the Units; (iv) there is no present event or condition that is
directed, addressed or relates specifically to the Units and
that would materially and adversely affect the capability of the Units
to operate as intended by the Lessee or materially impair their fair market
value, utility, condition or remaining economic useful life; and (v) all
licenses, patents, trademark, tradenames and similar rights that are
necessary for the operation of the Units by a third party are
in full force and effect and have been, or on the Lease Term
Commencement Date will be, duly assigned to the Lessor; it being
understood that such licenses, patents, trademarks, tradenames and similar
rights do not include licenses, patents, trademarks, tradenames and
similar rights related to the products produced by the Lessee with the
Units.
4. Basic Rent, Stipulated Loss Values and Termination Values. The Basic
Rent payable under Section 3.2 of the Lease, Stipulated Loss Values, Termination
Values and the Fixed Price Purchase Option Amount applicable in respect of the
Units are set forth, respectively, on the appropriate portions of Schedules
2, 3, 4 and 6 to the Participation Agreement.
5. Confirmation. The Lessee hereby confirms its agreement, in accordance
with the Lease as supplemented by this Lease Supplement, to pay Rent to the
Lessor for each Unit leased hereunder as provided for in the Lease.
6. Incorporation into Lease. This Lease Supplement shall be construed in
connection with and as part of the Lease, and all terms, conditions and
covenants contained in the Lease, as supplemented by this Lease Supplement,
shall be and remain in full force and effect.
7. References. Any and all notices, requests, certificates and other
instruments executed and delivered concurrently with or after the execution
and delivery of this Lease Supplement may refer to the "Lease Agreement,
dated as of June 27, 1997", or may identify the Lease in any other respect
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.
8. Counterparts. This Lease Supplement may be executed in any number of
counterparts, each executed counterpart constituting an original but all
together constituting one and the same instrument.
9. Governing Law. THIS LEASE SUPPLEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS AND DECISIONS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE, EXCEPT AS TO MATTERS
RELATING TO REAL PROPERTY AND THE EXERCISE OF REMEDIES WITH
RESPECT THERETO, WHICH WILL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS.
IN WITNESS WHEREOF, the Lessor and the Lessee have caused this Lease
Supplement to be duly executed and delivered on the day and year first above
written.
LESSOR:
BOATMEN'S TRUST COMPANY OF TEXAS, not
in its individual capacity, but solely as Owner
Trustee
By:_____________________________________
Name:___________________________________
Title:__________________________________
LESSEE:
EL DORADO NITROGEN COMPANY
By:_____________________________________
Name: __________________________________
Title:__________________________________
Receipt of the original
counterpart of the foregoing
Lease Supplement is hereby
acknowledged this
____ day of _________, 199_.
WILMINGTON TRUST COMPANY,
as Indenture Trustee
By:___________________________
Name:_________________________
Title:________________________
SCHEDULE 1
Units
Serial No. Description Equipment Cost
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EXHIBIT B
DESCRIPTION OF PREMISES
[TO BE PROVIDED]