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Exhibit 10.8
EXECUTION DRAFT
Closing Item No. 1
AGREEMENT
Between
COUNTY OF CARROLL, KENTUCKY
and
KENTUCKY LADDER COMPANY
Dated as of September 1, 1990
The interest of the County of Carroll, Kentucky under the Lease Agreement has
been assigned to Dal-Ichi Kangyo Trust Company of New York, as Trustee (the
"Trustee") in Section 4.7, hereof and in a Trust Indenture dated as of
September 1, 1990 between the County and the Trustee.
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TABLE OF CONTENTS
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Page
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I. Background, Representations and Findings ..........................1
Section 1.1 Background ................................................1
Section 1.2 Definitions ...............................................1
Section 1.3 Company Representations ...................................4
Section 1.4 Issuer Representations and Findings .......................5
II. Leasing of Premises and Construction of Project
Facilities ........................................................6
Section 2.1 Acquisition and Transfer of Land; Possession
and Quiet Enjoyment by Company ............................6
Section 2.2 Contracts for Project Facilities ..........................6
Section 2.3 Provisions with Respect to Title ..........................7
Section 2.4 Description of Project Facilities .........................7
Section 2.5 Administration of Contracts ...............................7
Section 2.6 Notices and Permits .......................................7
Section 2.7 Additions and Changes to Project Facilities ...............7
III. Financing of Project ..............................................7
Section 3.1 Issuance of Bonds .........................................7
Section 3.2 Construction Fund .........................................8
Section 3.3 Bonds Not to Become Arbitrage Bonds; Fixed Rate ...........8
Section 3.4 Restriction on Use of Construction Fund ...................8
Section 3.5 Three-Year Expenditure Requirements .......................9
Section 3.6 Completion of Project Facilities; Excess Bond Proceeds ....9
Section 3.7 No "Same Issue" Bonds .....................................9
IV. Lease of Project Facilities .......................................9
Section 4.1 Lease of Project Facilities ...............................9
Section 4.2 Security Interest .........................................9
Section 4.3 Payment of Rent ..........................................10
Section 4.4 Letter of Credit .........................................10
Section 4.5 Acceleration of Payment to Redeem Bonds ..................11
Section 4.6 No Defense or Set-Off ....................................11
Section 4.7 Assignment of Issuer's Rights ............................11
Section 4.8 Adjustments ..............................................11
V. Covenants of Company .............................................12
Section 5.1 Maintenance and Operation of Project Facilities ..........12
Section 5.2 Maintenance of Existence .................................12
Section 5.3 Payment of Compensation and Expenses of Trustee,
Remarketing Agent and Tender Agent .......................12
Section 5.4 Payment of Issuer's Fees and Expenses ....................12
Section 5.5 Indemnity Against Claims .................................13
Section 5.6 Damage to or Condemnation of Project Facilities ..........14
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Section 5.7 Taxes, Other Governmental Charges and
Utility Charges ..........................................14
Section 5.8 Insurance ................................................15
Section 5.9 Prohibition of Liens .....................................15
Section 5.10 Company's Sublease of Project Facilities .................16
Section 5.11 Granting of Easements ....................................17
Section 5.12 Compliance with Laws .....................................17
Section 5.13 Financing Statements .....................................17
Section 5.14 Limitation on Capital Expenditures .......................18
Section 5.15 Restricted and Prohibited Activities .....................18
Section 5.16 $40,000,000 Limit ........................................18
Section 5.17 Arbitrage Rebate .........................................19
VI. Events of Defaults and Remedies ..................................19
Section 6.1 Events of Default; Acceleration ..........................19
Section 6.2 Payment of Rental on Default; Suit Therefor ..............21
Section 6.3 Other Remedies ...........................................21
Section 6.4 Cumulative Rights ........................................22
VII. Options of Company ...............................................22
Section 7.1 Option to Prepay .........................................22
Section 7.2 Option to Purchase .......................................22
VIII. Miscellaneous ....................................................23
Section 8.1 Limitation of Liability of Issuer ........................23
Section 8.2 Notices ..................................................23
Section 8.3 Severability .............................................24
Section 8.4 Applicable Law ...........................................24
Section 8.5 Assignment; Successors and Assigns .......................24
Section 8.6 Enforcement of Certain Provisions by the Bank ............25
Section 8.7 Amendments ...............................................25
Section 8.8 Term of Agreement ........................................25
Section 8.9 No Warranty by issuer of Condition, Suitability
or Zoning of Project .....................................25
Section 8.10 Company's Federal Income Taxation ........................25
Section 8.11 Amounts Remaining in Bond Fund or
Construction Fund ........................................26
Section 8.12 Survival of Covenants, Conditions and
Representations ..........................................26
Section 8.13 Receipt of indenture .....................................26
Section 8.14 Headings .................................................26
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Exhibit A - Real Estate Description
Exhibit B - Description of Project Facilities
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LEASE AGREEMENT dated as of September 1, 1990 (the "Lease") between
COUNTY OF CARROLL, KENTUCKY (the "Issuer") and KENTUCKY LADDER COMPANY, a
Pennsylvania corporation qualified to do business in Kentucky (the "Company").
I. Background, Representations and Findings.
Section 1.1 BACKGROUND.
(a) The Issuer is a county and political subdivision of the
Commonwealth of Kentucky (the "State") under the laws of the Commonwealth of
Kentucky. Under Chapter 103 of the Kentucky Revised Statutes, as amended (the
"Act"), the Issuer is authorized to enter into agreements providing for the
acquisition, construction and equipping of industrial building projects and the
sale or lease thereof to industrial occupants for the public purposes of
alleviating conditions of unemployment, maintaining employment at a high level,
and creating and developing business opportunities by the acquisition,
construction, improvement and financing of industrial and manufacturing
enterprises.
(b) The Issuer has undertaken the financing of the costs of a
project (the "Project") consisting of (1) the financing of the acquisition and
construction on a parcel of land located in the Carroll County Industrial Park
in Carroll County, Kentucky (the "Premises") of an approximately 193,000 square
foot facility (the Premises and facilities being herein collectively called the
"Project Facilities") and (2) the lease of the Project Facilities to the
Company. The Premises are more fully described in Exhibit A attached hereto and
made a part hereof, or such other tract of land located in the County as the
Company may substitute for the tract so described (in which case a metes and
bounds description for such tract shall be substituted and shall be the
"Premises"). The Project Facilities shall be used by the Company in the
manufacturing, processing and assembly of climbing ladder and related products,
together with storage, warehousing and distribution facilities with respect
thereto. A more complete description of the Project Facilities to be financed as
part of the Project and the estimated costs thereof is set forth in Exhibit B
attached to this Lease. The Issuer and the Company intend that the Issuer's
bonds issued to finance the Project will constitute an exempt small issue for
the purposes of Section 144(a)(4)(A) of the Internal Revenue Code of 1986
(including any amendments and successor provisions thereto and the rules and
regulations thereunder, the "Code"), so that interest on such bonds will not be
included in the gross income of tine recipients thereof under the Code.
Section 1.2 DEFINITIONS. In this Lease (except as otherwise expressly
provided or unless the context otherwise requires) defined terms may be used in
the singular or the
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plural, the use of any gender includes all other genders, and the following
terms shall have the meanings specified in the foregoing recitals:
Act Premises
Code Project
Lease Project Facilities
Issuer State
In addition, the following terms shall have the meanings specified in this
Section, unless the context otherwise requires:
"Bank" means The Dai-Ichi Kangyo Bank, Limited, New York Branch, as
issuer of the original Letter of Credit and any bank or financial institution
issuing any replacement Letter of Credit.
"Bond" or "Bonds" means the Variable Rate Demand Industrial Building
Revenue Bonds (Kentucky Ladder Company) issued under the Indenture in the
original aggregate principal amount of $5,000,000.
"Condemnation Award" means any award or payment (less any expenses,
including attorneys' fees, incurred by the Issuer, the Trustee, the Bank or the
Company in connection therewith) which may be made with respect to the Project
Facilities as a result of (i) the taking of all or a portion of the Project
Facilities by the exercise of the right of eminent domain by any governmental
body, or by any person, firm or corporation acting under governmental
authority (or a bona fide sale in lieu of such taking) or (ii) the alteration of
the grade of any street.
"Contracts" means the contracts and purchase orders awarded by the
Company pursuant to Section 2.2.
"Cost" or "Costs" means any cost of the Project or in respect of the
Project Facilities now or hereafter permitted under the Act. Without limiting
the generality of the foregoing; such costs may include: (i) amounts payable to
contractors and suppliers (including fees for designing Project Facilities where
the designs are provided by the contractor or supplier); (ii) costs of labor,
services, materials, supplies and equipment furnished by the Company (including
shipping costs), (iii) architectural, engineering, legal and other professional
fees, marketing costs and brokerage commissions; (iv) interest on the Bonds to
the extent permitted by the Act; and (v) costs of financing, including but not
limited to bond discount, printing expense, recording fees, Trustee, Tender
Agent, Co-Trustee and Remarketing Agent fees, Letter of Credit issuance fees and
expenses and legal and accounting fees.
"County" means the County of Carroll, located within the Commonwealth
of Kentucky.
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"Event of Default" means any of the events described in Section 6.1
hereof.
"Force Majeure" means any cause, circumstance or event not reasonably
within the control of the Company, including, without limitation, the following:
acts of God; strikes, lock-outs or other industrial disturbances; acts of public
enemies; orders or restraints of any kind of the government of the United States
or of the State or any of their departments, agencies, political subdivisions
or officials, or any civil disturbances; riots; epidemics; landslides;
lightning; earthquakes; fires; hurricanes; storms; droughts; floods; washouts;
arrests; restraint of government and people; explosions; breakage, malfunction
or accident to facilities, machinery, transmission pipes or canals; partial or
entire failure of utilities; and shortages of labor, materials, supplies or
transportation; provided that lack of funds on the part of the Company shall not
be deemed to be a Force Majeure.
"Indenture" means the Issuer's Trust Indenture dated as of the date
hereof to the Trustee, as amended or supplemented at the time in question.
"Leasehold Mortgage" means the Leasehold Mortgage and Security Agreement
dated as of September 1, 1990 from the Company to the Bank.
"Letter of Credit" means the Bank's original Letter of Credit in favor
of the Tender Agent or any substitute therefor or any replacement letter of
credit or similar credit facility delivered to the Tender Agent pursuant to
Section 7.05 or 7.07 of the Indenture or any Fixed Rate Letter of Credit.
"Placement Agreement" means the Placement Agreement dated as of August
24, 1990 between the Company and Manufacturers Hanover Securities Corporation,
as Placement Agent.
"Reimbursement Agreement" means the Reimbursement Agreement dated as of
September 1, 1990 between the Company and the Bank, as the same may be amended
from time to time and filed with the Trustee and the Tender Agent, and any
agreement of the Company with the Bank issuing a replacement Letter of Credit
setting forth the obligations of the Company to such Bank arising out of any
payments under the replacement Letter of Credit and which provides that it shall
be deemed to be a Reimbursement Agreement for the purpose of the Indenture.
"Remarketing Agent" means Manufacturers Hanover Securities Corporation
and its successors in such capacity as provided in Section 14.01 of the
Indenture.
"Rental" means the aggregate rental payments to be paid by the Company
for the lease of the Project Facilities pursuant to Section 4.3.
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"Tender Agent" means the entity appointed as such by the Issuer and
accepting such appointment for the time being pursuant to Article XIII of the
Indenture.
"Trustee" means Dai-Ichi Kangyo Trust Company of New York, having its
principal corporate trust office in New York, New York, and its successors in
the trust under the Indenture.
The words "hereof," "herein," "hereto," "hereby" and "hereunder" refer
to this entire Lease. Unless otherwise indicated, all references to particular
Articles or Sections are references to the Articles or Sections of this Lease.
All capitalized terms used but not otherwise defined in this Lease shall have
the meanings ascribed to them in the Indenture.
Section 1.3 COMPANY REPRESENTATIONS. The Company represents that:
(a) It is a corporation, duly organized and existing under the laws of
the Commonwealth of Pennsylvania, and has been duly qualified to conduct its
business under the laws of the State. The making and performance of this Lease
on the Company's part have been duly authorized in accordance with the terms and
provisions of the Company's bylaws and will not violate or conflict with any
governmental rule or regulation of the United States or of the state in which
the Company is incorporated, or with any agreement, instrument or document by
which the Company or any of its properties is bound.
(b) The Project Facilities consist of land or property of a character
subject to allowance for depreciation under Section 167 of the Code.
(c) The acquisition, construction, renovation and equipping of the
Project Facilities, as provided under this Lease, will tend to promote the
employment and general welfare of the residents of the County and the State by
promoting the continuation and expansion of gainful employment opportunities for
such residents. The availability of financial assistance by the Issuer makes it
possible for the Company to undertake the acquisition and construction of the
Project Facilities.
(d) The proceeds of the Bonds will not exceed the Costs of the Project.
(e) The Company has acquired or will acquire before they are needed all
material permits and licenses and has satisfied or will satisfy other
requirements necessary for the acquisition, construction and operation of the
Project Facilities.
(f) The Company intends to lease and operate the Project Facilities as a
manufacturing facility and as a
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"building" or "industrial building" within the meaning of the Act.
Section 1.4 ISSUER REPRESENTATIONS AND FINDINGS. The Issuer hereby
confirms its findings and represents that:
(a) The Issuer is a county and political subdivision duly organized and
existing under the constitution and laws of the State (including the Act) and is
authorized and empowered by the constitution and laws of the State and its
ordinance dated September 11, 1990 to enter into the transactions contemplated
by this Lease and to carry out its obligations hereunder. The Project
constitutes and will constitute an industrial building project within the
meaning of the Act.
(b) Based on representations and information furnished to the Issuer by
or on behalf of the Company, the Issuer has found that the Company is engaged
in industrial activities in the State requiring substantial capital and creating
substantial employment opportunities, that its operations contribute to
economic growth and the creation of employment opportunities in the State,
and that the Company is financially responsible to assume its obligations
prescribed by this Lease and the Act.
(c) Based on representations and information furnished to the Issuer by
or on behalf of the Company, the Issuer has found that the Project will promote
the health, safety and general welfare of the people of the State and the
public purposes of the Act by alleviating conditions of unemployment and by
maintaining employment at a high level and creating and developing business
opportunities in the State.
(d) The Project Facilities are, and will be, located wholly within the
boundaries of the County.
(e) The Project has been approved by a publicly elected local official
as required by the Code, after a public hearing held upon at least two weeks
public notice.
(f) The issuance of the Bonds and the execution of this Lease and the
Indenture have been approved by the Issuer at a duly constituted meeting.
(g) Except as otherwise permitted by this Lease, the Issuer covenants
that it has not and will not pledge the income and revenues derived from this
Lease other than to secure the Bonds or the related obligations of the Company
to the Bank under the Reimbursement Agreement.
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II. Leasing of Premises and Construction of Project Facilities.
Section 2.1 ACQUISITION AND TRANSFER OF LAND; POSSESSION AND QUIET
ENJOYMENT BY COMPANY. The Company has caused the acquisition of the Premises by
the Issuer. Upon acquisition of the Premises by the Issuer, the Company will pay
all expenses of such transfer, including any and all applicable real estate
transfer and other taxes and legal, recording, notary and other similar fees
and charges. The Company agrees to pay all charges and costs including but
not limited to legal fees, recording fees, notary fees and any other similar
fees and charges. Acquisition of or work on certain portions of the Project
Facilities may have been commenced or completed on or before the date the
Issuer issues the Bonds under this Lease. The Company by deed, bill of sale or
other appropriate instrument agrees to grant, convey and assign to the Issuer
all of its right, title and interest in and to the Project Facilities (other
than portions thereof which are not purchased with proceeds of the Bonds).
Upon request of the Issuer, the Company will grant, convey and assign or cause
to be granted, conveyed and assigned, to the Issuer, by deed, bill of sale,
lease, assignment, license, grant of easements or other appropriate instrument,
such interests as it may have in the Project Facilities and such additional
rights as the Issuer shall require in order to comply with the Act. The Issuer
agrees that so long as no Event of Default hereunder or under the Indenture has
occurred and is continuing, the Company, on performing the covenants and
conditions contained herein, shall and may peaceably and quietly have, hold,
enjoy and possess the Project Facilities, including such land and existing
buildings, free from molestation, eviction or disturbance by the Issuer or by
any other person or persons claiming the same, by, through or under the Issuer.
The Issuer agrees that it will not create any lien, encumbrance or charge upon
the Project Facilities other than the security intended to be given under the
Indenture or the security intended to be given to the Bank to secure the
Company's obligations under the Reimbursement Agreement, and that it will not
grant any easement, license, right of way or other rights or privileges in the
nature of easements with respect to the Project Facilities, or otherwise
encumber the Project Facilities, without the prior written consent of the
Company. Pursuant to Article VII hereof, upon payment in full of all amounts due
as Rental under this Lease, the Issuer shall convey the Premises and the Project
Facilities to the Company.
Section 2.2 CONTRACTS FOR PROJECT FACILITIES. The Company has awarded or
will award contracts and purchase orders (collectively, the "Contracts")
covering the acquisition and construction of the Project Facilities. Each
Contract for construction and/or renovation will contain a valid waiver by the
contractor of the right to file and maintain any mechanic's liens on the Project
Facilities, which waiver shall be filed before
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commencement of work by such contractor in the appropriate office of the County.
Subject to Force Majeure, the Company will proceed diligently with the
acquisition and construction of the Project Facilities to completion. The
Company will pay all sums required to complete the same to the extent that the
cost thereof is not provided pursuant to the Indenture.
Section 2.3 PROVISIONS WITH RESPECT TO TITLE. Title to the improvements
and related equipment included in the Project Facilities shall be deemed to vest
in the Issuer as the materials and equipment constituting the same are
delivered, erected, installed and/or put in place and immediately thereafter
shall be deemed to be leased to the Company without any further action required
of the Issuer or the Company, except that title to property not financed with
any part of the proceeds of the Bonds shall not vest in the Issuer but shall
remain in the Company.
Section 2.4 DESCRIPTION OF PROJECT FACILITIES. The Company will revise
Exhibit B and such supplemental information to reflect material additions to,
deletions from and changes in the Project Facilities and will notify the Trustee
of such modifications.
Section 2.5 ADMINISTRATION OF CONTRACTS. The Company will have full
responsibility for preparing, administering, amending and enforcing the
Contracts and litigating or settling claims thereunder, and will be entitled to
all warranties, guaranties and indemnities provided under the Contracts and by
law.
Section 2.6 NOTICES AND PERMITS. The Company shall give or cause to be
given all notices and comply or cause compliance with all laws, ordinances,
municipal rules and regulations and requirements of public authorities applying
to or affecting the conduct of the work on the Project Facilities, and the
Company will defend and save the Issuer, its members, officers, agents and
employees, harmless from all fines due to failure to comply therewith. The
Company shall procure or cause to be procured all material permits and licenses
necessary for the prosecution of the work.
Section 2.7 ADDITIONS AND CHANGES TO PROJECT FACILITIES. Subject to
Section 5.14, the Company may, at its option and at its own cost and expense, at
any time and from time to time, make such improvements, additions and changes to
the Project Facilities as it may deem to be desirable.
III. Financing of Project.
Section 3.1 ISSUANCE OF BONDS. In order to finance the Project
Facilities, the Issuer, upon request of the Company, will issue and sell the
Bonds up to the maximum aggregate principal amount of $5,000,000. The Bonds will
be issued under
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and secured by the Indenture. The Bonds will be payable solely from payments
made by the Company pursuant to the terms hereof, or from other moneys available
for such purpose under the terms of the Indenture. The net proceeds of the Bonds
shall be applied pursuant to Article III hereof and Section 2.11 of the
Indenture.
Section 3.2 CONSTRUCTION FUND. The net proceeds of the Bonds (exclusive
of accrued interest, if any) will be deposited in the Construction Fund
established under the Indenture for payment of Costs of the Project upon
requisition by the Company as provided in Section 5.02 of the Indenture. The
Company agrees that the sums so requisitioned from the Construction Fund will
be used only for the Costs of the Project, and will not be used for any other
purpose. The Company shall have the right to enforce payments from the
Construction Fund upon compliance with the procedures set forth in this Section
and Section 5.02 of the Indenture; provided that during the continuance of an
Event of Default as defined in the Indenture, the Construction Fund shall be
held for the benefit of holders of the Bonds in accordance with the provisions
of the Indenture.
Section 3.3 BONDS NOT TO BECOME ARBITRAGE BONDS; FIXED RATE. As provided
in Article VIII of the Indenture, the Trustee will invest moneys held by or on
behalf of the Trustee as directed by the Company except as otherwise provided in
the Indenture. The Issuer and the Company hereby covenant to each other and to
the holders of the Bonds that, notwithstanding any other provision of this Lease
or any other instrument, they will neither make nor instruct the Trustee to make
any investment or other use of the Construction Fund or other proceeds of the
Bonds which would cause the Bonds to be arbitrage bonds under Section 148(a) or
103(b)(2) of the Code and the regulations thereunder, and that they will comply
with the requirements of such Section and regulations throughout the term of the
Bonds. The Company shall not elect to establish a Fixed Rate for the Bonds,
unless it shall have first delivered to the Trustee the Favorable Opinion
required by Section 3.03 of the Indenture.
Section 3.4 RESTRICTION ON USE OF CONSTRUCTION FUND. The Company (i)
shall not use or direct the use of moneys from the Construction Fund in any way,
or take or omit to take any other action, so as to cause the interest on any
Bonds to become subject to Federal income tax, (ii) shall not use more than 2%
of the proceeds of the Bonds for costs of issuance thereof, (iii) shall use at
least 95% of the proceeds of the Bonds for Costs constituting land or property
of a character subject to an allowance for depreciation for federal tax purposes
within the meaning of Section 167 of the Code, and (iii) shall not use the
proceeds of the Bonds to acquire, construct or install facilities, the nature
of which would cause the interest on the Bonds to become subject to federal
income tax.
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Section 3.5 THREE-YEAR EXPENDITURE REQUIREMENTS. Except to the extent
otherwise approved by a Favorable Opinion furnished by the Company to the
Trustee, within three years of the date of original delivery and payment for the
Bonds, the Company shall have completed the Project Facilities and caused all of
the proceeds of the Bonds to be expended for Costs of the Project or to be
transferred from the Construction Fund to the Bond Fund as described in Section
3.6.
Section 3.6 COMPLETION OF PROJECT FACILITIES; EXCESS BOND PROCEEDS. When
the Company certifies to the Trustee and the Issuer, in the manner provided in
Section 5.03 of the Indenture, that the Project Facilities are complete, any
amounts remaining in the Construction Fund will be transferred to the
Construction Fund Surplus Account in the Bond Fund and applied by the Trustee in
accordance with Section 5.03 of the Indenture. Such application shall constitute
payment of a portion of, and shall be credited against, the Purchase Price due
from the Company to the Issuer. If for any reason the amount in the Construction
Fund proves insufficient to pay all Costs of the Project, the Company will pay
the remainder of such Costs.
Section 3.7 NO "SAME ISSUE" BONDS. Neither the Company nor any other
principal user of the Project Facilities, nor any related person, within the
meaning of Section 144(a)(3) of the Code, has participated, or will participate,
in the offering for sale or sale of any issue of private activity bonds within
the meaning of Section 141 of the Code, which are or will be required to be
aggregated with the Bonds as part of the "same issue" within the meaning of
Revenue Rulings 81-216, 1981-2, C.B. 21.
IV. Lease of Project Facilities.
Section 4.1 LEASE OF PROJECT FACILITIES. The Issuer hereby leases and
rents to the Company, and the Company hereby accepts and does hereby lease and
rent from the Issuer, the Project Facilities, under and subject to all
easements, covenants, reversions, conditions and restrictions existing at the
time of settlement pursuant to Section 4.7, for the Rental set forth in Section
4.3.
Section 4.2 SECURITY INTEREST.
(a) In order to secure its obligations hereunder, the Company agrees
that the issuer shall have a security interest, which shall be second in
priority to the security interest of the Bank in "Funds Collateral" pursuant to
the Reimbursement Agreement, subject only to the rights of the Trustee and the
holders of the Bonds in all the Company's right, title and interest in and to
all funds and investments thereof now or hereafter held by or on behalf of the
Trustee or the Tender Agent under the Indenture as security for the payment of
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the Bonds, including without limitation any and all construction funds, debt
service funds and other funds and securities and other instruments comprising
investments thereof and interest and other income derived therefrom held as
security for the payment of the Bonds. The terms of this Section shall
constitute a security agreement within the meaning of the State Uniform
Commercial Code.
(b) The Company agrees that its interest in the Project Facilities and
its rights hereunder are and shall be subordinate to the rights of the Trustee
under the Indenture, except for its right to prepay all of the amounts due
hereunder and to cancel and terminate this Lease at any time, and agrees to
comply with and be bound by all of the provisions thereof that are binding upon
the Issuer.
Section 4.3 PAYMENT OF RENT. The Rental to be paid by the Company for
the lease of the Project Facilities will be an amount equal to the principal or
applicable redemption price of, premium, if any, on and interest on the Bonds.
The Rental shall be payable by the Company in monthly installments which as to
amounts and due dates correspond to the payments of the principal or applicable
redemption price of, premium (if any) on and interest on the Bonds. In addition
to its obligation hereunder to pay the Rental, the Company also agrees to pay or
cause to be paid to the Trustee any amount necessary to enable the Tender Agent
to effect the purchase of Bonds for purchase pursuant to Article IV of the
Indenture to the extent that moneys are not otherwise available therefor from
the proceeds of the remarketing of such Bonds and/or from drawings on any Letter
of Credit then held by the Tender Agent. Such Rental and other payment
obligations shall be reduced to the extent that other moneys are available for
such purpose in funds available for payment by the Trustee or the Tender Agent
and a credit in respect thereof has been granted pursuant to the terms hereof or
the terms of the Indenture. It Is the intention of the Issuer and the Company
that, notwithstanding any other provision of this Agreement, the Trustee, as
assignee of the Issuer, shall receive funds from or on behalf of the Company at
such times and in such amounts as will enable the Issuer to meet all of its
obligations under the Bonds, including any such obligations surviving the
payment of the Bonds.
Section 4.4 LETTER OF CREDIT. Concurrently with the issuance by the
Issuer of the Bonds, the Company shall cause the Letter of Credit to be
delivered to the Tender Agent. The Company may also from time to time cause the
extension of the Letter of Credit or the delivery of another Letter of Credit in
replacement therefor, to the extent permitted by the terms of the Indenture. It
is anticipated that so long as any Letter of Credit is held by the Tender Agent,
all payments of principal and interest on the Bonds will be funded from draws on
the Letter of Credit.
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Section 4.5 ACCELERATION OF PAYMENT TO REDEEM BONDS. Whenever the Bonds
are subject to optional redemption pursuant to the Indenture, the Issuer will be
deemed, but only upon request of the Company to the Trustee, to have, directed
the Trustee to call the same for redemption as provided in the Indenture.
Whenever the Bonds are subject to mandatory redemption pursuant to the
Indenture, the Company will cooperate with the Issuer and the Trustee in
effecting such redemption. In the event of any mandatory or optional redemption
of the Bonds, the Company will pay or cause to be paid on or before the date of
redemption an amount equal to the applicable redemption price as a prepayment of
that portion of the Rental corresponding to the Bonds to be redeemed, together
with applicable premium (if any) and interest accrued to the date of redemption.
Section 4.6 NO DEFENSE OR SET-OFF. The obligations of the Company to
make or cause to be made payments of the Rental shall be absolute and
unconditional without defense or set-off by reason of any default by the
contractors under the Contracts or by the Issuer under this Lease or under any
other agreement between the Company and the Issuer or for any other reason,
including without limitation, failure to complete the Project Facilities, any
acts or circumstances that may constitute failure of consideration, destruction
of or damage to the Project Facilities, commercial frustration of purpose, or
failure of the Issuer to perform and observe any agreement, whether express or
implied, or any duty, liability or obligation arising out of or connected with
this Agreement, it being the intention of the parties that the payments required
of the Company hereunder will be paid in full when due without any delay or
diminution whatsoever. Payments of the Rental and additional sums required to be
paid by or on behalf of the Company hereunder shall be received by the Issuer or
the Trustee as net sums and the Company agrees to pay or cause to be paid all
charges against or which might diminish such net sums.
Section 4.7 ASSIGNMENT OF ISSUER'S RIGHTS. As security for the payment
of the Bonds, the Issuer will assign in the Indenture and does hereby assign to
the Trustee all the Issuer's rights under this Lease (except the rights of the
Issuer to receive payments under Sections 5.4 and 5.5). The Company consents to
such assignment and agrees to make or cause to be made payments of the Rental
under Sections 4.3 and 4.5 directly to the Trustee without defense or set-off by
reason of any dispute between the Company and the Trustee.
Section 4.8 ADJUSTMENTS. The Company agrees to pay all charges and costs
which are required and whenever required in connection with the Issuer's
acquisition of the Project Facilities and in connection with the conveyance of
the Project Facilities from the Issuer to the Company. The Company agrees that
the Issuer shall not be responsible for any inaccuracies in any settlement sheet
in connection with the foregoing.
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V. Covenants of Company.
Section 5.1 MAINTENANCE AND OPERATION OF PROJECT FACILITIES.
(a) During the term of this Lease, the Company will at its own cost and
expense keep and maintain, or cause to be kept and maintained, in good repair
and condition (excepting reasonable wear and tear) the Project Facilities and
all additions and improvements thereto; provided that this covenant shall not
prevent the Company from selling its interest in the Project Facilities pursuant
to Section 7.5.
(b) The Company will maintain and use the Project Facilities as a
manufacturing facility with warehousing and distribution facilities related
thereto, as set forth in the Company's Use of Bond Proceeds Certificate to be
executed and delivered on the Closing Date, or, subject to the provisions of
Section 5.10, lease them to tenants for industrial use. The Company will not use
or permit the use of the Project Facilities in any manner which would result in
a violation of Section 144(a)(8) or Section 147(e) of the Code.
(c) The Company agrees to timely pay, or cause to be paid, for any
improvements to the Project Facilities lawfully done or lawfully ordered to be
done by any municipal, state or Federal authority and to comply in all material
respects at its own cost and expense with all lawful and enforceable notices
received from public authorities from and after the date hereof, which affect
the Project Facilities and the use and operation thereof, other than those
improvements, orders and notices, the amount, validity or application of which
is at the time being contested, in whole or in part, in good faith by
appropriate proceedings.
Section 5.2 MAINTENANCE OF EXISTENCE. The Company will maintain its
existence and its qualification to do business in the State, subject to the
provisions of the Reimbursement Agreement.
Section 5.3 PAYMENT OF COMPENSATION AND EXPENSES OF TRUSTEE, REMARKETING
AGENT AND TENDER AGENT. Except to the extent payment is provided from the
Construction Fund, the Company will pay the Trustee's and Tender Agent's
reasonable compensation and expenses under the Indenture (including any such
amounts payable to a separate or co-trustee appointed by the Trustee pursuant to
the Indenture), including all costs of redeeming Bonds thereunder. The Company
will also pay the reasonable compensation of the Remarketing Agent for the
performance of its duties and services under the Indenture.
Section 5.4 PAYMENT OF ISSUER'S FEES AND EXPENSES. Except to the extent
payment is provided from the Construction
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Fund, the Company will pay the Issuer's standard administration fees (if any)
and all reasonable expenses, including legal and accounting fees, incurred by
the Issuer in connection with the issuance of the Bonds and the performance by
the Issuer of its functions and duties under this Lease and the Indenture, plus
advertising costs and all other out-of-pocket costs (including fees and expenses
payable (and not subject to refund) at the end of each Bond Year thereafter so
long any Bonds remain Outstanding).
Section 5.5 INDEMNITY AGAINST CLAIMS. In the exercise of the powers of
the Issuer, the Trustee or the Tender Agent under the Indenture or hereunder,
including without limiting the foregoing the application of moneys, the
investment of funds and the letting or other disposition of the Project
Facilities upon the occurrence of an Event of Default, neither the Issuer, the
Trustee, the Tender Agent nor their members, directors, officers, employees or
agents shall be accountable to the Company for any action taken or omitted by
any of them in good faith and with the belief that it is authorized or within
the discretion or rights or powers conferred. The Issuer, the Trustee, the
Tender Agent and their members, directors, officers, employees and agents shall
be protected in acting upon any paper or document believed to be genuine, and
any of them may conclusively rely upon the advice of counsel and may (but need
not) require further evidence of any fact or matter before taking any action. No
recourse shall be had by the Company for any claims based herein or on the
Indenture against any member, director, officer, employee or agent of the
Issuer, the Trustee or the Tender Agent alleging personal liability on the part
of such person unless such claims are based upon the gross negligence, bad
faith, fraud or deceit of such person. The Company will indemnify and hold
harmless the Issuer, the Trustee, the Tender Agent and each member, director,
officer, employee and agent of the Issuer, the Trustee or the Tender Agent
against any and all claims, losses, damages or liabilities, joint and several,
to which the Issuer, the Trustee, the Tender Agent or any member, director,
officer, employee or agent of the Issuer, the Trustee or the Tender Agent may
become subject, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise directly or indirectly out of the Project or
are based upon any other act or omission in connection with the Project by the
Issuer, the Trustee or the Tender Agent, unless the losses, damages or
liabilities arise from the gross negligence or willful misconduct of the person
to be indemnified. In the event any claim is made or action brought against the
Issuer, the Trustee, the Tender Agent or any member, director, officer, employee
or agent of the Issuer, the Trustee or the Tender Agent, except for claims or
actions brought which arise from the gross negligence or willful misconduct of
such person, the Issuer, the Trustee or the Tender Agent may direct the Company
to assume the defense of the claim and any action brought thereon and pay all
reasonable expenses (including attorney's fees) incurred therein; or the Issuer,
the Trustee or
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the Tender Agent, after notice to the Company and the Company's failure to
defend, may assume the defense of any such claim or action, the reasonable cost
(including attorney's fees) of which shall be paid by the Company upon written
request of the Issuer, the Trustee or the Tender Agent to the Company. The
counsel selected by the Issuer, the Trustee or the Tender Agent to conduct such
defense shall be approved by the Company, which approval shall not be
unreasonably withheld. The Company may engage its own counsel to participate in
the defense of any such action. The defense of any such claim shall include the
taking of all actions necessary or appropriate thereto.
Section 5.6 DAMAGE TO OR CONDEMNATION OF PROJECT FACILITIES. Damage to,
destruction of or condemnation of all or a portion of the Project Facilities
shall not terminate this Lease, or cause any abatement of or reduction in the
payments to be made by the Company or otherwise affect the respective
obligations of the Issuer or the Company, except as set forth in this Agreement.
Section 5.7 TAXES, OTHER GOVERNMENTAL CHARGES AND UTILITY CHARGES. The
Company shall pay, or cause to be paid before the same become delinquent, 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 Facilities, including any equipment or related
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 revenues or income of the Issuer with respect to the sale of the
Project Facilities), and all utility and other charges incurred in the
operation, maintenance, use, occupancy and upkeep of the Project Facilities.
With respect to special assessments or other governmental charges that lawfully
may 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
term hereof. The Company may, at its expense, in good faith contest any such
taxes, assessments and other charges and, in the event of any such contest, may
permit the taxes, assessments or other charges so contested to remain unpaid
during the period of such contest and any appeal therefrom. The Company agrees
that it will not use, as a basis for contesting or adjudicating any taxes or
assessments upon the Project Facilities, the fact that the Issuer has an
ownership interest therein. The Company also agrees to comply at its own cost
and expense with all notices received from public authorities from and after the
date hereof.
The Company and the Issuer acknowledge that during the period in which
title to the Project is held by the Issuer the Project will be exempt from
certain real property taxes which would otherwise be payable by the Company to
the Issuer in respect of the Project Facilities. The Company and the Issuer
agree that during such period the Company shall make payments in
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lieu of taxes to the Issuer at the then current school rate plus .05 cents per
$100 per annum on the value of the Project Facilities as improved (provided that
in no event shall the assessed value of the Project Facilities for purposes of
determining the amount of such payments exceed $3,500,000).
Section 5.8 INSURANCE.
(a) The Company shall at its own cost and expense obtain or cause be be
obtained insurance policies naming the Company, the Issuer and the Bank as
insureds, insuring against such risks, and in such amounts as are customarily
insured against by entities owning facilities of like size and type to the
Project Facilities, paying as the same become due and payable, all premiums in
respect thereof, including but not necessarily limited to:
(i) until the completion of the construction of the Project
Facilities, builders' "all risk" insurance;
(ii) from and after the completion of the construction of the
Project Facilities, fire insurance with uniform standard extended
coverage endorsements, and vandalism and malicious mischief insurance;
(iii) comprehensive general liability insurance with minimum
limits of $500,000 per person and $500,000 per occurrence, and property
damage coverage with a minimum limit of $100,000; and
(iv) workers' compensation coverage and any other type of
insurance required by the laws of the State.
(b) The Company shall require that any contractor employed for
construction of the Project Facilities provide comprehensive general liability
coverage and workers' compensation coverage in amounts customarily carried by
contractors with respect to such construction.
(c) The insurance policies or endorsements shall cover the entire
Project Facilities and, if obtainable, shall provide that the coverage will not
be reduced or cancelled without 30 days prior written notice to the Trustee and
the Bank. The Company shall provide the Issuer, the Trustee and the Bank with
certificates from the insurers at such times as may be necessary (but in no
event less than once every three years) to show that insurance is being
maintained as required by this Section.
Section 5.9 PROHIBITION OF LIENS. The Company shall not create or suffer
to be created by any other person any lien or charge upon the Construction Fund
or the Project Facilities or any part thereof or upon the rents, contributions,
charges,
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receipts or revenues therefrom, other than any easement, license, other right or
privilege as permitted under Section 5.11 hereof or the Leasehold Mortgage;
provided that nothing in this Lease shall limit the right of the Company to
enforce payments from the Construction Fund pursuant to Section 5.02 of the
Indenture. The Company further agrees to pay or cause to be discharged or make
adequate provision to satisfy and discharge, within 90 days after the same shall
become due, any such lien or charge and also all lawful claims or demands for
labor, materials, supplies or other charges which, if unpaid, might be or become
a lien upon the Construction Fund, the Project Facilities or any part thereof or
the revenues or income therefrom. Nothing in this Section shall require the
Company to pay or cause to be discharged or make provision for any such lien or
charge so long as the validity thereof shall be contested in good faith and so
long as the Construction Fund, the Project Facilities or any part thereof are
not subject to loss or forfeiture. The Issuer shall cooperate with the Company
in any such contest and shall cooperate with the Company with respect to
obtaining any necessary releases of liens or other encumbrances on the Project
Facilities.
Section 5.10 COMPANY'S SUBLEASE OF PROJECT FACILITIES. The Company may
sublease any portion of the Project Facilities, but only subject to the
following conditions:
(a) No such sublease shall relieve the Company of its obligation
to make the payments required under Sections 4.3 and 4.5 or to perform
all other covenants hereunder, for which the Company shall remain
primarily liable;
(b) If the tenant would be deemed a "principal user" or "test
period beneficiary" of the Project Facilities within the meaning of
Section 103 of the Code, the Company shall have obtained and submitted
to the Trustee a Favorable Opinion that the proposed lease will not have
an adverse effect on the tax-exempt status of the Bonds;
(c) Not more than an aggregate of 25% of the rentable space of
the Project Facilities shall be leased to provide facilities the primary
purpose of which is provision of retail food and beverage service,
automobile sales or service, recreation or entertainment, nor shall such
facilities furnish more than 25% of the rental revenues produced by the
Project Facilities; and
(d) Such lease shall contain covenants (i) forbidding any use of
the leased premises which would constitute a violation of Section
144(a)(8) or Section 147(e) of the Code and (ii) if and as appropriate
in the Favorable Opinion, with respect to the $10,000,000 limit of
Section 144(a)(4)(A) of the Code and the $40,000,000 limit of Section
144(a)(10) of the Code.
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Section 5.11 GRANTING OF EASEMENTS. If no Event of Default under this
Lease has occurred and is continuing, the Company may, notwithstanding anything
contained in this Lease to the contrary, at any time or times, grant easements,
licenses, rights of way and other rights or privileges with respect to any
property included in the Project Facilities, free from the lien of this Lease,
or release existing easements, licenses, rights of way and other rights or
privileges, all with or without consideration and upon such terms and
conditions as the Company shall determine. The Issuer agrees that it will
execute and deliver or will cause the execution and delivery of, and will cause
and direct the Trustee to execute and deliver, any instrument necessary or
appropriate to confirm and grant or release any such easement, license, right of
way or other right or privilege. If no Event of Default has occurred and is
continuing, any payments or other consideration received by the Company for any
such grant shall be and remain the property of the Company but, if an Event of
Default has occurred and is continuing, all rights then existing of the Company
with respect to or under such grant, shall inure to the benefit of the Trustee.
Section 5.12 COMPLIANCE WITH LAWS. With respect to the Project
Facilities and any additions, alterations or improvements thereto, the Company
will at all times comply in all material respects with all applicable
requirements of federal, state and local laws and with all applicable lawful
requirements of any agency, board or commission created under the laws of the
State or of any other duly constituted public authority, and will use, and
permit the use of, the Project Facilities only for such purposes as are lawful
under the Act; provided that the Company shall be deemed in compliance with this
Section so long as it is contesting in good faith any such requirement by
appropriate legal proceedings.
Section 5.13 FINANCING STATEMENTS. The Company shall at the request of
the Trustee and at the Company's own expense cause financing statements under
the State Uniform Commercial Code to be filed in the places required by law in
order to perfect the security interests created by Section 4.2 naming the Issuer
as first secured party and the Trustee as assignee. From time to time, as
reasonably requested by the Trustee, the Company shall furnish to the Trustee an
opinion of counsel setting forth what actions, if any, should be taken by the
Company or the Trustee to preserve such security interest in favor of the
Trustee, and the right, title and interest of the Trustee in and to the trust
estate created under the Indenture. The Company shall execute and file or cause
to be executed and filed all further instruments as shall be required by law to
preserve such security interest, and shall furnish satisfactory evidence to the
Company of the filing and refiling of such instruments.
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Section 5.14 LIMITATION ON CAPITAL EXPENDITURES. Without having first
obtained a Favorable Opinion, the Company will not make or permit to be made any
capital expenditures, within the meaning of Section 144(a)(4)(A) of the Code,
with respect to the Project Facilities or any other facilities in the County or
with respect to any facilities contiguous or integrated with any such facilities
within the meaning of Sections 1.103-l0(b)(2)(ii)(e) and 1.103-10(d)(2) of the
Treasury Regulations (in this Section, "integrated facilities"), of which the
Company, any other person who is a principal user of the Project Facilities or
any related person is the owner, occupant or other principal user (in this
Section, "capital expenditures"), which, when added to (i) the face amount of
the Bonds and (ii) the outstanding amount of any other governmental obligations
described in Section 144(a) of the Code issued with respect to any facilities
located in Carroll County, Kentucky or with respect to any integrated
facilities, of which the Company, any other person who is a principal user of
the Project Facilities or any related person is the owner, occupant or other
principal user, would make the total of such face amount, such outstanding
amount and all capital expenditures for the six-year period beginning three
years before the date of issuance of the Bonds, exceed $10,000,000, or such
other limit as may, in the opinion of nationally recognized bond counsel, be
permitted under the Code.
SECTION 5.15 RESTRICTED AND PROHIBITED ACTIVITIES.
(a) The Company covenants that not more than 25% of the proceeds of the
Bonds shall be used (directly or indirectly) to provide any facilities the
primary purposes of which is to provide retail food or beverage services, or the
provision of recreation or entertainment, within the meaning of Section
144(a)(8) of the Code.
(b) The Company covenants that no portion of the proceeds of the Bonds
shall be used (directly or indirectly) to provide any facilities to be used for
a private or commercial golf course, country club, massage parlor, tennis club,
skating facility (including roller skating, skateboard and ice skating), racquet
sports facility (including any handball or racquetball court), hot tub facility,
suntan facility, racetrack, airplane, skybox or luxury box, health club
facility, facility primarily used for gambling or store, the principal business
of which is the sale of alcoholic beverages for consumption off premises, within
the meaning of Section 144(a)(8) or Section 147(e) of the Code.
Section 5.16 $40,000,000 LIMIT. The Company will not permit any person
to become a principal user of the Project Facilities or a related person, and
will not become a principal user or permit any related person to become a
principal user of any other facilities, within the meaning of Section 144(a) of
the
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Code, within the three-year period following the date that the Project
Facilities are first placed in service if, as a result thereof the $40,000,000
limit of Section 144(a)(l0) of the Code would be violated with respect to the
Bonds.
Section 5.17 ARBITRAGE REBATE. Within 30 days after the end of each Bond
Year, the Company shall determine the Excess Investment Earnings and deliver
moneys to the Trustee for deposit into the Rebate Fund (or instruct the Trustee
to transfer to the Rebate Fund moneys representing available arbitrage earnings,
if any, in the Construction Fund or the Bond Fund) in an aggregate amount equal
to the Excess Investment Earnings, if any. The Company shall instruct the
Trustee to withdraw from the Rebate Fund and pay over to the United States (1)
not less frequently than once each five years after the date of original
delivery and payment for the Bonds, an amount equal to 90% of the net aggregate
amount of Excess Investment Earnings deposited into the Rebate Fund during such
period, plus all investment earnings on amounts on deposit in the Rebate Fund
during such period (and not theretofore paid to the United States), and (2) not
later than 30 days after the redemption, payment at maturity or other retirement
of the last Bond, 100% of all moneys in the Rebate Fund. Because the Company's
present intent is that all funds held under the Indenture shall be invested in
investments the earnings on which are tax-exempt, the Issuer and the Company do
not expect any such payments to be required.
VI. Events of Defaults and Remedies.
Section 6.1 EVENTS OF DEFAULT; ACCELERATION. Each of the following
events is hereby defined as, and is declared to be and to constitute, an "Event
of Default" hereunder:
(a) Failure by the Company to make or cause to be made any payment
required to be made under Section 4.3 or 4.5 on or before the date the same is
due; or
(b) Failure or refusal by the Company to comply with any of its other
covenants hereunder and such failure or refusal shall continue for a period of
60 days after written notice thereof has been given to the Company and the Bank
by the Issuer or the Trustee; provided that if such failure is of such nature
that it can be corrected but not within 60 days, it will not be an Event of
Default so long as prompt corrective action is instituted and is diligently
pursued; or
(c) The Company shall (i) apply for or consent to the appointment of a
receiver, trustee, liquidator or custodian or the like of itself or of its
property, or (ii) admit in writing its inability to pay its debts generally as
they become due, or (iii) make a general assignment for the benefit of
creditors, or (iv) be adjudicated a bankrupt or insolvent, or (v) commence a
voluntary case under the United States Bankruptcy
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Code, or file a voluntary petition or answer seeking reorganization, an
arrangement with creditors or an order for relief, or seeking to take advantage
of any insolvency law or file an answer admitting the material allegations of a
petition filed against it in any bankruptcy, reorganization, or insolvency
proceeding, or action shall be taken by it for the purpose of effecting any of
the foregoing, or (vi) if without the application, approval or consent of the
Company, a proceeding shall be instituted in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency, reorganization
or relief of debtors, seeking in respect of the Company an order for relief or
an adjudication in bankruptcy, reorganization, dissolution, winding up,
liquidation, a composition or arrangement with creditors, a readjustment of
debts, the appointment of a trustee, receiver, liquidator or custodian or the
like of the Company or of all or any substantial part of its assets, or other
like relief in respect thereof under any bankruptcy or insolvency law, and, if
such proceeding is being contested by the Company in good faith, the same shall
(A) result in the entry of an order for relief or any such adjudication or
appointment or (B) remain unvacated, undismissed and undischarged for a period
of 90 days; or
(d) If for any reason the Bonds are declared due and payable by
acceleration in accordance with Section 11.02 of the Indenture; or
(e) If the Trustee and the Tender Agent receive notice from the Bank (i)
that an Event of Default as defined in the Reimbursement Agreement has occurred
and is continuing arid (ii) requesting the Trustee to declare the principal of
the outstanding Bonds immediately due and payable; or
(f) If the Trustee and the Tender Agent receive notice from the Bank
prior to the 10th day following a drawing under the Letter of Credit for
interest on Bonds which remain outstanding after the application of the proceeds
of such drawing, that the Letter of Credit will not be reinstated with respect
to such interest;
then and in each and every such case the Trustee, by notice in writing to the
Company, may, if such Event of Default has not been cured, declare all sums
which the Company is obligated to pay under this Lease to be due and payable
immediately, and upon any such declaration the same shall become and shall be
immediately due and payable, anything in this Lease contained to the contrary
notwithstanding. In case the Trustee shall have proceeded to enforce any right
under this Lease and such proceedings shall have been discontinued or abandoned
for any reason or shall have been determined adversely to the Trustee, then and
in every such case the Company, the Issuer and the Trustee shall be restored
respectively to their several positions and rights hereunder, and all rights,
remedies and powers of the
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Company, the Issuer and its assignee or the Trustee shall continue as though no
proceeding had been taken.
Section 6.2 PAYMENT OF RENTAL ON DEFAULT; SUIT THEREFOR.
(a) The Company covenants that, in case it shall fail to pay or cause to
be paid any sum payable by or on behalf of the Company under Section 4.3 or 4.5
as and when the same shall become due and payable whether at maturity or by
acceleration or otherwise, then, upon demand of the Trustee, the Company will
pay to the Trustee the whole amount of the Rental that then shall have become
due and payable under such Sections; and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
including a reasonable compensation to the Issuer, the Trustee and Tender Agent,
their agents and counsel, and any expenses or liabilities incurred by the
issuer, the Trustee or the Tender Agent. In case the Company shall fail
forthwith to pay such amounts upon such demand, the Trustee shall be entitled
and empowered to institute any actions or proceedings at law or in equity for
the collection of the sums so due and unpaid, and may prosecute any such action
or proceeding to judgment or final decree, and may enforce any such judgment or
final decree against the Company and collect in the manner provided by law out
of the property of the Company the moneys adjudged or decreed to be payable.
(b) In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company under the Federal bankruptcy laws or any other
applicable law, or in case a receiver or trustee shall have been appointed for
the benefit of the creditors or the property of the Company, the Trustee shall
be entitled and empowered, by intervention in such proceedings or otherwise, to
file and prove a claim or claims for the whole amount of the Rental, including
interest owing and unpaid in respect thereof, and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee allowed in
such judicial proceedings relative to the Company, its creditors, or its
property, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute the same after the deduction
of its charges and expenses. Any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized to make such payments to Issuer or the
Trustee, and to pay to the Issuer or the Trustee any amount due it for
compensation and expenses, including counsel fees incurred by it up to the date
of such distribution.
Section 6.3 OTHER REMEDIES. Whenever all sums which the Company is
obligated to pay under this Lease shall have been declared to be immediately due
and payable, the Trustee may take
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whatever action may be available at law or in equity as may appear necessary or
desirable to collect the Rental and any other amounts payable by the Company
hereunder, or to enforce performance and observance of any obligation, agreement
or covenant of the Company under this Lease.
If any statute or rule of law shall validly limit the amount of damages
to be paid under this Section to less than the amount provided in this Section,
the Trustee shall be entitled to the maximum amount allowable under such statute
or rule of law.
Section 6.4 CUMULATIVE RIGHTS. No remedy conferred upon or reserved to
the Issuer or the Trustee by this Lease is intended to be exclusive of any other
available remedy, but each and every such remedy shall be cumulative and shall
be in addition to every other remedy given under this Agreement or now or
hereafter existing at law or in equity or by statute. No waiver by the Issuer or
the Trustee of any breach by the Company of any of its obligations, agreements
or covenants hereunder shall be a waiver of any subsequent breach, and no delay
or omission to exercise any right or power 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.
VII. Options of Company
Section 7.1 OPTION TO PREPAY. There is expressly reserved to the Company
the right, and the Company is authorized and permitted, to prepay all or any
part of the Rental payable hereunder on any installment payment date as set
forth in the Indenture, but no partial prepayment shall alter the order or
amount of periodic Rental payments otherwise required hereunder; and the Issuer
agrees that the Trustee may accept such prepayment of the Bonds when the same is
tendered by the Company. If the Company prepays the Bonds in full this Lease
shall terminate.
Section 7.2 OPTION TO PURCHASE. The Company shall have, and is hereby
granted, the option to purchase the Project for a price equal to an amount of
money sufficient to pay in full the principal amount of, premium, if any on and
interest on the Bonds then outstanding, together with accrued interest, if any,
to the date of such purchase arid any other amounts owed to the Trustee, the
Bank or the Issuer under this Lease or the Indenture, and such payment together
with written notice delivered by the Company to the Issuer will be deemed to be
the exercise of such option.
Upon payment in full of the Bonds as provided in the preceding paragraph
and payment by the Company to the Issuer of consideration in the amount of Ten
Dollars ($10.00), the Issuer shall execute, acknowledge and deliver such deed,
bill of sale and/or other instrument or instruments as the Company may
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reasonably request or as may be necessary or appropriate to vest title to the
Project in the Company or its assignee.
Any conveyance, reconveyance or transfer of the Project by the Issuer to
the Company or its assignee pursuant to this Section shall be by deed of special
warranty, and the same shall be free and clear of all liens and encumbrances
except such as exist on the date hereof, such as are created by the Issuer with
the Company's approval arid such as are created by the Company. Costs of such
conveyance, reconveyance or transfer, including the cost of state and local
realty transfer taxes, shall be paid by the Company or its assignee.
VIII. Miscellaneous
Section 8.1 LIMITATION OF LIABILITY OF ISSUER. This Lease does not
pledge the general credit nor the taxing power of the Commonwealth of Kentucky
or any political subdivision thereof or the County of Carroll. The liability of
the undersigned shall be limited to the proceeds resulting from the sale of the
Project Facilities and the rents, issues and profits therefrom.
No covenant or agreement contained in this Lease shall be deemed to be
the covenant or agreement of any member, officer, attorney, agent or employee of
the Issuer in an individual capacity. No recourse shall be had for the payment
of the principal, the interest thereon, the premium, if any, payable upon the
redemption of the Bonds or for any amounts due under this Lease or any claim
based thereon against any officer, member, agent, attorney or employee of the
Issuer, past, present or future, or its successors or assigns, as such, either
directly or through the Issuer, or any such successor, whether by virtue of any
constitutional provision, statute or rule of law, or by the enforcement of any
assessment or penalty, or otherwise, all of such liability of such members,
officers, agents, attorneys or employees being hereby released as a condition of
and as a consideration for the execution and delivery of this Lease.
Section 8.2 NOTICES. Notice hereunder shall be effective upon receipt
and shall be given by personal service or by certified or registered mail,
return receipt requested, to:
The Issuer - County of Carroll, Kentucky
County Courthouse
Carrollton, Kentucky 41008
Attn: County Judge/Executive
The Company - Kentucky Ladder Company
93 Werner Road
Greenville, Pennsylvania 16125
Attn: Eric J. Werner, Esquire
Corporate Counsel
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The Trustee and - Dai-Ichi Kangyo Trust Company
Tender Agent of New York
One World Trade Center
Suite 5031
New York, New York 10048
Attn: Corporate Trust Department
The Bank - The Dai-Ichi Kangyo Bank, Limited,
New York Branch
One World Trade Center
Suite 4911
New York, New York 10048
Attn: Loan Administration Dept.
Section 8.3 SEVERABILITY. If any provision hereof is found by a court of
competent jurisdiction to be prohibited or unenforceable, it shall be
ineffective only to the extent of such prohibition or unenforceability, and such
prohibition or unenforceability shall not invalidate the balance of such
provision to the extent it is not prohibited or unenforceable, nor invalidate
the other provisions hereof, all of which shall be liberally construed in favor
of the Issuer or the Trustee in order to effect the provisions of this Lease.
Section 8.4 APPLICABLE LAW. This Lease shall be deemed to be a contract
made in the State and governed by the laws of the State.
Section 8.5 ASSIGNMENT; Successors and Assigns. The Company shall not
assign this Lease or any interest of the Company herein, either in whole or in
part, without the prior written consent of the Trustee, which consent shall be
given if the following conditions are fulfilled: (i) the assignee assumes in
writing all of the obligations of the Company hereunder; (ii) neither the
validity nor the enforceability of this Agreement shall be adversely affected by
such assignment; (iii) the Project shall continue in the opinion of nationally
recognized bond counsel to be a "project" as such term is defined in the Act
after such assignment; (iv) such assignment shall not, in the opinion of
nationally recognized bond counsel, have an adverse effect on the exclusion from
gross income of interest on the Bonds for federal income tax purposes; and (v)
if a Letter of Credit is held by the Tender Agent, the consent of the Bank. For
purposes of this Section, no assignment shall be deemed to have occurred by
reason of a change in the composition of the ownership of the Company. Subject
to the foregoing, this Lease shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns, and
the terms "Issuer" and "Company" shall, where the context requires, include the
respective successors and assigns of such persons. No assignment pursuant to
this Section shall release
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the Company from its obligations under this Lease unless consented to by the
Bank or, if there is no Letter of Credit securing the Bonds, the assignee has a
net worth equal to or greater than that of the Company.
Section 8.6 ENFORCEMENT OF CERTAIN PROVISIONS BY THE BANK. The Bank is
hereby explicitly recognized as a third party beneficiary of this Lease.
Section 8.7 AMENDMENTS. This Lease may not be amended except by an
instrument in writing signed by the parties and, if such amendment occurs after
the issuance of any of the Bonds, consented to by the Trustee.
Section 8.8 TERM OF AGREEMENT. This Lease and the respective obligations
of the parties hereto shall be in full force and effect from the date hereof
until (i) the principal or redemption price of, premium, if any, on and all
interest on the Bonds shall have been paid, or provision for such payment shall
have been made pursuant to the terms of the Indenture, (ii) the Indenture shall
have been released pursuant to Section 17.01 thereof, (iii) the Company shall
have satisfied all its obligations under the Reimbursement Agreement, and (iv)
the Company and the Issuer shall have satisfied their respective obligations
under Section 4.7.
Section 8.9 NO WARRANTY BY ISSUER OF CONDITION, SUITABILITY OR ZONING OF
PROJECT. The Issuer makes no warranty, either express or implied, as to the
condition of the Project Facilities or any part thereof or that they will be
suitable for the Company's purposes or needs. The Company acknowledges and
agrees that the Issuer is not a dealer in property of such kind, and that the
Issuer has not made, and does not hereby make, any representation or warranty or
covenant with respect to the merchantability, fitness for a particular purpose,
condition or suitability of the Project Facilities in any respect or in
connection with or for the purposes and uses of the Company or its tenants. The
Issuer makes no representations as to the zoning of the Premises.
Section 8.10 COMPANY'S FEDERAL INCOME TAXATION. Consistent with the
terms and conditions of this Agreement, the Issuer agrees that the Company shall
be deemed tine owner of the Project Facilities for federal income tax purposes
and further agrees to cooperate fully with the Company in obtaining favorable
federal income tax treatment of this lease and the Project Facilities subject
hereto. For such purposes, the parties acknowledge their intent to create a
valid lease herein, with legal title to the Project Facilities held by Issuer in
order to comply with the provisions of the Act prior to the eventual transfer of
such title to Company in the manner provided herein.
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Section 8.11 AMOUNTS REMAINING IN BOND FUND OR CONSTRUCTION FUND. It is
agreed by the parties that any amounts remaining in the Bond Fund or
Construction Fund, after payment in full of the Bonds (or provision for payment
thereof having been made in accordance with the provisions of the Indenture)
arid of the fees, charges and expenses of the Trustee and the Issuer in
accordance with the Indenture, shall upon release of the Indenture pursuant to
Section 17.01 thereof, be paid by the Trustee to the Bank to the extent of any
unreimbursed drawing under the Letter of Credit, or any other obligations owing
by the Company to the Bank under the Reimbursement Agreement. Any remaining
moneys shall belong to and be paid to the Company by the Trustee as overpayment
of the Rental.
Section 8.12 SURVIVAL OF COVENANTS, CONDITIONS AND REPRESENTATIONS. All
covenants, conditions and representations of the Company contained herein which,
by nature, impliedly or expressly involve performance in any particular manner
after the delivery of the Issuer's deed or which cannot be ascertained to have
been performed until after the said delivery, shall survive said delivery.
Section 8.13 RECEIPT OF INDENTURE. Tine Company hereby acknowledges that
it has received an executed copy of the Indenture and is familiar with its
provisions, and agrees that it will take all such actions as are required or
contemplated of it under the Indenture to preserve and protect tine rights of
the Trustee and of the Bondholders thereunder and that it will not take any
action which would cause a default thereunder. Any redemption of Bonds prior to
maturity shall be effected as provided in the Indenture.
Section 8.14 HEADINGS. The captions or headings in this Lease are for
convenience of reference only and shall not control or affect the meaning or
construction of any provision hereof.
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IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Lease to be executed and delivered as of the date first written
above.
COUNTY OF CARROLL, KENTUCKY
[SEAL]
Attest /s/ By /s/ Harold "Shorty" Tomlinson
--------------------------------- --------------------------------
Clerk County Judge/Executive
KENTUCKY LADDER COMPANY
Attest /s/ Eric J. Werner By /s/
---------------------------------- ---------------------------------
Secretary President
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COUNTY OF CARROLL )
) : SS.
COMMONWEALTH OF KENTUCKY )
The foregoing instrument was acknowledged before me this, the ____ day
of _______________, 1990 by __________________ as ________________ of COUNTY OF
CARROLL, KENTUCKY, on behalf of the Company.
My conimission expires: 12/1/93
/s/ James Carlton Monk
---------------------------------------------
Notary public
[NOTARIAL SEAL]
COMMONWEALTH OF KENTUCKY )
-------- ) : SS.
COUNTY OF CARROLL )
-------
The foregoing instrument was acknowledged before me this, the 14TH day
of September, 1990 by Howard L. Salot as President of KENTUCKY LADDER COMPANY,
on behalf of the Company.
My conimission expires: June 26, 1992
----------------
/s/ Diane Gordon
---------------------------------------------
Notary public
[NOTARIAL SEAL]
This instrument prepared by:
/s/ Charles R. Brodbeck
Charles R. Brodbeck
COHEN & GRIGSBY, A Professional
Corporation
2900 CNG Tower
625 Liberty Avenue
Pittsburgh, PA 15222
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EXHIBIT A
Real Estate Description
-----------------------
See attached.
33
DEED DESCRIPTION
PROPERTY TO BE CONVEYED TRACT A
BY:
CARROLL COUNTY INDUSTRIAL DEVELOPMENT FOUNDATION, INC.
TO:
BEING PART OF ORIGINAL TRACT OF CCIDF AS RECORDED IN DEED BOOK 65, PAGE
563 AND LYING ON THE WEST SIDE OF ACCESS ROAD FOR CCIDF PARK AND BEING 1020 FEET
SOUTHEAST OF INTERSECTION OF AIRPORT ROAD AND BEING MORE PARTICULARLY DESCRIBED
AS FOLLOWS:
BEGINNING IN THE WEST RIGHT OF WAY OF CCIDF PARK ROAD AN IRON PIN FOUND
AND FRONTING WOODMASTERS FOUNDATION; THENCE WITH SOUTH RIGHT OF WAY OF SAID ROAD
AND ALONG PROPERTY LINE OF WOODMASTERS FOUNDATION S 55-00'-04"E, 400.06 FEET TO
AN IRON PIN FOUND AND PROPERTY LINE OF CCIDF CORNER; THENCE WITH CCIDF AND
LEAVING WOODMASTERS FOUNDATION AND ALONG SOUTH RIGHT OF WAY OF CCIDF PARK ROAD S
55-00'-04"E, 282.10 FEET TO AN IRON PIN SET AND REAL BEGINNING OF PROPERTY TO BE
CONVEYED BEING TRACT A; THENCE LEAVING CCIDF NEW DIVISION LINE AND ALONG SOUTH
50 FOOT RIGHT OF WAY OF CCIDF PARK ROAD AND iS FOOT EASEMENT ON THE SOUTH SIDE
OF THIS DESCRIBED LINE S 50-00'-04"E, 1009.69 FEET TO AN IRON PIN SET IN
PROPERTY LINE OF OAK'S; THENCE LEAVING ACCESS ROAD CCIDF PARK ROAD AND ALONG
OAK'S LINE S 34-35'-15"W, 506.31 FEET TO A STONE AND CORNER OF TRACT NO. 5 AND 4
OF EARL FLOYD FROM GENERAL MOTORS AND NOW KNOWN AS TRACT B ON PLAT; THENCE WITH
TRACT B N 55-10'-07"W, 1013.33 FEET TO AN IRON PIN AND CORNER POST AND PROPERTY
LINE OF CCIDF; THENCE LEAVING FLOYD AND ALONG NEW DIVISION LINE OF CCIDF AND
CENTER OF 30 FOOT UTILITY EASEMENT 15 FEET LEFT AND RIGHT OF THIS DESCRIBED LINE
N 34-59'-56"E, 509.26 FEET TO AN IRON PIN AND BEGINNING CONTAINING 11.791 ACRES
AND BEING SUBJECT TO LEGAL RIGHT OF WAYS AND LEGAL EASEMENTS ON RECORD AND/OR IN
EXISTENCE.
34
DEED DESCRIPTION
PROPERTY TO BE CONVEYED
BY:
EARL FLOYD TRACT B
TO:
BEING TRACT NO. 5 OF GENERAL MOTORS TO EARL FLOYD AND LYING ON THE
NORTHWEST PORTION OF TOTAL 107 ACRE TRACT OF EARL FLOYD FROM GENERAL MOTORS AND
BEING MORE PARTICULARLY DESCRIBED AS FOLLOWS:
BEGINNING IN SOUTH RIGHT OF WAY OF ACCESS ROAD TO CCIDF PARK AN IRON PIN
SET AND PROPERTY LINE OF TRACT A; THENCE LEAVING SOUTH RIGHT OF WAY AND ALONG
DIVISION LINE OF CCIDF AND TRACT A AND ALONG 30 FOOT UTILITY EASEMENT 15 FEET
LEFT AND RIGHT OF DESCRIBED LINE S 34-59'-56"W, 509.26 FEET TO A CORNER POST AND
IRON PIN AND REAL BEGINNING OF TRACT B; THENCE WITH PROPERTY LINE OF CCIDF AND
30 FOOT UTILITY EASEMENT BEING 15 FEET LEFT AND RIGHT OF DESCRIBED LINE S
48-23'-04"W, 480.38 FEET TO A CORNER POST AND PROPERTY LINE OF PHELPS DODGE
ALUMINUM PRODUCTS CO. AND END OF 30 FOOT UTILITY EASEMENT AND BEGINNING OF 20
FOOT EASEMENT LYING TOTAL EAST OF THIS LINE BEING LEFT OF DESCRIBED LINE; THENCE
WITH PDAPC PROPERTY LINE AND 20 FOOT EASEMENT S 15-27'-31"E, 1446.56 FEET TO AN
IRON PIN AND CORNER OF TRACT 2 AND TRACT 3 OF EARL FLOYD; THENCE LEAVING PDAPC
AND CORNER OF TRACT 2 AND 20 FOOT EASEMENT AND ALONG PROPERTY LINE OF TRACT 3 N
47-59'-33"E, 672.01 FEET TO AN IRON PIN FOUND AND CORNER OF TRACT 4 OF EARL
FLOYD; THENCE LEAVING TRACT 3 AND ALONG TRACT NO. 4 N 48-10'-21"E, 755.52 FEET
TO AN IRON PIN SET AND PROPERTY LINE OF OAK'S; THENCE LEAVING TRACT NO. 4 AND
ALONG OAK'S LINE N 54-51'-13"W, 314.27 FEET TO A STONE AND CORNER OF TRACT A;
THENCE LEAVING OAK'S AND ALONG TRACT A N 55-10'-07"W, 1013.33 FEET TO AN IRON
PIN AND CORNER POST AND BEGINNING CONTAINING 28.341 ACRES AND SUBJECT TO LEGAL
RIGHT OF WAYS AND LEGAL EASEMENTS ON RECORD AND/OR IN EXISTENCE.
35
EXHIBIT B
Description of Project Facilities
---------------------------------
The Project Facilities to be financed with the proceeds of the Bonds
consist of the acquisition of land and construction and equipping of a
manufacturing facility thereon to be used in the manufacture, processing and
assembly of climbing ladder products and related products, together with
storage, warehousing and distribution facilities with respect thereto.
The following is an itemization of the estimated Project Facilities
Costs:
SOURCES AND USES OF FUNDS
-------------------------
SOURCES OF FUNDS
----------------
Principal Amount of Bonds $5,000,000
Company Equity Contribution $ 100,000
----------
TOTAL SOURCES OF FUNDS $5,100,000
USES OF FUNDS
-------------
Land $ 307,500
Building $3,707,500
Equipment $ 785,000
Landscaping, title fees,
architects, engineers,
financing costs $ 300,000
----------
TOTAL USES OF FUNDS $5,100,000
==========