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EXHIBIT 10.25
LEASE
between the
DIRECTOR OF DEVELOPMENT
OF THE STATE OF OHIO
and
BAILEY TRANSPORTATION PRODUCTS, INC.
Dated
as of
July 1, 1992
(OHIO ENTERPRISE BOND FUND PROGRAM)
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LEASE
THIS LEASE made and entered into as of July 1, 1992 between the Director
of Development of the State of Ohio (the "Director"), and Bailey Transportation
Products, Inc., a corporation organized under the laws of the State of Delaware
and qualified to do business in the State of Ohio (the "Company"), under the
circumstances summarized in the following recitals (the capitalized terms used
in the recitals being used therein as defined in Article I hereof):
A. Pursuant to the Act, the Director is authorized, among other things, to
acquire property, and convey property so acquired, by lease, lease purchase or
other disposition, upon such terms and conditions as the Director determines to
be appropriate to satisfy the objectives of the Act.
B. The Company has requested that the Director provide financial
assistance for the Project by acquiring the Project, leasing the Project to the
Company and conveying the Project to the Company upon termination of the Lease
Term, all subject to and in accordance with the terms of this Lease.
C. The Director has determined that the Project constitutes an Eligible
Project and that the financial assistance to be provided pursuant to this Lease
and under the Loan Agreement is appropriate under the Act and will be in
furtherance and in implementation of the public policy set forth in the Act.
D. The financial assistance to be provided pursuant to this Lease and
under the Loan Agreement has been reviewed and approved by the Development
Financing Advisory Board and the Controlling Board, pursuant to the Act.
NOW, THEREFORE, in consideration of the premises and the representations
and agreements hereinafter contained, the Director and the Company agree as
follows (provided, that any obligation of the Director created by or arising
out of this Lease shall not be a general debt on the part of the Director or
the State but shall be payable solely out of the rentals, revenues and other
income, charges and moneys realized from the use, lease, sale or other
disposition of the Project and any insurance and condemnation awards as herein
provided):
ARTICLE I
DEFINITIONS
Section 1.1 Use of Defined Terms. In addition to the words and terms
elsewhere defined in this Lease or by reference to other instruments, the words
and terms set forth in Section 1.2 hereof shall have the meanings therein set
forth unless the context or use expressly indicates a different meaning or
intent. Such definitions shall be equally applicable to both the singular and
plural forms of any of the words and terms therein defined.
Section 1.2 Definitions. As used herein:
"Act" means Chapter 166, Ohio Revised Code, as from time to time
enacted and amended.
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"Additional Rent" means the additional rent specified in Section 4.3 of
this Lease.
"Allowable Costs" means "allowable costs" of the Project within the
meaning of the Act.
"Application" means the Application of the Company, dated April _,
1992, submitted to the Director requesting assistance under the Act.
"Approved Letter of Credit" means an irrevocable letter of credit, in
form satisfactory to the Trustee, issued by a commercial bank organized
under the laws of the United States of America or any state thereof and
acceptable to the Director, which letter of credit may be drawn upon by
the Trustee to provide funds for the Primary Reserve Account pursuant to
Section 4.5 of this Lease. An Approved Letter of Credit must permit
drawings thereunder for a period of not less than one (1) year or until
fifteen (15) days after the final maturity of the Bonds, whichever first
occurs.
"Authorized Company Representative" means the persons at the time
designated to act on behalf of the Company by written certificate
furnished to the Director and the Trustee, containing the specimen
signature of such person and signed on behalf of the Company by the Vice
President of the Company. Such certificate may designate an alternate
or alternates. In the absence of an effective certificate designating
the Authorized Company Representative, any officer of the Company may
act as the Authorized Company Representative.
"Bonds" means the State of Ohio State Economic Development Revenue
Bonds (Ohio Enterprise Bond Fund), Series 1992-3 (Bailey Transportation
Products, Inc. Project) (Taxable Bonds) authorized by the General Bond
Order and the Series Bond Order.
"Collateral Proceeds Account" means the Series 1992-3 Collateral
Proceeds Account, established pursuant to the General Bond Order and the
Series Bond order, in the Economic Development Bond Service Fund.
"Commitment" means the letter from the Director to the Company, dated
June 10, 1992, pursuant to which the Director, on behalf of the State,
agrees to provide assistance under the Act for the Project.
"Company" means Bailey Transportation Products, Inc., a corporation
organized under the laws of the State of Delaware and qualified to do
business in the State of Ohio.
"Completion Date" means the date of completion of the Project, as
certified by the Company pursuant to Section 3.4 hereof.
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"Construction Period" means the period between the commencement of
construction or acquisition of the Project or the date on which this
Lease is delivered to the Director, whichever is earlier, and the
Completion Date.
"Controlling Board" means the Controlling Board of the State.
"Cost Certification" means a certification of the Company, as of a
specified date, setting forth in reasonable detail the costs incurred
and, if appropriate, to be incurred in completing the Provision of the
Project, including a detailed listing, by category, of all Allowable
Costs.
"Debt Service Account" means the Debt Service Account, established
pursuant to the General Bond order, in the Economic Development Bond
Service Fund.
"Development Financing Advisory Board" means the Development Financing
Advisory Board of the State.
"Director" means the officer of the State, appointed pursuant to
Section 121.03 of the Ohio Revised Code, who administers and is the
executive head of the Department of Development of the State, the
officer who by law performs the functions of that office, and any person
acting on behalf of the Director of Development of the State pursuant to
any delegation permitted by law.
"Economic Development Bond Service Fund" means the Economic Development
Bond Service Fund created by Section 166.08(S) of the Ohio Revised Code.
"Eligible Project" means an "eligible project" within the meaning of
the Act.
"Eligible Investments" means Eligible Investments as defined in the
Trust Agreement.
"Event of Default" means any of the events described as an event of
default in Section 9.1 hereof.
"Facilities Establishment Fund" means the Facilities Establishment Fund
created by Section 166.03 of the Ohio Revised Code.
"General Bond Order" means the General Bond Order of the Treasurer,
dated April 11, 1988, as the same may be amended from time to time in
accordance with its provisions or the provisions of the Trust Agreement.
"Governing Instruments" means the certificate of incorporation and
By-Laws of the Company.
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"Governmental Authority" means, collectively, the State, any political
subdivision thereof, any municipality, and any agency, department,
commission, board or bureau of any of the foregoing having jurisdiction
over the Project.
"Guarantors" means Bailey Corporation, a Delaware corporation of which
the Company is a wholly-owned subsidiary, and the Company, joint and
severally.
"Guaranty" means the guaranty agreement of even date herewith between
the Guarantors and the Trustee.
"Independent Engineer" means an engineer or engineering firm or an
architect or architectural firm qualified to practice the profession of
engineering or architecture under the laws of the State and who or which
is not an officer or a full time employee of the Company or any
sublessee of the Project.
"Interest Rate For Advances" means (a) the interest rate borne by the
Bonds, or (b) a rate which is one percent in excess of the prime or base
interest rate then charged by the Trustee in its lending capacity as a
bank, whichever is greater and lawfully chargeable.
"Issuance Expense Account" means the Series 1992-3 Issuance Expense
Account created in the Series Bond Order.
"Lease" means this Lease, as from time to time amended or supplemented.
"Lease Approval Documents" means, with respect to the Lease, the
Recommendation of the Director to the Development Financing Advisory
Board dated April 30, 1992, the Resolution of the Development Financing
Advisory Board dated April 30, 1992, the Approval of the Controlling
Board dated May 18, 1992, and the Commitment.
"Lease Pro Rata Share" means the amount derived by multiplying an
amount of money to be distributed pursuant to Sections 11.2 and 11.3
hereof by a fraction the numerator of which is the outstanding balance
hereunder (exclusive of amounts due pursuant to Section 4.3(e) hereof)
and the denominator of which is the aggregate of the outstanding
balances hereunder (exclusive of amounts due pursuant to Section 4.3(e)
hereof) and under the Loan Agreement.
"Lease Term" or "Term" means the duration of the leasehold estate
created in this Lease as specified in Section 4.2 hereof.
"Loan" means the loan by the Director to the Company in the original
principal amount of One Million Dollars ($1,000,000) as evidenced by the
Note of the Company to the Director issued pursuant to the Loan
Agreement the proceeds of which Loan were part of the
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consideration for the transfer of the Project to the Director and were used
to pay Allowable Costs. The Loan is secured by the Project.
"Loan Agreement" means the Loan Agreement, dated as of July 29, 1992,
between the Director and the Company, as amended and supplemented from time
to time.
"Loan Pro Rata Share" means the amount derived by multiplying the amount of
money to be distributed pursuant to Sections 11.2 and 11.3 hereof by a
fraction the numerator of which is the outstanding balance under the Loan
Agreement and the denominator of which is the aggregate of the outstanding
balances hereunder (exclusive of amounts due pursuant to Section 4.3(e)
hereof) and under the Loan Agreement.
"Net Proceeds," when used with respect to any insurance or condemnation
award, means the gross proceeds from the insurance or condemnation award
with respect to which that term is used remaining after payment of all
expenses incurred in the collection of such gross proceeds.
"Notice Address" means:
(a) As to the Director: Department of Development
P.O. Box 1001
Columbus, Ohio 43266-0101
Attn: Director
Facsimile No. 614-644-1789
and
Calfee, Halter & Griswold
Suite 1800
800 Superior Avenue, N.E.
Cleveland, Ohio 44114
Attention: Virginia D. Benjamin
Facsimile No. (216) 241-0816
(b) As to the Company: Bailey Transportation Products, Inc.
333 Gore Road
Conneaut, Ohio 44030
Attention: President
Facsimile No. (216) 599-7870
and
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Sheehan, Phinney, Bass & Green 1000
Elm Street
P.O. Box 3701
Manchester, NH 03105-3701 Attn:
Alan L. Reische, Esq.
Facsimile No. (603) 627-8121
(c) As to the Trustee: The Provident Bank
One East Fourth Street
Cincinnati, Ohio 45269
Attn: Corporate Trust Dept.
Facsimile No. (513) 579-2850
or such additional or different address, notice of which is given under Section
12.3 hereof.
"Original Deposit" means Three Hundred Seventeen Thousand Dollars
($317,000), which amount is to be deposited in the Primary Reserve Account
upon delivery of this Lease, in accordance with Section 4.5 hereof.
"Permitted Encumbrances" means this Lease and those liens, charges,
easements, conditions, restrictions and encumbrances with respect to the
Project as described on Exhibit D attached hereto.
"Plans and Specifications" means the plans and specifications or other
appropriate documents describing the Project prepared by or at the
direction of the Company.
"Primary Reserve Account" means the Series 1992-3 Primary Reserve Account,
established pursuant to the General Bond Order and the Series Bond Order,
in the Economic Development Bond Service Fund.
"Project" means the Project Site and the buildings and improvements
thereon, the Project Facilities and the Project Equipment, together
constituting an Eligible Project.
"Project Equipment" means the equipment, machinery and other personal
property described on Exhibit C attached hereto.
"Project Facilities" means the buildings, structures, additions and
improvements described in Exhibit B attached hereto.
"Project Fund" means the Series 1992-3 Project Fund, established pursuant
to the Series Bond Order.
"Project Purposes" means the manufacture of molded plastic components for
automobiles and other industrial uses.
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"Project Site" means the real estate described in Exhibit A attached
hereto.
"Provision" means, as applicable, the acquiring, constructing,
reconstructing, rehabilitating, renovating, enlarging, improving, equipping
or furnishing of the Project.
"Series Bond Order" means Series Bond Order No. R3-92 of the Treasurer,
dated July 27, 1992, as the same may be amended from time to time in
accordance with its provisions or the provisions of the Trust Agreement.
"State" means the State of Ohio.
"Supplement" means the Twenty-Eighth Supplemental Trust Agreement, dated as
of July 1, 1992, between the Treasurer and the Trustee, of which the Series
Bond Order is a part.
"Terms and Conditions to Disbursement" means the terms and conditions which
must be satisfied by the Company with respect to each request for
disbursement of moneys from the Project Fund in order to obtain the
Director's approval of such request for disbursement, which terms and
conditions are set forth on Exhibit E attached hereto.
"Treasurer" means the Treasurer of State of the State, or the officer who
by law performs the functions of that office.
"Trustee" means the trustee at the time serving as such under the Trust
Agreement, initially The Provident Bank, Cincinnati, Ohio.
"Trust Agreement" means the Trust Agreement, dated as of April 1, 1988,
between the Treasurer and the Trustee, of which the General Bond Order is a
part, as the same may be amended, modified or supplemented by any
amendments or modifications thereof and any supplements thereto (including,
but not limited to, the Supplement) entered into in accordance with the
provisions thereof.
Section 1.3 Certain Words and References. Any reference herein to the
Director shall include those succeeding to his functions, duties or
responsibilities pursuant to or by operation of law or lawfully performing such
functions. Any reference to a section or provision of the Constitution of the
State or to the Act or to a section, provision or chapter of the Ohio Revised
Code shall include such section, provision or chapter as from time to time
amended, modified, revised, supplemented or superseded; provided, that no
amendment, modification, supplement, revision or superseding section, provision
or chapter shall be applicable solely by reason of this paragraph if it
constitutes in any way an impairment of the rights or obligations of the State,
the owners of the Bonds, the Company or the Trustee under this Lease or any
instrument or document entered into in connection therewith.
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The terms "hereof," "hereby," "herein," "hereto," "hereunder" and similar
terms refer to this Lease; and the term "heretofore" means before, and the term
"hereafter" means after, the date of delivery of this Lease.
ARTICLE II
DETERMINATION AND REPRESENTATIONS
Section 2.1 Determinations of the Director. Pursuant to the Act and on the
basis of the representations and other information provided by the Company, the
Director has heretofore made certain determinations, as set forth in the Lease
Approval Documents, which are hereby confirmed, and the Director hereby
determines that the financial assistance to be provided by the State pursuant to
this Lease will conform to the requirements of the Act, including Section 166.02
thereof, and will further implement the purposes of the Act by creating new jobs
or preserving existing jobs and employment opportunities and improving the
economic welfare of the people of the State.
Section 2.2. Representations of the Company. The Company hereby represents
and warrants that:
(a) It is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and is qualified to do business in
the State of Ohio.
(b) It has full power and authority to execute, deliver and perform this
Lease and to enter into and carry out the transactions contemplated
hereby. Such execution, delivery and performance do not, and will not,
violate any provision of law applicable to the Company or the Governing
Instruments of the Company and do not, and will not, conflict with or
result in a default under any agreement or instrument to which the Company
is a party or by which it or any of its property or assets is or may be
bound immediately following the consummation of the transactions
contemplated hereby. This Lease has, by proper action, been duly
authorized, executed and delivered and all necessary actions have been
taken to constitute this Lease a legal, valid and binding obligation of
the Company.
(c) The provision of financial assistance pursuant to the Lease Approval
Documents and this Lease induced the Company to provide the Project,
thereby creating new jobs or preserving existing jobs and employment
opportunities and improving the economic welfare of the people of the
State.
(d) It presently intends that the Project will be used and operated in a
manner consistent with the Project Purposes until the end of the Lease
Term, and the Company knows of no reason why the Project will not be so
operated.
(e) Except as disclosed on Exhibit F attached hereto, there are no actions,
suits or proceedings pending or threatened against or affecting the
Company or the Project which, if adversely
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determined, would individually or in the aggregate materially impair the
ability of the Company to perform any of its obligations under this Lease
or materially adversely affect the financial condition of the Company.
(f) The Company is not in default under this Lease or in the payment of any
indebtedness for borrowed money or under any agreement or instrument
evidencing any such indebtedness, and no event has occurred which by
notice, the passage of time or otherwise would constitute any such event
of default.
(g) Zoning regulations applicable to the Project Site permit the Provision of
the Project thereon in accordance with the Plans and Specifications and
the operation of the Company's business thereon; and all utilities,
including water, storm and sanitary sewer, gas, electric and telephone,
and rights of access to public ways are available to the Project Site in
sufficient locations and capacities to meet the requirements of operating
the Project and of any applicable Governmental Authority.
(h) Except as disclosed on Exhibit G, prior to June 10, 1992, the Company
made no contract or arrangement of any kind, other than this Lease, which
has given rise to or the performance of which by the other party thereto
would give rise to a lien or claim of lien on the Project or other
collateral covered by this Lease, and no materials or labor have, prior to
June 10, 1992, been supplied to or performed in connection with the
Project.
(i) No representation or warranty of the Company contained in any of the
Lease Approval Documents or this Lease, and no statement contained in any
certificate, schedule, list, financial statement or other instrument
furnished to the Director by or on behalf of the Company (including,
without limitation, the Application) contains any untrue statement of a
material fact, or omits to state a material fact necessary to make the
statements contained herein or therein not misleading. To the extent that
any of the foregoing consist of projections the Company acknowledges that
such projections were prepared in good faith and the Company believes that
the projections and the assumptions on which they are based were
reasonable when made and continue to be reasonable as of the date hereof
but the Company does not warrant that the results set forth in any
projection can be achieved or that the assumptions on which the
projections were based will in fact prove to be accurate.
(j) The financial statements of the Company heretofore delivered to the
Director are true and correct, in all material respects, have been
prepared in accordance with generally accepted accounting principles
consistently applied, and fairly present the financial condition and the
results of operation of the Company as of the dates thereof. No
materially adverse change has occurred in the financial condition of the
Company since the respective dates thereof.
(k) The Company will convey, or cause to be conveyed, at the Closing, to the
Director good and marketable title to a fee simple interest in the Project
Site and Project Facilities and to such portion, if any, of the Project
Equipment heretofore owned by the Company, subject in all
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cases to no lien, charge, easement, condition, restriction or encumbrance
except as created by this Lease and except for Permitted Encumbrances.
(1) Except as disclosed on Exhibit D to this Lease, there are no other
easements or agreements, including, without limitation, parking
agreements, encroachment agreements, access easements, service agreements,
real estate tax abatement agreements and other similar agreements
affecting the Project.
(m) The Project Site has never, and does not currently contain, nor is it
contaminated by, any hazardous or toxic waste materials in violation of
any applicable environmental laws or regulations, including, but not
limited to, Section 103 of the Comprehensive Environmental Response,
Compensation and Liability Act, 42 USC 9601 et sea, and Chapter 3734 of
the Ohio Revised Code; and no "clean-up" of the Project Site has occurred
pursuant to any applicable federal or state environmental laws or
regulations which would give rise to (i) liability on the part of any
person, entity or association to reimburse any governmental authority for
the costs of any such "clean-up," or (ii) a lien or encumbrance on the
Project Site.
ARTICLE III
COMMENCEMENT AND COMPLETION OF THE PROJECT
Section 3.1 Provision of the Project. The Director agrees that it
will cause the Provision of the Project on the Project site. The Director
further agrees that it will timely enter into, or accept the assignment of, such
contracts as the Company may request in order to effectuate the purposes of this
Section.
The Director hereby makes, constitutes and appoints the Company as its true
and lawful agent, with full power of substitution in the premises and the
Company hereby accepts such agency, (a) to cause the Provision of the Project,
(b) to make, execute, acknowledge and deliver any contracts, orders, receipts,
writings and instructions, either in the name of the Company solely or as the
stated agent for the Director, with any other persons, firms or corporations,
and in general to do all things which may be requisite or proper, all for
acquiring the Project, with the same powers and with the same validity as the
Director could do if acting in its own behalf, (c) pursuant to the provisions of
this Lease, to pay all Allowable Costs incurred in the acquisition of the
Project from funds made available therefor in accordance with this Lease and (d)
to ask, demand, sue for, levy, recover and receive all such sums of money,
debts, dues and other demands whatsoever which may be due, owing and payable to
the Director under the terms of any contract, order, receipt, writing and
instruction in connection with Provision of the Project and to enforce the
provisions of any contract, agreement, obligation, bond or other performance
security. So long as the Company is not in default under any of the provisions
of this Lease, this appointment of the Company to act as agent and all authority
hereby conferred is granted and conferred irrevocably until all activities in
connection with the Provision of the Project shall have been completed, and
shall not be terminated prior thereto by
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act of the Director or the Company or by operation of law.
The Director and the Company each agree that the Provision of the Project
shall proceed with all reasonable dispatch.
The Company agrees that all wages paid to laborers and mechanics employed
on the Project by the Company or its contractors or subcontractors shall be paid
at the prevailing rates of wages of laborers and mechanics for the class of work
called for by the Project, which wages shall be determined in accordance with
the requirements of Chapter 4115 of the Ohio Revised Code for determination of
prevailing wage rates.
Section 3.2 Deposits to the Project Fund and the Issuance-Expense Account.
In order to provide funds for payment of the Allowable Costs of the Project, the
Director, upon delivery of this Lease, shall cause to be transferred from the
Facilities Establishment Fund to the Project Fund the sum of Two Million Seven
Hundred Fifty Thousand Three Hundred Fifty-Five Dollars ($2,750,355). In order
to provide funds for payment of costs of issuance of the Bonds, the amount of
Bond proceeds deposited in the Issuance Expense Account shall be One Hundred Two
Thousand Six Hundred Forty-Five Dollars ($102,645).
Section 3.3 Disbursements from the Project Fund. The Treasurer has, in
the Supplement, authorized and directed the Trustee to disburse the moneys in
the Project Fund for Allowable Costs of the Project. Except as otherwise
provided in this Lease, each payment from the Project Fund shall be made only
upon (A) the written direction of the Authorized Company Representative, who
shall certify with respect to each such payment: (i) that each item for which
payment is requested is an Allowable Cost properly payable out of the Project
Fund in accordance with the terms and conditions of this Lease and none of the
items for which the payment is proposed to be made has formed the basis for any
payment theretofore made from the Project Fund, (ii) that each item for which
payment is proposed to be made is or was necessary in connection with the
Project and (iii) that the Company has received from each payee or
contemporaneously with the making of payment will receive from each payee
appropriate waivers of any mechanics' or other liens (or has provided
indemnification in lieu thereof satisfactory to the Director) and (B) the
written approval of the Director. The Director shall not be required to approve
any request for disbursement of moneys from the Project Fund unless the Company
has complied with all of the Terms and Conditions to Disbursement. The Trustee
shall be allowed a reasonable time, not to exceed fifteen (15) days, in view of
the character of any investment or investments required to be liquidated for the
purpose, for the making of any disbursement from the Project Fund authorized by
this Section.
Section 3.4 Establishment of Completion Date. The Company covenants that
the Completion Date shall occur not later than July 31, 1993. The Completion
Date shall be evidenced to the Director and to the Trustee by a certificate
signed by the Authorized Company Representative stating that, except for amounts
retained by the Trustee in the Project Fund for Allowable Costs of the Project
not then due and payable, (i) Provision of the Project has been completed in
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accordance with the Plans and Specifications and all labor, services, materials
and supplies used in such acquisition, construction, renovation and
installation have been paid for, (ii) all other facilities necessary in
connection with the Project have been constructed, acquired and installed in
accordance with the plans and specifications therefor and all costs and
expenses incurred in connection therewith have been paid, (iii) the Project and
all other facilities necessary in connection with the Project have been
constructed or installed, as the case may be, in such manner as to conform to
all applicable zoning, planning, building, environmental and other regulations
of the Governmental Authorities having jurisdiction of the Project; provided
that if any part of the construction or installation does not conform to such
regulations, the certificate shall describe any such nonconformities and the
actions being taken to remedy them, (iv) the Project Equipment, if any, (which
shall be described in an exhibit attached to said certificate) has been
installed to his satisfaction, and as so installed is suitable and sufficient
for the efficient operation of the Project for the Project Purposes, and (v)
all materially significant disputes, controversies or claims arising out of or
in connection with the acquisition, construction, renovation and installation
of the Project have been resolved, satisfied or paid in full, as the case may
be. Notwithstanding the foregoing, such certificate shall state that it is
given without prejudice to any rights against third parties which exist at the
date of such certificate or which may subsequently come into being. The
Company shall also deliver to the Director and to the Trustee a Cost
Certification. Any amount remaining in the Project Fund on the Completion
Date, except for amounts which the Authorized Company Representative certifies
to the Trustee as being required to pay Allowable Costs of the Project not then
due and payable, shall be transferred by the Trustee to the Collateral Proceeds
Account.
Section 3.5 Company Required to Pay Costs in Event Project Fund
Insufficient. In the event the moneys in the Project Fund available for payment
of costs of the Project should not be sufficient to pay the costs thereof in
full, the Company agrees for the benefit of the Director, to complete the
Project and to pay all the portion of the costs of the Project as may be in
excess of the moneys available therefor in the Project Fund. THE DIRECTOR DOES
NOT MAKE ANY WARRANTY, EITHER EXPRESS OR IMPLIED, THAT THE MONEYS WHICH WILL BE
PAID INTO THE PROJECT FUND AND WHICH UNDER THE PROVISIONS OF THIS LEASE WILL BE
AVAILABLE FOR PAYMENT OF THE ALLOWABLE COSTS OF THE PROJECT WILL BE SUFFICIENT
TO PAY ALL THE COSTS WHICH WILL BE INCURRED IN THAT CONNECTION. The Company
agrees that if after exhaustion of the moneys in the Project Fund the Company
should pay any portion of the said costs of the Project pursuant to the
provisions of this Section, it shall not be entitled to any reimbursement
therefor from the Director or the Trustee, nor shall it be entitled to any
diminution in or postponement of the rents payable under Section 4.3 hereof.
Section 3.6 Remedies to Be Pursued Against Contractors and
Subcontractors and their Sureties. In the event of default of any contractor or
subcontractor under any contract made by it in connection with the Project or in
the event of a breach of warranty with respect to any materials, workmanship, or
performance guaranty, the Company will promptly proceed, either separately or in
conjunction with others, to exhaust the remedies of the Company against the
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contractor or subcontractor so in default and against each such surety for the
performance of such contract. The Lease Pro Rata Share of any amounts received
by way of damages, refunds, adjustments or otherwise in connection with the
foregoing, after deduction of expenses incurred in such recovery, prior to the
Completion Date shall be paid into the Project Fund or, if recovered after the
Completion Date and full disposition of the Project Fund in accordance with
Section 3.4 hereof, shall be paid to the Trustee for deposit in the Collateral
Proceeds Account and the Loan Pro Rata Share of any such amount shall be
applied as provided in the Loan Agreement.
Section 3.7 Investment of Project Fund, Primary Reserve Account or
Collateral Proceeds Account. Any moneys held as part of the Project Fund, the
Primary Reserve Account or the Collateral Proceeds Account shall be invested by
the Trustee, upon the written or oral direction (but if oral, confirmed promptly
in writing) of the Authorized Company Representative, in Eligible Investments.
Section 3.8 Lease as Security Agreement. This Lease is intended to
create and does create in the Director a security interest in the Project, and
in each part thereof, under the Ohio Uniform Commercial Code (Chapters 1301 to
1309, inclusive, of the Ohio Revised Code) as security for the payment of rent
required by Section 4.3 hereof.
Section 3.9 Plans and Specifications; Inspections. At his option, the
Director may retain, at the Company's expense, an architect, engineer, appraiser
or other consultant for the purpose of approving the Plans and Specifications,
verifying costs and performing inspections as Provision of the Project
progresses. Such inspections or approvals of Plans and Specifications or the
Project shall impose no responsibility or liability of any nature upon the
Director, the State, their agents, representatives or designees nor, without
limitation, carry any warranty or representation as to the adequacy or safety of
the structures or any of their component parts or any other physical condition
or feature pertaining to the Project. The Company shall, at the request of the
Director, make periodic reports (including, if required, submission of updated
Cost Certifications) to the Director concerning the status of completion of the
Project and the expenditure of costs in respect thereof.
The Company may revise the Plans and Specifications from time to time;
provided that no revision shall be made (a) which would change the Project
Purposes to purposes other than those permitted by the Act; (b) without
obtaining, to the extent required by law, the approval of any applicable
Governmental Authority; and (c) without the prior written approval of the
Director if such revision would change the amounts set forth in the most
recently furnished Cost Certification. In any event, all revisions to the Plans
and Specifications shall be promptly filed with the Director.
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ARTICLE IV
LEASE OF PROJECT, LEASE TERM AND RENTAL
Section 4. 1 Lease of Project. The Director, as lessor hereunder, in
consideration of the rents, covenants and agreements herein stated, agrees to,
and does hereby lease to the Company, as lessee hereunder, and the Company
agrees to, and does hereby lease from the Director, subject to the provisions of
this Lease, the Project for the Lease Term.
Section 4.2 Lease Term and Possession. The Lease Term shall commence on
the date of delivery of this Lease and, subject to earlier termination as
provided herein, shall end on September 2, 2002. The Director agrees to deliver
to the Company full possession of the Project (subject to Section 7.2 hereof) at
the commencement of the Lease Term and the Company agrees to accept possession
of the Project upon such delivery. The Director covenants and agrees that it
will not take any action, other than pursuant to Article IX of this Lease, to
prevent the Company from having quiet and peaceable possession and enjoyment of
the Project during the Lease Term and will, at the request of the Company, and
at the Company's cost, cooperate with the Company in order that the Company may
have quiet and peaceable possession and enjoyment of the Project. This
provision shall not be construed to require cooperation by the Director with the
Company in any labor dispute.
Section 4.3 Rents and Other Amounts Payable. Not later than the
fifteenth (15th) day of each month commencing September 15, 1992 and continuing
thereafter until the principal of and interest on the Bonds shall have been
fully paid or provision for the payment thereof shall have been made in
accordance with the Trust Agreement, the Company shall pay to the Trustee as
rent an amount equal to the sum of (i) one third (1/3) of the amount of interest
on the Bonds which will be payable on the next succeeding date on which such
interest is due to be paid, and (ii) one third (1/3) of the amount of principal
of the Bonds which will be payable (whether at stated maturity or by mandatory
sinking fund redemption) on the next succeeding date on which such principal is
due to be paid. The Company shall receive a credit against the rent payment due
in the month of February of each year to the extent and in the manner provided
in the General Bond Order and the Series Bond Order. If the Company fails to
make any payment required by this paragraph on the due date thereof, the Trustee
shall, to the extent that funds are available therefor, transfer to the Debt
Service Account an amount equal to such payment from the Collateral Proceeds
Account and, if the balance in the Collateral Proceeds Account is insufficient,
from the Primary Reserve Account.
(b) If moneys are transferred from the Primary Reserve Account or the
Collateral Proceeds Account to the Debt Service Account pursuant to the
provisions of Section 14 of the General Bond Order, and if no Event of Default
is then existing, the Company shall receive a credit against rental payments
payable under subparagraph (a) of this Section, in inverse order of their
maturity, in an amount equal to the amount so transferred.
(c) If no Event of Default is then existing and if the balance in the
Primary Reserve Account is greater than or equal to the aggregate amount of
rental payments to become due and
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payable during the remaining term of this Lease pursuant to subparagraph (a) of
this Section 4.3, the Company may direct the Trustee to apply monies in the
Primary Reserve Account to monthly rental payments as they become due and, in
such case and notwithstanding the provisions of Section 4.5 hereof, the Company
shall not be required to deliver moneys to the Trustee to restore the balance
in the Primary Reserve Account to an amount equal to the Original Deposit.
(d) Not later than the fifteenth (15th) day of each month, commencing
September 15, 1992, the Company shall pay to the Trustee (i) an amount equal to
one twelfth (1/12) of the Trustee's annual administrative fee (which annual
administrative fee shall be calculated at a rate equal to the sum of (A) $1,200
per million dollars for each million dollars or any part thereof of the first
five million dollars of outstanding principal amount of Bonds, and (B) $700 per
million dollars for each million dollars or any part thereof of the next five
million dollars of outstanding principal amount of Bonds, and (C) $600 per
million dollars for each million dollars or any part thereof of outstanding
principal amount of Bonds in excess of ten million dollars), constituting the
fee of the Trustee in connection with its administration of the Project Fund,
the Primary Reserve Account and the Collateral Proceeds Account, and (ii) an
amount equal to .0104167% of the outstanding principal amount of the Bonds
("Additional Rent"). The Company and the Director acknowledge and agree that
the Additional Rent is intended to reimburse the Department of Development for a
portion of the cost of administering the Ohio Enterprise Bond Fund program. Each
calculation of the Trustee's annual administrative fee and the Additional Rent
shall be made based on the outstanding principal amount of Bonds as of the most
recent preceding March 2, June 2, September 2 or December 2, as applicable.
(e) The Company also agrees to pay as rent to the Director the amounts
due under the Loan Agreement, including but not limited to, the principal sum of
the Note of the Company to the Director in the amount of One Million Dollars
($1,000,000) with interest on the amount of the principal balance thereof from
time to time outstanding from the Disbursement Date (as defined in the Loan
Agreement) at the rate of Three Percent (3%) per annum until paid plus a monthly
service fee equal to one-twelfth (1/12) of one-fourth of one percent (0.25%) of
such principal balance from time to time outstanding from such Disbursement Date
until paid; such amounts were partial consideration for the Provision of the
Project to the Director and for purposes hereof all such amounts shall be deemed
rent and shall be applied to reduce amounts due to the Director under the Note
and the Loan Agreement.
(f) The Company also agrees to pay to the Director reasonable expenses
of the Director related to the Project and requested by the Company or required
by this Lease or the Trust Agreement, or incurred in enforcing the provisions of
this Lease or the Trust Agreement and which are not otherwise required to be
paid by the Company under the terms of this Lease.
(g) In the event the Company should fail to make any of the payments
required in this Section 4.3 (except for payments required by subparagraph
4.3(e)), the item or installment so in default shall continue as an obligation
of the Company until the amount in default shall have been fully paid, and the
Company agrees to pay the same with interest thereon at the rate of the Interest
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Rate for Advances. If any payment required by subparagraph (a) of this Section
4.3 is not made by the first day of the month following the month in which such
payment is due, the Company shall pay, in addition to such payment, a late
payment charge of five percent (5%) of the amount of such payment.
Section 4.4 Place of Payments. The rent provided for in subparagraph
(a) of Section 4.3 hereof and the late payment charge provided for in
subparagraph (g) of Section 4.3 hereof shall be paid directly to the Trustee at
its principal corporate trust office for the account of the Director, and the
Trustee shall deposit such payments in the Debt Service Account. Additional
Rent shall be paid to the Trustee, who shall pay such amounts to the Director,
not less frequently than monthly, for deposit in the First Half Account (if
received by the Director between January 1 and June 30) or the Second Half
Account (if received by the Director between July 1 and December 31) created in
the Trust Agreement. The additional payments to be made to the Director under
Section 4.3(f) hereof shall be paid directly to the Director for use as provided
in such Section. Amounts paid pursuant to section 4.3(e) hereof shall be paid
to the Director and applied as provided in the Note and Loan Agreement.
Section 4.5 Primary Reserve Account. Upon delivery of this Lease and in
accordance with the General Bond Order and the Series Bond Order, the Company
shall deliver or cause to be delivered to the Trustee for deposit or credit to
the Primary Reserve Account a sum of money equal to the Original Deposit (which
sum may, to the extent provided for in the Series Bond Order, be derived from
proceeds of the sale of the Bonds). In accordance with the provisions of the
General Bond Order and the Series Bond order, the Trustee shall transfer moneys
from the Primary Reserve Account to the Debt Service Account if (a) the Company
shall have failed to make a rent payment required by the subparagraph (a) of
Section 4.3 hereof, and (b) the balance in the Collateral Proceeds Account is
insufficient to provide funds for such transfer.
If, as a result of a transfer described in the immediately preceding
paragraph, the balance in the Primary Reserve Account is less than the original
Deposit, the Trustee shall promptly notify the Company, by telephone and
confirmed in writing, of the amount of such deficiency, and the Company shall,
not later than ten (10) days after receipt of such notice, deliver to the
Trustee for deposit or credit to the Primary Reserve Account moneys or an
Approved Letter of Credit in the amount of such deficiency.
Pursuant to Section 14 of the General Bond Order, the Trustee shall, under
the circumstances described in said Section 14, transfer moneys from the Primary
Reserve Account to the Debt Service Account, in order to obtain moneys to make
such transfer.
Section 4.6 Obligations of the Company Hereunder Unconditional. The
obligations of the Company to make the payments required in Section 4.3 and
Section 4.5 hereof and to perform and observe the other agreements on its part
contained herein shall be absolute and unconditional and until such time as the
principal of and interest and premium, if any, on the Bonds shall have been
fully paid or provision for the payment thereof shall have been made in
accordance with the Trust
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Agreement and all payments under the Loan Agreement and the Note shall have
been made in accordance with the terms thereof, the Company (i) will not,
subject to the provisions of Section 8.6 hereof, suspend or discontinue any
payments provided for in Section 4.3 or Section 4.5 hereof, (ii) will perform
and observe all of its other agreements contained in this Lease, and (iii)
except as provided in Article X hereof, will not terminate the Lease for any
cause including, without limiting the generality of the foregoing, failure to
complete the Project, any acts or circumstances that may constitute failure of
consideration, destruction of or damage to the Project, commercial frustration
of purpose, any change in the tax or other laws or administrative rulings of or
administrative actions by the United States of America or the State or any
political subdivision of either, or any failure of the Director to perform and
observe any agreement, whether expressed or implied, or any duty, liability or
obligation arising out of or connected with this Lease, the Loan Agreement, the
Note, or the Trust Agreement. Nothing contained in this Section shall be
construed to release the Director from the performance of any of the agreements
on its part contained in this Lease, the Loan Agreement or the Note; and in the
event the Director should fail to perform any such agreement on its part, the
Company may institute such action against the Director as the Company may deem
necessary to compel performance or recover its damages for nonperformance so
long as such action shall not impair the agreements on the part of the Company
contained in the next preceding sentence. The Company may, however, at its own
cost and expense and in its own name or in the name of the Director, prosecute
or defend any action or proceeding or take any other action involving third
persons which the Company deems reasonably necessary in order to secure or
protect its right of possession, occupancy and use hereunder, and in such event
the Director hereby agrees to cooperate fully with the Company and to take all
action necessary to effect the substitution of the Company for the Director in
any such action or proceeding if the Company shall so request. This provision
shall not be construed to require cooperation by the Director with the Company
in any labor dispute.
ARTICLE V
MAINTENANCE, TAXES AND INSURANCE
Section 5.1 Maintenance and Modifications of Project by the Company. The
Company agrees that during the Lease Term it will keep the Project including all
appurtenances thereto and the equipment and machinery therein in good repair and
good operating condition at its own cost.
The Company shall have the privilege of remodeling or making additions,
modifications or improvements to the Project from time to time as it, in its
discretion, may deem to be desirable for its uses and purposes, the cost of
which remodeling, additions, modifications and improvements shall be paid by the
Company, and the same (except any machinery, equipment or furniture installed
pursuant to Section 8.7 hereof) shall be the property of the Director and be
included under the terms of this Lease as part of the Project.
Section 5.2 Removal of Project Equipment. The Company shall not be
under any obligation to renew, repair or replace any inadequate, obsolete, worn
out, unsuitable, undesirable or
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unnecessary Project Equipment. The Company shall have the privilege from time
to time of substituting machinery, equipment and related property for any
Project Equipment; provided that the machinery and equipment so substituted
shall be of a value not less than the value of the machinery or equipment
replaced at the time of replacement and shall not make the Project unsuitable
for the Project Purposes. Any such substitute machinery and equipment shall
become the property of the Director and be included under the terms of this
Lease, and the replaced Project Equipment shall become the property of the
Company. The Company shall promptly notify the Director and the Trustee of any
substitutions of machinery or equipment, which notice shall include a
description of the substituted machinery or equipment. The Company shall also
have the privilege of removing any Project Equipment, without substitution
therefor; provided, that the Company pays to the Director a sum equal to the
then value of said Project Equipment, as determined by an Independent Engineer
or appraiser selected by the Company and acceptable to the Director, and so
long as any of the Bonds remain outstanding or amounts remain outstanding under
the Loan Agreement and the Note, the Company shall pay such amounts directly to
the Trustee for deposit of the Lease Pro Rata Share of such amounts in the
Collateral Proceeds Account and payment of the Loan Pro Rata Share to the
Director for application in accordance with the Loan Agreement and shall
deliver to the Director and the Trustee a certificate signed by said
Independent Engineer or appraiser setting forth the value of said Project
Equipment and stating that the removal of such equipment will not make the
Project unsuitable for the Project Purposes.
The Company may at any time while it is not in default under this Lease
remove from the Project any machinery or equipment purchased and installed by it
pursuant to Section 8.7 of this Lease and not included as Project Equipment.
In the event any removal of machinery or equipment under this Section or
Section 8.7 causes damage to existing buildings or structures, the Company shall
restore the same or repair such damage at its sole expense.
The Director agrees to execute and deliver such documents as the Company
may properly request in connection with any action taken by the Company in
conformity with this Section 5.2. The removal from the Project of any portion of
the Project Equipment pursuant to the provisions of this Section shall not
entitle the Company to any abatement or diminution of the rents payable under
Section 4.3 hereof.
Section 5.3 Indemnification by the Company. The Company shall indemnify
and hold the Director, the Treasurer and the Trustee (including any member,
officer, director or employee thereof) (collectively, the "Indemnified Parties")
harmless against any and all claims, asserted by or on behalf of any person,
firm or corporation, private or public, arising or resulting from, or in any way
connected with (i) financing, installation, operation, use or maintenance of the
Project (including, but not limited to, claims relating to compliance with
Chapter 4115, Ohio Revised Code), (ii) any act, failure to act or
misrepresentation by any person, firm, corporation or governmental authority in
connection with the issuance, sale or delivery of the Bonds, and (iii) any act,
failure to act or misrepresentation by any other Indemnified Party in connection
with, or in the performance
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of any obligation related to the issuance, sale and delivery of the Bonds or
under this Lease or the Trust Agreement, including all liabilities, costs and
expenses, including reasonable counsel fees, incurred in any action or
proceeding brought by reason of any such claim. In the event any action or
proceeding is brought against any Indemnified Party by reason of any such
claim, such Indemnified Party will promptly give written notice thereof to the
Company. In case such notice shall be so given, the Company shall be entitled
to participate at its own expense in the defense or, if it so elects, to assume
at its own expense the defense of such claim, suit, action or proceeding, in
which event such defense shall be conducted by counsel chosen by the Company
and reasonably satisfactory to such Indemnified Party against whom such action
or proceeding is pending; but if the Company shall elect not to assume such
defense, it shall reimburse such Indemnified Party for the reasonable fees and
expenses of any counsel retained by such Indemnified Party. If at any time the
Indemnified Party becomes dissatisfied in good faith with the selection of
counsel by the Company, a new mutually agreeable counsel shall be retained at
the expense of the Company. Each Indemnified Party agrees that the Company
shall have the sole right to compromise, settle or conclude any claim, suit,
action or proceeding against any of the Indemnified Parties. Notwithstanding
the foregoing, each Indemnified Party shall have the right to employ counsel in
any such action at its own expense; and provided further that such Indemnified
Party shall have the right to employ counsel in any such action and the
reasonable fees and expenses of such counsel shall be at the expense of the
Company if: (i) the employment of counsel by such Indemnified Party has been
authorized by the Company, (ii) there reasonably appears that there is a
conflict of interest between the Company and the Indemnified Party in the
conduct of the defense of such action (in which case the Company shall not have
the right to direct the defense of such action on behalf of the Indemnified
Party) or (iii) the Company shall not in fact have employed counsel to assume
the defense of such action. The Company shall also indemnify the Indemnified
Parties from and against all reasonable costs and expenses, including
reasonable counsel fees, lawfully incurred in enforcing any obligations of the
Company under this Lease. Anything herein to the contrary notwithstanding, the
foregoing agreements by the Company to indemnify any Indemnified Party shall
not apply to grossly negligent acts or omissions or acts or omissions of
willful misconduct on the part of such Indemnified Party. The Company shall
not be liable for any settlement of any action or claim effected without its
consent. The obligations of the Company under this Section shall survive the
termination of this Lease and shall be in addition to any other rights,
including without limitation, rights to indemnity which any Indemnified Party
may have at law, in equity, by contract or otherwise.
Section 5.4 Taxes, Other Governmental Charges and Utility Charges. The
Company will pay, as the same respectively become due, all taxes, assessments,
whether general or special, and governmental charges of any kind whatsoever that
may at any time be lawfully assessed or levied against or with respect to the
Project or any machinery, equipment or other property installed or brought by
the Company therein or thereon (including, without limiting the generality of
the foregoing, any taxes levied upon or with respect to the receipts, income or
profits of the Director from the Project which, if not paid, may become or be
made a lien on the Project or a charge on the revenues and receipts therefrom),
and all utility and other charges incurred in the operation, maintenance, use,
occupancy and upkeep of the Project, provided, that with respect to special
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assessments or other governmental charges that may lawfully be paid in
installments over a period of years, the Company shall be obligated to pay only
such installments as are required to be paid during the Lease Term. Nothing in
this Section shall require the Company to pay or discharge any such tax,
assessment, governmental charge or levy so long as the validity thereof shall
be contested in good faith and by appropriate legal proceedings, provided that
the Company shall have delivered to the Director and the Trustee an opinion of
counsel, selected by the Company and reasonably acceptable to the Director and
the Trustee, to the effect that nonpayment of any such items during the
pendency of such contest will not adversely affect the Director's right, title
or interest in the Project.
Section 5.5 Insurance Required. The Company shall insure the Project
Facilities and the Project Equipment in an aggregate amount equal to the
replacement cost of the Project, but in any event not less than the principal
amount of Bonds outstanding from time to time, against loss or damage by fire,
boiler explosion, as well as such other risks as are covered by the endorsement
commonly known as "extended coverage", plus vandalism and malicious mischief, in
insurance companies authorized to issue such policies in the State. Any
insurance policy maintained by the Company pursuant to this Section 5.5 may
provide that the policy does not cover the first $15,000 or less of loss, or
such greater amount as may (with due regard to insurance practices from time to
time current with respect to buildings and equipment similar to the Project
Facilities and the Project Equipment) be approved in writing by the Director,
with the result that the Company is its own insurer to that extent. Any return
of insurance premium or dividends based upon such premium shall be due and
payable solely to the Company unless such premium shall have been paid by the
Director or Trustee.
As an alternative to the above, the Company may insure such property under
a blanket insurance policy or policies which cover not only such property but
other properties.
During the Construction Period, the Company shall carry, or cause the
contractor or contractors for the Project to carry, builders' risk insurance of
such character and in such amount as is customarily carried on similar projects
in the State.
Section 5.6 Additional Provisions Respecting Insurance. Any
insurance policy issued pursuant to Section 5.5 hereof shall be so written or
endorsed as to make losses, if any, adjustable by the Company and payable to the
Company and the Trustee, for the account of the Director; provided, any such
insurance policy may be so written or endorsed as to make losses not in excess
of $50,000 for each occurrence payable directly to the Company as hereinafter
provided in Section 6.1. Each insurance policy provided for in Section 5.5 and
Section 5.8 hereof shall contain a provision to the effect that the insurance
company shall not cancel the same without first giving written notice thereof to
the Director and the Trustee at least thirty (30) days in advance of such
cancellation, and the Company shall deliver to the Director and the Trustee
duplicate copies or certificates of insurance pertaining to each such policy of
insurance procured by the Company and shall keep such duplicate copies or
certificates up to date.
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Section 5.7 Application of Net Proceeds of Insurance. Net Proceeds of
the insurance carried pursuant to the provisions of this Lease shall be applied
as follows: (i) the Net Proceeds of the insurance required in Section 5.5
hereof determined in accordance with Section 11.2 hereof shall be applied as
provided in Section 6.1 hereof, and (ii) the Net Proceeds of the insurance
required in Section 5.8 hereof shall be applied toward extinguishment or
satisfaction of the liability with respect to which such insurance proceeds may
be paid.
Section 5.8 Public Liability Insurance. The Company agrees that it
will carry public liability insurance with reference to its operations at the
Project with one or more reputable insurance companies duly qualified to do
business in the State, in minimum amounts of $1,000,000 for the death of or
personal injury to one person and $3,000,000 for personal injury or death for
each occurrence in connection with the Project and $500,000 for property damage
of any occurrence in connection with the Project, with a deductible not to
exceed $15,000. The Director and the Trustee shall be made additional insureds
under such policies. The insurance provided by this Section 5.8 may be by
blanket insurance policy or policies.
Section 5.9 Advances. In the event the Company shall fail to maintain
the full insurance coverage required by this Lease or shall fail to keep the
Project in good repair and operating condition, the Director or the Trustee may
(but shall be under no obligation to) take out the required policies of
insurance and pay the premiums on the same or may make such repairs or
replacements as are necessary and provide for payment thereof; and all amounts
so advanced therefor by the Director or the Trustee shall become an additional
obligation of the Company to the Director or the Trustee, respectively, which
amounts, together with interest thereon at the Interest Rate for Advances from
the date thereof, the Company agrees to pay on demand.
ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 6.1 Damage and Destruction. If prior to full payment of the
Bonds (or provision for payment thereof having been made in accordance with the
provisions of the Trust Agreement) and of all amounts due under the Loan
Agreement and the Note, the Project Facilities or Project Equipment shall be
damaged or partially or totally destroyed by fire, flood, windstorm, or other
casualty at any time during the Lease Term, there shall be no abatement or
reduction in the rent payable by the Company under this Lease including amounts
payable under Section 4.3(e) hereof, and, to the extent that the claim for loss
resulting from such damage or destruction is not greater than $50,000 the
Company (i) will promptly repair, rebuild or restore the property damaged or
destroyed with such changes, alterations and modifications (including the
substitution and addition of other property) as may be desired by the Company
and as will not make the Project unsuitable for the Project Purposes, and (ii)
will apply for such purpose so much as may be necessary of any Net Proceeds of
insurance policies resulting from claims for such losses not in excess of
$50,000 as well
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as any additional moneys of the Company necessary therefor. All Net Proceeds
of insurance resulting from claims for any such loss not in excess of $50,000
shall be paid to the Company.
If prior to full payment of the Bonds (or provision for payment thereof
having been made in accordance with the provisions of the Trust Agreement) and
of all amounts due under the Loan Agreement and the Note, the Project Facilities
or the Project Equipment shall be destroyed (in whole or in part) or damaged by
fire, flood, windstorm or other casualty to such extent that the claim for loss
resulting from such destruction or damage is in excess of $50,000 the Company
shall promptly give written notice thereof to the Director and the Trustee. The
Lease Pro Rata Share of all Net Proceeds of insurance policies resulting from
claims for such losses in excess of $50,000 shall be paid to and held by the
Trustee in the Collateral Proceeds Account, whereupon, unless the Company shall
have elected to exercise its option to purchase the Project pursuant to the
provisions of Section 10.2(a) of this Lease, (i) the Company will proceed to
repair, rebuild or restore the property damaged or destroyed with such changes,
alterations and modifications (including the substitution and addition of other
property) as may be desired by the Company and as will not make the Project
unsuitable for the Project Purposes, and (ii) the Trustee will disburse moneys
in the Collateral Proceeds Account to or upon the direction of the Company for
payment of the costs of such repair, rebuilding or restoration, either on
completion thereof or, if the Company shall so request, as the work progresses.
Any such disbursements shall be made pursuant to the procedures set forth in
Section 3.3 of this Lease for disbursement of moneys in the Project Fund,
including, but not limited to, the requirement that the Company obtain the
written approval of the Director with respect to each disbursement. The Loan
Pro Rata Share of all Net Proceeds of insurance policies resulting from claims
for such losses in excess of $50,000 shall be paid and applied as provided in
the Loan Agreement. In the event the moneys in the Collateral Proceeds Account
and moneys available pursuant to the terms of the Loan Agreement and Note, if
any, are not sufficient to pay in full the costs of such repair, rebuilding or
restoration, the Company nonetheless will complete the work and pay the costs
thereof from its own resources. The Company shall not, by reason of the payment
of such excess costs, be entitled to any reimbursement from the Director or any
diminution in or postponement of the rents payable under Section 4.3 of this
Lease.
Section 6.2. Eminent Domain. In the event that title to or the
temporary use of the Project, or any part thereof, shall be taken under the
exercise of the power of eminent domain by any governmental body or by any
person, firm, or corporation acting under governmental authority, there shall be
no abatement or reduction in the rent payable by the Company under this Lease
during the balance of the Lease Term, and the Lease Pro Rata Share of any Net
Proceeds received from any award made in such eminent domain proceedings shall
be paid to and deposited by the Trustee in the Collateral Proceeds Account and
shall be applied by the Director or the Company in one or more of the following
ways as shall be directed in writing by the Authorized Company Representative:
(a) to the restoration of the improvements located on
the Project Site to substantially the same condition as they
existed prior to the exercise of said power of eminent
domain;
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(b) to the acquisition, by construction or otherwise,
by the Director or the Company of other improvements
suitable f or the Company's operation at the Project
(which improvements shall be deemed a part of the
Project and available for use and occupancy by the
Company without the payment of any rent other than
herein provided, to the same extent as if such other
improvements were specifically described herein and
demised hereby); or
(c) to the redemption of all of the Bonds pursuant to
the Trust Agreement, together with accrued interest
thereon to the date of redemption upon exercise of the
option to purchase authorized by Section 10.2(b) of this
Lease.
Within ninety (90) days from the date of entry of a final order in an eminent
domain proceeding granting condemnation, the Authorized Company Representative
shall direct the Director and the Trustee in writing as to which of the ways
specified in this Section the Company elects to have the Lease Pro Rata of any
Net Proceeds of the condemnation award applied. Any balance of the Lease Pro
Rata Share of any Net Proceeds remaining after such application shall be
retained in the Collateral Proceeds Account. The Loan Pro Rata Share of all
Net Proceeds received from any award made in such eminent domain proceedings
shall be paid and applied as provided in the Loan Agreement.
The Director shall cooperate fully with the Company in the handling and
conduct of any prospective or pending condemnation proceeding with respect to
the Project or any part thereof and, to the extent it may lawfully do so, will
permit the Company to litigate in any such proceeding in its own name or in the
name and on behalf of the Director (except as such proceedings are instigated by
the Director, in which event the Company shall have the right to proceed as if
it were the owner of the Project). In no event will the Director voluntarily
settle or consent to the settlement of any prospective or pending condemnation
proceeding with respect to the Project or any part thereof without the written
consent of the Company.
Section 6.3 Condemnation of Company Owned Property. The Company shall
be entitled to the Net Proceeds of any condemnation award or portion thereof
made for damages to or taking of its own property.
ARTICLE VII
SPECIAL COVENANTS
Section 7.1 NO WARRANTY OF CONDITION OR SUITABILITY. THE DIRECTOR DOES
NOT MAKE ANY WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE CONDITION,
WORKMANSHIP, MERCHANTABILITY OR CAPACITY OF THE PROJECT OR ANY PART THEREOF OR
AS TO ITS OR ANY PART'S SUITABILITY OR OPERATION FOR THE PROJECT PURPOSES.
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At any time, upon request of the Company, so long as it is not in default
hereunder, the Director will assign to the Company all warranties and guarantees
of all contractors, subcontractors, manufacturers, suppliers and engineers for
the furnishing of labor, materials, supervision or design in connection with the
Project and any rights or causes of action against any of the foregoing.
Section 7.2 Right of Access to the Project. The Company agrees that the
Director and any of the Director's duly authorized agents shall have the right
at all reasonable times to enter upon the Project and to examine and inspect the
same. The Company further agrees that the Director and the Director's duly
authorized agents upon prior written notice to the Company shall have such
rights of access to the Project as may be reasonably necessary to cause to be
completed the Provision of the Project provided for in Section 3.1 hereof, and
thereafter for the proper maintenance of the Project in the event of failure by
the Company to perform its obligations under Sections 3.1 or 5.1 hereof.
Section 7.3 Granting Easements. If the Company is not in default under
this Lease, the Director at the request of the Company shall grant easements,
licenses, rights-of-way (including the dedication of public highways) and other
rights or privileges in the nature of easements with respect to the Project
Site, or may release existing easements, licenses, rights-of-way and other
rights or privileges with or without consideration, and the Director agrees that
it shall execute and deliver any instrument necessary or appropriate to grant or
release any such easement, license, right-of-way or other right or privilege
upon receipt of: (a) a copy of the instrument of grant or release; (b) a
written application signed by the Authorized Company Representative requesting
such instrument; and (c) a certificate executed by an Independent Engineer that
in his opinion such grant or release will not make the Project unsuitable for
the Project Purposes.
Section 7.4 No Abatement or Diminution of Rent. No release or grant
effected under the provisions of Section 7.3 of this Lease shall entitle the
Company to any abatement or diminution of the rents payable under Section 4.3
hereof.
Section 7.5 Deposit of Moneys. The Lease Pro Rata Share of any moneys
received by the Director pursuant to Section 7.3 of this Lease shall immediately
be paid to the Trustee for deposit in the Collateral Proceeds Account. The Loan
Pro Rata Share of any moneys received by the Director pursuant to this Lease
shall be applied as provided in the Loan Agreement.
Section 7.6 Information Concerning Operations. At the request of the
Director and, in any event, within seventy-five (75) days after the last day of
each fiscal year of the Company beginning with the fiscal year in which the
Completion Date occurs, the Company shall furnish to the Director a report on
Project operations, setting forth the total number of employees then employed on
the Project and such other employment, economic and statistical data concerning
the Project as may reasonably be requested by the Director.
Section 7.7 Affirmative Covenants of the Company. Throughout the Term
of this Lease, the Company shall:
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(a) Taxes and Assessments. Pay and discharge promptly, or cause to
be paid and discharged promptly, when due and payable, all taxes,
assessments and governmental charges or levies imposed upon it, its
income or any of its property, or upon any part thereof, as well as
all claims of any kind (including claims for labor, materials and
supplies) which, if unpaid, might by law become a lien or charge upon
its property. Nothing in this Section shall require the Company to
pay or discharge any such tax, assessment, governmental charge or
levy so long as the validity thereof shall be contested in good
faith and by appropriate legal proceedings, provided that the
Company shall have delivered to the Director an opinion of counsel,
selected by the Company and reasonably acceptable to the Director,
to the effect that nonpayment of any such items during the pendency
of such contest will not adversely affect the Director's right,
title or interest in the Project.
(b) Maintain Existence. Do or cause to be done all things
necessary to preserve and keep in full force and effect its
existence and its material rights and franchises.
(c) Maintain Property. Maintain and keep its property in good
repair, working order and condition, ordinary wear and tear
excepted, and from time to time make all repairs, renewals and
replacements which, in the opinion of the Company, are necessary and
proper so that the business carried on in connection therewith may
be conducted at all times in a fashion Project Purposes; provided,
however, that nothing in this subsection (c) shall prevent the
Company from selling or otherwise disposing of any property
whenever, in the good faith judgment of the Company, such property
is obsolete, worn out, without economic value or unnecessary for the
conduct of the business of the Company.
(d) Maintain Insurance. Keep all of its insurable property
insured against loss or damage by fire and other risks, maintain
public liability insurance against claims for personal injury,
death, or property damage suffered by others upon, in or about any
premises occupied by the Company; maintain insurance on the life of
Anthony A. Martino in the amount of $500,000, with the beneficiary
of such policy being the Director for the benefit of the holders of
the Bonds; and maintain all such worker's compensation or similar
insurance as may be required under the laws of any state or
jurisdiction in which it may be engaged in business. All insurance
for which provision has been made in this subsection (d) shall be
maintained against such risks and in at least such amounts (but
subject to such deductibles) as such insurance is usually carried by
persons engaged in the same or similar businesses, and all insurance
herein provided for shall be effected and maintained in force under
a policy or policies issued by insurers of recognized
responsibility, except that it may effect worker's compensation or
similar insurance in respect of operations in any state or other
jurisdiction either through an insurance fund operated by such state
or other jurisdiction or by causing to be maintained a system or
systems of self-insurance which is in accordance with applicable
law.
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(e) Furnish Information.
(i) Furnish or cause the Guarantor to furnish to the
Director the financial statements and information
required by the Guaranty.
(ii) Certificate; No Default. With the financial reports
required to be furnished under this Section, a
certificate of the Company's chief executive officer or
chief financial officer stating that (a) no Event of
Default has occurred and is continuing and no event or
circumstance which would constitute an Event of Default,
but for the requirement that notice be given or time elapse
or both, has occurred and is continuing, or, if such an
Event of Default or such event or circumstance has occurred
and is continuing, a statement as to the nature thereof and
the action which the Company proposes to take with respect
thereto, and that (b) no action, suit or proceeding by it
or against it at law or in equity, or before any
governmental instrumentality or agency, is pending or
threatened, which, if adversely determined, would
materially impair the right or ability of the Company to
carry on the business which is contemplated in connection
with the Project or would materially impair the right or
ability of the Company to perform the transactions
contemplated by this Lease or would materially and
adversely affect its business, operations, assets or
condition, all as of the date of such certificate, except
as disclosed in such certificate; and
(iii) Other Information. Such other information
respecting the business, properties or the condition or
operations, financial or otherwise, of the Company as the
Director may reasonably request, provided that reasonable
provision is made for protecting proprietary information of
the Company.
(f) Deliver Notice. Forthwith upon learning of any of the following,
deliver written notice thereof to the Director, describing the same and the
steps being taken by the Company with respect thereto:
(i) the occurrence of an Event of Default or an event
or circumstance which would constitute an Event of
Default, but for the requirement that notice be given or
time elapse or both, or
(ii) any action, suit or proceeding by it or against
it at law or in equity, or before any governmental
instrumentality or agency, instituted or threatened which,
if adversely determined, would materially impair the right
or ability of the Company to carry on the business which is
contemplated in connection with the Project or would
materially impair the right or ability of the Company to
perform the transactions contemplated by this Lease, or
would materially and adversely affect its business,
operations, assets or condition, or
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(iii) the occurrence of a Reportable Event, as defined in the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"),
under, or the institution of steps by the Company to withdraw
from, or the institution of any steps to terminate, any employee
benefit plan as to which the Company may have liability.
(g) Inspection Rights. At any reasonable time and from time to time
upon reasonable advance notice, permit the Director, or any agents or
representatives thereof, to examine and make copies of and abstracts
from the records and books of account of, and visit the properties of,
the Company and discuss the general business affairs of the Company
with any of its officers; provided, however, that the Company reserves
the right to restrict access to any of its facilities in accordance
with reasonably adopted procedures relating to safety and security.
(h) Zoning, Planning and Environmental Regulations. The Provision
of the Project will be completed and the Project will be operated and
maintained in such manner as to conform with all applicable zoning,
planning, building, environmental and other applicable governmental
regulations (or variances therefrom) imposed by any Governmental
Authority and as to be consistent with the purposes of the Act.
(i) Use of Project Fund Moneys. All moneys disbursed from the Project
Fund (except for any amounts transferred to the Collateral Proceeds
Account pursuant to the terms of this Lease) shall be used for the
payment of Allowable Costs relating to Provision of the Project. No
part of any such moneys shall be knowingly paid to or retained by the
Company or any partner, officer, shareholder, director or employee of
the Company as a fee, kick-back or consideration of any type. The
Company has no identity of interest with, or interest in, the general
contractor or any architect, subcontractor, laborer or materialman
performing work or services of supplying materials in connection with
the Provision of the Project.
Section 7.8 Negative Covenants of the Company. Throughout the Lease
Term, the Company shall not without the prior written consent of the Director:
(a) Maintain Existence. Sell, transfer or otherwise dispose of
all, or substantially all, of its assets, consolidate with or merge
into any other entity, or permit one or more entities to consolidate
with or merge into it; provided, however, that the Company may,
without violating the agreement contained in this subsection (a),
consolidate with or merge into another entity, or permit one or more
other entities to consolidate with or merge into it, or sell,
transfer or otherwise dispose of all, or substantially all, of its
assets as an entirety and thereafter dissolve if: (i) the prior
written consent of the Director is obtained; or (ii) (A) the
surviving, resulting or transferee entity, as the case may be,
assumes in writing all of the obligations of the Company hereunder
(if such surviving, resulting or transferee entity is other than the
Company) ; and (B) the
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surviving, resulting or transferee entity, as the case may be,
is an entity duly organized and validly existing under the laws of
the State or duly qualified to do business therein, and has a net
worth of not less than that of the Company immediately prior to such
disposition, consolidation or merger, transfer or change of form.
(b) ERISA. Voluntarily terminate any employee benefit plan or
other plan (a "Plan") maintained for employees of the Company and
covered by Title IV of ERISA, so as to result in any material
liability of the Company to the Pension Benefit Guaranty Corporation
("PBGC"), enter into any Prohibited Transaction (as defined in
Section 4975 of the Internal Revenue Code of 1986, as amended, and
in ERISA) involving any Plan which results in any material liability
of the Company to the PBGC, cause any occurrence of any Reportable
Event (as defined in Title IV of ERISA) which results in any
material liability of it to the PBGC, or allow or suffer to exist
any other event or condition which results in any material liability
of the Company to the PBGC.
(c) Agreements. Enter into any agreement containing any
provision which would be violated or breached by the performance of
its obligations hereunder or under any instrument or document
delivered or to be delivered by it hereunder or in connection
herewith.
(d) Other Covenants.
(i) Suspension of operation. Suspend or discontinue operation of
the Project.
(ii) Encumber Assets. Pledge, assign, sell-leaseback,
hypothecate or in any manner encumber any of the Project
assets, except as otherwise expressly permitted by this Lease.
(iii) Removal of Assets. Remove, transfer or transport any
of the Project assets from the Project Site other than
the operation of motor vehicles, the shipment of goods in the
ordinary course of business or as otherwise permitted by the
terms hereof.
(iv) Maintain Additional Reserve. Maintain at all times
while the Bonds are outstanding an Additional Reserve
in the amount of $500,000, which Additional Reserve shall
consist of, either (A) a letter of credit issued by a bank or
trust company reasonably satisfactory to the Director in favor
of the Trustee (the "Letter of Credit"), or (B) cash deposited
with the Trustee and held in a separate account, which account
may be invested by the Trustee, upon the written or oral
direction (but if oral, confirmed promptly in writing) of the
Authorized Company Representative in Eligible Investments.
The Company may at any time cause the release of cash held by
the Trustee upon
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delivery to the Trustee of the Letter of Credit or cause
release of the Letter of Credit upon delivery of cash. Any
investment income shall be paid to the Company upon delivery
of a Letter of Credit or on September 15 of each year
commencing September 15, 1993, whichever is earlier. Upon
the failure of the Company to make rental payments pursuant
to Section 4.3 hereof (other than Section 4.3(e)), the
Trustee may apply all or a portion of the Additional Reserve
to the payment of such rental payments and the Company shall
deposit cash or an additional Letter of Credit so that the
Additional Reserve is at all times equal to $500,000.
Section 7.9 Mechanics' and Other Liens. The Company shall not suffer or
permit any mechanics' or other liens to be filed or exist against the Project
nor any part thereof, nor against the Company's leasehold interest in the
Project, nor against the Project Fund or the Collateral Proceeds Account, by
reason of work, labor, services, or materials supplied or claimed to have been
supplied to, for, or in connection with, the Project or any part thereof or to
the Director or the Company or anyone holding the Project or any part thereof
through or under the Company. Nothing in this Section shall require the Company
to pay or discharge any such lien so long as the validity thereof shall be
contested in good faith and by appropriate legal proceedings, provided that the
Company shall have delivered to the Director an opinion of counsel, selected by
the Company and reasonably acceptable to the Director, to the effect that
nonpayment of any such lien during the pendency of such contest will not
adversely affect the Director's right, title or interest in the Project. If any
such liens shall at any time be filed, the Company shall, within one hundred
twenty (120) days after notice of the filing thereof but subject to the right to
contest set forth in the immediately preceding sentence, cause the same to be
discharged of record by payment, deposit, bond, order of a court of competent
jurisdiction or otherwise. If the Company shall fail to cause such lien to be
discharged, or to contest the validity or amount thereof, within the period
aforesaid, then, in addition to any other right or remedy of the Director, the
Director may, but shall not be obligated to, discharge the same either by paying
the amount claimed to be due or by procuring the discharge of such lien by
deposit or by bonding. Any amount paid by the Director shall be reimbursed by
the Company to the Director on demand, and if not so reimbursed on demand shall
be paid by the Company with interest thereof at the Interest Rate for Advances
from the date of payment by the Director, which amounts the Company agrees to
pay.
ARTICLE VIII
ASSIGNMENT, SUBLEASING AND SELLING;
REDEMPTION; RENT PREPAYMENT AND ABATEMENT
Section 8.1 Assignment and Subleasing by the Lessee. Except as expressly
permitted by Section 7. 8 (a) hereof in connection with the consolidation or
merger of the Company into another entity, this Lease may not be assigned in
whole or in part, nor may the Project be subleased as a whole or in part, by
the Company without the prior written consent of the Director.
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Section 8.2 Pledge by the Director. The Director has pledged any moneys
receivable under or pursuant to this Lease except for amounts due pursuant to
Section 4.3(e) hereof and the Loan Pro Rata share of amounts received pursuant
to Sections 11.2 and 11.3 hereof (except for reimbursement of expenses and
indemnification by the Company) to the Trustee pursuant to the Trust Agreement.
The Company hereby consents to such assignment and pledge.
Section 8.3 Restrictions on Transfer and Encumbrance of Project by the
Director. The Director agrees that, except as otherwise provided in this Lease,
it will not sell, assign, transfer, convey or otherwise dispose of the Project
or any portion thereof during the Lease Term and that it will not, to the extent
permitted by law, take any action which may reasonably be construed as tending
to cause or induce the levy of special assessments by others against the Project
Site without the written consent of the Company, nor will it create or suffer to
be created any debt, lien or charge thereon or make any pledge or assignment of
or create any lien or encumbrance upon the rents, revenues and receipts derived
from the sale, lease or other disposition of the Project other than as provided
in Section 8.2 hereof.
Section 8.4 Redemption of Bonds. The Director, at the written request
at any time of the Company if the Bonds are then callable, shall forthwith take
all steps that may be necessary under the applicable redemption provisions of
the Trust Agreement to effect redemption of all or part of the then outstanding
Bonds, as may be specified by the Company, on the earliest redemption date on
which such redemption may be made under such applicable provisions, if the
Company shall then have deposited with the Trustee moneys sufficient to pay the
principal of and premium, if any, and interest due or to become due on such
redemption date with respect to the Bonds as to which such request is made.
Section 8.5 Prepayment of Rents. There is expressly reserved to the
Company the right, and the Company is authorized and permitted, at any time it
may choose, to prepay all or any part of the rents payable under Section 4.3
hereof, and the Director agrees that the Trustee may accept such prepayment of
rents when the same are tendered by the Company. Notwithstanding the provisions
of Section 4.4 of this Lease, all prepaid rent (except for rent payments
pursuant to Section 4.3(e) of the Lease) shall be deposited to the Collateral
Proceeds Account and transferred to the Debt Service Account as rental payments
in the amounts and on the dates specified for rental payments pursuant to
Section 4.3 of this Lease. Prepayments of rent pursuant to Section 4.3(e) shall
be applied by the Director as provided in the Loan Agreement.
Section 8.6 Lessee Entitled to Certain Rent Abatements if Bonds Paid
Prior to Maturity and Loan Prepaid. If at any time during the Lease Term there
shall be no Bonds outstanding within the meaning of the Trust Agreement and the
Loan is paid in full, and if the Company is not at the time in default
hereunder, the Company shall be entitled to use and occupy the Project from such
time to the termination of the Lease, without the payment of the rent (but
otherwise on the terms and conditions hereof).
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Section 8.7 Installation of the Company's Own Machinery and Equipment.
In addition to the Project Facilities and Project Equipment, the Company may
from time to time, in its sole discretion and at its own expense, install
additional movable personal property, machinery, equipment, furniture or
fixtures in the Project Facilities or on the Project Site. All such property so
installed by the Company shall remain the sole property of the Company in which
the Director shall have no interest, and may be modified or removed at any time
while the Company is not in default hereunder. Nothing contained in the
preceding provisions of this Section shall prevent the Company from purchasing,
after delivery of this Lease, movable personal property, machinery, equipment,
furniture or fixtures, not constituting Project Equipment, on conditional sale
contract or lease sale contract, or subject to vendor's lien or security
agreement, as security for the unpaid portion of the purchase price thereof;
provided no such lien or security interest shall attach to any part of the
Project.
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1 Event of Default. Each of the following shall be an "Event of
Default":
(a) The Company shall fail to pay any amount payable
pursuant to this Lease or the Loan Agreement on the date on
which such payment is due and payable or within any applicable
period of grace or cure; or
(b) The Company shall fail to observe and perform any
agreement, term or condition contained in this Lease or the
Loan Agreement other than as required pursuant to subsection
(a) above, and such failure continues for a period of thirty
(30) days after notice of such failure is given to the Company
by the Director, or for such longer period as the Director may
agree to in writing; provided, that if the failure is of such
nature that it can be corrected but not within the applicable
period, such failure shall not constitute an Event of Default
so long as the Company institutes curative action within the
applicable period and diligently pursues such action to
completion; or
(c) Any representation or warranty made by the
Company (or any of its officers) herein or in any Lease
Approval Document or in connection herewith or therewith shall
prove to have been incorrect in any material respect when
made; or
(d) The Company shall fail to pay any material
indebtedness of the Company, or any interest or premium
thereon, when due (whether by scheduled maturity, required
prepayment, by acceleration, on demand or otherwise) and such
failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such
indebtedness; or any other default
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under any agreement or instrument relating to any such
indebtedness, or any other event, shall occur and shall
continue after the applicable grace period, if any, specified
in such agreement or instrument and as a result the holder of
such indebtedness elects to accelerate the maturity of such
indebtedness; or any such indebtedness shall be declared to
be due and payable, or required to be prepaid (other than by
a regularly scheduled required prepayment), prior to the
stated maturity thereof; or
(e) The Company commences a voluntary case concerning
it under titles of the United States Code entitled
"Bankruptcy" as now or hereafter in effect, or any successor
thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against the Company under the Bankruptcy Code and
relief is ordered against the Company, or the petition is
controverted but is not dismissed within sixty (60) days after
the commencement of the case; or the Company is not generally
paying its debts as such debts become due; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of the
Company; or the Company commences any other proceeding under
any reorganization, arrangement, readjustment of debt, relief
of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect; or
there is commenced against the Company any such proceeding
which remains undismissed for a period of sixty (60) days; or
the Company is adjudicated insolvent or bankrupt; or the
Company fails to controvert in a timely manner any such case
under the Bankruptcy Code or any such proceeding or any order
of relief or other order approving any such case or proceeding
or in the appointment of any custodian or the like of or for
it or any substantial part of its property or suffers any such
appointment to continue undischarged or unstayed for a period
of sixty (60) days; or the Company makes a general assignment
for the benefit of creditors; or any action is taken by the
Company for the purpose of effecting any of the foregoing; or
a receiver or trustee or any other officer or representative
of the court or of creditors, take and hold possession of any
substantial part of the property or assets of the Company for
a period in excess of sixty (60) days; or
(f) A judgment or order for the payment of money in
excess of Fifty Thousand Dollars ($50,000) shall be rendered
against the Company and either (i) enforcement proceedings
shall have been commenced by any creditor upon such judgment
or order or (ii) there shall be any period of thirty (30)
consecutive days during which a stay of enforcement of such
judgment or order, by reason of a pending appeal or otherwise,
shall not be in effect; or
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(g) Any default under the Guaranty or Loan Agreement shall
have occurred and be continuing; or
(h) The Company fails to meet its minimum
funding requirements under Section 301 et seq. of
ERISA, with respect to any of its Plans.
Section 9.2 Remedies on Default. Whenever an Event of Default shall have
happened and be subsisting beyond any applicable period of grace or cure, any
one or more of the following remedial steps may be taken:
(a) The Director may at its option declare all
installments of rent payable under Section 4.3 hereof for the
remainder of the Lease Term to be immediately due and payable,
whereupon the same shall become immediately due and payable.
(b) The Director may reenter and take possession of
the Project without terminating this Lease, and sublease the
Project for the account of the Company, holding the Company
liable for the difference between the rent and other amounts
payable by such sublessee in such subleasing and the rents and
other amounts payable by the Company hereunder.
(c) The Director may terminate the Lease Term, exclude
the Company from possession of the Project and use its best
efforts to lease or sell the Project to another, but holding
the Company liable for all rent and other payments due up to
the effective date of such leasing.
(d) The Director may direct the Trustee, in writing, to
transfer any amounts remaining in the Project Fund to the
Collateral Proceeds Account.
(e) The Director may take whatever action at law or in
equity as may appear necessary or desirable to collect the rent
then due and thereafter to become due, or to enforce
performance and observance of any obligation, agreement or
covenant of the Company under this Lease.
(f) The Director may take all actions permitted under
Section 11.1 of this Lease.
Any amounts collected pursuant to action taken under this Section shall be
allocated as provided in Section 11.3 of this Lease, and the Lease Pro Rata
Share of such amounts shall be paid into the Collateral Proceeds Account and
applied in accordance with the provisions of the Trust Agreement or, if the
Bonds have been fully paid (or provision for payment thereof has been made in
accordance with the provisions of the Trust Agreement) and all other amounts
payable thereunder and hereunder have been paid, as directed by the Company.
The Loan Pro Rata Share of such amounts shall be applied by the Director as
provided in the Loan Agreement.
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Section 9.3 No Remedy Exclusive. No remedy conferred upon or reserved
to the Director by this Lease is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Lease or now or hereafter
existing at law or in equity or by statute. No delay or omission to exercise
any right or power accruing upon any default shall impair any such right or
power or shall be construed to be a waiver thereof, but any such right and power
may be exercised from time to time and as often as may be deemed expedient. In
order to entitle the Director to exercise any remedy reserved to it in this
Article, it shall not be necessary to give any notice, other than such notice as
may be herein expressly required.
Section 9.4 Agreement to Pay Attorneys' Fees and Expenses. In the event
the Company should default under any of the provisions of this Lease and the
Director should employ attorneys or incur other expenses for the collection of
rent or the enforcement of performance or observance of any obligation or
agreement on the part of the Company contained in this Lease, the Company agrees
that it will on demand therefor reimburse the reasonable fees of such attorneys
and such other expenses so incurred. If any such fees and expenses are not so
reimbursed, the amount thereof, together with interest thereon from the date of
demand for payment at the Interest Rate for Advances, shall, to the extent
permitted by law, constitute indebtedness secured hereby and by the Trust
Agreement, and in any action brought to collect such indebtedness, the Director
shall be entitled to seek the recovery of such fees and expenses in such action
except as limited by law or by judicial order or decision entered in such
proceedings.
Section 9.5 No Additional Waiver Implied by One Waiver. In the event
any agreement contained in this Lease should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
Section 9.6 Waiver of Appraisement, Valuation, Etc. In the event the
Company should default under any of the provisions of this Lease, the Company
agrees to waive, to the extent it may lawfully do so, the benefit of all
appraisement, valuation, stay, extension or redemption laws now or hereafter in
force, and all right of appraisement and redemption to which it may be entitled.
Section 9.7 Reinstatement. Notwithstanding any termination of this
Lease in accordance with the provisions of Section 9.2 hereof, unless and until
the Director shall have entered into a valid and binding agreement providing for
the reletting of the Project, the Company may at any time after such termination
pay all accrued unpaid rent and any other amounts due and payable under the Loan
Agreement plus any costs to the Director and the Trustee (including, but not
limited to, fees and expenses) occasioned by the default and fully cure all
other defaults then capable of being cured. Upon such payment and cure, this
Lease shall be fully reinstated, as if it had never been terminated, and the
Company shall be restored to the use, occupancy and possession of the Project.
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ARTICLE X
OPTIONS AND OBLIGATIONS TO PURCHASE PROJECT
Section 10.1 Option to Terminate. The Company shall have the option to
cancel or terminate the term of this Lease at any time when all the Bonds shall
be deemed to have been paid and discharged under the provisions of the Trust
Agreement and all amounts payable by the company hereunder and under the Loan
Agreement shall have been paid. Such option shall be exercised by giving the
Director notice in writing of such cancellation or termination and such
cancellation and termination shall forthwith become effective.
Section 10.2 Option to Purchase Project Prior to Payment of the Bonds
and the Loan. The Company shall have, and is hereby granted, the option to
purchase the Project prior to the expiration of the Lease and prior to the full
payment of the Bonds (or provision for payment thereof having been made in
accordance with the provisions of the Trust Agreement) and of the Loan, if any
of the following shall have occurred:
(a) The Project Facilities or the Project Equipment
shall have been damaged or destroyed as set forth in Section
6.1 hereof (i) to such extent that they cannot be reasonably
restored within a period of six months to the condition
thereof immediately preceding such damage or destruction, or
(ii) to such extent that the Company is thereby prevented
from carrying on its normal operations for a period of six
consecutive months.
(b) Title to, or the temporary use of, all or
substantially all of the Project shall have been taken under
the exercise of the power of eminent domain by any
governmental authority, or person, firm or corporation acting
under governmental authority (including such a taking or
taking as results in the Company being thereby prevented from
carrying on its normal operations therein for a period of six
consecutive months).
(c) As a result of any changes in the Constitution of the
State of Ohio or the Constitution of the United States of
America or of legislative or administrative action (whether
state or federal) or by final decree, judgment or order of
any court or administrative body (whether state or federal)
entered after the contest thereof by the Director in good
faith, this Lease shall have become void or unenforceable or
impossible of performance in accordance with the intent and
purpose of the parties as expressed in this Lease, or if
unreasonable burdens or excessive liabilities shall have been
imposed upon the Director or the Company, with respect to the
Project or operation thereof, including without limitation
federal, state or other ad valorem, property, income or other
taxes not being imposed on the date of this Lease other than
ad valorem taxes presently levied upon privately owned
property used for the
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same general purpose as the Project; provided, that the
provisions of this subsection shall in no way effect the
Company's obligation for the continued maintenance of the
Project during the Lease Term.
To exercise such option, the Company shall, within ninety (90) days following
the event authorizing the exercise of such option, give written notice to the
Director, and to the Trustee if any of the Bonds shall then be unpaid, and
shall specify therein the date of closing such purchase, which date shall be
not less than forty-five (45) nor more than ninety (90) days from the date such
notice is mailed, and in case of a redemption of the Bonds in accordance with
the provisions of the Trust Agreement shall make arrangements satisfactory to
the Trustee for the giving of the required notice of redemption, in which
arrangements the Director shall cooperate. The purchase price payable by the
Company, in the event of its exercise of the option granted in this Section,
shall be the sum of the following:
(1) An amount of money which, when added to (i) the moneys and
investments held to the credit of the Collateral Proceeds Account and the
Primary Reserve Account and (ii) the aggregate rental payments made by
the Company and not theretofore applied to the payment of principal of or
interest on the Bonds, will be sufficient pursuant to the provisions of
the Trust Agreement, to pay and discharge all then outstanding Bonds on
the first possible date for redemption and to pay the Loan and all
amounts due under the Loan Agreement and Note in full, plus
(2) An amount of money equal to the Trustee's fees and expenses, to the
extent payable by the Company pursuant to this Lease, accrued and to
accrue until such final payment and redemption of the Bonds, plus
(3) The sum of One Dollar ($1.00) to the Director.
In the event of the exercise of the option granted in this Section any Net
Proceeds of insurance or condemnation shall be paid to the Company,
notwithstanding any provision of Section 6.1, 6.2 and 11.2 hereof, and the
Director will deliver to the Company the documents referred to in Section 10.4
hereof.
The mutual agreements contained in this Section 10. 2, are independent of,
and constitute an agreement separate and distinct from, any and all other
provisions of this Lease and shall be unaffected by any fact or circumstance
which might impair or be alleged to impair the validity of any other
provisions.
Section 10.3 Agreement to Purchase Project. The Company agrees that it
will purchase and the Director agrees that it will sell the Project for One
Dollar ($1.00) upon full payment of the Bonds or provision for payment thereof
having been made in accordance with the provisions of the Trust Agreement and
full payment of the Loan and all amounts due under the Loan Agreement and the
Note. Upon sale of the Project to the Company as provided in this Section
10.3, the Director will
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deliver to the Company the documents referred to in Section 10.4 hereof.
Section 10.4 Conveyance upon Exercise of Option to Purchase. Upon
exercise of any option or agreement to purchase granted herein, the Director
will upon payment of the purchase price deliver or cause to be delivered to the
Company documents conveying to the Company good and marketable title to the
property being purchased, as such property then exists, subject to the
following: (i) those liens and encumbrances, if any, to which title to said
property was subject when conveyed to the Director; (ii) those liens and
encumbrances created by the Company or to the creation or suffering of which the
Company consented; (iii) those liens and encumbrances resulting from the failure
of the Company to perform or observe any of the agreements on its part contained
in this Lease; (iv) Permitted Encumbrances, other than this Lease; and (v) if
the option is exercised pursuant to the provisions of Section 10.2(b) hereof,
the rights and title of the condemning authority.
Section 10.5 Option to Purchase, Redeem or Def ease Bonds. Provided no
Event of Default has occurred and is existing, the Company may instruct the
Trustee to apply any moneys on deposit in the Collateral Proceeds Account,
together with any moneys furnished to the Trustee by the Company but not
constituting payments due under Article IV of this Lease, to any of the
following purposes:
(a) Purchase of Bonds in the open market at prices not greater
than their fair market value;
(b) Redemption of Bonds pursuant to the optional redemption
provisions thereof; or
(c) Defeasance of Bonds pursuant to Article IX of the Trust
Agreement.
If the sum of the amounts in the Collateral Proceeds Account and the Primary
Reserve Account, when added to the amount delivered by the Company to the
Trustee for application in accordance with this Section 10.5, is sufficient to
purchase for cancellation, optionally redeem or defease all of the Outstanding
Bonds, the Trustee shall, at the direction of the Company, apply moneys in the
Primary Reserve Account for any of such purposes.
ARTICLE XI
RELATIVE RIGHTS OF DIRECTOR AS TO BONDS AND LOAN
Section 11.1 Default, Notices and Remedies. If an Event of Default
occurs hereunder or under the Loan Agreement, the giving or receiving of notice
of such Event of Default under either the terms hereof or of the Loan Agreement
shall be deemed to give notice under the other agreement. Upon the occurrence
of such an Event of Default which is not cured within any applicable period of
grace or cure, the Director shall have the right to declare all installments of
rent payable under Section 4.3 hereof for the remainder of the Lease Term to be
immediately due and payable and to
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declare all amounts due under the Loan Agreement to be immediately due and
payable, without notice or demand to the Company, and to avail itself of all
remedies provided herein, under the Loan Agreement, in any related security
documents or under applicable law.
Section 11.2 Allocation of Proceeds from Damage, Destruction or
Condemnation. Any moneys received by the Director, or by the Trustee on behalf
of the Director, as a result of eminent domain proceedings or damage and
destruction of the Project shall be allocated as follows:
1. the Lease Pro Rata Share of such moneys shall be applied in
accordance with Article VI hereof; and
2. the Loan Pro Rata Share of such moneys shall be paid and
applied in accordance with the applicable provisions of the Loan
Agreement.
Section 11. 3 Allocation of Other Proceeds. Except as provided in
Section 11.2 hereof, moneys, including, without limitation, the proceeds of any
sale of the Project, and any part thereof or any interest therein, received by
the Director or by the Trustee on behalf of the Director under either this Lease
or the Loan Agreement pursuant to the exercise of any remedies provided herein,
in the Loan Agreement or by law following the occurrence of an uncured Event of
Default hereunder or under the Loan Agreement shall be applied as follows:
First: To the payment of all costs of collection including reasonable
attorneys fees and expenses; and
Second: To the payment hereunder and under the Loan Agreement in proportion
to the ratio of the amount of moneys reasonably advanced hereunder or
thereunder for managing, operating and maintaining the Project to the
aggregate amount of moneys so advanced hereunder and thereunder, of
all moneys reasonably advanced for managing, operating and
maintaining the Project, including, without limitation, the
salaries, fees and wages of a managing agent and such other
employees as the Director may deem necessary or desirable to employ,
all taxes, charges, claims, assessments, water rents, sewer rents
and other liens, and premiums for all insurance which the Director
may deem necessary or desirable to pay, and the cost of all
alterations, renovations, repairs or replacements made by the
Director with respect to the Project; and
Third: To the payment to all remaining indebtedness owed hereunder
(exclusive of amounts due pursuant to Section 4.3(e) hereof) or
under the Loan Agreement provided that if the amount available is
insufficient for such payment in full, the payment shall be made in
the Lease Pro Rata Share and the Loan Pro Rata Share until payment
in full of all amounts due to the Director hereunder (exclusive of
amounts due pursuant to Section 4.3(e) hereof) and under the Loan
Agreement.
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The Director hereby agrees that upon the occurrence and during the
continuance of an Event of Default hereunder or under the Loan Agreement, the
Trustee shall be the Director's agent for the purpose of (a) receiving any of
the above-described monies and (b) paying expenses and costs from such monies
received, and depositing and allocating the remainder of such monies in
accordance with Paragraphs Second and Third above. In the event causes the
appointment of a receiver, the Director shall cause such receiver to pay over to
the Trustee any of such monies collected by such receiver so that the Trustee
may perform the functions described in this Section. Upon notification by the
Director to the Trustee and the Company of an uncured Event of Default, the
Trustee shall, upon direction from the Director, commence collection of such
monies in the manner set forth in this Section.
ARTICLE XII
MISCELLANEOUS
Section 12.1 Surrender of Project. In the event the Company should
default under this Lease and the Lease Term is terminated, the Company agrees to
surrender possession of the Project peaceably and promptly to the Director in as
good condition as prevailed at the time it was put in full possession thereof,
loss by fire or other casualty covered by insurance, ordinary wear and tear,
obsolescence and acts of God excepted.
Section 12.2 Amounts Remaining in Collateral Proceeds Account and
Primary Reserve Account and Additional Reserve. It is agreed by the parties
hereto that any amounts remaining in the Collateral Proceeds Account, the
Primary Reserve Account or the Additional Reserve upon expiration or sooner
cancellation or termination of this Lease, after payment in full of the Bonds
(or provision for payment thereof having been made in accordance with the
provisions of the Trust Agreement) and the fees, charges and expenses of the
Trustee and all other amounts required to be paid hereunder, shall belong to and
be paid to the Company by the Trustee as overpayment of rents.
Section 12.3 Notices. All notices, certificates, requests or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by registered or certified mail, postage prepaid, sent prepaid via a
reputable overnight courier or by telecopy addressed to the recipient at its
Notice Address. A duplicate copy of each notice, certificate, request or other
communication given hereunder to the Director, the Company, or the Trustee shall
also be given to the others. The Company, the Director and the Trustee may, by
notice given hereunder, change a Notice Address or designate any further
addresses to which subsequent notices, certificates, requests or other
communications shall be sent.
Section 12.4 Net Lease. This Lease shall be deemed and construed to be
a "net lease", and the Company shall pay absolutely net during the Lease Term
the rent and all other payments required hereunder, free of any deductions,
without abatement, deduction or set-off other than those herein expressly
provided.
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Section 12.5 Binding Effect. This Lease shall inure to the benefit of
and shall be binding upon the Director, the Company and their respective
successors and assigns, subject, however, to the limitations contained in
Sections 8.1 and 8.3 hereof, and subject to the further limitation, as set forth
on page 1 of this Lease, that any obligation of the Director created by or
arising out of this Lease shall not be a general debt of the Director or the
State but shall be payable solely out of the proceeds derived from this Lease or
the Net Proceeds of any insurance or condemnation awards as provided herein.
Section 12.6 Extent of Covenants of the Director: No Personal Liability.
All covenants, stipulations, obligations and agreements of the Director
contained in this Lease shall be effective to the extent authorized and
permitted by applicable law. No such covenant, stipulation, obligation or
agreement shall be deemed to be a covenant, stipulation, obligation or agreement
of any present or future Director in other than such Director's official
capacity acting pursuant to the Act.
Section 12.7 Amendments, Changes and Modifications. This Lease may not
be effectively amended, changed or modified except by an instrument in writing
executed by the Director and the Company. No amendment to the Supplement which
has the effect of increasing the Company's obligations under this Lease shall
become effective without the written consent of the Company.
Section 12.8 Execution Counterparts. This Lease may be executed in
several counterparts, each of which shall be regarded as an original and all of
which shall constitute but one and the same Lease.
Section 12.9 Severability. If any clause, provision or section of this
Lease shall be held illegal or invalid by any court, the invalidity of such
clause, provision or section shall not affect any of the remaining clauses,
provisions or sections hereof and this Lease shall be construed and enforced as
if such illegal or invalid clause, provision or section had not been contained
herein. In case any agreement or obligation contained in this Lease shall be
held to be in violation of law then such agreement or obligation shall be deemed
to be the agreement or obligation of the Director or the Company, as the case
may be, to the full extent permitted by law.
Section 12.10 Captions. The captions or headings in this Lease are for
convenience only and in no way define, limit or describe the scope or intent of
any provisions or sections of this Lease.
Section 12.11 Governing Law. This Lease shall be deemed to be a contract
made under the laws of the State of Ohio and for all purposes shall be governed
by and construed in accordance with the laws of the State of Ohio.
IN WITNESS WHEREOF, the Director and the Company have caused this Lease to
be executed in their respective names by their duly authorized officers, all as
of the date first above written.
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Signed and acknowledged DIRECTOR OF DEVELOPMENT OF THE
in the presence of: STATE OF OHIO
/s/ Marlo B. Tannous By: /s/ Thomas C. Washbush
- --------------------------- -------------------------------
/s/ Stanley J. Dobrowski Title: Chief Legal Counsel
- --------------------------- ----------------------------
Signed and acknowledged BAILEY TRANSPORTATION
in the presence of: PRODUCTS, INC.
/s/ Virginia D. Benjamin By: By: /s/ Anthony A. Martino
- --------------------------- -------------------------------
/s/ Stanley J. Dobrowski Title: President
- --------------------------- ----------------------------
STATE OF OHIO :
: ss.
COUNTY OF Franklin :
----------
On this 27th day of July, 1992, before me, a Notary Public in and for
said County and State, personally appeared Thomas C. Washbush, Chief Legal
Counsel of the Department of Development of the State of Ohio, and
acknowledged the execution of the foregoing instrument and that the same is his
voluntary act and deed on behalf of the Director of Development of the State of
Ohio and the voluntary act and deed of said officer as such.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my seal
on the day and year aforesaid.
/s/ Stanley J. Dobrowski
----------------------------
Notary Public
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STATE OF OHIO :
:ss.
COUNTY OF FRANKLIN
On this 27th day of July, 1992, before me, a Notary Public in and for
said County and State, personally appeared Anthony A. Martino, President of
Bailey Transportation Products, Inc., the corporation which executed the
foregoing instrument, who acknowledged that he did sign said instrument as such
President, for and on behalf of said Bailey Transportation Products, Inc.; that
the same is his free act and deed as such President, and the free act and deed
of said Bailey Transportation Products, Inc.
IN WITNESS WHEREOF, I have hereunto subscribed my name and affixed my
seal on the day and year aforesaid.
/s/ Stanley J. Dobrowski
-----------------------------
Notary Public
This instrument was prepared by Virginia D. Beni., Calfee, Halter & Griswold,
800 Superior Avenue, N.E., Cleveland,
Ohio 44114.
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