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S10-85 , I ORDINANCE NO. s10-85 AN ORDINANCE AUTHORIZING THE ADDITIONAL FINANCING BY THE CITY OF ELGIN, ILLINOIS, OF A PROJECT CONSISTING OF THE ACQUISITION OF LAND AND OF THE CONSTRUCTION AND INSTALLATION OF BUILDINGS AND EQUIPMENT TO BE USED AS A MANUFACTURING FACILIT TO BE LOCATED THEREON IN ORDER TO CREATE AND RETAIN EMPLOYMENT OPPORTUNITIES IN THE LOCALITY OF THE CITY OF ELGIN, ILLINOIS AND ENCOURAGE ECONOMIC DEVELOPMENT THEREIN, THEREBY REDUCING THE EVILS ATTENDANT UPON UNE PLOYMENT AND PROVIDING FOR THE INCREASED WELFARE AND PROSPERITY OF THE RESIDENTS OF SAID LOCALITY; AUTHORIZING AND PROVIDING FOR THE ISSUANCE BY THE CITY OF ELGIN, ILLINOIS OF ITS ECONOMIC DEVELOPMENT REVENUE BOND (UNIVERSAL CHEMICALS AND COATINGS, INC. PROJECT) SERIES 1985 IN THE PRINCIPAL AMOUNT OF $1,500,000, AND IN CONNECTION THEREWITH AUTHORIZING THE EXECUTION AND DELIVERY OF AN AGREEMENT AMONG THE CITY, UNIVERSAL CHEMICALS AND COATINGS, INC. AND THE AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, PROVIDING FOR THE MAKING OF A LOAN TO UNIVERSAL CHEMICALS AND COATINGS, INC. FROM THE PROCEEDS OF SAID BOND, THE SECURITY FOR SAID BOND, THE SALE OF SAID BOND TO THE AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO; AND RELATED MATTERS. WHEREAS, pursuant to its home rule powers and pursuant to City of Elgin Ordinance No. S2-80 (the "Act"), the City of Elgin, Illinois (the "Issuer"), a municipality and home rule unit of the State of Illinois, has the power to issue its revenue bonds to finance facilities for the purpose of creating or retaining employment opportunities within the locality of the Issuer and encouraging economic development therein, thereby reducing the evils attendant upon unemployment and providing for the increased welfare and prosperity of the residents of said locality; and WHEREAS, pursuant to a Memorandum of Agreement dated November 25, 1985 between the Issuer and Universal Chemicals and Coatings, Inc. (hereinafter sometimes referred to as the "Company"), a Delaware corporation, the Issuer in order to further the public purposes set forth above, agreed to issue its economic development revenue bond to provide additional funds to finance completion of the constructing and equipping of buildings used as a manufacturing facility within the corporate limits of the Issuer (the "Project"). I WHEREAS, the Issuer is willing to issue its revenue bond to finance a portion of the cost of the Project and to enter into an Agreement with the Company and American National Bank and Trust Company of Chicago (the "Institutional Lender"), upon terms which will produce revenues and receipts sufficient to provide for the prompt payment at maturity of the principal and interest on such revenue bond, all as set forth in the provisions of the Agreement hereinafter identified; and WHEREAS, pursuant to the requirements of the Tax Equity and Fiscal Responsibility Act of 1982, and public notice published on December 6 , 1985, in the Daily Courier News, a newspaper of general circulation in the City of Elgin, a public hearing on the plan of financing for the Project was held by the City Council on December 23, 1984; and WHEREAS, the Issuer hereby finds that the issuance of the proposed revenue bond will further the public purposes set forth above, and the same is a matter pertaining to the government and affairs of the Issuer; and WHEREAS, it is necessary to authorize the execution of an Agreement to be dated as of December 1, 1985 (the "Agreement") among the Issuer, the Company and the Institutional Lender, under the terms of which the Issuer agrees to sell its industrial development revenue bond to the Institutional Lender and to lend the proceeds to the Company, and the Company agrees to mortgage the Project and to assign certain contracts and to pay to the Issuer or its assignee amounts sufficient to pay at maturity the principal of and interest on the revenue bond hereinafter authorized and will evidence such obligations by executing its direct obligation note in the principal amount of $1,500,000 (the "Note"); and WHEREAS, it is necessary to authorize the issuance and sale of said economic development revenue bond to the Institutional Lender; and -2- 1 WHEREAS, the Issuer has caused to be prepared and presented to this meeting the following documents, which the Issuer proposes to enter into: 1. The form of Agreement; 2. The form of Mortgage and Security Agreement; 3. The form of Collateral Assignment; 4. The form of the proposed $1,500,000 City of Elgin, Illinois Economic Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project) Series 1985 (the "Bond"); and 5. The form of Assignment and Security Agreement. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF ELGIN, ILLINOIS AS FOLLOWS: Section 1. That the form, terms and provisions of the proposed Agreement be, and they hereby are, in all respects approved, and that the Mayor of the Issuer is hereby authorized, empowered and directed to execute, and the City Clerk of the Issuer is hereby authorized, empowered and directed to attest and to affix the seal of the Issuer to, the Agreement in the name and on behalf of the Issuer, and thereupon to cause the Agreement to be delivered to the Company and the Institutional Lender; that the Agreement is to be in substantially the form presented to and before this meeting and hereby approved, and that from and after the execution and delivery of the Agreement, the officials, agents and employees of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Agreement as executed. Section 2. That the form, terms and provisions of the proposed Assignment be, and they hereby are, in all respects approved, and that the Mayor of the Issuer is hereby authorized, empowered and directed to execute, and the City Clerk of the Issuer is hereby authorized, empowered and directed to attest and to affix the seal of the Issuer to, the Assignment in the name and on behalf of the Issuer, and thereupon to cause the -3- Assignment to be delivered to the Institutional Lender, and the Assignment shall constitute a lien for the security of the Bond issued under the Agreement upon the revenues and receipts derived from the Agreement, including, but not limited to, the Note, the Collateral Assignment (the "Collateral Assignment") and the Mortgage and Security Agreement (the "Mortgage"); that the Assignment is to be in substantially the form presented to this meeting and hereby approved, and that from and after the execution and delivery of the Assignment, the officials, agents and employees of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with he provisions of the Assignment as executed. Section 3. (a) That the Mayor or the City Clerk of the Issuer be and each of them is hereby authorized, empowered and directed to cause the Bond to be prepared in the principal amount of $1,500,000; that the Bond will be dated the date of issuance and will be payable in equal quarterly installments of Seventy-Five Thousand Dollars ($75,000) on March 31, June 30, September 30 and December 30 (the "Payment Dates") with the first installment due on March 31, 1986 and the final installment due on December 30, 1990. The Bond will be expressed to bear interest on the unpaid principal balance from the date of its issuance at a varying rate per annum which shall be seventy percent (70%) of the rate of interest publicly announced from time to time by the American National Bank and Trust Company of Chicago as its prime rate (the "Prime Rate") with adjustments in such varying rate to be made on the same date as any announced change in the Prime Rate, provided however that except upon the occurrence of an event requiring purchase of the Bond pursuant to the Contingent Purchase Agreement the rate of interest borne by the Bond and the Note shall never be less than six percent (6%) per annum nor more than nine percent (9%) per annum and provided further that any changes in the Prime Rate occurring within 15 days before any Payment Date resulting in an increase or decrease in -4- the interest which would otherwise be payable on such Payment Date, shall not, if an increase, be payable by the Company on such Payment Date, but shall instead be payable on the next succeeding Payment Date or shall, if a decrease, reduce the amount which would otherwise be payable on the next succeeding Payment Date. Interest shall be calculated, for actual days elapsed, on a 360 day year. In the event of a declaration of default by the Institutional Lender, interest on overdue principal and, to the extent permitted by law, on overdue interest, shall be payable on demand at a rate equal to the Prime Rate then in effect plus three percent (3%) per annum until paid. The Bond shall be in the form of a single typewritten registered Bond, payable in such medium of payment and at such place, subject to such terms of prepayment and redemption and containing such other terms and provisions specified in the Agreement (as executed and delivered) and shall be executed in the name of the Issuer with the manual signatures of the Mayor and the City Clerk of the Issuer, and the seal of the Issuer shall be affixed thereto or imprinted thereon. (b)The Bond will be issued pursuant to the Act and will not constitute a general obligation of the Issuer, but will be a limited obligation of the Issuer, payable solely out of the income and revenues of the Issuer to be derived from the Project pursuant to the Agreement. No holder of the Bond shall have the right to compel any exercise of the taxing power of the Issuer, or the State of Illinois or any political subdivision thereof, to pay the Bond or the interest or premium, if any, thereon, and the Bond will not constitute an indebtedness or a loan of credit of the Issuer, the State of Illinois or any political subdivision thereof, or a charge against their general credit or taxing powers, within the meaning of any constitutional or statutory provision. (c)Neither the Issuer nor the State of Illinois or any political subdivision thereof shall in any event be liable for the payment of principal of, premium, if any, or interest on the Bond, or for damages arising out of the failure to perform any pledge, mortgage, obligation or Agreement of any kind whatsoever of the Issuer. -5- (d)Neither the Bond nor any of the Issuer's agreements or obligations thereunder will constitute an indebtedness or a loan of credit of the Issuer or of the State of Illinois or any political subdivision thereof within the meaning of any constitutional or statutory provision whatsoever, nor shall the Bond be construed to create any moral obligation of the Issuer, the State of Illinois or any political subdivision thereof. Neither the faith and credit nor the taxing power of the Issuer or the State of Illinois or any political subdivision thereof is pledged to the payment of the principal of the Bond, the interest or any premium thereon, or other costs incident thereto. (e)No recourse shall be had for the payment of the principal of, premium, if any, or interest on the Bond or for any claim based thereon or upon any obligation, covenant or Agreement contained in this Ordinance, the Agreement, the Assignment, or in any other instrument contemplated therein, against any past, present or future official, officer, agent or employee of the Issuer, or any successor corporation, as such, either directly or through the Issuer or any successor corporation, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise. Section 4. That the form of the Bond submitted to this meeting, subject to appropriate insertion and revision in order to comply with the provisions of the Agreement be, and the same hereby is, approved and when the same shall be executed on behalf of the Issuer in the manner contemplated by the Agreement and this Ordinance in the principal amount of $1,500,000, it shall represent the approved form of the Bond of the Issuer. Section 5. That the Mayor of the Issuer be and is hereby authorized, empowered and directed, for and on behalf of the Issuer, to issue and sell to the Institutional Lender the Bond in the principal face amount of $1,500,000 at a price and on terms and conditions as provided in the Agreement. -6- . t Section 6. That from and after the execution and delivery of said documents, the proper officials, agents and employees of the Issuer are hereby authorized, empowered and directed to do all such acts and things and to execute all such documents as may be necessary to carry out and comply with the provisions of the Assignment, the Agreement and the Bond as executed and to further the purposes and intent of this Ordinance, including the preamble hereto. Section 7. That adoption of the Ordinance by the corporate authorities of the Issuer and the approval hereof by the Mayor of the Issuer shall constitute the approval by the "applicable elected representative" required by Section 103(k)(2)(B)(i) of the Internal Revenue Code of 1954, as amended by the Tax Equity and Fiscal Responsibility Act of 1982 (the "Code"). Section 8. That the Issuer elects to have the provisions of Section 103(b)(6)(D) of the Code apply to the Bond, and the Mayor or City Clerk is hereby authorized and direct to file or cause to be filed an appropriate statement relating to such election with the Internal Revenue Service (relating to the temporary period) pertaining to Section 103(c) of the Code. Section 9. That the provisions of the Agreement require the Company to bear the risks of any loss that may result from investments of monies as held as part of the proceeds of the Bond, and the City Council hereby finds and determines that the authorization to the Institutional Lender to invest monies held as part of such proceeds as provided in the Agreement will not involve any undue risk of loss of funds derived from the general revenue of the Issuer. Section 10. That no covenant, stipulation, obligation or Agreement herein contained, or contained in any instrument or document executed in connection with the Project shall be deemed to be a covenant, stipulation, obligation or Agreement of any of the corporate authorities of the Issuer or any officer, agent or employee of the Issuer in -7- their individual capacities, and neither the corporate authorities of the Issuer nor any officer of the Issuer executing the Bond shall be liable personally on the Bond or subject to any personal liability or accountability by reason of the issuance thereof. Section 11. That all acts and doings of the officials of the Issuer which are in conformity with the purposes and intent of this Ordinance and in furtherance of the issuance and sale of the Bond and the financing of the Project be, and the same hereby are, in all respects, approved and confirmed. Section 12. That the provisions of this Ordinance are hereby declared to be separable, and if any section, phrase or provision shall, for any reason, be declared to be invalid, such declaration shall not affect the validity of the remainder of the sections, phrases or provisions hereof. Section 13. That notwithstanding any other provisions of law to the contrary, the Bond, the Agreement, and any transaction provided for therein shall not be void by reason of the pecuniary interest therein of any of the corporate authorities of the Issuer. Section 14. That all ordinances or parts of ordinances in conflict with the provisions of this Ordinance are hereby repealed to the extent of such conflict. Section 15. That this Ordinance shall be in full force and effect upon its passage and approval and its filing in the records of the Issuer by the City Clerk. s/ Richard L. Verbic Mayor Passed: December 23 , 1985 Approved: December 23, 1985 Published: Attest: s/ Marie Yearman City Clerk -8- CTH-10002:111885 MEMORANDUM OF AGREEMENT THIS MEMORANDUM OF AGREEMENT is between the City of Elgin, Illinois (the "Issuer") and Universal Chemical and Coatings, Inc., a Delaware corporation (the "Borrower"). 1. Preliminary Statement. Among the matters of mutual inducement which have resulted in this Agreement are the following: (a) The Issuer is a home rule unit of local government and is authorized under its home rule powers as set forth in the 1970 Constitution of the State of Illinois, Article VII, Section 6 and the provisions of an Ordinance adopted on February 13, 1980, as supplemented and amended (the "Ordinance") to issue economic development revenue bonds for the purpose of financing, in whole or in part, the cost of the construction, acquisition, purchase, reconstruction, improvement, betterment or extension of any economic development project and to enter into a loan agreement with the Borrower pursuant to which the proceeds of such revenue bonds may be loaned to the Borrower or its designee to finance the costs of the construction of such project. (b) The Borrower wishes to obtain satisfactory assurance from the Issuer that the proceeds of the sale of the revenue bonds of the Issuer will be made available to it or its designee to finance the costs of construction and equipping of an industrial facility to be located on the south side of Fox Lane approximately 1000 ft. west of North McLean Boulevard, within the territorial boundaries of the Issuer (the "Project"). (c) Subject to the conditions contained herein and to the due compliance with all requirements of law, the Issuer, by virtue of the provisions of the Ordinance, will issue and sell its revenue bonds in an amount not to exceed $1,500,000 (the "Bonds") to finance the costs of the Project. 2. Undertakings on the Part of the Issuer. Subject to the conditions above stated, the Issuer agrees as follows: (a) That it will authorize the issuance and sale of the Bonds under the provisions of the Ordinance. (b) That it will, at the proper time and subject in all respects to the prior advice, consent and approval of the Borrower, adopt, or cause to be adopted, such proceedings and authorize the execution of such documents as may be necessary and advisable for the authorization, issuance, and sale of the Bonds, and that it will enter into a loan agreement whereby the Borrower or its designee will pay to or on behalf of the Issuer such sums as shall be sufficient to pay the principal and interest and redemption premium, if any, on the Bonds as and when the same shall become due and payable. 3. Undertakings on the Part of the Borrower. Subject to the conditions above stated, the Borrower agrees as follows: (a) That it will use all reasonable efforts to find one or more purchasers for the Bonds. (b) That contemporaneously with the delivery of the Bonds, it or its designee, will enter into a loan agreement with the Issuer under the terms of which the Borrower or its designee will obligate itself to pay to the Issuer sums sufficient in the aggregate to pay the principal of and interest and redemption premium, if any, on the Bonds as and when the same shall become due and payable. 4. General Provisions. (a) All commitments of the Issuer under Paragraph 2 hereof and of the Borrower or its designee under Paragraph 3 hereof are subject to the condition that on or before December 31, 1985 (or such other date as shall be mutually satisfactory to the Issuer and the Borrower), the Issuer and the Borrower or its designee shall have agreed to mutually acceptable terms and conditions of the loan agreement and of the Bonds and other instruments or proceedings relating to the Bonds and the Bonds shall have been issued. The decision not to approve or agree to any term or condition of any document or not to take any action prior to issuance of the Bonds shall rest solely within the complete discretion of the parties to this Agreement. (b) If the events set forth in (a) of this Paragraph 4 do not take place within the time set forth or any extension thereof and the Bonds in an amount not exceeding the amount stated above are not sold within such time, the Borrower agrees that it will reimburse the Issuer for all reasonable and necessary direct out-of-pocket expenses which the Issuer may incur at the Borrower's or the Borrower's designee's request or as a result of arising out of the passage of this Resolution including but not limited to the payment of attorney and other consultant fees arising from the execution of this Agreement and the performance by the Issuer of its obligations hereunder, and this Agreement shall thereupon terminate. IN WITNESS WHEREOF, the parties hereto have entered into this Agreement by their officers thereunto duly authorized as of the day of 1985. CITY OF ELGIN, ILLINOIS Mayor (SEAL) ATTEST: City Clerk UNIVERSAL CHEMICAL AND COATINGS, INC. By Its (SEAL) ATTEST: Its d UNIVERSAL CHEMICALS AND COATINGS, INC. AGREEMENT Dated as of December 1, 1985 Re: $1,500,000 City of Elgin, Illinois Economic Development Revenue Bond (Universal Chemicals and Coatings, Inc, Project) Series 1985 4 Table of Contents Section Heading Page Preliminary Statement 1 1. Commitments for the Loans and Closings 2 1.1. Borrowing by the Company and Description of Direct Obligation Note 2 1.2 Sale and Description of Bond 2 1.3 Interest Rate 2 1.4 Bond Closing 3 (a) Loan from the Issuer to the Company 3 (b) Proceeds of the Bond to Issuer 3 1.5 Limited Liability of Issuer 3 1.6 Expenses 3 2. Warranties and Representations 4 2.1 Company Warranties and Representations 4 (a) Corporate Organization and Authority 4 (b) Full Disclosure 4 (e) Pending Litigation 5 (d) Title to Properties 5 (e) Borrowing Legal and Authorized 5 (f) No Defaults 5 (g) Governmental Consent 5 (h) Use of Proceeds 6 (1) Compensating Balances 6 (j) Compliance with Law 7 (k) Restrictions on the Company 7 (1) Title to Project 7 (m) Public Purpose 7 (n) Qualification of Project 7 (o) Location of Project 7 (p) No Conflict of Interest 7 (q) Consent of Holders of Other Securities 7 (r) Affiliate Transactions 7 (s) Financial Statements 8 (t) Taxes 8 (u) Private Placement 8 2.2 Issuer Warranties and Representations 8 (a) Organization and Corporate Power 8 (b) Legality of Transaction 8 (c) Pending Litigation 9 (d) Authorization of Transaction 9 (e) Restriction of Pledges 9 - i - (f) Validity of Bond 9 (g) Use of Proceeds 10 (h) Public Purpose 10 (i) Conflicts 10 (j) No Defaults 10 (k) Governmental Approval 10 (1) Issuer's Existence 11 (m) Private Placement 11 2.3 Representations and Covenants of the Institutional Lender 11 3. Bond Closing Conditions 11 3.1. Consent of Holders of Other Securities 11 3.2. Company Closing Certificates 11 3.3. Issuer Closing Certificates 11 3.4 Opinions of Counsel 12 3.5 Documents 12 3.6 Contingent Purchase Agreement 12 3.7 Election of Issuer 12 3.8 Insurance 12 3.9 Proceedings Satisfactory 12 3.10 The Mortgage and the Assignment 12 3.11 Mortgage Title Insurance 12 3.12 Purchase Contracts 13 3.13 Budget and Construction Schedule 13 4. Custody and Application of Proceeds 13 4.1 Appointment of Escrow Trustee 13 4.2 Construction Fund; Disbursements 13 5. Prepayment of Note 15 5.1 Optional Prepayments Without Premium 15 5.2 Optional Calls by the Institutional Lender 15 5.3 Mandatory Prepayment 16 5.4 Notice of Prepayment 16 5.5 Partial Prepayment 16 5.6. Payment 17 5.7. Surrender of Note on Prepayment 17 6. Prepayment and Redemption of Bond 17 6.1 Prepayments and Redemption 17 6.2 Partial Prepayment 17 6.3 Surrender of Bond on Prepayment 17 7. Bond Proceeds and Investments 18 7.1. Bond Proceeds 18 7.2 Investments 18 8. Company Covenants 18 - ii - 8.1 Agreement to Acquire and Construct the Project 18 8.2 Additional Payments 19 8.3 No Defense of Set-Off - Unconditional Obligation 19 8.4 Assignment of Issuer's Rights 20 8.5 Right of Access to the Project and Books 20 8.6 The Company to Maintain its Corporate Existence; Conditions Under Which Exceptions Permitted 20 8.7. Release and Indemnification Covenants 20 8.8 Damage and Destruction 21 8.9 Condemnation 23 8.10. Tax Exempt Status of Interest on the Bond 24 8.11. Arbitrage 26 8.12. Licenses and Permits 26 8.13. Burdensome Contracts with Affiliates 26 8.14. Maintenance and Repair 26 8.15. Taxes 26 8.16. Finance Charge 26 8.17 Fees of Institutional Lender 26 8.18 Insurance 27 8.19. Limitation on Liens 27 • 9. Issuer Covenants 27 9.1 Payment of Bond 27 9.2. Warranty of Title 27 9.3. Further Assurances 27 9.4. Arbitrage 27 9.5. Election of Issuer 27 9.6. Information Reporting Requirements 28 10. Financial and Business Information as to Company 28 11. Events of Default 29 11.1.Nature of Events 29 (a) Principal Payments on Note 29 (b) Interest Payments on Note 29 (c) Other Company Defaults 29 (d) Tax and Arbitrage Compliance Agreement 29 (e) Warranties or Representations of Company 29 (f) Involuntary Bankruptcy Proceedings Against Company or Any Subsidiary 30 (g) Voluntary Petition by Company or Any Subsidiary 30 (h) Assignments by Company or Any Subsidiary for Benefit of Creditors, Etc. 31 (i) Undischarged Final Judgments Against Company or Any Subsidiary 31 (j) Other Debt 31 (1) Principal Payments on Bond 31 (m) Interest Payments on Bond 31 (n) Other Issuer Defaults 31 (o) Warranties or Representations of Issuer 31 - iii - 11.2. Default Remedies 31 (a) Acceleration of Note and Bond 31 (b) Attorney's Fees 31 (c) Other Actions 32 11.3. Notice of Default 32 11.4. Nonwaiver 32 12. Interpretation of This Agreement 32 12.1. Terms Defined 32 12.2. Directly or Indirectly 34 12.3. Governing Law 34 13. Miscellaneous 34 13.1. Notices 34 13.2. Reproduction of Documents 34 13.3. Survival 35 13.4. Successors and Assigns 35 13.5. Amendments 35 13.6. Duplicate Originals 35 13.7. Payments Due on Saturday, Sundays and Holidays 35 13.8. Severability 35 - iv - AGREEMENT Re: 81,500,000 City of Elgin, Illinois Economic Development Revenue Bond Series 1985 (Universal Chemicals and Coatings, Inc. Project) AGREEMENT dated as of December 1, 1985 (the "Agreement") among CITY OF ELGIN, ILLINOIS, a municipal corporation and a home rule unit of government of the State of Illinois (the "Issuer"), UNIVERSAL CHEMICALS AND COATINGS, INC., a Delaware corporation (the "Company"), AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Bondholder (the "Institutional Lender"), and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Escrow Trustee (the "Escrow Trustee"). Preliminary Statement The Company requires additional funds to pay or reimburse the Company for the payment of the costs of completing the constructing and equipping of a manufacturing facility on land within the corporate limits of the Issuer (the "Project"), all as more fully described in Schedule I hereto. The Company proposes to obtain this financing through a borrowing from the Issuer in the aggregate principal amount of $1,500,000 to be evidenced by the Company's Direct Obligation Note described in Section 1.1. The Company obtained preliminary financing for the Project through a borrowing from the Issuer in the aggregate amount of $4,000,000, the Issuer having obtained funds for the aforementioned loan to the Company through the sale of the Issuer's $4,000,000 principal amount Industrial Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project). Pursuant to its home rule powers and pursuant to City of Elgin Ordinance No. S2-80 (the "Act") the Issuer proposes to obtain funds for the loan to the Company through the sale of the Issuer's economic development revenue bond, Series 1985 (as described in Section 1.2 hereof) to the Institutional Lender. The Institutional Lender is the holder of the $4,000,000 principal amount Industrial Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project). Under an Assignment and Security Agreement dated as of December 1, 1985 (the "Assignment") between the Issuer and the Institutional Lender, the Issuer will pledge and assign to the Institutional Lender the Issuer's rights hereunder (except its rights to payment under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b)) hereof, together with its rights under the Direct Obligation Note (hereinafter defined) of the Company and the Mortgage (hereinafter defined) and the Collateral Assignment dated as of December 1, 1985 from the Company to the Issuer (the "Collateral Assignment"). The economic development revenue bond of the Issuer will be payable solely out of payments or prepayments to be made by the Company on the Direct Obligation Note (hereinafter defined) of the Company. The Company will mortgage the Facilities (hereinafter defined) to the Issuer in a Second Mortgage and Security Agreement (the "Mortgage") dated as of December 1, 1985 from the Company to the Issuer. The Company will also enter into a Contingent Purchase Agreement dated as of December 1, 1985 (the "Contingent Purchase Agreement") with the Institutional Lender. Section 1. Commitments for the Loans and Closings. 1.1 Borrowing by the Company and Description of Direct Obligation Note. Subject to all the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth and subject to the closing of the concurrent sale of the Issuer's economic development revenue bond by the Issuer to the Institutional Lender pursuant to Section 1.2 hereof, the Issuer agrees to lend to the Company, and the Company agrees to borrow from the Issuer on the Bond Closing Date provided for in Section 1.4 the principal amount of $1,500,000 to be evidenced by the Direct Obligation Note (the "Note") of the Company. The Note will be dated the date of issue and the principal thereon will be repaid in equal quarterly installments of Seventy-Five Thousand Dollars ($75,000) on March 31, June 30, September 30 and December 30 (the "Payment Dates") with the first installment due on March 31, 1986 and the final installment due on December 30, 1990. The Note will be expressed to bear such interest as specified in Section 1.3 and all unpaid accrued interest shall be paid on each Payment Date. The Note will be otherwise substantially in the form attached hereto as Exhibit A. 1.2. Sale and Description of Bond. Subject to all the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, the Institutional Lender agrees to purchase at par from the Issuer, and the Issuer agrees to sell at par to the Institutional Lender on the Bond Closing Date, provided for in Section 1.4 the principal amount of $1,500,000 to be evidenced by the Issuer's Economic Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project) Series 1985 in the principal amount of $1,500,000 (the "Bond"). The Bond will be a non-coupon bond, payable to the Institutional Lender and dated the Bond Closing Date, and the principal thereon will be payable in equal quarterly installments of Seventy-Five Thousand Dollars ($75,000) on the Payment Dates with the first installment due on March 31, 1986 and the final installment due on December 30, 1990. The Bond will be expressed to bear such interest as specified in Section 1.3 and all unpaid accrued interest shall be paid on each Payment Date. The Bond will be nontransferable by the Institutional Lender except as a whole and shall be transferable only as provided in the form of Bond attached hereto as Exhibit B. The Bond will be otherwise substantially in the form of Exhibit B. If the Bond is transferred, the term "Institutional Lender" as used herein shall mean the transferee of the Bond. 1.3. Interest Rate. The Note and Bond shall be expressed to bear interest on the unpaid principal balance of each from the date of their issuance at a varying rate per annum which shall be seventy percent (70%) of the rate of interest publicly announced from time to time by the American National Bank and Trust Company of Chicago as its prime rate (the "Prime Rate") with adjustments in such varying rate to be made on the same date as any announced change in the Prime Rate, provided, however, that except upon the occurrence of an event requiring purchase of the Bond pursuant to the Contingent Purchase Agreement, the rate of interest borne by the Bond and the Note shall never be less than six percent (6%) per annum nor more than nine percent (9%) per annum, and provided further that any changes in the Prime Rate occurring within 15 days before any Payment Date resulting in an increase or decrease in the interest which would otherwise be payable on the Note and the Bond on such Payment Date shall not, if an increase, be payable on such Payment Date, but shall instead be payable on the next succeeding Payment Date or shall, if a decrease, reduce the amount which would otherwise be payable on the next succeeding Payment Date. Interest shall be calculated, for actual days elapsed, on a 360 day year. In the event of a declaration of default by the Institutional Lender, interest on overdue principal and, to the extent permitted by - 2 - law, on overdue interest shall be payable on demand at a rate equal to the rate otherwise applicable plus three percent (3%) per annum until paid. 1.4. Bond Closing. (a) Loan from the Issuer to the Company. The proceeds of the loan made pursuant to Section 1.1 by the Issuer to the Company shall be made available to the Company by depositing such proceeds for the benefit of the Company with the Institutional Lender at or before 2:00 P.M., Chicago time on such date on or before December 30, 1985, as the Company shall designate by not less than two business days' prior written notice to the Issuer and the Institutional Lender (the "Bond Closing Date") in Federal Reserve funds current in Chicago, Illinois, or other immediately available funds in an amount equal to the principal amount of the Note, all against delivery of the Note and other showings hereinafter provided for. The Note will be delivered to the Issuer in the form of a single typewritten Note, payable to the order of the Issuer, in the principal amount of $1,500,000. (b) Proceeds of the Bond to Issuer. The proceeds of the Bond shall be made available to the Issuer (or at the direction of the Issuer, to the Institutional Lender on behalf of the Company) at the time and place of closing under Section 1.4(a) by payment to the Issuer of Federal Reserve funds current in Chicago, Illinois, or other immediately available funds in an amount equal to the principal amount of the Bond. The Bond will be delivered to the Institutional Lender in the form of a single typewritten fully registered Bond, payable to the Institutional Lender. 1.5. Limited Liability of Issuer. (a) The Bond authorized and issued hereunder and all payments to be made by the Issuer thereon are not general obligations of the Issuer but are limited obligations of the Issuer payable solely from the payments or prepayments by the Company on the Note, and other amounts payable under this Agreement or the Mortgage. (b) The Bond is issued pursuant to the home rule powers of the Issuer and under the Act and is a limited obligation of the Issuer, payable solely out of the revenues and receipts derived from the Note and otherwise under this Agreement or the Mortgage. The Bond shall not constitute or give rise to a general obligation or liability of the Issuer or a charge against its general credit or taxing powers and does not constitute an indebtedness or a loan of credit of the Issuer within the meaning of any constitutional or statutory provision. No holder of the Bond has the right to compel any exercise of the taxing power of the Issuer to pay the Bond or the interest thereon. 1.6. Expenses. Whether or not the Bond is sold, the Company will from time to time upon request of the Issuer or the Institutional Lender, as the case may be, pay all expenses of the Issuer or the Institutional Lender, as the case may be, relating to the transactions contemplated by this Agreement, including but not limited to: (a) the reasonable fees and disbursements of bond counsel; (b) the out-of-pocket expenses of the Issuer and all fees and charges of the Issuer incident to the transactions contemplated by this Agreement, including fees of Issuer's counsel; (c) all expenses, including attorneys' fees, relating to any amendments, waivers or consents pursuant to the provisions of, or any other action deemed by the Issuer to be necessary or appropriate in - 3 - connection with its obligations under the Agreement and the Note, whether incurred or expended prior or subsequent to the issuance and sale of the Bond; and (d) all taxes in connection with the execution and delivery of this Agreement, the Mortgage, the Assignment, the Note or the Bond or the Contingent Purchase Agreement, whether or not the Note is then outstanding, all expenses of the Institutional Lender, including but not limited to attorneys' fees, all taxes, assessments, recording, filing and registration fees, all registration taxes, title insurance premiums, construction escrow charges, architects' fees, appraisal, survey or inspection fees and charges and all costs of performance and payment of the Bond and all recording and filing fees relating to the pledge and assignment of the Note or the mortgaging of the Project, and all expenses, including reasonable attorneys' fees, relating to any amendments, waivers or consents pursuant to the provisions hereof, the Assignment, the Note, the Bond, the Mortgage, the Collateral Assignment, the Contingent Purchase Agreement. The obligations of the Company under this Section 1.6 shall survive the payment or prepayment of the Bond and the termination of this Agreement. Section 2. Warranties and Representations. 2.1. Company Warranties and Representations. The Company warrants and represents to the Institutional Lender that: (a) Corporate Organization and Authority. The Company (1) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has duly qualified and is authorized to do business and is in good standing as a foreign corporation in Illinois; (2) has all requisite power and authority to own and operate its properties and to carry on its business as now conducted and as presently proposed to be conducted. (b) Full Disclosure. Neither this Agreement nor any written statement furnished by the Company to the Institutional Lender in connection with the negotiation of the sale of the Bond, contains any untrue statement of a material fact or omits a material fact necessary to make the statements contained therein or herein not misleading. There is no fact which the Company has not disclosed to the Institutional Lender in writing which materially affects adversely or, so far as the Company can now foresee, will materially affect adversely the properties, business, prospects or condition (financial and otherwise) of the Company or the ability of the Company to pay the Note or to perform this Agreement, the Mortgage or the Contingent Purchase Agreement. - 4 - (e) Pending Litigation. There are no proceedings pending, or to the knowledge of the Company threatened, against or affecting the Company in any court or before any governmental authority which involve the possibility of materially and adversely affecting the business or condition (financial or otherwise) of the Company, or the ability of the Company to pay the Note or perform this Agreement, the Mortgage or the Contingent Purchase Agreement. The Company is not in default with respect to any order of any court or governmental authority. (d) Title to Properties. The Company has good and marketable title in fee simple to the real property subject to the Mortgage, upon acquisition of the Project will have good and marketable title to the personal property subject to the Mortgage and has good title to all its other property. (e) Borrowing Legal and Authorized. The consummation by the Company of the transactions provided for in this Agreement and compliance by the Company with the provisions of this Agreement, the Mortgage, the Collateral Assignment, the Contingent Purchase Agreement and the Note: (1) are within the corporate powers and have been duly authorized by all necessary corporate action on the part of the Company; and (2) will not result in any breach of any of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to any indenture, loan agreement or other instrument (other than this Agreement) to which the Company is a party or by which the Company may be bound, nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-Laws of the Company. (f) No Defaults. No event has occurred and no condition exists which, upon the execution of this Agreement, the Contingent Purchase Agreement, the Collateral Assignment or the Mortgage or upon the issuance of the Note, would constitute a default or an event of default. The Company is not in violation in any material respect and has not received notice of any claimed violation of any term of any agreement, charter instrument, Certificate of Incorporation, by-law or other instrument to which it is a party or by which it is bound. (g) Governmental Consent. Neither the nature of the Company nor any of its activities or properties, nor any relationship between the Company and any other person, nor any circumstances in connection with this Agreement, the Contingent Purchase Agreement, the Collateral Assignment, the Mortgage or the Note or the performance or observance of any covenant or agreement required to be observed or performed by the Company under this Agreement, the Collateral Agreement, the - 5 - Mortgage, the Contingent Purchase Agreement or the Note, is such as to require a consent, approval or authorization of or filing, registration or qualification with, any governmental authority as a condition to the execution and delivery of this Agreement, the Collateral Assignment, the Mortgage, the Contingent Purchase Agreement or the offer, sale or delivery of the-Note by the Company. (h) Use of Proceeds. (1) The Company will apply the proceeds of the loan from the Issuer solely for the purpose of providing funds to pay or reimburse the Company for the payment of Costs of the Project. None of the transactions contemplated by this Agreement (including without limitation thereof, the use of the proceeds of the Note) will violate or result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended, including without limitation, Regulations G, T and U of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Company will not use any of the proceeds of the Note to purchase or carry any "margin security" within the meaning of said Regulation G or in any manner cause the Bond to be an "arbitrage bond" within the meaning of Section 103(c) of the Code and Treasury Regulations Sections 1.103-13, 1.103-14 and 1.103-15 AT. (2) The estimated construction Costs of the Project are as set forth in Schedule I hereto, and have been determined in accordance with sound engineering and accounting principles. (3) The Project consists and will consist of those facilities generally described in Schedule I hereto and no changes shall be made in the Project or in the operation thereof which will impair the exclusion of interest on the Bond from the gross income of the owner of the Bond for federal income tax purposes. (4) At least 90% of the Costs of the Project to be financed from Bond proceeds constitute amounts which (i) will be charged to the Project's capital account or which would be so chargable either with a proper election by the Company under the Code or but for a proper election by the Company under the Code to deduct such amount and (ii) were paid and incurred after November 25, 1985 ("Qualified Costs"). (5) The proceeds of the Note will not be used to provide working capital for the Company within the meaning of Section 103(b) of the Code. (i) Compensating Balances. The Company shall maintain with the Institutional Lender average available demand deposits ("Required Deposits"), so long as the Bond remains outstanding, at not less than $300,000.00. On December 31, 1985 and each March 30, June 30, September 30 and December 30 thereafter so long as the Bond remains outstanding, the Company, to the extent the Required Deposits are not maintained, shall pay to the Institutional Lender a balance deficiency fee on the shortfall in the Required Deposits equal to the daily average prime rate announced by the Institutional Lender in effect for the preceding quarter plus one percent (1%). - 6 - (j) Compliance with Law. The Company (1) is in compliance with all laws, ordinances, governmental rules and regulations to which it is subject, and (2) has obtained or will obtain all licenses, permits, franchises or other governmental authorizations necessary to the ownership of its property or to the conduct of its activities, non-compliance with which or failure to obtain which might materially adversely affect the ability of the Company to conduct its activities as presently conducted or the condition (financial or otherwise) of the Company. (k) Restrictions on the Company. The Company is not a party to any contract or agreement, or subject to any charter or other corporate restriction, which materially and adversely affects its business. (1) Title to Real Estate. The Company has title to the real estate described in Schedule I sufficient for its purposes. (m) Public Purpose. The completion of the construction of the Project which has created new employment opportunities in the City of Elgin, Illinois. (n) Qualification of Project. The Company intends to utilize or cause the Project to be utilized as a manufacturing facility until the expiration or earlier termination of this Agreement as provided herein. (o) Location of Project. The Project is located wholly within the corporate limits of the City of Elgin, Illinois. (p) No Conflict of Interest. No member of the governing body of the Issuer, nor any elected or salaried officer or official of the Issuer has any interest (financial, employment or other) in the Company or in the real estate held by Chicago Title and Trust Company, as trustee under a Land Trust Agreement dated May 17, 1983, commonly known as Trust No. 1083846, (the "Land Trust") or the transactions contemplated by this Agreement. (q) Consent of Holders of Other Securities. All consents or approvals required to be obtained from any holder or holders of any outstanding security of the Company and any amendments of any agreement pursuant to which any security has been issued which shall be necessary to permit the consummation of the transactions contemplated hereby have been obtained. (r) Affiliate Transactions. The Company is not a party to any contract or agreement with any of its affiliates, the terms and conditions of which are less favorable to the Company than would be usual and customary in similar contracts or agreements between persons, firms or corporations not affiliated with each other. - 7 - (as) Financial Statements. The financial statements of the Company for the fiscal years 1984 and 1985 including balance sheets as of June 30 of such years, and the related statements of operations, stockholders equity and changes in financial position for the years then ended, and the interim financial statements of the Company as of September 30, 1985 heretofore furnished to Institutional Lender, truly and accurately reflect the financial condition of the Company as of said dates and the results of operations for the periods covered ti-.�reby. The Company has no material contingent liabilities other than idicated on said financial reports except as created in the ordinary course of business and since September 30, 1985, there have been no material adverse changes in the condition or prospects, financial or otherwise, of the Company. (t) Taxes. The Company has paid and discharged all taxes, rates, assessments, fees and governmental charges due from the Company. No audits of or assessments of deficiency with respect to or controversies in respect of the United States federal income tax returns of the Company are, to the knowledge of the Company, pending or threatened for any fiscal year. (u) Private Placement. Neither the Company nor any agent thereof has offered the Bond or any similar security to any person other than the Institutional Lender. 2.2. Issuer Warranties and Representations. The Issuer warrants and represents to the Institutional Lender that: (a) Organization and Corporate Power. The Issuer (i) is a municipality duly organized and existing under the applicable laws of the State of Illinois and is a home rule unit of government existing under the provisions of Section 6(a) of Article VII of the 1970 Constitution of the State of Illinois; and (ii) has all requisite power and authority pursuant to its home rule powers, to issue the Bond for the purposes for which it is to be issued, to loan the proceeds thereof to the Company as evidenced by the Note, to enter into this Agreement and to pledge and assign its rights hereunder (except its rights to payments under Sec- tions 1.6, 8.2, 8.7, 9.3 and 11.2(b) hereof), and under the Note, the Collateral Assignment and the Mortgage to the Institutional Lender under and pursuant to the provisions of the Assignment as security for the payment of the prin- cipal of and interest on the Bond. (b) Legality of Transaction. The sale of the Bond by the Issuer and compliance by the Issuer with all of the provisions of this Agreement, the Assignment and the Bond: - 8 - (i) are within the power of the Issuer, and (ii) are legal and will not conflict with, result in any breach by the Issuer of any of the provisions of or constitute a default under any existing law, court or administrative regulation, decree or order or any agreement, indenture, mortgage, lease or other instrument to which the Issuer is a party or by which it may be bound. (c) Pending Litigation. There are no proceedings pending or, to the knowledge of the Issuer, threatened against or affecting the Issuer in any court or before any governmental authority or arbitration board or tribunal which involve the possibility of an unfavorable decision, ruling or finding which would adversely affect (i) the transactions contemplated hereby or the validity of the Bond, the Assignment, the Mortgage, the Collateral Assignment, this Agreement or any agreement or instrument to which the Issuer is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby, or (ii) the excludability of the interest on the Bond from the gross income of the owner of the Bond for federal income tax purposes. Neither the corporate existence of the Issuer nor the titles of the officials of the Issuer to their respective offices are being contested. The Issuer is not in default with respect to any order of any court, governmental authority or arbitration board or tribunal or under any agreement, indenture, mortgage, lease or other instrument to which the Issuer is a party or by which it may be bound where such default would in any way have an adverse effect on the transactions contemplated by this Agreement. (d) Authorization of Transaction. The Issuer has duly authorized or, prior to the Closing, shall have duly authorized: (i) the issuance and sale of the Bond upon the terms set forth herein, (ii) the loan of the proceeds of the Bond to the Company; (iii) the pledging and assigning by the Issuer pursuant to the provisions of the Assignment of its rights hereunder (except its rights to payments under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b) hereof), and under the Note, the Mortgage and the Collateral Assignment; (iv) the execution, delivery and receipt of this Agreement, the Assignment, the Bond and any and all such other agreements and documents as may be required to be executed, delivered and received by the Issuer in order to carry out, give effect to and consummate the transactions contemplated hereby; and (v) the effectuation and consummation of the transactions contemplated by this Agreement and the Assignment. (e) Restriction of Pledges. The Issuer has not pledged and will not pledge its interest in this Agreement (except its rights to payments under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b) hereof) or in the Note, the Mortgage or the Collateral Assignment other than to secure the Bond. (f) Validity of Bond. The Bond, when issued, delivered and paid for as herein provided, will have been duly authorized and issued and will constitute the valid and binding obligation of the Issuer enforceable in - 9 - accordance with its terms and will be entitled to the benefits of this Agreement, the Mortgage, the Collateral Assignment and the Assignment (subject to the limitations referred to in Sections 1.5 and 9.1 hereof and subject to any applicable bankruptcy, reorganization, insolvency, moratorium or other law affecting the enforcement of creditors' rights generally or affecting state agencies, municipalities or authorities, such as the Issuer, from time to time in effect). (g) Use of Proceeds. The Issuer will apply the proceeds from the sale of the Bond to the loan to the Company under and pursuant to this Agreement which the Company represents and warrants will be used to pay or reimburse the Company for the payment of the Costs of the Project in accordance with the Agreement. So long as the Bond remains outstanding, and except as may be authorized by this Agreement, the Issuer will not issue or sell any bonds, notes or other obligations, other than the Bond sold hereunder, the interest or principal of which will be payable from payments upon the Note and other amounts payable by the Company to the Issuer under this Agreement or which shall be secured by any pledge or assignment or other lien upon the Project or the Note. (h) Public Purpose. The Issuer hereby finds and determines that financing the Project by the issuance of the Bond will further its public purposes in that it will create and retain employment opportunities within the corporate boundaries of the Issuer and encourage economic development therein, thereby reducing the evils attendant upon unemployment and providing for the increased welfare and prosperity of the residents of the Issuer. (i) Conflicts. No member of the governing body of the Issuer nor any elected or salaried officer of the Issuer has any interest (financial, employment or other) in the Company, the Land Trust, the Institutional Lender or the transactions contemplated by this Agreement. (j) No Defaults. The Issuer is not in default in any material respect under any agreement or instrument to which it is a party or by which it may be bound where such default would in any way have an adverse effect on the transactions contemplated by this Agreement. No event has occurred and no condition exists which, upon the issuance of the Bond, would constitute a default or an event of default hereunder. (k) Governmental Approval. No approval, consent or withholding of objection on the part of any regulatory body, federal, state or local, is required in connection with (i) the issuance and sale of the Bond in the manner herein provided for or (ii) the execution or delivery of or compliance by the Issuer with the terms and provisions hereof and of the Assignment, and the consummation of the transactions set forth in the foregoing clauses (i) and (ii) in the manner and under the terms and provisions as herein provided will comply with the provisions of any and all applicable state, local or federal laws and any rules and regulations promulgated thereunder by any regulatory authority or agency. - 10 - (1) Issuer's Existence. The Issuer will do or cause to be done all things necessary to preserve and keep in full force and effect its existence. (m) Private Placement. The Issuer has not offered the Bond or any similar security to any person other than the Institutional Lender. 2.3. Representations and Covenants of the Institutional Lender. (a) The Institutional Lender represents to the Issuer and the Company that (i) it is purchasing the Bond for its own account for investment, as evidence of a loan made in the ordinary course of its banking business, and with no present intention of distributing or reselling the Bond or any part thereof, provided that the disposition of the property of the Institutional Lender shall at all times be within its control and (ii) it has not relied upon the Issuer for any information or data with respect to the Company, its operations or its properties, including the costs which will be financed with the proceeds of the loans hereunder. (b) The Institutional Lender shall note on the payment record attached to the Bond and the Note the date and amount of payment of each principal installment and interest then being paid and of interest theretofore paid and not yet noted thereon, and upon request of the Company or the Issuer, the Bond and the Note shall be available for inspection by the Company or the Issuer during normal banking hours at the offices of the Institutional Lender at 33 North LaSalle Street, Chicago, Illinois, 60690. Section 3. Bond Closing Conditions. The obligation of the Issuer to make the loan to the Company provided for in Section 1.1 and the obligation of the Institutional Lender to purchase the Bond as provided for in Section 1.2 shall be subject to the following conditions precedent: 3.1. Consent of Holders of Other Securities. Any consents or approvals required to be obtained from any holder or holders of any outstanding security of the Company and any amendments of any agreements pursuant to which any security may have been issued which shall be necessary to permit the consummation of the transactions contemplated hereby shall have been obtained and all such consents or amendments shall be satisfactory in form and substance to the Institutional Lender. 3.2. Company Closing Certificates. The warranties and representations contained in Section 2.1 shall be true in all material respects on the Bond Closing Date with the same effect as though made on and as of said date; and the Issuer and the Institutional Lender shall have received a certificate dated the Bond Closing Date, signed by the President, a Vice President or principal financial officer of the Company to that effect. 3.3. Issuer Closing Certificates. The warranties and representations contained in Section 2.2 shall be true in all material respects on the Bond Closing Date with the same effect as though made on and as of that date; and the Institutional Lender shall have received a certificate dated the Bond Closing Date signed by an authorized official of - 11 - the Issuer to that effect; and the Institutional Lender shall have received an "arbitrage" certificate of the Issuer signed by an authorized official of the Issuer in form and substance reasonably satisfactory to bond counsel and the Institutional Lender. 3.4. Opinions of Counsel. The Issuer and the Institutional Lender shall have received the opinions-of Sachnoff, Weaver & Rubenstein, Ltd., counsel for the Company, Erwin W. Jentsch, counsel for the Issuer, and Friedman & Hoven, bond counsel, dated in each case the Bond Closing Date. 3.5. Documents. This Agreement, the Assignment, the Contingent Purchase Agreement, the Note and the Tax and Arbitrage Compliance Agreement shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their respective terms. The Institutional Lender shall have received the Note (duly endorsed by the Issuer to the order of the Institutional Lender), the Bond and fully executed counterparts of this Agreement, the Assignment, the Contingent Purchase Agreement and the Tax and Arbitrage Compliance Agreement in form and substance satisfactory to it. 3.6. Contingent Purchase Agreement. The warranties and representations contained in Section 2 of the Contingent Purchase Agreement shall be true in all material respects as of the Bond Closing Date. 3.7. Election of Issuer. The Issuer shall have duly elected to have the provisions of Section 103(b)(6)(D) of the Code apply to the issuance of the Bond, and such election shall have been made in accordance with the applicable regulations or procedures of the Internal Revenue Service. 3.8 Insurance. The Institutional Lender and the Issuer shall have received from the Company evidence of insurance coverages with such companies and under such terms as are satisfactory to the Institutional Lender. 3.9. Proceedings Satisfactory. All proceedings taken in connection with the borrowing by the Company, the issuance of the Note, the borrowing by the Issuer and the issuance of the Bond and all documents and papers relating thereto shall be satisfactory to the Issuer, the Institutional Lender and bond counsel. The Issuer, the Institutional Lender and Bond Counsel shall have received copies of such documents and papers as they may reasonably request in connection therewith, all in form and substance satisfactory to the Issuer, the Institutional Lender and Bond Counsel. 3.10. The Mortgage and the Assignment. The Mortgage and the Collateral Assignment (and/or financing statements or similar notice thereof, if and to the extent permitted or required by applicable law) shall have been executed and recorded or filed in such public offices as may be deemed necessary or appropriate by the Institutional Lender in order to perfect the security interest in the Note, the Mortgage and the Collateral Assignment as provided by the Assignment and in order to constitute the Mortgage as a second mortgage lien and fully perfected security interest on the land, buildings and fixtures which are real property and a full perfected security interest in and to the personal property that constitutes the Facilities under the Mortgage. 3.11. Mortgage Title Insurance. The Company, at its own cost and expense will procure and deliver to the Institutional Lender a Loan Policy of Title Insurance (ALTA- - 12 - 1975) (the "Title Policy") issued by dated as of the closing date in the aggregate principal amount of $1,500,000, naming the Institutional Lender as the insured, showing good and marketable fee simple title to the real property subject to the Mortgage to be in the Company and containing construction, mechanics' lien, pending disbursements, usury, zoning, doing business, comprehensive and other endorsements as required by the Institutional Lender, subject only to the exceptions as have been approved in writing by the Institutional Lender and shall also guarantee the Institutional Lender against all loss or damage sustained by reason of the Mortgage not being a first and paramount lien (subject only to the existing mortgage and security agreement dated September 1, 1984 from the Company to the Issuer) at the date of such policy upon property therein described and which policy shall cover the date of recording of the Mortgage, and shall otherwise be in form and substance satisfactory to the Institutional Lender. 3.12. Purchase Contracts. The Institutional Lender shall receive from the Company satisfactory contracts for the purchase of equipment which shall constitute the Project, which shall set forth the name of the manufacturer, type of equipment, purchase price and serial and model number. 3.13. Budget and Construction Schedule. Prior to each draw-down on bond proceeds the Institutional Lender shall receive from the Company a satisfactory budget specifying all costs related to the draw-down, together with a construction schedule and receive the reasonable approval of the Institutional Lender. Section 4. Custody and Application of Proceeds. 4.1 Appointment of Escrow Trustee. American National Bank and Trust Company of Chicago is hereby appointed as escrow trustee (the "Escrow Trustee"). The entire proceeds of the Bond shall be deposited in the Construction Fund established pursuant to Section 4.2 hereof, and shall be disbursed by the Escrow Trustee in accordance with the provisions of said Section. 4.2 Construction Fund; Disbursements. There is hereby created and established with the Escrow Trustee a trust fund in the name of the Issuer to be designated "Construction Fund." Provided that the conditions set forth in Section 3 hereof have occurred, the proceeds of the Bond shall be disbursed by the Escrow Trustee for the following purposes: (a) Payment of the initial commitment fee of the Institutional Lender in the amount of ;15,000. (b) Payment of, or reimbursement for, legal, financial and accounting fees and expenses, including fees and disbursements of counsel for the Issuer, counsel for the Institutional Lender and Bond Counsel, fees of the Issuer, if any, and payment of, or reimbursement for, all fees, costs and expenses for the preparation of this Agreement, the Mortgage, the Collateral Assignment, the Assignment and the Contingent Purchase Agreement, the Tax and Arbitrage Compliance Agreement, and other re- lated documents used in connection with the sale of the Bond and the Bond. - 13 - (c) Payment or reimbursement of the fees, if any for architectural, engineering, legal, printing, underwriting, investment banking and supervisory services with respect to the Project or in connection with the sale, issuance and delivery of the Bond. (d) Payment or reimbursement for labor, services, materials and supplies used or furnished in site improvement and in the construction, acquisition and equipping of the Project, all as provided in the Budget therefor; payment of, or reimbursement for, the cost of the construction, acquisition and installation of utility services or other facilities, and acquisition and installation of all real and personal property deemed necessary in connection with the Project and payment for the miscellaneous capitalized expenditures incidental to any of the foregoing items. (e) To the extent not paid by the contractor for construction or installation with respect to any part of the Project, payment of or reimbursement for, the premiums on all insurance required to be taken out and maintained during the Construction Period as defined in Section 12.1 hereof. (f) Payment of the taxes, assessments and other charges, if any, • that may become payable during the Construction Period with respect to the Project, or reimbursement thereof if paid by the Company. (g) Payment of, or reimbursement for, expenses incurred in seeking to enforce any remedy against any contractor or subcontractor in respect of any default under a contract relating to the Project. (h) All remaining proceeds (including investment proceeds) of the Bond, if any, after the Completion Date or after an acceleration under Section 11.2(a) hereof, and after payment or provision for payment of all other items provided for in subsections 4.2(a) to 4.2(f) hereof, inclusive, shall be deposited by the Escrow Trustee in a separate escrow account and used to prepay the Bond in whole or in part on the next succeeding payment date provided that, none of such remaining proceeds may be used to prepay the Bond unless and until the Institutional Lender has been furnished with an opinion of nationally recognized bond counsel mutually acceptable to the Company, the Issuer and to the Institutional Lender, to the effect that such use is lawful under the home rule powers of the Issuer and does not adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bond; and provided further that, until used for such purpose, such remaining moneys may be invested in investments authorized by Section 7.2. Each of the payments referred to in this Section shall be made monthly upon receipt by the Escrow Trustee of a requisition signed by the authorized Company representative which shall state with respect to each payment to be made: (1) the requisition number, (2) the name and address of the person, firm or corporation to whom payment or reimbursement is due, which may be the Institutional Lender or the Company, (3) the amount to be paid, (4) that substantially all (at least 90%) of the amounts previously disbursed and to be disbursed pursuant to such requisition are to - 14 - defray Qualified Costs of the Project, (5) that each obligation mentioned therein has been properly incurred, is a proper charge against the proceeds of the Bond, is unpaid, and has not been the basis of any previous disbursement from the proceeds of the Bond, (6) that except for the amount, if any, stated pursuant to the foregoing clause (3) in such certificate to be due for services or materials to the particular supplier, there is no outstanding indebtedness to the particular supplier known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such construction which, if unpaid, might become the basis of any lien upon the Project, (7) that there has not been filed with respect to the Project or any part thereof any vendor's, mechanic's, laborer's materialman's or other lien which has not been discharged of record, except such as will be discharged by payment of the amount then requested or are being contested in accordance with the Mortgage and (8) that no event of default exists under this Agreement, and that no notice has been given to the Company of a default hereunder which has not been corrected, and shall be accompanied by such other showings (including contractor's statements, affidavits, liens waivers, title policy date-down endorsements and attorney's opinions) as may be reasonably requested by the Escrow Trustee or are customarily required by prudent lenders for disbursements under commercial real estate and equipment financing. In making any such payment from the proceeds of the Bond, the Issuer and the Escrow Trustee may rely on such requisitions delivered to the Escrow Trustee, and the Escrow Trustee shall be relieved of all liability with respect to making such payments in accordance with the foregoing. No change in any cost categories set forth in the final Budget shall be made without the Escrow Trustee's prior written approval. Sufficient undisbursed Bond proceeds must remain in each cost category, in the Escrow Trustee's discretion, to complete construction of the Project, provided that the Escrow Trustee shall at all times have the right to allocate the Bond proceeds as requested per requisition. If at any time, in the Escrow Trustee's discretion, undisbursed proceeds of the Bond are insufficient to complete construction of the Project, the Company shall, within ten (10) days after written notice from the Escrow Trustee, deposit with the Escrow Trustee the amount of any such deficiencies. Section 5. Prepayment of Note. 5.1. Optional Prepayments Without Premium. The Company shall have the option to prepay the Note in whole at any time or in part on any Payment Date from any source at the principal amount thereof, without premium, plus accrued interest to the prepayment date, provided, however, that partial prepayments shall be in $5,000 increments. 5.2. Optional Call by the Institutional Lender. Unless the Institutional Lender shall otherwise consent, the Company shall be obligated to prepay the Note in whole at the option of the Institutional Lender at any time that the chief executive officer of the Company is anyone other than Yenson E. Chin or one of the two sons of Yenson E. Chin employed by the Company as of the date hereof. The Institutional Lender shall call for prepayment under this subsection by giving notice of such call to the Company and the Issuer, not less than 120 days nor more than 360 days before said date. Notice of any such call for prepayment shall specify (a) the date of the prepayment, (b) the section of this Agreement under which the call for prepayment is made, (c) the principal amount of the Note to be prepaid on such date, and (d) the accrued interest applicable to the - 15 - • prepayment. Notice of prepayment having been so given, the remaining principal amount of the Note, together with the accrued interest thereon, shall become due and payable on the prepayment date. 5.3. Mandatory Prepayment. (a) The Company shall be obligated to prepay the Note as a whole at any time at the principal amount thereof, without premium, plus accrued interest to the date of prepayment in the event there occurs a change in the Constitution of the State of Illinois or the Constitution of the United States of America or any legislative or administrative action (whether state, local or federal) or a final decree, judgment or order of any court or administrative body (whether state, local or federal), with the result that the Note, the Bond, the Mortgage, the Collateral Assignment, the Assignment, the Contingent Purchase Agreement, the Tax and Arbitrage Compliance Agreement or this Agreement shall have become void or impossible of performance in accordance with the intent and purposes of the parties hereto as expressed herein. Said prepayment shall be made as soon as practicable after the occurrence of the event requiring such prepayment, but in any event within 120 days of such occurrence. (b) The Company shall be obligated to prepay the Note in part at the principal amount of the portion of the Note prepaid, without premium, plus accrued interest to the prepayment date, (i) if there remain any insurance proceeds after rebuilding of the Project as provided by Section 8.8 hereof, or (ii) if there remains any portion of a condemnation award after compliance with Section 8.9 hereof. The amount of said prepayment shall be equal to the amount of money so remaining. Prepayment shall be made within 120 days after the payment of all costs pursuant to Section 8.8 and Section 8.9. 5.4. Notice of Prepayment. Except as to prepayments pursuant to Section 5.2., the Company will give notice of any prepayment of the Note and Bond to the Issuer and the Institutional Lender, not less than 5 days nor more than 20 days before the date fixed for prepayment, specifying (a) such date, (b) the section of this Agreement under which the prepayment is to be made, (c) the principal amount of the Note or Bond to be prepaid on such date, and (d) the accrued interest applicable to the prepayment. Such notice of prepayment shall also certify all facts which are conditions precedent to any such prepayment. Notice of prepayment having been so given, the aggregate principal amount of the Note and Bond specified in such notice, together with the accrued interest thereon, shall become due and payable on the prepayment date. 5.5. Partial Prepayment. Partial prepayments applicable to the Note pursuant to Sections 5.1, 5.3(b) and 4(i) hereof shall be applied on the installments of principal thereof in the inverse order of their maturities. - 16 - 5.6. Payment. The Company will promptly and punctually pay all amounts payable with respect to the Note, without any presentment of the Note and without any notation of such payment being made thereon, directly to the Institutional Lender or its assigns in immediately available funds before 2:00 P.M., Chicago, Illinois time, on the payment date marked for attention as indicated or by charging the account of the Company at the Institutional Lender, which is hereby authorized by the Company. All payments made to the Institutional Lender or its assigns with respect to the Bond shall be made by the Company on behalf of the Issuer and shall be deemed a credit against the Company's obligation to pay the Note and the Issuer's obligation to pay the Bond to the extent of such payment. The Institutional Lender shall make a notation on the Bond and the Note on the payment record thereon of each principal prepayment made pursuant to this Section 5.6 and the date to which interest has been paid. Such prepayment shall be valid upon payment thereof to the Institutional Lender, and the Issuer and the Company shall be fully released and discharged from all liability to the extent of such payment whether or not such notation has been made by the Institutional Lender and irrespective of any error or omission in such notation. 5.7. Surrender of Note on Prepayment. Subject to Section 5.6., upon any partial prepayment of the Note, such Note may, at the option of the Institutional Lender, be surrendered to the Company in exchange for a new note in a principal amount equal to the principal amount remaining unpaid on the surrendered Note. In case the entire principal amount of the Note is prepaid, such Note shall be surrendered to the Company for cancellation and shall not be reissued. Section 6. Prepayment and Redemption of Bond. 6.1. Prepayments and Redemption. In the event a principal payment of the Note shall become due and payable pursuant to Section 5 of this Agreement, the same principal amount of the Bond shall become due and payable on the due date for the principal payment of the Note. All payments of principal shall be made together with interest accrued thereon to the date of payment. 6.2. Partial Prepayment. Partial prepayment applicable to the Bond pursuant to Sections 5.1, 5.3(b) and 4(i) hereof shall be applied on the installments of principal thereof in the inverse order of their maturities. 6.3. Surrender of Bond on Prepayment. The Bond shall be paid as provided in Section 5.6. Subject to Section 5.6, upon any partial prepayment of the Bond, such Bond may, at the option of the owner thereof, be surrendered to the Issuer in exchange for a new Bond in a principal amount equal to the principal amount remaining unpaid on the surrendered Bond. In case the entire principal amount of the Bond is prepaid, such Bond shall be surrendered to the Company for cancellation and shall not be reissued. In the event of an exchange for a new Bond pursuant to this paragraph, the owner of the Bond shall reimburse the Issuer for any direct or indirect expense incurred and shall pay to the Issuer a reasonable reissuance fee, if the Issuer so requires. - 17 - Section 7. Bond Proceeds and Investments. 7.1. Bond Proceeds. The Issuer hereby authorizes and directs the Escrow Trustee, on behalf of the Issuer, to disburse the proceeds of the Bond to or on behalf of the Company, to be used to pay the Costs of the Project. 7.2. Investments. The Bond proceeds and any moneys held as part of a fund established pursuant to Section 8.8 or 8.9 hereof shall at the written request of the Company be invested or reinvested by the Escrow Trustee, solely in obligations the interest on which is excludable from the gross income of the owner thereof for Federal income tax purposes under Section 103(a)(1) of the Code. The Escrow Trustee may make any and all such investments through its own bond department. The investments so purchased shall be held by the Escrow Trustee and shall be deemed at all times a part of the fund for which they were purchased, and the interest accruing thereon and any profit realized therefrom shall be credited to such fund and any losses resulting from such investment shall be charged to such fund, and the Company shall forthwith pay the amount of such losses to the Escrow Trustee for deposit into such fund. The Issuer shall not bear the risk of any loss that may occur as a result of such investment of funds. Section 8. Company Covenants. 8.1. Agreement to Construct and Equip the Project. The Company agrees that it will complete the construction and equipping of the Project, and construct, acquire and install other facilities and real and personal property deemed necessary for the operation of the Project. The Completion Date of the construction portion of the Project shall be evidenced to the Institutional Lender by a certificate signed by the Company stating that (i) construction of the Project has been completed substantially in accordance with the description in Schedule I hereto and all labor, services, materials and supplies used in the construction have been paid for (other than costs and expenses for which payment has been withheld), (ii) all facilities necessary in connection with the Project have been constructed, acquired and installed and all costs and expenses incurred in connection therewith (other than costs and expenses for which the payment has been withheld pursuant to bona fide dispute or standard retainage) have been paid and (iii) substantially all (at least 90%) of the moneys previously disbursed and to be disbursed from the Bond Proceeds defrayed or are to defray Qualified Costs of the Project. It shall be the duty of the Company to complete or cause the completion of the construction portion of the Project on or before December 1, 1988 and to cause the certificate of completion and "as built" drawings of the Project as completed to be furnished to the Escrow Trustee within a reasonable period after the Project shall have been completed. In the event the moneys available pursuant to this Agreement for payment of the Costs of the Project should not be sufficient to pay the costs thereof in full, the Company agrees to pay the Costs of the Project as may be in excess of the moneys available therefor pursuant to this Agreement. The Issuer does not make any warranty, either express or implied, that the proceeds of the Bond which, under the provisions of this Agreement, will be available for payment of the Costs of the Project, will be sufficient to pay all the costs which will be incurred in that connection. The Company - 18 - agrees that if after exhaustion of such moneys the Company should pay any portion of the said Costs of the Project pursuant to the provisions of this Section, it shall not be entitled to any reimbursement therefor from the Issuer, the Escrow Trustee or the Institutional Lender, nor shall it be entitled to any diminution of the amounts payable under the Note. In the event that Schedule I hereto is to be amended or supplemented in accordance with the provisions of Section 13.5 hereof, the Issuer, the Company and the Institutional Lender will enter into an amendment of or supplement to Schedule I hereto upon receipt of: (1) a certificate of the Company describing in detail the proposed changes and stating that they will not have the effect of disqualifying the Project as facilities that are financeable under the meaning of the Act; (ii) an opinion of nationally recognized municipal bond counsel to the effect that the proposed changes will not have the effect of disqualifying the Project as facilities that are financeable under the Issuer's home rule powers and • will not result in the interest on the Bond becoming includable in the gross income of the owner of the Bond for federal income tax purposes; and (iii) a copy of the proposed form of amendment or supplement to Schedule I hereto. 8.2. Additional Payments. The Company agrees to pay upon written request the reasonable expenses of the Issuer related to the Project which are not otherwise required to be paid by the Company under the terms of this Agreement. 8.3. No Defense or Set-Off - Unconditional Obligation. The obligations of the Company to make the payments on the Note and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional, irrespective of any defense or any rights of set-off, recoupment or counterclaim it might otherwise have against the Issuer or the Institutional Lender, and the Company shall pay absolutely net during the term of this Agreement the payments on the Note and all other payments required hereunder free of any deductions and without abatement, diminution or set-off; and until such time as the principal of, premium, if any, and interest on the Note shall have been fully paid, the Company: (i) will not suspend or discontinue any payments provided for on the Note; (ii) will perform and observe all of its other agreements contained in this Agreement; and (iii) will not terminate this Agreement for any cause, including without limiting the generality of the foregoing, failure to acquire and complete the Project, the occurrence of any act or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commerical frustration of purpose, any change in the tax laws of the United States of America or of the State of Illinois or any political subdivision of either of these, or any failure of the Issuer or Institutional Lender to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement or the Assignment, except to the extent permitted by this Agreement. - 19 - 8.4. Assignment of Issuer's Rights. As security for the payment of the Bond, the Issuer has, pursuant to the Assignment, assigned and pledged the Note, the proposed Mortgage and the Collateral Assignment to the Institutional Lender. The Company hereby assents to such assignment and will make payments directly to the Institutional Lender as herein provided without defense or set-off by reason of any dispute between the Company and the Issuer or the Institutional Lender. 8.5. Right of Access to the Project and Books. The Company agrees that the Issuer and the Institutional Lender shall have the right at all reasonable times during normal business hours to enter upon the site of the Project to examine and inspect the Project and shall be permitted to examine the books and records of the Company as they pertain to the Project. The rights of access hereby reserved to the Issuer and the Institutional Lender may be exercised only after the Issuer or Institutional Lender, as the case may be, shall have executed secrecy agreements in the form reasonably required by the Company, provided that the Issuer may inspect the site of the Project pursuant to its police power without executing such secrecy agreements. 8.6. The Company to Maintain its Corporate Existence; Conditions Under Which Exceptions Permitted. The Company agrees that during the term of this Agreement it will maintain its corporate existence, will continue to be a corporation either organized under the laws of or duly qualified to do business as a foreign corporation in the State of Illinois, will not dissolve or otherwise dispose of all or substantially all of its assets and will not consolidate with or merge into another corporation; or permit one or more corporations to consolidate with or merge into it; provided that the Company may, without violating the agreement contained in this Section, consolidate with or merge into another domestic corporation (i.e., a corporation incorporated and existing under the laws of one of the states of the United States or the District of Columbia), or permit one or more corporations to consolidate with or merge into it, or sell or otherwise transfer to another domestic corporation all or substantially all of its assets as an entirety and thereafter dissolve, provided, (a) the Institutional Lender shall consent to such consolidation, merger, sale or transfer, and (b) the surviving, resulting or transferee corporation, as the case may be, if other than the Company (i) is a domestic corporation as aforesaid and (ii) assumes in writing all of the obligations of the Company under this Agreement, the Note, the Mortgage, Collateral Assignment and the Contingent Purchase Agreement and the Tax and Arbitrage Compliance Agreement and provided that the surviving, resulting or transferee corporation, as the case may be, has a consolidated net worth (after giving effect to such consolidation, merger or transfer) at least equal to that of the Company immediately prior to such consolidation, merger or transfer. The term "net worth", as used in this Section shall mean the difference obtained by subtracting total liabilities (not including as a liability any capital or surplus item) from total assets (exclusive of good will, patents and other intangibles) of the Company and any Subsidiary. 8.7. Release and Indemnification Covenants. The Company releases the Issuer from and covenants and agrees that the Issuer shall not be liable for, and agrees to indemnify, defend and hold the Issuer, its officers, employees and independent contractors harmless against, any claims or judgments in connection with the transactions contemplated by this Agreement, and against any loss or damage to property or any injury or death of any person occurring on or about or resulting from any defect in the Project, and, from any other expenses incurred by the Issuer in connection with the transactions contemplated by this Agreement or resulting from any defect in the Project, provided that the indemnity provided in this sentence shall be effective only to the - 20 - • extent of any loss that may be sustained by the Issuer in excess of the net proceeds received from any insurance carrier with respect to the loss sustained, and provided further, that the indemnity shall not be effective for damages that result from gross negligence or intentional acts on the part of the Issuer, its officers, employees, or independent contractors. The covenants of the Company in this Section 8.7 shall survive the term of the Bond.- 8.8. Damage and Destruction. Unless the Company shall have exercised its option to prepay the Note in full pursuant to the provisions of Section 5.1 hereof, if, prior to full payment of the Bond, the Project is destroyed (in whole or in part) or is damaged by fire or other casualty, the Company shall be obligated to continue to make the payments specified in the Note and shall promptly give written notice thereof to the Escrow Trustee. All net proceeds of insurance resulting from such claims for losses shall be paid to and held by the Escrow Trustee in a separate fund, whereupon the Company shall have the option to: (a) apply such proceeds to the prepayment of the Note in whole in accordance with Section 5.1 hereof; or (b) (i) proceed promptly to repair, rebuild or restore the property damaged or destroyed to substantially the same condition as it existed prior to the event causing such damage or destruction, with such changes, alterations and modifications (including the substitution and addition of other property) as may be desired by the Company and as will not impair operating unity or productive capacity or the character of the Project or materially reduce its value, and (ii) cause the Escrow Trustee to apply so much as may be necessary of the net proceeds of such insurance to payment of the costs of such repairing, rebuilding or restoration as the work progresses. In the event said net proceeds are not sufficient to pay in full the costs of such repairing, rebuilding or restoration, the Company will nonetheless cause such repairing, rebuilding or restoration to be completed and will pay that portion of the costs thereof in excess of the amount of said net proceeds. Any moneys held by the Escrow Trustee in the separate fund under the provisions of the preceding paragraph shall, at the written consent of the Company, be invested or reinvested by the Escrow Trustee in investments enumerated in Section 7.2. hereof. The Company shall forthwith pay to the Escrow Trustee the amount of any losses on such investments for deposit into such fund. Each of the payments referred to in subparagraph (b) of this Section 8.8 shall be made upon receipt by the Escrow Trustee of a written requisition signed by the authorized Company representative certifying: (i) that none of the items for which the payment is proposed to be made has formed the basis for any payment theretofore made from the fund; and (ii) that each item for which the payment is proposed to be made is or was necessary in connection with the repairing, rebuilding or restoration; and (iii) that all of the costs to be paid or reimbursed pursuant to such requisition constitute amounts which will be charged to the Project's capital account or which would be so chargeable either with a proper election by the Company under the Code or but for a proper election by the Company to deduct such amount. Such requisition shall also with respect to each payment to be made: - 21 - (1) State the requisition number; (2) State the name and address of the person, firm or corporation to whom payment is due or has been made, which may include the Company; (3) State the amount to be or which has been paid; (4) State that each obligation mentioned therein has been properly incurred, is a proper cost of repairing, rebuilding or restoring the Project and has not been the basis of any previous requisition; (5) State that except for the amount, if any, stated pursuant to the foregoing clause (3) in such certificate to be due for services or materials to the particular supplier, there is no outstanding indebtedness to the particular supplier known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such construction which, if unpaid, might become the basis of any lien upon the Project; (6) State that there has not been filed with respect to the Project or any part thereof any vendor's, mechanic's, laborer's, materialman's or other lien which has not been discharged of record, except such as will be discharged by payment of the amount then requested or are being contested in accordance with the Mortgage; (7) State that no event of default exists under this Agreement, and that no notice has been given to the Company of a default hereunder which has not been corrected; and (8) Be accompanied by such other showings (including contractor's statements, affidavits, lien waivers, title policy date-down endorsements and attorney's opinions) as may be reasonably requested by the Escrow Trustee or are customarily required by prudent lenders for disbursements under commercial real estate and equipment financing. A copy of each such requisition shall be furnished to the Issuer. The Escrow Trustee is hereby authorized and directed to make or cause each disbursement therefor in accordance with the provisions of this Section. The Escrow Trustee shall keep and maintain adequate records pertaining to the separate fund described in this Section 8.8 and all disbursements therefrom, and after the repairing, rebuilding and restoration of the Project has been completed and a certificate of payment of all costs is or has been filed as provided in the following paragraph, the Escrow Trustee shall file an accounting thereof with the Issuer and the Company. The Issuer shall not be liable, under any circumstances, for any payments made by the Escrow Trustee in error or in violation of - 22 - the provisions of this paragraph. The Company shall hold the Issuer harmless from any claims, judgments or damages suffered by the Issuer by reason of any acts of the Escrow Trustee under this paragraph. Completion of the repairing, rebuilding or restoration of the Project shall be evidenced to the Escrow Trustee by a certificate signed by the Company stating the cost of such repairing, rebuilding .ind restoration and stating that (i) repairing, rebuilding and restoration of the Project has been completed, and (ii) all other facilities necessary in connection with the Project have been acquired, and all costs and expenses incurred in connection therewith have been paid (except for moneys withheld pursuant to bona fide disputes or standard retainage). Notwithstanding the foregoing, such certificate may state that it is given without prejudice to any rights against third parties which exist at the date of such certificate or which may subsequently come into being. It shall be the duty of the Company to cause such certificate to be furnished to the Escrow Trustee within a reasonable time after the repairing, rebuilding and restoration of the Project shall have been completed. Any balance of such net proceeds remaining after payment of all the costs of such repairing, rebuilding or restoration shall be used to prepay the Note and the Bond, in whole or in part, without premium in accordance with Section 5.3(b) hereof. If the Note and the Bond have been fully paid, all net proceeds will be paid to the Company. The Company shall not, by reason of the payment of such excess costs, be entitled to any reimbursement from the Issuer, the Escrow Trustee or the Institutional Lender or any abatement or diminution of the amounts payable on the Note. 8.9 Condemnation. Unless the Company shall have exercised its option to prepay the Note in full pursuant to the provisions of Section 5.1 hereof, in the event that title to, or the temporary use of, the Project or any part thereof shall be taken under the exercise of the power of eminent domain by any governmental body or by any person, firm or corporation acting under governmental authority, the Company shall be obligated to continue to make the payments specified in the Note. The Company, the Escrow Trustee and the Institutional Lender will cause the net proceeds received by them or any of them from any award made in such eminent domain proceedings, to be paid to and held by the Escrow Trustee in a separate fund, to be applied in one or more of the following ways as shall be directed in writing by the Company: (a) The restoration of the Project to substantially the same condition as it existed prior to the exercise of the said power of eminent domain. (b) The acquisition, by construction or otherwise, of other improvements suitable for the Company's operations within the boundaries of the Issuer (which improvements shall be acquired subject to no liens or encumbrances prior to the lien of the Mortgage, other than permitted encumbrances as defined in the Mortgage). (c) Prepayment in whole or in part of the Note and the Bond together with accrued interest thereon to the date of prepayment; provided, that no part of any such condemnation award may be applied for such prepayment unless, in the event that the Note and the Bond are to be partially prepaid, the Company shall furnish to the Escrow Trustee a - 23 - certificate of an independent engineer acceptable to the Escrow Trustee stating (i) that the property forming a part of the Project that was taken by such condemnation proceedings is not essential to the Company's use or occupancy of the Project, or (ii) that the Project has been restored to a condition substantially equivalent to its condition prior to the taking by such condemnation proceedings or (iii) that improvements have been acquired which are suitable for the Company's operations at the Project as contemplated by the foregoing subsection (b) of this Section. Within 90 days from the date of entry of a final order in any eminent domain proceedings granting condemnation, the Company shall direct the Escrow Trustee in writing as to which of the ways specified in this Section the Company elects to have the condemnation award applied. If the Company shall direct the proceeds to be applied in accordance with (a) or (b) above, the Escrow Trustee shall make disbursements from the fund upon receipt of one or more requisitions complying with Section 8.8 hereof with appropriate changes to reflect the fact that there has been a condemnation of all or a portion of the Project. If the Company fails to so direct the Escrow Trustee within the stated time, or in the event any balance of the net proceeds of the award in such eminent domain proceedings shall remain after completion and payment of the costs of the restoration or replacement of the Project pursuant to (a) or (b) above, the net proceeds, or balance thereof, of the award in such eminent domain proceedings shall be applied to the prepayment of the Note and the Bond, in whole or in part, without premium, If the Note and the Bond have been fully paid, all net proceeds will be paid to the Company. Any moneys held by the Escrow Trustee in the separate fund under the provisions of the preceding paragraph shall, at the written request of the Company, be invested or reinvested by the Escrow Trustee as provided in Section 7.2 hereof. The Company shall forthwith pay to the Escrow Trustee for deposit into such fund the amount of any losses on such investments. 8.10. Tax Exempt Status of Interest on the Bond. The Company covenants that it shall furnish to the Issuer whatever information is necessary for the Issuer to make the election required to be made by it in Section 9.5 hereof and to comply with the provisions of Section 103(1) of the Code, and shall file such supplemental statements and other information as are required by the applicable regulations or procedures of the Internal Revenue Service. The Company represents that (i) the proceeds of the Bond are to be used for the payment of the costs of construction and equipping of facilities located wholly within the corporate limits of the City of Elgin, Illinois; (ii) that the Company will be the only principal user of the facilities to be acquired with the proceeds of the Bond within the meaning of Section 103(b)(6) of the Code; and (iii) that, except for the $4,000,000 principal amount Industrial Development Revenue Bond (Universal Chemical and Coatings, Inc. Project) of the Issuer dated September 12, 1984 as of December 2, 1985 outstanding in the principal amount of $3,890,000, there are no outstanding obligations of any state, territory or possession of the United States, or any political subdivision of the foregoing or of the District of Columbia constituting "exempt small issues" within the meaning of Section 1.103-10 of the Internal Revenue Service Rules and Regulations, (the "Regulations"), the proceeds of which have been or are to be used primarily with respect to facilities located within the corporate limits of the City of Elgin, Illinois (or with respect to any contiguous or integrated facilities within the meaning of the Code), and which are to be used primarily by the Company (including any person related to the Company within the meaning of Section 103(b)(6)(C) of the Code) other than the Bond. - 24 - The Company further covenants and represents that it does not presently intend to make any capital expenditures which will cause the interest on the Bond to become subject to federal income taxes pursuant to the provisions of Section 103(b) of the Code so long as any portion of the Bond is unpaid. The Company further covenants that it has not taken any action or permitted any action to be taken, and that it will not take any action or permit any-action to be taken, which would cause the interest on the Bond to become subject to federal income taxes, provided that the Company shall not have violated this covenant if the interest on the Bond becomes taxable to a person who is a substantial user of the Project or a related person within the meaning of such terms under Section 103(b)(6)(C) of the Code. The Company further covenants and represents that there are no other obligations heretofore issued or to be issued by or on behalf of any state, territory, or possession of the United States, or political subdivision of any of the foregoing, or of the District of Columbia which constitute "industrial development bonds" within the meaning of Section 103 of the Code and which were or are to be sold (1) at substantially the same time as the Bond, (2) at substantially the same interest rate as the Bond, (3) pursuant to a common plan of marketing as the marketing plan for the Bond, and (4) are payable directly or indirectly by the Company or from the source from which the Bond is payable. The Company acknowledges that the capital expenditures referred to in the preceding and succeeding paragraphs include all capital expenditures with respect to property used by the Company (or any related person) which may, under any rule or election under the Code, be treated as a capital expenditure (whether or not such expenditure is so treated), including certain research and development costs relating to the Project that may have been paid or incurred at any location other than in the corporate limits of the City of Elgin, Illinois. The Company further covenants that it shall furnish to the Institutional Lender (i) at the time of the issuance of the Bond, a statement of the aggregate amount of capital expenditures made or incurred in the corporate limits of the City of Elgin, Illinois (or with respect to any contiguous or integrated facilities within the meaning of the Code) ("included capital expenditures") during the period beginning three years before the date of such issue and (ii) within 30 days after it has made or incurred the maximum amount of capital expenditures permitted under Section 103(b)(6)(D) of the Code, a statement to that effect. Upon the written request of the Institutional Lender, the Company shall also furnish to such Institutional Lender (a) within 90 days following the close of each fiscal year of the Company occurring within two years after the issuance of the Bond, a statement of the aggregate amount of included capital expenditures made or incurred during the period beginning with the date of the last statement filed with the Institutional Lender and ending on the last day of the preceding fiscal year and (b) within 90 days following the third anniversary date of the issuance of the Bond, a statement of the aggregate amount of included capital expenditures made or incurred during the period beginning with the date of the last statement filed with the Institutional Lender and ending on the last day of the preceding fiscal year and (b) within 90 days following the third anniversary date of the issuance of the Bond, a statement of the aggregate amount of included capital expenditures made or incurred during the period beginning with the date of the last statement filed with the Institutional Lender and ending on such anniversary date. Such supplemental statements shall also be filed with the district - 25 - director or director of the regional service center with whom the Company's income tax return is required to be filed on the due date prescribed for filing such return (without regard to any extensions of time). Each such statement shall set forth (a) a description of those capital expenditures which are capital expenditures under Section 103(b)(6)(D)(ii) of the Code and shall take into account facilities referred to in Section 103(b)(6)(E) of the Code in computing such capital expenditures, and (b) a description and the reason for the exclusion of any capital expenditures which the Company has not taken into account under Section 103(b)(6)(F) of the Code. This covenant shall survive the termination of this Agreement. No action taken by the Company hereunder shall so modify, or result in sue- modification of, the Project so as to cause the Project to cease being facilities that may be financed under the Issuer's home rule powers or to impair the excludability of interest on the Bond from the gross income of the owner of the Bond for purposes of federal income taxation. 8.11. Arbitrage. The Company will not take any action or fail to take any action with respect to the investment of the proceeds of the Bond or the Note or with respect to the payments derived from the Bond or the Note which may result in constituting the Bond an "arbitrage bond" within the meaning of such term under Section 103(c) of the Code and the regulations promulgated thereunder. 8.12. Licenses and Permits. The Company will preserve and keep in force and effect, and cause any Subsidiaries to preserve and keep in force and effect, all licenses and permits necessary to the proper conduct of its and their respective businesses. 8.13. Burdensome Contracts with Affiliates. The Company will not, nor will it permit any Subsidiary to, enter into any contract, agreement or business arrangement with an affiliate on terms and conditions which are less favorable to the company or such Subsidiary than would be usual and customary in similar contracts, agreements or business arrangements between persons not affiliated with each other. 8.14. Maintenance and Repair. The Company will maintain the Facilities in accordance with the requirements of the Mortgage. The Company will maintain, preserve and keep its properties and equipment in good repair, working order and condition and will from time to time make all needful and proper repairs, renewals, replacements, additions and betterments thereto so that at all times the efficiency thereof shall be fully preserved and maintained, and will cause any Subsidiary so to do in respect of property owned or used by it. 8.15. Taxes. The Company will duly pay and discharge and will cause any Subsidiary to duly pay and discharge, all taxes, rates, assessments, fees and governmental charges upon or against the Company, or such Subsidiary or against their respective properties, in each case before the same become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith and by appropriate proceedings. 8.16. Finance Charge. Upon delivery of the Bond, the Company shall pay directly to Institutional Lender the Institutional Lender's commitment fee of $15,000.00. 8.17. Fees of Institutional Lender. The Company agrees to pay all reasonable attorneys fees incurred by the Institutional Lender in connection with the Project. - 26 - 8.18. Insurance. The Company will maintain, or cause to be maintained, all necessary insurance with respect to the Facilities in accordance with the Mortgage. 8.19. Limitation on Liens. The Company will not, without the prior written consent of the Institutional Lender, grant any security interest or mortgage covering any of its real or personal property; provided, however, this provision shall not restrict any purchase of property by the Company in which the seller retains a vendor's lien which is released upon payment in the ordinary course of business or installment purchases of equipment. Section 9. Issuer Covenants. The Issuer covenants that on and after the date of initial issue of the bond and so long as the bond is outstanding: 9.1. Payment of Bond. Subject to the limited source of payment hereinafter referred to, the Issuer will cause the principal, premium, if any, and interest due in respect of the Bond to be paid according to the terms thereof. The principal, premium, if any, and interest on the Bond are payable solely from payments or prepayments by the Company upon the Note and other amounts payable under this Agreement and the Mortgage. 9.2. Warranty of Title. The Issuer has full right, power and authority to pledge and assign its interest herein (except its right to payments under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b) hereof), and under the Note, the Collateral Assignment and the Mortgage to the Institutional Lender for the uses and purposes set forth in the Assignment. The Issuer hereby authorizes the Company and the Institutional Lender, at no cost to the Issuer, to defend, on behalf of the Issuer, against all claims and demands of all persons whomsoever relating to the Issuer's interest in this Agreement, the Note, the Collateral Assignment and the Mortgage and the right, power and authority of the Issuer to assign this Agreement, the Note, the Collateral Assignment and the Mortgage. 9.3. Further Assurances. The Issuer, upon the posting with it of funds sufficient to cover all expenses and costs therein involved, will execute, acknowledge and deliver all and every further act, deed, conveyance, transfer and assurance necessary or proper for the better assuring of the pledge and assignment to the Institutional Lender of the Issuer's rights hereunder (except its right to payment under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b) hereof), and under the Note, the Collateral Assignment and the Mortgage. 9.4. Arbitrage. The Issuer will not take any action with respect to the investment of the proceeds of the Bond or with respect to the payments derived from the Note which may result in constituting the Bond an "arbitrage bond" within the meaning of such term as used in Section 103(c) of the Code and regulations promulgated thereunder. 9.5. Election of Issuer. The Issuer covenants that it shall, prior to the issuance of the Bond, duly elect to have the provisions of Section 103(b)(6)(D) of the Code apply to such issue, and such election shall be made in accordance with the applicable regulations or procedures of the Internal Revenue Service, such statement to be based on documentation provided by the Company. - 27 - 9.6. Information Reporting Requirements. The Issuer covenants that it shall comply with any and all information reporting requirements including but not limited to those required in Section 103(1) of the Code. The Company shall, at the request of the Issuer, reimburse the Issuer for all expenses and costs incurred by the Issuer resulting from compliance with this Section 9.6. Section 10. Financial and Business Information as to Company. The Company will, and will cause any Subsidiary to, maintain a standard and modern system of accounting in accordance with sound accounting practice and will furnish to the Institutional Lender and its duly authorized representatives such information respecting the business and financial condition of the Company and any Subsidiaries as the Institutional Lender may reasonably request, and without any request, will furnish to the Institutional Lender: (a) as soon as available, and in any event within 45 days after the close of each quarterly fiscal period of the Company (except the fourth quarter) a copy of the balance sheet and statements of income and surplus of the Company and its consolidated Subsidiaries, if any, for such period, prepared on a consolidated basis all in reasonable detail and certified to by the Chief Financial Officer thereof; (b) As soon as available, and in any event within 90 days after the close of each fiscal year of the Company, a copy of: (1) a consolidated balance sheet of the Company and its consolidated Subsidiarie•. if any, at the end of such year, and (2) consolidated statements of income and surplus of the Company and its consolidated Subsidiaries, if any, for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and in accordance with generally accepted accounting principles, along with an audit opinion by independent certified public accountants selected by the Company and acceptable to the Institutional Lender; (c) promptly upon receipt thereof, one copy of each other report submitted to the Company or any Subsidiary by independent accountants in connection with any annual, interim or special review made by them of the books of the Company or any Subsidiary; (d) promptly after the sending or filing thereof, copies of all proxy statements, financial statements, and reports, if any, which the Company sends to its shareholders, and copies of all regular, periodic and special reports and all registration statements, if any, which the Company files with the Securities and Exchange Commission or any governmental authority which may be substituted therefor, or with any national securities exchange; - 28 - (e) within the periods provided in subsections (a) and (b) above, the written statement of the Company to the effect that the Company has re-examined the provisions of this Agreement, and at the date of said statement is not aware of any default or event of default, or, if the Company is aware of any such default or event of default, it shall disclose in such statement the nature thereof; and (f) promptly after knowledge thereof shall have come to the attention of any responsible officer of the Company, written notice of any threatened or pending litigation or governmental proceeding against the Company or any Subsidiary which would materially adversely affect the business and properties of the Company and any Subsidiaries on a consolidated basis and of the occurrence of any default or event of default hereunder. Section 11. Events of Default. 11.1. Nature of Events. An "event of default" shall exist if any of the following occurs and is continuing: (a) Principal Payments on Note - The Company fails to make any payment of principal on the Note on or before the date such payment is due; or (b) Interest Payments on Note - The Company fails to make any payment of interest on the Note on or before the date such payment is due; or (c) Other Company Defaults - The Company fails to comply with any covenant, warranty or provision of this Agreement, the Mortgage, the Collateral Assignment or the Contingent Purchase Agreement (other than an event of default which is specifically provided elsewhere in this Section 11.1), and such failure continues for a period of thirty days after there has been given, by registered or certified mail, to the Company by the Institutional Lender, a written notice specifying such failure and requiring it to be remedied and stating that such notice is "notice of default" hereunder, unless the default is such that it cannot be remedied within the 30 day period and the Company institutes corrective action within such 30 day period and diligently pursues such action and the default is remedied within 60 days of the notice of default; or (d) Tax and Arbitrage Compliance Agreement - The Company fails to comply with the provisions of the Tax and Arbitrage Compliance Agreement; or (e) Warranties or Representations of Company - Any warranty, representation or other statement by or on behalf of the Company contained in this Agreement or in any instrument furnished in compliance with or in reference to this Agreement is false or misleading in any material respect; or - 29 - (f) Defaults on Existing Indebtedness - There is (a) a default under any of the following existing indebtedness: (i) $750,000 revolving line of credit made by the Institutional Lender to the Company and Chem- Metals, Inc., maturing September 30, 1986, secured by a pledge of accounts receivables and inventory and any renewals or extensions thereof or (ii) $244,000 term loan made by the Institutional Lender to the Company, maturing September 30, 1986, secured by an Assignment of Beneficial Interest in LaSalle National Bank Trust No. 52187 and any extensions and renewals thereof; or (iii) $3,980,000 outstanding principal amount as of December 2, 1985 of the $4,000,000 City of Elgin Industrial Revenue Bond issued on September 1, 1984 maturing March 31, 1999, secured by a first mortgage and security agreement dated as of September 2, 1984 from the Company or (iv) $301,600 guarantee on the revenue bond issue of the City of Valparaiso, Indiana for the benefit of Chem-Metals, Inc., maturing February 1, 1992, secured by a Second Assignment of Beneficial Interest in LaSalle National Bank Trust No. 52187. (g) Involuntary Bankruptcy Proceedings Against Company or Any Subsidiary - A custodian, receiver, trustee, conservator, or liquidating agent or committee of the Company or any Subsidiary or of any material part of the property of the Company or any Subsidiary is appointed by order or decree of a court or agency or supervisory authority having jurisdiction in the premises and such order or decree remains in effect for more than 30 days; or an order for relief under Title 11 of the United States Code, as amended, is entered against the Company or any Subsidiary; or any material part of the property of the Company or any Subsidiary is sequestered by court order and such order remains in effect for more than 30 days; or a petition is filed against the Company or any Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, or a petition is filed proposing the entry of an order for relief under Title 11 of the Untied States Code, as amended, against the Company or any Subsidiary and any such petition is not dismissed (or stayed in cases ancillary to foreign proceedings or in state proceedings) within 30 days after such filing; or (h) Voluntary Petition by Company or Any Subsidiary. The Company shall institute bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy or insolvency law or laws for the relief of debtors or proceedings seeking the entry of an order for relief under Title 11 of the United States Code, as amended, with respect to the Company or any Subsidiary or the Company or any Subsidiary shall consent to the institution of such proceedings against the Company or any Subsidiary by others or approving as filed any petition seeking reorganization under any bankruptcy or similar law or shall apply for or shall consent to the appointment of a custodian, receiver, trustee, conservator or liquidating agent or committee for the Company or for any material part of the property of the Company or any Subsidiary; or - 30 - (1) Assignments by Company or Any Subsidiary for Benefit of Creditors, Etc. The Company or any Subsidiary makes an assignment for the benefit of its creditors or admits in writing its inability to pay its debts generally as they become due, or consents to the appointment of a custodian, receiver, trustee or liquidator of the Company or any Subsidiary, or of all or any part of the property of the Company or any Subsidiary; or (j) Undischarged Final Judgments Against Company or any Subsidiary. Final judgment or judgments for the payment of money aggregating in excess of $50,000 is or are outstanding against the Company or any Subsidiary and any one of such final judgments has been outstanding for more than 30 days from the date of its entry and has not been discharged in full or stayed; or (k) Other Debt. Any material indebtedness, guarantee or financial obligation of the Company becomes or is declared due prior to its expressed maturity by reason of any default by the Company in the observance of any obligation or condition; or (1) Principal Payments on Bond. The Issuer fails to make the payment of principal on the Bond when due; or (m) Interest Payments on Bond. The Issuer fails to make any payment of interest on the Bond when due; or (n) Other Issuer Defaults. The Issuer fails to comply with any provisions of this Agreement or the Assignment, and such failure continues for more than 30 days; or (o) Warranties or Representations of Issuer. Any warranty, representation or other statement by or on behalf of the Issuer contained in this Agreement or the Assignment or in any instrument furnished in compliance with or in reference to this Agreement or the Assignment is false or misleading, when made in any material respect. 11.2. Default Remedies. (a) Acceleration of Note and Bond. When any event of default described in Section 11.1 has occurred and is continuing, the Institutional Lender may, by notice in writing sent by registered mail to the Issuer and the Company, declare the principal of and any accrued interest on the Note and the Bond to be immediately due and payable without further demand, presentment, protest or notice of any kind; and thereupon the Note and the Bond, including both principal and interest, shall become immediately due and payable, and the Company agrees to pay to the Institutional Lender the entire principal of and interest accrued on the Note and (on behalf of the Issuer) the Bond. (b) Attorneys' Fees. The Company agrees to pay to the Issuer and the Institutional Lender all costs and expenses reasonably incurred by them in the collection of the Note and the Bond, including but not limited - 31 - to reasonable attorneys' fees incurred by the Issuer or the Institutional Lender for all services rendered in connection therewith. (c) Other Actions. The Institutional Lender may take whatever action at law or in equity may appear necessary or desirable to collect the payments and other amounts then due and thereafter to become due or to enforce performance and observance of any obligation, agreement or covenant of the Company under this Agreement. In case the Company shall fail forthwith to pay such amounts upon such demand, the Issuer or the Institutional Lender shall be entitled and empowered to institute any action or proceeding at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or judgment or final decree against the Company and collect, in the manner provided by law out of the property of the Company, the moneys adjudged or decreed to be payable. In case there shall be pending proceedings for the bankruptcy or for the reorganization of the Company under the federal bankruptcy laws or any other applicable law, or in case a custodian, receiver or trustee shall have been appointed for the property of the Company, or in the case of any other similar judicial proceedings relative to the Company, or to the creditors or property of the Company, the Institutional Lender shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount owing and unpaid pursuant to this Agreement and, in case of any judicial proceedings, will file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Institutional Lender allowed in such judicial proceedings relative to the company, its creditors, or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses; and any custodian, receiver, assignee or trustee is hereby authorized to make such payments to the Institutional Lender, and to pay the Institutional Lender any amount due it for compensation and expenses, including reasonable counsel fees incurred by it up to the date of such distribution. 11.3. Notice of Default. When any event of default described in Section 11.1(c) through 11.1(i) has occurred, the Company agrees to give notice within five days after the occurrence of such event of default to the Issuer and to the Institutional Lender, such notice to be in writing and sent by registered or certified mail or by telegram. 11.4. Nonwaiver. No course of dealing on the part of the Issuer or the Institutional Lender, nor any delay or failure on the part of the Issuer or the Institutional Lender to exercise any right shall operate as a waiver of such right or otherwise prejudice the Issuer's or the Institutional Lender's rights, powers and remedies. Section 12. Interpretation of This Agreement. 12.1. Terms Defined. As used in this Agreement, the following terms shall have the following respective meanings: - 32 - Affiliate. The term "affiliate" shall mean any person which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with the Company. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether by contract or otherwise. Authorized Company Representative. The term "Authorized Company Representative" means the President of the Company and any other person at the time, and from time to time, designated to act on behalf of the Company by written certificate furnished to the Institutional Lender containing the specimen signature of such person and signed on behalf of the Company by the President. Such certificate may designate an alternate or alternates. Bond Counsel. The term "Bond Counsel" means the counsel who rendered the opinion as to the tax-exempt status of interest on the Bond or other nationally recognized municipal bond counsel satisfactory to the Company, the Issuer and the Institutional Lender. Code. The term "Code" means the Internal Revenue Code of 1954, as amended. Completion Date. The term "Completion Date" means the date of completion of the Project as the date shall be certified as provided in Section 8.1 hereof. Construction Period. The term "Construction Period" means the period between the beginning of construction of the Project or the date on which the Bond is first delivered to the Institutional Lender, whichever is earlier, and the Completion Date. Costs of the Project. The term "Costs of the Project" shall mean the sum of the items authorized to be paid from the proceeds of the Bond pursuant to Section 4.3. Default. The term "default" shall mean an event or condition, the occurrence of which would, with the lapse of time or the giving of notice, or both, become an event of default. Event of Default. The term is defined in Section 11.1. Facilities. The term "Facilities" means the land, buildings and equipment subject to the Mortgage. Independent Engineer. The term "Independent Engineer" means an engineer or an engineering firm qualified to practice and which practices the profession of engineering under the laws of the State of Illinois and who or which is not a full-time employee, officer or director of the Issuer, the Company or the Institutional Lender. Inducement Resolution. The term "Inducement Resolution" means the resolution passed and approved by the City Council of the Issuer on November 25, 1985 authorizing the execution of the Memorandum of Agreement between the Issurer and the Company. Person. The term "person" shall mean an individual, partnership, joint venture, corporation, trust, unincorporated organization or foundation, or a government or agency or political subdivision thereof. - 33 - Property. The term "property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. Qualified Costs of the Project. The term "Qualified Costs of the Project" shall mean those Costs of the Project which are (i) incurred for property subject to the allowance for depreciation provided by Section 167 of the Code; (ii) capitalized for Federal income tax purposes; and (iii) consistent with the certifications and covenants made in the Tax and Arbitrage Compliance Agreement dated as of December 1, 1985 by and among the Issuer, the Company and the Escrow Trustee. Subsidiary. The term "Subsidiary" shall mean a corporation of which the Company owns, directly or indirectly, more than 50% of the voting stock. 12.2. Directly or Indirectly. Where any provision in this Agreement refers to action to be taken by any person, or to action which any person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such person. 12.3. Governing Law. This Agreement and the Note and the Bond shall be governed by and construed in accordance with Illinois law. • Section 13. Miscellaneous. 13.1. Notices. (a) Except as may expressly be otherwise provided in this Agreement, all communications under this Agreement or under the Note or the Bond shall be in writing and shall be mailed by first class mail, postage prepaid, addressed as follows: If to the Company, at 1124 Elmhurst Road, Elk Grove Village, Illinois 60007 Attention: President; If to Issuer, at 150 Dexter Court, Elgin, Illinois 60120 Attention: City Clerk; If to the Institutional Lender, at 33 North LaSalle Street, Chicago, Illinois, 60690, Attention: Corporate Trust Department; or at such other place at any such party may designate by notice duly given in accordance with this Section. (b) Any notice so addressed and mailed by registered or certified mail shall be deemed to be given when so mailed. 13.2. Reproduction of Documents. This Agreement and all documents relating hereto, including without limitation (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by the Issuer or the Institutional Lender at the closing (except the Note and the Bond themselves) and (c) financial statements, certificates and other information previously or hereafter furnished to the Issuer, may be reproduced by any party hereto by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and any party hereto may destroy any original document so reproduced. Each of the parties hereto agrees and stipulates that any such reproduction shall be admissable in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or - 34 - not such reproduction was made by any party hereto in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. 13.3. Survival. All warranties, representations and covenants made by the Company, the Issuer-or the Institutional Lender herein or in any certificate or other instrument delivered by it or on its behalf under this Agreement shall survive the Bond Closing and the issuance and delivery of the Note and the Bond. 13.4. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties. In the event that the Company assigns its rights to the proceeds of the bond to persons other than those entitled to receive payments pursuant to Section 4.2 of this Agreement, said assignee shall agree to assume all of the obligations under this Agreement and the Company shall not be released from its obligations thereunder. 13.5. Amendments. This Agreement may only be amended with the written consent of all the parties hereto. The Mortgage or the Collateral Assignment may not be amended without the prior written consent of the Institutional Lender. 13.6. Duplicate Originals. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. All of the parties hereto may sign the same counterpart or any one or more of the parties hereto may sign separate counterparts. Only the executed counterpart delivered to and receipted for by the Institutional Lender shall constitute an original for purposes of creating a security interest herein under the Illinois Uniform Commercial Code. 13.7. Payments Due on Saturdays, Sundays and Holidays. In any case where the date of maturity of interest on or principal of the Bond or Note or the date fixed for prepayment of the Bond or Note shall be on a Saturday, Sunday or a legal holiday or a day on which banking institutions are authorized by law or executive order to close in the city where the principal office of the Institutional Lender is located, then payment of interest or principal need not be made on such date but may be made on the next succeeding business day not a Saturday, Sunday or a legal holiday or a day upon which banking institutions are authorized by law or executive order to close, and the Bond and Note shall continue to bear interest until said date. 13.8. Severability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative, or unenforceable to any extent whatever. - 35 - IR IN WITNESS WHEREOF, the Issuer, the Company and the Institutional Lender have each caused this Agreement to be executed in their respective corporate names and attested by their duly authorized officers, all as of the date first above written. CITY OF ELGIN, ILLINOIS [CORPORATE SEAL] BY ATTEST: Mayor City Clerk UNIVERSAL CHEMICALS AND COATINGS, INC. [CORPORATE SEAL] By ATTEST: President Secretary AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO [CORPORATE SEAL] By ATTEST: Its Officer Its Vice President - 36 - SCHEDULE I Legal Description of the Real Estate Description of the Project: Completion of construction and equipping of buildings located on the above- described real estate. Estimated Costs of the Project: Construction $ Equipment $ Total Costs of Project $ - 37 - SECOND MORTGAGE AND SECURITY AGREEMENT THIS MORTGAGE AND SECURITY AGREEMENT (the "Mortgage"), made as of December 1, 1985 between Universal Chemicals and Coatings, Inc., a Delaware corporation, with its principal office at 1124 Elmhurst Road, Elk Grove Village, Illinois, 60007 (the "Mortgagor"), and the City of Elgin, Illinois, a municipal corporation and a home rule unit of government of the State of Illinois, having its principal office at 150 Dexter Court, Elgin, Illinois, 60120 (the "Mortgagee"). WITNESSETH: THAT WHEREAS this Mortgage is made to secure the principal sum of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000) which is the proceeds of the Economic Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project) Series 1985 (the "Bond") of the Mortgagee and the Bond proceeds have been or will be received by the Mortgagor from the Mortgagee pursuant to an Agreement dated as of December 1, 1985, among American National Bank and Trust Company of Chicago, as Bondholder (the "Institutional Lender"), American National Bank and Trust Company of Chicago, as escrow trustee, the Mortgagor, and the Mortgagee (the "Agreement"), and such Bond proceeds will be used by the Mortgagor in addition to the proceeds of the $4,000,000 principal amount Industrial Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project) dated September 12, 1984 to complete the construction and equipping of the Project as defined in the Agreement and the Agreement, together with the loan repayment installments due thereunder, has been assigned by the Mortgagee to the Institutional Lender under an Assignment and Security Agreement dated as of December 1, 1985 (the "Assignment"); and WHEREAS, in order to evidence the loan made to it under the Agreement and this Mortgage, the Mortgagor has executed and delivered to the Mortgagee its Direct Obligation Note dated December _, 1985 (the "Note") in the principal sum of $1,500,000, the principal of which is payable in equal quarterly installments of Seventy- Five Thousand Dollars ($75,000) on each September 1, December 1, March 1 and June 1 (the "Payment Dates") with the first installment due on March 1, 1986 and the final installment due on December 1, 1990. Interest on the unpaid principal balance of the Note from the date of its issuance is payable on each Payment Date at a varying rate per annum which shall be seventy percent (70%) of the rate of interest publicly announced from time to time by American National Bank and Trust Company of Chicago as its prime rate (the "Prime Rate") with adjustments in such varying rate to be made on the same date as any announced change in the Prime Rate, provided, however, that except upon the occurrence of an event requiring purchase of the Bond pursuant to the Contingent Purchase Agreement dated as of December 1, 1985 from the Company to the Institutional Lender, the rate of interest borne by the Note shall never be less than six percent (6%) per annum nor more than nine percent (9%) per annum, and provided further that any changes in the Prime Rate occurring within 15 days before any Payment Date resulting in an increase or decrease in the interest which would otherwise be payable thereon on such Payment Date shall not, if an increase, be payable on such Payment Date, but shall instead be payable by the Company on the next succeeding Payment Date or shall, if a decrease, reduce the amount that the Company would otherwise have to pay on such next succeeding Payment Date, and interest shall be calculated, for actual days elapsed, on a 360 day year. In the event of a declaration of default by the Institutional Lender, interest on overdue principal and, to the extent permitted by law, on overdue . . interest shall be payable on demand at a rate equal to the rate otherwise applicable plus three percent (3%) per annum until paid; and WHEREAS, the Institutional Lender, as the purchaser of the Bond, is unwilling to purchase the Bond of the Mortgagee unless, among other things, the Mortgagor shall execute and deliver this instrument for the purpose of securing the Note; NOW THEREFORE, the Mortgagor, to secure the payment of the principal of and interest on the Note in accordance with the terms and provisions thereof, and the payment of any other sums therein provided for, and the observance and performance of the covenants and agreements contained herein or in the Agreement or in the Note or in any other instrument or document securing the Note and all other indebtedness which this Mortgage by its terms secures, and in consideration of the premises, of the purchase and acceptance of the Note by the Mortgagee, and the sum of Ten Dollars in hand paid, the receipt whereof is hereby acknowledged, does by these presents (and subject only to those Permitted Encumbrances set forth in Schedule II hereto) mortgage, warrant and assign unto Mortgagee, its successors and assigns and does hereby grant to Mortgagee, its successors and assigns a security interest in all and singular the properties, rights, interests and privileges described in Granting Clauses I through VII below, all of same being collectively referred to herein as the "Premises", provided, however, that the Premises shall not include (1) any current or future interest in corporate stock or (ii) any interest in an evidence of indebtedness. GRANTING CLAUSE I That certain real estate laying wholly within the corporate limits of the City of Elgin, Illinois, more particularly described in Schedule I attached hereto and made a part hereof (the "Land"). GRANTING CLAUSE II All buildings and improvements of every kind and description now existing or hereafter erected or placed on the Land and all materials intended for construction, reconstruction, alteration and repairs of such improvements now existing or hereafter erected thereon, all of which materials shall be deemed to be included within the Premises immediately upon the delivery thereof to said Land, and all fixtures, fitting, radiators, awnings, shades, screens, all gas, coal, steam, electric, oil and other heating, cooking, power and lighting apparatus and fixtures, all cooling and ventilating apparatus and systems, all plumbing, incinerating, sprinkler equipment and fixtures, all elevators and escalators and communication equipment; all other fixtures of every kind and nature whatsoever now or hereafter acquired by Mortgagor and attached to said Land and the buildings and Improvements now existing or hereafter located thereon; and all renewals or replacements of any of the foregoing or articles in substitution therefor, whether or not the same are or shall be attached to said buildings or improvements in any manner; it being mutually agreed, intended and declared that all the property owned by said Mortgagee and placed by it on the Land shall so far as permitted by law be deemed to form a part and parcel of the Land and for the purpose of this Mortgage to be real estate and covered by this Mortgage. GRANTING CLAUSE III -2- . All right, title and interest of Mortgagor now owned or hereafter acquired in and to all and singular the estates, tenements, hereditaments, privileges, easements, franchises and appurtenances belonging or in any wise appertaining to the Land and the buildings and improvements now or hereafter located thereon and the reversions, rents, issues, revenues and profits thereof, including all interest of Mortgagor in all rents, issues and profits of the aforementioned property and all rents, issues, profits, revenues, royalties, bonuses, rights and benefits due, payable or accruing (including all deposits of money as advanced rent or for security) under any and all leases or subleases and renewals thereof of said property (including during any period allowed by law for the redemption of said property after any foreclosure or other sale) together with the right, but not the obligation, to collect, receive and receipt for all such rents and apply them to the indebtedness hereby secured and to demand, sue for and recover the same when due or payable, provided that the assignments made hereby shall not impair or diminish the obligations of Mortgagor under the provisions of such leases nor shall such obligations be imposed upon Mortgagee. GRANTING CLAUSE IV All judgments, awards of damages, settlements and other compensation hereafter made resulting from condemnation proceedings or the taking of the Land or any part thereof or any building or other improvement now or at any time hereafter located thereon or any easement or other appurtenance thereto under the power of eminent domain, or any similar power or right (including any award from the United States Government at any time after the allowance of the claim therefor, the ascertainment of the amount thereto and the issuance of the warrant for the payment thereof), whether permanent or temporary, or for any damage (whether caused by such taking or otherwise) to said property or any part thereof or the improvements thereon or any part thereof, or to any rights appurtenant thereto, including severance and consequential damage, and any award for change of grade of streets (collectively "Condemnation Awards"). GRANTING CLAUSE V All property and rights, if any, which are by the express provisions of this instrument required to be subjected to the lien hereof and any additional property and rights that may from time to time hereafter, by installation or writing of any kind, be subjected to the lien hereof by Mortgagor or by anyone in Mortgagor's behalf. GRANTING CLAUSE VI All rights in and to common areas and access roads on adjacent properties heretofore or hereafter granted to Mortgagor and any after-acquired title or reversion in and to the beds of any ways, roads, streets, avenues and alleys adjoining the Land or any part thereof. GRANTING CLAUSE VII All equipment (as defined in Article 9 of the Illinois Uniform Commercial Code) now owned or hereafter acquired by the Mortgagor, through the use of the proceeds of the Bond and now or hereafter placed in, affixed to or used in connection with the buildings now or hereafter constructed upon any real property which (or upon any real property an interest in which) is now or hereafter subject to the lien hereof; -3- And as to the property aforesaid which is not deemed to be real property, including but not limited to equipment and fixtures this Mortgage is hereby deemed to be as well a Security Agreement under the provisions of the Illinois Uniform Commercial Code for the purpose of creating hereby a security interest in said property, which is hereby granted by the Mortgagor, as debtor, to the Mortgagee, as secured party, further securing the indebtedness hereby secured; the addresses of the Mortgagor (debtor) and the Mortgagee (secured party) appear at the beginning of this Mortgage; TO HAVE AND TO HOLD the Premises and the properties, rights and privileges hereby mortgaged, warranted and assigned, or intended so to be unto Mortgagee, its successors and assigns, forever; provided, however, that this Mortgage is upon the express condition that if Mortgagor shall pay or cause to be paid all indebtedness hereby secured and shall keep, perform and observe all and singular the covenants and promises in the Note and in this Mortgage or in any other instrument or document securing the Note or in the Agreement expressed to be kept, performed and observed by Mortgagor, then this Mortgage and the estate and rights hereby granted shall cease, determine and be void, and this Mortgage shall be released by Mortgagee upon the written request and at the expense of Mortgagor, otherwise to remain in full force and effect. IT IS FURTHER UNDERSTOOD AND AGREED THAT: 1. Maintain Premises. Unless Mortgagor shall have exercised its option to prepay the Note in full pursuant to Section 5.1 of the Agreement, Mortgagor shall (1) promptly repair, restore or rebuild any buildings or improvements now or hereafter on the Land which may become damaged or destroyed; (2) keep the Premises in as reasonably safe condition as its operations permit and in good condition and repair, without waste and free from charges, encumbrances, mechanics; or other liens; (3) pay when due any indebtedness which may be secured by a lien, charge or encumbrance on the Premises and upon request exhibit satisfactory evidence of the discharge of same to the Institutional Lender; (4) complete by December 1, 1988 the installation and construction of the Project; (5) comply with all requirements of law or municipal ordinances with respect to the premises and the use thereof; (6) without prior written consent of the Institutional Lender, which shall not be unreasonably withheld, not make any material alteration in said Premises except as required by law or municipal ordinance; and (7) promptly notify the Institutional Lender of any damage or destruction on the Premises, of any pending or threatened proceeding for the taking (by eminent domain or otherwise) of any part thereof, of any notice from any governmental authority alleging violation of any building code, zoning ordinance or other governmental requirement or of any other event or condition which might impair the value of the Premises or its use for its intended purpose. 2. Pay Taxes, Charges. Mortgagor shall pay before any penalty attaches all general taxes, special taxes, special assessments, water charges, sewer service charges and other charges against the Premises or the interest of the Mortgagor therein or the use or occupancy thereof or the activities conducted thereat when due, and shall upon written request furnish to the Institutional Lender duplicate receipts therefor. To prevent default hereunder, Mortgagor shall pay in full under protest, in the manner provided by statute, any tax or assessment which Mortgagor may desire to contest. -4- 3. Maintain Insurance. Mortgagor shall keep the Premises insured against loss or damage by fire, lightning, windstorm, explosion and such other risks as are usually included under extended coverage policies, and which are usually insured against by owners of like property in the State of Illinois, in amounts sufficient to prevent Mortgagor or Mortgagee from becoming a co-insurer of any partial loss under applicable policies and in any event not less than the then full insurable value (actual replacement value without deduction for physical depreciation) thereof. Mortgagor shall not carry separate insurance concurrent in kind or form and contributing in the event of loss, with any insurance required hereinabove. Mortgagor shall also maintain general public liability insurance with respect to the Premises against loss because of bodily injury, including death, or damage to property of others, such insurance to afford protection to the limit of not less than $1,000,000 in respect of any one occurrence. Mortgagor shall also obtain and maintain adequate workers compensation insurance and such other insurance with respect to the Premises in such amounts and against such insurable hazards as Mortgagee from time to time may require, including, without limitation, boiler and machinery insurance, insurance against flood risks and insurance against other losses due to fire and risks now or hereafter embraced by so-called "extended coverage" and builders risk insurance. Such insurance policies shall be maintained in companies reasonably satisfactory to the Institutional Lender, under insurance policies payable, in case of loss or damage, to Mortgagee and the Institutional Lender, as their respective interests may appear (such rights to be evidenced by the standard noncontributory mortgage clause to be attached to each policy) and providing that the same may not be cancelled except upon 30 days' prior written notice to the Institutional Lender, and shall deliver all policies, including additional and renewal policies, to the Institutional Lender, and in case of insurance about to expire, shall deliver renewal policies not less than 30 days prior to the respective dates of expiration. Any insurance proceeds paid under such policies shall be disbursed in accordance with Section 8.8 of the Agreement. Mortgagor hereby irrevocably constitutes and appoints the Institutional Lender its true and lawful attorney in fact to endorse the name of Mortgagor on any commercial paper evidencing any insurance proceeds. Any insurance proceeds remaining after completion of restoration of any improvements shall be applied in accordance with Section 8.8 of the Agreement. 4. Condemnation. Mortgagor acknowledges that Condemnation Awards have been assigned to Mortgagee, which awards Mortgagee is hereby irrevocably authorized to collect and receive, and to give appropriate receipts and acquittances therefor. Mortgagor covenants and agrees that Mortgagor will give Mortgagee and Institutional Lender immediate notice of the actual or threatened commencement of any proceedings under condemnation or eminent domain affecting all or any part of the Premises including any easement therein or appurtenance thereof or severance and consequential damage and change in grade of streets, and will deliver to Institutional Lender copies of any and all papers served in connection with any such proceedings. All Condemnation Awards shall be paid over to the Escrow Trustee and shall be held or disbursed or applied upon the terms and conditions provided in Section 8.9 of the Agreement. 5. Institutional Lender May Act. In case Mortgagor shall fail to perform any covenants herein contained, the Institutional Lender may, but need not, make any payment or perform any act herein required of Mortgagor in any form and manner deemed expedient, and may, but need not, make full or partial payments of principal or interest on prior encumbrances, if any, and purchase, discharge, compromise or settle any tax lien or other prior lien on title or claim thereof, or redeem from any tax sale or -5- forfeiture affecting said Premises or contest and tax assessment. All monies paid for any of the purposes herein authorized and all expenses paid or incurred in connection therewith, including attorneys' fees, and any other moneys advanced by the Institutional Lender to protect the Premises and the lien hereof, plus reasonable compensation to the Institutional Lender for each matter concerning which action herein authorized may be taken shall be so much additional indebtedness secured hereby and shall become immediately due and payable without notice and with interest thereon at a rate equal to the Prime Rate then in effect plus one percent per annum, and all sums so advanced, with interest, if and to the extent such sums and interest do not exceed an amount equal to the amount of the Note, shall be secured hereby in priority to the indebtedness evidenced by the Note; but no such advance shall be deemed to relieve the Mortgagor from any default hereunder. The Institutional Lender shall be subrogated to all rights, claims and liens of any party whose debt is discharged pursuant to this Section 5. Inaction of the Institutional Lender shall never be considered as a waiver of any right accruing to it on account of any default hereunder on the part of the Mortgagor. The Institutional Lender in making any payment hereby authorized may do so according to any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof. 6. Default. Mortgagor shall pay each item of indebtedness herein mentioned, both principal and interest, when due according to the terms hereof and of the Note. At the option of the Institutional Lender exercised by notice in writing to Mortgagor, all unpaid indebtedness secured hereby shall, notwithstanding anything in the Note or in this Mortgage to the contrary, become due and payable (a) in the case of the default in making payment when due of any installment of principal or interest on the Note when due or in making payment of any other sum due hereunder, or (b) in case Mortgagor shall, without the prior written consent of the Institutional Lender, which consent shall not be unreasonably withheld, sell, assign, transfer or lease the real estate subject hereto, or any portion thereof or interest therein, or contract or agree so to do, or (c) when any other default shall occur and continue for 30 days in the performance or observance of any other agreement of the Mortgagor herein contained, unless the default is such that it cannot be remedied within the 30 day period and the Company institutes corrective action within such 30 day period and diligently pursues such action and the default is remedied within 60 days after the date of default, or (d) the occurrence of an Event of Default under Section 11 of the Agreement, or (e) Mortgagor abandons the Premises, or (f) proceedings shall be commenced to foreclose or otherwise realize upon any lien, charge or encumbrance on the Premises or any part thereof which in the Institutional Lender's judgment will impair the security of this Mortgage. The occurrence of any of the foregoing events described in (a) through (f) of this Section 6 will constitute an event of default hereunder. 7. Remedies. When the indebtedness hereby secured shall become due, whether by acceleration or otherwise, Mortgagee shall have the following rights and remedies: (a) Mortgagee may proceed to protect and enforce the rights of Mortgagee hereunder (i) by any action at law, suit in equity or other appropriate proceedings, whether for the specific performance of any agreement contained herein, or for an injunction against the violation of any of the terms hereof, or in aid to the exercise of any power granted hereby or by law, or (ii) by the foreclosure of this Mortgage. -6- (b) The Mortgagee shall, with respect to any part of the Premises constituting property of the type in respect of which the realization of a lien or security interest granted therein is governed by the Illinois Uniform Commercial Code, including without limitation (i) the right to the possession of any such property, or any part thereof, and the right to enter without legal process any premises where any such property may be found and remove the same therefrom (provided that if such property is affixed to real estate, such removal shall be subject to the conditions stated in the Illinois Uniform Commercial Code); (ii) the right to hold, maintain, preserve and prepare such property for sale, until disposed of, or to retain such property subject to the Mortgagor's right of redemption in satisfaction of the Mortgagor's obligations, as provided in the Illinois Uniform Commercial Code; (iii) the right to require the Mortgagee to assemble such property and make it available to the Mortgagee for its possession at a place to be designated by the Mortgagee which is reasonably convenient to both parties; and (iv) the right to buy at any public sale and, if such property is of a type customarily sold in a recognized market or is of the type which is the subject of widely distributed standard price quotations, at private sale, which sale may be held as part of and in conjunction with any foreclosure sale of the real estate comprised within the Premises. (c) Upon the bringing of any suit to foreclose this Mortgage or enforce any other remedy available hereunder, Mortgagee shall, as a matter of right, without notice and without giving bond to Mortgagor or anyone claiming by, under or through either of them, and without regard to the solvency or insolvency of Mortgagor or the then value of the Premises, to the extent permitted by applicable law, be entitled to have a receiver appointed of all or any part of the Premises and the rents, issues and profits thereof, with such power as the court making such appointment shall confer, and Mortgagor hereby consents to the appointment of such receiver and shall not oppose any such appointment. Any such receiver may, to the extent permitted under applicable law, without notice, enter upon and take possession of the Premises or any part thereof by force, summary proceedings, ejectment or otherwise, and may remove Mortgagor or other persons and any and all property therefrom and income, rents, issues and profits accruing with respect thereto or any part thereof, whether during the pendency of any foreclosure or until any right of redemption shall expire or otherwise. (d) In any suit to foreclose the lien hereof there shall be allowed and included as additional indebtedness in the decree for sale all expenditures and expenses which may be paid or incurred by or on behalf of Mortgagee or the Institutional Lender for attorneys' fees, appraisers' fees, outlays for documentary and expert evidence, stenographic charges, publication costs and costs (which may be estimated as to items to be expended after the entry of the decree) of procuring all such abstracts of title, title searches and examinations, guarantee policies, Torrens certificates and similar data and assurances with respect to title as Mortgagee or the Institutional Lender may deem to be reasonably necessary to prosecute any foreclosure action or to evidence to the bidder at any sale pursuant thereto the true condition of the title to or the value of the -7- Premises, all of which expenditures shall become so much additional indebtedness hereby secured and be immediately due and payable with interest thereon at a rate equal to the Prime Rate then in effect plus three percent per annum from the date of expenditure until paid. (e) Upon the happening of any event of default hereunder, Mortgagor in furtherance of, and not by way of limitation of, the Granting Clauses of this Mortgage, hereby assigns and sets over to Mortgagee all rents, issues and profits of the Premises, which, whether before or after foreclosure, until the full and complete payment of said indebtedness and performance of all obligations, covenants or agreements hereunder, shall accrue and be owing for the use and occupation of the Premises, or any part thereof. For the purpose aforesaid, Mortgagor does hereby constitute and appoint the Institutional Lender its attorney in fact irrevocably in its name to receive, collect and receipt for all earnings and income from the Premises, as the same may accrue; and out of the amount so collected to pay and discharge all unpaid indebtedness hereby secured. For the purpose aforesaid, the Institutional Lender may enter and take possession of the Premises and manage and operate the same and take any action which, in the Institutional Lender's judgment is necessary or proper to conserve the value of the Premises. The Institutional Lender may also take possession of, and for these purposes use, any and all personal property contained in the Premises and used by Mortgagor. The right to enter and take possession of the Premises and use any personal property therein, to manage, operate and conserve the same, and to collect the rents, issues and profits thereof, shall be in addition to all other rights or remedies of the Institutional Lender hereunder or afforded by law, and may be exercised concurrently therewith or independently thereof. The expenses (including any receiver's fees, counsel fees, costs and agent's compensation) incurred pursuant to the powers herein contained shall be secured hereby. The Institutional Lender and Mortgagee shall not be liable to account to Mortgagor for any action taken pursuant hereto other than to account for any rents actually received by the Institutional Lender. 8. Application of Proceeds. The purchase money proceeds and/or avails of any sale of the Premises, or any part thereof and the proceeds and the avails of any remedy hereunder shall be paid to and applied as follows: (a) First, to the payment pro rata of costs and expenses of foreclosure or suit, if any, and of such sale by the Mortgagee or the Institutional Lender, their agents, attorneys and counsel, and of all proper expenses, liability and advances incurred or made hereunder by the Mortgagee or the Institutional Lender, together with interest thereon at a rate equal to the Prime Rate then in effect plus one percent per annum until paid (or such lesser rate as may be the maximum not prohibited by applicable law) on all such advances, and of all taxes, assessment or liens superior to the lien of these presents, except any taxes, assessments or other superior lien subject to which said sale may have been made; and (b) Second to the payment pro rata of the amount then owing or unpaid on the Note for principal and interest; and -8- (c) Third, to the payment of any other sums required to be paid by the Mortgagor pursuant to any provisions of this Mortgage, the Collateral Assignment, the Agreement, the Contingent Purchase Agreement (as defined in the Agreement), or the Note; and (d) Fourth, to the payment of the surplus, if any, to the Mortgagor, its successors and assigns, or to whomsoever may be lawfully entitled to receive the same. In case the Mortgagee or the Institutional Lender shall have proceeded to enforce any right under this Mortgage by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then and in every such case the Mortgagor, the Mortgagee and the Institutional Lender shall be restored to their respective former positions and rights hereunder with respect to the property subject to the lien of this Mortgage. 9. Additional Remedies. Mortgagor shall not and will not apply for or avail itself of any appraisment, valuation, stay, extension, exemption or redemption laws, or any so-called "Moratorium Laws," now existing or hereafter enacted, in order to prevent or hinder the enforcement or foreclosure of this Mortgage or the sale of the Premises, but hereby waives the benefit of such laws. Mortgagor for itself and all who may claim through or under it waives any and all right to have the property and estates comprising the Premises marshalled upon any foreclosure of the lien hereof and agrees that any court having jurisdiction to foreclose such lien may order the Premises sold as an entirety. Mortgagor hereby waives any and all rights of the redemption from sale to which it may be entitled under the laws of the State of Illinois on behalf of Mortgagor and each and every person acquiring any interest in, or title to, the Premises described herein subsequent to the date of this Mortgage, and on behalf of all other persons to the extent permitted by law. 10. Indemnity. Mortgagee shall not be obligated to perform or discharge, nor does it hereby undertake to perform or discharge, any obligation, duty or liability of Mortgagor, and to the extent provided by law, Mortgagor agrees to protect, indemnify, defend and hold Mortgagee harmless of and from any and all liability, loss, cost, expense, or damage which it may or might incur in the exercise of its rights, remedies, powers and authority hereunder, and of and from any and all claims and demands whatsoever which may be asserted against it by reason of any alleged obligations, undertakings or liabilities, except for such claims and demands as result from Mortgagee's gross negligence or willful actions. Should Mortgagee incur any such liability, loss, cost or damage of or hi the defense of any claims or demands, the amount thereof, including costs, expenses and attorneys' fees, shall be secured hereby, and Mortgagor shall reimburse Mortgagee therefor immediately upon demand, with interest accruing at a rate equal to the Prime Rate then in effect plus one percent per annum from the date of expenditure until paid. 11. Inspection of Premises. Mortgagee and the Institutional Lender shall have the right to inspect the Premises at all reasonable times and access thereto shall be permitted for that purpose, subject to the limitations of access set forth in Section 8.5 of the Agreement. -9- 12. Remedies Cumulative. No remedy or right of Mortgagee or of the Institutional Lender acting on Mortgagee's behalf shall be exclusive of, but shall be cumulative and in addition to, every other remedy or right now or hereafter existing at law or in equity or by statute or otherwise. No delay in the exercise of or omission to exercise any remedy or right accruing on any default shall impair any such remedy or right or be construed to a waiver of any such default or acquiescence therein, nor shall it affect any subsequent default of the same or a different nature. Every such remedy or right may be exercised concurrently or independently, and when and as often as may be deemed expedient by Mortgagee or the Institutional Lender. 13. Mortgagor to Pay Costs, Fees. If Mortgagee or the Institutional Lender shall be made a party to or shall intervene in any action or proceeding affecting the Premises or the title thereto or the interest of Mortgagee or the Institutional Lender under this Mortgage, or if the Mortgagee or the Institutional Lender employs an attorney to collect any or all of the indebtedness hereby secured, Mortgagee and the Institutional Lender shall be reimbursed by Mortgagor, immediately and without demand, for all reasonable costs, charges, expenses and attorneys' fees incurred by them in any such case, and the same shall be secured hereby as a further charge and lien upon the Premises. 14. Recording and Perfecting of Lien. The Mortgagor shall record or cause the recording of this Mortgage and shall execute and deliver to Mortgagee any and all financing statements, continuation statements and documents deemed necessary or appropriate by the Mortgagee in order to perfect and maintain the security interests herein granted. 15. Severability. All rights, powers and remedies provided herein may be exercised only to the extent that the exercise thereof does not violate any applicable law, and are intended to be limited to the extent necessary so that they will not render this mortgage invalid, unenforceable or not entitled to be recorded, registered or filed under any applicable law. If any terms of this Mortgage shall be held to be invalid, illegal or unenforceable, the validity of the other terms of this Mortgage shall in no way be affected thereby. 16. Successors and Assigns. Whenever any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all the covenants, promises and agreements in this Mortgage contained by or on behalf of the Mortgagor, or by or on behalf of Mortgagee, shall bind and inure to the benefit of the respective successors and assigns of such parties, whether so expressed or not. 17. Written Instruments Required. This Mortgage and the provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. 18. Headings. The headings of the sections of this Mortgage are for convenience only and shall not affect the meaning or construction of any provisions hereof. 19. Notices. All notices hereunder shall be given in accordance with Section 13.1 of the Agreement. -10- 20. Governing Law. This Mortgage shall be governed by and construed in accordance with Illinois law. IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be executed and sealed, all as of the day and year first above written, but actually executed and delivered this day of December, 1985. UNIVERSAL CHEMICALS AND COATINGS, INC. By: (SEAL) Attest: Its Secretary -11- ASSIGNMENT OF MORTGAGE The City of Elgin, Illinois hereby assigns the foregoing Second Mortgage and Security Agreement to American National Bank and Trust Company of Chicago and its successors and assigns pursuant to the Assignment and Security Agreement dated as of December 1, 1985 between the City of Elgin, Illinois and said American National Bank and Trust Company. CITY OF ELGIN, ILLINOIS Mayor (CORPORATE SEAL) ATTEST: Clerk -12- -£T- pus,' alp Jo tionclizraaa tella'I I a'IIIQSHoS . 4 • SCHEDULE II PERMITTED ENCUMBRANCES 1. Mortgage dated September 1, 1984 and recorded September , 1984 as document made by Universal Chemical & Coatings, Inc. to the City of Elgin to secure a note for $4,000,000. 2. Liens for ad valorem taxes and special assessments or installments thereof not then delinquent, or, if delinquent, being contested in accordance with the Second Mortgage and Security Agreement (the "Mortgage") of which this is a part. 3. The Loan Agreement as defined in the Mortgage. -14- COLLATERAL ASSIGNMENT This COLLATERAL ASSIGNMENT (the "Collateral Assignment"), dated as of December 1, 1985 from UNIVERSAL CHEMICALS AND COATINGS, INC., a Delaware corporation (the "Assignor"), having an address at 1124 Elmhurst Road, Elk Grove Village, Illinois 60007, Attention: President, to the CITY OF ELGIN, a home rule unit of government of the State of Illinois (the "Assignee"), having an address at 150 Dexter Court, Elgin, Illinois 60120, Attention: City Clerk: RECITALS A. At or about the time of delivery hereof, the Assignor is borrowing the sum of $1,500,000 from the Assignee. Such borrowing is evidenced by the Direct Obligation Note of the Assignor (the "Note"), in the principal amount of $1,500,000. To acquire the funds to make the loan evidenced by the Note, the Assignee is issuing its Economic Development Revenue Bond (Universal Chemicals & Coatings, Inc. Project) Series 19854in the principal amount of $1,500,000 (the "Bond") pursuant to the terms of an Agreement dated as of December 1, 1985 (the "Agreement") among the Assignee, the Assignor and American National Bank and Trust Company of Chicago (the "Institutional Lender" and the "Escrow Trustee"). The Note bears interest at such rates and is payable upon such terms and conditions and at such times and in such amounts as shall be necessary to pay the principal of, and interest and premium, if any, on the Bond when due. B. The Note is secured by a Mortgage and Security Agreement (the "Mortgage") dated as of December 1, 1985 between Assignor and Assignee, as mortgagee, which creates a first lien on the premises described in Exhibit A hereto and the real estate improvements, personal property and equipment thereon or to be located thereon (the "Property"). The Agreement provides that the Note is to be endorsed and pledged and the Mortgage is to be assigned to the Institutional Lender. With respect to the improvements to be constructed on the real property, Assignor has or will enter into the contracts listed on Exhibit B attached hereto and incorporated herein by reference (the "Contracts"). C. With respect to the improvements to be constructed on the real property, Assignor has or will have completed plans and specifications (the "Plans") and has or will obtain permits, licenses, consents and approvals issued or to be issued by one or more governmental authorities or agencies (the "Permits"). In consideration of and as an inducement to the Assignee to issue the Bond and to acquire the Note, and as an inducement to the purchaser of the Bond to purchase the same, the Assignor is entering into the undertakings herein set forth for the benefit and security of the Assignee and the owner of the Bond (the "Bondholder"). All capitalized terms not defined herein but defined in the Mortgage or the Agreement shall have the same meaning herein unless the context or use indicates another or different meaning or intent. NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. THE ASSIGNMENT. The Assignor, in consideration of the sum of One Dollar ($1.00) and other good and valuable considerations, the receipt and sufficiency of which is hereby acknowledged, in furtherance of the covenants of the Mortgage and as security for the payment of the principal of, and premium, if any, and interest and all other sums payable on the Note, and the performance and observance of all obligations of the Assignor under the provisions of the Note, the Mortgage and the Agreement, does hereby specifically and presently irrevocably assign, transfer, convey and set over to the Assignee, all of the Assignor's estate, right, title and interest in to any and all development rights (the "Developer's Rights") of the Assignor in or relating to the Property, including the right to use the Plans and exercise the privileges of the holder of the Permits, and in and under the Contracts, together with all amendments and supplements thereto, together with all rights, powers, privileges, options and other benefits of the Assignor as the holder of the Developer's Rights and as a party to the Contracts including, but not by way of limitation, the following: (a) the right to perform all functions, take all actions necessary to give all approvals necessary or appropriate and to perform all functions and responsibilities of the Assignor in connection with the Developer's Rights and the Contracts, including the administration, performance and enforcement thereof; (b) the right to take such action upon the happening of a default under the Contracts, including the commencement, conduct and consummation of proceedings at law or in equity, as shall be permitted under any provision of the Contracts or by law or in equity; (c) the right to give all notices, consents and releases; (d) the right to make all waivers and agreements; and (e) the right to do any and all other things which the Assignor is or may become entitled to do with respect to the Developer's Rights and under the Contracts. SECTION 2. TERMINATION OF ASSIGNMENT. The assignment made hereby is executed as collateral security, and the execution and delivery thereof shall not in any way impair or diminish the obligations of the Assignor under the provisions of the Contracts, nor shall any of the obligations contained in the Contracts be imposed upon the Assignee. Upon the termination of the Agreement as provided therein, said assignment and all rights herein assigned to the Assignee shall cease and terminate and all the estate, right, title and interest of the Assignor in and to the Developer's Rights and the Contracts shall revert to the Assignor, and the Assignee shall deliver to the Assignor an instrument cancelling this Agreement and reassigning to the Assignor all estate, right, title and interest of the Assignee in and to the property hereby assigned. -2- SECTION 3. DESIGNATION BY ASSIGNOR. The Assignor hereby designates the Assignee to receive a copy of all notices, offers, demands, statements, documents, insurance policies or certificates evidencing such policies and all other communications and the Assignor hereby directs the parties to the Contracts to remit or deliver directly to the Assignee at its address set forth above or at such other address as the Assignee shall designate, duplicate original copies of all such notices, offers, demands, documents, insurance policies or certificates evidencing such policies and all other communications. SECTION 4. CONTRACTS IN EFFECT. The Assignor represents to the Assignee and the Bondholder that as to those Contracts which are presently in full force and effect that no default or Event of Default exists thereunder and that any consent to this Collateral Assignment required to be given by any of the parties has been given. The Assignor represents to the Assignee that the Assignor has not executed any other assignment of the subject matter of the assignment hereby made to the Assignee. SECTION 5. AGREEMENT OF ASSIGNOR. The Assignor agrees that the Assignment made hereby and the designation and direction hereinabove set forth in Section 3 are irrevocable, and that it will not, while said assignment is in effect or thereafter until Assignor has received from the Assignee notice of the termination thereof, take any action under the Developer's Rights or the Contracts or otherwise which is inconsistent with said assignment, or make any other assignment, designation or direction inconsistent therewith, and that any assignment, designation or direction inconsistent therewith shall be void. The Assignor will from time to time, upon the request of the Assignee, execute all instruments of further assurance and all such supplemental instruments as the Assignee may specify. The Assignor will also obtain any consents to this Collateral Assignment required to be given by other parties to the Contracts which have not yet taken effect. SECTION 6. NO MODIFICATION OF CONTRACTS. The Assignor agrees that it will not enter into any agreement materially amending or modifying the Contracts in a manner which is inconsistent with the Agreement or terminating the Contracts or this Agreement without the consent thereto in writing of the Assignee and any attempted such amendment, modification or termination without such consent shall be void. In the event that the Contract shall be amended as permitted herein, the Contracts as so amended shall continue to be subject to the provisions of this Agreement without the necessity of any further act by any of the parties hereto. SECTION 7. SUCCESSORS AND ASSIGNS; RECORDING. This Agreement shall be binding upon the parties hereto and upon their respective -3- successor and assigns. The Assignor at its expense, will at all times cause this Agreement, and all instruments with respect thereto (including without limitation properly completed and executed financing statements and continuation statements under the Illinois Uniform Commercial Code), to be recorded, registered and filed and to be kept recorded, registered and filed in such manner and in such places, and will pay all such recordation, registration and filing fees and other charges, and will comply with all such statutes and regulations, as may be required by law in order to establish, preserve and protect the Assignee's interests and rights hereunder (including without limitation, any interest or rights under the date hereof) and to establish, preserve and protect the lien created hereby as a valid present assignment of the Assignor's entire estate, right, title and interest in, to and under the Contracts. SECTION 8. LAW GOVERNING. The interpretation and enforcement of this Agreement shall in all respects be governed by the laws of the State of Illinois. IN WITNESS WHEREOF, the Assignor has caused this Agreement to be executed as of the day and year first above written. UNIVERSAL CHEMICALS & COATINGS, INC. a Delaware corporation By: Its President -4- • • EDIT A PARCEL ONE THE NORTH 1010.81 FEET OF THE WEST 861.88 FEET OF THE FOLLOWING DESCRIBED-PARCEL OF LAND: THAT PART OF THE SOUTH EAST 1/4 OF SECTION 32, TOWNSHIP 42 NORTH, RANGE 8 EAST OF THE THIRD PRINCIPAL MERIDIAN DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTH WEST CORNER OF THE SOUTH EAST 1/4 OF SAID SECTION 32; THENCE NORTHERLY ALONG THE WEST LINE OF SAID SOUTH EAST 1/4, 741.5 FEET FOR THE POINT OF BEGINNING THENCE NORTH 086 DEGREES, 48 MINUTES, 00 SECONDS EAST 2566.41 FEET TO CENTER LINE OF SLEEPY HOLLOW ROAD, THENCE NORTHERLY ALONG SAID CENTER LINE 729.71 FEET TO THE SOUTHERLY RIGHT OF WAY LINE, AS MONUMENTED, OF PARCEL NO. N-4D-59, AS ACQUIRED BY THE ILLINOIS STATE TOLL HIGHWAY . COMMISSION THROUGH PROCEEDINGS FILED IN THE CIRCUIT COURT OF KANE ' COUNTY AS CASE NO. 57-533; THENCE NORTHWESTERLY ALONG SAID SOUTHERLY RIGHT OF WAY LINE, AS MONUMENTED, 683.3 FEET TO A JOG IN SAID SOUTHERLY RIGHT OF WAY LINE; THENCE NORTHEASTERLY ALONG SAID JOG, AS MONUMENTED, BEING AT RIGHT ANGLES TO THE LAST DESCRIBED COURSE, 20.0 FEET; THENCE NORTHWESTERLY ALONG SAID SOUTHERLY RIGHT OF WAY LINE, AS MONUMENTED, BEING AT RIGHT ANGLES TO THE LAST DESCRIBED COURSE, 1134.12 FEET TO THE NORTH LINE OF THE SOUTH EAST 1/4 OF SAID SECTION 32; THENCE WESTERLY ALONG SAID NORTH LINE, 861.88 FEET TO THE. NORTH WEST CORNER OF SAID SOUTH EAST 1/4; THENCE SOUTH ALONG THE WEST LINE OF SAID SOUTH EAST 1/4, 1894.3 FEET TO THE POINT OF BEGINNING, IN THE TOWNSHIP OF DUNDEE, KANE COUNTY, ILLINOIS. PARCEL TWO: EASEMENT FOR INSTALLING, MAINTAINING, REPLACING, REPAIRING, REMOVING AND OPERATING UTILITIES, BUT NOT LIMITED TO ELECTRIC, TELEPHONE, WATER, GAS, DRAINAGE AND SEWER, AS CREATED IN GRANT OF EASEMENT RECORDED FEBRUARY 6, 1984 AS DOCUMENT 1669052, MADE BY CHICAGO TITLE AND TRUST COMPANY, TRUSTEE, TRUST NUMBER 56210, TO CHICAGO TITLE AND TRUST COMPANY, TRUSTEE, TRUST NUMBER 1083646 OVER THE WEST 33 FEET (EXCEPT THE NORTH 1010.81) FEET OF THE FOLLOWING DESCRIBED PARCEL OF LAND: THAT PART OF THE SOUTH EAST 1/4 OF SECTION 32, TOWNSHIP 42 NORTH, RANGE 8 EAST OF THE THIRD PRINCIPAL MERIDIAN, DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTH WEST CORNER OF THE SOUTH EAST 1/4 OF SAID SECTION 32; THENCE NORTHERLY ALONG THE WEST LINE OF SAID SOUTH EAST 1/4, 741.5 FEET FOR THE POINT OF BEGINNING; THENCE NORTH 086 DEGREES, 48 MINUTES, 00 SECONDS EAST, 2566.41 FEET TO THE CENTER LINE OF SLEEPY HOLLOW ROAD, THENCE NORTHERLY ALONG SAID CENTER LINE 729.71 FEET TO THE SOUTHERLY RIGHT OF WAY LINE, AS MONUMENTED, OF PARCEL NO. N-4D- 59, AS ACQUIRED BY THE ILLINOIS STATE TOLL HIGHWAY COMMISSION THROUGH PROCEEDINGS FILED IN THE CIRCUIT COURT OF KANE COUNTY AS CASE NO. 57- 533; THENCE NORTHWESTERLY ALONG SAID SOUTHERLY RIGHT OF WAY LINE, AS MONUMENTED, 683.3 FEET TO A JOG IN SAID SOUTHERLY RIGHT OF WAY LINE; THENCE NORTHEASTERLY ALONG SAID JOG, AS MONUMENTED, BEING AT RIGHT ANGLES TO THE LAST DESCRIBED COURSE, 20.0 FEET, THENCE NORTHWESTERLY ALONG SAID SOUTHERLY RIGHT OF WAY LINE, AS MONUMENTED, BEING AT RIGHT ANGLES TO THE LAST DESCRIBED COURSE, 1134.12 FEET TO THE NORTH LINE OF THE SOUTH EAST 1/4 OF SAID SECTION 32; THENCE WESTERLY ALONG SAID NORTH LINE, 861.88 FEET TO THE NORTH WEST CORNER OF SAID SOUTH EAST 1/4; THENCE SOUTH ALONG THE WEST LINE OF SAID SOUTH EAST 1/4, 1894.3 FEET TO THE POINT OF BEGINNING, IN THE TOWNSHIP OF DUNDEE, KANE COUNTY, ILLINOIS. This Bond is Transferable Only as a Whole. UNITED STATES OF AMERICA STATE OF ILLINOIS CITY OF ELGIN, ILLINOIS ECONOMIC DEVELOPMENT REVENUE BOND (UNIVERSAL CHEMICALS AND COATINGS, INC. PROJECT) SERIES 1985 $1,500,000 KNOW ALL MEN BY THESE PRESENTS that the City of Elgin, Illinois, a municipal corporation and a home rule unit of government of the State of Illinois (the "Issuer"), for value received, promises to pay from the source and as hereinafter provided, to American National Bank and Trust Company of Chicago (the "Institutional Lender"), the principal sum of ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($1,500,000), payable in equal quarterly installments of Seventy-Five Thousand Dollars ($75,000) on each March 31, June 30, September 30 and December 30 (the "Payment Dates") with the first installment due on March 31, 1986 and the final installment due on December 30, 1990 and to pay interest on the unpaid principal balance hereof from the date of this Bond at a varying rate per annum which shall be seventy percent (70%) of the rate of interest publicly announced by American National Bank and Trust Company of Chicago from time to time as its prime rate (the "Prime Rate") with adjustments to such varying rate to be made on the same date as any announced change in the Prime Rate, provided, however, that except upon the occurrence of an event requiring purchase of this Bond pursuant to the Contingent Purchase Agreement dated as of December 1, 1985 between the Company and the Institutional Lender, the rate of interest borne by this Bond shall never be less than six percent (6%) per annum nor more than nine percent (9%) per annum, and provided further that any changes in the Prime Rate occurring within 15 day$ before any Payment Date resulting in an increase or decrease in the interest which wou. otherwise be payable hereon on such Payment Date shall not, if an increase, be payable by the Company (hereinafter defined) on such Payment Date, but shall instead be payable by the Company (hereinafter defined) on the next succeeding Payment Date or shall, if a decrease, reduce the amount that the Company (hereinafter defined) would otherwise have to pay on such next succeeding Payment Date. Interest shall be calculated, for actual days elapsed, on a 360 day year. In the event of a declaration of default by the Institutional Lender interest on overdue principal and, to the extent permitted by law, on overdue interest, shall be payable on demand at a rate equal to the Prime Rate then in effect plus three percent (3%) per annum until paid. Both principal hereof and interest hereon are payable in immediately available funds current by 2:00 O'Clock P.M. on each due date thereof at the principal office of Institutional Lender, in Chicago, Illinois or its successors and assigns. In any case where the date of maturity of interest on or principal of this Bond or the date fixed for prepayment of all or a portion of this Bond shall be on a Saturday, I Sunday or a legal holiday or a day on which banking institutions are authorized by law or executive order to close in the city where the principal office of the Institutional Lender is located, then payment of interest or principal need not be made on such date but may be made on the next succeeding business day not a Saturday, Sunday or a legal holiday or a day upon which banking institutions are authorized by law or executive order to close, and this Bond shall continue to bear interest until said date. This Bond is issued for the purpose of funding a loan by the Issuer to Universal Chemicals and Coatings, Inc. (the "Company"), a Delaware corporation, for the purpose of financing the costs of completing the constructing and equipping a manufacturing facility within the corporate limits of the Issuer (the "Project") and the payment of necessary costs incidental thereto. This Bond is secured by and entitled to the protection of an Assignment and Security Agreement dated as of December 1, 1985 (the "Assignment"), duly executed and delivered by the Issuer to the Institutional Lender and by a Second Mortgage and Security Agreement and a Collateral Assignment from the Company to the Issuer. The terms and conditions of the construction and equipping of the Project, the loan of the proceeds of this Bond to the Company for such purpose, the issuance by the Company of its Direct Obligation Note (the "Note") sufficient to repay said loan, and the terms upon which this Bond is issued and secured are contained in an Agreement dated as of December 1, 1985 (the "Agreement") among the Issuer, the Company, the Institutional Lender and American National Bank and Trust Company of Chicago, as escrow trustee. It is hereby certified, recited and declared that all acts, conditions and things required to exist, happen and be performed precedent to and in the execution and delivery of the Agreement, the Assignment and the issuance of the Bond do exist, have happened and have been performed in due time, form and manner as required by law; and that the issuance of this Bond, together with all other obligations of the Issuer, does not exceed or violate any constitutional or statutory limitation. This Bond is issued pursuant to the home rule powers of the Issuer and pursuant to proceedings of the City Council of the Issuer authorizing the execution and delivery of the Agreement and the Assignment. This Bond does not constitute a general obligation of the Issuer, but is a limited obligation of the Issuer, payable solely out of the income and revenues of the Issuer to be derived from the Project pursuant to the Agreement. No holder of this Bond shall have the right to compel any exercise of the taxing power of the Issuer, or the State of Illinois or any political subdivision thereof, to pay this Bond or the interest or premium, if any, thereon, and this Bond does not constitute an indebtedness or a loan of credit of the Issuer, the State of Illinois or any political subdivision thereof, or a charge against their general credit or taxing powers, within the meaning of any constitutional or statutory provision. No recourse shall be had for the payment of the principal of and interest on this Bond or for any claim based thereon or upon any obligation, covenant or agreement in the Agreement contained, against any past, present or future official, officer, agent or employee of the Issuer or any successor corporation, as such, either directly or through the Issuer or any successor corporation, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such official, officer, agent or employee as such is hereby expressly waived and released as a condition of and in consideration for the execution of Agreement and the issuance of this Bond. - 2 - t As provided in the Agreement, this Bond is subject to provisions for optional and mandatory prepayment, in whole or in part, all without premium as specified and subject to the limitations set forth in the Agreement. The Issuer agrees to make required prepayments on account of this Bond in accordance with the provisions of the Agreement. Any partial prepayments shall be applied to the installments due hereon in the inverse order of their maturities. In the Agreement the Company agrees to pay to the Issuer and the Institutional Lender all costs and expenses reasonably incurred by them in the collection of the Note and this Bond, including reasonable attorneys' fees incurred by the Issuer or the Institutional Lender for all services rendered in connection therewith. Payments upon this Bond are to be made directly by the Company, on behalf of the Issuer to the Institutional Lender as permitted under the Agreement and, accordingly, any transferee hereof should verify the unpaid principal hereof with the Company prior to the acquisition hereof. This Bond is transferable only as a whole and only upon surrender hereof for cancellation together with a written instrument of transfer satisfactory to the Issuer executed by the Institutional Lender or its duly authorized attorney. Upon such transfer, a new Bond, in like form as this Bond, will be issued, both principal and interest of which will be payable to the transferee, in the principal amount of the outstanding principal balance hereof. If this Bond is so transferred, the term "Institutional Lender" shall mean the transferee of this Bond. This Bond shall be governed and construed in accordance with the laws of the State of Illinois. IN WITNESS WHEREOF, the City of Elgin, Illinois has caused this Bond to be executed in its name by the manual signature of the Mayor and attested by the manual signature of its City Clerk, and its corporate seal to be impressed hereon, all as of , 1985. CITY OF ELGIN, ILLINOIS By Mayor Attest: City Clerk [SEAL] - 3 - a u ti ASSIGNMENT AND SECURITY AGREEMENT THIS ASSIGNMENT AND SECURITY AGREEMENT dated as of December 1, 1985 (the "Assignment") between CITY OF ELGIN, ILLINOIS, a municipal corporation and a home rule unit of government of the State of Illinois (the "Issuer"), and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as secured party (the "Institutional Lender"); WITNESSETH: WHEREAS, the Issuer intends to issue its $1,500,000 Economic Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project) Series 1985 (the "Bond") under and pursuant to the Agreement of even date herewith (the "Agreement") among the Issuer, Universal Chemicals and Coatings, Inc. (the "Company"), and the Institutional Lender; and WHEREAS, the proceeds derived from the issuance of the Bond are to be loaned to the Company to provide funds to pay or reimburse the Company for the payment of the costs of completing the constructing and equipping of a manufacturing facility within the corporate limits of the Issuer (the "Project") which are described and referred to in the Agreement; and WHEREAS, the Company will evidence its obligation in respect of such loan by issuing and delivering its Direct Obligation Note (the "Note") in the principal amount of $1,500,000; and WHEREAS, the Institutional Lender has required as a condition to its purchase of the Bond that the Company, prior to the disbursement of Bond proceeds execute a Second Mortgage and Security Agreement to be recorded at the office of the Recorder of Deeds of Cook County (the "Mortgage") with the Issuer pursuant to which the Company grants to the Issuer a mortgage on the land, buildings, and security interest in the equipment and fixtures that are part of the Facilities, together with other items, to secure the Note, and that the Issuer execute this Assignment as further security for the Bond, and the Issuer is willing to execute this Assignment; WHEREAS, the Institutional Lender has required as a further condition to its purchase of the Bond that the Company, prior to the disbursement of Bond proceeds, execute a Collateral Assignment to be filed with the Secretary of State (the "Collateral Assignment") with the Issuer pursuant to which the Company assigns to the Issuer the plans and specifications, developers rights, and all contracts required by the Institutional Lender pertaining to construction, the real estate and the Project to secure the Note, and that the Issuer execute this Assignment as further security for the Bond, and the Issuer is willing to execute this Assignment; NOW, THEREFORE, as one of the inducements to and as part of the consideration for the purchase by the Institutional Lender of the Bond as provided in the Agreement and in consideration of the premises and other good and valuable consideration, the receipt whereof is hereby acknowledged: SECTION 1. ASSIGNMENT, PLEDGE AND DEPOSIT OF COLLATERAL. The Issuer does hereby pledge, deliver, assign, transfer and grant to the Institutional Lender and its successors and assigns, as security for the due and punctual payment of the principal installments of and interest on the Bond, all of its right, title and interest in and including without limitation its rights to payment of any and all amounts which may become due under, (a) the Agreement, except any payment made pursuant to Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b) of the Agreement relating to indemnification and payment of expenses of the Issuer by the Company, (b) the Note, (c) the Mortgage, as and when executed, (d) the Collateral Assignment as and when executed, and (e) all other rights and remedies to enforce such payment of any amount due the Issuer from the Company under the Agreement, the Note, the Mortgage and the Collateral Assignment (hereinafter called the "Pledged Collateral"). This assignment, transfer, pledge, grant, and delivery is made as and shall at all times constitute security for the payment in full of all principal of and interest on the Bond and the performance and observance by the Issuer of all the covenants and conditions contained in the Bond and the Agreement; and as security for all expenses and charges, legal or otherwise, reasonably paid or incurred by the Institutional Lender in realizing upon or protecting this Assignment or the indebtedness hereby secured. SECTION 2. WARRANTIES. The Issuer hereby represents and warrants to the Institutional Lender that the Issuer is the owner of the Pledged Collateral and all rights incident thereto are free and clear of any lien, security interest or other claim thereto other than the pledge made hereunder. SECTION 3. FURTHER ASSISTANCE. The Issuer agrees on request of the Institutional Lender to execute and deliver to the Institutional Lender such other documents or instruments as shall be reasonably requested by the Institutional Lender to confirm unto the Institutional Lender the pledge hereunder of the Pledged Collateral. SECTION 4. CERTAIN RESTRICTIONS ON ISSUER'S RIGHTS IN RESPECT OF PLEDGED COLLATERAL. 4.1. The Issuer will not: (a) declare a default or exercise the remedies of the holder of the Note under the Agreement, or exercise the remedies under the Mortgage or under the Collateral Assignment or terminate, modify or accept a surrender of, or offer or agree to any termination, modification or surrender of the Note, the Mortgage, or the Collateral Assignment or by affirmative act consent to the creation or existence of any security interest or other lien to secure the payment of indebtedness upon the Note or the Agreement or the Mortgage or the Collateral Assignment or any part thereof; or (b) assign, transfer or hypothecate (other than to the Institutional Lender hereunder) any payment then due or to accrue in the future under the Agreement, the Note, the Mortgage, or the Collateral Assignment. - 2 - SECTION 5. DEFAULT AND REMEDIES. 5.1. If an event of default under the Agreement shall occur and be continuing, the Institutional Lender, without obligation to resort to any other security, at its own expense or the expense of the Company, shall have the right at any time and from time to time, in its sole discretion, to enforce the rights and remedies specified in Section 11 of the Agreement and in Section 7 of the Mortgage pledged and assigned hereunder, and to take any and all action which, in the judgment of the Institutional Lender, is necessary or appropriate to enforce the rights of the Issuer in respect of its interest in the Note and all other moneys payable under the Agreement and in respect of the interests of the Issuer in the Mortgage and the Collateral Assignment. Upon any such enforcement of rights under the Agreement, the Note, the Mortgage or the Collateral Assignment, after deducting all costs and expenses of every kind of the Institutional Lender and the Issuer, including attorney's fees, from the proceeds of any recovery, the Institutional Lender shall apply any residue to the payment of any liabilities of the Issuer on the Bond, all as provided in the Agreement, the Mortgage and the Collateral Assignment. The balance, if any, remaining after payment in full of all of the liabilities of the Issuer on the Bond shall be paid to the Company. 5.2. The remedies provided herein shall not be deemed exclusive, but shall be cumulative and shall be in addition to all other remedies existing at law or in equity. 5.3. The satisfaction or performance of any part of the indebtedness hereby secured shall not affect the security hereby afforded or intended to be afforded for any other indebtedness hereby secured; but the pledge hereby made shall at all times remain in full force and effect for the benefit of all indebtedness hereby secured until all such indebtedness is fully satisfied. 5.4. No delay on the part of the Institutional Lender in exercising any of its options, powers or rights, or any partial or single exercise thereof, shall constitute a waiver thereof. SECTION 6. MISCELLANEOUS. 6.1. Whenever any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all the covenants, promises and agreements in this Assignment contained by or on behalf of the Institutional Lender shall bind and inure to the benefit of the respective successors and assigns of such parties whether so expressed or not. 6.2. The unenforceability or invalidity of any provision or provisions of this Assignment shall not render any other provision or provisions herein contained unenforceable or invalid. 6.3. The Institutional Lender shall release this Assignment and the lien hereof by proper instrument or instruments upon presentation of satisfactory evidence that all indebtedness hereby secured has been fully paid or discharged. 6.4 The parties agree that the assignments made hereby shall not subject the Institutional Lender to, or transfer, or pass or in any way affect or modify, any obligations of the Issuer under the Agreement, it being understood and agreed that all - 3 - iI such obligations of the Issuer shall be and remain enforceable only against the Issuer. This assignment is given solely for the purpose of securing payment by the Issuer of the principal of and interest on the Bond and the Existing Loans. 6.5. Any term, covenant, agreement or condition of this Asssignment may be amended or compliance therewith may be waived (either generally or in a particular instance and either retrospectively or prospectively) by an instrument in writing executed by the Issuer and the Institutional Lender. 6.6. (a) Any notice provided for herein shall be in writing and shall be mailed by first class mail, postage prepaid, addressed as follows: If to the Issuer: City of Elgin, Illinois City Hall 150 Dexter Court Elgin, Illinois Attention: City Clerk If to the Institutional Lender: American National Bank and Trust Company of Chicago 33 North LaSalle Street Chicago, Illinois 60690 Attention: Corporate Trust Department If to the Company: Universal Chemicals and Coatings, Inc. 1124 Elmhurst Road Elk Grove Village, IL 60007 Attention: President or to the Issuer or the Institutional Lender or the Company at such other address as the Issuer or the Institutional Lender or the Company may designate by notice duly given in accordance with this Section to the other parties. (b) Any notice so addressed and mailed by registered or certified mail shall be deemed to be given when mailed. 6.7. It is understood that all obligations of the Issuer hereunder are subject to the limitations set forth in Section 1.5 of the Agreement. 6.8. This Assignment shall in all respects be construed in accordance with and governed by the laws of the State of Illinois. This Assignment may not be amended or modified except in writing signed by the parties hereto. 6.9. This Assignment may be executed, acknowledged and delivered in any number of counterparts, each of such counterparts constituting an original but all together only one Assignment. IN WITNESS WHEREOF, the City of Elgin, Illinois has caused this Assignment and Security Agreement to be executed on its behalf by its Mayor and attested and sealed with the corporate seal of said City by its City Clerk, and American National Bank and Trust Company of Chicago has caused this Assignment and Security Agreement to be - 4 - executed on behalf by its Officer, and attested and sealed with the corporate seal of said bank all as of the day and year first above written, but actually executed and delivered on this _day of September, 1984. CITY OF ELGIN, ILLINOIS By Mayor (SEAL) Attest: Village Clerk AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO By Its Officer (SEAL) Attest: Its Vice President The undersigned hereby consents and agrees to all of the terms and provisions of the above and foregoing Assignment and Security Agreement. [CORPORATE SEAL] UNIVERSAL CHEMICALS AND COATINGS, INC. President ATTEST: Secretary - 5 - T UNIVERSAL CHEMICALS AND COATINGS, INC. AGREEMENT Dated as of September 1, 1984 Re: $4,000,000 City of Elgin, Illinois Industrial Development Revenue Bond (Universal Chemicals and Coatings, Inc, Project) r 1 Table of Contents Section Heading Page Preliminary Statement 1 1. Commitments for the Loans and Closings 1 1.1. Borrowing by the Company and Description of Direct Obligation Note 1 1.2 Sale and Description of Bond 2 1.3 Interest Rate 3 1.4 Bond Closing 3 (a) Loan from the Issuer to the Company 3 (b) Proceeds of the Bond to Issuer 3 1.5 Limited Liability of Issuer 4 1.6 Expenses 4 2. Warranties and Representations 5 2.1 Company Warranties and Representations 5 (a) Corporate Organization and Authority 5 (b) Full Disclosure 5 (c) Pending Litigation 5 (d) Title to Properties 5 (e) Borrowing Legal and Authorized 5 (f) No Defaults 6 (g) Governmental Consent 6 (h) Use of Proceeds 6 (i) Compensating Balances 7 (j) Compliance with Law 7 (k) Restrictions on the Company 8 (1) Title to Project 8 (m) Public Purpose 8 (n) Qualification of Project 8 (o) Location of Project 8 (p) No Conflict of Interest 8 (q) Consent of Holders of Other Securities 8 (r) Affiliate Transactions 8 (s) Financial Statements 8 (t) Taxes 9 (u) Private Placement 9 2.2 Issuer Warranties and Representations 9 (a) Organization and Corporate Power 9 (b) Legality of Transaction 9 (c) Inducement Resolution 9 r (d) Pending Litigation 10 (e) Authorization of Transaction 10 (f) Restriction of Pledges 10 (g) Validity of Bond 10 (h) Use of Proceeds 10 (i) Public Purpose 11 (j) Conflicts 11 (k) No Defaults 11 (1) Governmental Approval 11 (m) Issuer's Existence 11 (n)- Arbitrage 11 (o) Private Placement 11 2.3 Representations and Covenants of the Institutional Lender 12 3. Bond Closing Conditions 12 3.1. Consent of Holders of Other Securities 12 3.2. Company Closing Certificates 12 3.3. Issuer Closing Certificates 12 3.4. Legality of Interest Exclusion 12 3.5. Opinions of Counsel 13 3.6. Documents 13 3.7. Contingent Purchase Agreement 13 3.8. Election of Issuer 13 3.9. Insurance 13 3.10. Proceedings Satisfactory 13 3.11. The Mortgage and the Assignment 13 3.12. Mortgage Title Insurance 14 3.13. Survey 14 3.14. Soil Tests 14 4. Disbursement of Proceeds 14 4.1. Disbursement of Proceeds 14 4.2. Additional Conditions 15 (a) Construction Contract 15 (b) Budget and Construction Schedule 15 (c) Plans and Specifications 15 (d) Architect's Certificate 15 (e) Report of the Institutional Lender's Inspecting Architect 16 (f) Adequacy of Utilities 16 (g) Permits 16 (h) Additional Documents 16 4.3. Additional Disbursements 16 5. Prepayment of Note 19 5.1 Optional Prepayments Without Premium 19 5.2 Optional Calls by the Institutional Lender 19 5.3 Mandatory Prepayment 19 5.4 Notice of Prepayment 20 5.5 Partial Prepayment 20 5.6. Payment 20 5.7. Surrender of Note on Prepayment 20 6. Prepayment and Redemption of Bond 20 6.1 Prepayments and Redemption 20 6.2 Partial Prepayment 20 6.3 Surrender of Bond on Prepayment 21 7. Bond Proceeds and Investments 21 7.1. Bond Proceeds 21 7.2 Investments 21 8. Company Covenants 21 8.1. Agreement to Acquire and Construct the Project 21 8.2. Additional Payments 22 8.3. No Defense of Set-Off - Unconditional Obligation 22 8.4. Assignment of Issuer's Rights 23 8.5. Right of Access to the Project and Books 23 8.6. The Company to Maintain its Corporate Existence; Conditions Under Which E 23 8.7. Release and Indemnification Covenants 24 8.8. Damage and Destruction 24 8.9. Condemnation 26 8.10. Tax Exempt Status of Interest on the Bond 27 8.11. Arbitrage 29 8.12. Licenses and Permits 29 8.13. Burdensome Contracts with Affiliates 29 8.14. Maintenance and Repair 29 8.15. Taxes 29 8.16. Finance Charge 30 8.17. Fees of Institutional Lender 30 8.18. Insurance 30 8.19. Limitation on Liens 30 9. Issuer Covenants 30 9.1 Payment of Bond 30 9.2. Warranty of Title 30 9.3. Further Assurances 30 9.4. Arbitrage 30 9.5. Election of Issuer 31 9.6. Information Reporting Requirements 31 10. Financial and Business Information as to Company 31 11. Events of Default 32 11.1. Nature of Events 32 (a) Principal Payments on Note 32 (b) Interest Payments on Note 32 (c) Other Company Defaults 32 (d) Warranties or Representation of Company 32 (e) Defaults on Existing Loans 33 (f) Involuntary Bankruptcy Proceedings Against 33 (g) Voluntary Petition by Company or Any Subsidiary 33 (h) Assignments by Company or Any Subsidiary for Benefit of Creditors, Etc. 33 (i) Undischarged Final Judgments Against Company or any Subsidiary 34 (j) Other Debt 34 (k) Principal Payments on Bond 34 (1) Interest Payments on Bond 34 (m) Other Issuer Defaults 34 (n) Warranties or Representations of Issuer 34 11.2. Default Remedies 34 (a) Acceleration of Note and Bond 34 (b) Attorney's Fees 34 (c) Other Actions 35 11.3. Notice of Default 35 11.4. Nonwaiver 35 12. Interpretation of This Agreement 35 12.1. Terms Defined 35 12.2. Directly or Indirectly 36 12.3. Governing Law 37 13. Miscellaneous 37 13.1. Notices 37 13.2. Reproduction of Documents 37 13.3. Survival 37 13.4. Successors and Assigns 37 13.5. Amendments 38 13.6. Duplicate Originals 38 13.7. Payments Due on Saturday, Sundays and Holidays 38 13.8. Severability 38 AGREEMENT Re: $4,000,000 City of Elgin, Illinois Industrial Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project) AGREEMENT dated as of September 1, 1984 among CITY OF ELGIN, ILLINOIS, a municipal corporation and a home rule unit of government of the State of Illinois (the "Issuer"), UNIVERSAL CHEMICALS AND COATINGS, INC., a Delaware corporation (the "Company"), and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO (the "Institutional Lender"). Preliminary Statement The Company requires financing to obtain funds to pay or reimburse the Company for the payment of the costs of acquiring land and of constructing and equipping a manufacturing facility within the corporate limits of the Issuer (the "Project"), all as more fully described in Schedule I hereto. The Company proposes to obtain this financing through a borrowing from the Issuer in the aggregate principal amount of $4,000,000 to be evidenced by the Company's Direct Obligation Note described in Section 1.1. Pursuant to its home rule powers and pursuant to City of Elgin Ordinance No. S2-80 (the "Act") the Issuer proposes to obtain funds for the loan to the Company through the sale of the Issuer's revenue bond (as described in Section 1.2) to the Institutional Lender. The Issuer will pledge and assign its rights hereunder (except its rights to payment under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b)), the Direct Obligation Note of the Company and the Mortgage (hereinafter defined) and the Collateral Assignment dated as of September 1, 1984 from the Company to the Issuer (the "Collateral Assignment") to the Institutional Lender under an Assignment and Security Agreement dated as of September 1, 1984 (the "Assignment") between the Issuer and the Institutional Lender, substantially in the form attached hereto as Exhibit F. The Mortgage is also security for the existing loans described in Section 11.1(e) hereof under the terms and conditions set forth in the Mortgage. The revenue bond of the Issuer will be payable solely out of payments or prepayments to be made by the Company on the Direct Obligation Note of the Company. Simultaneous with the expenditure of the proceeds of the revenue bond to pay, or reimburse the Company for the payment of the costs, for acquisition of the land, the Company will mortgage the Project to the Issuer in a Mortgage and Security Agreement (the "Mortgage"), substantially in the form attached hereto as Exhibit H. The Company will also enter into a Contingent Purchase Agreement dated as of September 1, 1984 (the "Contingent Purchase Agreement") with the Institutional Lender substantially in the form attached hereto as Exhibit G. Section 1. Commitments for the Loans and Closings. 1.1 Borrowing by the Company and Description of Direct Obligation Note. Subject to all the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth and subject to the closing of the concurrent sale of the Issuer's revenue bond by the Issuer to the Institutional Lender pursuant to Section 1.2, the Issuer agrees to lend to the Company, and the Company agrees to borrow from the Issuer on the Bond Closing Date provided for in Section 1.4 the principal amount of $4,000,000 to be evidenced by the Direct Obligation Note (the "Note") of the Company. The Note will be dated the date of issue and the principal thereon will be repaid on September 1, December 1, March 1 and June 1 ("Payment Dates") in the amounts as follows: Principal Payment for Payment Date Payment Dates $20,000 December 1, 1984, March 1, 1985, June 1, 1985, September 1, 1985 $30,000 December 1, 1985, March 1, 1986, June 1, 1986, September 1, 1986 $40,000 December 1, 1986, March 1, 1987, June 1, 1987, September 1, 1987 $50,000 December 1, 1987, March 1, 1988, June 1, 1988, September 1, 1988 $60,000 December 1, 1988, March 1, 1989, June 1, 1989, September 1, 1989 $80,000 December 1, 1989 and each Payment Date thereafter to and including September 1, 1999 The Note will be expressed to bear such interest as specified in Section 1.3 and all unpaid accrued interest shall be paid on each Payment Date. The Note will be otherwise substantially in the form attached hereto as Exhibit A. 1.2. Sale and Description of Bond. Subject to all the terms and conditions hereof and on the basis of the representations and warranties hereinafter set forth, the Institutional Lender agrees to purchase at par from the Issuer, and the Issuer agrees to sell at par to the Institutional Lender on the Bond Closing Date, provided for in Section 1.4 the principal amount of $4,000,000 to be evidenced by the Issuer's Industrial Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project) in the principal amount of $4,000,000 (the "Bond"). The Bond will be a non-coupon bond, payable to the Institutional Lender and dated the Bond Closing Date, and the principal thereon will be payable on the Payment Dates in the amounts as follows: Principal Payment for Payment Date. Payment Dates $20,000 December 1, 1984, March 1, 1985, June 1, 1985, September 1, 1985 $30,000 December 1, 1985, March 1, 1986, June 1, 1986, September 1, 1986 $40,000 December 1, 1986, March 1, 1987, June 1, 1987, September 1, 1987 - 2 - $50,000 December 1, 1987, March 1, 1988, June 1, 1988, September 1, 1988 $60,000 December 1, 1988, March 1, 1989, June 1, 1989, September 1, 1989 $80,000 December 1, 1989 and each Payment Date thereafter to and including September 1, 1999 The Bond will be expressed to bear such interest as specified in Section 1.3 and all unpaid accrued interest shall be paid on each Payment Date. The Bond will be nontransferable by the Institutional Lender except as a whole and shall be transferable only as provided in the form of Bond attached hereto as Exhibit B. The Bond will be otherwise substantially in the form of Exhibit B. If the Bond is transferred the term "Institutional Lender" shall mean the transferee of the Bond. 1.3. Interest Rate. The Note and Bond shall be expressed to bear interest on the unpaid principal balance from the date of their issuance at nine and one-half percent (9 1/2%) per annum through August 31, 1989 and thereafter at a varying rate per annum which shall be seventy-five percent (75%) of the rate of interest publicly announced from time to time by the American National Bank and Trust Company of Chicago as its prime rate (the "Prime Rate") with adjustments in such varying rate to be made on the same • date as any announced change in the Prime Rate, provided that any changes in the Prime Rate occurring within 15 days before any Payment Date resulting in an increase or decrease in the interest which would otherwise be payable on the Note and the Bond on such Payment Date shall not, if an increase, be payable on such Payment Date, but shall instead be payable on the next succeeding Payment Date or shall, if a decrease, reduce the amount which would otherwise be payable on the next succeeding Payment Date. Interest shall be calculated, for actual days elapsed, on a 360 day year. In the event of a declaration of default by the Institutional Lender, interest on overdue principal and, to the extent permitted by law, on overdue interest shall be payable on demand at a rate equal to the rate otherwise applicable plus three percent (3%) per annum until paid. 1.4. Bond Closing. (a) Loan from the Issuer to the Company. The proceeds of the loan pursuant to Section 1.1 by the Issuer to the Company shall be made available to the Company by depositing such proceeds for the benefit of the Company with the Institutional Lender at or before 2:00 P.M., Chicago time on such date on or before September 15, 1984, as the Company shall designate by not less than two business days' prior written notice to the Issuer and the Institutional Lender (the "Bond Closing Date") in Federal Reserve funds current in Chicago, Illinois, or other immediately available funds in an amount equal to the principal amount of the Note, all against delivery of the Note and other showings hereinafter provided for. The Note will be delivered to the Issuer in the form of a single typewritten Note, payable to the order of the Issuer, in the principal amount of $4,000,000. (b) Proceeds of the Bond to Issuer. The proceeds of the Bond shall be made available for the Issuer (or at the direction of the Issuer, directly to the Institutional Lender on behalf of the Company) at the time and place of closing under Section 1.4(a) by payment to the Issuer of Federal Reserve funds current in Chicago, Illinois, or other immediately available funds in an amount equal to the principal amount of the Bond. The Bond will be delivered to the Institutional Lender in the form of a single typewritten fully registered Bond, payable to the Institutional Lender. - 3 - 1.5. Limited Liability of Issuer. (a) The Bond authorized and issued hereunder and all payments to be made by the Issuer thereon are not general obligations of the Issuer but are limited obligations of the Issuer payable solely from the payments or prepayments by the Company on the Note, and other amounts payable under this Agreement or the Mortgage. (b) The Bond is issued pursuant to the home rule powers of the Issuer and under the Act and is a limited obligation of the Issuer, payable solely out of the revenues and receipts derived from the Note and otherwise under this Agreement or the Mortgage. The Bond shall not constitute nor give rise to a general obligation or liability of the Issuer or a charge against its general credit or taxing powers and does not constitute an indebtedness or a loan of credit of the Issuer within the meaning of any constitutional or statutory provision. No holder of the Bond has the right to compel any exercise of the taxing power of the Issuer to pay the Bond or the interest thereon. 1.6. Expenses. Whether or not the Bond is sold, the Company will from time to time upon request of the Issuer or the Institutional Lender, as the case may be, pay all expenses of the Issuer or the Institutional Lender, as the case may be, relating to the transactions contemplated by this Agreement, including but not limited to: (a) the reasonable fees and disbursements of bond counsel; (b) the out-of-pocket expenses of the Issuer and all fees and charges of the Issuer incident to the transactions contemplated by this Agreement, including fees of Issuer's counsel; (c) all expenses, including attorneys' fees, relating to any amendments, waivers or consents pursuant to the provisions of, or any other action deemed by the Issuer to be necessary or appropriate in connection with its obligations under the Agreement and the Note, whether incurred or expended prior or subsequent to the issuance and sale of the Bond; and (d) all taxes in connection with the execution and delivery of this Agreement, the Mortgage, the Assignment, the Note or the Bond or the Contingent Purchase Agreement, whether or not the Note is then outstanding, all expenses of the Institutional Lender, including but not limited to attorneys' fees, all taxes, assessments, recording, filing and registration fees, all registration taxes, title insurance premiums, construction escrow charges, architects' fees, appraisal, survey or inspection fees and charges and all costs of performance and payment of the Bond and all recording and filing fees relating to the pledge and assignment of the Note or the mortgaging of the Project and all expenses, including reasonable attorneys' fees, relating to any amendments, waivers or consents pursuant to the provisions hereof, the Assignment, the Note, the Bond, the Mortgage, the Collateral Assignment, the Contingent Purchase Agreement or the Construction Loan Escrow Agreement. The obligations of the Company under this Section 1.6 shall survive the payment or prepayment of the Bond and the termination of this Agreement. - 4 - Section 2. Warranties and Representations. 2.1. Company Warranties and Representations. The Company warrants and represents to the Institutional Lender that: (a) Corporate Organization and Authority. The Company (1) is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has duly qualified and is authorized to do business and is in good standing as a foreign corporation in Illinois; (2) has all requisite power and authority to own and operate its properties and to carry on its business as now conducted and as presently proposed to be conducted. (b) Full Disclosure. Neither this Agreement nor any written statement furnished by the Company to the Institutional Lender in connection with the negotiation of the sale of the Bond, contains any untrue statement of a material fact or omits a material fact necessary to make the statements contained therein or herein not misleading. There is no fact which the Company has not disclosed to the Institutional Lender in writing which materially affects adversely nor, so far as the Company can now foresee, will materially affect adversely the properties, business, prospects or condition (financial and otherwise) of the Company' or the ability of the Company to pay the Note or to perform this Agreement, the Mortgage, or the Contingent Purchase Agreement. (c) Pending Litigation. There are no proceedings pending, or to the knowledge of the Company threatened, against or affecting the Company in any court or before any governmental authority which involve the possibility of materially and adversely affecting the business or condition (financial or otherwise) of the Company, or the ability of the Company to pay the Note or perform this Agreement, the Mortgage, or the Contingent Purchase Agreement. The Company is not in default with respect to any order of any court or governmental authority. (d) Title to Properties. Upon acquisition of the Project, the Company will have good and marketable title in fee simple to the real and personal property subject to the Mortgage and has good title to all its other property. (e) Borrowing Legal and Authorized. The consummation by the Company of the transactions provided for in this Agreement and compliance by the Company with the provisions of this Agreement, the Mortgage, the Collateral Assignment, the Contingent Purchase Agreement and the Note: (1) are within the corporate powers and have been duly authorized by all necessary corporate action on the part of the Company; and - 5 - (2) will not result in any breach of any of the terms, conditions or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company pursuant to any indenture, loan agreement or other instrument (other than this Agreement) to which the Company is a party or by which the Company may be bound, nor will such action result in any violation of the provisions of the Certificate of Incorporation or By-Laws of the Company. (f) No Defaults. No event has occurred and no condition exists which, upon the execution of this Agreement, the Contingent Purchase Agreement, the Collateral Assignment or the Mortgage or upon the issuance of the Note, would constitute a default or an event of default. The Company is not in violation in any material respect and has not received notice of any claimed violation of any term of any agreement, charter instrument, Certificate of Incorporation, by-law or other instrument to which it is a party or by which it is bound. (g) Governmental Consent. Neither the nature of the Company nor any of its activities or properties, nor any relationship between the Company and any other person, nor any circumstances in connection with this Agreement, the Contingent Purchase Agreement, the Collateral Assignment, the Mortgage or the Note or the performance or observance of any covenant or agreement required to be observed or performed by the Company under this Agreement, the Collateral Agreement, the Mortgage, the Contingent Purchase Agreement or the Note, is such as to require a consent, approval or authorization of or filing registration or qualification with, any governmental authority on the part of the Company as a condition to the execution and delivery of this Agreement, the Collateral Assignment, the Mortgage, the Contingent Purchase Agreement or the offer, sale or delivery of the Note. (h) Use of Proceeds. (1) The Company will apply the proceeds of the loan from the Issuer solely for the purpose of providing funds to pay or reimburse the Company for the payment of Costs of the Project. None of the transactions contemplated by this Agreement (including without limitation thereof, the use of the proceeds of the Note) will violate or result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended, including without limitation, Regulations G, T and U of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II. The Company will not use any of the proceeds of the Note to purchase or carry any "margin security" within the meaning of said Regulation G or in any manner that would cause the Bond to be an "arbitrage bond" within the meaning of Section 103(c) of the Code and Treasury Regulations, Sections 1.103-13, 1.103-14 and 1.103-15. (2) The estimated construction Costs of the Project are as set forth in Schedule I hereto, and have been determined in accordance with sound engineering and accounting principles. - 6 - (3) The Project consists and will consist of those facilities generally described in Schedule I hereto and no changes shall be made in the Project or in the operation thereof which will impair the exclusion of interest on the Bond from the gross income of the owner of the Bond for federal income tax purposes. (4) At least 90% of the Costs of the Project to be financed from Bond proceeds constitute amounts which will be charged to the Project's capital account or which would be so chargable either with a proper election by the Company under the Code or but for a proper election by the Company under the Code to deduct such amount and were paid and incurred after April 11, 1983 ("Qualified Costs"). (5) The proceeds of the Note will not be used to provide working capital for the Company within the meaning of Section 103(b) of the Code. (6) The Company represents and warrants that it will comply with all the terms and conditions of the Construction Loan Escrow Agreement dated as of , 1984 between the Institutional Lender and the Construction Loan Escrow Agent (the "Construction Loan Escrow Agreement"). (i) Compensating Balances. The Company shall maintain with the Institutional Lender average available demand deposits ("Required Deposits") as follows: On October 1, 1984 the Required Deposits shall be not less than $100,000.00; thereafter the Required Deposits will be increased on the first day of each month at a rate of $10,000.00 per month until the Required Deposits are not less than $200,000.00; thereafter, so long as the Bond remains outstanding, the Required Deposits shall be maintained at not less than $200,000.00. On December 30, 1984 and each March 30, June 30 and September 30 thereafter so long as the Bond remains outstanding, the Company, to the extent the Required Deposits are not maintained, shall pay to the Institutional Lender a balance deficiency fee on the shortfall in the Required Deposits equal to the daily average prime rate announced by the Institutional Lender in effect for the preceding quarter plus one percent (1%). (j) Compliance with Law. The Company (1) is in compliance with all laws, ordinances, governmental rules and regulations to which it is subject, and (2) has obtained or will obtain all licenses, permits, franchises or other governmental authorizations necessary to the ownership of its property or to the conduct of its activities, non-compliance with which or failure to obtain which might materially adversely affect the ability of the Company to conduct its activities as presently conducted or the condition (financial or otherwise) of the Company. - 7 - (k) Restrictions on the Company. The Company is not a party to any contract or agreement, or subject to any charter or other corporate restriction, which materially and adversely affects its business. (1) Title to Project. The Company has or upon acquisition will have title to the Project sufficient for its purposes. (m) Public Purpose. The acquisition and construction of the Project will create new employment opportunities in the City of Elgin, Illinois. (n) Qualification of Project. The Company intends to utilize or cause the Project to be utilized to the expiration or earlier termination of this Agreement as provided herein, as a manufacturing facility. (o) Location of Project. The Project is located wholly within the corporate limits of the City of Elgin, Illinois. (p) No Conflict of Interest. No member of the governing body of the Issuer, nor any elected or salaried officer or official of the Issuer has any interest (financial, employment or other) in the Company or in the real estate held by Chicago Title and Trust Company, as trustee under a Land Trust Agreement dated May 17, 1983, commonly known as Trust No. 1083846, (the "Land Trust") or the transactions contemplated by this Agreement. (q) Consent of Holders of Other Securities. All consents or approvals required to be obtained from any holder or holders of any outstanding security of the Company and any amendments of any agreement pursuant to which any security has been issued which shall be necessary to permit the consummation of the transactions contemplated hereby have been obtained. (r) Affiliate Transactions. The Company is not a party to any contract or agreement with any of its affiliates in terms and conditions which are less favorable to the Company than would be usual and customary in similar contracts or agreements between persons, firms or corporations not affiliated with each other. (s) Financial Statements. The financial statements of the Company for the fiscal years 1982 and 1983 including balance sheets as of June 30 of such years, and the related statements of operations, stockholders equity and changes in financial position for the years then ended, and the interim financial statements of the Company as of December 31, 1983 and March 31, 1984 heretofore furnished to Institutional Lender, truly and accurately reflect the financial condition of the Company as of said dates and the results of operations for the periods covered thereby. The Company has no material contingent liabilities other than as indicated on said financial reports except as created in the ordinary course of business and since March 31, 1984, and there have been no material adverse changes in the condition or prospects, financial or otherwise, of the Company. - 8 - (t) Taxes. The Company has paid and discharged all taxes, rates, assessments, fees and governmental charges due from the Company. No objections to or controversies in respect of the United States federal income tax returns of the Company are pending or threatened for any fiscal year. (u) Private Placement. Neither the Company nor any agent thereof has offered the Bond or any similar security to any person other than the Institutional Lender. 2.2. Issuer Warranties and Representations. The Issuer warrants and represents to the Institutional Lender that: (a) Organization and Corporate Power. The Issuer (i) is a municipality duly organized and existing under the applicable laws of the State of Illinois and is a home rule unit of government existing under the provisions of Section 6(a) of Article VII of the 1970 Constitution of the State of Illinois; and (ii) has all requisite power and authority pursuant to its home rule powers, to issue the Bond for the purposes for which it is to be issued, to loan the proceeds thereof to the Company as evidenced by the Note, to enter into this Agreement and to pledge and assign its rights hereunder (except its rights to payments under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b)), the Note, the Collateral Assignment and the Mortgage to the Institutional Lender under and pursuant to the provisions of the Assignment as security for the payment of the principal of and interest on the Bond. (b) Legality of Transaction. The sale of the Bond by the Issuer and compliance by the Issuer with all of the provisions of this Agreement, the Assignment and the Bond: (i) are within the power of the Issuer, and (ii) are legal and will not conflict with, result in any breach by the Issuer in any of the provisions of or constitute a default under any existing law, court or administrative regulation, decree or order or any agreement, indenture, mortgage, lease or other instrument to which the Issuer is a party or by which it may be bound. (c) Inducement Resolution. The City Council of the Issuer passed and approved the Inducement Resolution prior to June 19, 1984. - 9 - (d) Pending Litigation. There are no proceedings pending or, to the knowledge of the Issuer, threatened against or affecting the Issuer in any court or before any governmental authority or arbitration board or tribunal which involve the possibility of an unfavorable decision, ruling or finding which would adversely affect (i) the transactions contemplated hereby or the validity of the Bond, the Assignment, the Mortgage, the Collateral Assignment, this Agreement or any agreement or instrument to which the Issuer is a party and which is used or contemplated for use in the consummation of the transactions contemplated hereby, or (ii) the excludability of the interest on the Bond from the gross income of the owner of the Bond for federal income tax purposes. Neither the corporate existence of the Issuer nor the titles of the officials of the Issuer to their respective offices are being contested. The Issuer is not in default with respect to any order of any court, governmental authority or arbitration board or tribunal or under any agreement, indenture, mortgage, lease or other instrument to which the Issuer is a party or by which it may be bound where such default would in any way have an adverse effect on the transactions contemplated by this Agreement. (e) Authorization of Transaction. The Issuer has duly authorized or, prior to the Closing, shall have duly authorized: (i) the issuance and sale of the Bond upon the terms set forth herein, (ii) the loan of the proceeds of the Bond to the Company; (iii) the pledging and assigning by the Issuer pursuant to the provisions of the Assignment of its rights hereunder (except its rights to payments under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b)), the Note, the Mortgage and the Collateral Assignment; (iv) the execution, delivery and receipt of this Agreement, the Assignment, the Bond and any and all such other agreements and documents as may be required to be executed, delivered and received by the Issuer in order to carry out, give effect to and consummate the transactions contemplated hereby; and (v) the effectuation and consummation of the transactions contemplated by this Agreement and the Assignment. (f) Restriction of Pledges. The Issuer has not pledged and will not pledge its interest in this Agreement (except its rights to payments under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b)), the Note, the Mortgage and the Collateral Assignment other than to secure the Bond. (g) Validity of Bond. The Bond, when issued, delivered and paid for as herein provided, will have been duly authorized and issued and will constitute the valid and binding obligation of the Issuer enforceable in accordance with its terms and will be entitled to the benefits of this Agreement, the Mortgage, the Collateral Assignment and the Assignment (subject to the limitations referred to in Sections 1.5 and 9.1 hereof and subject to any applicable bankruptcy, reorganization, insolvency, moratorium or other law affecting the enforcement of creditors' rights generally or affecting state agencies, municipalities or authorities, such as the Issuer, from time to time in effect). (h) Use of Proceeds. The Issuer will apply the proceeds from the sale of the Bond to the loan to the Company under and pursuant to this Agreement which the Company represents and warrants will be used to - 10 - pay or reimburse the Company for the payment of the Costs of the Project in accordance with the Agreement and the Construction Loan Escrow Agreement. So long as the Bond remains outstanding, and except as may be authorized by this Agreement, the Issuer will not issue or sell any bonds, notes or other obligations, other than the Bond sold hereunder, the interest or principal of which will be payable from payments upon the Note and other amounts payable by the Company to the Issuer under this Agreement or which shall be secured by any pledge or assignment or other lien upon the Project or the Note. (1) Public Purpose. The Issuer hereby finds and determines that financing the Project by the issuance of the Bond will further its public purposes in that it will create and retain employment opportunities within the corporate boundaries of the Issuer and encourage economic development therein, thereby reducing the evils attendant upon unemployment and providing for the increased welfare and prosperity of the residents of the Issuer. (j) Conflicts. No member of the governing body of the Issuer nor any elected or salaried officer of the Issuer has any interest (financial, employment or other) in the Company, the Land Trust, the Institutional Lender or the transactions contemplated by this Agreement. (k) No Defaults. The Issuer is not in default in any material respect under any agreement or instrument to which it is a party or by which it may be bound where such default would in any way have an adverse effect on the transactions contemplated by this Agreement. No event has occurred and no condition exists which, upon the issuance of the Bond, would constitute a default or an event of default hereunder. (1) Governmental Approval. No approval, consent or withholding of objection on the part of any regulatory body, federal, state or local, is required in connection with (i) the issuance and sale of the Bond in the manner herein provided for or (ii) the execution or delivery of or compliance by the Issuer with the terms and provisions hereof and of the Assignment, and the consummation of the transactions set forth in the foregoing clauses (i) and (ii) in the manner and under the terms and provisions as herein provided will comply with the provisions of any and all applicable state, local or federal laws and any rules and regulations promulgated thereunder by any regulatory authority or agency. (m) Issuer's Existence. The Issuer will do or cause to be done all things necessary to preserve and keep in full force and effect its existence. (n) Arbitrage. The Issuer has not been notified of any listing or proposed listing of it by the Internal Revenue Service as a bond issuer whose arbitrage certifications may not be relied upon. (o) Private Placement. The Issuer has not offered the Bond or any similar security to any person other than the Institutional Lender. - 11 - 2.3. Representations and Covenants of the Institutional Lender. (a) The Institutional Lender represents to the Issuer and the Company that (i) it is purchasing the Bond for its own account for investment, as evidence of a loan made in the ordinary course of its banking business, and with no present intention of distributing or reselling the Bond or any part thereof, provided that the disposition of the property of the Institutional Lender shall at all times be within its control and (ii) it has not relied upon the Issuer for any information or data with respect to the Company, its operations or its properties, including the costs which will be financed with the proceeds of the loans hereunder. (b) The Institutional Lender shall note on the payment record attached to the Bond and the Note the date and amount of payment of each principal installment and interest then being paid and of interest theretofore paid and not yet noted thereon, and upon request of the Company or the Issuer, the Bond and the Note shall be available for inspection by the Company or the Issuer during normal banking hours at the offices of the Institutional Lender at 33 North LaSalle Street, Chicago, Illinois, 60690. Section 3. Bond Closing Conditions. The obligation of the Issuer to make the loan to the Company provided for in Section 1.1 and the obligation of the Institutional Lender to purchase the Bond as provided for in Section 1.2 shall be subject to the following conditions precedent: 3.1. Consent of Holders of Other Securities. Any consents or approvals required to be obtained from any holder or holders of any outstanding security of the Company and any amendments of any agreements pursuant to which any security may have been issued which shall be necessary to permit the consummation of the transactions contemplated hereby shall have been obtained and all such consents or amendments shall be satisfactory in form and substance to the Institutional Lender. 3.2. Company Closing Certificates. The warranties and representations contained in Section 2.1 shall be true in all material respects on the Bond Closing Date with the same effect as though made on and as of said date; and the Issuer and the Institutional Lender shall have received a certificate dated the Bond Closing Date, signed by the President, a Vice President or principal financial officer of the Company to that effect. 3.3. Issuer Closing Certificates. The warranties and representations contained in Section 2.2 shall be true in all material respects on the Bond Closing Date with the same effect as though made on and as of that date; and the Institutional Lender shall have received a certificate dated the Bond Closing Date signed by an authorized official of the Issuer to that effect; and the Institutional Lender shall have received an "arbitrage" certificate of the Issuer signed by an authorized official of the Issuer in form and substance reasonably satisfactory to bond counsel and the Institutional Lender. 3.4. Legality of Interest Exclusion. Between the date of execution and delivery of this Agreement and the Bond Closing Date, there shall have been no legislation enacted or actively considered for enactment by the Congress, or recommended for - 12 - enactment by the Congress or recommended to the Congress for passage by the president of the United States, or favorably reported for passage to either House of the Congress by any committee of such House to which such legislation has been referred for consideration, nor shall a decision by a court of the United States or the United States Tax Court have been rendered, or a ruling, regulation or official statement by or on behalf of the Treasury Department of the United States, the Internal Revenue Service or other governmental agency have been made, or proposed to be made with respect to federal taxation upon revenues or other income of the general character to be derived by the issuer under this Agreement or by any similar body, or upon interest or obligations of the general character of the Bond, nor shall other action or events have transpired which may have the purpose or effect, directly or indirectly, of changing the federal income tax consequences of any of the transactions contemplated in connection herewith. 3.5. Opinions of Counsel. The Issuer and the Institutional Lender shall have received the opinions of Sachnoff, Weaver & Rubenstein, Ltd., counsel for the Company, Erwin W. Jentsch, counsel for the Issuer, and Friedman & Koven, bond counsel, dated in each case the Bond Closing Date, which are described in Exhibits C, D and E, respectively, to this Agreement. 3.6. Documents. This Agreement, the Assignment, the Contingent Purchase Agreement, the Construction Loan Escrow Agreement and the Note shall have been duly authorized, executed and delivered by the parties thereto and shall constitute the legal, valid and binding obligations of such parties, enforceable in accordance with their respective terms. The Institutional Lender shall have received the Note (duly endorsed by the Issuer to the order of the Institutional Lender), the Bond and fully executed counterparts of this Agreement, the Assignment and the Contingent Purchase Agreement in form and substance satisfactory to it. 3.7. Contingent Purchase Agreement. The warranties and representations contained in Section 2 of the Contingent Purchase Agreement shall be true in all material respects as of the Bond Closing Date. 3.8. Election of Issuer. The Issuer shall have duly elected to have the provisions of Section 103(b)(6)(D) of the Code apply to the issuance of the Bond, and such election shall have been made in accordance with the applicable regulations or procedures of the Internal Revenue Service. 3.9 Insurance. The Institutional Lender and the Issuer shall have received from the Company evidence of insurance coverages with such companies and under such terms as are satisfactory to the Institutional Lender. 3.10. Proceedings Satisfactory. All proceedings taken in connection with the borrowing by the Company, the issuance of the Note, the borrowing by the Issuer and the issuance of the Bond and all documents and papers relating thereto shall be satisfactory to the Issuer, the Institutional Lender and bond counsel. The Issuer, the Institutional Lender and bond counsel shall have received copies of such documents and papers as they may reasonably request in connection therewith, all in form and substance satisfactory to the Issuer, the Institutional Lender and bond counsel. 3.11. The Mortgage and the Assignment. The Mortgage and the Collateral Assignment (and/or financing statements or similar notice thereof, if and to the extent permitted or required by applicable law) shall have been executed substantially in the - 13 - • form of Exhibit H and Exhibit I respectively and recorded or filed in such public offices as may be deemed necessary or appropriate by the Institutional Lender in order to perfect the security interest in the Note, the Mortgage and the Collateral Assignment as provided by the Assignment and in order to constitute the Mortgage as a first mortgage lien and fully perfected security interest on the land, buildings and fixtures which are real property and a full perfected security interest in and to the personal property that constitutes the Premises under the Mortgage. 3.12. Mortgage Title Insurance. The Company, at its own cost and expense will procure and deliver to the Institutional Lender a Construction Loan Policy of Title Insurance (ALTA-1975) (the "Title Policy") issued by Ticor Title Insurance Company dated as of Closing in the aggregate principal amount of $4,000,000, showing good and marketable fee simple title to the real property subject to the Mortgage to be in the Company and containing construction, mechanics' lien, pending disbursements, usury, zoning, doing business, comprehensive and other endorsements as required by the Institutional Lender, subject only to the exceptions as have been approved in writing by the Institutional Lender and shall also guarantee the Institutional Lender against all loss or damage sustained by reason of the Mortgage not being a first and paramount lien at the date of such policy upon property therein described and which policy shall cover the date of recording of the Mortgage, and shall otherwise be in form and substance satisfactory to the Institutional Lender. 3.13. Survey. The Institutional Lender shall have received five (5) copies of a satisfactory survey of the real estate legally described in the Mortgage prepared and certified by a registered surveyor as of a date not earlier than May 2, 1984 and showing (i) the boundaries of the real estate, (ii) the area of the real estate to the nearest 1/100 of an acre, (iii) the location of all existing and proposed improvements on the real estate and other physical matters affecting title and use of the real estate, including, but not limited to, the absence or location of set-back lines, encroachments, rights-of-way, easements, utilities, water courses, drains, sewers, roads or driveways and other matters of interest to the Institutional Lender, with courses and distances so as to permit a verbal description of the Real Estate and other items noted in the survey. In addition, the survey shall show the names and widths of streets with the distance from the nearest corner to the beginning point of the property surveyed, shall be in compliance with the most recent standards of the American Land Title Association ("ALTA") and shall contain a certificate signed by the surveyor, dated as of the date the survey was made, as to the survey and a legal description which shall be certified for the benefit of the Issuer, the Institutional Lender and Ticor Title Insurance Company. Survey defects may be waived by the Institutional Lender if the Company provides the Institutional Lender with a satisfactory title insurance endorsement insuring against loss or damage on account of such defects. 3.14. Soil Tests. The Institutional Lender shall have received soil test reports indicating to its satisfaction that the real estate will support the improvements to be constructed thereon, according to the approved plans and specifications and the final Budget. Section 4. Disbursement of Proceeds. 4.1 Disbursements Upon Closing. Provided that the conditions set forth in Section 3 hereof have occurred, the proceeds of the Bond shall be disbursed for the following purposes: - 14 - (a) Payment of the initial commitment fee of the Institutional Lender in the amount of $40,000. (b) Payment of, or reimbursement for, legal, financial and accounting fees and expenses, including fees and disbursements of counsel for the Issuer, counsel for the Institutional Lender and bond counsel, fees of the Issuer, if any, and payment of, or reimbursement for, all fees, costs and expenses for the preparation of this Agreement, the Mortgage, the Collateral Assignment, the Assignment and the Contingent Purchase Agreement, and other related documents used in connection with the sale of the Bond and the Bond. (c) Payment to the Company of such amounts, if any, as shall be necessary to reimburse the Company for advances and payments made by it at any time prior to or after the delivery of the Bond for expenditures in connection with the preparation of plans and specifications for the Project (including any preliminary study or planning of the Project or any aspect thereof). (d) Payment or reimbursement of the fees, if any for architectural, engineering, legal, printing, underwriting, investment banking and supervisory services with respect to the Project or in connection with the sale, issuance and delivery of the Bond. 4.2 Additional Conditions. There is hereby created a Construction Fund (the "Construction Fund") into which the Institutional Lender shall disburse the remaining proceeds of the Bond on behalf of the Company for the Costs of the Project, provided that, in addition to the conditions set forth in Section 3 hereof, the following conditions precedent shall have occurred: (a) Construction Contract. The Institutional Lender shall have • received from the Company a satisfactory construction contract (the "Construction Contract") with a guaranteed maximum price of Two Million Five Hundred Thousand Dollars ($2,500,000). (b) Budget and Construction Schedule. The Institutional Lender shall have received from the Company a satisfactory budget specifying all costs related to the Project (the "Budget"), together with a construction schedule. The Company shall also have submitted and the Institutional Lender shall have approved a list of subcontractors and suppliers for the Project with copies of subcontracts, all in a form satisfactory to the Institutional Lender at fixed prices or guaranteed maximum prices in the aggregate not exceeding any applicable cost categories in the Budget. (c) Plans and Specifications. The Institutional Lender shall have received from the Company a satisfactory set of plans and specifications for the Project, certified by the Company's architect, whose contract shall also have been approved by the Institutional Lender. (d) Architect's Certificate. The Institutional Lender shall have received a Certificate of the Company's architect certifying to the effect - 15 - that: (i) when completed the Project will comply with all currently applicable laws, ordinances, rules and regulations, and with all covenants, conditions, easements and restrictions to which the Project is subject; (ii) except as permitted by the last sentence of Section 4.2(j) hereof, any and all required licenses, certificates, consents and permits for, and approvals of, the Project and the Plans and Specifications have been issued by all governmental and private authorities having jurisdiction thereof, and all fees due in connection with the foregoing have been paid; (iii) there is adequate and sufficient water, storm sewer, sanitary sewer, gas, electrical and telephone service available to the Project without the necessity of any off-site improvements whatsoever, and without the necessity of any on-site improvements other than those provided for in the approved Plans and Specifications and the final Budget, and that Universal has obtained all permits and consents necessary for connection with and service from the aforesaid utilities and municipal services. (e) Report of the Institutional Lender's Inspecting Architect. The Institutional Lender shall have received a report satisfactory to the Institutional Lender from its inspecting architect approving the Plans and Specifications, Budget, and such other construction documentation and information furnished to the Institutional Lender in connection with this transaction as the Institutional Lender shall require; provided that, if a report has not been received within 14 days after the Institutional Lender has received such Plans and Specifications and Budget, such Plans and Specifications and Budget shall be considered approved by the Institutional Lender. (f) Adequacy of Utilities. The Institutional Lender shall have received such engineer's reports and other evidence as it may require, establishing to its satisfaction, the adequacy and quantity, quality and capacity of sewers, water supply, gas, electrical and other services to be furnished to the Project, both for the construction and use of the Project. (g) Permits. The Company shall have obtained from the appropriate governmental and private agencies all permits, certificates, consents and approvals necessary for the construction of the Project and the full use of the Project after completion of construction, including, without limitation, those pertaining to zoning, buildings, utility service, fire safety, land and water use, subdivision control, environmental protection, occupational health and safety and flood hazard. If any of such permits, certificates, consents or approvals cannot by law be obtained prior to the commencement or completion of construction, the Company shall establish to the satisfaction of the Institutional Lender that it will be able and qualified to obtain such permits, certificates, consents or approvals upon or prior to completion of construction. (h) Additional Documents. Such other documents, instruments, assignments and estoppels, as the Institutional Lender may require. 4.3. Additional Disbursements. Provided that the conditions set forth in Section 3 and Section 4.2 hereof have occurred, the proceeds of the Bond shall be disbursed by the Institutional Lender or by the escrow trustee pursuant to the Construction Loan Escrow - 16 - Agreement on behalf of the Company for the following purposes (but, subject to the provisions of Section 7.2, for no other purpose): (a) Payment of, or reimbursement for, the costs of acquisition of the land described in Schedule 1 hereto, and for the expenses incidental thereto. (b) Payment or reimbursement for labor, services, materials and supplies used or furnished in site improvement and in the construction, acquisition and equipping of the Project, all as provided in the plans, specifications and work orders therefor; payment of, or reimbursement for, the cost of the construction, acquisition and installation of utility services or other facilities, and acquisition and installation of all real and personal property deemed necessary in, connection with the Project and payment for the miscellaneous capitalized expenditures incidental to any of the foregoing items. (c) To the extent not paid by the contractor for construction or installation with respect to any part of the Project, payment of or reimbursement for, the premiums on all insurance required to be taken out and maintained during the Construction Period as herein defined. (d) Payment of the taxes, assessments and other charges, if any, that may become payable during the Construction Period with respect to the Project, or reimbursement thereof if paid by the Company. (e) Payment of, or reimbursement for, expenses incurred in seeking to enforce any remedy against any contractor or subcontractor in respect of any default under a contract relating to the Project. (f) Interest on the Bond during the Construction Period as herein defined. (g) All remaining proceeds (including investment proceeds) of the Bond, if any, after the Completion Date or after an acceleration under Section 11.2(a) hereof, and after payment or provision for payment of all other items provided for in the preceding Section 4.1 and subsections (a) to (f) hereof, inclusive, shall be deposited by the Institutional Lender in a separate escrow account and used to prepay the Bond in whole or in part on the next succeeding payment date provided that, none of such remaining proceeds may be used to prepay the Bond unless and until the Institutional Lender has. been furnished with an opinion of nationally recognized bond counsel mutually acceptable to the Company, the Issuer and to the Institutional Lender, to the effect that such use is lawful under the home rule powers of the Issuer and does not adversely affect the exclusion from gross income for federal income tax purposes of the interest on the Bond; and provided further that, until used for such purpose, such remaining moneys may be invested in investments authorized by Section 7.2, but may not be invested to produce a yield on such moneys (computed from the Completion Date and taking into account any investment of such moneys during the period from the Completion Date until such moneys were deposited in such escrow - 17 - account) greater than the yield on the Bond, all as such terms are used in and determined in accordance with Section 103(c) of the Code and regulations promulgated thereunder. Each of the payments referred to in this Section, other than the payment referred to in subsection (f), shall be made monthly upon receipt by the Institutional Lender and the escrow trustee of a requisition signed by the authorized Company representative which shall state with respect to each payment to be made: (1) the requisition number, (2) the name and address of the person, firm or corporation to whom payment or reimbursement is due, which may be the Institutional Lender or the Company, (3) the amount to be paid, (4) that substantially all (at least 90%) of the amounts previously disbursed and to be disbursed pursuant to such requisition are to defray Qualified Costs of the Project, (5) that each obligation mentioned therein has been properly incurred, is a proper charge against the proceeds of the Bond, is unpaid, and has not been the basis of any previous disbursement from the proceeds of the Bond, (6) that except for the amount, if any, stated pursuant to the foregoing clause (3) in such certificate to be due for services or materials to the particular supplier, there is no outstanding indebtedness to the particular supplier known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such construction which, if unpaid, might become the basis of any lien upon the Project, (7) that there has not been filed with respect to the Project or any part thereof any vendor's, mechanic's, laborer's materialman's or other lien which has not been discharged of record, except such as will be discharged by payment of the amount then requested or are being contested in accordance with the Mortgage, (8) that no event of default exists under this Agreement, and that no notice has been given to the Company of a default hereunder which has not been corrected, and (9) be accompanied by such other showings (including contractor's statements, affidavits, liens waivers, title policy date-down endorsements and attorney's opinions) as may be reasonably requested by the Institutional Lender or required pursuant to the Construction Loan Escrow Agreement or are customarily required by prudent lenders for disbursements under commercial real estate and equipment financing. In making any such payment from the proceeds of the Bond, the Issuer and the Institutional Lender may rely on such requisitions delivered to the Institutional Lender, and the Institutional Lender shall be relieved of all liability with respect to making such payments in accordance with the foregoing. The Institutional Lender will establish a construction escrow into which moneys from the Construction Fund will be paid for disbursements under the terms and conditions of the Construction Loan Escrow Agreement entered into concurrently herewith. No change in any cost categories set forth in the final Budget shall be made without the Institutional Lender's prior written approval. Sufficient undisbursed Bond proceeds must remain in each cost category, in the Institutional Lender's discretion, to complete construction of the Project, provided that the Institutional Lender shall at all times have the right to allocate the Bond proceeds as requested per requisition. If at any time, in the Institutional Lender's discretion, undisbursed proceeds of the Bond are insufficient to complete construction of the Project, the Company shall, within ten (10) days after written notice from the Institutional Lender, deposit with the Institutional Lender the amount of any such deficiencies which, in turn, may be deposited in the construction escrow created pursuant to the Construction Loan Escrow Agreement. - 18 - Section 5. Prepayment of Note. 5.1. Optional Prepayments Without Premium. The Company shall have the option to prepay the Note in whole at any time or in part on any Payment Date from any source at the principal amount thereof, without premium, plus accrued interest to the prepayment date, provided, however, that partial prepayments shall be in $5,000 increments. 5.2. Optional Calls by the Institutional Lender. At the option of the Institutional Lender, the Company shall be obligated to prepay the Note as a whole on September 1, 1989 or September 1, 1994 at the remaining principal amount thereof, without premium, plus accrued interest to the date of prepayment. Unless the Institutional Lender shall otherwise consent, the Company shall also be obligated to prepay the Note in whole at the option of the Institutional Lender at any time that the chief executive officer of the Company is anyone other than Yenson E. Chin or one of the two sons of Yenson E. Chin employed by the Company as of the date hereof. The Institutional Lender shall call for prepayment under this subsection by giving notice of such call to the Company and the Issuer, not less than 120 days nor more than 360 days before said date. Notice of any such call for prepayment shall specify (a) the date of the prepayment, (b) the section of this Agreement under which the call for prepayment is made, (c) the principal amount of the Note to be prepaid on such date, and (d) the accrued interest applicable to the prepayment. Notice of prepayment having been so given, the remaining principal amount of the Note, together with the accrued interest thereon, shall become due and payable on the prepayment date. • 5.3. Mandatory Prepayment. (a) The Company shall be obligated to prepay the Note as a whole at any time at the principal amount thereof, without premium, plus accrued interest to the date of prepayment in the event there occurs a change in the Constitution of the State of Illinois or the Constitution of the United States of America or any legislative or administrative action (whether state, local or federal) or a final decree, judgment or order of any court or administrative body (whether state, local or federal), with the result that the Note, the Bond, the Mortgage, the Collateral Assignment, the Assignment, the Contingent Purchase Agreement or this Agreement shall have become void or impossible of performance in accordance with the intent and purposes of the parties hereto as expressed herein. Said prepayment shall be made as soon as practicable after the occurrence of the event requiring such prepayment, but in any event within 120 days of such occurrence. (b) The Company shall be obligated to prepay the Note in part at the principal amount of the portion of the Note prepaid, without premium, plus accrued interest to the prepayment date, (i) if there remain any insurance proceeds after rebuilding of the Project as provided by Section 8.8 hereof, or (ii) if there remains any portion of a condemnation award after compliance with Section 8.9 hereof. The amount of said prepayment shall be equal to the amount of money so remaining. Prepayment shall be made within 120 days after the payment of all costs pursuant to (i) and (ii) above. - 19 - 5.4. Notice of Prepayment. Except as to Section 5.2., the Company will give notice of any prepayment of the Note and Bond to the Issuer and the Institutional Lender, not less than 5 days nor more than 20 days before the date fixed for prepayment, specifying (a) such date, (b) the section of this Agreement under which the prepayment is to be made, (c) the principal amount of the Note or Bond to be prepaid on such date, and (d) the accrued interest applicable to the prepayment. Such notice of prepayment shall also certify all facts which are conditions precedent to any such prepayment. Notice of prepayment having been so given, the aggregate principal amount of the Note and Bond specified in such Notice, together with the accrued interest thereon, shall become due and payable on the prepayment date. 5.5. Partial Prepayment. Partial prepayments applicable to the Note pursuant to Sections 5.1, 5.3(c) and 4.2(k) hereof shall be applied on the installments of principal thereof in the inverse order of their maturities. 5.6. Payment. The Company will promptly and punctually pay all amounts payable with respect to the Note, without any presentment of the Note and without any notation of such payment being made thereon, directly to the Institutional Lender or its assigns in immediately available funds before 2:00 P.M., Chicago, Illinois time, on the payment date marked for attention as indicated or by charging the account of the Company at the Institutional Lender, which is hereby authorized by the Company. All payments made to the Institutional Lender or its assigns with respect to the Bond shall be made by the Company on behalf of the Issuer and shall be deemed a credit against the Company's obligation to pay the Note to the extent of such payment. The Institutional Lender shall make a notation on the Bond and the Note on the payment record thereon of each principal prepayment made pursuant to this Section 5.6 and the date to which interest has been paid. Such prepayment shall be valid upon payment thereof to the Institutional Lender, and the Issuer and the Company shall be fully released and discharged from all liability to the extent of such payment whether or not such notation has been made by the Institutional Lender and irrespective of any error or omission in such notation. 5.7. Surrender of Note on Prepayment. Subject to Section 5.6., upon any partial prepayment of the Note, such Note may, at the option of the Institutional Lender, be surrendered to the Company in exchange for a new note in a principal amount equal to the principal amount remaining unpaid on the surrendered Note. In case the entire principal amount of the Note is prepaid, such Note shall be surrendered to the Company for cancellation and shall not be reissued. Section 6. Prepayment and Redemption of Bond. 6.1. Prepayments and Redemption. In the event a principal payment of the Note shall become due and payable pursuant to Section 5 of this Agreement, the same principal amount of the Bond shall become due and payable on the due date for the principal payment of the Note. All payments of principal shall be made together with interest accrued thereon to the date of payment. 6.2. Partial Prepayment. Partial prepayment applicable to the Bond pursuant to Sections 5.1, 5.3(b) and 4.2(k) hereof shall be applied on the installments of principal thereof in the inverse order of their maturities. - 20 - 6.3. Surrender of Bond on Prepayment. The Bond shall be paid as provided in Section 5.6. Subject to Section 5.6, upon any partial prepayment of the Bond, such Bond may, at the option of the owner thereof, be surrendered to the Issuer in exchange for a new Bond in a principal amount equal to the principal amount remaining unpaid on the surrendered Bond. In case the entire principal amount of the Bond is prepaid, such Bond shall be surrendered to the Company for cancellation and shall not be reissued. In the event of an exchange for a new Bond pursuant to this paragraph, the owner of the Bond shall reimburse the Issuer for any direct or indirect expense incurred and shall pay to the Issuer a reasonable reissuance fee, if the Issuer so requires. Section 7. Bond Proceeds and Investments. 7.1. Bond Proceeds. The Issuer hereby authorizes and directs the Institutional Lender, on behalf of the Issuer, to disburse the proceeds of the Bond to or on behalf of the Company, to be used to pay the costs of the Project. 7.2. Investments. The Bond proceeds and any moneys held as part of a fund established pursuant to Section 8.8 or 8.9 hereof shall at the written request of the Company be invested or reinvested by the Institutional Lender, to the extent permitted by law, in the following ("Eligible Securities"): (i) bonds, notes, certificates of indebtedness, treasury bills or other securities issued or fully guaranteed by the United States of America, (ii) certificates of deposit or time deposits constituting direct obligations of any bank, including the Institutional Lender, as defined in the Illinois Banking Act as heretofore or hereafter amended having a combined capital, surplus and undivided profits of at least $15,000,000, or (iii) any other investments permitted by law, but only with the prior written approval of the Institutional Lender. The Institutional Lender may make any and all such investments through its own bond department. The investments so purchased shall be held by the Institutional Lender and shall be deemed at all times a part of the fund for which they were purchased, and the interest accruing thereon and any profit realized therefrom shall be credited to such fund and any losses resulting from such investment shall be charged to such fund, and the Company shall forthwith pay the amount of such losses to the Institutional Lender for deposit into such fund. The Issuer shall not bear the risk of any loss that may occur as a result of such investment of funds. Section 8. Company Covenants. 8.1. Agreement to Acquire and Construct the Project. The Company agrees that it will complete the acquisition and construction of the Project, and construct, acquire and install other facilities and real and personal property deemed necessary for the operation of the Project. The Completion Date of the construction portion of the Project shall be evidenced to the Institutional Lender by a certificate signed by the Company stating that (1) construction of the Project has been completed substantially in accordance with the description in Schedule I hereto and all labor, services, materials and supplies used in the construction have been paid for (other than costs and expenses for which payment has been withheld), (ii) all facilities necessary in connection with the Project have been constructed, acquired and installed and all costs and expenses incurred in connection - 21 - therewith (other than costs and expenses for which the payment has been withheld pursuant to bona fide dispute or standard retainage) have been paid and (iii) substantially all (at least 90%) of the moneys previously disbursed and to be disbursed from the Bond Proceeds defrayed or are to defray Qualified Costs of the Project. It shall be the duty of the Company to complete or cause the completion of the construction portion of the Project on or before August 1, 1985 and to cause the certificate of completion and "as built" drawings of the Project as completed to be furnished to the Institutional Lender within a reasonable period after the Project shall have been completed. In the event the moneys available pursuant to this Agreement for payment of the Costs of the Project should not be sufficient to pay the costs thereof in full, the Company agrees to pay the Costs of the Project as may be in excess of the moneys available therefor pursuant to this Agreement. The Issuer does not make any warranty, either express or implied, that the proceeds of the Bond which, under the provisions of this Agreement, will be available for payment of the Costs of the Project, will be sufficient to pay all the costs which will be incurred in that connection. The Company agrees that if after exhaustion of such moneys the Company should pay any portion of the said Costs of the Project pursuant to the provisions of this Section, it shall not be entitled to any reimbursement therefor from the Issuer or from the Institutional Lender, nor shall it be entitled to any diminution of the amounts payable under the Note. In the event that Schedule I hereto is to be amended or supplemented in accordance with the provisions of Section 13.5 hereof, the Issuer, the Company and the Institutional Lender will enter into an amendment of or supplement to Schedule I hereto upon receipt of: (i) a certificate of the Company describing in detail the proposed changes and stating that they will not have the effect of disqualifying the Project as facilities that are financeable under the meaning of the Act; (ii) an opinion of nationally recognized municipal bond counsel to the effect that the proposed changes will not have the effect of disqualifying the Project as facilities that are financeable under the Issuer's home rule powers and will not result in the interest on the Bond becoming includable in the gross income of the owner of the Bond for federal income tax purposes; and (iii) a copy of the proposed form of amendment or supplement to Schedule I hereto. 8.2. Additional Payments. The Company agrees to pay upon written request the reasonable expenses of the Issuer related to the Project which are not otherwise required to be paid by the Company under the terms of this Agreement. 8.3. No Defense or Set-Off - Unconditional Obligation. The obligations of the Company to make the payments on the Note and to perform and observe the other agreements on its part contained herein shall be absolute and unconditional, irrespective of any defense or any rights of set-off, recoupment or counterclaim it might otherwise - 22 - have against the Issuer or the Institutional Lender, and the Company shall pay absolutely net during the term of this Agreement the payments on the Note and all other payments required hereunder free of any deductions and without abatement, diminution or set-off; and until such time as the principal of, premium, if any, and interest on the Note shall have been fully paid, the Company: (i) will not suspend or discontinue any payments provided for on the Note; (ii) will perform and observe all of its other agreements contained in this Agreement; and (iii) will not terminate this Agreement for any cause, including without limiting the generality of the foregoing, failure to acquire and complete the Project, the occurrence of any act or circumstances that may constitute failure of consideration, destruction of or damage to the Project, commerical frustration of purpose, any change in the tax laws of the United States of America or of the State of Illinois or any political subdivision of either of these, or any failure of the Issuer or Institutional Lender to perform and observe any agreement, whether express or implied, or any duty, liability or obligation arising out of or connected with this Agreement or the Assignment, except to the extent permitted by this Agreement. 8.4. Assignment of Issuer's Rights. As security for the payment of the bond, the Issuer has, pursuant to the Assignment, assigned and pledged the Note, the proposed Mortgage and the Collateral Assignment to the Institutional Lender. The Company hereby assents to such assignment and will make payments directly to the Institutional Lender as herein provided without defense or set-off by reason of any dispute between the Company and the Issuer or the Institutional Lender. 8.5. Right of Access to the Project and Books. The Company agrees that the Issuer and the Institutional Lender shall have the right at all reasonable times during normal business hours to enter upon the site of the Project to examine and inspect the Project and shall be permitted to examine the books and records of the Company as they pertain to the Project. The rights of access hereby reserved to the Issuer and the Institutional Lender may be exercised only after the Issuer or Institutional Lender, as the case may be, shall have executed secrecy agreements in the form reasonably required by the Company, provided that the Issuer may inspect the site of the Project pursuant to its police power without executing such secrecy agreements. 8.6. The Company to Maintain its Corporate Existence; Conditions Under Which Exceptions Permitted. The Company agrees that during the term of this Agreement it will maintain its corporate existence, will continue to be a corporation either organized under the laws of or duly qualified to do business as a foreign corporation in the State of Illinois, will not dissolve or otherwise dispose of all or substantially all of its assets and will not consolidate with or merge into another corporation; or permit one or more corporations to consolidate with or merge into it; provided that the Company may, without violating the agreement contained in this Section, consolidate with or merge into another domestic corporation (i.e., a corporation incorporated and existing under the laws of one of the states of the United States or the District of Columbia), or permit one or more corporations to consolidate with or merge into it, or sell or otherwise transfer to another domestic corporation all or substantially all of its assets as an entirety and thereafter dissolve, provided, (a) the Institutional Lender shall consent to such consolidation, merger, sale or transfer, and (b) the surviving, resulting or transferee corporation, as the case may be, if other than the Company (i) is a domestic corporation as aforesaid and (ii) assumes in writing all of the obligations of the Company under this Agreement, the Note, the Mortgage, Collateral Assignment and the Contingent Purchase Agreement and provided that the surviving, resulting or transferee corporation, as the case may be, has a consolidated net worth (after giving effect to such consolidation, - 23 - merger or transfer) at least equal to that of the Company immediately prior to such consolidation, merger or transfer. The term "net worth", as used in this Section shall mean the difference obtained by subtracting total liabilities (not including as a liability any capital or surplus item) from total assets (exclusive of good will, patents and other intangibles) of the Company and any Subsidiaries. 8.7. Release and Indemnification Covenants. The Company releases the Issuer from and covenants and agrees that the Issuer shall not be liable for, and agrees to indemnify, defend and hold the Issuer, its officers, employees and independent contractors harmless against, any claims or judgments in connection with the transactions contemplated by this Agreement, and against any loss or damage to property or any injury or death of any person occurring on or about or resulting from any defect in the Project, and, from any other expenses incurred by the Issuer in connection with the transactions contemplated by this Agreement or resulting from any defect in the project, provided that the indemnity provided in this sentence shall be effective only to the extent of any loss that may be sustained by the Issuer in excess of the net proceeds received from any insurance carrier with respect to the loss sustained, and provided further, that the indemnity shall not be effective for damages that result from gross negligence or intentional acts on the part of the Issuer, its officers, employees, or independent contractors. The covenants of the Company in this Section 8.7 shall survive the term of the Bond. 8.8. Damage and Destruction. Unless the Company shall have exercised its option to prepay the Note in full pursuant to the provisions of Section 5.1 hereof, if, prior to full payment of the Bond, the Project is destroyed (in whole or in part) or is damaged by fire or other casualty, the Company shall be obligated to continue to make the payments specified in the Note and shall promptly give written notice thereof to the Institutional Lender. All net proceeds of insurance resulting from such claims for losses shall be paid to and held by the Institutional Lender in a separate fund, whereupon the Company shall have the option to: (a) apply such proceeds to the prepayment of the Note in whole in accordance with Section 5.1 hereof; or (b) (i) proceed promptly to repair, rebuild or restore the property damaged or destroyed to substantially the same condition as it existed prior to the event causing such damage or destruction, with such changes, alterations and modifications (including the substitution and addition of other property) as may be desired by the Company and as will not impair operating unity or productive capacity or the character of the Project or materially reduce its value, and (ii) cause the Institutional Lender to apply so much as may be necessary of the net proceeds of such insurance to payment of the costs of such repairing, rebuilding or restoration as the work progresses. In the event said net proceeds are not sufficient to pay in full the costs of such repairing, rebuilding or restoration, the Company will nonetheless cause such repairing, rebuilding or restoration to be completed and will pay that portion of the costs thereof in excess of the amount of said net proceeds. Any moneys held by the Institutional Lender in the separate fund under the provisions of the preceding paragraph shall, at the written consent of the Company, be invested or reinvested by the Institutional Lender in investments enumerated in Section 7.2. hereof. The Company shall forthwith pay to the Institutional Lender the amount of any losses on such investments for deposit into such fund. - 24 - Each of the payments referred to in subparagraph (b) of this Section 8.8 shall be made upon receipt by the Institutional Lender of a written requisition signed by the authorized Company representative certifying: (i) that none of the items for which the payment is proposed to be made has formed the basis for any payment theretofore made from the fund; and (ii) that each item for which the payment is proposed to be made is or was necessary in connection with the repairing, rebuilding or restoration; and (iii) that all of the costs to be paid or reimbursed pursuant to such certificate constitute amounts which will be charged to the Project's capital account or which would be so chargeable either with a proper election by the Company under the Code or but for a proper election by the Company to deduct such amount. Such certificate shall also with respect to each payment to be made: (1) State the requisition number; (2) State the name and address of the person, firm or corporation to whom payment is due or has been made, which may include the Company; (3) State the amount to be or which has been paid; (4) State that each obligation mentioned therein has been properly incurred, is a proper cost of repairing, rebuilding or restoring the Project and has not been the basis of any previous requisition; (5) State that except for the amount, if any, stated pursuant to the foregoing clause (3) in such certificate to be due for services or materials to the particular supplier, there is no outstanding indebtedness to the particular supplier known to the person signing such certificate, after due inquiry, which is then due for labor, wages, materials, supplies or services in connection with such construction which, if unpaid, might become the basis of any lien upon the Project; (6) State that there has not been filed with respect to- the Project or any part thereof any vendor's, mechanic's, laborer's, materialman's or other lien which has not been discharged of record, except such as will be discharged by payment of the amount then requested or are being contested in accordance with the Mortgage; (7) State that no event of default exists under this Agreement, and that no notice has been given to the Company of a default hereunder which has not been corrected; and (8) Be accompanied by such other showings (including contractor's statements, affidavits, lien waivers, title policy date-down endorsements and attorney's opinions) as may be reasonably requested by the Institutional Lender - 25 - tt or are customarily required by prudent lenders for disbursements under commercial real estate and equipment financing. A copy of each such requisition shall be furnished to the Issuer. The Institutional Lender is hereby authorized and directed to make or cause each disbursement therefor in accordance with the provisions of this Section and the Construction Loan Escrow Agreement if still in force and effect. The Institutional Lender shall keep and maintain adequate records pertaining to the construction escrow and all disbursements therefrom, and after the repairing, rebuilding and restoration of the Project has been completed and a certificate of payment of all costs is or has been filed as provided in the following paragraph, the Institutional Lender shall file an accounting thereof with the Issuer and the Company. The Issuer shall not be liable, under any circumstances, for any payments made by the Institutional Lender in error or in violation of the provisions of this paragraph. The Company shall hold the Issuer harmless from any claims, judgments or damages suffered by the Issuer by reason of any acts of the Institutional Lender under this paragraph. Completion of the repairing, rebuilding or restoration of the Project shall be evidenced to the Institutional Lender by a certificate signed by the Company stating the cost of such repairing, rebuilding and restoration and stating that (i) repairing, rebuilding and restoration of the Project has been completed, and (ii) all other facilities necessary in connection with the Project have been acquired, and all costs and expenses incurred in connection therewith have been paid (except for moneys withheld pursuant to bona fide disputes or standard retainage). Notwithstanding the foregoing, such certificate may state that it is given without prejudice to any rights against third parties which exist at the date of such certificate or which may subsequently come into being. It shall be the duty of the Company to cause such certificate to be furnished to the Institutional Lender within a reasonable time after the repairing, rebuilding and restoration of the Project shall have been completed. Any balance of such net proceeds remaining after payment of all the costs of such repairing, rebuilding or restoration shall be used to prepay the Note and the Bond, in whole or in part, without premium in accordance with Section 5.3(c) hereof. If the Note and the Bond have been fully paid, all net proceeds will be paid to the Company. The Company shall not, by reason of the payment of such excess costs, be entitled to any reimbursement from the Issuer or the Institutional Lender or any abatement or diminution of the amounts payable on the Note. 8.9 Condemnation. Unless the Company shall have exercised its option to prepay the Note in full pursuant to the provisions of Section 5.1 hereof, in the event that title to, or the temporary use of, the Project or any part thereof shall be taken under the exercise of the power of eminent domain by any governmental body or by any person, firm or corporation acting under governmental authority, the Company shall be obligated to continue to make the payments specified in the Note. The Company and the Institutional Lender will cause the net proceeds received by them or any of them from any award made in such eminent domain proceedings, to be paid to and held by the Institutional Lender in a separate fund, to be applied in one or more of the following ways as shall be directed in writing by the Company: - 26 - (a) The restoration of the project to substantially the same condition as it existed prior to the exercise of the said power of eminent domain. (b) The acquisition, by construction or otherwise, of other improvements suitable for the Company's operations within the boundaries of the Issuer (which improvements shall be acquired subject to no liens or encumbrances prior to the lien of the Mortgage, other than permitted encumbrances as defined in the Mortgage. (c) Prepayment in whole or in part of the Note and the Bond together with accrued interest thereon to the date of prepayment; provided, that no part of any such condemnation award may be applied for such prepayment unless, in the event that the Note and the Bond are to be partially prepaid, the Company shall furnish to the Institutional Lender a certificate of an independent engineer acceptable to the Institutional Lender stating (i) that the property forming a part of the Project that was taken by such condemnation proceedings is not essential to the Company's use or occupancy of the Project, or (ii) that the Project has been restored to a condition substantially equivalent to its condition prior to the taking by such condemnation proceedings or (iii) that improvements have been acquired which are suitable for the Company's operations at the Project as contemplated by the foregoing subsection (b) of this Section. Within 90 days from the date of entry of a final order in any eminent domain proceedings granting condemnation, the Company shall direct the Institutional Lender in writing as to which of the ways specified in this Section the Company elects to have the condemnation award applied. If the Company shall direct the proceeds to be applied in accordance with (a) or (b) above, the Institutional Lender shall make disbursements from the fund upon receipt of a certificate complying with Section 8.8 hereof with appropriate changes to reflect the fact that there has been a condemnation of all or a portion of the Project. If the Company fails to so direct the Institutional Lender within the stated time, or in the event any balance of the net proceeds of the award in such eminent domain proceedings shall remain after completion and payment of the costs of the restoration or replacement of the Project pursuant to (a) or (b) above, the net proceeds, or balance thereof, of the award in such eminent domain proceedings shall be applied to the prepayment of the Note and the Bond, in whole or in part, without premium, If the Note and the Bond have been fully paid, all net proceeds will be paid to the Company. Any moneys held by the Institutional Lender in the separate fund under the provisions of the preceding paragraph shall, at the written request of the Company, be invested or reinvested by the Institutional Lender in investments enumerated in Section 7.2 hereof. The Company shall forthwith pay to the Institutional Lender for deposit into such fund the amount of any losses on such investments. 8.10. Tax Exempt Status of Interest on the Bond. The Company covenants that it shall furnish to the Issuer whatever information is necessary for the Issuer to make the election required to be made by it in Section 9.5 hereof and to comply with the provisions of Section 103(1) of the Code, and shall file such supplemental statements and other information as are required by the applicable regulations or procedures of the Internal Revenue Service. - 27 - The Company represents that (i) the proceeds of the Bond are to be used for the payment of the costs of acquisition and construction of facilities located wholly within the corporate limits of the City of Elgin, Illinois; (ii) that the Company will be the only principal user of the facilities to be acquired with the proceeds of the Bond within the meaning of Section 103(b)(6) of the Code; and (iii) that there are no outstanding obligations of any state, territory or possession of the United States, or any political subdivision of the foregoing or of the District of Columbia constituting "exempt small issues" within the meaning of Section 1.103-10 of the Internal Revenue Service Rules and Regulations, (the "Regulations"), the proceeds of which have been or are to be used primarily with respect to facilities located within the corporate limits of the City of Elgin, Illinois (or with respect to any contiguous or integrated facilities within the meaning of the Code), and which are to be used primarily by the Company (including any person related to the Company within the meaning of Section 103(b)(6)(C) of the Code) other than the Bond. The Company further covenants and represents that it does not presently intend to make any capital expenditures which will cause the interest on the Bond to become subject to federal income taxes pursuant to the provisions of Section 103(b) of the Code so long as any portion of the Bond is unpaid. The Company further covenants that it has not taken any action or permitted any action to be taken, and that it will not take any action or permit any action to be taken, which would cause the interest on the Bond to become subject to federal income taxes, provided that the Company shall not have violated this covenant if the interest on the Bond becomes taxable to a person who is a substantial user of the Project or a related person within the meaning of such terms under Section 103(b)(6)(C) of the Code. The Company further covenants and represents that there are no other obligations heretofore issued or to be issued by or on behalf of any state, territory, or possession of the United States, or political subdivision of any of the foregoing, or of the District of Columbia which constitute "industrial development bonds" within the meaning of Section 103 of the Code and which were or are to be sold (1) at substantially the same time as the Bond, (2) at substantially the same interest rate as the Bond, (3) pursuant to a common plan of marketing as the marketing plan for the Bond, and (4) are payable directly or indirectly by the Company or from the source from which the Bond is payable. The Company acknowledges that the capital expenditures referred to in the preceding and succeeding paragraphs include all capital expenditures with respect to property used by the Company (or any related person) which may, under any rule or election under the Code, be treated as a capital expenditure (whether or not such expenditure is so treated), including certain research and development costs relating to the Project that may have been paid or incurred at any location other than in the corporate limits of the City of Elgin, Illinois. The Company further covenants that it shall furnish to the Institutional Lender (i) at the time of the issuance of the Bond, a statement of the aggregate amount of capital expenditures made or incurred in the corporate limits of the City of Elgin, Illinois (or with respect to any contiguous or integrated facilities within the meaning of the Code) ("included capital expenditures") during the period beginning three years before the date of such issue and (ii) within 30 days after it has made or incurred the maximum amount of capital expenditures permitted under Section 103(b)(6)(D) of the Code, a statement to that effect. Upon the written request of the Institutional Lender, the Company shall also furnish to such Institutional Lender (a) within 90 days following the close of each fiscal - 28 - year of the Company occurring within two years after the issuance of the Bond, a statement of the aggregate amount of included capital expenditures made or incurred during the period beginning with the date of the last statement filed with the Institutional Lender and ending on the last day of the preceding fiscal year and (b) within 90 days following the third anniversary date of the issuance of the Bond, a statement of the aggregate amount of included capital expenditures made or incurred during the period beginning with the date of the last statement filed with the Institutional Lender and ending on the last day of the preceding fiscal year and (b) within 90 days following the third anniversary date of the issuance of the Bond, a statement of the aggregate amount of included capital expenditures made or incurred during the period beginning with the date of the last statement filed with the Institutional Lender and ending on such anniversary date. To the extent required by law, such supplemental statements shall be filed with the district director or director of the regional service center with whom the Company's income tax return is required to be filed on the due date prescribed for filing such return (without regard to any extensions of time). Each such statement shall set forth (a) a description of those capital expenditures which are capital expenditures under Section 103(b)(6)(D)(ii) of the Code and shall take into account facilities referred to in Section 103(b)(6)(E) of the Code in computing such capital expenditures, and (b) a description and the reason for the exclusion of any capital expenditures which the Company has not taken into account under Section 103(b)(6)(F) of the Code. This covenant shall survive the termination of this Agreement. No action taken by the Company hereunder shall so modify, or result in such modification of, the Project so as to cause the Project to cease being facilities that may be financed under the Issuer's home rule powers or to impair the excludability of interest on the Bond from the gross income of the owner of the Bond for purposes of federal income taxation. 8.11. Arbitrage. The Company will not take any action or fail to take any action with respect to the investment of the proceeds of the Bond or the Note or with respect to the payments derived from the Bond or the Note which may result in constituting the Bond an "arbitrage bond" within the meaning of such term under Section 103(c) of the Code and the regulations promulgated thereunder. 8.12. Licenses and Permits. The Company will preserve and keep in force and effect, and cause any Subsidiaries to preserve and keep in force and effect, all licenses and permits necessary to the proper conduct of its and their respective businesses. 8.13. Burdensome Contracts with Affiliates. The Company will not, nor will it permit any Subsidiary to, enter into any contract, agreement or business arrangement with an affiliate on terms and conditions which are less favorable to the company or such Subsidiary than would be usual and customary in similar contracts, agreements or business arrangements between persons not affiliated with each other. 8.14. Maintenance and Repair. The Company will maintain the Project in accordance with the requirements of the Mortgage. The Company will maintain, preserve and keep its properties and equipment in good repair, working order and condition and will from time to time make all needful and proper repairs, renewals, replacements, additions and betterments thereto so that at all times the efficiency thereof shall be fully preserved and, maintained, and will cause any Subsidiary so to do in respect of property owned or used by it. - 29 - , 8.15. Taxes. The Company will duly pay and discharge and will cause any Subsidiary to duly pay and discharge, all taxes, rates, assessments, fees and governmental charges upon or against the Company, or such Subsidiary or against their respective properties, in each case before the same become delinquent and before penalties accrue thereon, unless and to the extent that the same are being contested in good faith and by appropriate proceedings. 8.16. Finance Charge. Upon delivery of the Bond, the Company shall pay directly to Institutional Lender the Institutional Lender's commitment fee of $40,000.00. 8.17. Fees of Institutional Lender. The Company agrees to pay all reasonable attorneys fees incurred by the Institutional Lender in connection with the Project. 8.18. Insurance. The Company will maintain, or cause to be maintained, all necessary insurance with respect to the Project in accordance with the Mortgage. 8.19. Limitation on Liens. The Company will not, without the prior written consent of the Institutional Lender, grant any security interest or mortgage covering any of its real or personal property; provided, however, this provision shall not restrict any purchase of property by the Company in which the seller retains a vendor's lien which is released upon payment in the ordinary course of business or installment purchases of equipment. Section 9. Issuer Covenants. The Issuer covenants that on and after the date of initial issue of the bond and so long as the bond is outstanding: 9.1. Payment of Bond. Subject to the limited source of payment hereinafter referred to, the Issuer will cause the principal, premium, if any, and interest due in respect of the Bond to be paid according to the terms thereof. The principal, premium, if any, and interest on the Bond are payable solely from payments or prepayments by the Company upon the Note and other amounts payable under this Agreement and the Mortgage. 9.2. Warranty of Title. The Issuer has full right, power and authority to pledge and assign its interest herein (except its right to payments under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b)), the Note, the Collateral Assignment and the Mortgage to the Institutional Lender for the uses and purposes set forth in the Assignment. The issuer hereby authorizes the Company and the Institutional Lender, at no cost to the Issuer, to defend, on behalf of the Issuer, against all claims and demands of all persons whomsoever relating to the Issuer's interest in this Agreement, the Note, the Collateral Assignment and the Mortgage and the right, power and authority of the Issuer to assign this Agreement, the Note, the Collateral Assignment and the Mortgage. 9.3. Further Assurances. The Issuer, upon the posting with it of funds sufficient to cover all expenses and costs therein involved, will execute, acknowledge and deliver all and every further act, deed, conveyance, transfer and assurance necessary or proper for the better assuring of the pledge and assignment to the Institutional Lender of the Issuer's rights hereunder (except its right to payment under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b) hereof), the Note, the Collateral Assignment and the Mortgage. - 30 - 9.4. Arbitrage. The Issuer will not take any action with respect to the investment of the proceeds of the Bond or with respect to the payments derived from the Note which may result in constituting the Bond an "arbitrage bond" within the meaning of such term as used in Section 103(c) of the Code and regulations promulgated thereunder. 9.5. Election of Issuer. The Issuer covenants that it shall, prior to the issuance of the Bond, duly elect to have the provisions of Section 103(b)(6)(D) of the Code apply to such issue, and such election shall be made in accordance with the applicable regulations or procedures of the Internal Revenue Service, such statement to be based on documentation provided by the Company. 9.6. Information Reporting Requirements. The Issuer covenants that it shall comply with any and all information reporting requirements including but not limited to those required in Section 103(1) of the Code. The Company shall, at the request of the Issuer, reimburse the Issuer for all expenses and costs incurred by the Issuer resulting from compliance with this Section 9.6. Section 10. Financial and Business Information as to Company. The Company will, and will cause any Subsidiary to, maintain a standard and modern system of accounting in accordance with sound accounting practice and will furnish to the Institutional Lender and its duly authorized representatives such information respecting the business and financial condition of the Company and any Subsidiaries as the Institutional Lender may reasonably request, and without any request, will furnish to the Institutional Lender: (a) as soon as available, and in any event within 45 days after the close of each quarterly fiscal period of the Company (except the fourth quarter) a copy of the balance sheet and statements of income and surplus of the Company and its consolidated Subsidiaries, if any, for such period, prepared on a consolidated basis all in reasonable detail and certified to by the Chief Financial Officer thereof; (b) As soon as available, and in any event within 90 days after the close of each fiscal year of the Company, a copy of: (1) a consolidated balance sheet of the Company and its consolidated Subsidiaries, if any, at the end of such year, and (2) consolidated statements of income and surplus of the Company and its consolidated Subsidiaries, if any, for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and in accordance with generally accepted accounting principles, along with an audit opinion by independent certified public accountants selected by the Company and acceptable to the Institutional Lender; (c) promptly upon receipt thereof, one copy of each other report submitted to the Company or any Subsidiary by independent accountants in connection with any annual, interim or special review made by them of the books of the Company or any Subsidiary; - 31 - (d) promptly after the sending or filing thereof, copies of all • proxy statements, financial statements, and reports, if any, which the Company sends to its shareholders, and copies of all regular, periodic and special reports and all registration statements, if any, which the Company files with the Securities and Exchange Commission or any governmental authority which may be substituted therefor, or with any national securities exchange; (e) within the periods provided in subsections (a) and (b) above, the written statement of the Company to the effect that the Company has re-examined the provisions of this Agreement, and at the date of said statement is not aware of any default or event of default, or, if the Company is aware of any such default or event of default, it shall disclose in such statement the nature thereof; and (f) promptly after knowledge thereof shall have come to the attention of any responsible officer of the Company, written notice of any threatened or pending litigation or governmental proceeding against the Company or any Subsidiary which would materially adversely affect the business and properties of the Company and any Subsidiaries on a consolidated basis and of the occurrence of any default or event of default hereunder. Section 11. Events of Default. 11.1. Nature of Events. An "event of default" shall exist if any of the following occurs and is continuing: (a) Principal Payments on Note - The Company fails to make any payment of principal on the Note on or before the date such payment is due; or (b) Interest Payments on Note - The Company fails to make any payment of interest on the Note on or before the date such payment is due; or (c) Other Company Defaults - The Company fails to comply with any covenant, warranty or provision of this Agreement, the Mortgage, the Collateral Assignment or the Contingent Purchase Agreement (other than an event of default which is specifically provided elsewhere in this Section 11.1), and such failure continues for a period of thirty days after there has been given, by registered or certified mail, to the Company by the Institutional Lender, a written notice specifying such failure and requiring it to be remedied and stating that such notice is "notice of default" hereunder, unless the default is such that it cannot be remedied within the 30 day period and the Company institutes corrective action within such 30 day period and diligently pursues such action and the default is remedied within 60 days of the notice of default; or - 32 - (d) Warranties or Representations of Company - Any warranty, representation or other statement by or on behalf of the Company contained in this Agreement or in any instrument furnished in compliance with or in reference to this Agreement is false or misleading in any material respect; or (e) Defaults on Existing Loans - There is (a) a default under either of the following existing loans: (i) $750,000 revolving line of credit made by the Institutional Lender to the Company and Chem-Metals, Inc., maturing December 31, 1984, secured by a pledge of accounts receivables and inventory and any renewals or extensions thereof or (ii) $288,000 term loan made by the Institutional Lender to the Company, maturing February 1, 1985, secured by a Third Assignment of Beneficial Interest in LaSalle National Bank Trust No. 52187 and any extensions and renewals thereof; or (b) a default in the payment of principal of or interest on the revenue bond issue of the City of Valparaiso, Indiana for the benefit of Chem- Metals, Inc., maturing February 1, 1992, secured by a Second Assignment of Beneficial Interest in LaSalle National Bank Trust No. 52187. (f) Involuntary Bankruptcy Proceedings Against Company or Any Subsidiary - A custodian, receiver, trustee, conservator, or liquidating agent or committee of the Company or any Subsidiary or of any material part of the property of the Company or any Subsidiary is appointed by order or decree of a court or agency or supervisory authority having jurisdiction in the premises and such order or decree remains in effect for more than 30 days; or an order for relief under Title 11 of the United States Code, as amended, is entered against the Company or any Subsidiary; or any material part of the property of the Company or any Subsidiary is sequestered by court order and such order remains in effect for more than 30 days; or a petition is filed against the Company or any Subsidiary under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, or a petition is filed proposing the entry of an order for relief under Title 11 of the Untied States Code, as amended, against the Company or any Subsidiary and any such petition is not dismissed (or stayed in cases ancillary to foreign proceedings or in state proceedings) within 30 days after such filing; or (g) Voluntary Petition by Company or Any Subsidiary. The Company shall institute bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings or other proceedings for relief under any bankruptcy or insolvency law or laws for the relief of debtors or proceedings seeking the entry of an order for relief under Title 11 of the United States Code, as amended, with respect to the Company or any Subsidiary or the Company or any Subsidiary shall consent to the institution of such proceedings against the Company or any Subsidiary by others or approving as filed any petition seeking reorganization under any bankruptcy or similar law or shall apply for or shall consent to the appointment of a custodian, receiver, trustee, conservator or liquidating agent or committee for the Company or for any material part of the property of the Company or any Subsidiary; or - 33 - (h) Assignments by Company or Any Subsidiary for Benefit of Creditors, Etc. The Company or any Subsidiary makes an assignment for the benefit of its creditors or admits in writing its inability to pay its debts generally as they become due, or consents to the appointment of a custodian, receiver, trustee or liquidator of the Company or any Subsidiary, or of all or any part of the property of the Company or any Subsidiary; or (i) Undischarged Final Judgments Against Company or any Subsidiary. Final judgment or judgments for the payment of money aggregating in excess of $50,000 is or are outstanding against the Company or any Subsidiary and any one of such final judgments has been outstanding for more than 30 days from the date of its entry and has not been discharged in full or stayed; or (j) Other Debt. Any material indebtedness, guarantee or financial obligation of the Company becomes or is declared due prior to its expressed maturity by reason of any default by the Company in the observance of any obligation or condition; or (k) Principal Payments on Bond. The Issuer fails to make the payment of principal on the Bond when due; or (1) Interest Payments on Bond. The Issuer fails to make any payment of interest on the Bond when due; or (m) Other Issuer Defaults. The Issuer fails to comply with any provisions of this Agreement or the Assignment, and such failure continues for more than 30 days; or (n) Warranties or Representations of Issuer. Any warranty, representation or other statement by or on behalf of the Issuer contained in this Agreement or the Assignment or in any instrument furnished in compliance with or in reference to this Agreement or the Assignment is false or misleading, when made in any material respect. 11.2. Default Remedies. (a) Acceleration of Note and Bond. When any event of default described in Section 11.1 has occurred and is continuing, the Institutional Lender may, by notice in writing sent by registered mail to the Issuer and the Company, declare the principal of and any accrued interest on the Note and the Bond to be immediately due and payable without further demand, presentment, protest or notice of any kind; and thereupon the Note and the Bond, including both principal and interest, shall become immediately due and payable, and the Company agrees to pay to the Institutional Lender the entire principal of and interest accrued on the Note and (on behalf of the Issuer) the Bond. (b) Attorneys' Fees. The Company agrees to pay to the Issuer and the Institutional Lender all costs and expenses reasonably incurred by them in the collection of the Note and the Bond, including but not limited - 34 - to reasonable attorneys' fees incurred by the Issuer or the Institutional Lender for all services rendered in connection therewith. (c) Other Actions. The Institutional Lender may take whatever action at law or in equity may appear necessary or desirable to collect the payments and other amounts then due and thereafter to become due or to enforce performance and observance of any obligation, agreement or covenant of the Company under this Agreement. In case the Company shall fail forthwith to pay such amounts upon such demand, the Issuer or the Institutional Lender shall be entitled and empowered to institute any action or proceeding at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or judgment or final decree against the Company and collect, in the manner provided by law out of the property of the Company, the moneys adjudged or decreed to be payable. In case there shall be pending proceedings for the bankruptcy or for the reorganization of the Company under the federal bankruptcy laws or any other applicable law, or in case a custodian, receiver or trustee shall have been appointed for the property of the Company, or in the case of any other similar judicial proceedings relative to the Company, or to the creditors or property of the Company, the Institutional Lender shall be entitled and empowered, by intervention in such proceedings or otherwise, to file and prove a claim or claims for the whole amount owing and unpaid pursuant to this Agreement and, in case of any judicial proceedings, will file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Institutional Lender allowed in such judicial proceedings relative to the company, its creditors, or its property, and to collect and receive any moneys or other property payable or deliverable on any such claims, and to distribute the same after the deduction of its charges and expenses; and any custodian, receiver, assignee or trustee is hereby authorized to make such payments to the Institutional Lender, and to pay the Institutional Lender any amount due it for compensation and expenses, including reasonable counsel fees incurred by it up to the date of such distribution. 11.3. Notice of Default. When any event of default described in Section 11.1(c) through 11.1(i) has occurred, the Company agrees to give notice within five days after the occurrence of such event of default to the issuer and to the Institutional Lender, such notice to be in writing and sent by registered or certified mail or by telegram. 11.4. Nonwaiver. No course of dealing on the part of the Issuer or the Institutional Lender, nor any delay or failure on the part of the issuer or the Institutional Lender to exercise any right shall operate as a waiver of such right or otherwise prejudice the Issuer's or the Institutional Lender's rights, powers and remedies. Section 12. Interpretation of This Agreement. 12.1. Terms Defined. As used in this Agreement, the following terms shall have the following respective meanings: - 35 - Affiliate. The term "affiliate" shall mean any person which directly or indirectly • through one or more intermediaries controls, or is controlled by, or is under common control with the Company. The term "control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether by contract or otherwise. Authorized Company Representative. The term "Authorized Company representative" means the President of the Company and any other person at the time, and from time to time, designated to act on behalf of the Company by written certificate furnished to the Institutional Lender containing the specimen signature of such person and signed on behalf of the Company by the President. Such certificate may designate an alternate or alternates. Code. The term "Code" means the Internal Revenue Code of 1954, as amended. Completion Date. The term "Completion Date" means the date of completion of the Project as the date shall be certified as provided in Section 8.1 hereof. Construction Period. The term "Construction Period" means the period between the beginning of construction of the Project or the date on which the Bond is first delivered to the Institutional Lender, whichever is earlier, and the Completion Date. Costs of the Project. The term "Costs of the Project" shall mean the sum of the items authorized to be paid from the proceeds of the Bond pursuant to Section 4.3. Default. The term "default" shall mean an event or condition, the occurrence of which would, with the lapse of time or the giving of notice, or both, become an event of default. Event of Default. The term is defined in Section 11.1. Independent Engineer. The term "Independent Engineer" means an engineer or an engineering firm qualified to practice and which practices the profession of engineering under the laws of the State of Illinois and who or which is not a full-time employee, officer or director of the Issuer, the Company or the Institutional Lender. Inducement Resolution. The term "Inducement Resolution" means the resolution passed and approved by the City Council of the Issuer on April 11, 1983 authorizing the execution of the Memorandum of Agreement between the Issurer and the Company. Person. The term "person" shall mean an individual, partnership, joint venture, corporation, trust, unincorporated organization or foundation, or a government or agency or political subdivision thereof. Property. The term "property" shall mean any interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. Subsidiary. The term "Subsidiary" shall mean a corporation of which the Company owns, directly or indirectly, more than 50% of the voting stock. - 36 - A 12.2. Directly or Indirectly. Where any provision in this Agreement refers to action to be taken by any person, or to action which any person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such person. 12.3. Governing Law. This Agreement and the Note and the Bond shall be governed by and construed in accordance with Illinois law. Section 13. Miscellaneous. 13.1. Notices. (a) Except as may expressly be otherwise provided in this Agreement, all communications under this Agreement or under the Note or the Bond shall be in writing and shall be mailed by first class mail, postage prepaid, addressed as follows: If to the Company, at 1124 Elmhurst Road, Elk Grove Village, Illinois 60007 Attention: President; If to Issuer, at 150 Dexter Court, Elgin, Illinois 60120 Attention: City Clerk; If to the Institutional Lender, at 33 North LaSalle Street, Chicago, Illinois, 60690, Attention: Corporate Trust Department; or at such other place at any such party may designate by notice duly given in accordance with this Section. (b) Any notice so addressed and mailed by registered or certified mail shall be deemed to be given when so mailed. 13.2. Reproduction of Documents. This Agreement and all documents relating hereto, including without limitation (a) consents, waivers and modifications which may hereafter be executed, (b) documents received by the Issuer or the Institutional Lender at the closing (except the Note and the Bond themselves) and (e) financial statements, certificates and other information previously or hereafter furnished to the Issuer, may be reproduced by any party hereto by any photographic, photostatic, microfilm, microcard, miniature photographic or other similar process and any party hereto may destroy any original document so reproduced. Each of the parties hereto agrees and stipulates that any such reproduction shall be admissable in evidence as the original itself in any judicial or administrative proceeding (whether or not he original is in existence and whether or not such reproduction was made by any party hereto in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. 13.3. Survival. All warranties, representations and covenants made by the Company, the Issuer or the Institutional Lender herein or in any certificate or other instrument delivered by it or on its behalf under this Agreement shall survive the Bond Closing and the issuance and delivery of the Note and the Bond. 13.4. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties. In the event that the - 37 - 4 e Company assigns its rights to the proceeds of the bond to persons other than those entitled to receive payments pursuant to Section 4.2 of this Agreement, said assignee shall agree to assume all of the obligations under this Agreement and the Company shall not be released from its obligations thereunder. 13.5. Amendments. This Agreement may only be amended with the written consent of all the parties hereto. The Mortgage or the Collateral Assignment may not be amended without the prior written consent of the Institutional Lender. 13.6. Duplicate Originals. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument. All of the parties hereto may sign the same counterpart or any one or more of the parties hereto may sign separate counterparts. Only the executed counterpart delivered to and receipted for by the Institutional Lender shall constitute an original for purposes of creating a security interest herein under the Illinois Uniform Commercial Code. 13.7. Payments Due on Saturdays, Sundays and Holidays. In any case where the date of maturity of interest on or principal of the Bond or Note or the date fixed for prepayment of the Bond or Note shall be on a Saturday, Sunday or a legal holiday or a day on which banking institutions are authorized by law or executive order to close in the city where the principal office of the Institutional Lender is located, then payment of interest or principal need not be made on such date but may be made on the next succeeding business day not a Saturday, Sunday or a legal holiday or a day upon which banking institutions are authorized by law or executive order to close, and the Bond and Note shall continue to bear interest until said date. 13.8. Severability. If any provision of this Agreement shall be held or deemed to be or shall, in fact, be illegal, inoperative or unenforceable, the same shall not affect any other provision or provisions herein contained or render the same invalid, inoperative, or unenforceable to any extent whatever. IN WITNESS WHEREOF, the Issuer, the Company and the Institutional Lender have each caused this Agreement to be executed in their respective corporate names and attested by their duly authorized officers, all as of the date first above written. CITY OF ELGIN, ILLINOIS [CORPORATE SEAL] By ATTEST: Mayor City Clerk UNIVERSAL CHEMICALS AND COATINGS, INC. [CORPORATE SEAL] By ATTEST: President Secretary - 38 - k. AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO [CORPORATE SEAL] By ATTEST: Its Officer Its Vice President - 39 - MORTGAGE AND SECURITY AGREEMENT THIS MORTGAGE AND SECURITY AGREEMENT (the "Mortgage"), made as of between Universal Chemicals and Coatings, Inc., a Delaware corporation, with its principal office at 1124 Elmhurst Road, Elk Grove Village, Illinois 60007 (the "Mortgagor"), and the City of Elgin, Illinois, a municipal corporation and a home rule unit of government of the State of Illinois, having its principal office at 150 Dexter Court, Elgin, Illinois 60120 (the "Mortgagee"). WITNESSETH: THAT WHEREAS this Mortgage is made to secure the principal sum of FOUR MILLION DOLLARS ($4,000,000) which is the proceeds of the Industrial Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project) dated 1984 (the "Bond) of the Mortgagee and to further secure the following existing loans: (i) $750,000 revolving line of credit made by the Institutional Lender to the Mortgagor and Chem-Metals, Inc., maturing December 31, 1984, secured by a pledge of accounts receivables and inventory and any renewals and extensions thereof; (ii) $288,000 term loan made by the Institutional lender to the Company, maturing February 1, 1985, secured by a Third Assignment of Beneficial Interest in LaSalle National Bank Trust No. 52187 and any renewals and extensions thereof; and (iii) revenue bond issue of the City of Valparaiso, Indiana for the benefit of Chem-Metals, Inc. maturing February 1, 1992, secured by a Second Assignment of Beneficial Interest in LaSalle National Bank and Trust No. 52187 (the "Existing Loans") and the Bond proceeds have been or will be received by the Mortgagor from the Mortgagee pursuant to an Agreement dated as of September 1, 1984, among American National Bank and Trust Company of Chicago (the "Institutional Lender"), the Mortgagor, and the Mortgagee (the "Agreement"), and such Bond proceeds will be used by the Mortgagor to finance the acquisition, construction and equipping of the Project as defined in the Agreement and the Agreement, together with the loan repayment installments due thereunder, has been assigned by the Mortgagee to the Institutional Lender under an Assignment and Security Agreement dated as of September 1, 1984 (the "Assignment"); and WHEREAS, in order to evidence the loan made to it under the Agreement and this Mortgage, the Mortgagor has executed and delivered to the Mortgagee its Direct Obligation Note dated , 1984 (the "Note") in the principal sum of $4,000,000 the principal of which is payable on September 1, December 1, March 1 and June 1 of the years (the "Payment Dates") and in the amounts as follows: Principal Payment for Payment Date Payment Dates $20,000 December 1, 1984, March 1, 1985, June 1, 1985, September 1, 1985 $30,000 December 1, 1985, March 1, 1986, June 1, 1986, September 1, 1986 $40,000 December 1, 1986, March 1, 1987, June 1, 1987, September 1, 1987 $50,000 December 1, 1987, March 1, 1988, June 1, 1988, September 1, 1988 $60,000 December 1, 1988, March 1, 1989, June 1, 1989, September 1, 1989 $80,000 December 1, 1989 and each Payment Date thereafter until September 1, 1999 Interest on the unpaid principal balance of the Note from the date of its issuance is payable on each Payment Date at nine and one-half percent (9-1/2%) per annum through August 31, 1989 and thereafter at a varying rate per annum which shall be seventy-five percent (75%) of the rate of interest publicly announced from time to time by the American National Bank and Trust Company of Chicago as its prime rate (the "Prime Rate") with adjustments in such varying rate to be made on the same date as any announced change in the Prime Rate, provided that any changes in the Prime Rate occurring within 15 days before any Payment Date resulting in an increase or decrease in the interest which would otherwise be payable thereon on such Payment Date shall not, if an increase, be payable on such Payment Date, but shall instead be payable by the Company on the next succeeding Payment Date or shall, if a decrease, reduce the amount that the Company would otherwise have to pay on such next succeeding Payment Date, and interest shall be calculated, for actual days elapsed, on a 360 day year. In the event of a declaration of default by the Institutional Lender, interest on overdue principal and, to the extent permitted by law, on overdue interest shall be payable on demand at a rate equal to the rate otherwise applicable plus three percent (3%) per annum until paid; and WHEREAS, the Institutional Lender, as the purchaser of the Bond, is unwilling to purchase the Bond of the Mortgagee unless, among other things, the Mortgagor shall execute and deliver this instrument for the purpose of securing the Note; NOW THEREFORE, the Mortgagor, to secure the payment of the principal of and interest on the Note in accordance with the terms and provisions thereof, and the payment of any other sums therein provided for, and the observance and performance of the covenants and agreements contained herein or in the Agreement or in the Note or in any other instrument or document securing the Note and the other indebtedness which this Mortgage by its terms secures, and in consideration of the premises, of the purchase and acceptance of the Note by the Mortgagee, and the sum of Ten Dollars in hand paid, - 2 - the receipt whereof is hereby acknowledged, does by these presents (and subject only to those Permitted Encumbrances set forth in Schedule II hereto) mortgage, warrant and assign unto Mortgagee, its successors and assigns and does hereby grant to Mortgagee, its successors and assigns a security interest in all and singular the properties, rights, interests and privileges described in Granting Clauses I through VII below, all of same being collectively referred to herein as the "Premises." GRANTING CLAUSE I That certain real estate lying wholly within the corporate limits of the City of Elgin, Illinois, more particularly described in Schedule I attached hereto and made a part hereof (the "Land"). GRANTING CLAUSE II All buildings and improvements of every kind and description now existing or hereafter erected or placed on the Land and all materials intended for construction, reconstruction, alteration and repairs of such improvements now existing or hereafter erected thereon, all of which materials shall be deemed to be included within the Premises immediately upon the delivery thereof to said Land, and all fixtures, fitting, radiators, awnings, shades, screens, all gas, coal, steam, electric, oil and other heating, cooking, power and lighting apparatus and fixtures, all cooling and ventilating apparatus and systems, all plumbing, incinerating, sprinkler equipment and fixtures, all elevators and escalators and communication equipment; all other fixtures of every kind and nature whatsoever now or hereafter acquired by Mortgagor and attached to said Land and the buildings and improvements now existing or hereafter located thereon; and all renewals or replacements of any of the foregoing or articles in substitution therefor, whether or not the same are or shall be attached to said buildings or improvements in any manner; it being mutually agreed, intended and declared that all the property owned by said Mortgagee and placed by it on the Land shall so far as permitted by law be deemed to form a part and parcel of the Land and for the purpose of this Mortgage to be real estate and covered by this Mortgage. GRANTING CLAUSE III All right, title and interest of Mortgagor now owned or hereafter acquired in and to all and singular the estates, tenements, hereditaments, privileges, easements, franchises and appurtenances belonging or in any wise appertaining to the Land and the buildings and improvements now or hereafter located thereon and the reversions, rents, issues, revenues and profits thereof, including all interest of Mortgagor in all rents, issues and profits of the aforementioned property and all rents, issues, profits, revenues, royalties, bonuses, rights and benefits due, payable or accruing (including all deposits of money as advanced rent or for security) under any and all leases or subleases and renewals thereof of said property (including during any period allowed by law for the redemption of said property after any foreclosure or other sale) together with the right, but not the obligation, to collect, receive and receipt for all such rents and apply them to the indebtedness hereby secured and to demand, sue for and recover the same when due or payable, provided that the assignments made hereby shall not impair or diminish the obligations of Mortgagor under the provisions of such leases nor shall such obligations be imposed upon Mortgagee. - 3 - GRANTING CLAUSE IV All judgments, awards of damages, settlements and other compensation hereafter made resulting from condemnation proceedings or the taking of the Land or any part thereof or any building or other improvement now or at any time hereafter located thereon or any easement or other appurtenance thereto under the power of eminent domain, or any similar power or right (including any award from the United States Government at any time after the allowance of the claim therefor, the ascertainment of the amount thereto and the issuance of the warrant for the payment thereof), whether permanent or temporary, or for any damage (whether caused by such taking or otherwise) to said property or any part thereof or the improvements thereon or any part thereof, or to any rights appurtenant thereto, including severance and consequential damage, and any award for change of grade of streets (collectively "Condemnation Awards"). GRANTING CLAUSE V All property and rights, if any, which are by the express provisions of this instrument required to be subjected to the lien hereof and any additional property and rights that may from time to time hereafter, by installation or writing of any kind, be subjected to the lien hereof by Mortgagor or by anyone in Mortgagor's behalf. GRANTING CLAUSE VI All rights in and to common areas and access roads on adjacent properties heretofore or hereafter granted to Mortgagor and any after-acquired title or reversion in and to the beds of any ways, roads, streets, avenues and alleys adjoining the Land or any part thereof. GRANTING CLAUSE VII All equipment (as defined in Article 9 of the Illinois Uniform Commercial Code) now owned or hereafter acquired by the Mortgagor, through the use of the proceeds of the Bond and now or hereafter placed in, affixed to or used in connection with the buildings now or hereafter constructed upon any real property which (or upon any real property an interest in which) is now or hereafter subject to the lien hereof, including without limitation the machinery, equipment, apparatus, equipment fittings and readily removable fixtures described in Schedule II attached hereto and made a part hereof (sometimes hereinafter referred to as the "Equipment"); And as to the property aforesaid which is not deemed to be real property, including but not limited to equipment and fixtures this Mortgage is hereby deemed to be as well a Security Agreement under the provisions of the Illinois Uniform Commercial Code for the purpose of creating hereby a security interest in said property, which is hereby granted by the Mortgagor, as debtor, to the Mortgagee, as secured party, further securing the indebtedness hereby secured; the addresses of the Mortgagor (debtor) and the Mortgagee (secured party) appear at the beginning of this Mortgage; TO HAVE AND TO HOLD the Premises and the properties, rights and privileges hereby mortgaged, warranted and assigned, or intended so to be unto Mortgagee, its successors and assigns, forever; provided, however, that this Mortgage is - 4 - upon the express condition that if Mortgagor shall pay or cause to be paid all indebtedness hereby secured (except the Existing Loans) and shall keep, perform and observe all and singular the covenants and promises in the Note and in this Mortgage or in any other instrument or document securing the Note or in the Agreement expressed to be kept, performed and observed by Mortgagor, then this Mortgage and the estate and rights hereby granted shall cease, determine and be void, and this Mortgage shall be released by Mortgagee upon the written request and at the expense of Mortgagor, otherwise to remain in full force and effect. IT IS FURTHER UNDERSTOOD AND AGREED THAT: 1. Maintain Premises. Unless Mortgagor shall have exercised its option to prepay the Note in full pursuant to Section 5.1 of the Agreement, Mortgagor shall (1) promptly repair, restore or rebuild any buildings or improvements now or hereafter on the Land which may become damaged or destroyed; (2) keep the Premises in as reasonably safe condition as its operations permit and in good condition and repair, without waste and free from charges, encumbrances, mechanics' or other liens; (3) pay when due any indebtedness which may be secured by a lien, charge or encumbrance on the Premises and upon request exhibit satisfactory evidence of the discharge of same to the Institutional Lender; (4) complete by September 1, 1987 the acquisition, installation and construction of the Project; (5) comply with all requirements of law or municipal ordinances with respect to the premises and the use thereof; (6) without prior written consent of the Institutional Lender, which shall not be unreasonably withheld, not make any material alteration in said Premises except as required by law or municipal ordinance; and (7) promptly notify the Institutional Lender of any damage or destruction on the Premises, of any pending or threatened proceeding for the taking (by eminent domain or otherwise) of any part thereof, of any notice from any governmental authority alleging violation of any building code, zoning ordinance or other governmental requirement or of any other event or condition which might impair the value of the Premises or its use for its intended purpose. 2. Pay Taxes, Charges. Mortgagor shall pay before any penalty attaches all general taxes, special taxes, special assessments, water charges, sewer service charges and other charges against the Premises or the interest of the Mortgagor therein or the use or occupancy thereof or the activities conducted thereat when due, and shall upon written request furnish to the Institutional Lender duplicate receipts therefor. To prevent default hereunder, Mortgagor shall pay in full under protest, in the manner provided by statute, any tax or assessment which Mortgagor may desire to contest. 3. Maintain Insurance. Mortgagor shall keep the Premises insured against loss or damage by fire, lightning, windstorm, explosion and such other risks as are usually included under extended coverage policies, and which are usually insured against by owners of like property in the State of Illinois, in amounts sufficient to prevent Mortgagor or Mortgagee from becoming a co-insurer of any partial loss under applicable policies and in any event not less than the then full insurable value (actual replacement value without deduction for physical depreciation) thereof. Mortgagor shall not carry separate insurance concurrent in kind or form and contributing in the event of loss, with any insurance required hereinabove. Mortgagor shall also maintain general public liability insurance with respect to the Premises against loss because of bodily injury, including death, or damage to property of others, such insurance to afford protection to the limit of not less than $1,000,000 in respect of any one occurrence. Mortgagor shall also obtain and maintain adequate workers compensation insurance and such other - 5 - insurance with respect to the Premises in such amounts and against such insurable hazards as Mortgagee from time to time may require, including, without limitation, boiler and machinery insurance, insurance against flood risks and insurance against other losses due to fire and risks now or hereafter embraced by so-called "extended coverage" and builders risk insurance. Such insurance policies shall be maintained in companies reasonably satisfactory to the Institutional Lender, under insurance policies payable, in case of loss or damage, to Mortgagee and the Institutional Lender, as their respective interests may appear (such rights to be evidenced by the standard noncontributory mortgage clause to be attached to each policy) and providing that the same may not be cancelled except upon 30 days' prior written notice to the Institutional Lender, and shall deliver all policies, including additional and renewal policies, to the Institutional Lender, and in case of insurance about to expire, shall deliver renewal policies not less than 30 days prior to the respective dates of expiration. Any insurance proceeds paid under such policies shall be disbursed in accordance with Section 8.8 of the Agreement. Mortgagor hereby irrevocably constitutes and appoints the Institutional Lender its true and lawful attorney in fact to endorse the name of Mortgagor on any commercial paper evidencing any insurance proceeds. Any insurance proceeds remaining after completion of restoration of any improvements shall be applied in accordance with Section 8.8 of the Agree ment. 4. Condemnation. Mortgagor acknowledges that Condemnation Awards have been assigned to Mortgagee, which awards Mortgagee is hereby irrevocably authorized to collect and receive, and to give appropriate receipts and acquittances therefor. Mortgagor covenants and agrees that Mortgagor will give Mortgagee and Institutional Lender immediate notice of the actual or threatened commencement of any proceedings under condemnation or eminent domain affecting all or any part of the Premises including any easement therein or appurtenance thereof or severance and consequential damage and change in grade of streets, and will deliver to Institutional Lender copies of any and all papers served in connection with any such proceedings. All Condemnation Awards shall be paid over to the Institutional Lender and shall be held or disbursed or applied upon the terms and conditions provided in Section 8.9 of the Agree ment. 5. Institutional Lender May Act. In case Mortgagor shall fail to perform any covenants herein contained, the Institutional Lender may, but need not, make any payment or perform any act herein required of Mortgagor in any form and manner deemed expedient, and may, but need not, make full or partial payments of principal or interest on prior encumbrances, if any, and purchase, discharge, compromise or settle any tax lien or other prior lien on title or claim riereof, or redeem from any tax sale or forfeiture affecting said Premises or contest an ix assessment. All moneys paid for any of the purposes herein authorized and all e :pi ises paid or incurred in connection therewith, including attorneys' fees, and any attic- aoneys advanced by the Institutional Lender to protect the Premises and the lien hereo;, plus reasonable compensation to the Institutional Lender for each matter concerning which action herein authorized may be taken shall be so much additional indebtedness secured hereby and shall become immediately due and payable without notice and with interest thereon at a rate equal to the Prime Rate then in effect plus one percent per annum, and all sums so advanced, with interest, if and to the extent such sums and interest do not exceed an amount equal to the amount of the Note, shall be secured hereby in priority to the indebtedness evidenced by the Note; but no such advance shall be deemed to relieve the Mortgagor from any default hereunder. The Institutional Lender shall be subrogated to all rights, claims and liens of any party whose debt is discharged pursuant to this Section 5. - 6 - Inaction of the Institutional Lender shall never be considered as a waiver of any right accruing to it on account of any default hereunder on the part of the Mortgagor. The Institutional Lender in making any payment hereby authorized may do so according to any bill, statement or estimate procured from the appropriate public office or holder of the claim to be discharged without inquiry into the accuracy of such bill, statement or estimate or into the validity of any tax, assessment, sale, forfeiture, tax lien or title or claim thereof. 6. Default. Mortgagor shall pay each item of indebtedness herein mentioned, both principal and interest, when due according to the terms hereof and of the Note and with respect to the Existing Loans in accordance with the terms thereof. At the option of the Institutional Lender exercised by notice in writing to Mortgagor, all unpaid indebtedness secured hereby (except the Existing Loans) shall, notwithstanding anything in the Note or in this Mortgage to the contrary, become due and payable (a) in the case of default in making payment when due of any installment of principal or interest on the Note when due or in making payment of any other sum due hereunder, or (b) in case Mortgagor shall, without the prior written consent of the Institutional Lender, which consent shall not be unreasonably withheld, sell, assign, transfer or lease the real estate subject hereto, or any portion thereof or interest therein, or contract or agree so to do, or (c) when any other default shall occur and continue for 30 days in the performance or observance of any other agreement of the Mortgagor herein contained, unless the default is such that it cannot be remedied within the 30 day period and the Company institutes corrective action within such 30 day period and diligently pursues such action and the default is remedied within 60 days after the date of default, or (d) the occurrence of an Event of Default under Section 11 of the Agreement, or (3) Mortgagor abandons the Premises, or (f) proceedings shall be commenced to foreclose or otherwise realize upon any lien, charge or encumbrance on the Premises or any part thereof which in the Institutional Lender's judgment will impair the security of this Mortgage, or (g) the occurrence of a default under an Existing Loan. The occurrence of any of the foregoing events described in (a) through (g) of this Section 6 shall constitute an event of default hereunder. 7. Remedies. When the indebtedness hereby secured shall become due, whether by acceleration or otherwise, Mortgagee shall have the following rights and remedies: (a) Mortgagee may proceed to protect and enforce the rights of Mortgagee hereunder (i) by any action at law, suit in equity or other appropriate proceedings, whether for the specific per- formance of any agreement contained herein, or for an injunction against the violation of any of the terms hereof, or in aid to the exercise of any power granted hereby or by law, or (ii) by the foreclosure of this Mortgage. (b) The Mortgagee shall, with respect to any part of the Premises constituting property of the type in respect of which the realization on a lien or security interest granted therein is governed by the Illinois Uniform Commercial Code, including without limitation (i) the right to the possession of any such property, or any part thereof, and the right to enter without legal process any premises where any such property may be found and remove the same therefrom (provided that if such property is affixed to real - 7 - estate, such removal shall be subject to the conditions stated in the Illinois Uniform Commercial Code); (ii) the right to hold, maintain, preserve and prepare such property for sale, until disposed of, or to retain such property subject to the Mortgagor's right of redemption in satisfaction of the Mortgagor's obligations, as provided in the Illinois Uniform Commercial Code; (iii) the right to require the Mortgagee to assemble such property and make it available to the Mortgagee for its possession at a place to be designated by the Mortgagee which is reasonably convenient to both parties; and (iv) the right to buy at any public sale and, if such property is of a type customarily sold in a recognized market or is of the type which is the subject of widely distributed standard price quotations, at private sale, which sale may be held as part of and in conjunction with any foreclosure sale of the real estate comprised within the Premises. (c) Upon the bringing of any suit to foreclose this Mortgage or enforce any other remedy available hereunder, Mortgagee shall, as a matter of right, without notice and without giving bond to Mortgagor or anyone claiming by, under or through either of them, and without regard to the solvency or insolvency of Mortgagor or the then value of the Premises, to the extent permitted by applicable law, be entitled to have a receiver appointed of all or any part of the Premises and the rents, issues and profits thereof, with such power as the court making such appointment shall confer, and Mortgagor hereby consents to the appointment of such receiver and shall not oppose any such appointment. Any such receiver may, to the extent permitted under applicable law, without notice, enter upon and take possession of the Premises or any part thereof by force, summary proceedings, ejectment or otherwise, and may remove Mortgagor or other persons and any and all property therefrom and income, rents, issues and profits accruing with respect thereto or any part thereof, whether during the pendency of any foreclosure or until any right of redemption shall expire or otherwise. (d) In any suit to foreclose the lien hereof there shall be allowed and included as additional indebtedness in the decree for sale all expenditures and expenses which may be paid or incurred by or on behalf of Mortgagee or the Institutional Lender for attorneys' fees, appraisers' fees, outlays for documentary and expert evidence, stenographic charges, publication costs and costs (which may be estimated as to items to be expended after the entry of the decree) of procuring all such abstracts of title, title searches and examinations, guarantee policies, Torrens certificates and similar data and assurances with respect to title as Mortgagee or the Institutional Lender may deem to be reasonably necessary to prosecute any foreclosure action or to evidence to the bidder at any sale pursuant thereto the true condition of the title to or the value of the Premises, all of which expenditures shall become so much additional indebtedness hereby secured and be immediately due and payable with interest thereon at a rate equal to the Prime Rate then - 8 - in effect plus three percent per annum from the date of expenditure until paid. (e) Upon the happening of any event of default hereunder, Mortgagor in furtherance of, and not by way of limitation of, the Granting Clauses of this Mortgage, hereby assigns and sets over to Mortgagee all rents, issues and profits of the Premises, which, whether before or after foreclosure, until the full and complete payment of said indebtedness and performance of all obligations, covenants or agreements hereunder, shall accrue and be owing for the use and occupation of the Premises, or of any part thereof. For the purpose aforesaid, Mortgagor does hereby constitute and appoint the Institutional Lender its attorney in fact irrevocably in its name to receive, collect and receipt for all earnings and income from the Premises, as the same may accrue; and out of the amount so collected to pay and discharge all unpaid indebtedness hereby secured. For the purpose aforesaid, the Institutional Lender may enter and take possession of the Premises and manage and operate the same and take any action which, in the Institutional Lender's judgment, is necessary or proper to conserve the value of the Premises. The Institutional Lender may also take possession of, and for these purposes use, any and all personal property contained in the Premises and used by Mortgagor. The right to enter and take possession of the Premises and use any personal 'property therein, to manage, operate and conserve the same, and to collect the rents, issues and profits thereof, shall be in addition to all other rights or remedies of the Institutional Lender hereunder or afforded by law, and may be exercised concurrently therewith or independently thereof. The expenses (including any receiver's fees, counsel fees, costs and agent's compensation) incurred pursuant to the powers herein contained shall be secured hereby. The Institutional Lender and Mortgagee shall not be liable to account to Mortgagor for any action taken pursuant hereto other than to account for any rents actually received by the Institutional Lender. 8. Application of Proceeds. The purchase money proceeds and/or avails of any sale of the Premises, or any part thereof and the proceeds and the avails of any remedy hereunder shall be paid to and applied as follows: (a) First, to the payment pro rata of costs and expenses of foreclosure or suit, if any, and of such sale by the Mortgagee or the Institutional Lender, their agents, attorneys and counsel, and of all proper expenses, liability and advances incurred or made hereunder by the Mortgagee or the Institutional Lender, together with interest thereon at a rate equal to the Prime Rate then in effect plus one percent per annum until paid (or such lesser rate as may be the maximum not prohibited by applicable law) on all such advances, and of all taxes, assessments or liens superior to the lien of these presents, except any taxes, assessments or other superior lien subject to which said sale may have been made; and - 9 - (b) Second to the payment pro rata of the amount then owing or unpaid on the Note for principal and interest; and (c) Third, to the payment of any other sums required to be paid by the Mortgagor pursuant to any provisions of this Mortgage, the Collateral Assignment, the Agreement, the Contingent Purchase Agreement (as defined in the Agreement), or the Note; and (d) Fourth, to the payment or prepayment of the Existing Loans, if any, whether of not they are in default; and (d) Fifth, to the payment of the surplus, if any, to the Mortgagor, its successors and assigns, or to whomsoever may be lawfully entitled to receive the same. In case the Mortgagee or the Institutional Lender shall have proceeded to enforce any right under this Mortgage by foreclosure, sale, entry or otherwise, and such proceedings shall have been discontinued or abandoned for any reason or shall have been determined adversely, then and in every such case the Mortgagor, the Mortgagee and the Institutional Lender shall be restored to their respective former positions and rights hereunder with respect to the property subject to the lien of this Mortgage. 9. Additional Remedies. Mortgagor shall not and will not apply for or avail itself of any appraisement, valuation, stay, extension, exemption or redemption laws, or any so-called "Moratorium Laws," now existing or hereafter enacted, in order to prevent or hinder the enforcement or foreclosure of this Mortgage or the sale of the Premises, but hereby waives the benefit of such laws. Mortgagor for itself and all who may claim through or under it waives any and all right to have the property and estates comprising the Premises marshalled upon any foreclosure of the lien hereof and agrees that any court having jurisdiction to foreclose such lien may order the Premises sold as an entirety. Mortgagor hereby waives any and all rights of the redemption from sale to which it may be entitled under the laws of the State of Illinois on behalf of Mortgagor and each and every person acquiring any interest in, or title to, the Premises described herein subsequent to the date of this Mortgage, and on behalf of all other persons to the extent permitted by law. 10. Indemnity. Mortgagee shall not be obligated to perform or discharge, nor does it hereby undertake to perform or discharge, any obligation, duty or liability of Mortgagor, and to the extent provided by law, Mortgagor agrees to protect, indemnify, defend and hold Mortgagee harmless of and from any and all liability, loss, cost, expense, or damage which it may or might incur in the exercise of its rights, remedies, powers and authority hereunder, and of and from any and all claims and demands whatsoever which may be asserted against it by reason of any alleged obligations, undertakings or liabilities, except for such claims and demands as result from Mortgagee's gross negligence or willful actions. Should Mortgagee incur any such liability, loss, cost or damage of or in the defense of any claims or demands, the amount thereof, including costs, expenses and attorneys' fees, shall be secured hereby, and Mortgagor shall reimburse Mortgagee therefor immediately upon demand, with interest accruing at a rate equal to the Prime Rate then in effect plus one percent per annum from the date of expenditure until paid. - 10 - 11. Inspection of Premises. Mortgagee and the Institutional Lender shall have the right to inspect the Premises at all reasonable times and access thereto shall be permitted for that purpose, subject to the limitations of access set forth in Section 8.5 of the Agreement. 12. Remedies Cumulative. No remedy or right of Mortgagee or of the Institutional Lender acting on Mortgagee's behalf shall be exclusive of, but shall be cumulative and in addition to, every other remedy or right now or hereafter existing at law or in equity or by statute or otherwise. No delay in the exercise of or omission to exercise any remedy or right accruing on any default shall impair any such remedy or right or be construed to be a waiver of any such default or acquiescence therein, nor shall it affect any subsequent defaul4 of the same or a different nature. Every such remedy or right may be exercised concurrently or independently, and when and as often as may be deemed expedient by Mortgagee or the Institutional Lender. 13. Mortgagor to Pay Costs, Fees. If Mortgagee or the Institutional Lender shall be made a party to or shall intervene in any action or proceeding affecting the Premises or the title thereto or the interest of Mortgagee or the Institutional Lender under this Mortgage, or if Mortgagee or the Institutional Lender employs an attorney to collect any or all of the indebtedness hereby secured, Mortgagee and the Institutional Lender shall be reimbursed by Mortgagor, immediately and without demand, for all reasonable costs, charges, expenses and attorneys' fees incurred by them in any such case, and the same shall be secured hereby as a further charge and lien upon the Premises. 14. Recording and Perfecting of Lien. The Mortgagor shall record or cause the recording of this Mortgage and shall execute and deliver to Mortgagee any and all financing statements, continuation statements and documents deemed necessary or appropriate by the Mortgagee in order to perfect and maintain the security interests herein granted. 15. Severability. All rights, powers and remedies provided herein may be exercised only to the extent that the exercise thereof does not violate any applicable law, and are intended to be limited to the extent necessary so that they will not render this mortgage invalid, unenforceable or not entitled to be recorded, registered or filed under any applicable law. If any term of this Mortgage shall be held to be invalid, illegal or unenforceable, the validity of the other terms of this Mortgage shall in no way be affected thereby. 16. Successors and Assigns. Whenever any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all the covenants, promises and agreements in this Mortgage contained by or on behalf of the Mortgagor, or by or on behalf of Mortgagee, shall bind and inure to the benefit of the respective successors and assigns of such parties, whether so expressed or not. 17. Written Instruments Required. This Mortgage and the provisions hereof may be changed, waived, discharged or terminated only by an instrument in writing signed by the party against which enforcement of the change, waiver, discharge or termination is sought. - 11 - 18. Headings. The headings of the sections of this Mortgage are for convenience only and shall not affect the meaning or construction of any provisions hereof. 19. Notices. All notices hereunder shall be given in accordance with Section 13.1 of the Agreement. 20. Governing Law. This Mortgage shall be governed by and construed in accordance with Illinois law. IN WITNESS WHEREOF, Mortgagor has caused this Mortgage to be executed and sealed, all as of the day and year first above written, but actually executed and delivered this day of , 1984. UNIVERSAL CHEMICALS AND COATINGS, INC. (SEAL) By: President Attest: Its Secretary - 12 - ACKNOWLEDGEMENT STATE OF ILLINOIS ) SS. COUNTY OF COOK ) On this day of , 1984, before me personally appeared to me personally known, who being by me duly sworn, says that he is the President of Universal Chemicals and Coatings, Inc., that the foregoing instrument was signed and sealed on behalf of said corporation by authority of its Board of Directors and he acknowledged that the execution of the foregoing instrument was the free act and deed of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day and year last above written. Notary Public (SEAL) My Commission Expires: - 13 - ASSIGNMENT OF MORTGAGE The City of Elgin, Illinois hereby assigns the foregoing Mortgage and Security Agreement to and its successors and assigns pursuant to the Assignment and Security Agreement dated as of , 1984 between the City of Elgin, Illinois and said CITY OF ELGIN, ILLINOIS Mayor (CORPORATE SEAL) ATTEST: Clerk - 14 - ASSIGNMENT AND SECURITY AGREEMENT THIS ASSIGNMENT AND SECURITY AGREEMENT dated as of September 1, 1984 (the "Assignment") between CITY OF ELGIN, ILLINOIS, a municipal corporation and a home rule unit of government of the State of Illinois (the "Issuer"), and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as secured party (the "Institutional L ender"); WITNESSETH: WHEREAS, the Issuer intends to issue its $4,000,000 Industrial Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project) (the "Bond") under and pursuant to the Agreement of even date herewith (the "Agreement") among the Issuer, Universal Chemicals and Coatings, Inc. (the "Company"), and the Institutional Lender; and WHEREAS, the proceeds derived from the issuance of the Bond are to be loaned to the Company to provide funds to pay or reimburse the Company for the payment of the costs of acquiring land and of constructing and equipping a manufacturing facility within the corporate limits of the Issuer (the "Project") which are described and referred to in the Agreement; and WHEREAS, the Company will evidence its obligation in respect of such loan by issuing and delivering its Direct Obligation Note (the "Note") in the principal amount of $4,000,000; and WHEREAS, the Institutional Lender has required as a condition to its purchase of the Bond that the Company, prior to the disbursement of Bond proceeds for the acquisition of the land, building and fixtures, execute a Mortgage and Security Agreement to be recorded at the office of the Recorder of Deeds of Cook County (the "Mortgage") with the Issuer pursuant to which the Company grants to the Issuer a mortgage on the land, buildings, and security interest in the equipment and fixtures that are part of the Project, together with other items, to secure the Note, and that the Issuer execute this Assignment as further security for the Bond, and the Issuer is willing to execute this Assignment; WHEREAS, the Institutional Lender has required as a further condition to its purchase of the Bond that the Company, prior to the disbursement of Bond proceeds, execute a Collateral Assignment to be filed with the Secretary of State (the "Collateral Assignment") with the Issuer pursuant to which the Company assigns to the Issuer the plans and specifications, developers rights, and all contracts required by the Institutional Lender pertaining to construction, the real estate and the Project to secure the Note, and that the Issuer execute this Assignment as further security for the Bond, and the Issuer is willing to execute this Assignment; NOW, THEREFORE, as one of the inducements to and as part of the consideration for the purchase by the Institutional Lender of the Bond as provided in the Agreement and in consideration of the premises and other good and valuable consideration, the receipt whereof is hereby acknowledged: SECTION 1. ASSIGNMENT, PLEDGE AND DEPOSITOF COLLATERAL. The Issuer does hereby pledge, deliver, assign, transfer and grant to the Institutional Lender and its successors and assigns, as security for the due and punctual payment of the principal installments of and interest on the Bond, all of its right, title and interest in and including without limitation its rights to payment of any and all amounts which may become due under, (a) the Agreement, except any payment made pursuant to Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b) of the Agreement relating to indemnification and payment of expenses of the Issuer by the Company, (b) the Note, (c) the Mortgage, as and when executed, (d) the Collateral Assignment as and when executed, and (e) all other rights and remedies to enforce such payment of any amount due the Issuer from the Company under the Agreement, the Note, the Mortgage and the Collateral Assignment (hereinafter called the "Pledged Collateral"). This assignment, transfer, pledge, grant, and delivery is made as and shall at all times constitute security for the payment in full of all principal of and interest on the Bond and the performance and observance by the Issuer of all the covenants and conditions contained in the Bond and the Agreement; and as security for all expenses and charges, legal or otherwise, reasonably paid or incurred by the Institutional Lender in realizing upon or protecting this Assignment or the indebtedness hereby secured. SECTION 2. WARRANTIES. The Issuer hereby represents and warrants to the Institutional Lender that the Issuer is the owner of the Pledged Collateral and all rights incident thereto are free and clear of any lien, security interest or other claim thereto other than the pledge made hereunder. SECTION 3. FURTHER ASSISTANCE. The Issuer agrees on request of the Institutional Lender to execute and deliver to the Institutional Lender such other documents or instruments as shall be reasonably requested by the Institutional Lender to confirm unto the Institutional Lender the pledge hereunder of the Pledged Collateral. SECTION 4. CERTAIN RESTRICTIONS ON ISSUER'S RIGHTS IN RESPECT OF PLEDGED COLLATERAL. 4.1. The Issuer will not: (a) declare a default or exercise the remedies of the holder of the Note under the Agreement, or exercise the remedies under the Mortgage or under the Collateral Assignment or terminate, modify or accept a surrender of, or offer or agree to any termination, modification or surrender of the Note, the Mortgage, or the Collateral Assignment or by affirmative act consent to the creation or existence of any security interest or other lien to secure the payment of indebtedness upon the Note or the Agreement or the Mortgage or the Collateral Assignment or any part thereof; or - 2 - (b) assign, transfer or hypothecate (other than to the Institutional Lender hereunder) any payment then due or to accrue in the future under the Agreement, the Note, the Mortgage, or the Collateral Assignment. SECTION 5. DEFAULT AND REMEDIES. 5.1. If an event of default under the Agreement shall occur and be continuing, the Institutional Lender, without obligation to resort to any other security, at its own expense or the expense of the Company, shall have the right at any time and from time to time, in its sole discretion, to enforce the rights and remedies specified in Section 11 of the Agreement and in Section 7 of the Mortgage pledged and assigned hereunder, and to take any and all action which, in the judgment of the Institutional Lender, is necessary or appropriate to enforce the rights of the Issuer in respect of its interest in the Note and all other moneys payable under the Agreement and in respect of the interests of the Issuer in the Mortgage and the Collateral Assignment. Upon any such enforcement of rights under the Agreement, the Note, the Mortgage or the Collateral Assignment, after deducting all costs and expenses of every kind of the Institutional Lender and the Issuer, including attorney's fees, from the proceeds of any recovery, the Institutional Lender shall apply any residue to the payment of any liabilities of the Issuer on the Bond, all as provided in the Agreement, the Mortgage and the Collateral Assignment. The balance, if any, remaining after payment in full of all of the liabilities of the Issuer on the Bond shall be paid to the Company. 5.2. The remedies provided herein shall not be deemed exclusive, but shall be cumulative and shall be in addition to all other remedies existing at law or in equity. 5.3. The satisfaction or performance of any part of the indebtedness hereby secured shall not affect the security hereby afforded or intended to be afforded for any other indebtedness hereby secured; but the pledge hereby made shall at all times remain in full force and effect for the benefit of all indebtedness hereby secured until all such indebtedness is fully satisfied. 5.4. No delay on the part of the Institutional Lender in exercising any of its options, powers or rights, or any partial or single exercise thereof, shall constitute a waiver thereof. SECTION 6. MISCELLANEOUS. 6.1. Whenever any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party; and all the covenants, promises and agreements in this Assignment contained by or on behalf of the Institutional Lender shall bind and inure to the benefit of the respective successors and assigns of such parties whether so expressed or not. 6.2. The unenforceability or invalidity of any provision or provisions of this Assignment shall not render any other provision or provisions herein contained unenforceable or invalid. 6.3. The Institutional Lender shall release this Assignment and the lien hereof by proper instrument or instruments upon presentation of satisfactory evidence that all indebtedness hereby secured has been fully paid or discharged. - 3 - 6.4 The parties agree that the assignments made hereby shall not subject the Institutional Lender to, or transfer, or pass or in any way affect or modify, any obligations of the Issuer under the Agreement, it being understood and agreed that all such obligations of the Issuer shall be and remain enforceable only against the Issuer. This assignment is given solely for the purpose of securing payment by the Issuer of the principal of and interest on the Bond and the Existing Loans. 6.5. Any term, covenant, agreement or condition of this Asssignment may be amended or compliance therewith may be waived (either generally or in a particular instance and either retrospectively or prospectively) by an instrument in writing executed by the Issuer and the Institutional Lender. 6.6. (a) Any notice provided for herein shall be in writing and shall be mailed by first class mail, postage prepaid, addressed as follows: If to the Issuer: City of Elgin, Illinois City Hall 150 Dexter Court Elgin, Illinois Attention: City Clerk If to the Institutional L ender: American National Bank and Trust Company of Chicago 33 North LaSalle Street Chicago, Illinois 60690 Attention: Corporate Trust Department If to the Company: Universal Chemicals and Coatings, Inc. 1124 Elmhurst Road Elk Grove Village, IL 60007 Attention: President or to the Issuer or the Institutional Lender or the Company at such other address as the Issuer or the Institutional Lender or the Company may designate by notice duly given in accordance with this Section to the other parties. (b) Any notice so addressed and mailed by registered or certified mail shall be deemed to be given when mailed. 6.7. It is understood that all obligations of the Issuer hereunder are subject to the limitations set forth in Section 1.5 of the Agreement. 6.8. This Assignment shall in all respects be construed in accordance with and governed by the laws of the State of Illinois. This Assignment may not be amended or modified except in writing signed by the parties hereto. 6.9. This Assignment may be executed, acknowledged and delivered in any number of counterparts, each of such counterparts constituting an original but all together only one Assignment. - 4 - IN WITNESS WHEREOF, the City of Elgin, Illinois has caused this Assignment and Security Agreement to be executed on its behalf by its Mayor and attested and sealed with the corporate seal of said City by its City Clerk, and American National Bank and Trust Company of Chicago has caused this Assignment and Security Agreement to be executed on behalf by its Officer, and attested and sealed with the corporate seal of said bank all as of the day and year first above written, but actually executed and delivered on this day of June, 1984. CITY OF ELGIN, ILLINOIS By Mayor (SEAL) A tt est: Village Clerk AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO By Its Officer (SEAL) Attest: Its Vice President The undersigned hereby consents and agrees to all of the terms and provisions of the above and foregoing Assignment and Security Agreement. [CORPORATE SEAL] UNIVERSAL CHEMICALS AND COATINGS, INC. P resident ATTEST: Secretary - 5 - ACKNOWLEDGMENT STATE OF ILLINOIS ) COUNTY OF COOK ) On this day of September, 1984, before me personally appeared , to me personally known, who being by me duly sworn, says that he is an Officer of the American National Bank and Trust Company of Chicago, a national banking association organized and existing under the laws of the United States of America, that one of the seals affixed to the foregoing instrument is the seal of said banking association and was affixed on behalf of said banking association by authority of its Board of Directors, and he acknowledged that the executed and attested the foregoing instrument on behalf of said banking association by authority of its Board of Directors and that the execution of the foregoing instrument was the free act and deed of said banking association. IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day and year last above written. Notary Public My Commission Expires: (Notarial Seal) ACKNOWLEDGMENT STATE OF ILLINOIS ) COUNTY OF ) On this day of September, 1984, before me personally appeared and , to me personally known, who being by me duly sworn, say that they are the Mayor and the City Clerk, respectively, of the City of Elgin, Illinois, that one of the seals affixed to the foregoing instrument is the seal of said municipal corporation and was signed and sealed on behalf of said municipal corporation by authority of its City Council, and they acknowledged that they executed and attested the foregoing instrument on behalf of said municipal corporation by authority of its City Council and that the execution of the foregoing instrument was the free act and deed of said municipal corporation. IN WITNESS WHEREOF, I have hereunto set my hand and official seal on the day and year last above written. Notary Public My Commission Expires: (Notarial Seal) CONTINGENT PURCHASE AGREEMENT CONTINGENT PURCHASE AGREEMENT, dated as of September 1, 1984 between UNIVERSAL CHEMICALS AND COATINGS, INC. and AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO. SECTION 1. Definitions. The following terms shall have the following meanings for all purposes of this Contingent Purchase Agreement: "Additions to Tax" shall mean the amount of any penalties and additions to tax as described in Subchapter A of Chapter 68 of the Code. "Agreement" shall mean the Agreement dated as of September 1, 1984 among the Issuer, the Company and the Institutional Lender. "Assignment" shall mean the Assignment and Security Agreement dated as of September 1, 1984, between the Issuer and the Institutional Lender. "Bond" shall mean the Bond of the Issuer referred to in the Agreement. "Bondholder" shall mean American National Bank and Trust Company of Chicago or any entity to which American National Bank and Trust Company of Chicago or a transferee therefrom transfers the Bond which, at the time of such transfer, is (a) a bank or trust company having a combined capital and surplus of at least $10,000,000 or (b) a member of the affiliated group (within the meaning of Section 1504 of the Code and any successor section thereto) of American National Bank and Trust Company of Chicago or such transferee; provided, however, that such term shall not include a Substantial User or Related Person. "Code" shall mean the Internal Revenue Code of 1954, as amended. "Collateral Assignment" shall mean the collateral assignment referred to in the Agreement from the Company to the Issuer. "Company" shall mean Universal Chemicals and Coatings, Inc. "Federal Gross Income" shall mean gross income for Federal income tax purposes. "Indemnitee" shall mean (i) the Bondholder or (ii) any Participant. "Independent Counsel" shall mean any nationally recognized firm of attorneys with respect to matters pertaining to municipal bonds and the exemption from Federal income taxation of interest paid on such bonds. "Issuer" shall mean the City of Elgin, Illinois, and its successors. "Institutional Lender" shall mean American National Bank and Trust Company of Chicago and any Indemnitee to which it transfers the whole or its interest in the Bond. "Mortgage" shall mean the Mortgage referred to in the Agreement, from the Company to the Issuer. "Note" shall mean the Direct Obligation Note of the Company in the principal amount of $4,000,000 issued pursuant to the Agreement. "Participant" shall mean any entity to which a Bondholder sells a participation in the Bond which, at the time of such sale, is (a) a bank or trust company having a combined capital and surplus of at least $10,000,000 or (b) a member of the affiliated group (within the meaning of Section 1504 of the Code and any successor section thereto) of such Bondholder; provided, however, that such term shall not include a Substantial User or Related P erson. "Payment Period" shall mean the period from the date specified in the Section 3(a) Notice until the earlier of (i) repayment in full of the Bond together with accrued interest thereon, or (ii) the purchase of the Bond by the Company pursuant to Section 3 hereof. "Project" shall mean the Project as defined in the Agreement. "Section 3(a) Notice" shall mean a notice given by the Institutional Lender or any other Indemnitee to the Company of a proposed deficiency letter pursuant to Section 3(a)(i) hereof, or the delivery by a Bondholder to the Company pursuant to Section 3(a)(ii) hereof of a Taxability Opinion (as defined in said Section). "Substantial User or Related Person" shall mean "substantial user" of the Project or a "related person" within the meaning of Section 103(b)(10) of the Code (or any successor sections thereto) and the regulations issued thereunder. SECTION 2. Representations and Warranties. 2.1. Incorporation by Reference. The Company agrees that all representations and warranties made by it in Section 2.1 of the Agreement are incorporated herein by this reference. 2.2. No Event Permitting Institutional Lender to Require Purchase of Bond. There has occurred and is continuing no event or condition which, assuming the giving of notice or lapse of time or both, if required, would permit the Institutional Lender to require the Company to purchase the Bond pursuant to Section 3 hereof. SECTION 3. Obligation to Purchase Bond. The Bondholder may, at its election by written notice to the Company, require the Company to purchase the Bond on a date thereafter (the "Purchase Date") specified by such Bondholder in such notice, such Purchase Date to be no less than 60 days from the date such notice is given, if any of the following shall have occurred: - 2 - (a) (i) any proposed deficiency letter shall be issued to,any Indemnitee by the Internal Revenue Service stating in effect that any payment of interest on the Bond or any amount in respect of interest on the Bond is includable in such Indemnitee's Federal Gross Income, and notice of such proposed deficiency letter shall be given to the Company, and, if such Indemnitee is a Participant, to the Bondholder, by such Indemnitee; (ii) an Indemnitee shall have delivered to the Company, and, if such Indemnitee is a Participant, to the Bondholder, an opinion of Independent Counsel to the effect that any payment of interest on the bond or any amount in respect of interest on the Bond made on or after a date specified in said opinion is includable in the Federal Gross Income of such Indemnitee (the "Taxability Opinion"), other than an Indemnitee who is a substantial user of the Project or any person considered to be related to such person within the meaning of Section 103(b) of the Code, and within 30 days of the delivery of the Taxability Opinion to the Company, the Company shall not have delivered to such Indemnitee and, if such Indemnitee is a Participant, to the Bondholder, an opinion of Independent Counsel to the effect that any payment of interest on the Bond or any amount in respect of interest on the Bond made on or after the, date specified in the Taxability Opinion is excludable from the Federal Gross Income of such Indemnitee; (b) there occurs a change in the Constitution of the State of Illinois or the Constitution of the United States of America or any legislative or administrative action (whether state, local or Federal) or a final decree, judgment or order of any court or administrative body (whether state, local or Federal), with the result that the Note, the Bond, the Agreement, or this Contingent Purchase Agreement shall have become void or impossible of performance in accordance with the intent and purposes of the parties thereto as expressed therein; (c) an Event of Default shall occur under Section 11 of the Agreem ent; (d) any representation or warranty of the Company made herein shall prove to have been false in any material respect at the time that it was made; provided, that the Company shall not be required to purchase the Bond pursuant to subparagraph (a)(i) above unless the events set forth in the next succeeding paragraph shall have occurred. Each Indemnitee agrees that if requested by the Company, it will appeal any adjustment of its Federal income taxes proposed by any such proposed deficiency letter as described in subparagraph (a)(i) above until such appeal, if made, has been abandoned by the Company or has been finally determined by a court of the United States of America from which no further appeal exists, provided that such Indemnitee and the - 2 - Company shall have first received an opinion of Independent Counsel to the effect that there is a meritorious basis for defending against the determination by the Internal Revenue Service that interest on the Bond is includable in such Indemnitee's taxable income. The Company shall have the right to advise and consult with attorneys for such Indemnitee, to submit memoranda or briefs and, to the extent permitted by applicable law or rule or regulation, to attend conferences and to participate in any negotiations or proceedings relating to or in connection with any such appeal (and any such Indemnitee agrees that it will give the Company timely notice of any conferences with officers of or attorneys for the Internal Revenue Service at which the proposed adjustment will be discussed and will also consult with the Company with respect to the terms of any settlement of any such proposed adjustment). The Company agrees to pay all expenses incurred by any Indemnitee in connection with such appeal which are properly allocable to the appeal of the issue of the taxability of interest on the Bond, including any deficiency paid by the Indemnitee to the Internal Revenue Service during any such contest if such payment is requested to be made by the Company. The Indemnitee shall cooperate with the Company in such appeal Any notice pursuant to subparagraph (a) hereof shall set forth the date as of which interest may have become includable in the Indemnitee's Federal Gross Income and such date shall be the start of the Payment Period. The aggregate purchase price to be paid by the Company to the Bondholder if the Bond is required to be purchased pursuant to this Section 3, shall be equal to the sum of the unpaid principal amount of such Bond, together with accrued interest thereon to the date of purchase and shall be paid in Federal or other immediately available funds at the principal office of the respective Bondholder on the Purchase Date (it being agreed that time is of the essence in this Contingent Purchase Agreement) and upon such payment such Bond shall be delivered to the Company. Any sale to the Company of the Bond pursuant to this Section 3 shall be without recourse to the Bondholder and without representation or warranty of any kind by the Bondholder. SECTION 4. Continuing Nature of the Agreement. 4.1. The obligation of the Company hereunder shall be continuing and remain in full force and effect irrespective of: (a) the validity, regularity or enforceability of the Bond, the Agreement, the Note, the Mortgage, the Collateral Assignment or the Assignment or any of the terms thereof (including the failure or lack of priority of a first lien of the Mortgage, the Collateral Assignment or the Assignment), the continuance of any obligation of the Issuer on the Bond or under the Agreement or the Assignment or the existence or continuance of the Issuer or of the Project; (b) any failure of the Institutional Lender as to diligence in collection or protection, failure in presentment or demand for payment, protest, notice of protest, notice of default and of nonpayment, any failure to give notice, or failure of the Issuer to keep and perform any covenant or agreement under the terms of the Bond, the Agreement or the Assignment or failure to resort, for payment, to the Issuer or to any property, security, liens or other - 3 - rights or remedies (the Company hereby expressly waiving all of the foregoing); (c) the acceptance of any security or guaranty; the extension of additional credit or other financial accommodation to the Issuer, the renewal or extension of the Bond or amendments to or modifications of the Bond or of the Agreement, the Note, the Mortgage, the Collateral Assignment, or the sale, release, substitution or exchange of any security which may be given for the Bond (the Company hereby expressly consenting to all of the foregoing); (d) any defense whatsoever that the Issuer might have to the payment of the Bond (principal and interest) or to the performance or observance of any of the provisions of the Agreement or Assignment; (e) any act or failure to act of any Indemnitee with regard to the Bond, the Agreement, the Note, the Mortgage, the Collateral Assignment or the Assignment or anything which might vary the risk of the Company hereunder; (f) the waiver, surrender, compromise, settlement, discharge, release or termination of any of the obligations, covenants and agreements of the Issuer contained in the Bond, the Agreement, the proceedings authorizing. the Bond or in the Assignment; (g) any failure of title with respect to the Issuer's or the Company's interest in the Project or any part thereof; (h) any defense whatsoever that the Company might have to the payment of the Note (principal and interest) or to the performance or observance of any of the provisions of the Agreement or Assignment it being the purpose and intent of this Contingent Purchase Agreement that the obligations of the Company hereunder shall not be affected, modified or impaired upon the happening from time to time of any event, including without limitation, any of the foregoing. 4.2. In order to hold the Company liable hereunder, there shall be no obligation on the part of any Bondholder at any time to resort for payment to the Issuer or to any other persons, firms or corporations, their properties or estates, or to resort to any collateral, security, property, liens or other rights or remedies whatsoever, and the Bondholder shall have the right to enforce this Contingent Purchase Agreement irrespective of whether or not other proceedings or steps are pending seeking resort to or realization upon or from any of the foregoing. The Company waives notice of and consents to the purchase by American National Bank and Trust Company of Chicago of the Bond. The granting of credit to the Issuer by American National Bank and Trust Company of Chicago from time to time in addition to the obligation evidenced by the Bond without notice is hereby authorized and shall in no way affect or impair the obligations and liability of the Company hereunder. - 4 - 4.3. Any Bondholder may make repeated and successive demands hereunder. SECTION 5. Income Taxation. 5.1. Additional Payments. In the event that at any time (whether before or after redemption or other payment of the Bond or any purchase thereof by or on behalf of the Company), Bondholder shall give a Section 3(a) Notice (and in the case of Section 3(a) Notice pursuant to Section 3(a)(ii) hereof, the Company shall not have delivered a responsive opinion of Independent Counsel as provided for in Section 3(a)(ii)), the Company will pay to the Bondholder in Federal or other immediately available funds at the time or times set forth in Section 5.2 hereof the sum of: (a) an amount equal to (i) the amount of interest which would have been payable on the unpaid principal amount of the Bond held by such Bondholder during the Payment Period if the Bond had borne interest at a rate per annum equal to one hundred and ten percent (110%) of the Prime Rate (as defined in the Agreement), less (ii) the amount of interest or amounts in respect of interest actually paid or accrued with respect to the Bond on the Bond during the Payment Period; plus (b) an amount equal to the amount of any interest and Additions to Tax payable to the United States of America as a consequence of the failure to include the interest on, or any amount in respect of interest on, the Bond in the Federal Gross Income of any Indemnitee. The Bondholder has accepted the Bond upon, and has paid therefor a price which reflects, the understanding that the interest thereon is exempt from Federal income taxation. It is the intent and purpose of this Section 5 to indemnify the Bondholder in the event that such interest becomes taxable. 5.2. Payment Dates. (a) Payments provided for under Section 5.1(a) hereof shall be paid by the Company promptly on demand by the Bondholder, which demand or series of demands, as the case may be, may be made at the time of, and from time to time subsequent to, the occurrence of any event or the existence of any condition which is referred to in Section 3(a) Notice, provided that (i) if the Company elects to exercise its rights set forth in the second paragraph of Section 3 hereof with respect to Section 3(a) Notice given pursuant to Section 3(a)(i), the Company shall not be required to make any payments until the appeal described in such paragraph is abandoned by the Company or finally determined by a court of the United States of America from which no further appeal exists, and (ii) the Company shall not be required to make any payments prior to 30 days after Section 3(a) Notice given pursuant to Section 3(a)(ii). (b) Payments under Section 5.1(b) hereof shall be made by the Company promptly on demand or series of demands by the Bondholder. - 5 - 5.3. Repayments. In the event that after any payment by the Company to the Bondholder pursuant to Section 5.1 hereof: (a) the Internal Revenue Service or the United States Tax Court or any Federal court shall determine that interest on the Bond or amounts in respect of interest on the Bond is excludable from the Federal Gross Income of any Indemnitee, and as a result thereof, such Indemnitee shall have received from the Internal Revenue Service a refund of any Federal income tax (including any interest or Additions to Tax paid in respect thereof) paid by such Indemnitee in respect of interest on the Bond, such Indemnitee (as a condition precedent to such Indemnitee's right to receive any payment from the Company pursuant to Section 5.1 hereof) hereby agrees that it will pay to the Company an amount equal to the net after tax amount of such refund; or (b) any Indemnitee fails to include the payment of any interest on the Bond or any amount in respect of interest on the Bond relating to the Payment Period as Federal Gross Income in such Indemnitee's Federal tax return with respect to such period, such Indemnitee (as a condition precent to such Indemnitee's right to receive any payment from the Company pursuant to Section 5.1 hereof) hereby agrees that it will reimburse the Company within 30 days of filing such tax return for amounts paid by the Company to the Indemnitee pursuant to Section 5.1 pertaining to the period covered by such tax return. SECTION 6. Local Taxes, etc. The Company agrees to indemnify each Indemnitee and hold it harmless on an after-tax basis against any documentary, franchise, income (other than Illinois income taxes), sales, use or property taxes, fees, assessments or charges imposed with respect to the Bond or by reason of the execution, delivery, performance of or satisfaction of the Company's obligations under this Contingent Purchase Agreement, the Agreement, the Note, the Bond, the Mortgage, the Collateral Assignment or the Asssignment. The obligations of the Company hereunder shall survive the payment in full of the Bond and the purchase thereof pursuant to Section 3 hereof. SECTION 7. Miscellaneous. 7.1. Notices. All notices hereunder shall be deemed to have been given when deposited in the United States mail, first class postage prepaid, addressed as follows: if to the Company, at 1124 Elmhurst Road, Elk Grove Village, Illinois 60007, Attention: President; if to the Institutional Lender at 33 North LaSalle Street, Chicago, Illinois 60690, Attention: Corporate Trust Department; or at any other address of which any of the foregoing shall have notified the person giving such notice in writing. 7.2. Term of the Contingent Purchase Agreement. The term of this Contingent Purchase Agreement shall be until (i) the payment in full of all principal of and interest on the Bond and all other sums payable to the Bondholder pursuant to this Contingent Purchase Agreement or (ii) until the purchase of the Bond pursuant to Section 3 hereof and the payment of all other sums payable to the Bondholder pursuant to this Contingent Purchase Agreement, whichever is earlier. - 6 - 7.3. No Waivers. No failure or delay by any Bondholder in exercising any right, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. No failure or delay by any Bondholder in exercising any right, power or privilege under or in respect of the Bond, the Agreement, the Mortgage, the Collateral Assignment or the Assignment shall affect the rights, powers or privileges of the Bondholder hereunder or constitute a waiver of any thereof. 7.4. Illinois Law. This Contingent Purchase Agreement shall be deemed to be a contract made under and shall be construed in accordance with and governed by the laws of the state of Illinois. 7.5. Notation on Bond. American National Bank and T rust Company of Chicago agrees to make a notation on the Payment Records attached to the Bond and the Note of the date and amount of each such payment of principal and interest on the Bond and the Note and further agrees to make the Bond and the Note available at the principal office of the American National Bank and Trust Company of Chicago to representatives of the Company for verification of such notations. 7.6. Changes, Waivers, etc. Neither this Contingent Purchase Agreement nor any provisions hereof may be changed, waived, discharged or terminated, except by a statement in writing signed by each party against which enforcement of the change, waiver, discharge or termination is sought. 7.7. Counterparts. This Contingent Purchase Agreement may be signed in any number of counterparts with the same effect as if the signatures thereto and hereto were upon the same instrument. 7.8. Successors and Assigns. This Contingent Purchase Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. The Institutional Lender, or any assignee, may transfer the Bond only as a whole, and not in part, in accordance with the provisions of the Agreement, and upon any such transfer prompt notice thereof shall be given to the Company. - 7 - • a • 7.9. Participations. Nothing herein shall be deemed to prevent-or restrict a Bondholder from granting participations in the Bond to other parties deemed appropriate by it. UNIVERSAL CHEMICALS AND COATINGS,INC. [CORPORATE SEAL] ATTEST: By Its Its Secretary AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO [CORPORATE SEAL] ATTEST: By Its Its - 8 - 1 , . This Bond is Transferable Only as a Whole. UNITED STATES OF AMERICA STATE OF ILLINOIS CITY OF ELGIN, ILLINOIS INDUSTRIAL DEVELOPMENT REVENUE BOND (UNIVERSAL CHEMICALS AND COATINGS, INC. PROJECT) $4,000,000 KNOW ALL MEN BY THESE PRESENTS that the City of Elgin, Illinois, a municipal corporation and a home rule unit of government of the State of Illinois (the "Issuer"), for value received, promises to pay from the source and as hereinafter provided, to the American National Bank and Trust Company of Chicago (the "Institutional Lender"), the principal sum of FOUR MILLION DOLLARS ($4,000,000), payable in quarterly installments on September 1, December 1, March 1 and June 1 of the years (the "Payment Dates") and in the amounts as follows: Principal Payment for Payment Date Payment Dates $20,000 December 1, 1984, March 1, 1985, June 1, 1985, September 1, 1985 $30,000 December 1, 1985, March 1, 1986, June 1, 1986, September 1, 1986 $40,000 December 1, 1986, March 1, 1987, June 1, 1987, September 1, 1987 $50,000 December 1, 1987, March 1, 1988, June 1, 1988, September 1, 1988 $60,000 December 1, 1988, March 1, 1989, June 1, 1989, September 1, 1989 $80,000 December 1, 1989 and each Payment Date thereafter until September 1, 1999 and to pay interest on the unpaid principal balance hereof from the date of this Bond at nine and one-half percent (9-1/2%) per annum through August 31, 1989 and thereafter at a varying rate per annum which shall be seventy-five percent (75%) of the rate of interest publicly announced by the American National Bank and Trust Company of Chicago from time to time as its prime rate (the "Prime Rate") with adjustments to such varying rate to be made on the same date as any announced change in the Prime Rate, - 1 - provided that any changes in the Prime Rate occurring within 15 days before any Payment Date resulting in an increase or decrease in the interest which would otherwise be payable hereon on such Payment Date shall not, if an increase, be payable by the Company (hereinafter defined) on such Payment Date, but shall instead be payable by the Company (hereinafter defined) on the next succeeding Payment Date or shall, if a decrease, reduce the amount that the Company (hereinafter defined) would otherwise have to pay on such next succeeding Payment Date. Interest shall be calculated, for actual days elapsed, on a 360 day year. In the event of a declaration of default by the Institutional Lender interest on overdue principal and, to the extent permitted by law, on overdue interest, shall be payable on demand at a rate equal to the Prime Rate then in effect plus three percent (3%) per annum until paid. Both principal hereof and interest hereon are payable in immediately available funds current by 2:00 O'Clock P.M. on each due date thereof at the principal office of Institutional Lender, in Chicago, Illinois or its successors and assigns. In any case where the date of maturity of interest on or principal of this Bond or the date fixed for prepayment of all or a portion of this Bond shall be on a Saturday, Sunday or a legal holiday or a day on which banking institutions are authorized by law or executive order to close in the city where the principal office of the Institutional Lender is located, then payment of interest or principal need not be made on such date but may be made on the next succeeding business day not a Saturday, Sunday or a legal holiday or a day upon which banking institutions are authorized by law or executive order to close, and this Bond shall continue to bear interest until said date. This Bond is issued for the purpose of funding a loan by the Issuer to Universal • Chemicals and Coatings, Inc. (the "Company"), a Delaware corporation, for the purpose of financing the costs of acquiring land and of constructing and equipping a manufacturing facility within the corporate limits of the Issuer (the "Project") and the payment of necessary costs incidental thereto. This Bond is secured by and entitled to the protection of an Assignment and Security Agreement dated as of September 1, 1984 (the "Assignment"), duly executed and delivered by the Issuer to the Institutional Lender and by a Mortgage and Security Agreement and a Collateral Assignment from the Company to the Issuer. The terms and conditions of the acquisition and construction of the Project, the loan of the proceeds of this Bond to the Company for such purpose, the issuance by the Company of its Direct Obligation Note (the "Note") sufficient to repay said loan, and the terms upon which this Bond is issued and secured are contained in an Agreement dated as of September 1, 1984 (the "Agreement") among the Issuer, the Company and the Institutional Lender. It is hereby certified, recited and declared that all acts, conditions and things required to exist, happen and be performed precedent to and in the execution and delivery of the Agreement, the Assignment and the issuance of the Bond do exist, have happened and have been performed in due time, form and manner as required by law; and that the issuance of this Bond, together with all other obligations of the Issuer, does not exceed or violate any constitutional or statutory limitation. This Bond is issued pursuant to the home rule powers of the Issuer and pursuant to proceedings of the City Council of the Issuer authorizing the execution and delivery of the Agreement and the Assignment. This Bond does not constitute a general obligation of the Issuer, but is a limited obligation of the Issuer, payable solely out of the income and revenues of the Issuer to be derived from the Project pursuant to the Agreement. No - 2 - • holder of this Bond shall have the right to compel any exercise of the taxing power of the Issuer, or the State of Illinois or any political subdivision thereof, to pay this Bond or the interest or premium, if any, thereon, and this Bond does not constitute an indebtedness or a loan of credit of the Issuer, the State of Illinois or any political subdivision thereof, or a charge against their general credit or taxing powers, within the meaning of any constitutional or statutory provision. No recourse shall be had for the payment of the principal of and interest on this Bond or for any claim based thereon or upon any obligation, covenant or agreement in the Agreement contained, against any past, present or future official, officer, agent or employee of the Issuer or any successor corporation, as such, either directly or through the Issuer or any successor corporation, under any rule of law or equity, statute or constitution or by the enforcement of any assessment or penalty or otherwise, and all such liability of any such official, officer, agent or employee as such is hereby expressly waived and released as a condition of and in consideration for the execution of Agreement and the issuance of this Bond. As provided in the Agreement, this Bond is subject to optional calls by the Institutional Lender for mandatory prepayment, in whole, on September 1, 1989 and September 1, 1994 and to other provisions for optional and mandatory prepayment, in whole or in part, all without premium as specified and subject to the limitations set forth in the Agreement. The Issuer agrees to make required prepayments on account of this Bond in accordance with the provisions of the Agreement. Any partial prepayments shall be applied to the installments due hereon in the inverse order of their maturities. In the Agreement the Company agrees to pay to the Issuer and the Institutional Lender all costs and expenses reasonably incurred by them in the collection of the Note and this Bond, including reasonable attorneys' fees incurred by the Issuer or the Institutional Lender for all services rendered in connection therewith. Payments upon this Bond are to be made directly by the Company, on behalf of the Issuer to the Institutional Lender as permitted under the Agreement and, accordingly, any transferee hereof should verify the unpaid principal hereof with the Company prior to the acquisition hereof. This Bond is transferable only as a whole and only upon surrender hereof for cancellation together with a written instrument of transfer satisfactory to the Issuer executed by the Institutional Lender or its duly authorized attorney. Upon such transfer, a new Bond, in like form as this Bond, will be issued, both principal and interest of which will be payable to the transferee, in the principal amount of the outstanding principal balance hereof. If this Bond is so transferred, the term "Institutional Lender" shall mean the transferee of this Bond. - 3 - This Bond shall be governed and construed in accordance with the laws of the State of Illinois. IN WITNESS WHEREOF, the City of Elgin, Illinois has caused this Bond to be executed in its name by the manual signature of the Mayor and attested by the manual signature of its City Clerk, and its corporate seal to be impressed hereon, all as of , 1984. CITY OF ELGIN, ILLINOIS By Mayor Attest: City Clerk [SEAL] - 4 - DEPOSITARY AGREEMENT BY AND AMONG THE CITY OF ELGIN, ILLINOIS, UNIVERSAL CHEMICAL AND COATINGS, INC. AND AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Depositary Dated as of , 1984 Industrial Development Revenue Bond, Series (Universal Chemical and Coatings, Inc. Project) Table of Contents Recitals Page Section 1. Depositary Fund 2 Section 2. Depositary Charges and Expenses 3 Section 3 . Moneys to be Held in Trust 3 Section 4 . Investments 3 Section 5. Acceptance of Obligations 4 Section 6 . Resignation of Depositary 4 Section 7 . Indemnification of Depositary 5 Section 8. Termination 8 Section 9 . Severability 8 Section 10 . Counterparts 8 Section 11 . Notices 8 Section 12 . Seccessors and Assigns 8 Section 13 . Headings 8 Section 14 . Governing Law 9 DEPOSITARY AGREEMENT THIS DEPOSITARY AGREEMENT dated as of , 1984, by and among the City of Elgin, Illinois , a municipal corporation and a home rule unit duly organized and validly existing under the Constitution and laws of the State of Illinois ( the "Issuer" ) , Universal Chemical and Coatings , Inc . , a corporation duly organized and validly existing under the laws of the State of Delaware ( the "Company" ) , and American National Bank and Trust Company of Chicago, a national banking association duly organized and validly existing under and by , virtue of the laws of the United States of America, having power and authority to accept and execute trusts, and having its principal office in the City of Chicago, Illinois, as depositary ( the "Depositary" ) ; WITNESSET H: WHEREAS, the Issuer, the Company and American National Bank and Trust Company of Chicago have entered into an Agreement dated as of , 1984 ( the "Agreement" ) which provides that the Issuer shall issue an industrial development revenue bond and lend the proceeds thereof to the Company for the purpose of enabling the Company to finance the acquisition, construction and equippping of an industrial project ( the "Project" ) ; and WHEREAS, the City Council of the Issuer has adopted a Bond Resolution on , as amended by the City Coun- sel on ( the "Bond Resolution" ) , authorizing the -1- issuance of its Industrial Development Revenue Bond, (Universal Chemical and Coatings, Inc. Project) in the principal amount of $4 , 000,000 ( the "Bond" ) for the purpose of defraying the cost of acquiring, equipping and constructing the Project; and WHEREAS, Section 4 . 2 of the Agreement provides for the crea- tion with the Depositary of the Depositary Fund (as hereinafter defined) into which monies from the sale of the Bond other than monies paid into the Construction Fund (as defined in the Agree- ment) will be paid; and WHEREAS, pursuant to the Agreement the Depositary has been designated as depositary for all monies to be deposited in said Depositary Fund; NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows : Section 1. Depositary Fund. There is hereby established with the Depositary, as depositary of the Issuer , a special trust fund in the name of the Issuer to be designated City of Elgin, Illinois Industrial Development Revenue Bond Depositary Fund ( the "Depositary Fund" ) separate and apart from all other funds of the Issuer or of the Depositary. The principal proceeds of the Bond not paid into the Construction Fund shall be paid to the Deposi- tary for deposit into the Depositary Fund. The Depositary shall hold, disburse and account for all monies in the Depositary Fund as provided in the Agreement and herein. -2- The Depositary, as depositary, shall keep and maintain ade- quate records pertaining to the Depositary Fund and all disburse- ments therefrom, and shall deliver copies of such records to the Issuer and the Company upon completion of the Project . Section 2. Depositary Charges and Expenses . The Company hereby agrees to pay to the Depositary all reasonable fees, charges and expenses of the Depositary charged or incurred in connection with its services as depositary hereunder and any pay- ments due the Depositary under Section 7 hereof . Section 3 . Monies to be Held in Trust . All monies required to be deposited with or paid to the Depositary for the account of the Depositary Fund shall be held by the Depositary in trust for the owner of the Bond for the purpose specified in the Agreement and shall be held by the Depositary for its benefit, as the owner of the Bond, as security for the Bond. Section 4 . Investments . Any monies held as part of the Depositary Fund shall be invested or reinvested by the Depositary in accordance with written directions of the Company in such investments and securities as are specified in Section 7 . 2 of the Agreement . The Issuer and the Company agree that any such investment shall have a maturity not later than the estimated time when the funds so invested will be needed to pay disburse- ments from the Depositary Fund and the interest accruing there- on. Any profit realized from such investments shall be credited to the Depositary Fund and any loss resulting from such invest- -3- ment shall be charged to the Depositary Fund, and the Company shall forthwith pay the amount of such loss to the Depositary for deposit in the Depositary Fund . The Depositary shall sell and reduce to cash a sufficient portion of investments held for the account of the Depositary Fund whenever the cash in the Deposi- tary Fund is insufficient to pay any disbursement required to be made from the Depositary Fund pursuant hereto and to the Deposi- tary Agreement . Section 5 . Acceptance of Obligations . The Depositary hereby accepts and agrees to perform all of the duties and obligations of the depositary specified herein and in the Agreement . Section 6 . Resignation of Depositary. The Depositary at the time acting hereunder may at any time resign and be discharged from obligations created by this Agreement by giving not less than thirty ( 30 ) days ' prior written notice to the Issuer and the Company, but no such resignation shall take effect unless and until a successor Depositary shall have been appointed by the Issuer and the Company and shall have accepted such appointment , in which event such resignation shall take effect immediately upon the appointment and acceptance of a successor Depositary. The Depositary, upon the effective appointment or designation of a successor Depositary, shall transfer or deliver all monies and investments held by it pursuant to this Depositary Agreement to such successor Depositary. Should any transfer, assignment or instrument in writing from the Issuer and the Company be required -4- by the Depositary or the successor Depositary in order more fully and certainly to vest in such successor Depositary the monies, investments, powers and duties hereby vested or intended to be vested in the Depositary hereunder, any such transfer, assignment or instrument in writing shall, on the request of the Depositary or such successor Depositary, be executed, acknowledged and delivered by the Issuer and the Company. Any corporation into which the Depositary may be merged or converted or with which it may be consolidated or any corporation resulting from any merger , conversion or consolidation to which the Depositary or any successor to it shall be a party shall, unless and until a successor Depositary is designated or appointed, continue to be the Depositary hereunder without the execution or filing of any paper or other act on the part of any of the parties hereto, unless otherwise required by law. Any successor Depositary appointed or designated by the Issuer hereunder shall be a bank having combined capital, surplus, and undivided profits of not less than $15, 000, 000 at the time of such appointment , shall be a member of the Federal Depositary Insurance Corporation and shall have been approved in writing by the Company and by the owner of the Bond. Section 7 . Indemnification of Depositary. The Company hereby agrees to indemnify and hold harmless the Depositary and its directors, officers, employees and agents against and from (a) all claims by or on behalf of any person arising out of -5- ( i ) the acquisition, construction and equipping of, or any con- dition of, the Project or any injury or damage to any person occurring in or about the Project, ( ii ) any breach or default by the Issuer or the Company of any of their respective obligations hereunder or under the Bond Resolution or the Agreement, ( iii ) any act or omission of the Issuer or the Company or any of their respective directors, officers, agents, contractors, servants, employees or licensees, but only to the extent per- mitted by law or ( iv) this Depositary Agreement and (b) all costs, counsel fees , expenses or liabilities reasonably incurred in connection with any indemnified claim or any action or pro- ceeding brought thereon. Upon notice from the Depositary of any such action or proceeding, the Company shall resist or defend such action or proceeding. The Depositary shall cooperate and join with the Company, at the expense of the Company, as may be required in connection with any such action or proceeding defended by the Company. The Depositary shall be entitled to the advice of counsel (who may also be counsel for the Company or the owner of the Bond) and shall be wholly protected as to any action taken or omitted to be taken in good faith in reliance on such advice. The Depositary may rely conclusively on any communication or other documents furnished to it pursuant hereto or pursuant to the Bond Resolution or the Agreement and reasonably believed to be genuine. The Depositary shall not be liable for any action -6- (a) taken by it in good faith and reasonably believed by it to be within the discretion or powers conferred upon it, (b) in good faith not taken by it and reasonably believed by it to be within the discretion or powers conferred upon it, (c) taken by it pursuant to any direction or instruction given to it in or pursuant hereto or to the Bond Resolution or the Agreement, or (d) omitted to be taken by it by reason of the lack of any direction or instruction required hereby or by the Bond Resolution or the Agreement for such action; nor shall it be responsible for the consequences of any error of judgment reasonably made by it . When any consent or other action by the Depositary is called for pursuant to the Bond Resolution or the Agreement , it may defer such action pending such investigation or inquiry or receipt of such supporting evidence as it may required. The Depositary shall be entitled to reimbursement for expenses rea- sonably incurred and advances reasonably made, with interest , in the performance of its obligations hereunder or under the Bond Resolution or the Agreement. Notwithstanding anything to the contrary herein or in the Bond Resolution or the Agreement, absent gross negligence or willful misconduct , the Depositary shall not be liable to the Issuer, the Company or any owner of the Bond for any action taken or not taken hereunder or under the Bond Resolution or the Agreement . -7- Section 8. Termination. This Depositary Agreement shall terminate upon the later of the final disposition of the monies on deposit in the Depositary Fund or the payment of all amounts due the Depositary under Section 2 hereof. Section 9 . Severability. If any clause, provision or section of this Depositary Agreement be ruled invalid by any court of competent jurisdiction, the invalidity of such clause , provision or section shall not affect any of the remaining clauses, sections or provisions hereof . Section 10 . Counterparts. This Depositary Agreement may be executed in several counterparts , each of which shall constitute but one and the same instrument . Section 11 . Notices . All notices , demands and requests which may or are required to be given hereunder by or to any party hereto shall be given as provided in Section 13 . 1 of the Agreement . Section 12 . Successors and Assigns . The terms, provisions, covenants and conditions of this Depositary Agreement shall bind and inure to the benefit of the respective successors and assigns of the Issuer , the Company and the Depositary. Section 13 . Headings . The headings of this Depositary Agreement are inserted for convenience only and shall not be deemed to constitute a part of this Depositary Agreement . -8- Section 14 . Governing Law. This Depositary Agreement shall be governed by and construed in accordance with the laws of the State of Illinois. IN WITNESS WHEREOF, each of the Issuer and the Company has caused these presents to be signed, sealed and attested in its name and behalf by its duly authorized officers, and to evidence its acceptance of the trust hereby created the Depositary has caused these presents to be signed in its name and behalf by its duly authorized officer , all as of the date first above written. ( SEAL) CITY OF ELGIN, ILLINOIS Attest: By Mayor City Clerk ( SEAL) UNIVERSAL CHEMICAL AND COATINGS, INC. Attest : By President Secretary AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, as Depositary By Its -9- CERTIFICATE OF CLERK OF CITY OF ELGIN, ILLINOIS I, the undersigned, do hereby certify that I am the duly qualified and acting City Clerk of the City of Elgin, Illinois (the "City"), and that as such official I am the keeper of the records and files of the Council of the City (the "City Council"), and do further certify as follows: 1. The Mayor called a regular meeting to order at P.M., on August 27, 1984 at the City Hall, 150 Dexter Court, Elgin, Illinois and directed that the roll be called. 2. Upon roll call, the following answered present: Commissioners 3. The following were absent from the meeting: 4. The following Ordinance was presented: AN ORDINANCE AUTHORIZING THE FINANCING BY THE CITY OF ELGIN, ILLNOIS OF A PROJECT CONSISTING OF THE ACQUISITION OF LAND AND OF THE CONSTRUCTION AND INSTALLATION OF BUILDINGS AND EQUIPMENT TO BE USED AS A MANUFACTURING FACILITY TO BE LOCATED THEREON IN ORDER TO CREATE AND RETAIN EMPLOYMENT OPPORTUNITIES IN THE LOCALITY OF THE CITY OF ELGIN, ILLINOIS AND ENCOURAGE ECONOMIC DEVELOPMENT THEREIN, THEREBY REDUCING THE EVILS ATTENDANT UPON UNEMPLOYMENT AND PROVIDING FOR THE INCREASED WELFARE AND PROSPERITY OF THE RESIDENTS OF SAID LOCALITY; AUTHORIZING AND PROVIDING FOR THE ISSUANCE BY THE CITY OF ELGIN, ILLINOIS OF ITS INDUSTRIAL DEVELOPMENT REVENUE BOND (UNIVERSAL CHEMICALS AND COATINGS, INC., PROJECT) IN THE PRINCIPAL AMOUNT OF $4,000,000, AND IN CONNECTION THEREWITH AUTHORIZING THE EXECUTION AND DELIVERY OF AN AGREEMENT AMONG THE CITY, UNIVERSAL CHEMICALS AND COATINGS, INC. AND THE AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, PROVIDING FOR THE MAKING OF A LOAN TO UNIVERSAL CHEMICALS AND COATINGS, INC. FROM THE PROCEEDS OF SAID BOND, THE SECURITY FOR SAID BOND, THE SALE OF SAID BOND TO THE AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, AND RELATED MATTERS. 5. Commissioner moved and Commissioner seconded the motion that said Ordinance be passed. 6. After a full discussion thereof, the Mayor directed that the roll be called for a vote upon the motion to adopt the Ordinance as presented. 7. Upon the roll being called, the following Commissioners voted AYE: 8. The following Commissioners voted NAY: 9. The following Commissioners were ABSENT OR NOT VOTING: 10. Whereupon the Mayor declared the motion carried and said Ordinance passed. 11. Folloowing said meeting, the Mayor did approve and sign said Ordinance and the same was recorded in full in the records of the City Council of the City of Elgin, Illinois. 12. A true, correct and complete copy of said Ordinance is attached hereto as Exhibit A. 13. The deliberations of the City Council on the adoption of said Ordinance were conducted openly, the vote on the adoption of said Ordinance was taken openly, said meeting was held at a specified time and place convenient to the public, notice of said meeting was posted in the City Hall and was duly given to all of the news media requesting such notice. - 2 - IN WITNESS WHEREOF, I hereunto affix my official signature and the seal of this City, this day of September, 1984. Village Clerk [SEAL] - 3 - 1 CERTIFICATE AND REQUEST OF THE CITY OF ELGIN, ILLINOIS The undersigned, Mayor and City Clerk, respectively, of the City of Elgin, Illinois, a municipality and home rule unit of the State of Illinois (the "Issuer"), acting for the Issuer, do hereby certify that the Issuer is duly organized and validly existing as a municipality under the Constitution and laws of the State of Illinois, and do further certify as follows: 1. They are the duly elected, qualified and acting Mayor and City Clerk, respectively, of the Issuer, and held such offices on the date of execution of the instruments listed in paragraph 3 hereof, and as such officials are familiar with the books and corporate records of the Issuer. 2. Attached hereto are true, complete and correct copies of the following: (a) A Resolution passed and approved by the City Council of the Issuer on April 11, 1983 (the "Inducement Resolution"), authorizing the execution of the Memorandum of Agreement (Exhibit A); and (b) An Ordinance passed and approved by the City Council of the Issuer on August 27, 1984 (the "Bond Ordinance"), authorizing the issuance and sale of the Industrial Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project) in the aggregate principal amount of $4,000,000 (the "Bond"), the execution of an Agreement and related documents (Exhibit B); and (c) A publisher's affidavit with newspaper clippings attached evidencing publication on August 13, 1984 of a notice of public hearing, purusant to Section 103(k) of the Internal Revenue Code of 1954, as amended, (Exhibit C). The Inducement Resolution and Bond Ordinance are in full force and effect and have not been altered, amended or repealed, except as indicated above, as of the date hereof. 3. The following described instruments, as executed and delivered by the Mayor and City Clerk of the Issuer, are in substantially the same form and text as the copies of such instruments which were before, and approved by, the City Council of the Issuer at said meeting thereof referred to in paragraph 2(b) above. Instrument Date Other Party or Parties Agreement (the "Agreement") 9/1/84 Universal Chemicals and Coatings, Inc. (the "Company"), American National Bank and Trust Company of Chicago (the "Institutional Lender") Assignment and Security 9/1/84 The Institutional Lender Agreement (the "Assignment") Mortgage and Security Agreement The Company (the "Mortgage") Collateral Agreement The Company (the "Collateral Agreement") The Agreement, the Assignment, the Mortgage and the Collateral Assignment are sometimes collectively referred to herein as the "Issuer Documents." 4. The names and terms of office of the Mayor, City Clerk and members of the City Council of the Issuer, including every person to hold any of said offices subsequent to August 27, 1984 have been and are as follows: Date of Name Office Began End of Term Mayor City Clerk Commissioner Commissioner Corn missioner Commissioner 5. The persons named below were on the date or dates of the execution of the Issuer Documents, and are on the date hereof, the duly elected and qualified incumbents - 2 - of the offices of the Issuer set opposite their respective names and the signatures appearing at the right of their respective names are the genuine signatures of said officers: Title Name Signature Mayor City Clerk 6. The undersigned Mayor and City Clerk of the Issuer have manually executed and attested, respectively, on behalf of the Issuer, the Issuer Documents, and the Mayor has executed by manual signature, and the City Clerk has attested by his manual signature, the Bond in the aggregate principal amount of $4,000,000, dated September , 1984, and having principal due in the amounts and on the dates, bearing interest at the rates, subject to redemption prior to maturity, and having the form, details and specifications set forth in the Bond. The official corporate seal of the Issuer has been affixed hereto and to the Bond. 7. There are no proceedings pending, or to our knowledge threatened against or affecting the Issuer in any court or before any governmental authority or arbitration board or tribunal which involve the possibility of an unfavorable decision, ruling or finding which would adversely affect (i) the transactions contemplated hereby of the validity of the Bond Ordinance, the Bond or the Issuer Documents or any agreement or instrument to which the Issuer is a party and which is used or contemplated for use in the comsummation of the transactions contemplated hereby, or (ii) the excludability of the interest on the Bond from the gross income of the owner of the Bond for federal income tax purposes. Neither the corporate existence of the Issuer nor the titles of the officials of the Issuer to their respective offices are being contested. To our knowledge, the Issuer is not in default with respect to any order of any court, governmental authority or arbitration board or tribunal or under any agreement, indenture, mortgage, lease or other - 3 - instrument to which the Issuer is a party or by which it may be bound where such default would in any way have an adverse effect on the transactions contemplated by the Agreement. 8. The representations and warranties of the Issuer contained or referred to in the Issuer Documents are true and correct as of the date hereof. 9. To our knowledge, no event has occurred and no condition exists which, upon the issuance of the Bond, would constitute a default or an event of default hereunder. 10. The Issuer has duly authorized: (i) the issuance and sale of the Bond upon the terms set forth herein; (ii) the loan of the proceeds of the Bond to the Company; (iii) the pledging and assigning by the Issuer pursuant to the provisions of the Assignment of its rights hereunder (except under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b) of the Agreement), ° and the Note, the Collateral Assignment and the Mortgage which is to be executed and become security for the Bond upon disbursement of proceeds of the Bond by the Institutional Lender as reimbursement for costs of acquisition of the real estate; (iv) the execution, delivery and receipt of the Issuer Documents, the Bond and any and all such other agreement and documents as may be required to be executed, delivered and received by the Issuer in order to carry out, give effect to and consummate the transactions contemplated hereby; and (v) the effectuation and consummation of the transactions contemplated by the Issuer Documents. 11. The Issuer has not pledged and will not pledge its interest in the Agreement (except under Sections 1.6, 8.2, 8.7, 9.3 and 11.2(b) of the Agreement), the Note, the Collateral Assignment or the Mortgage other than to secure the Bond. 12. Any certificate signed by an official of the Issuer and delivered to the Company shall be deemed a representation and warranty by the Issuer to the Company as to the statements made therein. - 4 - r • 13. All meetings of the governing body of the Issuer referred to in paragraph 2 above, have been open to the public and held in accordance with the procedures adopted by the governing body of the Issuer and "AN ACT in relation to meetings," approved July 11, 1957, as amended, and all laws amendatory thereof and supplementary thereto. 14. The Issuer has not been notified of any listing or proposed listing of it by the Internal Revenue Service as a bond issuer whose arbitrage certifications may not be relied upon. IN WITNESS WHEREOF, we have hereunto affixed our signatures and caused to be affixed hereto the corporate seal of the City of Elgin, Illinois, this day of September, 1984. Signatures Official Titles Mayor of the City of Elgin, Illinois City Clerk of the City of Elgin, Illinois [SEAL] - 5 - s STATEMENT RELATING TO ELECTION TO HAVE THE PROVISIONS OF SECTION 103(b)(6)(D) OF THE INTERNAL REVENUE CODE APPLY TO AN ISSUE OF INDUSTRIAL DEVELOPMENT REVENUE BONDS (CITY OF ELGIN, ILLINOIS INDUSTRIAL DEVELOPMENT BOND (UNIVERSAL CHEMICALS AND COATINGS, INC. PROJECT)) The undersigned, the City of Elgin, Illinois a municipal corporation of the State of Illinois hereby elects to have the provisions of Section 103(b)(6)(D) of the Internal Revenue Code of 1954, as amended (the "Code"), apply to the hereinafter described industrial development revenue bond and certifies that: 1. The name of the government unit issuing said bond is the City of Elgin, Illinois (the "Issuer") whose address is 150 Dexter Court, Elgin, Illinois 60120. 2. The name of the principal user of the facilities to be acquired and constructed from the proceeds of the bond (the "Project") is Universal Chemicals and Coatings, Inc., a corporation organized under the laws of the State of Delaware (the "Corporation"), whose address is 1124 Elmhurst Road, Elk Grove Village, Illinois 60007, and whose identification number is 36-2642354. 3. Said Bond is designated City of Elgin, Illinois Industrial Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project) dated as of September , 1984 (the "Bond") and is in the aggregate principal amount of $4,000,000. 4. There are no outstanding obligations of any state, territory or possession of the United States, or any political subdivision of the foregoing, or the District of Columbia, the proceeds of which are or will be used primarily with respect to facilities (a) the principal user or users of which are or will be the Corporation or related persons (within the meaning of Section 103(b)(6)(B) of the Code) and (b) which are located within the corporate boundaries of the Issuer (the location of the facilities to be acquired and constructed with the proceeds of said Bond) or outside the corporate boundaries of the Issuer but "contiguous" to or "integrated" with facilities within the corporate boundaries of the Issuer, within the meaning of the Code, other than the Bond to be issued on this date. v 5. Except for the capital expenditures listed on Exhibit A attached hereto and made a part hereof, no capital expenditures have been paid or incurred within the three years preceding the date of said issue of Bond (other than those to be reimbursed out of the proceeds of said issue of Bond) with respect to facilities, the principal user of which is or will be the Corporation or related persons and which are located within the corporate boundaries of the Issuer or outside the corporate boundaries of the Issuer but "contiguous" to or "integrated" with facilities within the corporate boundaries of the Issuer, within the meaning of the Code. IN WITNESS WHEREOF, The City of Elgin, Illinois has caused this document to be executed in its name by a duly authorized official, this day of September, 1984. CITY OF ELGIN, ILLINOIS By Mayor -2- EXHIBIT A CAPITAL EXPENDITURES Date Amount Description September , 1981 through September 1984 -0- CROSS-RECEIPTS The undersigned acknowledges receipt from the City of Elgin, Illinois (the "Issuer") of its $4,000,000 Industrial Development Revenue Bond (Universal Chemicals and Coating, Inc. Project) payable to American National Bank and Trust Company of Chicago, issued by the Issuer on this date, dated the date of this certificate, maturing, bearing interest and being payable as provided in that certain Agreement, dated as of September 1, 1984 (the "Agreement"), among the Issuer, Universal Chemicals and Coatings, Inc. and the undersigned. The undersigned further acknowledges that $4,000,000, including finance charges, has been disbursed on this date, on behalf of the Issuer, to the undersigned to be held on behalf of Universal Chemicals and Coatings, Inc. pursuant to the Agreement. Dated , 1984 AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO By Its The undersigned on behalf of the City of Elgin, Illinois, hereby acknowledges receipt from American National Bank and Trust Company of Chicago of $4,000,000 representing payment in full of the $4,000,000 aggregate principal amount of the above- described Bond at the principal amount thereof. Dated: , 1984. CITY OF ELGIN, ILLINOIS By City Clerk The undersigned hereby acknowledges receipt from the City of Elgin, Illinois of $4,000,000, including finance charges, pursuant to the terms of the Agreement. Dated: , 1984 UNIVERSAL CHEMICALS AND COATINGS, INC. By Its 1 s $4,000,000 INDUSTRIAL DEVELOPMENT REVENUE BOND (UNIVERSAL CHEMICALS AND COATINGS, INC. PROJECT) ARBITRAGE CERTIFICATE I, , the duly qualified and acting Mayor of the City of Elgin, Cook County, Illinois (the "Issuer"), do hereby certify with respect to $4,000,000 Industrial Development Revenue Bond (Universal Chemicals and Coatings, Inc. Project), dated as of 1984 (the "Bond"), presently being delivered by the Issuer, as follows: 1. The Issuer is issuing and delivering the Bond simultaneously with the delivery of this certificate. The Bond is being issued for the purpose of providing funds for the financing of costs of acquiring and constructing certain property (herein called the "Project") to be located within the corporate boundaries of the City of Elgin, Illinois, which property is to be used by the Company (hereafter defined) as a manufacturing facility and is more specifically described in Schedule I to the Agreement (hereafter defined), all to the end that the Issuer may be able to encourage the creation of additional employment opportunities within its corporate boundaries. 2. Under and pursuant to an Agreement dated as of September 1, 1984 (the "Agreement"), among the Issuer, Universal Chemicals and Coatings, Inc. (the "Company"), and American National Bank and Trust Company of Chicago (the "Institutional Lender"), the Company is executing a Note (the "Note") and the Issuer is loaning to the Company the proceeds of the Bond to finance the cost of the Project. 3. Land has been acquired as part of the Project for $411,000. Binding contracts or commitments obligating the expenditure, for the work of acquiring and constructing the Project, of not less than $100,000 have heretofore been entered into or made. It is anticipated that the total costs to be partially financed with the proceeds of the Bond of such acquisition, construction and equipping (excluding the expenses r anticipated to be incurred in connection with the issuance of the Bond and also excluding the finance charge or discount) will be approximately $3,900,000. It is expected that the work of acquiring and constructing the Project will proceed with due diligence to full completion, presently anticipated on or about August 31, 1987. 4. The proceeds to be derived by the Issuer from the sale of the Bond (viz., the gross sum of $4,000,000) are expected to be needed and fully expended as follows: (a) $40,000 of said proceeds will be expended for payment of, or reimbursement for, the initial finance charge of the Institutional Lender; (b) $60,000 of said proceeds willbe expended for payment of or reimbursement for, finance charge of the Issuer, fees of counsel for the Issuer, counsel for the Company, counsel for the Institutional Lender and bond counsel. (c) the remaining $3,900,000 of said proceeds will be expended for payment of a portion of the costs of acquiring and constructing the Project (excluding the expenses anticipated to be incurred in connection with the issuance of the Bond), substantially in accordance with the following schedules: Quarter during which Amount Expected Expected to be Expended to be Expended See Exhibit A attached hereto and made a part hereof. 5. The Project is not presently expected to be sold or disposed of prior to the stated maturity of the Bond. 6. The proceeds of the Bond will not exceed the amount necessary for the cost of acquisition and construction of the Project as set forth in Paragraph 1 above. 7. The Issuer has not created or established and will not create or establish any sinking fund, reserve fund or any other similar fund to provide for the payment of the Bond. The Company has not accumulated and does not expect to accumulate amounts of money in a fund to pay or to be held as security for the payment of principal of or - 2 - l interest on the Bond other than: (i) amounts expected to be spent within a 13-month period beginning on the date of deposit in such fund, and (ii) investment earnings in such fund which will be spent within a 1-year period beginning on the date of receipt. 8. No bonds or other obligations have been sold in the past three months or will be sold in the next three months pursuant to a common plan of financing with the plan for the issuance of the Bond and payable out of substantially the same source of revenues. 9. Note payments are to be the same day as Bond payments in the same amount. 10. The facts and estimates in Paragraphs 3 through 9 are based solely on representations made by the Company. The Issuer is not aware of any facts or circumstances that would cause it to question the accuracy of the representations made by the Company, although the Issuer has made no investigations of such matters other than obtaining the information contained in Paragraph 3 through 9. 11. To the best of my knowledge, information and belief, the above expectations are reasonable. 12. The Issuer has not been notified of any listing or proposed listing of it by the Internal Revenue Service as an issuer that may not certify its bonds. 13. The undersigned, Mayor of the Issuer, is charged by ordinance of the Issuer, with responsibility of issuing and delivering the Bond. - 3 - r I IN WITNESS WHEREOF, I have hereunto subscribed my official signature this day of . CITY OF ELGIN, ILLINOIS By: Mayor Universal Chemicals and Coatings, Inc. hereby certifies that the facts and estimates in Paragraphs 3 through 9 above are true and correct. WITNESS the official signature of the representative of the Company as of the date subscribed to the foregoing certificates. UNIVERSAL CHEMICALS AND COATINGS, INC. By: Its - 4 - EXIDBiT A QUARTERLY EXPENDITURES OF BOND PROCEEDS Quarter during which expected to be Amount expected to expended be expended Quarter ending November 30, 1984 $1,000,000 Quarter ending February 28, 1985 800,000 Quarter ending May 31, 1985 650,000 Quarter ending August 31, 1985 300,000 Quarter ending November 30, 1985 300,000 Quarter ending February 28, 1986 200,000 Quarter ending May 31, 1986 200,000 Quarter ending August 31, 1986 100,000 Quarter ending November 30, 1986 100,000 Quarter ending February 28, 1987 100,000 Quarter ending May 31, 1987 100,000 Quarter ending August 31, 1987 100,000 - 5 - COLLATERAL ASSIGNMENT This COLLATERAL ASSIGNMENT (the "Collateral Assignment"), dated as of , 1984 from UNIVERSAL CHEMICALS AND COATINGS, INC., a Delaware corporation (the "Assignor"), having an address at 1124 Elmhurst Road, Elk Grove Village, Illinois 60007, Attention: President, to the City of Elgin, a home rule unit of government of the State of Illinois (the "Assignee"), having an address at 150 Dexter Court, Elgin Illinois 60120, Attention: City Clerk; RECITALS A. At or about the time of delivery hereof, the Assignor is borrowing the sum of $4,000,000 from the Assignee. Such borrowing is evidenced by the Direct Obligation Note of the Assignor (the "Note"), in the principal amount of $4,000,000. To acquire the funds to make the loan evidenced by the Note, the Assignee is issuing its Industrial Development Revenue Bond (Universal Chemicals & Coatings, Inc. Project) in the principal amount of $4,000,000. (the "Bond") pursuant to the terms of an Agreement dated as of September 1, 1984 (the "Agreement") among the Assignee, the Assignor and American National Bank and Trust Company of Chicago (the "Institutional Lender"). The Note bears interest at such rates and is payable upon such terms and conditions and at such times and in such amounts as shall be necessary to pay the principal of, and interest and premium, if any, on the Bond when due. B. The Note is secured by a Mortgage and Security Agreement (the "Mortgage") dated as of , 1984 between Assignor and Assignee, as mortgagee, which creates a first lien on the premises described in Exhibit A hereto and the real estate improvements, personal property and equipment thereon or to be located thereon (the "Property"). The Agreement provides that the Note is to be endorsed and pledged and the Mortgage is to be assigned to the Institutional Lender. With respect to the improvements to be constructed on the real property, Assignor has or will enter into the contracts listed on Exhibit B attached hereto and incorporated herein by reference (the "Contracts"). C. With respect to the improvements to be constructed on the real property, Assignor has or will have completed plans and specifications (the "Plans") and has or will obtain permits, licenses, consents and approvals issued or to be issued by one or more governmental authorities or agencies (the "Permits"). In consideration of and as an inducement to the Assignee to issue the Bond and to acquire the Note, and as an inducement to the purchaser of the Bond to purchase the same, the Assignor is entering into the undertakings herein set forth for the benefit and security of the Assignee and the owner of the Bond (the "Bondholder"). All capitalized terms not defined herein but defined in the Mortgage or the Agreement shall have the same meaning herein unless the context or use indicates another or different meaning or intent. . NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. THE ASSIGNMENT. The Assignor, in consideration of the sum of One Dollar ($1.00) and other good and valuable considerations, the receipt and sufficiency of which is hereby acknowledged, in furtherance of the covenants of the Mortgage and as security for the payment of the principal of, and premium, if any, and interest and all other sums payable on the Note, and the performance and observance of all obligations of the Assignor under the provisions of the Note, the Mortgage and the Agreement, does hereby specifically and presently irrevocably assign, transfer, convey and set over to the Assignee, all of the Assignor's estate, right, title and interest in to any and all development rights (the "Developer's Rights") of the Assignor in or relating to the Property, including the right to use the plans and exercise the privileges of the holder of the Permits, and in and under the Contracts, together with all amendments and supplements thereto, together with all rights, powers, privileges, options and other benefits of the Assignor as the holder of the Developer's Rights and as a party to the Contracts including, but not by way of limitation, the following: (a) the right to perform all functions, take all actions necessary to give all approvals necessary or appropriate and to perform all functions and responsibilities of the Assignor in connection with the Developer's Rights and the Contracts, including the administration, performance and enforcement thereof; (b) the right to take such action upon the happening of a default under the Contracts, including the commencement, conduct and consummation of proceedings at law or in equity, as shall be permitted under any provision of the Contracts or by law or in equity; (c) the right to give all notices, consents and releases; (d) the right to make all waivers and agreements; and (e) the right to do any and all other things which the Assignor is or may become entitled to do with respect to the Developer's Rights and under the Contracts. SECTION 2. TERMINATION OF ASSIGNMENT. The assignment made hereby is executed as collateral security, and the execution and delivery thereof shall not in any way impair or diminish the obligations of the Assignor under the provisions of the Contracts, nor shall any of the obligations contained in the Contracts be imposed upon the Assignee. Upon the termination of the Agreement as provided therein, said assignment and all rights herein assigned to the Assignee shall cease and terminate and all the estate, right, title and interest of the Assignor in and to the Developer's Rights and the Contracts shall revert to the Assignor, and the Assignee shall deliver to the Assignor an instrument cancelling this Agreement and reassigning to the Assignor all estate, right, title and interest of the Assignee in and to the property - 2 - hereby assigned. SECTION 3. DESIGNATION BY ASSIGNOR. The Assignor hereby designates the Assignee to receive a copy of all notices, offers, demands, statements, documents, insurance policies or certificates evidencing such policies and all other communications and the Assignor hereby directs the parties to the Contracts to remit or deliver directly to the Assignee at its address set forth above or at such other address as the Assignee shall designate, duplicate original copies of all such notices, offers, demands, documents, insurance policies or certificates evidencing such policies and all other communications. SECTION 4. CONTRACTS IN EFFECT. The Assignor represents to the Assignee and the Bondholder that as to those Contracts which are presently in full force and effect that no default or Event of Default exists thereunder and that any consent to this Collateral Assignment required to be given by any of the parties has been given. The Assignor represents to the Assignee that the Assignor has not executed any other assignment of the subject matter of the assignment hereby made to the Assignee. SECTION 5. AGREEMENT OF ASSIGNOR. The Assignor agrees that the assignment made hereby and the designation and direction hereinabove set forth in Section 3 are irrevocable, and that it will not, while said assignment is in effect or thereafter until Assignor has received from the Assignee notice of the termination thereof, take any action under the Developer's Rights or the Contracts or otherwise which is inconsistent with said assignment, or make any other assignment, designation or direction inconsistent therewith, and that any assignment, designation or direction inconsistent therewith shall be void. The Assignor will from time to time, upon the request of the Assignee, execute all instruments of further assurance and all such supplemental instruments as the Assignee may specify. The Assignor will also obtain any consents to this Collateral Assignment required to be given by other parties to the Contracts which have not yet taken effect. SECTION 6. NO MODIFICATION OF CONTRACTS. The Assignor agrees that it will not enter into any agreement materially amending or modifying the Contracts in a manner which is inconsistent with the Agreement or terminating the Contracts or this Agreement without the consent thereto in writing of the Assignee and any attempted such amendment, modification or termination without such consent shall be void. In the event that the Contracts shall be amended as permitted herein, the Contracts as so amended shall continue to be subject to the provisions of this Agreement without the necessity of any further act by any of the parties hereto. - 3 - . SECTION 7. SUCCESSORS AND ASSIGNS; RECORDING. This Agreement shall be binding upon the parties hereto and upon their respective successors and assigns. The Assignor at its expense, will at all times cause this Agreement, and all instruments with respect thereto (including without limitation properly completed and executed financing statements and continuation statements under the Illinois Uniform Commercial Code), to be recorded, registered and filed and to be kept recorded, registered and filed in such manner and in such places, and will pay all such recordation, registration and filing fees and other charges, and will comply with all such statutes and regulations, as may be required by law in order to establish, preserve and protect the Assignee's interests and rights hereunder (including without limitation, any interest or rights under any supplement or amendment to the Contracts, or otherwise, acquired after the date hereof) and to establish, preserve and protect the lien created hereby as a valid present assignment of the Assignor's entire estate, right, title and interest in, to and under the Contracts. • SECTION 8. LAW GOVERNING. The interpretation and enforcement of this Agreement shall in all respects be governed by the laws of the State of Illinois. IN WITNESS WHEREOF, the Assignor has caused this Agreement to be executed as of the day and year first above written. UNIVERSAL CHEMICALS AND COATINGS, INC., a Delaware corporation By: Its - 4 - 1 December 19, 1985 MEMORANDUM TO: Mayor and Members of the City Council FROM: James J. Cook, City Manager SUBJECT: Ordinance Providing for Issuance of Industrial Revenue Bonds--Universal Chemicals and Coatings, Inc. Project PURPOSE: Attached are an ordinance and transaction documents for the sale of $1,500,000 principal amount of industrial revenue bonds. BACKGROUND: The Council previously authorized a memorandum of agreement for the bonds and conducted the required public hearings. FINANCIAL IMPACT: As the bonds are payable solely out of the project revenues and all expenses are borne by the applicant, there is no direct financial impact to the City. RECOMMENDATION: Passage of the ordinance is recommended. pcX/tty Manager