Exhibit 10.12
DEVELOPMENT AUTHORITY OF ▇▇▇▇▇▇▇▇▇ COUNTY
(a public body corporate and politic)
as Lessor
and
CARBO CERAMICS INC.
(a corporation organized and existing
under the laws of the State of Delaware)
as Lessee
LEASE AGREEMENT
Dated as of November 1, 2003
THE RIGHTS AND INTEREST OF THE DEVELOPMENT AUTHORITY OF ▇▇▇▇▇▇▇▇▇ COUNTY IN THE
PROJECT LEASED HEREUNDER, THIS LEASE AGREEMENT AND CERTAIN REVENUES AND RECEIPTS
DERIVED HEREUNDER, EXCEPT FOR CERTAIN UNASSIGNED RIGHTS, AS DEFINED HEREIN, HAVE
BEEN OR WILL BE RESPECTIVELY CONVEYED, ASSIGNED AND PLEDGED AS SECURITY FOR THE
$170,000,000 MAXIMUM PRINCIPAL AMOUNT DEVELOPMENT AUTHORITY OF ▇▇▇▇▇▇▇▇▇ COUNTY
TAXABLE INDUSTRIAL DEVELOPMENT REVENUE BOND (CARBO CERAMICS INC. PROJECT),
SERIES 2003, AS PROVIDED IN A DEED TO SECURE DEBT, ASSIGNMENT OF RENTS AND
LEASES AND SECURITY AGREEMENT, DATED OF EVEN DATE HEREWITH, FROM THE DEVELOPMENT
AUTHORITY OF ▇▇▇▇▇▇▇▇▇ COUNTY, AS GRANTOR, TO CARBO CERAMICS INC., AS HOLDER.
LEASE AGREEMENT
TABLE OF CONTENTS
(This Table of Contents is not a part of the Lease
Agreement and is only for convenience of reference.)
PAGE
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ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION......................................................... 3
Section 1.1. Definitions........................................................................................... 3
Section 1.2. Construction Of Certain Terms......................................................................... 12
Section 1.3. Table of Contents; Titles and Headings................................................................ 13
Section 1.4. Contents of Certificates or Opinions.................................................................. 13
ARTICLE II REPRESENTATIONS AND UNDERTAKINGS............................................................................... 13
Section 2.1. Representations by the Issuer......................................................................... 13
Section 2.2. Representations by the Company........................................................................ 15
ARTICLE III LEASING CLAUSE; SECURITY; TITLE............................................................................... 16
Section 3.1. Lease of the Project.................................................................................. 16
Section 3.2. Security for Payments Under the Bond.................................................................. 16
Section 3.3. Title to Components of the Project.................................................................... 17
Section 3.4. Warranties and Covenants as to Title.................................................................. 17
ARTICLE IV COMPLETION OF THE PROJECT; ISSUANCE OF THE BOND; FUNDS........................................................ 17
Section 4.1. Agreement to Complete the Project..................................................................... 17
Section 4.2. Funding of Project Costs.............................................................................. 18
Section 4.3. Use of Amounts in the Project Fund.................................................................... 19
Section 4.4. Disbursements from the Project Fund................................................................... 19
Section 4.5. Obligation of the Parties to Cooperate in Furnishing
Documents; Reliance of the Custodian................................................................ 21
Section 4.6. Establishment of Completion Date...................................................................... 21
Section 4.7. Authorized Company and Issuer Representatives and Successors.......................................... 21
Section 4.8. Enforcement of Remedies Against Contractors, Subcontractors,
Suppliers, Fabricators and Their Sureties.................................................................. 21
ARTICLE V EFFECTIVE DATE OF THIS LEASE; DURATION OF LEASE TERM; RENTAL
PROVISIONS; NATURE OF OBLIGATIONS OF COMPANY....................................................... 21
Section 5.1. Effective Date of this Lease; Duration of Lease Term.................................................. 22
Section 5.2. Delivery and Acceptance of Possession; Use............................................................ 22
Section 5.3. Rents and Other Amounts Payable....................................................................... 22
Section 5.4. Place of Rental Payments.............................................................................. 23
Section 5.5. Nature of Obligations of Company Hereunder............................................................ 23
ARTICLE VI MAINTENANCE, TAXES, INSURANCE AND EMINENT DOMAIN............................................................... 24
Section 6.1. Maintenance of Project................................................................................ 24
Section 6.2. Removal of Leased Equipment........................................................................... 25
Section 6.3. Taxes, Other Governmental Charges, and Utility Charges................................................ 25
Section 6.4. Insurance............................................................................................. 26
Section 6.5. Application of Net Proceeds of Insurance.............................................................. 26
Section 6.6. Advances by the Issuer or the Holder.................................................................. 26
Section 6.7. Eminent Domain........................................................................................ 27
ARTICLE VII DAMAGE, DESTRUCTION, AND CONDEMNATION......................................................................... 27
Section 7.1. Election to Repair, Restore or Replace................................................................ 27
Section 7.2. Election Not to Repair, Restore or Replace............................................................ 28
ARTICLE VIII ADDITIONAL COVENANTS; ADDITIONAL BONDS....................................................................... 28
Section 8.1. No Warranty of Condition or Suitability by the Issuer................................................. 28
Section 8.2. Access to Project and Records......................................................................... 28
Section 8.3. Company to Maintain its Existence and Qualification; Conditions Under Which Exceptions Permitted...... 29
Section 8.4. Operation of the Project.............................................................................. 29
Section 8.5. Indemnity............................................................................................. 29
Section 8.6. Licenses and Permits.................................................................................. 30
Section 8.7. Compliance with Laws.................................................................................. 30
ARTICLE IX ASSIGNMENT, SUBLEASING, ENCUMBERING, AND SELLING; REDEMPTION; RENT PREPAYMENTS AND ABATEMENT; INSTALLATION
OF COMPANY'S OWN MACHINERY AND EQUIPMENT....................................................................... 31
Section 9.1. Assignment and Subleasing............................................................................. 31
Section 9.2. Restrictions on Sale, Encumbrance, or Conveyance of the Project by the Issuer......................... 32
Section 9.3. Restrictions on Encumbrance by the Company............................................................ 32
Section 9.4. Redemption of Bond.................................................................................... 32
Section 9.5. Prepayment of Basic Rent.............................................................................. 33
Section 9.6. Company's Use of the Project.......................................................................... 33
Section 9.7. Installation of Company's Own Machinery and Leased Equipment.......................................... 33
Section 9.8. Reference to the Bond Ineffective After the Bond is Paid.............................................. 33
ARTICLE X EVENTS OF DEFAULT AND REMEDIES.................................................................................. 33
Section 10.1. Events of Default Defined............................................................................ 33
Section 10.2. Remedies on Default.................................................................................. 34
Section 10.3. Remedies Not Exclusive............................................................................... 35
Section 10.4. Legal Fees and Expenses.............................................................................. 35
Section 10.5. Waiver of Events of Default.......................................................................... 36
ARTICLE XI OPTION IN FAVOR OF COMPANY..................................................................................... 36
Section 11.1. Option to Terminate Lease............................................................................ 36
Section 11.2. Option to Purchase................................................................................... 36
Section 11.3. No Obligation to Exercise Options.................................................................... 36
Section 11.4. Conveyance on Exercise of Option to Purchase......................................................... 37
Section 11.5. Public Purpose of Option to Purchase................................................................. 37
Section 11.6. Position of Option................................................................................... 37
ARTICLE XII MISCELLANEOUS................................................................................................. 37
Section 12.1. Notices.............................................................................................. 37
Section 12.2. Recording............................................................................................ 38
Section 12.3. Construction and Binding Effect...................................................................... 38
Section 12.4. Severability......................................................................................... 38
Section 12.5. Immunity of Members, Officers, and Employees of Issuer............................................... 38
Section 12.6. Amendments, Changes, and Modifications............................................................... 38
Section 12.7. Execution of Counterparts............................................................................ 39
Section 12.8. Law Governing Lease.................................................................................. 39
Section 12.9. Covenants Run with Project........................................................................... 39
Section 12.10. Subordination to Security Document.................................................................. 39
Section 12.11. Net Lease........................................................................................... 39
Section 12.12. Surrender of Project................................................................................ 39
Section 12.13. Immunity of Directors, Officers, and Employees of Company........................................... 39
Section 12.14. Payments Due on Other than Business Days............................................................ 40
EXHIBIT A - DESCRIPTION OF THE LEASED LAND
EXHIBIT B - DESCRIPTION OF LEASED IMPROVEMENTS
EXHIBIT C - DESCRIPTION OF THE LEASED EQUIPMENT
EXHIBIT D - FORM OF REQUISITION FOR PAYMENT FROM GRANT PROCEEDS
LEASE AGREEMENT
STATE OF GEORGIA )
)
▇▇▇▇▇▇▇▇▇ COUNTY )
This LEASE AGREEMENT (this "Lease"), dated for purposes of reference as
of November 1, 2003, by and between the DEVELOPMENT AUTHORITY OF ▇▇▇▇▇▇▇▇▇
COUNTY (the "Issuer"), a public body corporate and politic and public
corporation created and existing under the laws of the State of Georgia, party
of the first part, and CARBO CERAMICS INC. (the "Company"), a corporation
organized and existing under the laws of the State of Delaware, party of the
second part;
W I T N E S S E T H:
WHEREAS, the Development Authority of ▇▇▇▇▇▇▇▇▇ County (the "Issuer"),
is a public body corporate and politic and a public corporation duly created by
the Development Authorities Law, O.C.G.A. Section 36-62-1, et seq. (the "Act")
and activated by resolution of the Board of Commissioners of ▇▇▇▇▇▇▇▇▇ County;
and
WHEREAS, the Act provides that the Issuer is created for the public
purpose, among other purposes, of promoting industry, trade, commerce and
employment opportunities within ▇▇▇▇▇▇▇▇▇ County (the "County") and is
authorized by the Act to issue its revenue bonds to finance "projects" (as
defined in the Act) to be located in the County; and the Issuer's revenue bonds
are to be issued and validated under and in accordance with the applicable
provisions of the Revenue Bond Law, O.C.G.A. Section 36-82-61, et seq.; and
WHEREAS, pursuant to a Memorandum of Understanding executed in 1997
(the "1997 MOU") and a Lease Agreement executed in 1997 (the "1997 Lease") the
Issuer has acquired from CARBO Ceramics Inc., a Delaware corporation (the
"Company") and is leasing back to the Company a ceramic proppant manufacturing
facility (the "Existing Facility") in the County; and
WHEREAS, the Issuer has been informed by the Company that: (a) the
Company desires that the Issuer issue the Issuer's Taxable Industrial
Development Revenue Bond (CARBO Ceramics Inc. Project), Series ▇▇▇▇ (▇▇▇ "▇▇▇▇")
to reimburse the Company for its cost of the Existing Facility and to finance
the expansion, renovation and up-grade thereof (the "Upgrades") and, if the
Company elects to build and equip the same in the County, to finance the cost of
acquiring, constructing and equipping either a third production line at the site
of the Existing Facility (the "Line 3 Expansion") or an additional ceramic
proppant manufacturing facility in the County (the "New Plant")[the Existing
Facility and the Upgrades, the Line 3 Plant and the New Plant, as the same may
exist from time to time are herein called the "Project"]; (b) the Company has
estimated that the reimbursement of costs of the Existing Facility, the cost of
planning, acquisition, construction, installation and carrying out of the
Upgrade, the cost of planning, acquisition, construction, installation and
carrying out of the Line 3 Expansion or New Plant, the cost of issuance of the
Bonds and related costs permitted by the Act (collectively called "Project
Costs") may be up to $170,000,000 (hereinafter called the "Maximum Bond
Amount"); (c) the
Existing Facility is providing at least 35 jobs, the Line 3 Expansion, if
constructed and equipped, is expected to provide 16 additional jobs and the New
Plant, if acquired and constructed and equipped, is expected to provide at least
35 additional jobs, and hence the Project will expand industry in the County,
will retain the existing jobs and will, if either the Line 3 Expansion is built
or the New Plant is built, create new jobs in the County, and will otherwise
have a favorable impact upon the economy of the County; and (d) in addition to
the above-referenced Bond, the Issuer and the Company contemplate that proceeds
from State and federal grants may be funding sources for the Project or related
public infrastructure and that other incentives described in the Amended and
Restated Memorandum of Understanding (as defined herein) may be made available
for the Project; and
WHEREAS, after careful study and investigation of the nature of the
Project, the Issuer has determined that the Project will provide employment
opportunities in the County; thus the Issuer hereby determines that the Project
will develop and promote trade, commerce, industry and employment opportunities
for the public good and the general welfare and will promote the general welfare
of the State of Georgia and that the Project and the issuance of the Issuer's
revenue bond to finance the cost thereof will be in the public interest of the
inhabitants of the County and of the State and will be in furtherance of the
public purposes for which the Issuer was created and is existing, as provided in
the Act; and
WHEREAS, under the Act, the Issuer may issue its revenue bond to pay
costs of planning, acquiring, constructing, equipping and carrying out the
Project; and
WHEREAS, the Issuer has found and determined that the Project is a
"project" (as defined in the Act), and that the Project and the financing
thereof is economically feasible; and
WHEREAS, the Issuer further found and determined that the economic
benefits that will inure to the County and its residents from the Project and
the operation thereof by the Company and the payments to be made by the Company
under the Lease and related options contained therein will be equal to or
greater in value than the benefits to be derived by the Company from the Lease,
the related options and the proceeds of grants and, therefore, the issuance of
the Bond and the use of grant proceeds to finance the cost thereof, and the
leasing of the Project to the Company and related options involves no gratuity
to the Company that is prohibited by the Constitution of the State of Georgia of
1983; and
WHEREAS, pursuant to a resolution (the "Bond Resolution") and the
Security Document (identified herein), the Issuer is pledging the Pledged
Security (as such term is defined herein) to the payment of the Bond.
NOW, THEREFORE, in consideration of the respective representations and
agreements hereinafter contained, the parties hereto agree as follows, provided
that, in the performance of the agreements of the Issuer herein contained, any
obligation it may thereby incur for the payment of money shall not constitute a
general obligation of the Issuer but shall be payable solely out of the Pledged
Security and, to the extent available, the Qualified Funds, and the Bond shall
not constitute an indebtedness or general obligation of the State of Georgia,
the County, or any other agency or political subdivision of the State of
Georgia, within the meaning of any constitutional or statutory provision
whatsoever.
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 1.1. DEFINITIONS. Certain capitalized words and terms used in
this Lease are defined in the text hereof or in the Bond Resolution (defined
below). In addition to the words and terms defined elsewhere herein and in the
Bond Resolution, the following words and terms are defined terms under this
Lease:
"ACT" means the Development Authorities Law, O.C.G.A. Section 36-62-1,
et seq.
"ADDITIONAL RENT" means the amounts payable by the Company, described
in Section 5.3(b) of this Lease.
"ADDITIONS OR ALTERATIONS" means modifications, improvements,
alterations, additions, enlargements, or expansions in, on or to the Project.
"ADVANCE" means an amount paid (or constructively paid) by the Holder
to the Custodian of the Project Fund for the account of the Issuer pursuant to
the Bond Purchase Loan Agreement, to be applied against Qualified Project Costs
pursuant to the submission by the Company, as agent of the Issuer, of an Advance
Request under the Project Documents.
"ADVANCE REQUEST" and "REQUEST FOR ADVANCE" means a written submission
by the Company, as agent of the Issuer, to the Holder requesting an Advance
under the Bond Purchase Loan Agreement.
"AFFILIATE" means a Person which is controlled by the Company or its
corporate successor, which controls the Company or its successor or which is
under common control with the Company or its successor (direct or indirect
ownership of more than fifty percent (50%) of the voting power constituting
"control" of a Person for such purpose).
"AMENDED AND RESTATED MEMORANDUM OF UNDERSTANDING" means the Amended
and Restated Memorandum of Understanding, to be dated as of the Document Date,
among the Company, the Board of Commissioners for ▇▇▇▇▇▇▇▇▇ County, the Issuer,
the ▇▇▇▇▇▇▇▇▇ County Board of Education , and the ▇▇▇▇▇▇▇▇▇ County Board of Tax
Assessors, in the form to be agreed to by such parties and attached to the Bond
Resolution.
"ARCHITECT/ENGINEER" means any architect/engineer engaged by the
Company or any contractor or vendor in connection with any construction or
installation relating to the Project.
"AUTHORIZED COMPANY REPRESENTATIVE" means any person at the time
designated to act on behalf of the Company by written certificate furnished to
the Issuer and the Custodian, containing the specimen signature of such person
and signed on behalf of the Company by an officer of the Company; more than one
person may be designated as an Authorized Company Representative.
"AUTHORIZED ISSUER REPRESENTATIVE" means any person at the time
designated to act on behalf of the Issuer by written certificate furnished to
the Company and the Custodian, containing the specimen signature of such person
and signed on behalf of the Issuer by the
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Chairman, or other officer of the Issuer; more than one person may be designated
as an Authorized Issuer Representative.
"BASIC RENT" means the rent payable by the Company pursuant to Section
5.3(a) of this Lease.
"BOND" means the Issuer's Taxable Industrial Development Revenue Bond
(CARBO Ceramics Inc. Project), Series 2003.
"BOND COUNSEL" means a lawyer or firm containing lawyers who are
experienced in rendering opinions as to the validity of bonds issued by
governmental bodies in the State.
"BOND PURCHASE LOAN AGREEMENT" means the Bond Purchase Loan Agreement,
dated or to be dated as of the Document Date, among the Issuer, the Company and
the Purchaser, under which the Bond is to be issued to the Purchaser.
"BOND RESOLUTION" means the resolution, adopted by the Issuer, as it
may hereafter be amended in accordance with Article IX thereof, providing the
terms and provisions under which the Bond will be issued and providing for the
Pledged Security to be pledged as security for the payment of the Debt Service
on the Bond pursuant to the Security Document; the term "Bond Resolution" shall
include any resolution supplemental or amendatory thereto.
"BOND SECURITY" means the Bond Resolution, the Financing Documents and
the Pledged Security.
"BUSINESS DAY" means a day which is not a Saturday, Sunday, a legal
holiday, or any other day on which banking institutions are authorized to be
closed in the State.
"CODE" means the Internal Revenue Code of 1986, as amended, as
applicable to the Bond, together with any federal Income Tax Regulations that
are applicable to the Bond.
"COMMITMENT" means, when used with reference to the Bond and the Bond
Purchase Loan Agreement, the sum of $170,000,000.
"COMPANY" means CARBO Ceramics Inc., a Delaware corporation, and any
permitted successor lessee under this Lease.
"COMPANY DOCUMENTS" means this Lease, the Amended and Restated
Memorandum of Understanding, the Agency Agreement, the Bond Purchase Loan
Agreement, and the Security Document.
"COMPLETION DATE" means the date on which the Project is substantially
completed.
"CORPORATE SUCCESSOR" and "CORPORATE SUCCESSOR" mean any corporation,
partnership, or limited liability company into which the Company may merge, any
corporation, partnership, or limited liability company resulting from a
consolidation to which the Company is a party or any corporation, partnership,
or limited liability company to which the Company transfers its interest under
this Lease, and also includes any Corporate Successor (as above defined, but
4
substituting "corporate successor" for "Company") of a Corporate Successor.
"COUNTY" means ▇▇▇▇▇▇▇▇▇ County, Georgia.
"CUSTODIAN" means, as to the Grant Proceeds Fund, the Issuer, and as to
the Sinking Fund and the Project Fund, means the Company, or any successor
Custodian of the Sinking Fund and Project Fund which is to be designated
pursuant to Section 5.5 of the Bond Resolution.
"DEBT SERVICE" and "DEBT SERVICE" means, as to the Bond, the principal
of, interest on and redemption price of the Bond.
"DEBT SERVICE PAYMENT DATE" means, as to the Bond, any Principal
Payment Date or Interest Payment Date and any date on which the Bond is to be
redeemed, in whole or in part, and includes any special Debt Service Payment
Date established as provided in Section 2.3 of the Bond Resolution.
"DEFAULT INTEREST RATE" means when used with respect to interest on
delinquent payments of Additional Rent, 8.75% per annum and when used with
respect to the Basic Rent applicable to the Bond, the Default Rate provided for
in the Bond.
"DOCUMENT DATE" means November 1, 2003.
"EIP GRANT" means any EIP Grant to the city or County with respect to
the Project which, if received by the city or County is to be made available by
the city or County to the Issuer to pay EIP Project Costs.
"EIP INTERGOVERNMENTAL CONTRACT" means an intergovernmental contract
between the County and the Issuer relating to the EIP Grant.
"EIP PROJECT COSTS" means those Costs of the Project that may, pursuant
to the terms of the EIP Grant and any EIP Intergovernmental Contract made with
respect to the Project, be paid with proceeds of the EIP Grant.
"ENVIRONMENTAL LAWS" means all federal, state, and local laws, rules,
regulations, ordinances, programs, permits, guidance, orders, and consent
decrees relating to health, safety, and environmental matters, including, but
not limited to, the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, the Toxic Substances Control Act, as amended,
the Clean Water Act, as amended, the Clean Air Act, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, state and federal
superlien and environmental cleanup programs and laws, and U.S. Department of
Transportation regulations.
"LEASED EQUIPMENT" means those items of machinery, equipment and
related fixtures and personal property necessary or desirable for the Project as
a whole, whether or not for new operations or new products, and includes new
structures which are an integral part of the manufacturing process and which,
under normal practice, are replaced contemporaneously with the equipment which
they house, support or serve. The Leased Equipment is more fully described on
Exhibit A hereto. The Company will select the Leased Equipment, and the cost of
5
the Leased Equipment will be paid with Qualified Funds.
"EVENT OF DEFAULT" means, when used with respect to this Lease, the
events specified in Section 10.1 of this Lease.
"EXISTING FACILITY" means the Company's existing ceramic proppant
manufacturing facility that is located on the Initial Project Land.
"EXPANSION" means the expansion to the Existing Facility currently in
progress, referred to by the Company as the "line 3 expansion"
"FINANCING DOCUMENTS" means the Exhibits B through G of the Bond
Resolution, including this Lease, the Agency Agreement, the Amended and Restated
Memorandum of Understanding, the Bond Purchase Loan Agreement, and the Security
Document.
"GOVERNING BODY" means, as to the Issuer, the members of the Issuer
acting as its board of directors.
"GOVERNMENT OBLIGATIONS" means direct general obligations of the United
States of America (including obligations issued or held in book-entry form on
the books of the Department of Treasury of the United States of America) or
obligations the payment of the principal of and interest on which when due are
fully and unconditionally guaranteed by the United States of America.
"GRANT" means any EIP Grant, any ▇▇▇▇ ▇▇▇▇▇ and any OneGeorgia Grant.
"GRANT PROCEEDS FUND" means the Grant Proceeds Fund created by the Bond
Resolution.
"HOLDER" means the Person in whose name the Bond is registered on the
registration books of the Issuer.
"INITIAL PROJECT LAND" means the land described in Exhibit A hereto.
"INTEREST PAYMENT DATE" means, as to the Bond, each date on which any
interest is payable on the Bond.
"ISSUER" means the Development Authority of ▇▇▇▇▇▇▇▇▇ County.
"ISSUER DOCUMENTS" means this Lease, the Amended and Restated
Memorandum of Understanding, the Agency Agreement, the Bond Purchase Loan
Agreement, and the Security Document.
"LEASE" means this Lease Agreement, as the same may be amended from
time to time.
"LEASED EQUIPMENT" means all trade fixtures, machinery, equipment and
tangible personal property as it shall exist from time to time and conveyed by
the Company to the Issuer
6
pursuant to the Bond Purchase Loan Agreement or in consideration of proceeds of
any grant, and replacements and substitutions therefor.
"LEASED IMPROVEMENTS" mean the improvements described in Exhibit B to
this Lease.
"LEASED LAND" means the parcel(s) of land described in Exhibit A to
this Lease, if and when the New Plant Site is conveyed to the Issuer, Exhibit A
shall be amended to include the description thereof.
"LINE 3 EXPANSION" means a third production line which the Company may
elect to construct and equip on the Initial Project Land, which if constructed
and equipped, will become a part of the Project.
"MATURITY DATE" means December 1, 2016, being the date of final
maturity of the Bond.
"MAXIMUM PRINCIPAL AMOUNT" means $170,000,000.
"NET PROCEEDS" means, when used with respect to any proceeds of
casualty insurance received with respect to any damage or destruction of the
Project or any eminent domain award (or proceeds of sale in lieu of a taking by
eminent domain) or with respect to any other recovery on a contractual claim or
claim for damage to or for taking of the Project, or any part thereof, the gross
proceeds from such insurance, eminent domain award, sale or recovery with
respect to which that term is used remaining after payment of all costs and
expenses (including attorneys' fees and reimbursable expenses) incurred in the
collection of such gross proceeds.
"NEW PLANT" means a new ceramic proppant manufacturing plant which the
Company may elect to locate in the County, which if and when acquired by the
Issuer, constructed and equipped, is to be a part of the Project.
"ONEGEORGIA GRANT" means any one or more OneGeorgia Authority EDGE Fund
grants made with respect to the Project.
"ONEGEORGIA PROJECT COSTS" means those Costs of the Project that may,
pursuant to the terms of any OneGeorgia Grant made with respect to the Project,
be paid with proceeds of the OneGeorgia Grant
"OUTSTANDING" means a Bond, or portion thereof, which has been duly
delivered by the Issuer under the Bond Resolution, except:
(a) a Bond, or portion thereof, theretofore surrendered
and canceled or required to be canceled by the Issuer,
(b) a Bond, or portion thereof, which is deemed to have
been paid in accordance with Article XI of the Bond Resolution, and
(c) a Bond, or portion thereof, in substitution for which
another Bond has been delivered under Section 2.7 of the Bond
Resolution.
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If the Bond, or any portion thereof, has been defeased pursuant to Article XI of
the Bond Resolution, the Bond or such portion shall not be deemed to be
Outstanding within the meaning of this provision.
"PAYING AGENT" means the Company, acting as paying agent for the Issuer
with respect to the payment of Debt Service on the Bond.
"PERMITTED ENCUMBRANCES" means all encumbrances on any portion of the
Project on the date the Issuer acquires title thereto, encumbrances to which the
Company has consented or which the Company has granted or shall grant, and
vendors, mechanics' and materialmen's liens arising from the acquisition,
construction and equipping of Project or the repair, replacement or renovation
of the Project, or any part thereof, provided that any such vendors', mechanics'
and materialmen's liens shall be discharged prior to any foreclosure thereof.
"PERMITTED INVESTMENTS" means any of the following classes of
securities, to the extent to which investment in such securities is permitted
under State law:
(1) the local government investment pool created in Chapter 83 of
Title 36 of the Official Code of Georgia Annotated;
(2) bonds or obligations of the Issuer or bonds or obligations of
the State or other counties, municipal corporations, and political subdivisions
of the State;
(3) Government Obligations;
(4) obligations of agencies of the United States government issued
by the Federal Land Bank, the Federal Home Loan Bank, the Federal Intermediate
Credit Bank, or the Central Bank for Cooperatives;
(5) bonds or other obligations issued by any public housing agency
or municipal corporation in the United States, which such bonds or obligations
are fully secured as to the payment of both principal and interest by a pledge
of annual contributions under an annual contributions contract or contracts with
the United States government, or project notes issued by any public housing
agency, urban renewal agency, or municipal corporation in the United States
which are fully secured as to payment of both principal and interest by a
requisition, loan, or payment agreement with the United States government;
(6) securities of or other interests in any no-load, open-end
management type investment company or investment trust registered under the
Investment Company Act of 1940, as from time to time amended, or any common
trust fund maintained by any bank or trust company which holds such proceeds as
trustee or by an Affiliate thereof so long as:
(A) the portfolio of such investment company or
investment trust or common trust fund is limited to the obligations
described in clause (3) above and repurchase agreements fully
collateralized by any such obligations;
(B) such investment company or investment trust or common
trust fund takes delivery of such collateral either directly or through
an authorized custodian;
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(C) such investment company or investment trust or common
trust fund is managed so as to maintain its shares at a constant net
asset value; and
(D) securities of or other interests in such investment
company or investment trust or common trust fund are purchased and
redeemed only through the use of national or state banks having
corporate trust powers and located within the State; and
(7) certificates of deposit of national or state banks located
within the State which have deposits insured by the Federal Deposit Insurance
Corporation and certificates of deposit of federal savings and loan associations
and state building and loan or savings and loan associations located within the
State which have deposits insured by the Savings Association Insurance Fund of
the Federal Deposit Insurance Corporation or the Georgia Credit Union Deposit
Insurance Corporation, including the certificates of deposit of any bank,
savings and loan association, or building and loan association acting as
depository, custodian, or trustee for any such proceeds of the Bond.
The portion of the certificates of deposit described in clause (7)
above in excess of the amount insured by the Federal Deposit Insurance
Corporation, the Savings Association Insurance Fund of the Federal Deposit
Insurance Corporation, or the Georgia Credit Union Deposit Insurance
Corporation, if any, must be secured by deposit, with the Federal Reserve Bank
of Atlanta, Georgia, or with any national or state bank or federal savings and
loan association or state building and loan or savings and loan association
located within the State, of one or more of the following securities in an
aggregate principal amount equal at least to the amount of such excess: direct
and general obligations of the State or of any county or municipal corporation
in the State, Government Obligations described in clause (3) above, obligations
of the agencies of the United States government described in clause (4) above,
or bonds, obligations, or project notes of public housing agencies, urban
renewal agencies, or municipalities described in clause (5) above.
"PERSON" means a natural person, a public body and any form of business
organization or other legal entity.
"PLANS AND SPECIFICATIONS" means the final plans and specifications for
the Leased Improvements and further defined, prepared as provided in Section
4.2(e), below.
"PLEDGED SECURITY" means and includes, among other things, (a) the
Project, (b) the rights of the Issuer in and under this Lease (except for the
Unassigned Rights, and subject to the express provisions hereof), (c) the Basic
Rent, (d) the Net Proceeds of casualty insurance received on account of damage
to or destruction of the Leased Improvements and Leased Equipment paid for out
of Bond proceeds or any part thereof, (e) the Net Proceeds received on account
of a taking of the Project or any part thereof paid for out of Bond proceeds, or
any portion thereof, under power of eminent domain and the Net Proceeds of any
sale of the Project or any part thereof, (f) any amounts in the account of the
Project Fund (subject to the rights of the Issuer and the Company to apply
amounts in such account as provided in the Financing Documents), and (g) the
proceeds of the foregoing, all as to be more particularly described in the
Security Document.
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"PRINCIPAL BALANCE" means, as to the Bond as of any particular time:
(i) the total amount drawn down by the Issuer under the Bond Purchase Loan
Agreement, reduced by (ii) any principal amounts thereof which have theretofore
been paid.
"PRINCIPAL PAYMENT DATE" means, as to the Bond, the date on which any
principal thereof is due.
"PROJECT" means the Leased Land, the Leased Improvements and the Leased
Equipment as the same shall exist from time to time and initially is to include
the Existing Facility and the Expansion, and may ultimately include the New
Plant.
"PROJECT BUDGET" means, in the aggregate, Project Costs amounting to no
more than $170,000,000, plus any investment income earned on the Project Fund.
"PROJECT COSTS" means:
(a) the book value of the Existing Facility;
(b) the cost of the preparation of Plans and Specifications and
any changes thereto, costs of any preliminary studies and environmental surveys,
and any cost related to the planning of the Project or any aspect thereof;
(c) the cost of acquiring, constructing and installing the
components of the Project not in existence on December 31, 2002;
(d) payment of expenses incurred in seeking to enforce any remedy
against any vendor, supplier, fabricator, contractor or subcontractor in respect
of any default under a contract relating to the Leased Improvements;
(e) payment of the fees or out-of-pocket expenses of the Issuer
relating to the Project and the financing thereof, including, but not limited to
issuance costs, permits fees, surveys, costs of recording and filing documents,
utility connection charges and other out-of-pocket expenses, if any, of those
providing services with respect to the Project;
(f) payment of any other costs and expenses relating to the
Project permitted to be paid by the Issuer under the Act;
(g) amounts need to retire or pay debt service on an interim loan
incurred to make advances and payments for any of the items set forth in (a)
through (f) above; and
(h) payment to the Issuer or to the Company or to its Affiliates
of such amounts, if any, as shall be necessary to reimburse the Issuer, the
Company or its Affiliates in full for all advances and payments made by it for
any of the items set forth in (a) through (g) above.
"PROJECT DOCUMENTS" means any and all documents pertaining to the
acquisition, construction and installation of the Project.
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"PROJECT FUND" means the Development Authority of ▇▇▇▇▇▇▇▇▇ County
Taxable Industrial Development Revenue Bond (CARBO Ceramics Inc.
Project)--Project Fund" created by the resolution of the Issuer approving this
Lease, as supplemented by the Bond Resolution.
"PURCHASER" means the Company, being the initial purchaser of the Bond.
"QUALIFIED FUNDS" means funds derived from Grants and from the Bond
together with interest earned thereon while in the Project Fund.
"QUALIFIED PROJECT COSTS" means (i) as to the proceeds of any EIP
Grant, only EIP Project Costs, (ii) as to proceeds of any OneGeorgia Grant, only
OneGeorgia Project Costs and (iii) as to any ▇▇▇▇ ▇▇▇▇▇, only ▇▇▇▇ Project Costs
and (iv) as to the Bond, any Project Costs.
"▇▇▇▇ ▇▇▇▇▇" means any ▇▇▇▇ ▇▇▇▇▇ to the Issuer with respect to the
Project, and also includes any local assistance grant or other form of State
financial assistance to the Issuer intended to be used in connection with the
Project for purposes similar to those of the ▇▇▇▇ program.
"▇▇▇▇ PROJECT COSTS" means those Costs of the Project that may,
pursuant to the terms of any ▇▇▇▇ ▇▇▇▇▇ made with respect to the Project, be
paid with proceeds of such ▇▇▇▇ ▇▇▇▇▇.
"REDEMPTION DATE" or "REDEMPTION DATE" means, as to the Bond, any date
on which the Bond is to be prepaid and redeemed, in whole or in part, as
established by the notice of redemption relating thereto.
"REGISTER," means the registration books for the Bond maintained and to
be maintained by the Registrar.
"REGISTRAR" means the Custodian, acting on behalf of the Issuer, as
registrar for the Bond.
"REGULAR RECORD DATE" means, with respect to any Debt Service Payment
Date, the 15th day of the calendar month next preceding such Debt Service
Payment Date.
"RENT COMMENCEMENT DATE" means the date the Bond is issued.
"SECURITY DOCUMENT" means the instrument entitled "Deed to Secure
Debt,Assignment of Rents and Leases and Security Agreement" from the Issuer to
the Purchaser, its successors and assigns, pledging the Pledged Security as
security for the Bond.
"SPECIAL RECORD DATE" means, as to the Bond, the date established
pursuant to Section 2.3 of the Bond Resolution for the payment of delinquent
Debt Service on the Bond and deficiency interest thereon.
"STATE" means the State of Georgia.
"STATED INTEREST RATE" shall have the meaning set forth in Section 2.3
of the Bond Resolution.
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"TAXABLE" means, with reference to the Bond or interest thereon, that
the interest on the Bond is not Tax-Exempt.
"TAX-EXEMPT" means, with reference to a bond or interest thereon, that
the interest on the Bond is not includable in the gross income of the Holder for
federal income tax purposes, except during such period as the Bond is held by a
"substantial user" of the Project or a "related person" (as such terms are used
in the Code).
"TERM" means the initial Term of this Lease, as and if extended, all as
provided for in Section 5.1 hereof.
"UNASSIGNED RIGHTS" means all of the rights of the Issuer (i) to
receive reimbursements and payments pursuant to Sections 5.3(b)(i), 6.6, and
10.4 hereof, (ii) to receive notices pursuant to Section 12.1 hereof, under or
pursuant to any provision of this Lease or the Bond Resolution (iii) that are
certain consensual and enforcement rights pursuant to Sections 6.3, 6.4, 8.7 and
10.2 (as provided therein) hereof, (iv) to be indemnified as provided in Section
8.5 of this Lease, and (iv) to receive any special payment of Additional Rent
that may be due pursuant to Section 5.3(b)(i) and (5.3(b)(iii), below, or
pursuant to any other provision hereof; and (iii) to receive any payments due to
it pursuant to Section 11.2, below, that are not stated therein as to be
assigned to the Holder.
"UPGRADES" means additional equipment to be used at the Existing
Facility and may include a new sanitary sewer and waste treatment system.
SECTION 1.2. CONSTRUCTION OF CERTAIN TERMS. For all purposes of this
Lease, except as otherwise expressly provided or unless the context otherwise
requires, the following rules of construction shall apply:
(1) the use of the masculine, feminine, or neuter gender is for
convenience only and shall be deemed and construed to include
correlative words of the masculine, feminine, or neuter
gender, as appropriate;
(2) "this Lease" means this instrument as originally executed or
as it may from time to time be supplemented or amended by one
or more leases supplemental to this Lease and entered into
pursuant to the applicable provisions hereof;
(3) all references in this instrument to designated "Articles,"
"Sections," and other subdivisions are to the designated
articles, sections, and other subdivisions of this instrument;
(4) the words "herein, "hereof," and "hereunder" and other words
of similar import refer to this Lease as a whole and not to
any particular article, section, or other subdivision;
(5) the terms defined in this Article shall have the meanings
assigned to them in this Article and include the plural as
well as the singular; and
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(6) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally
accepted accounting principles as promulgated by the American
Institute of Certified Public Accountants, on and as of the
date of this Lease.
SECTION 1.3. TABLE OF CONTENTS; TITLES AND HEADINGS. The table of
contents, the titles of the articles, and the headings of the sections of this
Lease are solely for convenience of reference, are not a part of this Lease, and
shall not be deemed to affect the meaning, construction, or effect of any of its
provisions.
SECTION 1.4. CONTENTS OF CERTIFICATES OR OPINIONS. Every certificate or
written opinion delivered by any director or official of the Issuer or the
Company with respect to the compliance by the Issuer or the Company with any
condition or covenant provided for in this Lease shall be delivered only after
the person or persons signing the same has made such examination or
investigation as is necessary to enable him, her or them to express an informed
opinion as to whether or not such covenant or condition has been complied with.
Any such certificate or opinion made or given by any director or official of the
Issuer or the Company, insofar as it relates to legal or accounting matters, may
be made or given in reliance upon an opinion of counsel or a letter of such
accountant. Any such opinion of counsel or accountant's letter may be based
(insofar as it relates to factual matters with respect to information which is
in the possession of a director or an official of the Issuer, the Company or any
third party) upon the certificate or opinion of, or representations, by such
director or official of the Issuer, the Company or such third party on whom such
counsel or accountant may reasonably rely, unless such counsel or such
accountant knows that the certificate or opinion or representations with respect
to the matters upon which his legal opinion or accountant's letter may be based,
as aforesaid, is erroneous or in the exercise of reasonable care should have
known that the same was erroneous. The same director or official of the Issuer,
the Company or third party, or the same counsel or accountant, as the case may
be, need not certify or opine to all of the matters required to be certified or
opined under any provision of this Lease, but different directors, officials,
counsel, or accountants may certify or opine to different matters, respectively.
ARTICLE II
REPRESENTATIONS AND UNDERTAKINGS
SECTION 2.1. REPRESENTATIONS BY THE ISSUER. The Issuer makes the
following representations and warranties as the basis for the undertakings on
its part herein contained:
(a) Creation and Authority. The Issuer is a public body corporate
and politic and a corporation duly created and validly existing under the Act.
The Issuer has all requisite power and authority under the Act: (i) to issue the
Bond, (ii) to own the Project and to lease the same to the Company, and (iii) to
enter into, perform its obligations under, and exercise its rights under the
Issuer Documents. The Issuer has found that the Project is a "project" within
the meaning of the Act that will promote the public purposes set forth in the
Act.
(b) Pending Litigation. There are no actions, suits, proceedings,
inquiries, or investigations pending or, to the knowledge of the Issuer, after
making due inquiry with respect thereto, threatened against or affecting the
Issuer in any court or by or before any governmental
13
authority or arbitration board or tribunal, which involve the possibility of
materially and adversely affecting the transactions contemplated by the Issuer
Documents or which, in any way, would adversely affect the validity or
enforceability of the Bond, the Bond Resolution, this Lease, or any of the other
Issuer Documents, nor is the Issuer aware of any facts or circumstances
presently existing which would form the basis for any such actions, suits,
proceedings, inquiries, or investigations.
(c) Issue, Sale, and Other Transactions Are Legal and Authorized.
The issue and sale of the Bond, the execution and delivery by the Issuer of the
Issuer Documents, and the adoption by the Issuer of the Bond Resolution and the
compliance by the Issuer with all of the provisions of each thereof (i) are
within the purposes, powers, and authority of the Issuer, (ii) have been or will
be done in full compliance with the provisions of the Act and have been or will
be approved by the Governing Body of the Issuer, and (iii) the Bond and the
Issuer Documents have been or will be duly authorized by all necessary action on
the part of the Issuer, have been or will be duly executed, are or will be legal
and valid and do not or will not conflict with or constitute on the part of the
Issuer a violation of or a breach of or a default under, or result in the
creation or imposition of any lien, charge, restriction, or encumbrance upon any
property of the Issuer under the provisions of, any charter instrument, bylaw,
indenture, mortgage, deed to secure debt, pledge, note, lease, loan, or
installment sale agreement, contract, or other agreement or instrument to which
the Issuer is a party or by which the Issuer or its properties are otherwise
subject or bound, or any license, judgment, decree, law, statute, order, writ,
injunction, demand, rule, or regulation of any court or governmental agency or
body having jurisdiction over the Issuer or any of its activities or properties.
(d) Governmental Consents. Neither the nature of the Issuer nor
any of its activities or properties, nor any relationship between the Issuer and
any other Person, nor any circumstance in connection with the offer, issue,
sale, or delivery of the Bond is such as to require the consent, approval,
permission, order, license, or authorization of, or the filing, registration, or
qualification with, any governmental authority on the part of the Issuer in
connection with the execution, delivery, and performance of the Issuer
Documents, the adoption of the Bond Resolution, the consummation of any
transaction therein contemplated, or the offer, issue, sale, or delivery of the
Bond, except as shall have been obtained or made and as are in full force and
effect.
(e) No Defaults. To the knowledge of the Issuer, after making due
inquiry with respect thereto, no event has occurred and no condition exists
which would constitute an Event of Default (as such term is used in the various
Issuer Documents) or which, with the lapse of time or with the giving of notice
or both, would become an Event of Default under any of the Issuer Documents. To
the knowledge of the Issuer, after making due inquiry with respect thereto, the
Issuer is not in default or violation in any material respect under the Act or
under any charter instrument, bylaw, or other agreement or instrument to which
it is a party or by which it may be bound.
(f) No Prior Pledge. The Pledged Security has not and shall not be
mortgaged, pledged, or hypothecated by the Issuer in any manner or for any
purpose or subject to any security interest by other than as security for the
payment of the Bond, as to be provided in the Security Document.
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(g) Disclosure. The representations of the Issuer contained in the
Issuer Documents and any certificate, document, written statement, or other
instrument furnished to the Company by or on behalf of the Issuer in connection
with the transactions contemplated thereby do not or will not contain any untrue
statement of a material fact relating to the Issuer and do not or will not omit
to state a material fact relating to the Issuer necessary in order to make the
statements contained herein and therein relating to the Issuer not misleading.
Nothing has come to the attention of the Issuer which would materially and
adversely affect or in the future may (so far as the Issuer can now reasonably
foresee) materially and adversely affect the construction of the Leased
Improvements or acquisition and installation of the Leased Equipment by the
Issuer or any other transactions contemplated by the Issuer Documents and the
Bond Resolution which has not been set forth in writing to the Company and the
Purchaser of the Bond or in the certificates, documents, and instruments
furnished to the and the Purchaser of the Bond by or on behalf of the Issuer
prior to the date of execution of this Lease in connection with the transactions
contemplated hereby.
(h) Compliance with Conditions Precedent to the Issuance of the
Bond. All acts, conditions, and things required to exist, happen, and be
performed precedent to and in the execution and delivery by the Issuer of the
Bond do or will exist, have happened or will happen, and have been or will be
performed in due time, form, and manner as required by law; the issuance of the
Bond, together with all other obligations of the Issuer under the Issuer
Documents, do not or will not exceed or violate any constitutional or statutory
limitation.
SECTION 2.2. REPRESENTATIONS BY THE COMPANY. The Company makes the
following representations and warranties as the basis for the undertakings on
its part herein contained:
(a) Organization and Power. The Company is a corporation duly
organized, validly existing, and in good standing under and by virtue of the
laws of the State of Delaware and is qualified to do business and is in good
standing in the State, and has all requisite power and authority to lease the
Project from the Issuer and to enter into, perform its obligations under, and
exercise its rights under the Company Documents.
(b) Pending Litigation. There are no actions, suits, proceedings,
inquiries, or investigations pending or, to the knowledge of the Company, after
making due inquiry with respect thereto, threatened against or affecting the
Company in any court or by or before any governmental authority or arbitration
board or tribunal, which in the opinion of the Company involve the possibility
of materially and adversely affecting the ability of the Company to perform its
obligations under the Company Documents or the transactions contemplated by the
Company Documents or which, in any way, in the opinion of the Company would
adversely affect the validity or enforceability of the Company Documents or any
agreement or instrument to which the Company is a party and which is used or
contemplated for use in the consummation of the transactions contemplated hereby
or thereby, nor is the Company aware of any facts or circumstances presently
existing which would form the basis for any such actions, suits, proceedings,
inquiries, or investigations.
(c) Agreements Are Legal and Authorized. The Company Documents,
the consummation of the transactions therein contemplated, and the fulfillment
of or the compliance with all of the provisions thereof (i) are within the
power, legal right, and authority of the
15
Company, (ii) have been duly authorized by all necessary and appropriate
corporate action on the part of the Company, (iii) have been or will be duly
executed and delivered on the part of the Company, (iv) are or will be legal and
valid as to the Company, and (v) will not conflict with or constitute on the
part of the Company a violation of or a breach of or a default under any charter
instrument, bylaw, indenture, mortgage, deed to secure debt, pledge, note,
lease, loan, or installment sale agreement, contract, or other agreement or
instrument to which the Company is a party or by which the Company or its
properties are otherwise subject or bound which would have a material adverse
impact on the Company's ability to perform its obligations hereunder, or any
license, law, statute, rule, regulation, judgment, order, writ, injunction,
decree, or demand of any court or governmental agency or body having
jurisdiction over the Company or any of its activities or properties.
(d) Governmental Consents. No circumstances in connection with the
execution, delivery, and performance by the Company of its obligations under the
Company Documents or the Company's participation in the offer, issue, sale, or
delivery by the Issuer of the Bond are such as to require the Company to obtain
the consent, approval, permission, order, license, or authorization of, or the
filing, registration, or qualification with, any governmental authority on the
part of the Company in connection with the Company's execution, delivery, and
performance of the Company Documents, the consummation of any transaction herein
contemplated, or the offer, issue, sale, or delivery of the Bond, except as
shall have been obtained or made and as are in full force and effect and except
as are not presently obtainable. To the knowledge of the Company, after making
due inquiry with respect thereto, the Company will be able to obtain all such
additional consents, approvals, permissions, orders, licenses, or authorizations
of governmental authorities as may be required on or prior to the date the
Company is legally required to obtain the same in connection with the
performance of its obligations under the Company Documents.
(e) No Defaults. No event has occurred and no condition exists
that would constitute an Event of Default (as such term is used in the various
Company Documents) or which, with the lapse of time or with the giving of notice
or both, would become an Event of Default thereunder.
(f) Disclosure. The representations of the Company contained in
the Company Documents and any certificate, document, written statement, or other
instrument furnished by or on behalf of the Company to the Issuer or the
Purchaser of the Bond in connection with the transactions contemplated hereby,
do not or will not contain any untrue statement of a material fact.
ARTICLE III
LEASING CLAUSE; SECURITY; TITLE
SECTION 3.1. LEASE OF THE PROJECT. The Issuer, as lessor and landlord,
hereby leases (subject to Section 3.5, below) to the Company, as lessee and
tenant, and the Company hereby leases (subject to Section 3.5, below) from the
Issuer, the Project at the rental set forth in Section 5.3 hereof and for the
Term provided for in Section 5.1 hereof, and in accordance with the provisions
of this Lease.
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SECTION 3.2. SECURITY FOR PAYMENTS UNDER THE BOND. As security for the
payment of the Bond, the Issuer has adopted or will adopt the Bond Resolution,
under the terms of which the Issuer shall execute and deliver to the Purchaser
the Security Document, in which the Issuer shall assign unto the Purchaser, its
successors and assigns, the Pledged Security, as security for, among other
things, the payment of the Bond. The Company hereby agrees that its obligations
to make all payments under this Lease shall be absolute and shall not be subject
to any defense, except payment, or to any right of set off, counterclaim, or
recoupment arising out of any breach by the Issuer of any obligation to the
Company, whether hereunder or otherwise, or arising out of any indebtedness or
liability at any time owing to the Company by the Issuer. The Company further
agrees that all payments of Basic Rent required to be made under this Lease to
the Issuer shall be paid directly by the Company to the Holder as set forth on
the Register.
SECTION 3.3. TITLE TO COMPONENTS OF THE PROJECT.
The various components of the Project shall become a part of the
Project and title therein shall vest in the Issuer at such time as Qualified
Funds are used to pay, or to reimburse the Company for, the cost thereof. Upon
the vesting of title thereto in the Issuer, such components shall be leased by
the Issuer to the Company hereunder. The Issuer disclaims any interest in any
trade fixtures or equipment installed at Leased Land that neither are paid for
with Qualified Funds nor constitute Additions, Alterations, replacements or
substitutions for Leased Equipment that was paid for with Qualified Funds. The
Issuer warrants and covenants that, except for the lease of the Project and
options herein granted to the Company, except for any mechanics and
materialmen's liens relating to the construction or installation of Leased
Improvements or Leased Equipment in accord with the Plans and Specifications and
except as provided in the Security Document, the Issuer shall not otherwise
encumber the Project or any part thereof. The Issuer covenants, that if
requested by the Company and at the expense of the Company, the Issuer shall
take all acts necessary to defend its title to the Project and will do no act to
impair such title.
SECTION 3.4. WARRANTIES AND COVENANTS AS TO TITLE. The Company will
cause any mechanics' and materialmen's liens relating to the Project to be
discharged prior to any foreclosure thereof, and take such further actions as
are necessary to cause good and merchantable title to the Project to be vested
in the Issuer (subject only to Permitted Encumbrances). The Company covenants to
do no act that will impair the title of the Issuer to the Project.
ARTICLE IV
COMPLETION OF THE PROJECT;
ISSUANCE OF THE BOND; FUNDS
SECTION 4.1. AGREEMENTS RELATING TO THE PROJECT. The Issuer is the
owner of the Initial Project Land. The Issuer has, by operation of law, acquired
title to the Improvements heretofore constructed on the Initial Project Land and
shall, by operation of law, acquire title to all additional Improvements
hereafter constructed on the Initial Project Land. The Issuer holds title to the
items of Machinery and Equipment that are now located on the Initial Project
Land and it is agreed that any items of Machinery and Equipment hereafter
located on the Initial Project Land by the Company shall become the property of
the Issuer at the time such items of Machinery and Equipment are installed on
the Initial Project Land.
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It is further agreed that if the Company elects to locate the New Plant
in the County, land that is to serve as the site thereof (the "New Plant Site")
shall be conveyed to the Development Authority and that the Development
Authority shall, by operation of law, acquire title to all Improvements
theretofore or thereafter constructed on the New Plant Site. It is further
agreed that, by operation of this instrument, without need for a separate ▇▇▇▇
of Sale, any items of Machinery and Equipment, thereafter or hereafter located
on the New Plant Site by the Company while such New Plant Site is owned by the
Development Authority, shall become the property of the Issuer at the time such
items of Machinery and Equipment are installed on the New Plant Site.
The Company shall be responsible for any construction relating to the
Project and for the acquisition and installation of all machinery and equipment
that is to become a part of the Project. The Company, in its sole discretion,
shall determine the scope of the Upgrades, and shall determine whether or not to
construct the Line 3 Expansion and the scope thereof or whether or not to
acquire, construct and equip the New Plant and the location and scope thereof.
If the New Plant is to be constructed in the County, it is expected to be
constructed on the ▇▇▇▇▇▇-▇▇▇▇ Property that is described in the Amended and
Restated Memorandum of Understanding.
If the Company elects to add the Line 3 Expansion, it shall so notify
the Issuer and the County in writing, by an "Activation Notice" that it is
committed to construct the Line 3 Expansion; such Activation Notice shall
provide a schedule for the construction and equipping of the Line 3 Expansion,
and state the estimated date it is to be placed in service. Once such Activation
Notice is given, the Company shall be obligated to construct and equip the Line
3 Expansion, provided that it may thereafter elect not to construct or to
discontinue construction of the same.
If the Company elects to construct the New Plant, it shall so notify
the Issuer and the County in writing, by an "Activation Notice," that it is
committed to construct the New Plant; such Activation Notice shall identify the
site of the New Plant, shall provide a schedule for the construction and
equipping of the New Plant, and shall state the estimated date it is to be
placed in service. Once such Activation Notice is given, CARBO shall be
obligated to construct and equip the new plant, provided that it may thereafter
elect not to construct or to discontinue construction.
SECTION 4.2. FUNDING OF PROJECT COSTS.
(a) The Issuer will issue the Bond in the Maximum Principal Amount
of $170,000,000 to pay Qualified Project Costs.
(b) The Issuer or the County, or both, may apply, but shall not be
required to apply for, state or federal Grants. If any grant proceeds are
received by the Issuer, the Issuer will deposit the amount of any Grant proceeds
received by it in the Grant Proceeds Fund (if permitted to do so by the terms of
such Grant) and use the same (if permitted to do so by the terms of such Grant)
for the payment of Qualified Project Costs. The Issuer, as Custodian of the
Grant Proceeds Fund, shall establish a separate account in Grant Proceeds Fund
for the proceeds of each Grant and shall apply the proceeds of each such Grant
to the Qualified Project Costs
18
payable from such Grant. Proceeds of any Grant that are restricted by the terms
of such Grant shall be applied only in compliance with such Grant.
(c) Any proceeds of the Bond actually paid by the Holder to the
Issuer shall be deposited in the Project Fund, and such proceeds shall be
disbursed as directed by the Company to pay or reimburse Qualified Project
Costs. If the Company is also the Holder and if Company directly pays any
qualified Project Cost it may elect, as reflected in a Request for Advance, to
(i) advance funds to the Issuer for deposit in the Project Fund and to be
reimbursed from such account or (ii) to treat the payment as a constructive
advance under the Bond Purchase Loan Agreement and as a constructive
reimbursement from the Project Fund. In such case the constructive advance shall
be reflected on the books of the Project Fund as a constructive receipt and the
constructive reimbursement shall be reflected as a constructive disbursement.
(d) The Company shall be responsible for the construction and/or
installation activities relating to the Leased Improvements, including, without
limitation, entering into an installation or a construction contract or
contracts with a third party general contractor and other third party
contractors as necessary, provided that certain installation and construction
activities will be conducted by the Company using its own labor and materials.
The Company shall also be responsible for the acquisition and installation of
items of the Leased Equipment.
SECTION 4.3. USE OF AMOUNTS IN THE PROJECT FUND. Amounts in the Project
Fund shall be used only to pay third parties for, or to reimburse the Company or
an Affiliate of the Company for, Qualified Project Costs. Grant proceeds in the
respective accounts of the Grant Proceeds Fund shall be used only to pay those
Qualified Project Costs which are permitted by the terms of the respective
Grants.
SECTION 4.4. DISBURSEMENTS FROM THE PROJECT FUND.
(a) In General. The Custodian, upon the written request of the
Company, shall use Qualified Funds to pay Qualified Project Costs. To the extent
that the proceeds of a Grant may be used for Qualified Project Costs, payment
shall be made out of proceeds of such Grant if such proceeds are then available
in the account for such proceeds in the Grant Proceeds Fund, and to the extent
of any remaining costs, payment shall be made or constructively made out of the
proceeds of the Bond in the Project Fund. If any item of cost would be eligible
for payment from proceeds of a Grant and if, at the time the cost is required to
be paid, the proceeds of such Grant have not been received, such payment may be
made from proceeds of the Bond or by the Company (accompanied by a transfer of
title to the related property to the Issuer in anticipation of payment transfer
as provided below) and when such Grant Proceeds are subsequently received and
deposited in the account for such Grant in the Grant Proceeds Fund, they may,
subject to all applicable laws, regulations and applicable Grant program
requirements, be used to reimburse the Project Fund, or in the case of prior
payment by the Company, the Custodian shall, in accordance with the above
procedures, use funds in the Grant Proceeds Fund to pay the Company for the
above-mentioned related property. Any amount of Grant Proceeds used to reimburse
the Project Fund shall be used to pay other Qualified Project Costs, and if all
Qualified Project Costs have been paid, the same shall be used to retire
principal of the Bond and accrued interest on such principal reduction.
19
(b) Grant Proceeds. The deposit, retention, processing and
disbursement of proceeds of any Grant shall be subject to all applicable laws,
regulations and applicable Grant program requirements. Requisitions for payments
of Qualified Project Costs from the proceeds of any Grant shall be in writing in
the form attached hereto as Exhibit D, executed on behalf of the Company by an
Authorized Company Representative and submitted to the Issuer and shall be
accompanied by such documentation as shall be required by any applicable laws,
regulations and Grant program requirements.
(c) Bond Proceeds. If funds are on deposit in the Project Fund,
the Company may by a requisition of the Company in the form required by the Bond
Purchase Loan Agreement request that such funds be used to pay or to reimburse
it for Qualified Project Costs. If at the time such payment or reimbursement is
requested there are not sufficient Qualified Funds in the Project Fund to pay
the full amount of such payment and if the full amount of the Commitment under
the Bond Purchase Loan Agreement has not theretofore been drawn, the Company, as
agent of the Issuer may file with the Holder, with a copy to the Custodian of
the Project Fund a Request Advance under the Bond Purchase Loan Agreement, for
the lesser of (i) the additional amount needed to fund such payment or (ii) the
balance of such Commitment under the Bond Purchase Loan Agreement. The amount of
any such draw shall be credited to the Project Fund (including constructive
deposits as provided above) and the payment (including constructive payments as
provided above) requested by the Company shall be reflected on the records of
the Project Fund.
(d) Direct Payment. The Issuer may request the Custodian to make
payments for Qualified Project Costs directly to (i) vendors, suppliers,
contractors, subcontractors, laborers, materialmen, or persons furnishing labor,
services, or materials used or to be used in connection with the Project, (ii)
to the Company or any Affiliate of the Company to reimburse it for Qualified
Project Costs, or (iii) to any combination of the foregoing. Each payment from
the Project Fund (except constructive payments) shall be made by the Custodian
in lawful money of the United States by check, wire transfer or by interbank or
intrabank transfer of funds, as directed by the Company in the applicable
requisition, within ten (10) Business Days following receipt by the Custodian of
the requisition in compliance with the requirements of this Lease and the
Project Documents (or later, if necessitated by Grant-related procedures), and
the Custodian may act in reliance upon any instrument or signature reasonably
believed by it to be genuine and authorized.
(e) Evidence of Progress. The Issuer, upon the written request of
the Custodian or the Holder from time to time, shall furnish to the Custodian or
the Holder, as applicable, evidence which is reasonably satisfactory to the
Custodian or the Holder, as applicable, including, but not limited to,
certificates and affidavits of the Contractor and/or the consulting engineer, if
a consulting engineer has been or is engaged, or any contractor or such other
person as the Custodian, or the Holder may reasonably require, showing (i) the
extent completed, and estimated value, of the Leased Improvements and Leased
Equipment being paid for out of funding sources other than Bond proceeds, at
that time, (ii) that all outstanding claims for purchases, labor, materials,
fixtures, furnishings, equipment, and other work have been paid or provided for
in accordance with the requirements of this Lease, and (iii) that any
contractors, and any third party involved in the acquisition and installation of
Leased Equipment (other than Leased Equipment being paid for out of Bond
proceeds) has substantially complied with all of
20
such Person's obligations hereunder and under the Project Documents.
SECTION 4.5. OBLIGATION OF THE PARTIES TO COOPERATE IN FURNISHING
DOCUMENTS; RELIANCE OF THE CUSTODIAN. The Issuer and the Company agree to
cooperate with each other in furnishing to the Custodian the documents referred
to in this Article or in the Project Documents that are required to effect
payments from the Project Fund.
SECTION 4.6. ESTABLISHMENT OF COMPLETION DATE. When in the sole
judgment of the Company the Project been substantially completed (i.e.,
substantially acquired, constructed and or installed) such event shall be
evidenced to the Issuer, to the Custodian and to the Holder by a certificate of
the Company, stating that the Project has been substantially completed, listing
the items, if any, that need to be completed or corrected and the amounts needed
therefor, which certificate shall be signed by the Authorized Company
Representative. Notwithstanding the foregoing, such certificate may 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. It shall
be the duty of the Company to cause the certificate contemplated by this Section
to be furnished as soon as the acquisition, construction and installation of the
Leased Improvements shall have been substantially completed and the Leased
Equipment has been acquired and installed. When the Project has been fully
completed and all Qualified Project Costs have been fully paid, the Company
shall so notify the Issuer, the Custodian and the Holder in writing and (i) any
amounts in the Project Fund shall be paid to the Holder in partial redemption of
the Bond and (ii) any amount remaining in any account of the Grant Proceeds Fund
shall be applied as required by the terms of such Grant.
SECTION 4.7. AUTHORIZED COMPANY AND ISSUER REPRESENTATIVES AND
SUCCESSORS. The Company and the Issuer, respectively, shall designate, in the
manner prescribed in Section 1.1 hereof, the Authorized Company
Representative(s) and the Authorized Issuer Representative(s). In the event that
any person so designated should become unavailable or unable to take any action
or make any certificate provided for or required in this Lease, a successor or
additional Authorized Company Representative or Authorized Issuer Representative
shall be appointed in the manner prescribed in Section 1.1 hereof.
SECTION 4.8. ENFORCEMENT OF REMEDIES AGAINST CONTRACTORS,
SUBCONTRACTORS, SUPPLIERS, FABRICATORS AND THEIR SURETIES. The Company may, and
at the written direction of the Issuer shall, at the Company's expense, take
such action and institute such proceedings as shall be necessary to cause and
require all vendors, contractors, subcontractors, suppliers, fabricators of any
property forming a part of the Project, and their sureties to complete their
contracts diligently in accordance with the terms of such contracts, including,
without limitation, the correction of any defects. The Issuer may also, from
time to time, in its own name, take such action as may be necessary or
advisable, as determined by the Issuer, against such vendors, contractors,
subcontractors, suppliers, fabricators and their sureties, to insure the proper
sale, delivery and construction of the Leased Improvements and installation of
the Leased Equipment including, without limitation, the correction of any
defects.
ARTICLE V
EFFECTIVE DATE OF THIS LEASE; DURATION OF LEASE TERM;
RENTAL PROVISIONS; NATURE OF OBLIGATIONS OF COMPANY
21
SECTION 5.1. EFFECTIVE DATE OF THIS LEASE; DURATION OF LEASE TERM. This
Lease shall become effective upon its delivery. The Term of this Lease shall
expire at midnight, ▇▇▇▇▇▇▇▇▇ County, Georgia time, at the close of the December
1, 2016.
SECTION 5.2. DELIVERY AND ACCEPTANCE OF POSSESSION; USE. The Company
shall, commencing with the date of delivery of this Lease, have possession,
custody and control of the Project as it exists on such date and the Company
hereby accepts such possession, custody and control, all subject to Section 3.5,
above. The Issuer agrees that, subject to Permitted Encumbrances, so long as the
Company shall fully and punctually pay all of the rents and other amounts
provided to be paid hereunder by the Company and shall fully and punctually
perform all of its other covenants and agreements hereunder, the Company shall
be entitled to occupy and use the Project during the Term, and the Issuer
warrants and covenants, subject to Permitted Encumbrances, that it will defend
the Company in such use of the Project, all subject to Section 3.5, above. The
Issuer covenants and agrees that, subject to Permitted Encumbrances, it shall
not take any action, other than pursuant to Article X of this Lease, or the
other express provisions of this Lease, to prevent the Company from having the
use of the Project during the Term.
SECTION 5.3. RENTS AND OTHER AMOUNTS PAYABLE.
(a) Basic Rent: No Basic Rent shall be payable prior to the
issuance of the Bond. From and after the issuance of the Bond and until the
principal of and interest on the Bond shall have been fully paid or provision
for the payment thereof shall have been made in accordance with the Bond
Resolution, the Company shall pay to the Holder for the account of the Issuer as
Basic Rent for the Project on or before 11:00 a.m., Georgia time, on each date
on which Debt Service on the Bond is due, a sum equal to the amount payable on
that date as Debt Service on the Bond, as to be provided in the Bond and in the
Bond Resolution. Such Basic Rent payments shall be applied to and credited as
Debt Service payments on the Bond. Upon any termination or expiration of this
Lease prior to the retirement of the Bond, the Issuer shall call the Bond for
redemption and the Company shall make an additional payment of Basic Rent
sufficient to redeem the Bond at a redemption price of 100% of the principal
balance thereof plus accrued interest to the date of redemption, provided that
if the Company or its Affiliate then owns the Bond, the Bond may be surrendered
for cancellation in lieu of such cash payment by the Company and such
redemption.
(b) Additional Rent and Advanced Rent Payment:
(i) Additional Rent Payable to Issuer. On July 1 in each
of the years 2004 through 2016, both inclusive, the Company shall pay to the
Issuer Additional Rent of $35,000 per year, being the rent payable under the
prior Lease Agreement, dated July 22, 1997, which is hereby terminated and
superceded by this Lease. The Company also agrees that, during the Term, it
shall pay directly to the Issuer, as Additional Rent, an amount sufficient to
reimburse the Issuer for any amounts that are subject to payment or
indemnification by the Company to the Issuer under Sections 5.3(b)(i), 6.6, 8.5
or 10.4 hereof. The Issuer from time to time shall ▇▇▇▇ all payments of
Additional Rent described in this paragraph to the Company, together with
reasonable supporting documentation thereof. The Company shall pay amounts so
billed within thirty (30) days after receipt of the ▇▇▇▇ by the Company; the
right of the Issuer to payments under this paragraph is one of the Unassigned
Rights. In the event the Company shall fail to make any
22
of the payments required in this Section 5.3(b)(i), the unpaid amount shall
continue as an obligation of the Company until fully paid, and shall accrue
interest from such thirtieth day at the lesser of: (i) the Default Rate
calculated on the basis of a 365/366 day year and actual number of days elapsed
or (ii) the maximum rate allowed by law. Upon any expiration or termination of
this Lease, any amount then owing the Issuer for Additional Rent shall become
due shall be paid immediately by the Company.
(ii) Additional Rent Payable to Holder. The Company agrees
that, during the Term, it shall pay directly to the Holder, as Additional Rent,
an amount sufficient to reimburse the Holder for all expenses, advances or
liabilities incurred by the Holder, including, but not limited to, the
reasonable fees and expenses of counsel for the Holder, as a result of the
failure of the Company to comply with the terms of this Lease and any amounts
that are subject to payment or indemnification by the Company to the Holder
under Sections 5.3(b)(ii), 6.6, 8.5 or 10.4 hereof. The Holder from time to time
shall ▇▇▇▇ all payments of Additional Rent described in this paragraph to the
Company, together with reasonable supporting documentation thereof. The Company
shall pay amounts so billed within thirty (30) days after receipt of the ▇▇▇▇ by
the Company. In the event the Company shall fail to make any of the payments
required in this Section 5.3(b)(ii), the unpaid amount shall continue as an
obligation of the Company until fully paid, and shall accrue interest from such
thirtieth day at the lesser of: (i) the Default Rate calculated on the basis of
a 365/366 day year and actual number of days elapsed or (ii) the maximum rate
allowed by law. Upon any expiration or termination of this Lease, any amount
then owing the Issuer for Additional Rent shall become due shall be paid
immediately by the Company.
(iii) Payments under the Amended and Restated Memorandum of
Understanding. The Company shall timely pay all amounts required to be paid by
it under the Amended and Restated Memorandum of Understanding.
SECTION 5.4. PLACE OF RENTAL PAYMENTS. The Basic Rent provided for in
Section 5.3(a) hereof, shall be paid directly to the Holder as pledgee of the
Issuer. The Additional Rent provided for in Section 5.3(b)(i) and any interest
on late payments thereof shall be payable directly to the Issuer. The Additional
Rent provided for in Section 5.3(b)(ii) and any interest on late payments
thereof shall be payable directly to the Holder that is entitled thereto. The
payments referred to in Section 5.3(b)(iii) and any interest on late payments
thereof shall be payable as provided in the Amended and Restated Memorandum of
Understanding. All payments shall be paid in lawful money of the United States
of America in funds that are immediately available on the due date of such
payment.
SECTION 5.5. NATURE OF OBLIGATIONS OF COMPANY HEREUNDER.
(a) The obligations of the Company to make the payments required
in Section 5.3 hereof and other Sections hereof and to perform and observe any
and all of the other covenants and agreements on its part contained herein shall
be a general obligation of the Company and shall be absolute and unconditional
irrespective of any defense or any rights of set off, recoupment, or
counterclaim, except payment, it may otherwise have against the Issuer or the
Holder. The Company agrees that it shall not (i) suspend, ▇▇▇▇▇, reduce,
abrogate, diminish, postpone, modify, or discontinue any payments provided for
in Section 5.3 hereof, (ii) fail to
23
observe any of its other agreements contained in this Lease, or (iii) terminate
its obligations under this Lease for any contingency, act of God, event, or
cause whatsoever, including, without limiting the generality of the foregoing,
failure of the Company to occupy or to use the Project as contemplated in this
Lease or otherwise, any change or delay in the time of availability of the
Project, any acts or circumstances which may impair or preclude the use or
possession of the Project, any defect in the title, design, operation,
merchantability, fitness, or condition of the Project or in the suitability of
the Project for the Company's purposes or needs, failure of consideration, any
declaration or finding that a Bond is unenforceable or invalid, the invalidity
of any provision of this Lease, any acts or circumstances that may constitute an
eviction or constructive eviction, destruction of or damage to the Project, the
taking by eminent domain of title to or the use of all or any part of the
Project, failure of the Issuer's title to the Project or any part thereof,
commercial frustration of purpose, any change in the tax or other laws of the
United States of America or of the State or any political subdivision of either
thereof or in the rules or regulations of any governmental authority, or any
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 Lease.
(b) Nothing contained in this Section shall be construed to
release the Issuer from the performance of any of the agreements on its part
herein contained. In the event the Issuer should fail to perform any such
agreement on its part, the Company may institute such action against the Issuer
as the Company may deem necessary to compel performance so long as such action
does not abrogate the Company's obligations hereunder. The Issuer hereby agrees
that it shall not take or omit to take any action that would cause this Lease to
be terminated, except pursuant to an express right contained herein.
(c) The Company may, however, at its own cost and expense and in
its own name or in the name of the Issuer, 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 Issuer hereby
agrees to cooperate fully with the Company and to take all action necessary to
effect the substitution of the Company for the Issuer in any such action or
proceeding if the Company shall so request.
ARTICLE VI
MAINTENANCE, TAXES, INSURANCE AND EMINENT DOMAIN
SECTION 6.1. MAINTENANCE OF PROJECT. The Company, at the expense of the
Company, during the Term shall (i) keep the Project in as reasonably safe
condition as its operations shall permit and (ii) keep the Project in reasonably
good repair and operating condition, making from time to time, subject to the
provisions of Section 6.2 hereof, all necessary and proper repairs thereto and
renewals and replacements thereof, including, without limitation, external and
structural repairs, renewals, and replacements. Subject to the provisions of
Article VIII hereof, the Company, at its own expense, may from time to time make
any Additions or Alterations and any modifications, upgrades, replacements and
substitutions to the Leased Improvements or Leased Equipment that it may deem
desirable for its purposes. Subject to the provisions of Section 9.7 hereof,
Additions or Alterations and any modifications, upgrades, replacements and
substitutions to the Leased Improvements so made by the Company shall be located
on the
24
Leased Land and shall become a part of the Project and any modifications,
upgrades, replacements and substitutions to the Leased Equipment so made by the
Company shall be located on the Leased Land and shall become a part of the
Project. The Company shall not do or permit others under its control to do any
work in or about the Project or related to any repair, rebuilding, restoration,
replacement, alteration of, or addition to the Leased Improvements, or any part
thereof, unless all requisite municipal and other governmental permits and
authorizations shall have first been procured and paid for. All such work shall
be done in a good and workmanlike manner and in compliance with all applicable
laws, ordinances, governmental regulations, and requirements. Notwithstanding
the foregoing, in the event the Project, or any part thereof, is damaged or
destroyed by casualty, the Company's obligations to repair or replace the
Project, or portion thereof so damaged or destroyed, shall be governed
exclusively by Section 7.2 hereof.
SECTION 6.2. REMOVAL OF LEASED EQUIPMENT. Subject to Section 6.1,
above, the Company shall not be under any obligation to replace any inadequate,
obsolete, worn out, unsuitable, undesirable, or unnecessary Leased Equipment,
unless the replacement thereof is necessary, in the judgment of the Company, for
the proper operation of the Project or is necessary, in the judgment of the
Issuer, to preserve the value of the Project. The Company may from time to time
remove any Leased Equipment or other personal property from the Project,
provided additional Leased Equipment or other personal property of equal utility
to the operation of the Project, but not necessarily the same function, is or
has been conveyed to the Issuer as a part of the Project.
SECTION 6.3. TAXES, OTHER GOVERNMENTAL CHARGES, AND UTILITY CHARGES.
The Company, at the expense of the Company, shall, throughout the Term, duly pay
and discharge, as the same become due and payable, (i) all taxes and
governmental charges of any kind whatsoever that may at any time be lawfully
assessed or levied against or with respect to the interests of the Issuer, of
the Company and of the Holder in the Project, (ii) any sales or rent taxes
levied upon or with respect to the lease revenues and receipts of the Issuer
from the Project which, if not paid, will become a lien on the Project or a
charge on the revenues and receipts therefrom prior to or on a parity with the
charge, pledge, and assignment thereof created and made in the Bond Resolution
and in the Security Document, (iii) all utility and other charges incurred in
the operation, maintenance, use, occupancy, and upkeep of the Project, and (iv)
other levies, permit fees, inspection and license fees and all other charges
imposed upon or assessed against the Project or any part thereof or upon the
revenues, rents, issues, and income of the Project or arising in respect of the
occupancy, uses or possession thereof. Both the Issuer and the Holder shall be
entitled to enforce the provisions of this Section, and the Issuer's right to
enforce the same is one of the Unassigned Rights. The parties intend that the
Company pay ad valorem property taxes with respect to the interest of the
Company hereunder as contemplated in the Amended and Restated Memorandum of
Understanding.
If any taxing authority seeks to impose any taxes described in this
Section, and if the Company first notifies the Issuer and the Holder of its
intention to do so, the Company may, at its own expense and in its own name and
behalf or in the name and behalf of the Issuer and 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, but
only so long as neither the
25
Project nor any part thereof will be subject to imminent loss or forfeiture by
reason of such nonpayment.
Should such unpaid taxes cause the Project to be subject to imminent
loss or forfeiture by reason of such nonpayment, the Issuer shall provide for
the payment of such taxes and be entitled to collect any and all rebates or
return or such. The Company shall exhibit to Issuer and to the Holder upon
written request validated receipts showing the payment of any other charges and
taxes which may be or become a lien or encumbrance on the Project.
SECTION 6.4. INSURANCE.
(a) The Company, at the expense of the Company, throughout the
Term, shall carry the following insurance:
(i) hazard and casualty insurance on the Leased
Improvements and Leased Equipment, in amounts (taking into account a deductible
of not more than $100,000 per occurrence) not less than the lesser of (A) an
amount not less than 100% of replacement cost of the Project or (B) full
insurable value of the Project; all hazard, casualty, and flood insurance
policies obtained by the Company as required by Section 6.4(a)(i) shall be
endorsed to name the Issuer as a co-loss payee payable and shall be payable to
the Issuer or the Holder, as assignee of the Issuer, without contribution, under
a standard mortgagee clause (the deductible amount specified above may be
increased with the written consent of the Issuer);
(ii) general liability insurance, in amounts of $1,000,000
per occurrence and $2,000,000 in aggregate, and fire damage for any one fire of
$500,000, subject to deductibles per occurrence not to exceed $200,000; such
policy or policies shall name the Issuer and the Holder as additional insureds
(the deductible amount specified above may be increased with the written consent
of the Issuer and the Holder); and
(iii) worker's compensation insurance as required by law
relating to the Company's employees working at the Project.
(b) The Issuer, by the Security Document, shall assign its
interest in the casualty insurance described in (a)(i), above, to the Holder,
together with all unearned premiums as further security for the Bond.
(c) The Issuer and the Holder shall each respectively be entitled
to enforce the provisions of this Article insofar as their rights are concerned,
and the Issuer's right to enforce this Article shall be one of the Unassigned
Rights.
SECTION 6.5. APPLICATION OF NET PROCEEDS OF INSURANCE. The Net Proceeds
of the insurance carried pursuant to the provisions of Sections 6.4(a)(i) and
(ii) and similar insurance carried by any contractor shall be applied toward
extinguishment or satisfaction of the liability with respect to which such
insurance proceeds have been paid. The Net Proceeds of insurance carried
pursuant to Section 6.4(a)(i) shall be transferred to the Custodian and
deposited in the Project Fund to be applied as provided in Article VII hereof.
SECTION 6.6. ADVANCES BY THE ISSUER OR THE HOLDER. If the Company shall
fail to do
26
any act or pay any taxes, assessments, charges or insurance premiums required by
this Article, the Issuer or the Holder may (but shall be under no obligation
to), after notifying the Company of its intention to do so, do any such act or
pay any such taxes, assessments, charges or premiums required by this Article,
and all amounts so advanced therefor by the Issuer or the Holder shall become an
additional obligation of the Company to the one making the advancement, which
amounts shall constitute Additional Rent which shall be payable, with interest
as provided in Section 5.3 (b). Any remedy herein vested in the Issuer for the
collection of rent shall also be available to each Holder for the collection of
any Additional Rent payable to the Holder on account thereof.
SECTION 6.7. EMINENT DOMAIN. If the Issuer or the Company obtains
knowledge of the institution or threat of institution of any proceedings for the
taking of the Project or any portion thereof by exercise of the power of eminent
domain, it shall immediately notify the other party hereto and the Holder of the
pendency of such proceedings. The Issuer, the Company and Holder may participate
in any such proceedings and Issuer from time to time shall deliver to the
Company and each Holder all instruments requested by it to permit such
participation. The Issuer shall not settle any eminent domain proceeding
relating to the Project or any part thereof or sell the Project or any part
thereof under threat of eminent domain without the prior written consent of the
Company and the Holder. The Net Proceeds of any eminent domain award or any sale
in lieu of a taking by eminent domain shall be transferred to the Custodian and
deposited in the Project Fund to be applied as provided in Article VII hereof.
ARTICLE VII
DAMAGE, DESTRUCTION, AND CONDEMNATION
SECTION 7.1. ELECTION TO REPAIR, RESTORE OR REPLACE. If any portion of
the Project is damaged, destroyed or taken by eminent domain (or is sold under
threat of eminent domain), the Net Proceeds shall, upon receipt, be deposited in
the Project Fund which shall be held by the Custodian. If any such Net Proceeds
received with respect to property financed by such Grant is required to be
segregated in a separate account in the Project Fund, the Custodian shall create
such a separate account and administer the same as required by the terms
applicable to such Grant. If such Net Proceeds plus any other moneys voluntarily
deposited in the Project Fund by either the Issuer, the Company, or both, are
sufficient (taking into account any other funds available for such purpose) to
repair, restore or replace the Project, taken as a whole, as reasonably
determined by the Company, so that the Project as repaired, restored or replaced
shall be, when taken as a whole, at least equal in value and general utility as
it was prior to the damage or destruction or taking, then the Company, after
filing such cost and value estimates with the Issuer and the Holder, may elect
in a written notice filed with the Issuer and the Holder to repair, restore or
replace the Project. Such election shall be made not more than one hundred
twenty (120) days following the receipt of the last of such Net Proceeds. Such
election shall certify that such repair, restoration or replacement is
reasonably expected by the Company to be completed and placed in service by a
date specified therein which shall be not later than one year following such
election. If the Company elects to repair, restore or replace the Project, the
Company may enter into an agreement, under which a third party, acting as an
independent contractor for the Company, shall promptly proceed to do so and
shall prosecute its repair, restoration and replacement activities (including
the acquisition and installation of replacement Leased Equipment) with due
diligence. Amounts held in the Project Fund shall be disbursed to pay
27
costs for such repair, restoration or replacement substantially in the manner
provided for herein for the disbursement of amounts in the Project Fund. Under
no circumstance shall damage or destruction of the Project or restoration or
repair thereof be deemed to extend the stated maturity of the Bond or of this
Lease or relieve the Company of its obligations to make scheduled periodic
payments of Basic Rent to be used to pay interest and/or principal specified in
the Bond. Upon completion of the work and payment in full therefor, the
Custodian shall apply any amount remaining in the Project Fund first to
reimburse the Issuer and the Company, ratably for any voluntary deposits they
have made to the Project Fund and then to retire principal of the Bond, provided
however that if any Net Proceeds received with respect to any item of property
financed by any Grant are not fully expended to repair, restore or replace such
item and if the terms of such Grant require some other application of such
unspent Net Proceeds, the terms of the Grant shall govern.
SECTION 7.2. ELECTION NOT TO REPAIR, RESTORE OR REPLACE. If an election
to repair, restore or replace damaged, destroyed or taken portions or all of the
Project is not made within the time provided in Section 7.1, above, or if prior
to such time the Company notifies the Issuer, the Holder and the Custodian that
it elects not to repair, restore or replace damaged, destroyed or taken portions
or all of the Project, this Lease shall terminate and the Custodian shall apply
the Net Proceeds in the Project Fund first to reimburse the Issuer and the
Company, ratably for any voluntary deposits they have made to the Project Fund
and then to retire principal of the Bond, provided however that if any Net
Proceeds received with respect to any item of property financed by any Grant are
on deposit in the Project Fund and if the terms of such Grant require some other
application of such unspent Net Proceeds, the terms of the Grant shall govern.
ARTICLE VIII
ADDITIONAL COVENANTS; ADDITIONAL BONDS
SECTION 8.1. NO WARRANTY OF CONDITION OR SUITABILITY BY THE ISSUER. THE
ISSUER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE DESIGN,
CONSTRUCTION, MATERIALS, WORKMANSHIP, MERCHANTABILITY, OR CONDITION OF ANY PART
OF THE PROJECT OR THAT THE SAME WILL BE SUITABLE FOR THE COMPANY'S PURPOSES OR
NEEDS, AND THE COMPANY WAIVES AND RELEASES ALL CLAIMS AGAINST THE ISSUER BASED
ON OR RELATING TO SUCH MATTERS AND AGREES THAT AT ALL TIMES THE COMPANY HAS
RELIED UPON ITS OWN INSPECTIONS, REVIEWS AND ANALYSIS IN DETERMINING THE
SUITABILITY OF THE PROJECT FOR ITS INTENDED PURPOSES.
SECTION 8.2. ACCESS TO PROJECT AND RECORDS. The Issuer and the Holder
and their respective duly authorized representatives and agents, shall have the
right, upon reasonable prior notice, but subject to any reasonable restriction
imposed by the Company for the protection of its patents, trademarks, trade
secrets, and other confidential proprietary information, to enter the industrial
facilities at which the Project is located at all reasonable times during the
Term for the purpose of (i) examining and inspecting the Project and (ii)
performing such work in and about the Project made necessary by reason of an
Event of Default. The Issuer and the Holder shall also have the right at all
reasonable times to examine, photocopy and make extracts from the books and
records of the Company, insofar as such books and records relate to the repair
and maintenance of the Project or insofar as necessary to ascertain compliance
with this Lease and
28
compliance with the Amended and Restated Memorandum of Understanding.
SECTION 8.3. COMPANY TO MAINTAIN ITS EXISTENCE AND QUALIFICATION;
CONDITIONS UNDER WHICH EXCEPTIONS PERMITTED. The Company agrees that while this
Lease is in effect it shall maintain its legal existence and good standing as a
corporation in the state of its domicile and shall maintain its qualification to
do business and good standing in the State, shall not without the prior written
consent of the Issuer and the Holder, which consent shall not be unreasonably
withheld or delayed, consolidate with or merge into another Person or permit one
or more other Persons to consolidate with or merge into it, and shall not
dissolve or otherwise dispose of all or substantially all of its assets. The
Company may, without violating the agreement contained in this Section,
consolidate with or merge into another domestic entity (that is, an entity
organized and existing under the laws of one or more states of the United States
of America), or permit one or more such domestic entities to consolidate with or
merge into it, or sell or otherwise transfer to another Person all or
substantially all of its assets as an entirety and thereafter the Company may
dissolve, provided the surviving, resulting, or transferee Person (i) is
authorized to do business in the State, (ii) is a domestic corporation, (iii)
assumes in writing all of the obligations of the Company under this Lease, and
(iv) obtains all licenses and permits required by law to operate the Project.
SECTION 8.4. OPERATION OF THE PROJECT. The Company shall operate the
Project as a manufacturing facility throughout the Term, and, except in
accordance with its normal business practices (for a period not exceeding 30
consecutive days, or for more than 60 days per year), shall not suspend such
operation except as permitted by the Amended and Restated Memorandum of
Understanding if the Project is affected by an event of force majeure. The
Company expects the Project will preserve and create jobs as described in the
Amended and Restated Memorandum of Understanding.
SECTION 8.5. INDEMNITY.
(a) The Company shall and agrees to indemnify and save the Issuer
and the Holder and their respective officials, directors, officers, members, and
employees harmless against and from all claims by or on behalf of any Person
arising from or relating to (i) any condition of or operation of the Project,
(ii) any act or negligence of the Company or of any of its agents, contractors,
servants, employees, or licensees, (iii) any act or negligence of any assignee
or sublessee of the Company or of any agents, contractors, servants, employees,
or licensees of any assignee or sublessee of the Company, or (iv) any violation
of the federal or State securities laws by the Company. However, with respect to
matters referred to in the preceding clauses (i), (ii), (iii) or (iv), this
indemnity shall not apply, as to the Issuer, to any acts of gross negligence or
willful misconduct or intentional misconduct of the Issuer and, as to the
Holder, to any acts of gross negligence or willful misconduct or intentional
misconduct of the of the Holder, or in the case of matters referred to in clause
(iv) this indemnity shall not apply to the Holder if the Holder has acquired a
Bond other than in a bona fide private placement and has failed to perform a
thorough due diligence investigation in connection therewith. The Company shall
indemnify and save the Issuer and each Holder (and the other persons and
entities referred to above, as appropriate) harmless from and against all costs
and expenses incurred in or in connection with any such claim or in connection
with any action or proceeding brought thereon, including reasonable attorneys'
fees actually incurred, and upon notice from the Issuer, the Company shall
29
defend it (and the other persons and entities referred to above, as appropriate)
in any such action or proceeding. The indemnities set forth above specifically
extend to, but are in no way limited to, governmental or other claims relating
to any actual or alleged violation of any Environmental Laws.
(b) With respect to the indemnity contained in the preceding
subparagraph (a), if any proceeding before any court, governmental body or
arbitrator is brought against an indemnified party, the indemnifying party will
be entitled to participate in such proceeding and, to the extent that it wishes
(unless the indemnifying party is also a party to such proceeding and the
indemnified party determines in good faith that joint representation would be
inappropriate) to assume the defense of such proceeding with counsel
satisfactory to the indemnified party, acting reasonably. If the indemnifying
party assumes the defense of a proceeding, the indemnifying party without the
indemnified party's consent, which consent shall not be unreasonably withheld,
may effect no compromise or settlement of such claims on behalf of the
indemnified party. Notwithstanding the foregoing, if an indemnified party
determines in good faith that there is a reasonable probability that a
proceeding may adversely affect it or its affiliates other than as a result of
monetary damages for which it would be entitled to indemnification under this
Lease, the indemnified party may, by notice to the indemnifying party, assume
the exclusive right to defend, compromise, or settle such proceeding, but the
indemnifying party will not be bound by any determination of a proceeding so
defended or any compromise or settlement effected without its consent.
(c) Nothing contained in this Section 8.5 shall require the
Company to indemnify any indemnified Person for any claim or liability for which
the Company was not given any opportunity to contest or for any settlement of
any such action effected without the Company's consent (assuming such rights are
available and have not been waived in writing by the Company). The indemnity of
the indemnified Persons contained in this Section 8.5 shall survive the
termination of this Lease.
(d) The Issuer and the Holder shall each be entitled to enforce
its right to indemnification under this Section, and the Issuer's right to
indemnification hereunder shall be one of the Unassigned Rights.
SECTION 8.6. LICENSES AND PERMITS. The Company shall do all things
necessary to obtain, maintain, and renew, from time to time, as necessary, all
permits, licenses, franchises, and other governmental approvals necessary for
the operation of the Project and obtainable by the Company, the lack of which
would have a material adverse affect upon the Company's ability to meet its
obligations under this Lease. The Company hereby agrees to give prompt notice to
the Issuer and the Holder of the loss of any permit, license, franchise, or
other governmental approval, which notice shall set forth the reasons for such
loss.
SECTION 8.7. COMPLIANCE WITH LAWS. The Company warrants that throughout
the Term it shall, at its own expense, maintain the Project in compliance with
all applicable life and safety codes and all applicable building and zoning,
health, environmental, and safety ordinances and laws, including the
Occupational Health and Safety Act, the Americans With Disabilities Act of 1990,
and all applicable Environmental Laws, and all other applicable laws,
ordinances, rules, and regulations of the United States of America, the State,
and any political subdivision or
30
agency thereof having jurisdiction over the Project and which relate to the
operations of the Project, any violation of which would have a material adverse
affect on the Company's ability to fully perform its obligations under this
Lease. The Company shall not, in its use or operation of the Project,
discriminate or permit discrimination on the basis of race, sex, color or
national origin in any manner prohibited by local state or federal laws, rules,
orders or regulations.
If the Company shall first notify the Issuer and the Holder of its
intention to do so, the Company may, at its own expense and in its own name and
behalf or in the name and behalf of the Issuer and in good faith, contest any
allegation that it has not complied with the laws described in this Section 8.7
and, in the event of any such contest, the provisions of this Section 8.7 shall
not apply to any such alleged violations of law during the period of such
contest and any appeal therefrom. The Issuer shall, at the expense of the
Company, cooperate fully with the Company in any such contest.
The Issuer and the Holder shall each be entitled to enforce their
respective rights under the provisions of this Section, and the Issuer's right
to enforce this Section shall be one of the Unassigned Rights.
ARTICLE IX
ASSIGNMENT, SUBLEASING, ENCUMBERING, AND SELLING; REDEMPTION;
RENT PREPAYMENTS AND ABATEMENT; INSTALLATION OF
COMPANY'S OWN MACHINERY AND EQUIPMENT
SECTION 9.1. ASSIGNMENT AND SUBLEASING.
(a) Except as expressly permitted hereby, the Company may not
assign this Lease, without obtaining the prior written consent of the Issuer,
and the Holder. Notwithstanding the foregoing, the Company may sublease all or
any portion of the Project to an Affiliate and the Company may assign its
interest in this Lease (i) to any Person resulting from a consolidation, merger
or transfer of substantially all of the assets of the Company as provided in
Section 8.3 of this Lease if, in either case, the requirements set forth in
Section 8.3 pertaining to a "surviving, resulting or transferee Person" have
been fulfilled, (ii) to an Affiliate of Company or (iii) to any transferee of
the Bond. Any such assignment authorized in Section 8.3 hereof or above in this
Section 9.1, or otherwise consented to by the Issuer, shall be subject to each
of the following conditions:
(1) No assignment (other than pursuant to Section 8.3 hereof in a
transaction in which the Company ceases to exist) shall
relieve the Company from primary liability for any of its
obligations hereunder, and in the event of any such
assignment, the Company shall continue to remain primarily
liable for payment of the rents specified in Section 5.3
hereof and for the payment, performance, and observance of the
other obligations and agreements on its part herein provided
to be performed and observed by it, unless the Issuer and the
Holder of the Bond consent in writing to such release.
(2) The assignee shall assume in writing the obligations of the
Company hereunder to the extent of the interest assigned or
subleased.
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(3) The Company shall furnish or cause to be furnished to the
Issuer and the Holder assurances reasonably satisfactory to
the Issuer and the Holder that the Project will continue to be
operated in compliance with the provisions hereof.
(4) No such assignment or sublease (other than pursuant to Section
8.3 hereof in a transaction in which the Company ceases to
exist) shall give rise to a novation.
(5) The Company or such "surviving, resulting or transferee
Person" shall, within thirty (30) days after the execution
thereof, furnish or cause to be furnished to the Issuer a true
and complete copy of each such assignment or sublease or
documents of merger, consolidation or sale of assets, as the
case may be. The Issuer and the Holder shall have the right,
at any time and from time to time, to notify any assignee or
sublessee of their rights of under this paragraph.
(b) The provisions of subsection (a), above, shall apply to a
sublease of the entire Project. The Company may sublease a
portion of the Project, but shall continue to be obligated for
compliance with the provisions hereof.
SECTION 9.2. RESTRICTIONS ON SALE, ENCUMBRANCE, OR CONVEYANCE OF THE
PROJECT BY THE ISSUER. Except pursuant to the Security Document, and except for
any sale under threat of a taking by eminent domain or a sale pursuant to
Article VI hereof, the Issuer agrees that, during the Term, it shall not, except
pursuant to or as permitted by the Security Document, or except as contemplated
herein: (1) directly, indirectly, or beneficially sell, convey, or otherwise
dispose of any part of its interest in the Project, (2) permit any part of the
Project to become subject to any lien, claim of title, encumbrance, security
interest, conditional sale contract, title retention arrangement, finance lease,
or other charge of any kind, without the written consent of the Company and the
Holder, and (3) assign, transfer, or hypothecate (other than pursuant to the
Bond Resolution and the Security Document) any payment of rent (or analogous
payment) then due or to accrue in the future under any lease of the Project,
except that if the laws of the State at the time shall permit, nothing contained
in this Section shall prevent the consolidation of the Issuer with, or merger of
the Issuer into, or transfer of the Project as an entirety to, any public body
of the State whose property and income are not subject to taxation and which has
authority to carry on the business of owning and leasing the Project, provided,
that upon any such consolidation, merger, or transfer, the due and punctual
payment of the principal of, premium, if any, and interest on the Bond according
to their tenor, and the due and punctual performance and observance of all the
agreements and conditions of this Lease, the Bond Resolution and the Security
Document to be kept and performed by the Issuer, shall be expressly assumed in
writing by the public body resulting from such consolidation or surviving such
merger or to which the Project shall be transferred as an entirety.
SECTION 9.3. RESTRICTIONS ON ENCUMBRANCE BY THE COMPANY. The interest
of the Company hereunder shall not be pledged or encumbered, without the written
consent of the Issuer and of the Holder.
SECTION 9.4. REDEMPTION OF BOND. The Issuer, at the written request of
the Company at any time and if the Bond is then callable or available for
purchase, and if there are funds available therefor in the Project Fund or funds
provided by the Company, shall forthwith take all
32
steps that may be necessary under the applicable redemption or defeasance
provisions of the Bond Resolution to effect the redemption or defeasance of all
or part of any then Outstanding Bond, as may be specified by the Company, on the
earliest date on which such redemption or defeasance may occur under such
applicable provisions.
SECTION 9.5. PREPAYMENT OF BASIC RENT. In connection with the early
termination, in whole or in part, of the Term of this Lease pursuant to Section
11.1, below, the Company shall have the right to prepay all of the Basic Rent
payable under Section 5.3(a) hereof prior to or simultaneously therewith in any
amount sufficient to retire the Bond on the earliest date on which the Bond may
be redeemed under the Bond Resolution, and the Issuer agrees that it shall
accept such prepayment of Basic Rent when the same is tendered by the Company.
All Basic Rent so prepaid shall be applied to the retirement of the Bond.
SECTION 9.6. COMPANY'S USE OF THE PROJECT. The Company shall use the
Project primarily for manufacturing and the conduct of ancillary and related
activities.
SECTION 9.7. INSTALLATION OF COMPANY'S OWN MACHINERY AND LEASED
EQUIPMENT. The Company may from time to time, in its sole discretion, install
trade fixtures, machinery, equipment, furnishings, and other personal property
that are not a part of the Project on the Leased Land and the same shall remain
the sole property of the Company (or of any leasing company from whom the
Company may be renting such items), and the Company may remove the same from the
Project at any time, in its sole discretion and at its own expense. The Company
may create any mortgage, encumbrance, lien, or charge on any such trade
fixtures, machinery, equipment, furnishings, and other personal property that is
not a part of the Project. The Issuer shall not have any interest in and waives
any lessor's lien that it may have on any such trade fixtures, machinery,
equipment, furnishings, or personal property so installed pursuant to this
Section.
SECTION 9.8. REFERENCE TO THE BOND INEFFECTIVE AFTER THE BOND IS PAID.
Upon payment in full of the Bond (or provision for payment thereof having been
made in accordance with the defeasance provisions of the Bond Resolution), all
references in this Lease to the Bond and the Holder thereof shall be
ineffective, and the former Holder of the Bond shall not thereafter have any
rights hereunder, saving and excepting those that shall have theretofore vested
and any rights to indemnification under Section 8.5 hereof. For purposes of this
Lease, a Bond shall be deemed fully paid if it is defeased as provided in the
Bond Resolution.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.1. EVENTS OF DEFAULT DEFINED. The following shall be "Events
of Default" under this Lease, and the terms "Event of Default" or "Default"
shall mean, whenever they are used in this Lease, any one or more of the
following events:
(a) a failure of the Company to pay Basic Rent in the
amounts and at the times required by Section 5.3(a) of this Lease
provided, (1) that such failure to pay shall not constitute a "Default"
or an "Event of Default" unless continued for more than 5 days after
receipt by the Company of written notice of same given by the Issuer or
the Holder;
33
and (2) that the foregoing clause (1) shall be of no further force or
effect once notices have been given with respect to three (3) such
failures to pay in any one 24 month period; or
(b) the failure of the Company to pay the amounts
required to be paid under Section 5.3(b) of this Lease, at the times
specified therein, and continuing for a period of thirty (30) days
after the Company's receipt of written notice given by the Issuer in
the case of payments due under Section 5.3(b)(i), given by the Holder
in the case of payments due under Section 5.3(b)(i)); or given by the
Issuer or the taxing authorities in the case of payments due under
Section 5.3(b)(iii).
(c) In the case of the Company's failure to observe,
perform, or comply with any covenant, condition, or agreement in this
Lease on the part of the Company to be observed or performed, for a
period of thirty (30) days after written notice from the Issuer or the
Holder specifying such breach or failure and requesting that it be
remedied, unless the Issuer and the Holder shall agree in writing to an
extension of such time prior to its expiration. In the case of any such
breach or default which can be cured, but cannot be cured within such
thirty (30) day period, it shall not constitute an Event of Default if
corrective action is instituted by the Company within the applicable
thirty (30) day period and is diligently pursued until the breach or
default is corrected; or
(d) Any breach, default, event of default or Event of
Default by the Company under any of the other Company Documents, in
either case, which is not cured within thirty (30) days following
notice from the Issuer or the Holder specifying such breach or failure
and requesting that it be remedied, unless both the Issuer and the
Holder shall agree in writing to an extension of such time prior to its
expiration. In the case of any such breach or default which can be
cured, but cannot be cured within such thirty (30) day period, it shall
not constitute an Event of Default if corrective action is instituted
by the Company within the applicable thirty (30) day period and
diligently pursued until the breach or default is corrected; or
(e) The filing of a voluntary petition in Bankruptcy by
the Company or the adjudication of the Company as Bankrupt pursuant to
an involuntary petition filed by a creditor of the Company.
SECTION 10.2. REMEDIES ON DEFAULT. Whenever any Event of Default
referred to in Section 10.1 hereof shall have happened and be subsisting, the
Issuer, or the Holder as assignee of the Issuer, to the extent permitted by law,
may take any one or more of the following remedial steps:
(a) take whatever action at law or in equity or under the
terms of this Lease may appear necessary or desirable to collect the
rents and other amounts payable by the Company hereunder then due or
thereafter to become due, or to enforce performance and observance of
any obligation, agreement, or covenant of the Company under this Lease;
or
(b) terminate, subject to the respective provisions
concerning the priority and
34
subordination of the Company's option to purchase the Project that are
set forth in Section 11.4, below, this Lease and recover, as and for
liquidated and agreed final damages for the Company's default, all
amounts that have theretofore become due plus any additional amount
needed to retire or defease the Bond, and if any statute or rule of law
shall validly limit the amount of such liquidated final damages to less
than the amount agreed upon, the Issuer shall be entitled to the
maximum amount allowable under such statute or rule of law; no
termination of this Lease pursuant to this Section shall relieve the
Company from its indemnification obligations pursuant to Section 8.5
hereof or its obligations under the Amended and Restated Memorandum of
Understanding.
Any amounts of Basic Rent collected, pursuant to action taken under
this Section, shall be applied in payment of the Bond(s). Any amounts collected
as Additional Rent shall be paid to the Person or Persons to whom such
Additional Rent is due and owing hereunder.
Notwithstanding that this Lease (except for Unassigned Rights) is to be
assigned to the Holder, (a) the Issuer shall be entitled to enforce this Lease,
and its right to do shall be one of the Unassigned Rights, and (b) the Issuer
reserves all rights necessary for it to perform its obligations hereunder. The
Holder shall be entitled to enforce the provisions hereof that affect its
interests hereunder.
SECTION 10.3. REMEDIES NOT EXCLUSIVE. The remedies herein expressly
conferred upon the Issuer and the Holder are intended to be in addition to other
remedies existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any Event of 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 Issuer or the Holder 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 hereby.
SECTION 10.4. LEGAL FEES AND EXPENSES. In the event the Company or the
Issuer should default under any of the provisions of this Lease and the Issuer
or either Holder, on the one hand, or the Company, on the other, as appropriate,
should employ attorneys, accountants, or other experts or incur other expenses
for the collection of amounts due it hereunder or the enforcement of performance
or observance of any obligation or agreement on the part of the Company or
Issuer, as appropriate, herein contained for its benefit, the Company on the one
hand, and the Issuer, on the other hand, as appropriate, agrees that it shall on
demand therefor pay to such Person the reasonable and actual fees of such
attorneys, accountants, or other experts and such other expenses so incurred by
the Issuer or the Holder, on the one hand, or the Company, on the other, as
appropriate. Any attorneys' fees required to be paid by the Company or Issuer,
as appropriate, under this Lease shall include attorneys' and paralegal's fees
through all proceedings, including, but not limited to, negotiations,
administrative hearings, trials, and appeals, court costs and reimbursable
expenses of such attorneys. The Issuer, the Company and each Holder shall be
entitled to enforce its respective rights under this Section, and the Issuer's
rights under this Section shall be one of the Unassigned Rights, provided
however, that a party shall be entitled to payment of its legal fees and
expenses only if, or to the extent that, it is the prevailing party in
litigation, arbitration or mediation.
35
SECTION 10.5. WAIVER OF EVENTS OF DEFAULT. The Issuer may waive any
Event of Default hereunder and its consequences or rescind any declaration of
acceleration of payments of the rents and other amounts due hereunder, provided
that if such Event of Default relates to any portion of the Project paid for out
of Bond proceeds, the Issuer shall not grant such waiver (other than as to the
Unassigned Rights) without the prior written consent of the Holder. The Holder
may waive any Event of Default hereunder that relates exclusively to any portion
of the Project paid for out of Bond proceeds (unless the Issuer's Unassigned
Rights are also involved), provided, that any other waiver by the Holder shall
require the prior written consent of the Issuer. In case of any such waiver or
rescission, or in case any proceeding taken by the Issuer or the Holder on
account of any such Event of Default shall be discontinued or abandoned or
determined adversely to the Issuer or the Holder, then and in every such case
the Issuer, the Holder and the Company shall be restored to their former
positions and rights hereunder, but no such waiver or rescission shall extend to
or affect any subsequent or other Event of Default or impair or exhaust any
right, power, or remedy consequent thereon.
ARTICLE XI
OPTION IN FAVOR OF COMPANY
SECTION 11.1. OPTION TO TERMINATE LEASE. The Company may at its option,
subject to prior expiration or termination, from time to time terminate this
Lease. The Company shall give the Issuer and the Holder written notice of each
exercise of such option to terminate at least 60 days in advance of the
termination date, which shall be determined by the Company and specified in such
notice. In connection with such termination, the Company must cause the Bond to
be redeemed or surrendered and cancelled in whole, and in that connection the
Company shall make the payments required by Section 5.3 hereof.
SECTION 11.2. OPTION TO PURCHASE. The Company shall have, and is hereby
granted, the option to purchase the Project for a purchase price (the "option
exercise price") which shall be the sum of One Dollar ($1.00) (which amount
shall be paid directly to the Development Authority for its own account and not
to the Holder of the Bond), provided that: (i) the option is exercised not later
than 60 days after the receipt by the Company of written request for exercise
from the Development Authority after the expiration date of the Term of the Bond
Lease, (ii) the Bond has been fully paid or fully defeased as provided in the
Bond Resolution (or are paid or defeased as a part of the closing of such
purchase) or surrendered and cancelled, (iii) any amounts due the Development
Authority or the Holder for Additional Rent have been paid including the annual
$35,000 additional rent payable through the balance of the Lease Term (or are
paid as a part of the closing of such purchase) and (iv) any additional amount
required by the Amended and Restated Memorandum of Understanding relating to any
Jobs Shortfalls have been paid (or are paid as a part of the closing of such
purchase). The purchase of the Project shall be closed within sixty (60) days
from the date of such notice, or on such earlier or later date as may be agreed
to by the Issuer and the Company. If following such purchase any claim for
indemnification under this Lease and other Company Documents arises, the
obligation of the Company to pay the same shall become due and the Issuer and
the Holder may enforce their right to payment directly against the Company.
SECTION 11.3. NO OBLIGATION TO EXERCISE OPTIONS. The Company shall be
under no obligation to exercise the options granted in Section 11.1 or Section
11.2.
36
SECTION 11.4. CONVEYANCE ON EXERCISE OF OPTION TO PURCHASE. At the
closing of any purchase pursuant to the exercise of the option to purchase
granted herein, the Issuer shall upon receipt of the purchase price, deliver to
the Company, or the holder of the Superior Security Document, as applicable, a
limited warranty deed and a ▇▇▇▇ of sale conveying to the Company good title (of
the same quality as received by the Issuer) 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 immediately
following the delivery of the Bond but excluding this Lease, the Security
Document and the Bond Resolution, (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 and
(iv) other Permitted Encumbrances.
SECTION 11.5. PUBLIC PURPOSE OF OPTION TO PURCHASE. The Issuer and the
Company acknowledge that the option to purchase the Project granted in this
Article constitutes a material inducement to the Company to locate the Project
in the County and thereby create employment opportunities in the County and that
in granting such option, the Issuer is considering the entire transaction as a
whole, including the promotion and expansion for the public good and welfare
industry and trade within the County and the reduction of unemployment, and the
fact that as a condition to the exercise of the options all indebtedness with
respect to the Project will have been paid in full.
SECTION 11.6. POSITION OF OPTION. The option granted to the Company in
Section 11.2 shall be subordinate to the Security Document.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. NOTICES. Any request, demand, authorization, direction,
notice, consent, or other document provided or permitted by this Lease to be
made upon, given or furnished to, or filed with, the Issuer, the Company or the
Purchaser as set forth below shall be sufficient for every purpose hereunder if
in writing and (except as otherwise provided in this Lease) either (i) delivered
personally, by hand delivery, courier or express company, to the party or, if
such party is not an individual, to an officer or other legal representative of
the party to whom the same is directed, or (ii) mailed by registered or
certified mail, return receipt requested, postage prepaid, or (iii) sent by fax,
as follows.
To the Issuer: Development Authority of ▇▇▇▇▇▇▇▇▇ County
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Attorney
▇▇▇▇▇, ▇▇▇▇▇ and ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
37
To the Company and CARBO Ceramics, Inc.
Purchaser ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇. Vice President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any person designated in this Section 12.1 may, by notice given to each
of the others, designate any additional or different addresses to which
subsequent notices, certificates, or other communications shall be sent.
SECTION 12.2. RECORDING. This Lease, or a "short form lease" or
"memorandum of lease" giving appropriate notice hereof, may be recorded in all
offices as may at the time be provided by law as the proper place for
recordation.
SECTION 12.3. CONSTRUCTION AND BINDING EFFECT. This Lease constitutes
the entire agreement of the parties concerning the subject matter hereof and
supersedes any prior agreements with respect thereto. This Lease shall inure to
the benefit of and shall be binding upon the Issuer, the Company, and their
respective successors and assigns subject, however, to the limitations contained
in Sections 8.3, 9.1, and 9.2 hereof.
SECTION 12.4. SEVERABILITY. In the event any provision of this Lease
shall be held invalid or unenforceable by any court of competent jurisdiction,
such holding shall not invalidate or render unenforceable any other provision
hereof.
SECTION 12.5. IMMUNITY OF MEMBERS, OFFICERS, AND EMPLOYEES OF ISSUER.
No recourse shall be had for the enforcement of any obligation, covenant,
promise, or agreement of the Issuer contained in this Lease or for any claim
based hereon or otherwise in respect hereof or upon any obligation, covenant,
promise, or agreement of the Issuer contained in the Bond Resolution against any
director, member, officer, or employee, as such, in his individual capacity,
past, present, or future, of the Issuer, or any successor Person, whether by
virtue of any constitutional provision, statute, or rule of law, or by the
enforcement of any assessment or penalty or otherwise, it being expressly agreed
and understood that this Lease is solely a corporate obligation of the Issuer
payable only from the funds and assets of the Issuer herein specifically
provided to be subject to such obligation and that no personal liability
whatsoever shall attach to, or be incurred by, any director, member, officer, or
employee, as such, past, present, or future, of the Issuer, or of any successor
Person, either directly or through the Issuer, or any successor Person, under or
by reason of any of the obligations, covenants, promises, or agreements entered
into between the Issuer and the Company whether contained in this Lease or in
the Bond, in the Bond Resolution in the Financing Documents or to be implied
hereunder or thereunder as being supplemental hereto or thereto, and that all
personal liability of that character against every such director, member,
officer, and employee of the Issuer or any such successor Person is, by the
execution of this Lease and as a condition of and as part of the consideration
for the execution of this Lease, expressly waived and released by the Company.
The immunity of directors, members, officers, and employees of the Issuer under
the provisions contained in this Section shall survive the completion of the
Project and the termination of this Lease.
SECTION 12.6. AMENDMENTS, CHANGES, AND MODIFICATIONS. This Lease may
not be
38
amended, modified, altered, or terminated, except as provided in the Bond
Resolution.
SECTION 12.7. EXECUTION OF COUNTERPARTS. This Lease may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 12.8. LAW GOVERNING LEASE. This Lease shall be construed in
accordance with, and governed by, the laws of the State of Georgia, exclusive of
such state's rules governing choice of law.
SECTION 12.9. COVENANTS RUN WITH PROJECT. The covenants, agreements,
and conditions herein contained shall run with the Project hereby leased and
shall be binding upon, inure to the benefit of, and be enforceable by the
parties hereto and their respective successors and assigns.
SECTION 12.10. SUBORDINATION TO SECURITY DOCUMENT. The rights and
privileges hereunder of the Company are specifically made subject and
subordinate to the rights and privileges of the Holder under the Security
Document.
SECTION 12.11. NET LEASE. This Lease shall be deemed and construed to
be a "triple net lease," and the Company shall pay absolutely net during the
Term the rent and all other payments required hereunder, free of any deductions,
without abatement, diminution, or set-off other than those herein expressly
provided.
SECTION 12.12. SURRENDER OF PROJECT. Except as otherwise provided in
this Lease, at the expiration or sooner termination of the Term, the Company
agrees to surrender possession of the Project peaceably and promptly to the
Issuer in as good condition as at the commencement of the Term, excepting only
ordinary wear, tear, and obsolescence, and damage by fire or other casualty or a
taking by eminent domain which the Company is not obligated by this Lease to
repair.
SECTION 12.13. IMMUNITY OF DIRECTORS, OFFICERS, AND EMPLOYEES OF
COMPANY. No recourse shall be had for the enforcement of any obligation,
covenant, promise, or agreement of the Company contained in this Lease or for
any claim based hereon or otherwise in respect hereof, against any director,
officer, or employee of the Company or any successor corporation, in his
individual capacity, past, present, or future, of the Issuer, whether by virtue
of any constitutional provision, statute, or rule of law, or by the enforcement
of any assessment or penalty or otherwise, it being expressly agreed and
understood that this Lease is solely a corporate obligation of the Company and
that no personal liability whatsoever shall attach to, or be incurred by, any
such director, officer, or employee, either directly or through the Company, or
any successor corporation, under or by reason of any of the obligations,
covenants, promises, or agreements contained in this Lease or to be implied
herefrom, and that all personal liability of that character against every such
director, officer, and employee is, by the execution of this Lease and as a
condition of and as part of the consideration for the execution of this Lease,
expressly waived and released. The immunity of directors, officers, and
employees of the Company under the provisions contained in this Section shall
survive the termination of this Lease.
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SECTION 12.14. PAYMENTS DUE ON OTHER THAN BUSINESS DAYS. Whenever a
date upon which a payment is to be made under this Lease falls on a date that is
not a Business Day, such payment may be made on the next succeeding Business Day
without interest for the intervening period.
IN WITNESS WHEREOF, the Issuer has executed this Lease by causing its
name to be hereunto subscribed by its Chairman and by causing the official seal
of the Issuer to be impressed hereon and attested by its Secretary; and the
Company has executed this Lease by causing its name to be hereunto subscribed by
its duly authorized officer, all being done as of the day and year first above
written.
DEVELOPMENT AUTHORITY
OF ▇▇▇▇▇▇▇▇▇ COUNTY
By: ________________________________
ATTEST Signature
______________________
Secretary NAME:_______________________________
(AUTHORITY SEAL) TITLE:______________________________
DATE:_______________________________
AS TO THE DEVELOPMENT AUTHORITY OF ▇▇▇▇▇▇▇▇▇ COUNTY, SIGNED AND SEALED
IN THE PRESENCE OF-
_____________________________ ____________________________________
Unofficial Witness Notary Public
My Commission Expires_______________
(NOTARY SEAL)
40
CARBO CERAMICS INC.
BY: ________________________________
SIGNATURE
ATTEST:
_____________________________
Secretary NAME: C. ▇▇▇▇ ▇▇▇▇▇▇▇
(CORPORATE SEAL) TITLE: Its President and Chief
Executive Officer
AS TO CARBO CERAMICS INC.
SIGNED AND SEALED IN THE PRESENCE OF-
_____________________________ ____________________________________
Unofficial Witness Notary Public
My Commission Expires_______________
(NOTARY SEAL)
41
EXHIBIT A
DESCRIPTION OF INITIAL PROJECT LAND
All that tract or parcel of land situate, lying and being in Land ▇▇▇ ▇▇▇ ▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ and 327th (Irwinton) G.M. District of ▇▇▇▇▇▇▇▇▇ County,
Georgia, containing Thirty-Six and forty-three hundredths (36.43) Acres, more or
less, and being more particularly described and delineated by a plat of same by
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, GRLS No. 1679. Said Plat, dated June 17, 1997, and recorded in
Plat Book 18, page 9, in the Office of the Clerk of Superior Court of ▇▇▇▇▇▇▇▇▇
County, Georgia, is incorporated herein as a part of the description herein
given. Said property is now or formerly bounded as follows: North by the Norfolk
Southern Railroad; East by the right of way of a public county road, known as
Wriley Road; South by other lands of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇; West
by other lands of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. Said Property is a
portion of the same property conveyed to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ by
deeds recorded in Deed Book 218, pages 761-762; Deed Book 228, page 628; Deed
Book 225, pages 249-250; Deed Book 225, pages 251-252; Deed Book 225, pages
253-254; and Deed Book 225, pages 255-256, all of Record in the Office of the
Clerk of Superior Court of ▇▇▇▇▇▇▇▇▇ County, GA.
EXHIBIT B
DESCRIPTION OF LEASED IMPROVEMENTS
All buildings, structures, landscaping, utility lines and building
fixtures and appurtenances located from time to time on the Leased Land
described in Exhibit A (as the same may be amended).
EXHIBIT C
DESCRIPTION OF LEASED EQUIPMENT
All items of machinery, equipment, furnishings and trade fixtures that
are both (i) located on the Leased Land described in Exhibit A (as the same may
be amended), and (ii) the cost of which has been or is to be included in the
principal amount of the Bond.
EXHIBIT D
FORM OF
REQUISITION FOR PAYMENT
FROM GRANT PROCEEDS
Date: ____________ , _____
GRANT PROCEEDS REQUISITION NO.____
TO: DEVELOPMENT AUTHORITY OF ▇▇▇▇▇▇▇▇▇ COUNTY
CARBO Ceramics Inc. (the "Company") hereby requests, pursuant to the
Lease Agreement (the "Lease"), dated as of November 1, 2003, by and among the
Development Authority of ▇▇▇▇▇▇▇▇▇ County (the "Issuer") and the Company, that
pursuant to the Lease, the following amounts be disbursed from the Grant
Proceeds Fund maintained by the Company in accordance with the payment
instructions attached hereto as Schedule 1 (check appropriate paragraph(s)
below:
_____ The sum of $__________________ shall be disbursed from the OneGeorgia
EDGE Fund Grant Sub-account of the Project Fund to pay or reimburse
Qualified Project Costs which under the term of said grant may be used
for such purposes.
_____ The sum of $__________________ shall be disbursed from the EIP Grant
Sub-account of the Project Fund to pay or reimburse Qualified Project
Costs which under the term of said grant may be used for such purposes.
_____ The sum of $__________________ shall be disbursed from the ▇▇▇▇ ▇▇▇▇▇
Sub-account of the Project Fund to pay or reimburse Qualified Project
Costs which under the term of said grant may be used for such purposes.
The Company does hereby certify to the Issuer and to the Purchaser
that: (1) the nature of the costs of the Project with respect to which this
requisition is made is set forth on Schedule 2 hereof and such costs are within
the definition "Qualified Project Costs" set forth in the Lease, (2) the
representations and warranties of the Company in the Lease are true and correct
as of the date hereof, and (3) none of the "Qualified Project Costs" covered by
this requisition have been included in any prior requisition.
CARBO CERAMICS INC.
By:_______________________________
Authorized Company Representative
SCHEDULE 1
PAYMENT INSTRUCTIONS
(IF ANY)
One Georgia EDGE Fund grant moneys shall be disbursed as follows:
Amount Payee Payment to be made as follows:
------ ----- -----------------------------
EIP grant moneys shall be disbursed as follows:
Amount Payee Payment to be made as follows:
------ ----- -----------------------------
▇▇▇▇ ▇▇▇▇▇ moneys shall be disbursed as follows:
Amount Payee Payment to be made as follows:
------ ----- -----------------------------
2
SCHEDULE 2
SCHEDULE OF PROJECT COSTS
INCLUDED IN THE REQUISITION
TO WHICH THIS SCHEDULE IS ATTACHED
Qualified Project Costs to be paid from OneGeorgia EDGE Fund grant proceeds
Amount Nature of Cost
Qualified Project Costs to be paid from EIP grant proceeds
Amount Nature of Cost
Qualified Project Costs to be paid from ▇▇▇▇ ▇▇▇▇▇ proceeds
Amount Nature of Cost
3