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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the Fiscal Year Ended December 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES ACT
OF 1934 (NO FEE REQUIRED) For the transition period from ____ to ____
Commission File Number 1-9753
GEORGIA GULF CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 58-1563799
(State of Incorporation) (I.R.S. Employer Identification No.)
400 Perimeter Center Terrace, Suite 595, Atlanta, Georgia 30346
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (770) 395-4500
Securities registered pursuant to Section 12(b) of the Securities Exchange
Act of 1934:
Title of each class Name of each exchange on which registered
Common Stock, $0.01 par value New York Stock Exchange, Inc.
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
Aggregate market value of the voting stock held by nonaffiliates of the
Registrant, computed using the closing price on the New York Stock Exchange
for the Registrant's common stock on March 21, 1996 was $1,360,000,000.
Indicate the number of shares outstanding of the Registrant's common stock
as of the latest practicable date.
Class Outstanding at March 21, 1996
Common Stock, $0.01 par value 36,885,872 shares
DOCUMENTS INCORPORATED BY REFERENCE
(To the Extent Indicated Herein)
1995 Annual Report to Stockholders in Parts II and IV of this Form 10-K.
Proxy Statement for the Annual Meeting of Stockholders to be held on
May 21, 1996 in Part III of this Form 10-K.
TABLE OF CONTENTS
PART I
ITEM PAGE NUMBER
1) Business
General Description of Business 1-2
Electrochemical Products 2-3
Aromatic Chemical Products 3-4
Natural Gas Product 4
Great River Oil & Gas Corporation 4
Georgia-Pacific Contract 5
Marketing 5
Raw Materials 5
Competition 5
Employees 5
Environmental Regulation 6
2) Properties 7
3) Legal Proceedings 8
4) Submission of Matters to a Vote of Security Holders 8
PART II
5) Market Price of and Dividends on the Registrant's Common
Equity and Related Stockholder Matters 8
6) Selected Financial Data 8
7) Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
8) Financial Statements and Supplementary Data 8
9) Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure 8
PART III
10) Directors and Executive Officers of the Registrant 9
11) Executive Compensation 9
12) Security Ownership of Certain Beneficial Owners
and Management 10
13) Certain Relationships and Related Transactions 10
PART IV
14) Exhibits, Financial Statement Schedule and Reports on
Form 8-K 10-13
SIGNATURES
PART I
Item 1. BUSINESS.
General Description of Business
Georgia Gulf Corporation (the "Company") is a leading manufacturer and
marketer of quality chemical and plastic products. The Company's products
are manufactured through two highly integrated lines categorized into
electrochemicals and aromatic chemicals; and also include a third product
line, methanol, a natural gas chemical. The Company's electrochemical
products include chlorine, caustic soda, sodium chlorate, vinyl chloride
monomer ("VCM"), vinyl resins and compounds; the Company's aromatic chemical
products include cumene, phenol and acetone.
The Company has operated as an independent corporation since its
acquisition on December 31, 1984, of a major portion of the business and
assets of the chemical division of Georgia-Pacific Corporation
("Georgia-Pacific"). The Company's operations include production units at
five locations, several marketing organizations responsible for the sale
of the Company's products, a research and development laboratory and a
purchasing organization responsible for the acquisition of all major raw
materials. In most product areas, the Company's marketing program is
supported by an ongoing technical service effort. At the Company's five
manufacturing locations, there are twelve plants, six of which are located at
Plaquemine, Louisiana. The Company also leases storage terminals and
warehouses from which a portion of its products are distributed to customers.
The Company's products are generally intermediate chemicals that are sold
for further processing and use in a wide variety of applications. Some of
the more significant end-use applications include plastic piping, siding and
window frames made from vinyl resins; bonding agents for wood products and
high quality plastics made from phenol; acrylic sheeting for automotive and
architectural products made from acetone; and MBTE, a gasoline additive made
from methanol. The following percentages of sales were made in 1995 to the
manufacturers in the industries listed: 32% housing and construction, 26%
plastics and fibers, 17% solvents and chemicals, 14% consumer products, 6%
pulp and paper and 5% miscellaneous.
In the commodity chemical industry, a company's cost position as well as
the balance of supply and demand in particular product lines significantly
affect earnings and cash flow. Management believes that the Company is
among the lowest cost providers in each of its product lines. In addition,
the Company has invested over $440 million in the past five years to
maintain, expand and/or improve the efficiency of its operating facilities.
Management believes that with its low cost position and integrated product
lines, the Company is well positioned to compete in its various markets.
The Company's major capital projects during 1995 included a rigid vinyl
compound expansion of the plant at Gallman, Mississippi; a product quality
upgrade and expansion of the cumene plant at Pasadena, Texas; and a
modernization and expansion of the VCM plant in Plaquemine, Louisiana. The
Company spends approximately ten percent of its capital budget, before
capital expansion projects, on environmental and safety programs, which has
enabled the Company to continue to meet or exceed various regulatory
standards. The remaining expenditures are typically used to expand,
modernize and/or improve the efficiency of existing facilities.
The major planned capital expenditures for 1996 include the completion of
expansions to the VCM and rigid vinyl compound plants and the completion of
the cumene quality upgrade and expansion project, as well as continuing work
on the expansion of the phenol/acetone plant in Plaquemine, Louisiana,
scheduled for completion in the second quarter of 1997. Also at the
Plaquemine, Louisiana complex, an air separation plant is being constructed
to provide, at considerable savings, required oxygen and nitrogen that are
currently being purchased. This project is scheduled for completion during
the fourth quarter of 1996.
The Company's long-term strategy is to continue to concentrate its efforts
on products and services in the chemical and plastic industries, particular
in its core product areas. These efforts include the continuing investment
in maintaining and improving the Company's low cost position, as well as
selective and prudent capacity additions or expansions that will promote
growth in present and closely related product lines.
Electrochemical Products
Chlorine/Caustic Soda/Sodium Chlorate. The Company's facility at Plaquemine,
Louisiana has the annual capacity to produce 452 thousand tons of chlorine and
501 thousand tons of chlorine's co-product, caustic soda, as well as 27
thousand tons of sodium chlorate.
The major raw materials for these products are salt and electric power. The
Company has a long-term lease on a salt dome near the Plaquemine, Louisiana
facility with sufficient reserves of salt for the foreseeable future. The
lease grants the Company the exclusive use of the salt dome.
Electric power is the most significant cost component in the production of
chlorine, caustic soda and sodium chlorate. The Company's electrical
requirements are currently supplied by Louisiana Power and Light Company
("LP&L"), at rates that recognize the lower cost of supplying a very large,
high load-factor customer. The agreement with LP&L is terminable by the
Company upon six months notice, but is not terminable by LP&L prior to
September 1998.
As a major event in 1995, the Company announced a 250 megawatt
co-generation facility will be constructed at the Plaquemine, Louisiana,
complex which will supply under a long-term lease agreement, essentially all
the electricity and steam requirements for six of the Company's manufacturing
plants. Completion of the co-generation facility is scheduled for the third
quarter of 1997. Management believes the co-generation facility will
significantly reduce electrical costs as well as limit exposure to potential
problems arising from rapidly changing regulatory and rate environments.
Chlorine is used in the production of various chemicals, including those used
to make plastics and vinyl resins. Other applications include water
purification, waste water disinfection, pulp and paper bleaching,
agricultural products, laundry aids and pharmaceuticals. A majority of the
Company's chlorine production is consumed by the Company in the production of
VCM, which is then used to produce vinyl resins. The Company sells the
remaining chlorine principally to the pulp and paper and chemical industries.
The major uses of caustic soda are in the production of pulp and paper,
aluminum, oil, soaps and detergents. Caustic soda also has significant
applications in the production of other chemicals and chemical processes
where caustic soda is used to control pH levels aiding in waste
neutralization. Another use is in the textile industry where it makes
fabrics more absorbent and improves the strength of dyes. Caustic soda is
also used, to a lesser extent, in food processing and electroplating.
Sodium chlorate has major applications in the bleaching process for pulp and
paper. Sodium chlorate is also an ingredient in blasting agents, explosives and
solid rocket fuels.
Vinyl Chloride Monomer. The Company produces VCM at its Plaquemine,
Louisiana complex as the feedstock for the production of vinyl resins. The
major raw materials used in VCM production are purchased ethylene and
Company-produced chlorine. The VCM plant's annual capacity is presently 1.26
billion pounds, which is being expanded to 1.6 billion pounds with the
capability of also producing an additional 400 million pounds of ethylene
dichloride ("EDC"), the intermediate of the manufacture of VCM. The
expansion is scheduled for completion by the 1996 fourth quarter. A majority
of the VCM production in 1995 was used by the Company's vinyl resins
operations with the remainder being sold to other vinyl resins producers,
particularly in the export market.
Vinyl Suspension Resins. The Company operates a vinyl suspension resins
plant at Plaquemine, Louisiana. The plant is located adjacent to its major
raw material supplier, the Company's VCM facility, thereby minimizing
transportation and handling costs. The annual production capacity is 1.12
billion pounds, of which approximately one-fourth is used internally to
produce rigid vinyl compounds.
Vinyl suspension resins are one of the most widely used plastics in the
world today. After being formulated to desired properties, vinyl resins are
heated and shaped into finished products by various extrusion, calendaring and
molding processes. Applications are diverse and include pipe, window frames,
siding, flooring, shower curtains, packaging, bottles, film, medical tubing
and business machine housings. These vinyl resins are also important to the
automotive industry for use in seats, trim, floormats and vinyl tops.
Vinyl Emulsion Resins. The Company's Delaware City, Delaware facility
produces special purpose vinyl emulsion resins with an annual capacity of 48
million pounds. Vinyl emulsion resins, once compounded, are generally
semi-liquid and are processed with heat. All sales of vinyl emulsion resins
are to outside customers. Typical applications include filter gaskets,
battery separators, caulking compounds, sealants, surgical gloves, bottle cap
liners and squeeze toys.
Subsequent to December 31, 1995, the Company entered into an agreement to
sell its vinyl emulsion business, including the property and buildings at the
Delaware City location. The Company will continue to produce rigid vinyl
compounds at the Delaware City facility for a period of time. Closing of the
sale is contingent upon customary conditions. Assuming the consummation of
the sale, neither the proceeds or gain from the sale of the vinyl emulsion
business are expected to be material.
Rigid Vinyl Compounds. The Company's rigid vinyl compounding plants, had
an aggregate annual capacity of 290 million pounds for 1995, and are located
in Gallman, Mississippi; Delaware City, Delaware; and Tiptonville, Tennessee.
During the first half of 1996, the Company will start-up an 80 million pound
rigid vinyl compound expansion at the Gallman, Mississippi facility, which
has not been included in the stated annual capacity for 1995. A second phase
of the expansion, which includes 88 million pounds of additional capacity,
will be brought on-line as the market dictates. Rigid vinyl compound
production of approximately 80 million pounds at the Delaware City, Delaware
facility will be phased out as a result of the sale of that facility and the
majority of the rigid vinyl compound production will be transferred to the
lower cost Gallman plant.
Rigid vinyl compounds are formulated to provide specific end-use
properties that allow the material to be thermoformed directly into a
finished product. All sales of rigid vinyl compounds are to outside
customers. The product line can be segregated into three major product areas
according to the following fabrication methods:
Blow Molding -- The Company is a supplier of blow molding compounds,
which are primarily used for both food-grade and general purpose
bottles. Supplied in both clear and opaque colors, the materials
are used to package edible oils, cosmetics, shampoos, charcoal
lighter fluid and bottled water.
Injection Molding -- The Company supplies compounds used in the
business machine market for computer housings and keyboards. It also
supplies compounds to produce electrical outlet boxes. These
proprietary compounds, with extensive approval procedures by
customers or regulatory bodies, are sold to some of the leading
international producers of injection molded products. The Company
also manufactures compounds for use in pipe and furniture fittings.
Profile Extrusion -- The Company supplies profile extrusion markets,
which have applications in window and furniture profiles and extruded
sheets for household fixtures and decorative overlays. Profile
extrusions are an end-product for both pelletized and powder compounds.
Aromatic Chemical Products
Cumene. Cumene is produced at the Company's Pasadena, Texas facility
located on the Houston ship channel. The Company's cumene plant, the world's
largest, has an annual stated capacity of 1.42 billion pounds, which is
presently being expanded to 1.5 billion pounds. The expansion, due for
completion during the second quarter of 1996, includes a modernization of
technology, which will reduce overall manufacturing cost and increase
effective annual capacity by 300 million pounds. Cumene is produced from
benzene and propylene, which are purchased from various suppliers from the
numerous petroleum complexes located in the surrounding area. A large
portion of the Company's 1995 cumene output was consumed internally in the
production of phenol and its co-product acetone.
Phenol/Acetone. Phenol and acetone are produced at the Company's
Plaquemine, Louisiana facility which has 440 million pounds of annual phenol
capacity and 270 million pounds of annual acetone capacity, as well as at the
Pasadena, Texas, facility where annual capacity is 160 million pounds of
phenol and 100 million pounds of acetone. The Plaquemine, Louisiana
phenol/acetone plant is in the process of being expanded, which will add 60
million pounds of phenol and 36 million pounds of acetone, bringing name
plate capacity for the plant to 500 and 406 million pounds, respectively.
Phenol is a major ingredient in phenolic resins, which are used
extensively as bonding agents and adhesives for wood products such as plywood
and granulated wood panels, as well as in insulation, electrical parts, nylon
carpeting, oil additives and pharmaceuticals. Phenol is also a precursor to
high performance plastics used in automobiles, household appliances,
electronics and protective coating applications.
The largest uses for acetone are as a key ingredient to methyl
methacrylate, which is used to produce acrylic sheeting, and as an ingredient
for surface coating resins for automotive and architectural markets. Acetone
is also an intermediate for the production of engineering plastics and
several major industrial solvents. Other uses range from wash solvents for
automotive and industrial applications to pharmaceutical and cosmetics.
As a result of the phenol/acetone manufacturing process, the Company also
produces small amounts of a by-product, alpha-methylstyrene ("AMS"), which is
primarily used as a polymer modifier and as a chemical intermediate.
Natural Gas Product
Methanol. Methanol is produced at the Company's facility at Plaquemine,
Louisiana which has an annual capacity of 160 million gallons. Natural gas
represents the majority of the cost of methanol. The Plaquemine facility is
located in the center of Louisiana's oil and gas producing region and has
three separate pipeline systems delivering gas to the plant. The natural gas
is purchased by the Company under contracts at market prices from both producers
and gas pipeline suppliers.
A key use for methanol is in the production of methyl tertiary-butyl ether,
or MTBE, an additive that promotes cleaner burning gasoline by adding oxygen.
Methanol is also used as a raw material in the manufacture of formaldehyde,
which is an ingredient in bonding agents for building materials such as
granulated wood panels and plywood. Other applications for methanol include
windshield washer fluid, solvents, and components of acrylic sheeting,
coatings, fibers and household adhesives.
Great River Oil & Gas Corporation
The Company owns Great River Oil & Gas Corporation, a small oil and gas
exploration company with activities centered in southern Louisiana. This
subsidiary enhances the reliability of a small portion of the natural gas
requirements at the Company's Plaquemine, Louisiana complex.
Georgia-Pacific Contract
The Company has supply contracts, subject to certain limitations, for a
substantial percentage of Georgia-Pacific's requirements for certain
chemicals at market prices. These supply contracts have various expiration
dates (depending on the product) from 1996 through 1999 and may be extended
year-to-year upon expiration. The sales to Georgia-Pacific under these
supply contracts for the years ended December 31, 1995, 1994 and 1993 amounted
to approximately 14%, 15% and 15% of the Company's sales, respectively.
Marketing
The Company markets its products primarily to industrial customers
throughout the United States and also internationally. The Company's
products are sold by its sales force, which is organized by product line.
The sales organization, which is located predominantly in the southeastern
and midwestern United States, is supported by the Company's technical service
staff.
The Company's marketing program has been aimed at expanding and
diversifying its customer base both domestically and internationally. Other
than Georgia-Pacific, no single customer represents more than 10% of the
Company's net sales. Export sales accounted for approximately 15%, 13% and
14% of the Company's net sales for the years ended December 31, 1995, 1994
and 1993, respectively. The principal international markets served by the
Company include Canada, Mexico, Central and South America, Europe and Asia.
Raw Materials
The most important raw materials purchased by the Company are salt,
electricity, ethylene, benzene, propylene and natural gas. Raw materials
used for production of the Company's products are usually purchased from
various suppliers under supply contracts. Since raw materials account for a
significant portion of the Company's total production costs, the Company's
ability to pass on increases in these costs to its customers has a
significant impact on operating results which is, to a large extent, related
to market conditions. Management believes the Company has a reliable supply
base of raw materials under normal market conditions. The impact of any
future raw material shortages cannot be accurately predicted.
Competition
The Company experiences competition from numerous manufacturers in all of
its product lines. In some product areas, the Company's competitors have
substantially greater financial resources and are more highly diversified
than the Company. The Company competes on a variety of factors such as
price, product quality, delivery and technical service.
Management believes that the Company is well-positioned to compete as a
result of integrated product lines, the operational efficiency of its plants
and the location of its facilities near major water and rail transportation
terminals.
Employees
As of December 31, 1995, the Company had 1,143 full-time employees.
The Company has one collective bargaining agreement, which covered 55
employees at the Tiptonville, Tennessee, facility as of December 31, 1995.
Environmental Regulation
The Company's operations are subject to various federal, state and local
laws and regulations relating to environmental quality. These regulations,
which are enforced principally by the United States Environmental Protection
Agency and comparable state agencies, govern the management of solid and
hazardous waste; emissions into the air and discharges into surface and
underground waters; and the manufacture of chemical substances. All of the
plants operated by the Company meet current environmental standards.
Management believes that the Company is in material compliance with all
current environmental laws and regulations. The Company estimates that any
expenses incurred in maintaining compliance with these requirements will
not materially affect earnings or cause the Company to exceed its level of
anticipated capital expenditures. However, there can be no assurance that
regulatory requirements will not change, and therefore, it is not possible to
accurately predict the aggregate cost of compliance resulting from any such
changes.
Item 2. PROPERTIES
The Company's asset base was established from 1971 to the present with
construction of the Plaquemine, Louisiana, complex, the construction of the
Pasadena, Texas, cumene plant; the purchase of the three vinyl resin and/or
compound plants and the purchase of the Bound Brook, New Jersey,
phenol/acetone facility subsequently relocated to Pasadena, Texas, and
modernized in 1990. Subsequent to December 31, 1995, the Company entered
into an agreement to sell its vinyl emulsion business including the property
and buildings at the Delaware City location as described in Item 1 of this
Form 10-K. The Company continues to explore ways to expand both its plant
capacities and product lines. The Company believes current and additional
planned capacity will adequately meet anticipated demand requirements. The
average capacity utilization of the Company's production facilities in 1995
was 94%.
The following table sets forth the location of each chemical manufacturing
facility owned by the Company, the products manufactured at each facility and
the approximate processing capability of each, assuming normal plant
operation, as of December 31, 1995:
Locations Products Annual Capacity
Delaware City, DE Vinyl Emulsion Resins, in million pounds 48
Delaware City, DE Rigid Vinyl Compounds, in million pounds (1) 290
Gallman, MS
Tiptonville, TN
Pasadena, TX Cumene, in billion pounds (2) 1.42
Phenol, in million pounds 160
Acetone, in million pounds 100
Plaquemine, LA Chlorine, in thousand tons 452
Caustic Soda, in thousand tons 501
Sodium Chlorate, in thousand tons 27
Vinyl Chloride Monomer, in billion pounds (2) 1.26
Vinyl Suspension Resins, in billion pounds 1.12
Phenol, in million pounds (2) 440
Acetone, in million pounds (2) 270
Methanol, in million gallons 160
(1) Rigid vinyl compounds production capacity will be changing during
1996 as discussed in Item 1 of this Form 10-K.
(2) Production capacity is being expanded as discussed in Item 1 of this
Form 10-K.
The Company's manufacturing facilities are located near major water and
rail transportation terminals facilitating efficient delivery of raw
materials and prompt shipment of finished products. In addition, the Company
has a fleet of 2,430 railcars of which 756 are owned and the remainder leased
pursuant to operating leases with varying terms through the year 2010. The
total lease expense for the Company's railcars and other transportation
equipment was approximately $9,903,000 for 1995.
The Company leases office space for its principal executive offices in
Atlanta, Georgia. The Company also leases office space for information
services in Baton Rouge, Louisiana; and for sales and marketing offices in
Houston, Texas; Schaumburg, Illinois; and Lawrenceville, New Jersey; as well
as numerous storage terminals located throughout the United States.
Item 3. LEGAL PROCEEDINGS.
The Company is subject to claims and legal actions that arise in the
ordinary course of its business. Management believes that the ultimate
liability, if any, with respect to these claims and legal actions will not
have a material effect on the financial position or on the results of
operations of the Company.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of security holders during the fourth
quarter of 1995.
PART II
Item 5. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS.
The information set forth under the captions "Corporate Information
- --Common Stock Data" and Notes 5, 6, 7 and 13 of the "Notes to Consolidated
Financial Statements" of the Company's 1995 Annual Report to Stockholders is
hereby incorporated by reference herein in response to this item.
Item 6. SELECTED FINANCIAL DATA.
The information set forth under the caption "Ten-Year Selected Financial
Data" of the Company's 1995 Annual Report to Stockholders is hereby
incorporated by reference herein in response to this item.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information set forth under the caption "Management's Discussion and
Analysis" of the Company's 1995 Annual Report to Stockholders is hereby
incorporated by reference herein in response to this item.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information set forth on pages 19 through 33 of the Company's 1995
Annual Report to Stockholders is hereby incorporated by reference herein in
response to this item.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
The Company has not changed its independent public accountants and has had
no disagreements with its independent public accountants on accounting and
financial disclosure during the Registrant's two most recent fiscal years
prior to, or in any period subsequent to, the date of the most recent
financial statements included herein.
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information set forth under the caption "Election of Directors" in the
Company's Proxy Statement for the Annual Meeting of Stockholders to be held
May 21, 1996, is hereby incorporated by reference in response to this item.
The following is certain information regarding the executive officers of
the Company who are not Directors:
Richard B. Marchese, 54, has served as Vice President --Finance,
Chief Financial Officer and Treasurer of the Company since
May 1989, and prior thereto served as Corporate Controller from
its inception.
Thomas G. Swanson, 54, has served as Vice President -- Supply and
Corporate Development since August 1993. Mr. Swanson served as
Vice President -- Commodity Chemicals Group from December 1989 to
August 1993; as General Manager -- Commodity Chemicals Group from
November 1988 until December 1989; and prior thereto as Director
of Corporate Development for the Company from July 1987. Prior
thereto, Mr. Swanson was Manager -- Supply and Distribution for
the Company since its inception.
Mark J. Seal, 44, has served as Vice President -- Polymer Group
since August 1993. Mr. Seal served as Business and Manufacturing
Director -- Vinyl Resins from May 1992 until August 1993 and as
Business Manager PVC Resins and Compounds from May 1989 until
May 1992. Prior thereto, Mr. Seal served as Business Manager --
Electrochemicals from January 1987 until May 1989 and as Midwest
Regional Sales Manager for the Company from its inception until
January 1987.
Gary L. Elliott, 51, has served as Vice President -- Marketing and
Sales Commodity Chemicals Group since August 1993. Mr. Elliott
served as Business Manager -- Electrochemicals and Midwest
Regional Sales Manager from June 1989 until August 1993. Prior
thereto, Mr. Elliott served as Northeast Regional Sales Manager
from May 1987 until June 1989; as VCM Product Manager from
November 1985 to May 1987; and as a Sales Representative for the
Company from its inception until November 1985.
Edward A. Schmitt, 49, has served as Vice President -- Operations
Commodity Chemicals Group since August 1993. Mr. Schmitt served
as General Manager -- Chemical Operations from March 1992 until
August 1993; as General Manager -- Plaquemine Division from May
1989 until March 1992; and as Plant Manager - Plaquemine Division
from February 1988 until May 1989. Prior thereto, Mr. Schmitt
served as Manufacturing Manager from October 1985 until
February 1988 and as VCM Production Manager for the Company from
its inception until October 1985.
Joel I. Beerman, 46, has served as Vice President, General Counsel
and Secretary since February 1994 and as General Counsel since
February 1992. Prior thereto, Mr. Beerman served as Associate
General Counsel for the Company since its inception.
Executive officers are elected by, and serve at the pleasure of, the
Board of Directors.
Item 11. EXECUTIVE COMPENSATION.
The information set forth under the captions "Election of Directors" and
"Executive Compensation" in the Company's Proxy Statement for the Annual
Meeting of Stockholders to be held on May 21, 1996, is hereby incorporated
by reference in response to this item.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The information set forth under the captions "Principal Stockholders"
and "Security Ownership of Management" in the Company's Proxy Statement for
the Annual Meeting of Stockholders to be held on May 21, 1996, is hereby
incorporated by reference in response to this item.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The Company has not had any transactions required to be reported under this
item for the calendar year 1995, or for the period from January 1, 1996 to the
date of this report.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this 1995 Annual
Report for Georgia Gulf Corporation:
(1) The Consolidated Financial Statements, the Notes to Consolidated
Financial Statements, the Report of Management and the Report of
Independent Public Accountants listed below are incorporated
herein by reference from pages 19 through 33 of the Company's
1995 Annual Report to Stockholders:
Consolidated Balance Sheets as of December 31, 1995 and 1994
Consolidated Statements of Income for the years ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1994 and 1993
Consolidated Statements of Changes in Stockholders' Equity
(Deficit) for the years ended December 31, 1995, 1994 and 1993
Notes to Consolidated Financial Statements
Report of Management
Report of Independent Public Accountants.
(2) Financial Statement Schedules:
Report of Independent Public Accountants on Financial Statement
Schedule
The following financial statement schedule is for the years ended
December 31, 1995, 1994 and 1993:
II Valuation and Qualifying Accounts
Schedules other than the one listed above are omitted because they
are not required and are inapplicable or the information is
otherwise shown in the Consolidated Financial Statements or notes
thereto.
(3) Exhibits. Each management contract or compensatory plan or
arrangement is preceded by an asterisk.
The following exhibits are filed as part of this Form 10-K Annual Report:
EXHIBIT
NO. DESCRIPTION
The following exhibits relate to the Company's operating lease
agreement for its co-generation project:
10(a) Trust Agreement dated February 6, 1996, between NationsBanc
Leasing Corporation of North Carolina and First Security Bank
of Utah, N.A.
10(b) Leasehold Mortgage, Assignment of Leases, Security Agreement
and Financing Statement dated February 16, 1996, between the
Company, First Security Bank of Utah, N.A., and Val T. Orton.
10(c) Participation Agreement dated February 6, 1996, between the
Company, First Security Bank of Utah, N.A., NationsBanc
Leasing Corporation of North Carolina, NationsBank, N.A.
(South), ABN AMRO Bank N.V., Bank of Montreal, Bank of New
York, Bank of Nova Scotia, Bank of Tokyo Trust Company,
Chase Manhattan Bank, The Dai-Ichi Kangyo Bank, Limited,
Atlanta Agency, The Fuji Bank, Ltd., The Industrial Bank of
Japan, Limited, the Sakura Bank Limited, Atlanta Agency,
Rabobank Nederland, New York Branch, The Tokai Bank,
Limited, Atlanta Agency, Wachovia Bank of Georgia, N.A., and
Val T. Orton.
10(d) Lease Agreement (Tax Retention Operating Lease) dated February
6, 1996, between the Company and First Security Bank of
Utah, N.A.
10(e) Credit Agreement dated February 6, 1996, between First
Security Bank of Utah, N.A. and NationsBank, N.A. (South).
10(f) Security Agreement dated February 6, 1996, between First
Security Bank of Utah, N.A., Val T. Orton, NationsBank,
N.A. (South), and NationsBanc Leasing Corporation of North
Carolina.
10(g) Ground Lease Agreement dated February 16, 1996, between the
Company and First Security Bank of Utah, N.A.
13 1995 Annual Report to Stockholders
23 Consent of Independent Public Accountants
The following exhibit is incorporated herein by reference to the Company's Form
S-8 (File No. 33-64749) filed December 5, 1995:
EXHIBIT
NO. DESCRIPTION
10 Georgia Gulf Corporation Employee Stock Purchase Plan
The following exhibit is incorporated herein by reference to the Company's
Form S-3 (File No. 33-63051) filed September 28, 1995:
EXHIBIT
NO. DESCRIPTION
4 Indenture, dated as of November 15, 1995, between the Company
and LaSalle National Bank, as trustee (including form of
Notes).
The following exhibits are incorporated by reference to the Company's 1995 Form
10-Q Quarterly Report for the period ending June 30, 1995, filed August 2, 1995.
EXHIBIT
NO. DESCRIPTION
10(i) Receivables Transfer Agreement dated May 12, 1995, between the
Company, as Transferor, and Dynamic Funding Corporation.
10(ii) Term Loan Agreement dated June 29, 1995, between the Company and
The Industrial Bank of Japan, Limited as Administrative Agent.
The following exhibit is incorporated by reference to the Company's 1995 Form
10-Q Quarterly Report for the period ending March 31, 1995, filed May 15, 1995.
EXHIBIT
NO. DESCRIPTION
10 Credit Agreement, dated March 30, 1995, between the Company and The
Chase Manhattan Bank (National Association) as Administrative
Agent.
The following exhibits are incorporated herein by reference to the Company's
1991 Form 10-K Annual Report filed March 30, 1992.
EXHIBIT
NO. DESCRIPTION
3(a) Certificate of Amendment of Certificate of Incorporation
3(b) Amended and Restated By-Laws
*10 Georgia Gulf Corporation 1990 Incentive Equity Plan
22 Subsidiaries of the Registrant
The following exhibit is incorporated herein by reference to Exhibit 2 to the
Company's Registration Statement on Form 8-A filed May 11, 1990, as amended:
EXHIBIT
NO. DESCRIPTION
4 Amended and Restated Rights Agreement effective as of
August 31, 1990
The following exhibits are incorporated herein by reference to the Company's
Registration Statement on Form S-1 (file No. 33-9902) declared effective on
December 17, 1986:
EXHIBIT
NO. DESCRIPTION
3(a) Certificate of Agreement of Merger, with Certificate of
Incorporation of Company as Exhibit A thereto, dated
December 31, 1984, and amendments thereto
10(e) Stock Purchase Agreement between the Company and Georgia-Pacific
dated December 31, 1984, and Letter re: Stock Purchase
Agreement dated December 31, 1984
10(f) Chemical Sales Agreement between the Company and Georgia-Pacific
dated December 31, 1984 and Letter re: Chemical Sales Agreement
dated December 31, 1984
10(g) Agreement re: Liabilities among Georgia-Pacific, Georgia-Pacific
Chemicals, Inc. and others dated December 31, 1984
10(o) Georgia Gulf Savings and Capital Growth Plan
10(p) Georgia Gulf Salaried Employees Retirement Plan
10(q) Georgia Gulf Hourly Employees Retirement Plan
*10(u) Executive Retirement Agreements
10(v) Salt Contract
(b) Reports on Form 8-K
No report on Form 8-K was filed with the Securities and Exchange
Commission during the last quarter of 1995.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
GEORGIA GULF CORPORATION
(Registrant)
Date: March 28, 1996 By: /s/ Jerry R. Satrum
Jerry R. Satrum, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Jerry R. Satrum
Jerry R. Satrum President, Chief Executive March 28, 1996
Officer and Director
(Principal Executive Officer)
/s/ Richard B. Marchese
Richard B. Marchese Vice President - Finance, March 28, 1996
Chief Financial Officer and
Treasurer (Principal
Financial and Accounting Officer)
/s/ James R. Kuse
James R. Kuse Chairman of the Board and March 28, 1996
Director
/s/ John D. Bryan
John D. Bryan Director March 28, 1996
/s/ Dennis M. Chorba
Dennis M. Chorba Director March 28, 1996
/s/ Alfred C. Eckert III
Alfred C. Eckert III Director March 28, 1996
/s/ Robert E. Flowerree
Robert E. Flowerree Director March 28, 1996
/s/ Holcombe T. Green, Jr.
Holcombe T. Green, Jr. Director March 28, 1996
/s/ Edward S. Smith
Edward S. Smith Director March 28, 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE
To Georgia Gulf Corporation:
We have audited in accordance with generally accepted auditing standards,
the financial statements included in Georgia Gulf Corporation's Annual Report
to Stockholders incorporated by reference in this Form 10-K, and have issued
our report thereon dated February 15, 1996. Our audit was made for the
purpose of forming an opinion on those statements taken as a whole. The
schedule listed in Item 14 of this Form 10-K is the responsibility of the
Company's management and is presented for purposes of complying with the
Securities and Exchange Commission's rules and is not part of the basic
financial statements. This schedule has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, fairly states in all material respects the financial data required to
be set forth therein in relation to the basic financial statements taken as a
whole.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
February 15, 1996
GEORGIA GULF CORPORATION AND SUBSIDIARIES
SCHEDULE II --- VALUATION AND QUALIFYING ACCOUNTS
(Dollars in thousands)
Additions
Charged
Balance at Charged to to other Balance at
beginning costs and accounts-- Deductions end of
Description of period expenses describe --describe period
1993
Allowance for
doubtful accounts $3,200 $1,900 $ --- $(1,900) (1) $3,200
1994
Allowance for
doubtful accounts $3,200 $1,800 $ --- $(2,600) (1) $2,400
1995
Allowance for
doubtful accounts $2,400 $ 1,000 $ --- $(1,000) (1) $2,400
NOTES:
(1) Accounts receivable balances written off during the period.
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION PAGE (1)
10(a) Trust Agreement dated February 6, 1996, between
NationsBanc Leasing Corporation of North Carolina
and First Security Bank of Utah, N.A. . . . . . . ___
10(b) Leasehold Mortgage, Assignment of Leases, Security
Agreement and Financing Statement dated
February 16, 1996, between the Company, First Security
Bank of Utah, N.A., and Val T. Orton. . . . . . . ___
10(c) Participation Agreement dated February 6, 1996,
between the Company, First Security Bank of Utah, N.A.,
NationsBanc Leasing Corporation of North Carolina,
NationsBank, N.A. (South), ABN AMRO Bank N.V., Bank
of Montreal, Bank of New York, Bank of Nova Scotia,
Bank of Tokyo Trust Company, Chase Manhattan Bank,
The Dai-Ichi Kangyo Bank, Limited, Atlanta Agency,
The Fuji Bank, Ltd., The Industrial Bank of Japan,
Limited, the Sakura Bank Limited, Atlanta Agency,
Rabobank Nederland, New York Branch, The Tokai Bank,
Limited, Atlanta Agency, Wachovia Bank of Georgia,
N.A., and Val T. Orton. . . . . . . . . . . . . . ___
10(d) Lease Agreement (Tax Retention Operating Lease)
dated February 6, 1996, between the Company and
First Security Bank of Utah, N.A. . . . . . . . . ___
10(e) Credit Agreement dated February 6, 1996, between
First Security Bank of Utah, N.A. and NationsBank,
N.A. (South). . . . . . . . . . . . . . . . . . . ___
10(f) Security Agreement dated February 6, 1996, between
First Security Bank of Utah, N.A., Val T. Orton,
NationsBank, N.A. (South), and NationsBanc
Leasing Corporation of North Carolina. . . . . . ___
10(g) Ground Lease Agreement dated February 16, 1996,
between the Company and First Security Bank of
Utah, N.A. . . . . . . . . . . . . . . . . . . . ___
13 1995 Annual Report to Stockholders . . . . . . . ___
23 Consent of Independent Public Accountants . . . . ___
(1) Page numbers appear on the manually signed Form 10-K's only.
EXHIBIT 10(a)
TRUST AGREEMENT
dated as of February 6, 1996
among
NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA,
as the Holder,
and
FIRST SECURITY BANK OF UTAH, N.A.,
as Owner Trustee
GGC TRUST 1996-1
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
SECTION 1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 Interpretation.. . . . . . . . . . . . . . . . . . . . 1
ARTICLE II AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS;
DECLARATION OF TRUST BY TRUST COMPANY
SECTION 2.1 Authority To Execute and Perform Various Documents.. . 2
SECTION 2.2 Declaration of Trust by Trust Company. . . . . . . . . 2
ARTICLE III CONTRIBUTIONS AND PAYMENTS
SECTION 3.1 Procedure for Holder Fundings; Certificates. . . . . . 3
SECTION 3.2 Certificate Yield. . . . . . . . . . . . . . . . . . . 4
SECTION 3.3 Scheduled Return of Holder Fundings. . . . . . . . . . 4
SECTION 3.4 Early Return of Holder Fundings. . . . . . . . . . . . 4
SECTION 3.5 Payments from Trust Estate Only. . . . . . . . . . . . 5
SECTION 3.6 Method of Payment. . . . . . . . . . . . . . . . . . . 5
SECTION 3.7 Computation of Yield . . . . . . . . . . . . . . . . . 5
SECTION 3.8 Conversion and Continuation Options. . . . . . . . . . 6
SECTION 3.9 Increased Costs, Illegality, etc . . . . . . . . . . . 6
SECTION 3.10 Contribution Indemnity . . . . . . . . . . . . . . . . 8
SECTION 3.11 Notice of Amounts Payable. . . . . . . . . . . . . . . 8
ARTICLE IV COLLECTIONS AND DISTRIBUTIONS
SECTION 4.1 Collections and Remittances by the Owner Trustee . . . 9
SECTION 4.2 Priority of Distributions. . . . . . . . . . . . . . 10
SECTION 4.3 Holder Excepted Payments . . . . . . . . . . . . . . 10
SECTION 4.4 Distributions after Default. . . . . . . . . . . . . 10
ARTICLE V DUTIES OF THE OWNER TRUSTEE
SECTION 5.1 Notice of Certain Events . . . . . . . . . . . . . . 10
SECTION 5.2 Action Upon Instructions . . . . . . . . . . . . . . 11
SECTION 5.3 Indemnification. . . . . . . . . . . . . . . . . . . 11
SECTION 5.4 No Duties Except as Specified In Trust Agreement or
Instructions . . . . . . . . . . . . . . . . . . . . 11
SECTION 5.5 No Action Except Under Specified Documents or
Instructions . . . . . . . . . . . . . . . . . . . . 12
SECTION 5.6 Absence of Duties. . . . . . . . . . . . . . . . . . 12
ARTICLE VI THE OWNER TRUSTEE
SECTION 6.1 Acceptance of Trust and Duties . . . . . . . . . . . 12
SECTION 6.2 Furnishing of Documents. . . . . . . . . . . . . . . 13
SECTION 6.3 No Representations or Warranties as to the Facility
or Operative Agreements. . . . . . . . . . . . . . . 13
SECTION 6.4 No Segregation of Moneys; No Interest. . . . . . . . 13
SECTION 6.5 Reliance; Advice of Counsel. . . . . . . . . . . . . 13
SECTION 6.6 Liability With Respect to Documents. . . . . . . . . 14
SECTION 6.7 Not Acting In Individual Capacity. . . . . . . . . . 14
SECTION 6.8 Books and Records; Tax Returns . . . . . . . . . . . 14
SECTION 6.9 Substitute Owner Trustee; Owner Trustee Advisor. . . 15
ARTICLE VII INDEMNIFICATION OF THE OWNER TRUSTEE
SECTION 7.1 Indemnification Generally. . . . . . . . . . . . . . 15
SECTION 7.2 Compensation and Expenses. . . . . . . . . . . . . . 16
ARTICLE VIII TERMINATION OF TRUST AGREEMENT
SECTION 8.1 Termination of Trust Agreement . . . . . . . . . . . 16
SECTION 8.2 Termination at Option of the Holder. . . . . . . . . 16
SECTION 8.3 Termination at Option of the Owner Trustee . . . . . 16
SECTION 8.4 Actions by the Owner Trustee Upon Termination. . . . 17
ARTICLE IX SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES AND SEPARATE
OWNER TRUSTEES
SECTION 9.1 Resignation of the Owner Trustee; Appointment of
Successor . . . . . . . . . . . . . . . . . . . . . 17
SECTION 9.2 Co-Trustees and Separate Trustees. . . . . . . . . . 18
SECTION 9.3 Notice . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE X SUPPLEMENTS AND AMENDMENTS
SECTION 10.1 Supplements and Amendments . . . . . . . . . . . . . 21
SECTION 10.2 Limitation on Amendments . . . . . . . . . . . . . . 21
ARTICLE XI MISCELLANEOUS
SECTION 11.1 No Legal Title to Trust Estate in the Holder . . . . 21
SECTION 11.2 Sale of the Facility by the Owner Trustee is Binding 21
SECTION 11.3 Limitations on Rights of Others. . . . . . . . . . . 22
SECTION 11.4 Notices. . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 11.5 Severability . . . . . . . . . . . . . . . . . . . . 22
SECTION 11.6 Limitation on the Holder's Liability . . . . . . . . 22
SECTION 11.7 Separate Counterparts; Dating. . . . . . . . . . . . 22
SECTION 11.8 Successors and Assigns . . . . . . . . . . . . . . . 22
SECTION 11.9 Headings . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 11.10 Governing Law. . . . . . . . . . . . . . . . . . . . 23
SECTION 11.11 Performance by the Holder. . . . . . . . . . . . . . 23
SECTION 11.12 Conflict with Operative Agreements . . . . . . . . . 23
SECTION 11.13 No Implied Waiver. . . . . . . . . . . . . . . . . . 23
TRUST AGREEMENT
THIS TRUST AGREEMENT, dated as of February 6, 1996, is between
NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a North Carolina
corporation (the "Holder"), and FIRST SECURITY BANK OF UTAH, N.A., in its
individual capacity ("Trust Company"), and in its capacity as owner trustee
hereunder, together with its successors and assigns (the "Owner Trustee").
WHEREAS, in order to provide a portion of the funds for carrying out
the other transactions contemplated by the Operative Agreements, the Holder
will fund Holder Fundings pursuant to this Trust Agreement and the
Participation Agreement (as defined below);
WHEREAS, the Holder desires to form the Trust created hereby for the
purpose of developing, acquiring, installing, constructing and testing the
Facility and all components thereof and for carrying out certain transactions
contemplated by the Operative Agreements; and
WHEREAS, Trust Company is willing to act as trustee hereunder and to
accept the trust created hereby (the "Trust").
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions. For purposes of this Trust Agreement
(including the "WHEREAS" clauses set forth above), capitalized terms used in
this Trust Agreement and not otherwise defined herein shall have the meanings
assigned to them in Appendix A to that certain Participation Agreement, dated
as of February 6, 1996 (the "Participation Agreement"), among Georgia Gulf
Corporation, the Owner Trustee, the Holder, the various banks and other
lending institutions which are Lenders thereunder from time to time
(individually, a "Lender" and collectively, the "Lenders") and NationsBank,
N.A. (South), as Administrative Agent for the Lenders. Unless otherwise
indicated, references in this Trust Agreement to articles, sections,
paragraphs, clauses, appendices, schedules and exhibits are to the same
contained in this Trust Agreement.
SECTION 1.2 Interpretation. The rules of usage set forth in Appendix
A to the Participation Agreement shall apply to this Trust Agreement.
ARTICLE II
AUTHORITY TO EXECUTE AND PERFORM VARIOUS DOCUMENTS;
DECLARATION OF TRUST BY TRUST COMPANY
SECTION 2.1 Authority To Execute and Perform Various Documents. The
Holder hereby authorizes and directs the Owner Trustee (i) to execute and
deliver, as trustee for and on behalf of the Holder, each Operative Agreement
to which the Owner Trustee is a party and any other agreements, instruments,
certificates or documents related to the transactions contemplated hereby to
which the Owner Trustee is a party, (ii) to take whatever action shall be
required to be taken by the Owner Trustee by the terms of, and exercise its
rights and perform its duties under, each of the documents, agreements,
instruments and certificates referred to in clause (i) above as set forth in
such documents, agreements and certificates, and (iii) subject to the terms
of this Trust Agreement, to take such other action in connection with the
foregoing as the Holder may from time to time direct.
SECTION 2.2 Declaration of Trust by Trust Company.
(a) Trust Company hereby declares that it will hold all estate,
right, title and interest of the Owner Trustee in and to the
Facility, each Holder Funding, the Operative Agreements and any other
property contributed by the Holder, including, without limitation, all
amounts of Rent, insurance proceeds and condemnation awards, indemnity
or other payments of any kind (collectively, the "Trust Estate") as
Owner Trustee upon the trusts set forth herein and for the use and
benefit of the Holder, subject, however, to the provisions of the
Credit Agreement and the Security Documents. The name of the Trust
shall be "GGC Trust 1996-1".
(b) The purpose of the Trust is to hold title to the Trust Estate
for the benefit of the Holder and to engage in activities ancillary and
incidental thereto as the Holder shall determine to be desirable.
Except in connection with the foregoing, the Owner Trustee shall not
(i) engage in any business activity, (ii) have any property, rights or
interest, whether real or personal, tangible or intangible, (iii) incur
any legal liability or obligation, whether fixed or contingent,
matured or unmatured, other than in the normal course of the
administration of the Trust or (iv) subject any of its property or
assets to any mortgage, Lien, security interest or other claim or
encumbrance, other than in favor of the Lenders or the Holder
pursuant to the provisions of the Operative Agreements and this Trust
Agreement. THIS TRUST IS NOT A BUSINESS TRUST. THE SOLE PURPOSE OF
THE TRUST IS TO ACQUIRE AND HOLD TITLE TO THE TRUST ESTATE, SUBJECT
TO THE RIGHTS OF THE LENDERS, FOR THE BENEFIT OF THE HOLDER. THE OWNER
TRUSTEE MAY NOT TRANSACT BUSINESS OF ANY KIND WITH RESPECT TO THE
FACILITY COMPRISING THE TRUST ESTATE NOR SHALL THIS AGREEMENT BE
DEEMED TO BE, OR CREATE OR EVIDENCE THE EXISTENCE OF A CORPORATION
DE FACTO OR DE JURE, OR A MASSACHUSETTS TRUST, OR ANY OTHER TYPE OF
BUSINESS TRUST, ASSOCIATION OR JOINT VENTURE BETWEEN THE OWNER
TRUSTEE, THE HOLDER, THE ADMINISTRATIVE AGENT AND THE LENDERS.
ARTICLE III
CONTRIBUTIONS AND PAYMENTS
SECTION 3.1 Procedure for Holder Fundings; Certificates.
(a) Upon receipt from the Lessee by the Administrative Agent of
the Requisition specified in Section 5.2 of the Participation Agreement,
and subject to the terms and conditions of the Participation Agreement,
the Administrative Agent shall request from the Holder a Holder Funding
and the Holder shall make a Holder Funding under the Holder Commitment
on each date Fundings are made pursuant to Section 5 of the
Participation Agreement. The Administrative Agent may request a Holder
Funding under the Holder Commitment during the Commitment Period on
any date that a Funding may be requested pursuant to the terms of
Section 5.2(a) of the Participation Agreement, provided that the
Administrative Agent shall give the Holder irrevocable notice (which
notice must be received by the Holder prior to 12:00 Noon, Atlanta,
Georgia time, three Business Days prior to the requested date of
Holder Funding, specifying (A) the amount to be funded, (B) the
requested date of funding, (C) whether the Holder Funding is to be a
Eurodollar Holder Funding or an ABR Holder Funding or a combination
thereof, (D) if the Holder Funding is to be a combination of
Eurodollar Holder Fundings and ABR Holder Fundings, the respective
amounts of each type of Holder Funding and (E) the Interest Period
applicable to any Eurodollar Holder Fundings; provided, however, that
any Holder Funding by the Holder in an amount less than $100,000
shall be an ABR Holder Funding. Pursuant to the terms of the
Participation Agreement, the Administrative Agent shall be deemed to
have delivered such notice upon the delivery of a notice by the
Construction Agent or the Lessee containing such required information.
(b) Upon receipt of any such notice delivered pursuant to Section
3.1(a), the Holder shall make the amount of its Holder Funding available
to the Owner Trustee at the office of the Owner Trustee referred to in
Section 11.4 prior to 12:00 Noon, Atlanta, Georgia time on the date
requested by the Lessee in funds immediately available to the Owner
Trustee.
(c) On each date during the Commitment Period which is three
Business Days prior to any Scheduled Interest Payment Date for the
Loans, the Owner Trustee shall be deemed to have requested an ABR Holder
Funding pursuant to Section 3.1(a) in an amount equal to the
aggregate amount of Holder Yield due and payable on such date with
respect to the Facility. The date such Holder Funding shall be made
with respect to any such request shall be the relevant Scheduled
Interest Payment Date for the Loans and the proceeds of such Holder
Funding shall be applied to pay such Holder Yield. On each such
date, the Holder Facility Cost shall be increased by an amount equal to
the Holder Yield paid on such date with respect to the Facility with the
proceeds of such Holder Funding.
(d) The Holder Fundings made by the Holder to the Trust Estate
shall be evidenced by a Certificate of the Owner Trustee, substantially
in the form of Exhibit A hereto, issued in the name of the Holder and in
an amount equal to the Holder Commitment. Each Certificate shall (i)
be dated as of the Initial Closing Date, (ii) be stated to be due on
the Expiration Date, subject to scheduled redemptions in accordance with
Schedule 1 of the Participation Agreement and (iii) bear a yield on
the aggregate Holder Amount thereof from time to time outstanding at the
Holder Yield.
(e) To the extent that the Owner Trustee, in its capacity as
Borrower under the Credit Agreement, shall have elected to terminate
or reduce the amount of the Commitments pursuant to Section 2.5(a) of
the Credit Agreement, a pro rata election shall be deemed to have
been made with respect to the Holder Commitment. On any date on
which the Commitments shall be reduced to zero as a result of a
Credit Agreement Event of Default, the Holder Commitment shall
automatically be reduced to zero and the Owner Trustee shall redeem
the Certificate in full for the outstanding Holder Amount, together
with accrued but unpaid Holder Yield thereon and all other amounts
owing under the Certificate.
SECTION 3.2 Certificate Yield.
(a) The Owner Trustee shall pay to the Holder, from the Trust
Estate, its pro rata portion of Holder Yield on Holder Fundings made
hereunder. Payment of Holder Yield to the Holder shall be made in
arrears on each Scheduled Interest Payment Date for the Loans occurring
after the Basic Term Commencement Date or as otherwise provided herein
or in Sections 2.6 or Section 10.7 of the Participation Agreement.
If the date on which such payment of Holder Yield is due shall not be
a Business Day, such payment shall be made on the next succeeding
Business Day.
(b) If all or a portion of Holder Yield shall not be received by
the Holder when due (for any reason), such overdue amount shall, without
limiting the rights of the Holder hereunder or under any Operative
Agreement, bear an increased yield at the Holder Overdue Yield, in
each case from the date of nonpayment until paid (whether after or
before judgment).
SECTION 3.3 Scheduled Return of Holder Fundings. The outstanding
Holder Amount shall be due in full on the Expiration Date and shall be redeemed
in part on the dates and in amounts equal to the product of (i) the percentage
for the applicable date multiplied by (ii) the aggregate amount of Holder
Fundings calculated as of the Basic Term Commencement Date, as set forth in
Schedule 1 of the Participation Agreement. On each such date and on the
Expiration Date, subject to the terms of the Participation Agreement, the Owner
Trustee shall return to the Holder the portion of the aggregate Holder Amount
then due, together with all accrued but unpaid Holder Yield.
SECTION 3.4 Early Return of Holder Fundings.
(a) The Owner Trustee may at any time and from time-to-time redeem
the Certificates, in whole or in part, without premium or penalty (but
excluding for these purposes amounts due under Sections 3.9 and 3.10),
upon at least five (5) Business Days' irrevocable notice to the
Administrative Agent, on behalf of the Holder, specifying the date and
amount of any such redemption and whether the redemption is of ABR
Holder Fundings or Eurodollar Holder Fundings or a combination
thereof, and, if a combination thereof, the amount allocable to each.
Upon receipt of such notice, the Administrative Agent shall promptly
notify the Holder thereof. If such notice is given, the amount
specified in such notice shall be due and payable on the date
specified therein.
(b) If on any date the Administrative Agent or the Owner Trustee
shall receive any payment in respect of (i) any Casualty or Condemnation
pursuant to Section 15.1(a) or 15.1(g) of the Lease (excluding any
payments in respect thereof which are payable to Lessee in accordance
with the Lease), or (ii) the Termination Value in connection with the
delivery of a Termination Notice pursuant to Article XVI of the Lease,
or (iii) the Termination Value or such other applicable amount in
connection with the exercise of a Purchase Option under Article XX of
the Lease or (iv) any payment required to be made or elected to be made
by the Construction Agent to the Owner Trustee pursuant to the Agency
Agreement, then in each case, the Holder shall receive proceeds in
accordance with Section 10.7(b)(ii) of the Participation Agreement.
SECTION 3.5 Payments from Trust Estate Only. All payments to be made
by the Owner Trustee under this Trust Agreement (including, without limitation,
any payments pursuant to Section 3.10) shall be made only from the income and
proceeds from the Trust Estate and only to the extent that the Owner Trustee
shall have received income or proceeds from the Trust Estate to make such
payments in accordance with the terms hereof, except as specifically provided in
Section 6.1. The Holder agrees that it will look solely to the income and
proceeds from the Trust Estate to the extent available for payment as herein
provided and that, except as specially provided herein, Trust Company shall not
be liable to the Holder for any amounts payable under this Trust Agreement
and shall not be subject to any liability under this Trust Agreement.
SECTION 3.6 Method of Payment. All amounts payable to the Holder
pursuant to this Trust Agreement shall be paid or caused to be paid by the Owner
Trustee to, or for the account of, the Holder, or its nominee, by transferring
such amount in immediately available funds to a bank institution or banking
institutions with bank wire transfer facilities for the account of the Holder or
as otherwise instructed in writing from time to time by the Holder.
SECTION 3.7 Computation of Yield.
(a) Whenever it is calculated on the basis of the Prime Lending
Rate, Holder Yield shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed; and,
otherwise, Holder Yield shall be calculated on the basis of a 360-day
year for the actual days elapsed. Any change in the Holder Yield
resulting from a change in the ABR or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on
the day on which such change becomes effective.
(b) Pursuant to Section 14.13 of the Participation Agreement, the
calculation of Holder Yield under this Section 3.7 shall be made by the
Administrative Agent. Each determination of an interest rate by the
Administrative Agent shall be conclusive and binding on the Owner
Trustee and the Holder in the absence of manifest error.
(c) If the Eurodollar Rate cannot be determined by the
Administrative Agent in the manner specified in the definition of the
term "Eurodollar Rate", the Owner Trustee shall give telecopy or
telephonic notice thereof to the Holder as soon as practicable after
receipt of same from the Administrative Agent. Commencing on the
Scheduled Interest Payment Date for the Loans next occurring after the
delivery of such notice and continuing until such time as the
Eurodollar Rate can be determined by the Administrative Agent in the
manner specified in the definition of such term, all outstanding
Holder Fundings shall bear a yield at the ABR applicable from time to
time. Until such time as the Eurodollar Rate can be determined by
the Administrative Agent in the manner specified in the definition of
such term, no further Eurodollar Holder Fundings shall be made or shall
be continued as such at the end of the then current Interest Period nor
shall the Owner Trustee have the right to convert ABR Holder Fundings to
Eurodollar Holder Fundings.
SECTION 3.8 Conversion and Continuation Options. (a) The Lessee may
elect from time to time to convert Eurodollar Holder Fundings to ABR
Holder Fundings by giving the Owner Trustee at least three Business
Days' prior irrevocable notice of such election, provided that any such
conversion of Eurodollar Holder Fundings may only be made on the last
day of an Interest Period with respect thereto. The Lessee may elect
from time to time to convert ABR Holder Fundings to Eurodollar Holder
Fundings by giving the Owner Trustee at least five Business Days' prior
irrevocable notice of such election. Any such notice of conversion to
Eurodollar Holder Fundings shall specify the length of the initial
Interest Period or Interest Periods therefor. Upon receipt of any
such notice, the Owner Trustee shall promptly notify the Holder
thereof. All or any part of outstanding Eurodollar Holder Fundings or
ABR Holder Fundings may be converted as provided herein, provided that
no ABR Holder Funding may be converted into a Eurodollar Holder Funding
after the date that is one month prior to the Expiration Date.
(b) Any Eurodollar Holder Funding may be continued as such upon
the expiration of the then current Interest Period with respect thereto
by the Lessee giving irrevocable notice to the Owner Trustee, in
accordance with the applicable notice provisions for the conversion of
ABR Holder Fundings to Eurodollar Holder fundings set forth above
herein, of the length of the next Interest Period to be applicable to
such Eurodollar Holder Funding, provided that no Eurodollar Holder
Funding may be continued as such after the date that is one month
prior to the Expiration Date and provided, further, that if the Lessee
shall fail to give any required notice as described above or if such
continuation is not permitted pursuant to the preceding proviso or
otherwise, such Eurodollar Holder Fundings automatically be converted
to ABR Holder Fundings on the last day of such then expiring Interest
Period.
SECTION 3.9 Increased Costs, Illegality, etc.
(a) If, due to either (i) the introduction of or any change in or
in the interpretation of any law or regulation or (ii) the compliance
with any guideline or request hereafter adopted, promulgated or made
by any central bank or other governmental authority (whether or not
having the force of law), there shall be any increase in the cost to the
Holder of agreeing to make or making, funding or maintaining Holder
Fundings, then the Owner Trustee shall from time to time, upon demand by
the Holder, pay to the Holder additional amounts sufficient to
compensate the Holder for such increased cost. A certificate as to
the amount of such increased cost, submitted to the Owner Trustee by
the Holder, shall be conclusive and binding for all purposes, absent
manifest error.
(b) If the Holder determines that compliance with any law or
regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law, but
in each case promulgated or made after the date hereof) affects or
would affect the amount of capital required or expected to be
maintained by the Holder or any corporation controlling the Holder
and that the amount of such capital is increased by or based upon the
existence of the Holder's commitment to make Holder Fundings
hereunder and other commitments of this type, then, upon demand by
the Holder, the Owner Trustee shall immediately pay to the Holder,
from time to time as specified by the Holder, additional amounts
sufficient to compensate the Holder or such corporation in the light
of such circumstances, to the extent that the Holder reasonably
determines such increase in capital to be allocable to the existence of
the Holder's Commitment to make Holder Fundings hereunder. A
certificate as to such amounts submitted to the Owner Trustee by the
Holder shall be conclusive and binding for all purposes, absent
manifest error.
(c) Without limiting the effect of the foregoing, the Owner
Trustee shall pay to the Holder on the last day of the Interest
Period therefor so long as the Holder is maintaining reserves against
"Eurocurrency liabilities" under Regulation D an additional amount
(determined by the Holder and notified to the Owner Trustee) equal to
the product of the following for each Eurodollar Holder Funding for
each day during such Interest Period:
(i) the principal amount of such Eurodollar Holder
Funding outstanding on such day; and
(ii) the remainder of (x) a fraction the numerator of
which is the rate (expressed as a decimal) at which interest
accrues on such Eurodollar Holder Funding for such Interest Period
(less the Holder Applicable Margin) and the denominator of which is
one minus the effective rate (expressed as a decimal) at which such
reserve requirements are imposed on the Holder on such day minus
(y) such numerator; and
(iii) 1/360.
(d) Without affecting its rights under Section 3.9(a) or 3.9(b) or
any other provision of this Trust Agreement, the Holder agrees that if
there is any increase in any cost to or reduction in any amount
receivable by the Holder with respect to which the Owner Trustee would
be obligated to compensate the Holder pursuant to Sections 3.9(a) or
3.9(b), the Holder shall use reasonable efforts to select an
alternative office from which to fund Holder Fundings which would not
result in any such increase in any cost to or reduction in any amount
receivable by the Holder; provided, however, that the Holder shall
not be obligated to select such an alternate office if the Holder
determines that (i) as a result of such selection the Holder would be
in violation of any applicable law, regulation, treaty, or guideline, or
would incur additional costs or expenses or (ii) such selection would be
inadvisable for regulatory reasons or inconsistent with the interests of
the Holder.
(e) Notwithstanding any other provision of this Trust Agreement,
if the Holder shall notify the Owner Trustee that the introduction of or
any change in or in the interpretation of any law or regulation makes it
unlawful, or any central bank or other governmental authority asserts
that it is unlawful, for the Holder to perform its obligations hereunder
to make or maintain Holder Fundings bearing a yield based on the
Eurodollar Rate, then (x) all Eurodollar Holder Fundings outstanding
at such time shall thereafter bear a yield at the ABR from and after
the earlier of (i) the Scheduled Interest Payment Date for the Loans
next occurring after the date of such notice or (ii) such date as
required by law and (y) the obligation of the Holder to make, convert or
continue Eurodollar Holder Fundings shall be suspended until the Holder
has provided notification to the Owner Trustee of the Holder's
determination that the circumstances causing such suspension no
longer exist.
SECTION 3.10 Contribution Indemnity. Subject to the provisions of
Section 3.11, the Owner Trustee agrees to indemnify the Holder and to hold the
Holder harmless from any loss or reasonable expense which the Holder may sustain
or incur as a consequence of (a) default by the Owner Trustee in accepting any
Holder Funding hereunder after the Owner Trustee has given a notice requesting
the same in accordance with the provisions of this Trust Agreement, (b) default
by the Owner Trustee in making any redemption or other return of a Holder
Funding after the Owner Trustee has given a notice thereof in accordance with
the provisions of this Trust Agreement, or (c) the making of a voluntary or
involuntary redemption or other return of a Holder Funding on a day which is
not the last day of an Interest Period with respect thereto (unless such
Holder Funding is bearing a yield at the ABR in accordance with the terms
hereof). Such indemnification shall be in an amount equal to the excess, if
any, of (i) the amount of Holder Yield which would have accrued on the amount
so redeemed or returned or not accepted for the period from the date of such
redemption or other return or of such failure to accept on the last day of
such Interest Period (or, in the case of a failure to accept the Interest Period
that would have commenced on the date of such failure) in each case at the
applicable Eurodollar Rate for such Holder Fundings provided for herein over
(ii) the amount of yield (as determined by the Holder) which would have
accrued to the Holder on such amount by placing such amount on deposit for a
comparable period with leading banks in the relevant interest rate market.
This covenant shall survive the termination of this Trust Agreement and the
payment of all other amounts payable hereunder.
SECTION 3.11 Notice of Amounts Payable. (a) In the event that the
Holder becomes aware that any amounts are or will be owed to it pursuant to
Section 3.9 or 3.10 or that it is unable to make Holder Fundings which bear
a yield based on the Eurodollar Rate, then it shall promptly notify the Owner
Trustee thereof and, as soon as possible thereafter, the Holder shall submit
to the Owner Trustee a certificate indicating the amount owing to it and the
calculation thereof. The amounts set forth in such certificate shall be
prima facie evidence of the obligations of the Owner Trustee hereunder. If
the Holder receives a refund or realizes a return of any of the amounts
charged by the Holder pursuant to Section 3.9, the Holder shall promptly
credit such amounts to the Owner Trustee.
(b) Relocation. If the Holder claims any additional amounts payable
pursuant to Section 3.9 or that it is unable to make the Holder Funding which
bears a yield based on the Eurodollar Rate, it shall use its reasonable efforts
(consistent with legal and regulatory restrictions) to avoid or reduce the need
for paying such additional amounts or remedy such inability, including changing
the jurisdiction of its applicable lending office; provided, however, that the
taking of any such action would not in the sole judgment of the Holder, be
disadvantageous to the Holder.
(c) Mandatory Assignment. In the event that the Holder delivers to the
Owner Trustee a certificate in accordance with paragraph (a), or the Owner
Trustee is required to pay any additional amounts or other payments or the
Holder is required to make a Holder Funding bearing a yield at the ABR, subject
to the terms of the Participation Agreement, the Owner Trustee may, at its own
expense and in its sole discretion, (i) require the Holder to transfer or
assign, in whole or in part, without recourse (in accordance with Section
11.8), all or part of its interests, rights (except for rights to be
indemnified for actions taken while a party hereunder) and obligations under
this Agreement to a replacement bank or institution (provided, however, that,
subject to the Participation Agreement, the Owner Trustee, with the full
cooperation of the Holder, can identify a Person who is ready, willing and
able to be such replacement bank or institution with respect thereto) which
shall assume such assigned obligations, or (ii) during such time as no
Default or Event of Default has occurred and is continuing, terminate the
Holder Commitment of the Holder and redeem in full the outstanding Holder
Fundings of the Holder, provided, however, that (y) subject to the Participation
Agreement, the Owner Trustee or such replacement bank or institution, as the
case may be, shall have paid to the Holder in immediately available funds the
aggregate Holder Amount and accrued but unpaid Holder Yield to the date of
such payment and (subject to Section 3.9) all other amounts owed to it
hereunder and (z) such assignment or termination of the Holder Commitment and
redemption in full of the Holder Fundings do not conflict with any law, rule
or regulation or order of any court or Governmental Authority.
ARTICLE IV
COLLECTIONS AND DISTRIBUTIONS
SECTION 4.1 Collections and Remittances by the Owner Trustee. The
Owner Trustee agrees that, subject to the provisions of this Trust Agreement,
it will during the term of this Trust administer the Trust Estate and, at the
direction of the Holder (or, so long as the Credit Agreement shall continue,
subject to the provisions of the Credit Agreement and the Security
Documents), take steps to collect all Rent and other sums payable to the
Owner Trustee by the Lessee under the Lease. The Owner Trustee agrees to
distribute all proceeds received from the Trust Estate in accordance with
Article III and Sections 4.2 and 4.3. The Owner Trustee shall make such
distribution promptly upon receipt of such proceeds (provided such proceeds
are available for distribution) by the Owner Trustee, it being understood
and agreed that the Owner Trustee shall not be obligated to make such
distribution until the funds for such distribution have been received by the
Owner Trustee in cash or its equivalent reasonably acceptable to the Owner
Trustee.
SECTION 4.2 Priority of Distributions. Subject to the terms and
requirements of the Operative Agreements, all payments and amounts received
by Trust Company as Owner Trustee or on its behalf shall be distributed to
the Administrative Agent for allocation by the Administrative Agent in
accordance with the terms of Section 10.7 of the Participation Agreement or,
if such payments or amounts are received by the Owner Trustee from the
Administrative Agent, then they shall be distributed forthwith upon receipt
in the following order of priority: first, in accordance with the Holder
Yield protection provisions set forth in Article III; and, second, the
balance, if any, of such payment or amount remaining thereafter shall be
distributed to the Holder.
SECTION 4.3 Holder Excepted Payments. Anything in this Article IV or
elsewhere in this Trust Agreement to the contrary notwithstanding, any Holder
Excepted Payment received at any time by the Owner Trustee shall be distributed
promptly to the Person entitled to receive such Holder Excepted Payment.
SECTION 4.4 Distributions after Default. Subject to the terms of
Section 5.1 hereof, the proceeds received by the Owner Trustee from the
exercise of any remedy under the Lease shall be distributed pursuant to
Section 4.2 above. This Trust shall cease and terminate in accordance with
the terms set forth in Section 8.1 and upon the final disposition by the
Owner Trustee of all of the Trust Estate pursuant to this Section 4.4.
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
SECTION 5.1 Notice of Certain Events. In the event the Owner Trustee
shall have knowledge of any Lease Default, Lease Event of Default, Credit
Agreement Default, Credit Agreement Event of Default, Agency Agreement
Default or Agency Agreement Event of Default, the Owner Trustee shall give
written notice thereof within five (5) Business Days to the Holder, the
Lessee and the Administrative Agent unless such Default or Event of Default
no longer exists before the giving of such notice. Subject to the provisions
of Section 5.3, the Owner Trustee shall take or refrain from taking such
action as Administrative Agent shall direct so long as the Credit Agreement
is in effect (and as more specifically provided in Section 10.2(j) of the
Participation Agreement) and thereafter as the Holder shall direct, in each
case by written instructions to the Owner Trustee. If the Owner Trustee
shall have given the Administrative Agent and the Holder notice of any event
and shall not have received written instructions as above provided within 30
days after mailing notice of such event to the Administrative Agent and the
Holder, the Owner Trustee may, but shall be under no duty to, and shall have
no liability for its failure or refusal to, take or refrain from taking any
action with respect thereto, not inconsistent with the provisions of the
Operative Agreements, as the Owner Trustee shall deem advisable and in the
best interests of the Lenders and the Holder. For all purposes of this Trust
Agreement, in the absence of actual knowledge of a Responsible Officer
in the Corporate Trust Department of Trust Company, the Owner Trustee shall be
deemed not to have knowledge of any Default or Event of Default unless a
Responsible Officer of the Corporate Trust Department of Trust Company
receives notice thereof given by or on behalf of the Holder, the Lessee or
the Administrative Agent.
SECTION 5.2 Action Upon Instructions. Subject to the provisions of
Sections 5.1 and 5.3, upon the written instructions of the Administrative Agent
or the Holder (as applicable) or, as permitted expressly by the Operative
Agreements, the Lessee, as the case may be, the Owner Trustee will take or
refrain from taking such action or actions as may be specified in such
instructions.
SECTION 5.3 Indemnification. The Owner Trustee shall not be required
to take or refrain from taking any action under this Trust Agreement or any
other Operative Agreement (other than the actions specified in the first
sentence of Section 5.1 and in the last sentence of Section 5.4) unless Trust
Company shall have been indemnified by the Lessee or, if Owner Trustee
reasonably believes such indemnity to be inadequate, by either the Lenders or
the Holder in manner and form reasonably satisfactory to Owner Trustee,
against any liability, fee, cost or expense (including reasonable attorneys'
fees and expenses) that may be incurred or charged in connection therewith,
other than such as may result from the willful misconduct or gross negligence
or willful breach of the Owner Trustee; and, if the Administrative Agent
and/or the Holder shall have directed the Owner Trustee to take or refrain
from taking any action under any Operative Agreement, the Lenders and/or
the Holder, as applicable, agree to furnish such indemnity by a written
undertaking of indemnification and, in addition, to pay the reasonable
compensation of Owner Trustee for the services performed or to be performed
by the Owner Trustee pursuant to such direction. The Owner Trustee shall not
be required to take any action under any Operative Agreement if Owner Trustee
shall reasonably determine, or shall have been advised by counsel, that such
action is likely to result in personal liability for which Owner Trustee has
not been and will not be adequately indemnified or is contrary to the terms
hereof or of any Operative Agreement to which the Owner Trustee is a party or
is otherwise contrary to law. The Owner Trustee shall be under no liability
with respect to any action taken or omitted to be taken by the Owner Trustee
in accordance with instructions of the Administrative Agent or the Holder
pursuant to Section 5.2 hereof.
SECTION 5.4 No Duties Except as Specified In Trust Agreement or
Instructions. The Owner Trustee shall not have any duty or obligation to
manage, control, use, make any payment in respect of, register, record,
insure, inspect, sell, dispose of or otherwise deal with the Facility or any
other part of the Trust Estate, or to otherwise take or refrain from taking
any action under or in connection with any Operative Agreement to which the
Owner Trustee is a party, except as expressly provided by the terms of this
Trust Agreement or in written instructions from the Administrative Agent
and/or the Holder, as applicable, received pursuant to Section 5.1, 5.2 or
8.4; and no implied duties or obligations shall be read into this Trust
Agreement against the Owner Trustee. The Owner Trustee shall have no duty or
obligation to supervise or monitor the performance of the Construction Agent
pursuant to the Agency Agreement which for all purposes shall be an independent
contractor. Owner Trustee nevertheless agrees that it will (in its individual
capacity and at its own cost and expense), promptly take all action as may be
necessary to discharge any Lessor Liens on any part of the Trust Estate.
SECTION 5.5 No Action Except Under Specified Documents or
Instructions. The Owner Trustee agrees that it will not manage, control,
use, sell, dispose of or otherwise deal with the Facility or any other part
of the Trust Estate except (i) as required by the terms of the Operative
Agreements, (ii) in accordance with the powers granted to, or the authority
conferred upon, it pursuant to this Trust Agreement or (iii) in accordance
with the express terms hereof or with written instructions from the
Administrative Agent and/or the Holder, as applicable, pursuant to Section
5.1, 5.2 or 8.4.
SECTION 5.6 Absence of Duties.
(a) Except in accordance with written instructions furnished
pursuant to Section 5.1, 5.2 or 8.4, and without limitation of the
generality of Section 5.4, the Owner Trustee shall not have any duty to
(i) file, record or deposit any Operative Agreement or any other
document, or to maintain any such filing, recording or deposit or to
refile, rerecord or redeposit any such document; (ii) obtain
insurance on the Facility or effect or maintain any such insurance,
other than to receive and forward to the Holder any notices,
policies, certificates or binders furnished to the Owner Trustee
pursuant to the Lease; (iii) maintain the Facility; (iv) pay or
discharge any Tax or any Lien owing with respect to or assessed or
levied against any part of the Trust Estate, except as provided in
the last sentence of Section 5.4, other than to forward notice of
such Tax or Lien received by the Owner Trustee to the Holder and the
Administrative Agent; (v) confirm, verify, investigate or inquire
into the failure to receive any reports or financial statements of
the Lessee; (vi) inspect the Facility any time or ascertain or
inquire as to the performance or observance of any of the covenants of
the Lessee or any other Person under any Operative Agreement with
respect to the Facility; or (vii) manage, control, use, sell, dispose of
or otherwise deal with the Facility or any part thereof or any other
part of the Trust Estate, except as provided in Section 5.5.
(b) The Owner Trustee, in the exercise or administration of the
trusts and powers hereunder, including its obligations under Section 5.2
hereof, may, at the expense of the Lessee, employ agents, attorneys,
accountants, and auditors and enter into agreements with any of them and
Owner Trustee shall not be liable, either in its individual capacity or
in its capacity as Owner Trustee, for the default or misconduct of any
such agents, attorneys, accountants or auditors if such agents,
attorneys, accountants or auditors shall have been selected by it in
good faith.
ARTICLE VI
THE OWNER TRUSTEE
SECTION 6.1 Acceptance of Trust and Duties. Owner Trustee accepts
the trust and duties hereby created and agrees to perform the same, but only
upon the terms of this Trust Agreement. Owner Trustee agrees to receive,
manage and disburse all moneys constituting part of the Trust Estate actually
received by it as Owner Trustee in accordance with the terms of this Trust
Agreement. Owner Trustee shall not be answerable or accountable under any
circumstances, except for (i) its own willful misconduct or gross negligence
or willful breach, (ii) the inaccuracy of any of is representations or
warranties contained in Section 6.3 of this Trust Agreement or Section 7.2 of
the Participation Agreement, (iii) its failure to perform obligations
expressly undertaken by it in the last sentence of Section 5.4 of this Trust
Agreement or in Section 10.2(a) of the Participation Agreement, (iv) Taxes
based on or measured by any fees, commissions or compensation received by it
for acting as Owner Trustee in connection with any of the transactions
contemplated by the Operative Agreements, or (v) its failure to use ordinary
care to receive, manage and disburse moneys actually received by it in
accordance with the terms hereof.
SECTION 6.2 Furnishing of Documents. The Owner Trustee will furnish
to the Holder and to the Administrative Agent, promptly upon receipt thereof,
duplicates or copies of all reports, notices, requests, demands, opinions,
certificates, financial statements and any other instruments or writings
furnished to the Owner Trustee hereunder or under the Operative Agreements,
unless by the express terms of any Operative Agreement a copy of the same is
required to be furnished by some other Person directly to the Holder and/or
the Administrative Agent, or the Owner Trustee shall have determined that the
same has already been furnished to the Holder and the Administrative Agent.
SECTION 6.3 No Representations or Warranties as to the Facility or
Operative Agreements. OWNER TRUSTEE MAKES (i) NO REPRESENTATION OR WARRANTY,
EITHER EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, USE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE FACILITY (OR ANY PART
THEREOF), OR ANY OTHER REPRESENTATION, WARRANTY OR COVENANT WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE FACILITY (OR ANY PART THEREOF) AND
OWNER TRUSTEE SHALL NOT BE LIABLE FOR ANY LATENT, HIDDEN, OR PATENT DEFECT
THEREIN OR THE FAILURE OF THE FACILITY, OR ANY PART THEREOF, TO COMPLY WITH
ANY LEGAL REQUIREMENT except that Owner Trustee hereby represents, warrants
and covenants to the Holder that it will comply with the last sentence of
Section 5.4, and (ii) no representation or warranty as to the validity or
enforceability of any Operative Agreement or as to the correctness of any
statement made by a Person other than Owner Trustee or the Owner Trustee
contained in any thereof, except that Owner Trustee represents, warrants and
covenants to the Holder that this Trust Agreement has been and each of the other
Operative Agreements which contemplates execution thereof by the Owner Trustee
has been or will be executed and delivered by its officers who are, or will be,
duly authorized to execute and deliver documents on its behalf.
SECTION 6.4 No Segregation of Moneys; No Interest. Except as
otherwise provided herein or in any of the other Operative Agreements, moneys
received by the Owner Trustee hereunder need not be segregated in any manner
except to the extent required by law, and may be deposited under such general
conditions as may be prescribed by law, and neither Trust Company nor the
Owner Trustee shall be liable for any interest thereon, except as may be
agreed to in writing by Owner Trustee or the Trust Company.
SECTION 6.5 Reliance; Advice of Counsel. Owner Trustee shall not
incur any liability to any Person in acting upon any signature, instrument,
notice, resolution, request, consent, order, certificate, report, opinion,
bond or other document or paper believed by it to be genuine and believed by
it in good faith to be signed by the proper party or parties. Owner Trustee
may accept and rely upon a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive
evidence that such resolution has been duly adopted by such body and that the
same is in full force and effect. As to any fact or matter the manner of
ascertainment of which is not specifically prescribed herein, Owner Trustee
may for all purposes hereof rely on an Officers' Certificate of the relevant
party, as to such fact or matter, and such certificate shall constitute full
protection to Owner Trustee for any action taken or omitted to be taken by it
in good faith in reliance thereon. In the administration of the trusts
hereunder, the Owner Trustee may execute any of the trusts or powers hereof and
perform its powers and duties hereunder directly or through agents or attorneys
and may consult with counsel, accountants and other skilled Persons to be
selected and employed by it, and Owner Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
advice or opinion of any such counsel, accountants or other skilled Persons
and not contrary to this Trust Agreement.
SECTION 6.6 Liability With Respect to Documents. The Owner Trustee,
either in its trust or individual capacities, shall not incur any liability to
any Person for or in respect of the recitals herein, the validity or sufficiency
of this Trust Agreement or for the due execution hereof by the Holder or for the
form, character,genuineness, sufficiency, value or validity of the Facility or
for or in respect of the validity or sufficiency of any of the Operative
Agreements and the Owner Trustee, either in its trust or individual
capacities, shall in no event assume or incur any liability, duty or
obligation to any Person or to the Holder, other than as expressly provided
for herein or in any of the other Operative Agreements.
SECTION 6.7 Not Acting In Individual Capacity. All Persons having
any claim against Owner Trustee by reason of the transactions contemplated by
the Operative Agreements shall look only to the Trust Estate (or a part
thereof, as the case maybe) for payment or satisfaction thereof, except as
specifically provided in this Article VI and except to the extent that Owner
Trustee shall otherwise expressly agree in any Operative Agreement to which
it is a party.
SECTION 6.8 Books and Records; Tax Returns.
(a) The Owner Trustee shall be responsible for the keeping of all
appropriate books and records relating to the receipt and disbursement
of all moneys that it may receive hereunder, or under any other
Operative Agreement. The Owner Trustee shall, at the expense of the
Owner Trustee (in its individual capacity), file an application with
the Internal Revenue Service for a taxpayer identification number
with respect to the trust created hereby. The Owner Trustee shall,
at the expense of the Owner Trustee (in its individual capacity),
prepare or cause to be prepared and the Owner Trustee shall sign
and/or file the federal fiduciary tax return with respect to Taxes
due and payable by the trust created hereby in connection with the
transactions contemplated hereby and by any other Operative Agreement.
The Holder shall furnish the Owner Trustee with all such information as
may be reasonably required from the Holder in connection with the
preparation of such tax returns. The Owner Trustee shall keep copies of
all returns delivered to or filed by it.
(b) The Owner Trustee, either in its trust or individual
capacities, shall be under no obligation to appear in, prosecute or
defend any action, which in its opinion may require it to incur any
out-of-pocket expense or any liability unless it shall be furnished
with such reasonable security and indemnity against such expense or
liability as it may require. The Owner Trustee may, but shall be
under no duty to, undertake such action as it may deem necessary at
any and all times, without any further action by the Administrative
Agent or the Holder to protect the Facility and the rights and
interests of the Holder pursuant to the terms of this Trust Agreement;
provided, however, that Owner Trustee may obtain reimbursement for the
out-of-pocket expenses and costs of such actions, undertakings or
proceedings from the Lessee.
SECTION 6.9 Substitute Owner Trustee; Owner Trustee Advisor. First
Security Bank of Utah, N.A. has entered into this Trust Agreement and the other
Operative Agreements not individually, except as expressly stated herein or
therein (as the case may be), but solely as Owner Trustee under the Trust;
provided, notwithstanding the foregoing provisions of this Section 6.9, solely
to the extent that the Louisiana Trust Code (L.A. R.S. 9:1721 et. seq.) is
deemed to apply to the Trust, then (a) Mr. Val T. Orton, a resident of Davis
County, Utah shall be deemed to be the sole Owner Trustee with respect to the
Trust and (b) First Security Bank of Utah, N.A. (and any replacement or
successor thereto appointed by the Holder with the consent of the Majority
Lenders) shall be deemed to be the Owner Trustee Advisor. To the extent not
prohibited by the relevant provisions of the Louisiana Trust Code, in his
capacity as Owner Trustee, Mr. Val T. Orton shall act in accordance with the
express, written directions of the Owner Trustee Advisor and any actions not
in accordance with such directions shall be deemed null and void and of no
force or effect under the Operative Agreements or otherwise. In its capacity
as Owner Trustee Advisor, First Security Bank of Utah, N.A. shall act (x) in
accordance with the directions, limitations, terms and provisions of the
Operative Agreements otherwise applicable to the Owner Trustee and (y) to the
extent the Operative Agreements do not contain any direction, limitation,
term or provision with regard to any particular situation, in accordance with
the written instructions of the Holder. Actions taken by the Owner Trustee
Advisor which are not in accordance with the requirements of the immediately
preceding sentence shall be deemed null and void and of no force or effect
under the Operative Agreements or otherwise. In the event Mr. Val T. Orton
shall become the Owner Trustee, he shall not be required to post a bond of
any kind. To the extent the Louisiana Trust Code is deemed to apply to
the Trust, Mr. Val T. Orton hereby accepts the trust and duties hereby
created and agrees to perform the same, but only upon the terms of this
Trust Agreement.
ARTICLE VII
INDEMNIFICATION OF THE OWNER TRUSTEE
SECTION 7.1 Indemnification Generally. The Owner Trustee is
indemnified for matters related to the transactions described herein by the
Lessee pursuant to Section 13 of the Participation Agreement. Except as may
be specifically provided from time to time hereafter in writing by the
Holder, the Owner Trustee shall not have any right of indemnification from
the Holder with respect to the transactions described herein or in any of the
other Operative Agreements.
SECTION 7.2 Compensation and Expenses. The Lessee has agreed to pay
the fees and expenses of the Owner Trustee, the Holder Unused Fees and Holder
Participation Fees as provided in Sections 9.3, 9.4 and 9.5, respectively, of
the Participation Agreement.
ARTICLE VIII
TERMINATION OF TRUST AGREEMENT
SECTION 8.1 Termination of Trust Agreement. This Trust Agreement and
the trusts created hereby shall terminate and the Trust Estate shall, subject to
the provisions of the Participation Agreement, the other Operative Agreements
and Article IV hereof, be distributed to the Holder, and this Trust Agreement
shall be of no further force or effect, upon the earliest of (i) the written
request of the Holder following the sale or other final disposition by the
Owner Trustee of all property constituting part of the Trust Estate and the
final distribution by the Owner Trustee of all moneys or other property or
proceeds constituting part of the Trust Estate in accordance with the terms
hereof; provided, however, that the Trust Estate shall not be subject to sale
or other final disposition by the Owner Trustee prior to the payment in full
and discharge of the Loans and all other indebtedness secured by the Credit
Documents and the release of the Credit Documents and the liens and security
interest granted thereby and the payment in full of the Holder Amount and
Holder Yield thereon and all other amounts owing to the Holder under any of
the Operative Agreements; and (ii) 110 years after the date hereof.
SECTION 8.2 Termination at Option of the Holder. Notwithstanding
Section 8.1, this Trust Agreement and the trusts created hereby shall
terminate and the Trust Estate shall be distributed to the Holder, and this
Trust Agreement shall be of no further force and effect, upon the election of
the Holder by notice to the Owner Trustee, if such notice shall be
accompanied by the written agreement of the Holder assuming all the
obligations of the Owner Trustee under or contemplated by the Operative
Agreements and all other obligations of the Owner Trustee incurred by it as
trustee hereunder; provided, however, that the Holder agrees for the express
benefit of the Administrative Agent and the Lenders, that without the consent
of the Administrative Agent, no such election shall be effective until the
Liens and security interests of the Security Documents on the Collateral
shall have been released and until full payment of the principal of, and
interest on the Loans and all other sums due to the Lenders shall have been
made. Such written agreement shall be reasonably satisfactory in form and
substance to the Owner Trustee and shall release the Owner Trustee from all
further obligations of the Owner Trustee hereunder and under the agreements
and other instruments mentioned in the preceding sentence.
SECTION 8.3 Termination at Option of the Owner Trustee.
Notwithstanding any other section hereof, at any time that the Lease shall no
longer be in full force and effect and the Administrative Agent shall have
confirmed in writing to the Owner Trustee that the Lenders have received
payment in full of the principal of and interest on the Loans and that all
other sums due to the Administrative Agent and the Lenders under the
Operative Documents shall have been made, then the Holder hereby authorizes
the Owner Trustee to: (a) terminate this Trust Agreement and the trusts
created hereby and (b) distribute and convey the Trust Estate to the Holder
by executing the necessary transfer documents as contemplated by Section 8.4
hereof. The exercise of such option by the Owner Trustee shall cause this Trust
Agreement to be of no further force and effect and shall release the Owner
Trustee from all further obligations of the Owner Trustee hereunder and under
the agreements and other instruments mentioned in the preceding sentence.
SECTION 8.4 Actions by the Owner Trustee Upon Termination. Upon
termination of this Trust Agreement and the trusts created hereby pursuant to
Section 8.1, Section 8.2 or Section 8.3, the Owner Trustee shall upon notice
of such event take such action as may be necessary or as may be requested by
the Holder to transfer the Trust Estate to the Holder, including, without
limitation, the execution of instruments of transfer or assignment with
respect to any of the Operative Agreements to which the Owner Trustee is a
party.
ARTICLE IX
SUCCESSOR OWNER TRUSTEES, CO-OWNER TRUSTEES
AND SEPARATE OWNER TRUSTEES
SECTION 9.1 Resignation of the Owner Trustee; Appointment of
Successor.
(a) The Owner Trustee may resign at any time without cause by
giving at least 30 days' prior written notice to the Holder, the
Administrative Agent and the Lessee; provided, however that such
resignation shall not be effective until the acceptance of
appointment by a successor Owner Trustee under Section 9.1(b). The
Owner Trustee may be removed with or without cause at any time by the
Holder upon consent to such removal by the Administrative Agent and
with 30 days' prior written notice to the Owner Trustee, a copy of
which notice shall be concurrently delivered by the Holder to the
Administrative Agent and the Lessee. Any such removal shall be
effective upon the acceptance of appointment by a successor Owner
Trustee under Section 9.1(b). In case of the resignation or removal of
the Owner Trustee, the Holder may appoint a successor Owner Trustee by
an instrument signed by the Holder; provided, however, that such
successor Owner Trustee must be approved by the Administrative Agent.
In the event the Owner Trustee shall be an individual, his death or
incapacity, or termination of employment (whether voluntary or
involuntary) with First Security Bank of Utah, N.A. (or a successor
corporate Owner Trustee or Owner Trustee Advisor) shall be treated
as a resignation hereunder and shall be effective immediately. If a
successor Owner Trustee shall not have been appointed within 30 days
after the giving of written notice of such resignation or the
delivery of the written instrument with respect to such removal, the
Owner Trustee or the Holder may apply to any court of competent
jurisdiction to appoint a successor Owner Trustee to act until such
time, if any, as a successor shall have been appointed and shall have
accepted its appointment as above provided. Any successor Owner
Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Owner Trustee appointed as
above provided within one year from the date of the appointment by
such court.
(b) Any successor Owner Trustee, however appointed, shall execute
and deliver to the predecessor Owner Trustee an instrument accepting
such appointment, and thereupon such successor Owner Trustee, without
further act shall become vested with all the estates, properties,
rights, powers, duties and trusts of the predecessor Owner Trustee in
the trusts hereunder with like effect as if originally named an Owner
Trustee herein; but nevertheless, upon the written request of such
successor Owner Trustee such predecessor Owner Trustee shall execute
and deliver an instrument transferring to such successor Owner
Trustee, upon the trusts herein expressed, all the estates,
properties, rights, powers, duties and trusts of such predecessor Owner
Trustee, and such predecessor Owner Trustee shall duly assign, transfer,
deliver and pay over to such successor Owner Trustee all moneys or other
property then held by such predecessor Owner Trustee upon the trusts
herein expressed.
(c) Any successor Owner Trustee, however appointed, shall, to the
extent the provisions of the Louisiana Trust Code shall then be deemed
to apply to the Trust, be an individual, and otherwise, a bank or trust
company incorporated and doing business within the United States of
America and having a combined capital and surplus of at least
$50,000,000, if there be such an institution willing, able and
legally qualified to perform the duties of Owner Trustee hereunder
upon reasonable or customary terms.
(d) Any corporation into which the Owner Trustee may be merged or
converted or with which it may be consolidated, or