Document:

ex103.htm

    Exhibit
10.3

    

    Supplemental
Agreement No. 31

    

    to

    

    Purchase
Agreement No. 1977

    

    between

    

    The
Boeing Company

    

    and

    

    American
Airlines, Inc.

    

    Relating
to Boeing Model 737-800 Aircraft

    

    

    THIS SUPPLEMENTAL AGREEMENT, entered
into as of September 15, 2008, (Supplemental Agreement Number 31) by and between
THE BOEING COMPANY, a Delaware corporation with offices in Seattle, Washington,
(Boeing) and AMERICAN AIRLINES, INC., a Delaware corporation with offices in
Fort Worth, Texas, together with its successors and permitted
assigns (Customer);

    

    WHEREAS,
Boeing and Customer entered into Purchase Agreement No. 1977 dated October 31,
1997, relating to Boeing Model 737-823 aircraft, as amended and
supplemented (the Purchase Agreement).  Capitalized terms used herein
without definitions shall have the meanings specified therefore in such Purchase
Agreement;

    

    WHEREAS,
pursuant to Letter Agreement No. 6-1162-AKP-075 titled Aircraft Purchase Rights
and Substitution Rights (the “Rights Letter”), Boeing and Customer have agreed
to, among other things, the treatment of aircraft Purchase Rights;

    

    WHEREAS,
pursuant to Purchase Agreement No. 1977 Supplement Agreement No. 19 (“SA 19”),
Boeing and Customer have agreed to, among other things, [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT];

    

    WHEREAS,
pursuant to Letter Agreement No. 6-1162-LAJ-936 titled Special Matters for Model
737, 757, 767 and 777 Aircraft (“Special Matters Letter”), Boeing and Customer
have agreed to, among other things, [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT];

    
      
        
          P.A.
No. 1977                                                         
SA-31

          AAL

          BOEING
PROPRIETARY

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    WHEREAS,
Customer and Boeing desire to amend the Purchase Agreement to reflect the
following:

    

    
      	
              1)  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT]; and

            

    

    

    
      	
              2)  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT]; and

            

    

    

    
      	
              3)  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT]; and

            

    

    

    
      	
              4)  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT]; and

            

    

    

    

    NOW
THEREFORE, in consideration of the mutual covenants herein contained, the
parties agree to amend the Purchase Agreement as follows:

    

    
      	
              1.  

            	
              The
      table of contents is removed in its entirety and replaced with the new
      table of contents, attached hereto, to add [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT];

            

    

    

    
      	
              2.  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT].

            

    

    

    
      	
              3.  

            	
              Upon
      execution of Supplemental Agreement No. 31[CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT], and as Supplemental Agreement No. 31
      succeeds Supplemental Agreement No. 30, with regard to the matters set
      forth herein, [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL
TREATMENT].

            

    

    
      
        
          P.A.
No. 1977                                                         
SA-31

          AAL

          BOEING
PROPRIETARY

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    The
Purchase Agreement will be deemed to be amended to the extent provided herein
and as so amended will continue in full force and effect.  In the
event of any inconsistency between the above provisions and the provisions
contained in the referenced exhibits to this Supplemental Agreement, the terms
of the exhibits will control.

    

    EXECUTED
IN DUPLICATE as of the day and year first above written.

    

    THE
BOEING
COMPANY                                                                                     AMERICAN
AIRLINES, INC.

    

    

    

    By:                                               By:                                             

    

    

    
      	
               
      

            	
              Its:
         Attorney-In-Fact    

            	
              Its: VP Corporate
      Development and Treasurer

            

    

    

    

    
      
        
          P.A.
No. 1977                                                         
SA-31

          AAL

          BOEING
PROPRIETARY

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    TABLE OF
CONTENTS

    

    

     SA

    ARTICLES NUMBER

    

    1.                   Quantity,
Model and
Description                                                                                              SA21

    

    2.                   Delivery
Schedule

    

    3.                   Price

    

    4.                   Payment

    

    5.                   Miscellaneous

    

    

    TABLE

    

    
      	
               
      

            	
              1

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT] 

            	
              SA29

            

    

    

    
      	
               
      

            	
              1A

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT] 

            	
              SA30

            

    

    

    
      	
               
      

            	
              1B

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT] 

            	
              SA30

            

    

    

    
      	
                  1C

            	
              [CONFIDENTIAL
      PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A
      REQUEST FOR CONFIDENTIAL TREATMENT] 

            	
              SA30

            

    

    

    EXHIBITS

    

    
      	
              A.  

            	
              Aircraft
      Configuration

            

    

    

       A1                      Aircraft
Configuration SA28

    

    B.                   Aircraft
Delivery Requirements and Responsibilities

    

    C.                   Defined
Terms

    

    

    SUPPLEMENTAL
EXHIBITS

    

       AE1                                                                                                                             Escalation
Adjustment Airframe and Optional FeaturesSA20

    

    BFE1                                                                                                                          BFE
VariablesSA30

    

    CS1 Customer Support
Variables

    

    SLP1                   Service
Life Policy Components

    

    EE1 Engine Escalation, Engine
Warranty and Patent Indemnity

    
      
        
          PA No.
1977                                                               
 SA31

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    LETTER
AGREEMENTS

    

    6-1162-AKP-070                                   Miscellaneous
Commitments for Model 737, 757,

    767 and 777 Aircraft

    

    6-1162-AKP-071                                   Purchase
Obligations

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    6-1162-AKP-074R2                                   Business
Considerations

    

    6-1162-AKP-075                                   Aircraft
Purchase Rights and Substitution Rights

    - Attachment A

    - Attachment B SA30

    - Attachment C SA30

    

    6-1162-AKP-076                                   Aircraft
Performance Guarantees

    

    6-1162-AKP-077                                   Spares
Matters

    

    6-1162-AKP-078                                   Model
737 Miscellaneous Commitments

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    6-1162-AKP-080                                   Installation
of Cabin Systems Equipment

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    6-1162-AKP-082                                   Confidentiality

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    6-1162-AKP-117                                   Delivery
Schedule

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]SA28

    

    6-1162-CLO-1038                                   Advance
Payments and Permitted
Transactions                                                                                   SA31

    

    
      
        
          PA No.
1977                                                              
 SA31

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    6-1162-CLO-1038

    

    

    American
Airlines, Inc.

    P.O. Box
619616

    Dallas-Fort
Worth Airport, Texas 75261-9616

    

    

    Subject:                      Advance
Payments and Permitted Transactions

    

    

    
      	
              Reference:

            	
              Purchase
      Agreement No. 1977 (the Purchase Agreement) between The Boeing Company
      (Boeing) and American Airlines, Inc.  (Customer) relating to
      Model 737-823 aircraft (the
Aircraft)

            

    

    

    

    This
Letter Agreement amends and supplements the Purchase Agreement.  All
terms used but not defined in this Letter Agreement have the same meaning as in
the Purchase Agreement.

    

    

    
      	
              1.  

            	
              Advance Payments for
      Aircraft.

            

    

    

    Notwithstanding
Article 4.2 and Tables 1A, 1B, and 1C of the Purchase Agreement, which set forth
Boeing’s standard [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]), Boeing and Customer agree that the [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT], is hereby amended as follows:

    

    
      	
              1.1  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT].

            

    

    

    
      	
              1.2  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT]:

            

    

    

    
      	
              1.2.1  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT]h.

            

    

    

    
      	
              1.2.2  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT].

            

    

    

    
      	
              1.2.3

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT].

            

    

    

    
      	
              1.3  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT].

            

    

    

    
      	
              1.4  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT].

            

    

    

    2.           Permitted
Transactions

    

    [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].

    

    [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT]:

    

    
      	
              (i)  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT];

            

    

     

    
      	
              (ii)  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT];

            

    

     

    
      	
              (iii)  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT];

            

    

     

    
      	
              (iv)  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT]; and

            

    

     

    
      	
              (v)  

            	
              [CONFIDENTIAL PORTION OMITTED AND
      FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR
      CONFIDENTIAL TREATMENT].

            

    

     

    [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].

    

    [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].

    

    For
avoidance of doubt, nothing within this Letter Agreement is intended to, nor
shall it, derogate the rights and obligations of Boeing and Customer with regard
to the financing of aircraft at or following delivery in accordance with Article
9.2 of the AGTA.

    

    3.           Attachments

    

    Attached
to this Letter Agreement are advance payment status reports for [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].  For each month, the advance payment status report
shows the amount paid on each firm Aircraft including the affect of the
reallocations set forth in Paragraphs 1.2.1, 1.2.2, and 1.2.3 as of that
month.

    

    

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    

     

    4.            Confidential
Treatment.

     

     

    [CONFIDENTIAL PORTION OMITTED AND FILED
SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL
TREATMENT].

     

    

    

    

    Very
truly yours,

    

    THE
BOEING COMPANY

    

    

    By                                          

    

    Its           Attorney-In-Fact           

    

    

    ACCEPTED
AND AGREED TO this

    

    Date:
                               ,
2008

    

    AMERICAN
AIRLINES, INC.

    

    

    By                                          

    

    Its                                          

    

    

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    

    

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    Attachment
A to Letter Agreement 6-1162-CLO-1038

    

    

    [CONFIDENTIAL
PORTION OMITTED AND FILED SEPARATELY WITH THE COMMISSION PURSUANT TO A REQUEST
FOR CONFIDENTIAL TREATMENT]

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARY 

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    

    
      
        
          P.A. No.
1977

          Advance
Payments and Permitted Transactions

          BOEING
PROPRIETARYexhibit101.htm

    
      
         

      

      
         

        
          

        

      

      
         

        
          EXHIBIT
10.1

        

      

    

    REINSTATED
AND AMENDED SETTLEMENT AGREEMENT AND RELEASE

    

    THIS SETTLEMENT AGREEMENT AND
RELEASE (this “Agreement”) is made and entered into this 26th day of
June, 2008 by and among NL Industries, Inc., a New Jersey corporation (“NL”); NL
Environmental Management Services, Inc., a New Jersey corporation (“NL EMS” and,
together with NL, the “NL Companies”); the Sayreville Economic and Redevelopment
Agency, a municipal redevelopment agency (“SERA”); Sayreville Seaport
Associates, L.P., a Delaware limited partnership authorized to transact business
in New Jersey (“SSA”); and the County of Middlesex, a county organized under the
laws of New Jersey (the “County”).

     

    RECITALS

    

    WHEREAS, the NL Companies were
the owners of approximately 440 acres of real property located on the Raritan
River, near Raritan Bay in Sayreville, New Jersey, which real property is more
specifically described in this Agreement (the “Property”); and

     

    WHEREAS, the NL Companies have
been working to investigate and remediate environmental contamination on the
Property at the direction of the New Jersey Department of Environmental
Protection (“NJDEP”) pursuant to obligations under the Industrial Site Recovery
Act (“ISRA”), N.J.S.A. 13:1K-6,
et seq., and an
Administrative Consent Order; and

     

    WHEREAS, in 1995, the Borough
of Sayreville (the “Borough”) became interested in redeveloping the Property in
order to encourage various mixed-use development projects and to capitalize on
the proximity of the Property to major roadways and the Raritan River, which
provides access to New York City by ferry; and

     

    WHEREAS, in 1996, the Borough
designated the Property as part of an area in need of redevelopment pursuant to
the Local Redevelopment and Housing Law, N.J.S.A. 40A:12A-1,
et seq.;
and

     

    WHEREAS, in 2000, the
Borough’s redevelopment agency, SERA, began taking steps toward condemnation of
the Property under the “takings” clauses of the United States and New Jersey
constitutions and, in 2002, commenced litigation against the NL Companies and
others under the Eminent Domain Act of 1971, N.J.S.A. 20:3-1,
et seq. (“Condemnation
Action”); and

     

    WHEREAS, in 2005, prior to any
determination in the Condemnation Action of the value of the just compensation
to be paid by SERA to the NL Companies, SERA filed a Declaration of Taking and
pursuant to court order deposited Thirty-Three Million, Five Hundred Fifty
Thousand Dollars ($33,550,000) in escrow with the Superior Court of New Jersey
(the “Court”), thereby obtaining legal title to the Property (such funds
referred to herein as the “Escrow Funds”); and

     

    WHEREAS, the County currently
holds a mortgage on the Property to secure the loan extended by the County to
SERA to enable SERA to acquire the Property through condemnation (the “County
Loan”); and

     

    WHEREAS, the Court continues
to hold the Escrow Funds, no determination has yet been made in the Condemnation
Action as to the value of the Property, the Condemnation Action remains pending,
and the NL Companies have not been paid for the Property; and

     

    WHEREAS, as a result of the
Condemnation Action and the non-payment of the NL Companies in connection
therewith, the NL Companies currently claim an equitable lien on the Property in
the amount of the yet to be determined unpaid portion of the just compensation
owed by SERA to the NL Companies as a result of SERA’s taking of the Property
through eminent domain; and

     

    WHEREAS, in 2007 SERA issued a
Request for Qualifications followed by a Request for Proposals (“RFP”) in order
to identify qualified developers interested in undertaking the redevelopment of
the Property; and

     

    WHEREAS, by Resolution dated
October 29, 2007, SERA selected O’Neill Properties Group, L.P. (“OPG”) as the
redeveloper for the Property pursuant to the RFP process, and OPG has created
SSA for the purpose of purchasing and redeveloping the Property;
and

     

    WHEREAS, SERA and SSA have
finalized a Redevelopment Agreement (the “Redevelopment Agreement”) and a
Purchase and Sale Agreement (the “Sale Agreement”) with respect to the Property,
and are finalizing a Ground Lease Agreement (the “Ground Lease”) with respect to
the Property, memoranda of which have been attached to this Agreement as Exhibits A, B, and Q,
respectively and, SSA shall deliver true and correct copies of the Redevelopment
Agreement, the Purchase Agreement, and the Ground Lease to the NL Companies once
they have been fully executed and delivered; and

     

    WHEREAS, the parties to this
Agreement desire to resolve the Condemnation Action between SERA and the NL
Companies, satisfy the NL Companies’ claimed equitable lien and SERA’s loan
obligations to the County, and facilitate SSA’s acquisition and redevelopment of
the Property; and

     

    WHEREAS, for purposes of this
Agreement, the term “Hazardous Substances” shall mean any substance, whether
solid, liquid or gaseous, which is listed, defined or regulated as a “hazardous
substance” or “hazardous waste” or otherwise classified as hazardous or toxic,
in or pursuant to any applicable local, state, or federal environmental law,
regulation or guidance; or which is or contains asbestos, radon, any
polychlorinated biphenyl, radioactive material, or motor fuel or other petroleum
hydrocarbons; or which causes or poses a threat to cause a contamination or
nuisance on the Property or any adjacent property or a hazard to the environment
or to the health or safety of persons on the Property; and

     

    WHEREAS, the NL Companies,
SERA, SSA and the County were parties to a Settlement Agreement and Release
entered into as of April 1, 2008 (“Original Settlement Agreement”);
and

     

    WHEREAS, by termination notice
dated May 2, 2008, the NL Companies terminated the Original Settlement Agreement
when the Initial Closing failed to occur on May 1, 2008, as contemplated by the
terms of the Original Settlement Agreement; and

     

    WHEREAS, the parties to this
Agreement desire to enter into a new agreement that reinstates and amends the
terms of the Original Settlement Agreement.

     

    AGREEMENT

     

    NOW, THEREFORE, in
consideration of the mutual promises and obligations contained herein and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties agree as follows:

     

    1. Acquisition of the
Property.  SSA and the County will purchase portions of the
Property either in fee or by easements across the Property in phases as
follows:

     

    a. The
“Initial Closing” shall occur on or before August 1, 2008 (the “Initial Closing
Date”).  At the Initial Closing:

     

    i. SSA will
enter into a ground lease with SERA for that portion of the Property commonly
referred to by the parties as the C Parcels and described in the legal
description attached hereto as Exhibit C (“C
Parcels”), subject to the C-Parcels Easement (defined below).  SERA
shall ground lease such portions of the Property to SSA by entering into a
Ground Lease Agreement with SSA and a Memorandum of Ground Lease is attached
hereto as Exhibit
Q.

     

    ii. the
County will purchase from SERA an easement across a portion of the C Parcels
along the entire waterfront as more fully described on Exhibit C-1 (the “C
Parcels Easement”), subject to conditions set forth herein; and

     

    iii.           the
County will purchase from SERA an easement across Parcel B along the entire
waterfront as more fully described on Exhibit C-2 (the
“Parcel B Easement”), subject to the conditions set forth herein.

     

    b. The
“Second Closing” shall occur on the earlier of (i) that date which is six (6)
months after the Initial Closing or (ii) fifteen (15) days after the date upon
which the NJDEP provides written confirmation that all required remedial capping
on that portion of the Property commonly referred to by the parties as Parcel A
and described in the legal description attached hereto as Exhibit
D  (“Parcel A”) has been completed (the “Second Closing
Date”).

     

    i. At the
Second Closing, SSA will purchase from SERA (A) an easement on Parcel A for the
construction of an access road and turnaround (“Parcel A Easement”), as more
fully described in Exhibit D hereto, and
(B) the development rights to Parcel A, which development rights:  (i)
are described on Exhibit E hereto (the
“Development Rights”); and (ii) shall be transferred by SSA to Parcel C and/or
Parcel B pursuant to the Redevelopment Agreement or shall otherwise be preserved
so as to accrue to the benefit of SSA for use in the redevelopment of the C
Parcels and/or Parcel B.  Also, at the Second Closing, the County will
purchase from SERA Parcel A, and title to Parcel A shall be held by the County
in its Open Space Inventory and shall be subject to the above-referenced
easement as well as conservation easements to the other governmental entities
that are assisting in the funding of the purchase of Parcel A hereunder as are
required by those other government entities; and

     

    ii. Within
thirty (30) days of
the Initial Closing Date, SSA will submit its application(s) for any and all
permits necessary to allow SSA or SERA to cap Parcel A for remedial
purposes.  SSA or SERA will thereafter use its best efforts to obtain
any and all such permits at the earliest possible date.  SSA or SERA
will use its best efforts to complete the capping of Parcel A to the
satisfaction of the NJDEP at the earliest possible date, in no event later than
that date which is six (6) months after the Initial Closing.

     

    c. The
“Third Closing” shall occur on or before October 15, 2010 (the “Third Closing
Date”).  At the Third Closing, SSA will enter into a ground lease with
SERA for that portion of the Property commonly referred to by the parties as
Parcel B and described in the legal description attached hereto as Exhibit F (“Parcel
B”), subject to the easement referred to in Section 1.a.iii.
above.  SERA shall ground lease such portions of the Property to SSA
by entering into a Ground Lease Agreement and a Memorandum of Ground Lease is
attached hereto as Exhibit
Q.  

     

    2. Compensation of the NL
Companies and Repayment of the County Loan.  The NL Companies
hereby agree to accept Eighty-Two Million, Seven Hundred Fifty Thousand Dollars
($82,750,000) (the “Condemnation Price”) and SSA’s assumption of the Assumed
Environmental Liabilities (as set forth in Section 5 of this Agreement) and
SERA’s agreement to be the lead remediator under the Memorandum of Understanding
(as set forth in Section 9.a.v.(A) of this Agreement) in compensation for the
Property.  The Condemnation Price shall be paid to the NL Companies in
installments as set forth below.  Further, as set forth below, the
County hereby agrees to accept Forty-Two Million, Three Hundred Thousand Dollars
($42,300,000), plus administrative fees and costs, plus interest accruing on or
after January 1, 2008, in full repayment of the County Loan, and such amount
shall be paid to the County in installments as set forth
below.  Notwithstanding the foregoing, to the extent that the
administrative fees and costs and interest accruing on or after January 1, 2008
(collectively, the “SERA Payments”) are not paid through the First Closing,
Second Closing and/or Third Closing, SERA agrees that it shall remain solely
liable to the County for the SERA Payments unless otherwise agreed in writing by
the County.  SERA agrees further that if any SERA Payments are due and
owing by SERA to the County as of the Third Closing, SERA shall on or prior to
the Third Closing either (i) pay such SERA Payments to the County in full or
(ii) provide the County with substitute security reasonably satisfactory to the
County to fully secure SERA’s obligation to pay such SERA Payments to the County
(the “Substitute Security”).

     

    The NL
Companies, SERA and the County agree that immediately upon the parties’
execution of this Agreement, the NL Companies and SERA shall execute a consent
order in the form attached hereto as Exhibit G (the
“Consent Order”) and shall file the Consent Order with the Hon. Travis L.
Francis, A.J.S.C. in the New Jersey Superior Court, Law Division, Middlesex
County to petition the Court for immediate release of the Escrow Funds, together
with all accrued interest thereon, to the Attorney Trust Account (the “Trust
Account”) maintained by Archer & Greiner, PC (the “Trustee”).  The
parties shall use their best efforts to expedite the release of the Escrow Funds
to the Trust Account.  At the Initial Closing or as soon thereafter as
the Escrow Funds, together with all accrued interest thereon, are in the Trust
Account, the Trustee shall disburse:  (A) Twenty-Nine Million Dollars
($29,000,000) on behalf of SERA to the County, and the County agrees to accept
such funds in partial repayment of the County Loan; (B) Four Million Five
Hundred Fifty Thousand Dollars ($4,550,000) on behalf of SERA to the NL
Companies as partial payment of the Condemnation Price; and (C) all of the
accrued interest on the Escrow Funds to the NL Companies, and the parties
expressly acknowledge and agree that such interest shall not be considered to be
a payment by SERA toward the Condemnation Price and that the NL Companies are
the only parties entitled to make a claim to such accrued
interest.  The NL Companies and the County agree and acknowledge that
their receipt of funds under this paragraph is not a condition precedent to the
Initial Closing.

     

    a. Compensation Due at Initial
Closing.  At the Initial Closing:

     

    i. SSA shall
pay, on behalf of SERA, to the NL Companies the sum of Fifty Million Dollars
($50,000,000) in immediately-available, same-day funds via wire transfer as
partial payment of the Condemnation Price (the “Initial Payment”);
and

     

    ii. Subject
only to the County’s receipt of the Easement Appraisal (as defined in Section
9.a.vii. below), at the Initial Closing, SERA shall receive from the County the
sum of $3,000,000 representing consideration for the C Parcels Easement and the
Parcel B Easement, and SERA shall cause said payment to be used for the purpose
of a partial repayment of the County Loan by SERA.

     

    b. Compensation Due at Second
Closing.  At the Second Closing:

     

    i. SSA shall
pay, on behalf of SERA, to the NL Companies the sum of Eight Million Dollars
($8,000,000) in immediately-available, same-day funds via wire transfer as
partial payment of the Condemnation Price.  In so doing, SSA will
simultaneously acquire from SERA the Development Rights to Parcel A and the
Parcel A Easement;

     

    ii. Subject
only to the County’s receipt of the Parcel A Appraisal, SSA’s delivery of
written confirmation from the NJDEP that all required remedial capping on Parcel
A has been completed in accordance with applicable NJDEP rules and regulations
and receipt of a No Further Action Letter or an equivalent document from the
NJDEP with respect to Parcel A, at the Second Closing, SERA shall receive from
the County the sum of $8,000,000 representing consideration for Parcel A, and
SERA shall cause said payment to be used for the purpose of a partial repayment
of the County Loan by SERA;

     

    iii. SERA
agrees that immediately upon the parties’ execution of this Agreement, SERA
shall:  (A) file an application(s) with the NJDEP for a grant(s) in
the amount of Five Million Dollars ($5,000,000) to fund the purchase of Parcel
A; and (B) request from the Borough’s Open Space Fund a grant in the amount of
Eight Hundred Thousand Dollars ($800,000) to fund the purchase and preservation
of Parcel A as open space.  To the best of SERA’s knowledge, the
conditions required for the grant(s) from the NJDEP are the receipt of the
Parcel A Appraisal (revised or updated to meet the NJDEP requirements),
environmental clearance, and compliance with applicable NJDEP rules and
regulations.  To the best of SERA’s knowledge, the conditions required
for SERA to obtain a grant from the Borough’s Open Space Fund are the receipt of
the Parcel A Appraisal and Borough governing body approval.  At the
Second Closing, if the aforesaid grants are received, SERA shall pay to the NL
Companies the sum of Five Million Eight Hundred Thousand Dollars ($5,800,000) in
immediately-available, same-day funds via wire transfer as a partial payment of
the Condemnation Price.  A failure by SERA for any reason to pay the
NL Companies the sum of Five Million Eight Hundred Thousand Dollars ($5,800,000)
at the Second Closing shall be considered a Default pursuant to Section 12 of
this Agreement, and shall be subject to the arbitration provisions set forth in
Section 13 of this Agreement; and

     

    iv. The NL
Companies shall pay to SSA the sum of Two Million Dollars ($2,000,000), provided
that:  (A) SSA has delivered to the NL Companies, the County and SERA
a No Further Action Letter or an equivalent document from the NJDEP with respect
to Parcel A that all required remedial capping on Parcel A has been completed
and (B) the NL Companies have received all payments due under this Agreement
pursuant to Section 2.a above and this Section 2.b.; and (C) there has been no  material
breach or Default by any of the other parties hereunder which has not been cured
within any applicable notice and cure period.

     

    c. Compensation Due at Third
Closing.

     

    i. 

     

    SSA shall
pay to the NL Companies, on behalf of SERA, in immediately-available, same-day
funds via wire transfer the final payment of the Condemnation Price (the “Final
Payment”), which shall be Sixteen Million, Four Hundred Thousand Dollars
($16,400,000).

    

    ii. SSA shall
pay, on behalf of SERA, to the County the sum of Two Million, Three Hundred
Thousand Dollars ($2,300,000) as the final payment by SSA of the County Loan;
and

     

    iii. SERA
shall pay to the County the SERA Payments and, if applicable, provide the
Substitute Security to the County and so long as SSA has complied with all
payment obligations in this Section 2.c., the County shall nevertheless release
the County Mortgage on Parcel B as more particularly set forth under Section 4.c. of this Agreement below.

     

    3. Dismissal of Condemnation
Action; Release of the NL Companies’ Equitable Lien.  The NL
Companies agree to dismiss the Condemnation Action and to release their claimed
equitable lien on the Property, in accordance with the following
schedule:

     

    a. Upon the
NL Companies’ receipt of the Consent Order executed and entered by the Court and
the Initial Payment at the Initial Closing:

     

    i. The NL
Companies and SERA shall jointly act to dismiss the Condemnation Action by
executing, and seeking judicial entry of, the Stipulation of Dismissal with
Prejudice attached as Exhibit H to this
Agreement;

     

    ii. The NL
Companies shall release their claimed equitable lien with respect to the C
Parcels of the Property and the Parcel B Easement granted to the County by
executing and delivering to SSA for recording the Release of Equitable Lien
attached as Exhibit
I to this Agreement;

     

    iii. The NL
Companies’ remaining claimed equitable lien on Parcels A and B shall be in an
amount not less than the aggregate amount the NL Companies are then owed under
this Agreement, which amount the parties agree shall be considered unpaid
compensation that the NL Companies are owed as a result of SERA’s taking of the
Property by eminent domain.  The NL Companies will retain any and all
rights and claims they may have as to Parcels A and B of the Property, and the
parties expressly acknowledge and agree that, except as expressly set forth
herein, the NL Companies do not waive, release or otherwise compromise any such
rights, interests and/or liens in or to Parcels A and B of the Property, except
for the Parcel B Easement granted to the County; and

     

    iv. The NL
Companies may deliver to the County Clerk of Middlesex County for recording,
immediately following the Initial Closing, a notice in a form acceptable to the
NL Companies that places any subsequent purchaser of Parcels A and B on notice
of the NL Companies’ claimed equitable lien on Parcels A and
B.  Notwithstanding the foregoing, the County and SERA do not
acknowledge the validity of the NL Companies’ claimed equitable
lien.

     

    b. Upon the
NL Companies’ receipt of all payments due the NL Companies at the Second Closing
and the satisfaction or waiver of each condition to the Second Closing and
provided that there has been no material breach or Default by any other party to
this Agreement which has not been cured within any applicable notice and cure
period:

     

    i. The NL
Companies shall release their claimed equitable lien with respect to Parcel A of
the Property by executing and delivering to the County for recording the Release
of Equitable Lien attached as Exhibit J to this
Agreement; and

     

    ii. The NL
Companies’ remaining claimed equitable lien on Parcel B shall be in an amount
not less than the aggregate amount the NL Companies is then owed under this
Agreement, which amount the parties agree shall be considered unpaid
compensation that the NL Companies are owed as a result of SERA’s taking of the
Property by eminent domain.  The NL Companies will retain any and all
rights and claims they may have as to Parcel B of the Property, and the parties
expressly acknowledge and agree that, except as expressly set forth herein, the
NL Companies do not waive, release or otherwise compromise any such rights,
interests and/or liens in or to Parcel B of the Property, except as to the
Parcel B Easement granted to the County; and

     

    iii. The NL
Companies may deliver to the County Clerk of Middlesex County for recording,
immediately following the Second Closing, a notice in a form acceptable to the
NL Companies that places any subsequent purchaser of Parcel B on notice of the
NL Companies’ claimed equitable lien on Parcel B.  Notwithstanding the
foregoing, the County and SERA do not acknowledge the validity of the NL
Companies’ claimed equitable lien.

     

    c. Upon the
NL Companies’ receipt of all payments due the NL Companies at the Third Closing
and the satisfaction or waiver of each condition to the Third Closing and
provided that there has been no material breach or Default by any other party to
this Agreement which has not been cured within any applicable notice and cure
period, the NL Companies shall release their claimed equitable lien with respect
to Parcel B of the Property by executing and delivering to SSA for recording the
Release of Equitable Lien attached as Exhibit K to this
Agreement, and, thereafter, the NL Companies shall no longer have any rights,
interests, claims and/or liens in any part of the Property, except as otherwise
provided in this Agreement.

     

    4. Release of the County’s
Mortgage.  The County shall release the County’s Mortgage in
accordance with the following schedule:

     

    a. At the
Initial Closing:  (i) the Deed in Lieu of Foreclosure between SERA and
the County shall be considered null and void and shall be destroyed, and (ii)
the County shall release the County’s Mortgage on the C Parcels by executing and
delivering to SSA for recording a Release of Mortgage in the form attached as
Exhibit L to
this Agreement.  Following the Initial Closing, the County’s Mortgage
on Parcels A and B shall be reduced by the amount of the County Loan repaid at
the Initial Closing;

     

    b. At the
Second Closing, the County shall release the County’s Mortgage on Parcel A by
executing and delivering to SERA for recording a Release of Mortgage in the form
attached as Exhibit
L to this Agreement.  Following the Second Closing, the
County’s Mortgage on Parcel B shall be reduced by the amount of the County Loan
repaid at the Initial Closing and the Second Closing; and

     

    c. At the
Third Closing, the County shall release the County’s Mortgage on Parcel B by
executing and delivering to SSA for recording a Release of Mortgage in the form
attached as Exhibit
L to this Agreement.  SERA shall continue to be liable for any
SERA Payments owed by SERA to the County and, if applicable, SERA shall provide
the County with the Substitute Security.

     

    5. Responsibility for
Environmental Liabilities.

     

    a. Assumption by SSA of Certain
Environmental Liabilities.  At the Initial Closing, except for
those liabilities specifically excluded pursuant to Section 5.b below, SSA shall assume all responsibility for any
and all environmental investigation and remediation obligations, now existing or
hereafter arising, required to be conducted, whether by the United States
Environmental Protection Agency (“EPA”), the NJDEP or any other regulatory
agency, for the entire Property, as well as operation and maintenance of the
closed landfill and any remedial measures now existing or hereafter to be
investigated and/or implemented on or relating to the Property and any Hazardous
Substances currently in, on, or under the Property (the “Assumed Environmental
Liabilities”).  SSA shall conduct activities at the Property in
furtherance of these obligations or as part of its redevelopment  (i)
in accordance with the requirements of New Jersey law and, to the extent
applicable, federal law and (ii) so as to not exacerbate contamination present
at the Property as of the Initial Closing.  Subject to Section 5.b below, SSA expressly agrees that the term Assumed
Environmental Liabilities shall mean and include but shall not be limited
to:  (A) any and all requirements under ISRA and the Administrative
Consent Order, dated November 14, 1997, between the NL Companies and the NJDEP;
(B) any and all requirements under the Memorandum of Understanding to be entered
into between SERA and the NJDEP pursuant to Section 9.a.iii. of this Agreement;
(C) any and all operation and/or maintenance obligations associated with the
items in (A) or (B) above and/or associated with the closed landfill on the
Property; (D) post November 9, 2007 oversight or response costs incurred by the
NJDEP, EPA or a third-party relating to the Property; and (E) any and all costs
and expenses of any kind or nature incurred or expended by SSA relating in any
way to the Property prior to the Initial Closing (the “SSA Pre-Closing
Environmental Costs”).  SSA shall perform any and all environmental
investigation and remediation required in connection with the Assumed
Environmental Liabilities in accordance with NJDEP-approved workplans, the
NJDEP’s Technical Regulations and all other applicable government
requirements.  SSA shall retain its liability and responsibility, if
any, for SSA Pre-Closing Environmental Costs, and SSA shall indemnify, defend,
and hold the NL Companies and the County and their respective affiliates,
partners, and lenders harmless from and against any and all expenses, fines,
penalties claims, actions (administrative or otherwise), orders, damages,
liabilities, costs and expenses, including but not limited to reasonable
attorney’s fees and expenses, whether pursued by private third-parties or by an
agency of any government, that arise out of, or in any way result from the SSA
Pre-Closing Environmental Costs.  The parties expressly acknowledge
and agree that nothing in this Agreement shall preclude SSA from challenging any
determination by NJDEP or EPA as to the nature or extent of any Assumed
Environmental Liabilities; provided that SSA shall not undertake any action that
would result in the NL Companies becoming primarily responsible or primarily
liable for any Assumed Environmental Liabilities.

     

    b. Non-Assumption of Certain
Environmental Liabilities.  Notwithstanding the provisions of
Section 5.a above, the term Assumed Environmental
Liabilities shall not include, and SSA shall not assume any responsibility or
liability for:

     

    i. any
claims or potential claims for natural resource damages (“NRDs”) arising from or
in any way relating to any past or current environmental harm to or Hazardous
Substances currently or previously in, on, under, at, or that have migrated from
the Property, including but not limited to NRDs relating to groundwater
contamination in, at, under, or that has migrated from the Property (the “NRD
Liabilities”).  The parties expressly acknowledge and agree that
nothing in this Agreement shall be deemed an admission by the NL Companies, or
either of them, of any liability to EPA, NJDEP or any other regulatory agency
for any NRD Liabilities, and no party hereto shall attempt to use this Agreement
to establish such liability; and

     

    ii. any
environmental investigation and remediation required by EPA, NJDEP or any
third-party relating to sediment contained in the Raritan River and/or the Tidal
Wetlands on the Property, together with any NJDEP or EPA oversight costs
relating thereto, and including any liability for NRDs associated therewith (the
“Raritan River Liabilities”).  For purposes of this Section 5.b., the
term “Tidal Wetlands” shall mean and include only those areas which are depicted
as such on the map attached hereto as Exhibit
M.  The NL Companies shall retain their liability and
responsibility, if any, for any Raritan River Liabilities, and the NL Companies
shall jointly and severally indemnify, defend and hold SSA, the County and SERA
and their respective affiliates, partners, and lenders harmless from and against
any and all expenses, fines, penalties claims, actions (administrative or
otherwise), orders, damages, liabilities, costs and expenses, including but not
limited to reasonable attorney’s fees and expenses, whether pursued by private
third-parties or by an agency of any government, that arise out of, or in any
way result from any Raritan River Liabilities.  If at any time, any
remedial action is required for the Raritan River Liabilities, the NL Companies
shall be the lead party for performance of such obligations.  The
parties expressly acknowledge and agree that nothing in this Agreement shall be
deemed an admission by the NL Companies, or either of them, of any liability to
EPA, NJDEP, any other regulatory agency or any private third-parties for any
Raritan River Liabilities, and no party hereto shall attempt to use this
Agreement to establish such liability.  Notwithstanding the foregoing,
if and to the extent that SSA, SERA or the County conduct any activities
whatsoever, whether remedial, developmental or otherwise in any area of the
Raritan River adjacent to or nearby the Property and/or the Tidal Wetlands, SSA,
SERA or the County, as the case may be, shall be liable for, and the foregoing
indemnity of the NL Companies shall not apply with respect to the party that
actually performs the activities, to the extent of any costs and
expenses:  (A) incurred in performing such activities, including
without limitation any costs or expenses associated with the dredging and
disposal of contaminated sediments required in connection with such activities;
and (B) related to any exacerbation of any hazardous condition in any area of
the Raritan River and/or the Tidal Wetlands as a result of
SSA’s,  SERA’s or the County’s performance of such activities
(liabilities pursuant to Subsections (A) and (B) referred to herein collectively
as “Exacerbation River Liabilities”).  The parties hereby agree that
SSA’s, SERA’s  or the County’s performance of any and all activities
at the Property in compliance with all applicable laws (including, without
limitation, the terms and conditions of any and all permits issued by the NJDEP)
shall not constitute exacerbation of any hazardous condition in any area of the
Property including the Raritan River and/or Tidal Wetlands; and

     

    iii. any and
all oversight or response costs incurred by NJDEP, EPA or a third-party relating
to the Property prior to November 9, 2007, and any and all costs and expenses of
any kind or nature incurred or expended by the NL Companies relating in any way
to the Property prior to the Initial Closing (collectively, the “NL Pre-Closing
Environmental Costs”).  The NL Companies shall retain their liability
and responsibility, if any, for NL Pre-Closing Environmental Costs, and the NL
Companies shall jointly and severally indemnify, defend, and hold SSA, the
County and SERA and their respective affiliates, partners, and lenders harmless
from and against any and all expenses, fines, penalties claims, actions
(administrative or otherwise), orders, damages, liabilities, costs and expenses,
including but not limited to reasonable attorney’s fees and expenses, whether
pursued by private third-parties or by an agency of any government, that arise
out of, or in any way result from the NL Pre-Closing Environmental
Costs.  The parties expressly acknowledge and agree that nothing in
this Agreement shall be deemed an admission by the NL Companies, or either of
them, of any claimed liability to EPA, NJDEP, any other regulatory agency or any
private third-parties for any NL Pre-Closing Environmental Costs, and no party
hereto shall attempt to use this Agreement to establish such
liability.

     

    c. Indemnification by
SSA.  SSA agrees to indemnify, defend and hold harmless the NL
Companies, SERA and the County from any and all claims, actions (administrative
or otherwise), orders, penalties, damages, liabilities, costs and expenses,
including but not limited to reasonable attorney’s fees and expenses, whether
pursued by private third-parties or by an agency of any government, that arise
out of or in any way result from the Assumed Environmental Liabilities,
including those that are alleged to have occurred because of the condition of
the Property resulting from SSA’s performance of or failure to perform the
Assumed Environmental Liabilities or activities undertaken on the Property by
SSA or its contractors, subcontractors, invitees or agents (including any
exacerbation of existing contamination) (“Indemnified
Claims”).  Without limiting the generality of the foregoing, the term
“Indemnified Claims” includes any claims, actions, orders, penalties, damages,
liabilities, costs and expenses arising out of or resulting from SSA’s actions
or inactions with respect to: (i) after the Initial Closing, completing the
investigation and remediation of the Assumed Environmental Liabilities; (ii)
after the Initial Closing, operating and maintaining any remedial measure
heretofore or hereafter implemented on the Property; or (iii) after the Initial
Closing, operating and maintaining the closed landfill located on the
Property.  Without limiting the generality of the foregoing, SSA
acknowledges and agrees that the indemnity set forth in this Section 5.c shall extend to any and all penalties, fines,
fees, interest or other charges assessed by the NJDEP or any other federal,
state or local government agency relating to the Assumed Environmental
Liabilities, excluding NL Pre-Closing Environmental Costs.  The
parties expressly acknowledge and agree, however, that the term “Indemnified
Claims” does not mean or include any liability associated with (i) NRD
Liabilities; (ii) Raritan River Liabilities; (iii) NL Pre-Closing Environmental
Costs; (iv) any and all claims for personal injury and/or property damage
(including diminution in value with respect to property damage) resulting from
Hazardous Substances on, migrating from or that have migrated from the Property
and any and all consequential or indirect damages of any kind or nature related
thereto.  This indemnification also does not cover any claims or
liabilities to the extent resulting from any negligence or willful misconduct
(either through acts or omissions) of any of the Indemnified Parties occurring
on or after the date of execution of this Agreement.

     

    d. Default as to Assumed
Environmental Liabilities.

     

    i. In the
event SSA defaults on its obligations to remediate at the Property those
conditions that are Assumed Environmental Liabilities and, as a result, SERA
removes SSA as the party performing the remediation at the Property, SERA shall
select a certified contractor mutually acceptable to SERA and the NL Companies
to complete any and all remaining environmental investigation and/or remediation
obligations required in connection with the Assumed Environmental
Liabilities.  In that event, SERA shall have reasonable access to the
Property to complete any and all investigation or remedial activities, and shall
have the full benefit of and access to all remaining funds previously
established by or on behalf of SSA as Financial Assurance (as defined in Section
9.a.iii. below  for use in completing any and all of the environmental
investigation and/or remediation obligations associated with the Assumed
Environmental Liabilities (including, but not limited to, use of such funds as
security for repayment of any EIT loan(s) or use of such funds to pay for
investigation or remediation costs).

     

    ii. In the
event that SERA defaults on its obligations under its Memorandum of
Understanding with the NJDEP and, as a result, the NJDEP removes SERA as the
lead remediator at the Property, the parties agree that, as among the parties,
the parties shall fully cooperate with the NL Companies in its efforts to be
designated by NJDEP as the lead remediator of the Property.  In the
event NJDEP designates the NL Companies as the lead remediator of the Property,
the NL Companies immediately shall regain sole control over any and all
environmental investigation or remedial activities at the Property, shall be the
lead remediator at the Property, shall have reasonable access to the Property to
complete any and all investigation or remedial activities, and shall have the
full benefit of and access to all remaining funds previously established by or
on behalf of SSA as Financial Assurance (as defined in Section 9.a.iii.
below  for use in completing any and all of the environmental
investigation and/or remediation obligations associated with the Assumed
Environmental Liabilities (including, but not limited to, use of such funds as
security for repayment of any EIT loan(s) or use of such funds to pay for
investigation or remediation costs).  NL’s rights in the event of a
default under this Section shall be in addition to any and all remedies that NL
may have at law or in equity against SSA and SERA.

     

    e. Reliance.  The
parties expressly acknowledge and agree that the NL Companies’ willingness to
enter into this Agreement and all other agreements and documents contemplated
hereby to which the NL Companies are parties is expressly in reliance upon and
is conditioned upon the promises made by SSA and SERA in this Section 5 and the promises made by the County in Section 5.d.
above, that the NL Companies would not have entered into this Agreement but for
these promises, and that such promises are part of the compensation that the NL
Companies are receiving in exchange for the NL Companies’ agreement to dismiss
the Condemnation Action and release their equitable lien.

     

    f. Assignment of Environmental
Permits.  At or after the Initial Closing, the NL Companies
will assign, to the extent assignable by law and to the extent requested by SSA,
any and all permits currently held by the NL Companies that are necessary for
SSA’s performance of the Assumed Environmental Liabilities (the “Environmental
Permits”), a list of which is attached hereto as Exhibit
N.  SSA shall assume all responsibility under the Environmental
Permits.  SSA shall, to the extent assignable by law, if requested by
SERA, assign any Environmental Permit to SERA in the event that SSA is removed
by SERA as the lead remediator pursuant to Section 5.d.i. above.  SERA
shall, to the extent assignable by law, if requested by the NL Companies, assign
any Environmental Permit to the NL Companies in the event that SERA is removed
by the NJDEP as the lead remediator pursuant to Section 5.d.ii. above and the NL
Companies is designated by NJDEP as the lead remediator of the
Property.

     

    6. Availability of
Funds.  SSA represents and warrants to each of parties that it
has obtained firm loan commitments in the amount of $110,000,000, which
commitments together with SSA’s capital contribution are sufficient to fund the
acquisition and pre-development of the C Parcels, the acquisition of the Parcel
A Development Rights and Parcel A Easement and the completion of the Assumed
Environmental Liabilities up to Twenty Million Dollars
($20,000,000).  SSA shall promptly provide notice to the parties to
this Agreement if SSA receives any default notice from its lender(s) and shall
further advise the parties of the remedial actions taken by SSA to cure any such
default.

     

    7. Releases and Covenants Not
to Sue.

     

    a. Release and Covenant Not to
Sue by SSA.

     

    i. Except
for the Raritan River Liabilities, which release shall not be effective until
such time as the NL Companies have satisfied any obligations that they may have
with respect thereto, the following release shall be effective for each Parcel
when both of the following conditions have been satisfied for such Parcel: (1)
completion of the applicable closing, and (2) written confirmation from the
NJDEP in one or more letters, that no further action is required with respect
to  all Assumed Environmental Liabilities relating to such parcel (the
“SSA Release”): except for any claims relating to a party’s failure to satisfy
any of its obligations set forth in this Agreement or an Exhibit hereto,
including but not limited to the Raritan River Liabilities and the NL
Pre-Closing Environmental Costs, SSA, for itself and its heirs, assigns,
executors, administrators and successors, hereby acknowledges full and complete
satisfaction of and releases and forever discharges the NL Companies, SERA and
the County, their respective successors in interest and successors in title
(excluding SSA and its successors in interest and successors in title), their
respective past, present and future assigns, and all of their respective
employees, officers, tenants, predecessors, directors, agents, shareholders,
fiduciaries, representatives, attorneys, engineers, insurers’ divisions,
subsidiaries and affiliates, of and from any and all claims, demands, actions,
rights, losses, expenses, fees, costs, liabilities and causes of action, of
every kind and character, whether asserted or unasserted, whether known or
unknown, suspected or unsuspected, in law or in equity, for or by reason of any
matter, cause or thing whatsoever, that SSA may have in the past, now has, or
may in the future have arising in relation the Property.  Without
limiting the generality of the foregoing and subject to the exceptions provided
above, SSA releases any and all claims and causes of action that it has or may
in the future have (including, but not limited to, claims for cost recovery,
contribution or unjust enrichment) related to any costs or expenses incurred by
SSA: (A) to investigate or remediate environmental contamination on or emanating
from the Property, (B) to perform operation and maintenance of any remedial
measure heretofore or hereafter implemented on the Property, (C) to perform
operation and maintenance of the closed landfill on the Property, or (D) to
evaluate, dispute or resolve claims or potential claims for injury to natural
resources alleged to have been caused by Hazardous Substances on the Property or
emanating from the Property.

     

    ii. Prior to
the effective date of the SSA Release in accordance with subsection 7.a.i.
above, and except for any claims relating to a party’s failure to satisfy any of
its obligations set forth in this Agreement or an Exhibit hereto, including but
not limited to the Raritan River Liabilities and the NL Pre-Closing
Environmental Costs, SSA, for itself and its heirs, assigns, executors,
administrators and successors, hereby covenants not, and not to cause or
encourage any third party, to sue or take any judicial or administrative action
of any kind or nature against the NL Companies, SERA and the County, their
respective successors in interest, successors in title, their respective past,
present and future assigns, and all of their respective employees, officers,
tenants, predecessors, directors, agents, shareholders, fiduciaries,
representatives, attorneys, engineers, insurers’ divisions, subsidiaries and
affiliates, for or relating to any and all claims, demands, actions, rights,
losses, expenses, fees, costs, liabilities and causes of action, of every kind
and character, whether asserted or unasserted, whether known or unknown,
suspected or unsuspected, in law or in equity, for or by reason of any matter,
cause or thing whatsoever, that SSA may have in the past, now has, or may in the
future have arising in relation the Property.  Without limiting the
generality of the foregoing and subject to the exceptions provided above, SSA
covenants not, and not to cause or encourage any third party, to sue or take any
administrative or judicial action of any kind or nature for or relating to any
and all claims and causes of action that it has or may in the future have
(including, but not limited to, claims for cost recovery, contribution or unjust
enrichment) related to any costs or expenses incurred by SSA: (A) to investigate
or remediate environmental contamination on or emanating from the Property, (B)
to perform operation and maintenance of any remedial measure heretofore or
hereafter implemented on the Property, (C) to perform operation and maintenance
of the closed landfill on the Property, or (D) to evaluate, dispute or resolve
claims or potential claims for injury to natural resources alleged to have been
caused by Hazardous Substances on the Property or emanating from the
Property.

     

    b. Release and Covenant Not to
Sue by SERA.

     

    i. The
following release shall be effective for each Parcel when both of the following
conditions have been satisfied for such Parcel: (1) completion of the applicable
closing and (2) written confirmation from the NJDEP in one or more letters, that
no further action is required with respect to all Assumed Environmental
Liabilities relating to such Parcel (the “SERA Release”): except for any claims
relating to a party’s failure to satisfy any of its obligations set forth in
this Agreement or an Exhibit hereto, and the indemnity set forth in Section 5.c.
of this Agreement, SERA, for itself and its heirs, assigns, executors,
administrators and successors, hereby acknowledges full and complete
satisfaction of and releases and forever discharges the NL Companies, SSA and
the County, their respective successors in interest and successors in title
(excluding SERA and its successors in interest and successors in title except
for SSA and its successors in interest and successors in title), their
respective past, present and future assigns, and all of their respective
employees, officers, tenants, predecessors, directors, agents, shareholders,
fiduciaries, representatives, attorneys, engineers, insurers’ divisions,
subsidiaries and affiliates, of and from any and all claims, demands, actions,
rights, losses, expenses, fees, costs, liabilities and causes of action, of
every kind and character, whether asserted or unasserted, whether known or
unknown, suspected or unsuspected, in law or in equity, for or by reason of any
matter, cause or thing whatsoever, that SERA may have in the past, now has, or
may in the future have arising in relation the Property.  Without
limiting the generality of the foregoing and subject to the exceptions provided
above, SERA releases any and all claims and causes of action that it has or may
in the future have (including, but not limited to, claims for cost recovery,
contribution or unjust enrichment) related to any costs or expenses incurred by
SERA: (A) to investigate or remediate environmental contamination on or
emanating from the Property, (B) to perform operation and maintenance of any
remedial measure heretofore or hereafter implemented on the Property, (C) to
perform operation and maintenance of the closed landfill on the Property, or (D)
to evaluate, dispute or resolve claims or potential claims for injury to natural
resources alleged to have been caused by Hazardous Substances on the Property or
emanating from the Property.  Notwithstanding anything to the contrary
above, SERA does not release any cost recovery or contribution claims it may
have against the NL Companies relating to any work performed at the Property
funded with HDSRF grants or EIT loans.

     

    ii. Prior to
the effective date of the SERA Release in accordance with Section 7.b.i. above,
and except for any claims relating to a party’s failure to satisfy any of its
obligations set forth in this Agreement or an Exhibit hereto, and the indemnity
set forth in Section 5.c. of this Agreement, SERA, for itself and its heirs,
assigns, executors, administrators and successors, hereby covenants not, and not
to cause or encourage any third party, to sue or take any judicial or
administrative action of any kind or nature against the NL Companies, SSA and
the County, their respective successors in interest, successors in title, their
respective past, present and future assigns, and all of their respective
employees, officers, tenants, predecessors, directors, agents, shareholders,
fiduciaries, representatives, attorneys, engineers, insurers’ divisions,
subsidiaries and affiliates, for or relating to any and all claims, demands,
actions, rights, losses, expenses, fees, costs, liabilities and causes of
action, of every kind and character, whether asserted or unasserted, whether
known or unknown, suspected or unsuspected, in law or in equity, for or by
reason of any matter, cause or thing whatsoever, that SERA may have in the past,
now has, or may in the future have arising in relation the
Property.  Without limiting the generality of the foregoing and
subject to the exceptions provided above, SERA hereby covenants not, and not to
cause or encourage any third party, to sue or take any judicial or
administrative action of any kind or nature for or relating to any and all
claims and causes of action that it has or may in the future have (including,
but not limited to, claims for cost recovery, contribution or unjust enrichment)
related to any costs or expenses incurred by SERA: (A) to investigate or
remediate environmental contamination on or emanating from the Property, (B) to
perform operation and maintenance of any remedial measure heretofore or
hereafter implemented on the Property, (C) to perform operation and maintenance
of the closed landfill on the Property, or (D) to evaluate, dispute or resolve
claims or potential claims for injury to natural resources alleged to have been
caused by Hazardous Substances on the Property or emanating from the
Property.  Notwithstanding the foregoing, SERA does not covenant not
to sue or take administrative or judicial action for or relating to any claims,
demands, actions, rights, losses, expenses, fees, costs, liabilities or causes
of action that SERA may have, following a Default under this Agreement that
leads to the non-occurrence of the Second and/or Third Closing, related to the
activities listed in (A) through (D) of the immediately preceding
sentence.  Notwithstanding anything to the contrary above, SERA does
not covenant not to sue the NL Companies for cost recovery or contribution
relating to any work performed at the Property funded with HDSRF grants or EIT
loans.

     

    c. Release by the
County.

     

    i. The
following release shall be effective for each Parcel when both of the following
conditions have been satisfied for such Parcel: (1) completion of the applicable
closing and (2) written confirmation from the NJDEP in one or more letters, that
no further action is required with respect to all Assumed Environmental
Liabilities relating to such Parcel (the “County Release”): except for any
claims relating to a party’s failure to satisfy any of its obligations set forth
in this Agreement or an Exhibit hereto and the indemnity set forth in Section
5.c. of this Agreement, the County, for itself and its heirs, assigns,
executors, administrators and successors, hereby acknowledges full and complete
satisfaction of and releases and forever discharges the NL Companies and SSA,
their respective successors in interest and successors in title (excluding the
County and its successors in interest and successors in title), their respective
past, present and future assigns, and all of their respective employees,
officers, tenants, predecessors, directors, agents, shareholders, fiduciaries,
representatives, attorneys, engineers, insurers’ divisions, subsidiaries and
affiliates, of and from any and all claims, demands, actions, rights, losses,
expenses, fees, costs, liabilities and causes of action, of every kind and
character, whether asserted or unasserted, whether known or unknown, suspected
or unsuspected, in law or in equity, for or by reason of any matter, cause or
thing whatsoever, that the County may have in the past, now has, or may in the
future have arising in relation the Property.  Without limiting the
generality of the foregoing and subject to the exceptions provided above, the
County releases any and all claims and causes of action that it has or may in
the future have (including, but not limited to, claims for cost recovery,
contribution or unjust enrichment) related to any costs or expenses incurred by
the County: (A) to investigate or remediate environmental contamination on or
emanating from the Property, (B) to perform operation and maintenance of any
remedial measure implemented on the Property, (C) to perform operation and
maintenance of the closed landfill on the Property, or (D) to evaluate, dispute
or resolve claims or potential claims for injury to natural resources alleged to
have been caused by Hazardous Substances on the Property or emanating from the
Property.

     

    ii. Prior to
the effective date of the County Release in accordance with Section 7.c.i.
above, and except for any claims relating to a party’s failure to satisfy any of
its obligations set forth in this Agreement or an Exhibit hereto and the
indemnity set forth in Section 5.c. of this Agreement, the County, for itself
and its heirs, assigns, executors, administrators and successors, hereby
covenants not, and not to cause or encourage any third party, to sue or take any
judicial or administrative action of any kind or nature against the NL Companies
and SSA, their respective successors in interest, successors in title, their
respective past, present and future assigns, and all of their respective
employees, officers, tenants, predecessors, directors, agents, shareholders,
fiduciaries, representatives, attorneys, engineers, insurers’ divisions,
subsidiaries and affiliates, for or relating to any and all claims, demands,
actions, rights, losses, expenses, fees, costs, liabilities and causes of
action, of every kind and character, whether asserted or unasserted, whether
known or unknown, suspected or unsuspected, in law or in equity, for or by
reason of any matter, cause or thing whatsoever, that the County may have in the
past, now has, or may in the future have arising in relation the
Property.  Without limiting the generality of the foregoing and
subject to the exceptions provided above, the County hereby covenants not, and
not to cause or encourage any third party, to sue or take any judicial or
administrative action of any kind or nature for or relating to any and all
claims and causes of action that it has or may in the future have (including,
but not limited to, claims for cost recovery, contribution or unjust enrichment)
related to any costs or expenses incurred by the County: (A) to investigate or
remediate environmental contamination on or emanating from the Property, (B) to
perform operation and maintenance of any remedial measure implemented on the
Property, (C) to perform operation and maintenance of the closed landfill on the
Property, or (D) to evaluate, dispute or resolve claims or potential claims for
injury to natural resources alleged to have been caused by Hazardous Substances
on the Property or emanating from the Property.  Notwithstanding the
foregoing, the County does not covenant not to sue or take administrative or
judicial action for or relating to any claims, demands, actions, rights, losses,
expenses, fees, costs, liabilities or causes of action that the County may have,
in the event that the County acquires title to any portion of the Property
following a Default under this Agreement that leads to the non-occurrence of the
Second and/or Third Closing:  (Y) related to the activities listed in
(A) through (D) of the immediately preceding sentence; or (Z) related to the
validity, priority or enforcement of its mortgage with respect to the
Property.

     

    d. Release by the NL
Companies.

     

    i. The
following release shall be effective for each Parcel when both of the following
conditions have been satisfied for such Parcel: (1) completion of the applicable
closing and (2) written confirmation from the NJDEP in one or more letters, that
no further action is required with respect to all Assumed Environmental
Liabilities relating to such Parcel (the “NL Companies Release”): except for any
claims relating to a party’s failure to satisfy any of its obligations set forth
in this Agreement or an Exhibit hereto, including but not limited to the
indemnity set forth in Section 5.c. of this Agreement and the SSA Pre-Closing
Environmental Costs, the NL Companies, each for itself and its heirs, assigns,
executors, administrators and successors, hereby acknowledge full and complete
satisfaction of and releases and forever discharges SERA, the County and SSA,
their respective successors in interest and successors in title, their
respective past, present and future assigns, and all of their respective
employees, officers, tenants, predecessors, directors, agents, shareholders,
fiduciaries, representatives, attorneys, engineers, insurers’ divisions,
subsidiaries and affiliates, of and from any and all claims, demands, actions,
rights, losses, expenses, fees, costs, liabilities and causes of action, of
every kind and character, whether asserted or unasserted, whether known or
unknown, suspected or unsuspected, in law or in equity, for or by reason of any
matter, cause or thing whatsoever, that the NL Companies may have in the past,
now have, or may in the future have arising in relation to the
Property.  Without limiting the generality of the foregoing and
subject to the exceptions provided above, each of the NL Companies release any
and all claims and causes of action that it has or may in the future have
(including, but not limited to, claims for cost recovery, contribution or unjust
enrichment) related to any costs or expenses incurred by the NL Companies to:
(A) investigate or remediate environmental contamination on or emanating from
the Property, (B) perform operation and maintenance of any remedial measure
implemented on the Property, (C) perform operation and maintenance of the closed
landfill on the Property, or (D) evaluate, dispute or resolve claims or
potential claims for injury to natural resources alleged to have been caused by
Hazardous Substances on the Property or emanating from the Property, including
but not limited to NRD Liabilities, Raritan River Liabilities, NL Pre-Closing
Environmental Costs.  Notwithstanding the foregoing, the NL Companies
do not release any claims, demands, actions, rights, losses, expenses, fees,
costs, liabilities or causes of action that the NL Companies may have against
SERA arising in relation to actions or inactions by SERA with respect to the
Property after title to the Property vested in SERA.

     

    ii. Prior to
the effective date of the NL Companies Release in accordance with Section 7.d.i.
above, and except for any claims relating to a party’s failure to satisfy any of
its obligations set forth in this Agreement or an Exhibit hereto, including but
not limited to the indemnity set forth in Section 5.c. of this Agreement and the
SSA Pre-Closing Environmental Costs, the NL Companies, each for itself and its
heirs, assigns, executors, administrators and successors, hereby covenants not,
and not to cause or encourage any third party, to sue or take any judicial or
administrative action of any kind or nature against SERA, the County and SSA,
their respective successors in interest, successors in title, their respective
past, present and future assigns, and all of their respective employees,
officers, tenants, predecessors, directors, agents, shareholders, fiduciaries,
representatives, attorneys, engineers, insurers’ divisions, subsidiaries and
affiliates, for and relating to any and all claims, demands, actions, rights,
losses, expenses, fees, costs, liabilities and causes of action, of every kind
and character, whether asserted or unasserted, whether known or unknown,
suspected or unsuspected, in law or in equity, for or by reason of any matter,
cause or thing whatsoever, that the NL Companies may have in the past, now have,
or may in the future have arising in relation to the
Property.  Without limiting the generality of the foregoing and
subject to the exceptions provided above, each of the NL Companies hereby
covenants not, and not to cause or encourage any third party, to sue or take any
judicial or administrative action of any kind or nature for or relating to any
and all claims and causes of action that it has or may in the future have
(including, but not limited to, claims for cost recovery, contribution or unjust
enrichment) related to any costs or expenses incurred by the NL Companies to:
(A) investigate or remediate environmental contamination on or emanating from
the Property, (B) perform operation and maintenance of any remedial measure
implemented on the Property, (C) perform operation and maintenance of the closed
landfill on the Property, or (D) evaluate, dispute or resolve claims or
potential claims for injury to natural resources alleged to have been caused by
Hazardous Substances on the Property or emanating from the Property, including
but not limited to NRD Liabilities, Raritan River Liabilities and NL Pre-Closing
Environmental Costs.  Notwithstanding the foregoing, the NL Companies
do not covenant not to sue or take administrative or judicial action for or
relating to any claims, demands, actions, rights, losses, expenses, fees, costs,
liabilities or causes of action that the NL Companies may have: (X) against SERA
arising in relation to actions or inactions by SERA with respect to the Property
after title to the Property vested in SERA; or (Y) against SERA or the County
with respect to the NL Companies’ claimed equitable
lien.  Notwithstanding the foregoing, the NL Companies do not covenant
not to sue or take administrative or judicial action for or relating to any
claims, demands, actions, rights, losses, expenses, fees, costs, liabilities or
causes of action that the NL Companies may have: (X) against SERA arising in
relation to actions or inactions by SERA with respect to the Property after
title to the Property vested in SERA; or, following a Default under this
Agreement that leads to the non-occurrence of the Second and/or Third
Closing:   (Y) related to the activities listed in (A) through
(D) above in this Subsection; or (Z) related to the validity, priority or
enforcement of the NL Companies' claimed equitable lien with respect to the
Property.

     

    8. Representations, Warranties,
and Covenants.

     

    a. Representations and
Warranties of SSA.  SSA hereby represents and warrants to the
NL Companies, SERA and the County as follows:

     

    i. Organization;
Qualification.  SSA is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware
and authorized to transact business in the State of New Jersey and has all
requisite corporate power and authority to own, lease, and operate its
properties and to carry on its business as is now being conducted.

     

    ii. Authority Relative to this
Agreement.  SSA has full corporate power and authority to
execute and deliver this Agreement and all other agreements and documents
contemplated hereby or executed in connection herewith to which it is a party
(this Agreement and such other agreements and documents referred to collectively
as the “Transaction Documents”) and to consummate the transactions contemplated
thereby.  The execution and delivery of the Transaction Documents, and
the consummation of the transactions contemplated thereby, have been duly and
validly authorized by the partners of SSA, and no other corporate proceedings of
SSA are necessary to authorize the Transaction Documents or to consummate the
transactions contemplated thereby.  The Transaction Documents have
been duly and validly executed and delivered by SSA, and each of such agreements
constitutes a valid and binding agreement of SSA, enforceable against SSA in
accordance with its terms.

     

    iii. Consents and Approvals; No
Violation.  Neither the execution and delivery of the
Transaction Documents nor the consummation or performance of the transactions
contemplated thereby will, directly or indirectly (with or without notice or
lapse of time):

     

    (A) contravene,
conflict with, or result in a violation of (i) the organizational documents of
SSA, or (ii) any resolution adopted by the partners of SSA;

     

    (B) contravene,
or conflict with, or result in a violation of any federal, state, local,
municipal, foreign, international, multinational, or other order, constitution,
law, rule, ordinance, permit, principle of common law, regulation, statute, or
treaty (each, a “Legal Requirement”) to which the SSA may be
subject;

     

    (C) contravene,
or conflict with, or result in a violation of any of the terms or requirements
of, or give any governmental agency the right to revoke, withdraw, suspend,
cancel, terminate, or materially modify any permit, approval, consent,
authorization, license, variance, or permission required by a governmental
agency under any Legal Requirement (each, a “Permit”) that is material and is
held by SSA; or

     

    (D) contravene,
conflict with, or result in a violation or breach of any provision of, or give
any person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or modify,
or to receive any additional consideration under any material contract or
material Permit of SSA.

     

    iv. Availability of
Funds.  SSA has the loan commitments described in Section 6 of
this Agreement.

     

    b. Representations, Warranties
and Covenants of SERA.  SERA hereby represents and warrants to
the NL Companies, SSA and the County as follows:

     

    i. Organization;
Qualification.  SERA is a municipal redevelopment agency
established by the Borough of Sayreville pursuant to the Local Redevelopment and
Housing Law, N.J.S.A. 40A:12A-1,
et seq. and is duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and has all requisite power and authority to own, lease, and operate
its properties and to carry on its business as is now being
conducted.

     

    ii. Authority Relative to this
Agreement.  SERA has full power and authority to execute and
deliver the Transaction Documents and to consummate the transactions
contemplated thereby.  The execution and delivery of the Transaction
Documents, and the consummation of the transactions contemplated thereby, have
been duly and validly authorized by the Board of Commissioners of SERA, and no
other proceedings on the part of SERA are necessary to authorize the Transaction
Documents or to consummate the transactions contemplated thereby.  The
Transaction Documents have been duly and validly executed and delivered by SERA
and each of such agreements constitutes a valid and binding agreement of SERA,
enforceable against SERA in accordance with its terms.

     

    iii. Consents and Approvals; No
Violation.  Neither the execution and delivery of the
Transaction Documents nor the consummation or performance of the transactions
contemplated thereby will, directly or indirectly (with or without notice or
lapse of time):

     

    (A) contravene,
conflict with, or result in a violation of (i) the organizational documents of
SERA, or (ii) any resolution adopted by the Board of Commissioners of
SERA;

     

    (B) contravene,
or conflict with, or result in a violation of any Legal Requirement to which
SERA may be subject;

     

    (C) contravene,
or conflict with, or result in a violation of any of the terms or requirements
of, or give any governmental agency the right to revoke, withdraw, suspend,
cancel, terminate, or materially modify any Permit that is material and is held
by SERA; or

     

    (D) contravene,
conflict with, or result in a violation or breach of any provision of, or give
any person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or modify,
or to receive any additional consideration under any material contract or
material Permit of SERA.

     

    iv. Disclosure of Environmental
Information.  To the best of SERA’s actual knowledge,
information and belief, SERA has disclosed to SSA any and all environmental
information or data in any way relating to the Property in SERA’s possession,
custody, or control, whether written or unwritten, including but not limited to:
(1) the presence or former presence of any Hazardous Substances, environmental
contamination or remediation of soil, groundwater, wetlands, sediments, or the
Raritan River; (2) any permitting information relating to the Property,
including but not limited to existing permits, as well as evaluations and
assessments for securing permits; and (3) any communications with environmental
non-profit organizations or community organizations relating to the
Property.

     

    v. State Grants and
Loans.  In accordance with its obligations under the
Redevelopment Agreement, SERA hereby covenants and agrees to use its best
efforts to apply for and secure any and all available state grants and loans to
pay for the performance of the Assumed Environmental Liabilities.

     

    c. Representations and
Warranties of the County.  The County hereby represents and
warrants to the NL Companies, SERA and SSA as follows:

     

    i. Organization;
Qualification.  The County is a body politic and corporate duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and has all requisite power and authority to own, lease, and operate
its properties and to carry on its business as is now being
conducted.

     

    ii. Authority Relative to this
Agreement.  The County has full power and authority to execute
and deliver the Transaction Documents and to consummate the transactions
contemplated thereby.  The execution and delivery of the Transaction
Documents, and the consummation of the transactions contemplated thereby, have
been duly and validly authorized by the Board of Chosen Freeholders of the
County, and no other proceedings on the part of the County are necessary to
authorize the Transaction Documents or to consummate the transactions
contemplated thereby.  The Transaction Documents have been duly and
validly executed and delivered by the County and each of such agreements
constitutes a valid and binding agreement of the County, enforceable against the
County in accordance with its terms.

     

    iii. Consents and Approvals; No
Violation.  Neither the execution and delivery of the
Transaction Documents nor the consummation or performance of the transactions
contemplated thereby will, directly or indirectly (with or without notice or
lapse of time):

     

    (A) contravene,
conflict with, or result in a violation of (i) the organizational documents of
the County, or (ii) any resolution adopted by the Board of Chosen Freeholders of
the County;

     

    (B) contravene,
or conflict with, or result in a violation of any Legal Requirement to which the
County may be subject;

     

    (C) contravene,
or conflict with, or result in a violation of any of the terms or requirements
of, or give any governmental agency the right to revoke, withdraw, suspend,
cancel, terminate, or materially modify any Permit that is material and is held
by the County; or

     

    (D) contravene,
conflict with, or result in a violation or breach of any provision of, or give
any person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or modify,
or to receive any additional consideration under any material contract or
material Permit of the County.

     

    d. Representations, Warranties
and Covenant of NL Companies.  Each of the NL Companies hereby
represents and warrants to SSA, SERA and the County as follows:

     

    i. Organization;
Qualification.  Such NL Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New Jersey and has all requisite power and authority to own, lease, and operate
its properties and to carry on its business as is now being
conducted.

     

    ii. Authority Relative to this
Agreement.  Such NL Company has full power and authority to
execute and deliver the Transaction Documents and to consummate the transactions
contemplated thereby.  The execution and delivery of the Transaction
Documents, and the consummation of the transactions contemplated thereby, have
been duly and validly authorized in accordance with such NL Company’s
organizational documents, and no other proceedings on the part of the Company
are necessary to authorize the Transaction Documents or to consummate the
transactions contemplated thereby.  The Transaction Documents have
been duly and validly executed and delivered by such NL Company and each of such
agreements constitutes a valid and binding agreement of the NL Company,
enforceable against the NL Company in accordance with its terms.

     

    iii. Consents and Approvals; No
Violation.  Except for the Environmental Permits, neither the
execution and delivery of the Transaction Documents nor the consummation or
performance of the transactions contemplated thereby will, directly or
indirectly (with or without notice or lapse of time):

     

    (A) contravene,
conflict with, or result in a violation of (i) the organizational documents of
such NL Company, or (ii) any resolution adopted by the Board of Directors of
such NL Company;

     

    (B) contravene,
or conflict with, or result in a violation of any Legal Requirement to which
such NL Company may be subject;

     

    (C) contravene,
or conflict with, or result in a violation of any of the terms or requirements
of, or give any governmental agency the right to revoke, withdraw, suspend,
cancel, terminate, or materially modify any Permit that is material and is held
by such NL Company; or

     

    (D) contravene,
conflict with, or result in a violation or breach of any provision of, or give
any person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate, or modify,
or to receive any additional consideration under any material contract or
material Permit of such NL Company.

     

    iv. Disclosure of Environmental
Information.  The NL Companies covenant that prior to the
Initial Closing, the NL Companies shall make available to SSA all environmental
information, reports and data relating to the Property that currently is in the
possession of Environmental Resources Management except to the extent that the
NL Companies deem such information or data to be subject to attorney-client
privilege or the work product doctrine, and subject to the conditions that any
and all such information will be made available “AS IS” and without warranty of
any type or nature, including without limitation, any warranty of accuracy or
fitness for a particular purpose and that any and all warranties related to such
information are hereby expressly disclaimed.

     

    v. Environmental
Permits.  To the best of the NL Companies' actual knowledge,
information and belief: (1) the NL Companies are presently not in violation of
any term or condition of any Environmental Permits; (2) the NL Companies has not
received any written or verbal notice from the NJDEP, any other agency, or a
third party alleging that the NL Companies are in violation of any term or
condition of any Environmental Permit; and (3) there are no actual, pending, or
threatened claims by the NJDEP, any other agency, or a third-party relating to
any alleged violation of any Environmental Permit.

     

    9. Conditions
Precedent.

     

    a. Conditions to Obligations of
the Parties at the Initial Closing.  All obligations of the
parties at the Initial Closing hereunder are subject to the fulfillment of each
of the following conditions on or prior to the date specified in each such
condition, any one or more of which may be waived in writing by the party or
parties for whose benefit the condition is imposed:

     

    i. Representations and
Warranties.  The representations and warranties of SSA, SERA,
the NL Companies and the County in this Agreement shall be true and complete in
all material respects (with the exception of the representations and warranties
which have been previously qualified by materiality which shall be true and
correct) at and as of the Initial Closing Date as though such representations
and warranties were made at and as of such time.

     

    ii. Redevelopment Agreement and
Ground Lease Agreement.  On or by the Initial Closing, SSA and
SERA shall enter into the Redevelopment Agreement and the Ground Lease
Agreement.

     

    iii. Financial
Assurance.

     

    (A) On or by
the Initial Closing, SSA shall enter into a Four-Party Remediation Security
Agreement (the “Financial Assurance Agreement”), in substantially the form
attached to this Agreement as Exhibit O, with SERA,
the NL Companies and Bank of America, N.A., to provide a remediation funding
source in the amount of Twenty Million Dollars ($20,000,000) relating to the
Assumed Environmental Liabilities (the “Financial Assurance”), including the
costs associated with the remediation of contaminated freshwater wetlands at the
Site.  After entering the Financial Assurance Agreement, SSA shall
have no further obligation to replenish or contribute to the Financial
Assurance.  The Financial Assurance shall be used either to pay for
environmental investigation or remediation or to secure repayment of any EIT
loan(s) obtained by SERA relating to the Assumed Environmental Liabilities
(“Eligible Uses”), and the Financial Assurance Agreement shall provide that all
requests by  SSA for the release of funds to pay for Eligible Uses
shall be accompanied with a joint written approval by SERA and the NL
Companies.  SSA covenants and agrees that, prior to making a request
for reimbursement under the Financial Assurance Agreement, SSA shall first
utilize any state grant funds, EIT loans, or other public grants which have been
received by SERA to perform remediation at the Property and are available to
SSA.

     

    (B)           If
at any time SSA determines that the estimated cost of the remaining remedial
activities to satisfy the Assumed Environmental Liabilities (“Remaining
Estimated Costs”) are less than the funds remaining in the Financial Assurance
Agreement, SSA may submit a request for a release of funds from the Financial
Assurance Agreement so that the remaining funds held under the Financial
Assurance Agreement will equal the Remaining Estimated Costs.  Such a
request by SSA shall be accompanied with a certification and supporting
documentation from SSA’s environmental consultant, and the requested funds shall
be released to SSA provided that SERA and the NL Companies approve in writing
such a request.  In the event that SERA and/or the NL Companies
disagrees with such a request by SSA, such disagreeing party shall provide SSA
with written notice within thirty (30) days of SSA’s request, and, within five
(5) days of such written disagreement notice, SSA, SERA and the NL Companies
shall meet in a good faith effort to resolve any disagreement between the
parties.  If SERA and the NL Companies fail to disapprove of SSA’s
request within such thirty (30) day period, SSA shall deliver written notice to
SERA and the NL Companies of such failure.  If SERA and the NL
Companies shall then fail to deliver a written disapproval notice within ten
(10) days of such SSA notice, SSA request for reimbursement shall be deemed to
be approved by SERA and the NL Companies.

     

    (C)           The
Financial Assurance Agreement shall also provide that (1) in the event of a
default by SSA that leads to SERA’s removal of SSA as the party performing the
remediation for the Assumed Environmental Liabilities, SERA shall have the full
benefit of and access to any funds remaining in the Financial Assurance for use
in completing any and all of the environmental investigation and/or remediation
obligations associated with the Assumed Environmental Liabilities (including,
but not limited to, use of such funds as security for repayment of any EIT
loan(s) or use of such funds to pay for investigation or remediation costs); and
(2) in the event of a default by SERA that leads to the NJDEP’s removal of SERA
as the lead remediator and the NL Companies are designated by NJDEP as the lead
remediator of the Property, the NL Companies shall have the full benefit of and
access to any funds remaining in the Financial Assurance for use in completing
any and all of the environmental investigation and/or remediation obligations
associated with the Assumed Environmental Liabilities.

     

    (D)           Subject
to SSA’s ability to reduce the amount of Financial Assurance in accordance with
the terms of this Section 9.a.iii., SSA’s obligation to maintain the Financial
Assurance shall not terminate until both of the following conditions have been
satisfied: (1) written confirmation from the NJDEP, in one or more letters, that
no further action is required with respect to all Assumed Environmental
Liabilities; and (2) the Financial Assurance no longer is required to secure
repayment of any EIT loan(s).  In the event that the above conditions
described in this subsection have been satisfied with the exception of the
ongoing obligation by SSA to operate and maintain any engineering and
institutional controls utilized at the Property (the “O&M Obligations”),
SSA, SERA and the NL Companies shall mutually agree, which agreement shall not
be unreasonably conditioned, denied or delayed, on the estimated cost of the
O&M Obligations (the “O&M Cost Estimate”), and any funds remaining in
the Financial Assurance in excess of the O&M Cost Estimate shall be released
to SSA.

     

    iv. Intentionally
Omitted.

     

    v. NJDEP
Matters.

     

    (A) Memorandum of
Understanding.

     

    (1)           On
or by the Initial Closing, SERA shall enter into a Memorandum of Understanding
with the NJDEP in a form reasonably acceptable to the NL Companies and SSA,
pursuant to which SERA shall be the lead party for performance of all Assumed
Environmental Liabilities relating to the Property.  SERA shall
furnish the NL Companies, SSA and the County with a copy of the fully-executed
Memorandum of Understanding between SERA and the NJDEP.

     

    (2)           In
accordance with the terms of Section 5 of this Agreement, SSA hereby agrees to
perform any and all of SERA’s obligations under the Memorandum of
Understanding.

     

    (B) NRD Liabilities
Release.  On or by the Initial Closing, the NJDEP shall have
resolved any claims it may have for any and all NRD Liabilities by entering into
a settlement agreement with the NL Companies and SSA pursuant to which the NL
Companies and SSA shall receive a release with respect to the NRD
Liabilities.

     

    (C) Brownfield Development Area
Designation.  On or by the Initial Closing, SERA shall have
applied for, and the NJDEP shall have granted SERA’s application for,
designation of the Property as a Brownfield Development Area.

     

    (D) HDSRF/EIT
Release.  On or by the Initial Closing, the NJDEP shall have
entered into a settlement agreement with the NL Companies and SSA in a form
reasonably acceptable to the NL Companies and SSA, pursuant to which the NJDEP
shall release the NL Companies, and to the extent applicable, SSA, from any
claims or liabilities relating to any HDSRF grant funds or EIT loan(s) provided
to SERA in connection with the Property.

     

    (E) Consent
Order.  On or by the Initial Closing, the NJDEP will enter an
administrative consent order or orders with SSA, in a form reasonably acceptable
to the NL Companies, pursuant to which the NJDEP shall unconditionally covenant
not to sue SSA, and its respective affiliates, partners, successors (including
successors in title), assigns and tenants (collectively the “Released Parties”)
for any and all claims or liability that the NJDEP has or may have against the
Released Parties relating to the Raritan River Liabilities; provided, however,
that such consent order(s) may not provide SSA with any contribution protection
or release of liability for any Exacerbation River Liabilities.

     

    (F) HDSRF Grant
Application/Covenant of Best Efforts.  On or by the Initial
Closing, SERA shall have submitted the necessary application(s) to receive HDSRF
grants funds.  SERA covenants that it shall use its best efforts to
submit the necessary application(s) to receive EIT loan funds as expeditiously
as possible, and to continue to pursue the HDSRF grant and EIT loan applications
(including submitting all necessary supporting documents and information) so as
to secure the grants and loans as expeditiously as possible.

     

    vi. Environmental
Insurance.  On or by the Initial Closing, SSA shall, at its
sole cost and expense, obtain and maintain one or more environmental insurance
policies to be issued by AIG, XL or Chubb in substantially the same form as the
form attached hereto as Exhibit P, with a
minimum term of ten (10) years, with aggregate limits of not less than $20
Million, and a self-insured retention of not more than $250,000, to
cover:  (i) any and all third-party claims for bodily injury and
property damage (excluding NRD Liabilities) relating to known environmental
conditions at the Property; and (ii) any and all claims for bodily injury,
property damage, or remediation liability associated with unknown environmental
conditions at the Property, including but not limited to all necessary operation
and maintenance related to such unknown environmental conditions, if
any.  The NL Companies, SERA and the County shall be named as
additional insureds on each such policy.  Without limiting the
generality thereof and notwithstanding anything to the contrary reflected in
Exhibit P, each
such policy shall:  (i) make clear that the insured vs. insured
exclusion will not apply as among the parties to this Agreement; (ii) contain a
waiver of subrogation in favor of the NL Companies, SERA and the County; (iii)
be non-cancellable, except in the event of non-payment of premium and provide
for notice to the NL Companies in such event; (iv) contain an endorsement that
the policy is intended to be primary coverage; and (v) be subject to a final
review and approval by the NL Companies, which approval shall not be
unreasonably withheld, conditioned or delayed.  Notwithstanding
anything to the contrary above, the NL Companies shall not be named as an
additional insured with respect to any coverage provided for NRD Liabilities and
Raritan River Liabilities.  A certificate for each such policy
evidencing the coverage provided thereunder and that the NL Companies, the
County and SERA have been named as additional insureds shall be provided to the
NL Companies, the County and SERA.  Assurance of payment of the
premiums for such policies shall be provided as follows:

     

    (A) At the
Initial Closing, SSA shall provide evidence of payment in full of the premiums
for each policy for its full term; or

     

    (B) If SSA
elects to pay the premiums over time, then at the Initial Closing, SSA shall
provide evidence of payment in full of the premiums for each policy for the
first year of coverage, and shall provide a letter of credit for the remaining
balance of the premiums.

     

    vii. Appraisals.  On
or by the Initial Closing, the County shall have obtained appraisals
establishing a fair market value (A) of at least Three Million Dollars
($3,000,000) for the C Parcels Easement and the Parcel B Easement (the “Easement
Appraisal”) and (B) of at least Thirteen Million Eight Hundred Thousand Dollars
($13,800,000) for the fee interest in Parcel A (the “Parcel A Appraisal”)
(collectively, the Easement Appraisal and the Parcel A Appraisal, the
“Appraisals”) and the Parcel A Appraisal may be revised or updated to meet the
NJDEP requirements.  The County shall select an appraiser of its
choice to perform the Easement Appraisal.  With respect to the Parcel
A Appraisal, promptly following the execution and delivery of this Agreement,
the County shall promptly select an appraiser to perform the Parcel A Appraisal
from the NJDEP approved list for open space acquisitions and, thereafter,
diligently pursue completion thereof.

     

    viii. Court Consent
Order.  On or by the Initial Closing, the Court shall have
executed the Consent Order and delivered a copy thereof to the NL
Companies.

     

    b. Conditions to Obligations of
the Parties at the Second Closing.  All obligations of the
parties at the Second Closing hereunder are subject to the fulfillment prior to
or at the Second Closing Date of each of the following conditions, any one or
more of which may be waived in writing by the party or parties for whose benefit
the condition is imposed.

     

    i. Completion of Initial
Closing.  All conditions prerequisite to the Initial Closing
shall have been satisfied and the Initial Closing shall have been
completed.

     

    ii. Representations and
Warranties.  The representations and warranties of SSA, SERA,
the NL Companies and the County in this Agreement shall be true and complete in
all material respects (with the exception of the representations and warranties
which have been previously qualified by materiality which shall be true and
correct) at and as of the Second Closing Date as though such representations and
warranties were made at and as of such time.

     

    iii. Capping of Parcel
A.  SSA shall have delivered to SERA, the NL Companies and the
County a No Further Action Letter or equivalent document from the NJDEP that all
required capping on Parcel A has been completed.

     

    c. Conditions to Obligations of
the Parties at the Third Closing.  All obligations of the
parties at the Third Closing hereunder are subject to the fulfillment prior to
or at the Third Closing Date of each of the following conditions, any one or
more of which may be waived in writing by the party or parties for whose benefit
the condition is imposed.

     

    i. Completion of Initial and
Second Closings.  All conditions prerequisite to the Initial
and Second Closings shall have been satisfied and the Initial and Second
Closings shall have been completed.

     

    ii.   Representations and
Warranties.  The representations and warranties of SSA, SERA,
the County and the NL Companies in this Agreement shall be true and complete in
all material respects (with the exception of the representations and warranties
which have been previously qualified by materiality which shall be true and
correct) at and as of the Third Closing Date as though such representations and
warranties were made at and as of such time.

     

    d. Best Efforts to Satisfy
Closing Conditions.  The parties shall use their best efforts
to satisfy all conditions to each closing and shall take all such actions,
expend such sums and incur such costs as may be reasonable and appropriate in
order to accomplish the transactions contemplated hereby.

     

    10. Closings.

     

    a. Subject
to the satisfaction or, to the extent permissible by law, waiver (in writing, by
the party or parties designated with respect to specific conditions as
identified in Section 11.a.i. below) on or before the Initial Closing Date, the
Second Closing Date or the Third Closing Date, as the case may be, of the
conditions described in the applicable subsection of Section 9 hereof, the parties hereto shall be obligated to
consummate the transactions contemplated pursuant to the applicable subsections
of Sections 1 and 2 hereof.  The parties
shall use their best efforts to cause the Initial Closing to take place at 10
a.m. prevailing Eastern Time at the offices of SERA’s counsel on the Initial
Closing Date or such other location, date and time as the parties shall mutually
agree, provided, however, that in no event shall the Initial Closing Date be
later than August 1, 2008.

     

    b. Nothing
contained in this Section 10 shall limit a party’s
right to terminate this Agreement under Section 11.

     

    11. Termination.

     

    a. Termination
Rights.  The Agreement may be terminated with prior written
notice by the terminating party to the other parties, as follows:

     

    i. Prior to
the Initial Closing, provided that the applicable party has complied with the
provisions of Section 9.d. above, by (A) SSA if the following conditions have
not been satisfied (through no fault or other action or omission taken by or
under the control of SSA) or waived in writing by SSA by the Initial Closing:
subsections 9.a.i. through 9.a.iv, 9.a.v.(A)-(F), 9.a.vi., or 9.a.vii.; (B) by
the NL Companies if the conditions subsection 9.a. have not been satisfied
(through no fault or other action or omission taken by or under the control of
the NL Companies) or waived in writing by the NL Companies by the Initial
Closing; and (C) by the County or SERA if the following conditions have not been
satisfied (through no fault or omission taken by or under the control of the
County or SERA) or waived by the County or SERA by the Initial Closing:
subsections 9.a.i. through 9.a.iii, 9.a.v.(A), 9.a.v.(B), 9.a.v.(C), 9.a.vi.,
9.a.vii., or 9.a.viii.

     

    ii. After the
Initial Closing, by any party, if a Default has occurred and has not been timely
cured.

     

    b. SSA’s
Failure to Consummate Initial Closing.  If: (1) all parties other than
SSA have satisfied all of their respective conditions precedent to closing set
forth in Section 9 of this Agreement and SSA fails to consummate the Initial
Closing on the Initial Closing Date for any reason other than (i) a termination
by SSA under 11.a.i. above; (ii) the bankruptcy or insolvency of SSA’s lender(s)
or (iii) the rescission or withdrawal of the financial commitments of SSA’s
lender(s); or (2) the Initial Closing does not occur on the Initial Closing Date
and SSA has breached its obligations pursuant to Section 9.d. above and all
other parties have satisfied their obligations under Section 9.d. above (items
(1) and (2) hereof each referred to as a “SSA Consummation Breach”),
then:

     

    i.           the
NL Companies shall be entitled to receive from SSA, for the NL Companies’
damages as a result of such breach, a liquidated damages payment in the amount
of Five Hundred Thousand Dollars; and

     

    ii. Except
for the provisions of this Section 11.b. which shall remain in full force and
effect, this Agreement shall automatically terminate and become null and void
and none of the parties to this Agreement shall have any further obligations or
liabilities.

     

    c. Consequences of
Termination.

     

    i. Upon a
termination:  under Section 11.a.i. above,  this Agreement
shall become null and void and none of the parties to this Agreement shall have
any further obligations or liabilities under this Agreement.

     

    ii. Upon a
termination under Section 11.a.ii. above, the non-defaulting parties shall each
have the rights and remedies available to each of them under Section 13
below.  In such event, any provisions of this Agreement which survive
termination shall only survive with respect to the Parcels which have been
conveyed to SSA, with the exception of the NL Companies’ obligations under
Section 5, and the parties’ rights and obligations under Sections 7, 8, 13 and
15 of this Agreement, which shall survive the termination of this Agreement with
respect to the entire Property.

     

    12. Events of
Default.  The following events shall constitute an event of
default under this Agreement (a “Default”):

     

    a. SSA fails
to comply with any provision of this Agreement and such failure continues for
more than fifteen (15) days from SSA’s receipt of written notice or such longer
period of time reasonably required to cure such failure;

     

    b. Any party
fails to comply with any of its obligations under this Agreement and such
failure continues for more than fifteen (15) days from the defaulting party’s
receipt of written notice or such longer period of time reasonably required to
cure such failure; or

     

    c. Any
material representation and warranty set forth in Section 8.a is untrue as of the date it was made or becomes
untrue at any time between the execution and delivery of the Transaction
Documents and the completion of the Third Closing.

     

    d. SSA is
removed as the lead remediator of the Property by SERA.

     

    e. The NJDEP
terminates its Memorandum of Understanding with SERA and removes SERA as the
lead remediator of the Property.

     

    13. Remedy for Default Causing
Failure of Second and/or Third Closing.  In the event of a
Default after the Initial Closing that results in the non-occurrence of the
Second and/or Third Closing, the then-unpaid portion of the Condemnation Price
shall be adjusted in accordance with this Section 13, and such adjusted remaining Condemnation Price
shall become immediately due and payable to the NL Companies by SERA as
follows:  

     

    a. The NL
Companies and SERA shall participate in a binding arbitration before a panel of
three neutral arbitrators to determine the value of Parcel A and/or Parcel B, as
the case may be.

     

    i. The NL
Companies and SERA each shall select one arbitrator.  The arbitrators
selected by those parties shall, within ten (10) days of their appointment,
select a third arbitrator.  In the event that they are unable to do
so, the parties shall request that the Hon. Robert A. Longhi, J.S.C. (retired)
or some other mutually agreed third party select the third
arbitrator.  Prior to the commencement of hearings, each of the
arbitrators shall provide an oath or undertaking of impartiality.

     

    ii. The
arbitration shall occur and be concluded within 120 days after receipt by the
parties of notice that the Second or Third Closing, as the case may be, will not
occur.

     

    iii. The
arbitration shall be conducted in accordance with the provisions of N.J.S.A.
20:3-12(c)-(f) governing hearings of condemnation commissioners appointed
pursuant to the Eminent Domain Act of 1971.

     

    iv. For
purposes of the arbitration, the portion of the Property being valued shall be
valued “as if remediated” in accordance with Housing Authority of New
Brunswick v. Suydam Investors, LLC, 177 N.J. 2 (2003), with a valuation
date of July 1, 2002, and in accordance with the Court’s “Order Denying
Application of the Project Enhancement Rule” dated May 31, 2005.

     

    v. The
arbitrators’ award shall be rendered within ten (10) days after the conclusion
of the arbitration hearings.

     

    vi. The
results of the arbitration shall be final, binding and not
appealable.

     

    vii. A
judgment on the award of the arbitrators may be entered in any court having
jurisdiction.

     

    viii. The NL
Companies and SERA shall each pay 50% of the arbitrators’ fees and
costs.

     

    ix. The NL
Companies and SERA each shall bear their own costs with respect to the
arbitration.

     

    b. At the
conclusion of the arbitration, an award shall be entered setting the amount owed
to the NL Companies by SERA as the greater of (i) the value of Parcel A and/or
Parcel B, as the case may be, as determined by the arbitrators, or (ii) the
total amount of compensation that was to be paid to the NL Companies for Parcel
A and/or Parcel B, as the case may be, pursuant to Section(s) 2.b and/or 2.c
above.  The parties agree that the amount of the arbitration award
shall be considered unpaid compensation that the NL Companies are owed as a
result of SERA’s taking of the Property by eminent domain.

     

    c. SERA
shall pay to the NL Companies in immediately-available, same-day funds via wire
transfer the amount owed by SERA as specified in the arbitrators’ award within
thirty (30) days following issuance of the arbitrators’ award.  If, on
the 30th day
after issuance of the arbitrators’ award, SERA has not made full payment to the
NL Companies, interest shall begin to accrue at the prevailing post-judgment
interest rate established by the Superior Court of New Jersey, continuing until
SERA has made full payment to the NL Companies, including payment of all accrued
interest.

     

    d. The
County shall remain entitled to payment from SERA for the remaining unpaid
balance of the County Loan, including all accrued interest, administrative fees
and costs, and the County shall have all rights and remedies available at law or
in equity with respect to such debt.

     

    e. Upon
their respective receipt from SERA of full payment of the amounts owed pursuant
to this Section 13, the NL Companies shall release
the NL Companies’ claimed equitable lien on the Property and the County shall
release the County’s Mortgage.

     

    14. Survival of Representations,
Warranties and Agreements.  Subject to subsection 11.b., each
term and condition of this Agreement, together with the applicable
representations and warranties contained herein, shall survive the execution of
this Agreement and each Closing Date until the completion of each respective
term and condition along with the applicable representations and
warranties.

     

    15. Cooperation.  The
parties hereby acknowledge and agree that the utmost cooperation of each of the
parties to this Agreement is fundamental to the resolution of all of the
outstanding issues among the parties.  The parties shall utilize good
faith best efforts to cooperate with the other parties in the performance of
their respective obligations under this Agreement, which obligations shall
survive all of the Closings hereunder and shall continue in effect until such
time as all parties’ obligations under this Agreement have been fully satisfied
in all respects.  The NL Companies, SERA and the County’s cooperation
obligations hereunder shall include, without limitation: (i) with respect to
SERA and the County only, granting SSA full and unfettered access to the C
Parcels, Parcel A and Parcel B for the performance of investigatory and/or
remedial activities; (ii) responding to reasonable written requests by SSA and
its agents for environmental information, reports or data relating to the
Property, to the extent available and subject to the conditions that any and all
such information would be provided “AS IS” and without warranty of any type or
nature, including without limitation, any warranty of accuracy, or fitness for a
particular purpose and that any and all warranties related to such information
are hereby expressly disclaimed; (iii) granting SSA direct access to the
parties’ consultants, including, but not limited to Environmental Resources
Management and Cabrera Services, subject to the approval of the NL Companies,
which approval shall not be unreasonably withheld, conditioned or delayed; and
(iv) with respect to SERA and the County only, waiving any and all conflicts,
and requesting that the parties’ consultants waive any and all conflicts,
relating to SSA’s retention of a party’s consultant relating to the Property;
provided that, SSA’s retention of a party’s consultant shall be at SSA’s sole
cost and expense.

     

    16. Notices.  All
notices, demands or other communications to be given or delivered under or by
reason of the provisions of this Agreement shall be in writing and shall be
deemed to have been given (a) when delivered personally to the recipient, (b)
when sent to the recipient by telecopy (receipt electronically confirmed by
sender’s telecopy machine) if during normal business hours of the recipient,
otherwise on the next Business Day, or (c) one Business Day after the date when
sent to the recipient by reputable same or next day courier service (charges
prepaid).  Such notices, demands and other communications shall be
sent to the parties at the following addresses (or at such other address for a
party as shall be specified by like notice):

     

    If
to the NL Companies:

    NL
Industries, Inc. and/or

    NL
Environmental Management Services, Inc.

    5430 LBJ
Freeway, Suite 1700

    Dallas,
TX 75240

    Attention:  General
Counsel

    Telecopy
No.:  (972) 450-1444

    

    With
a copy to:

    Christopher
R. Gibson, Esq.

    Archer
& Greiner, P.C.

    One
Centennial Square

    Haddonfield,
NJ 08033

    Telecopy
No.:  (856) 795-0574

    

    If
to SSA:

    Sayreville
Seaport Associates, L.P.

    2701
Renaissance Boulevard, 4th
Floor

    King of
Prussia, PA 19444

    Attention:
Richard Heany, President

    Telecopy
No.:  (610) 337-5599

    

    With
a copy to:

    Macartney,
Mitchell & Campbell, LLC

    2701
Renaissance Boulevard, 4th
Floor

    King of
Prussia, PA 19444

    Attention:
Sean E. Mitchell, Esquire

    Telecopy
No.: (215) 754-4217

    

    If
to SERA:

    Sayreville
Economic and Redevelopment Agency

    167 Main
Street

    Sayreville,
NJ 08872

    Attention:
Executive Director

    Telecopy
No.: (732) 390-2922

    

    With
a copy to:

    Hoagland,
Longo, Moran, Dunst & Doukas, LLP

    40
Paterson Street

    New
Brunswick, NJ 08903

    Attention:
Michael J. Baker, Esquire

    Telecopy
No.: (732) 545-4579

    

    If
to the County:

    Middlesex
County Administration Building, 2nd
Floor

    John F.
Kennedy Square, P.O. Box 871

    New
Brunswick, NJ 08901

    Attention:
County Counsel

    Telecopy
No.: (732) 745-4539

    

    With
a copy to:

    Wilentz,
Goldman & Spitzer, P.A.

    90
Woodbridge Center Drive

    Woodbridge,
NJ 07095

    Attention:
John A. Hoffman, Esquire

    Telecopy
No.: (732) 855-6177

    

    17. Publicity.  Except
as required by applicable law, no party to this Agreement nor any of their
respective affiliates shall issue or cause the publication of any press release
or other public announcement with respect to the transactions contemplated
hereunder without the prior consultation and consent of the other
parties.

     

    18. Equitable
Relief.  Each party acknowledges and agrees that any breach or
threatened breach of this Agreement is likely to cause the other party
irreparable harm for which money damages may not be an appropriate or sufficient
remedy.  Each party therefore agrees that a non-breaching party is
entitled to receive injunctive or other equitable relief to remedy or prevent
any breach or threatened breach of this Agreement.  Such remedy is not
the exclusive remedy for any breach or threatened breach of this Agreement, but
is in addition to all other rights and remedies available at law or in
equity.  Notwithstanding the foregoing, in no event shall any party
under this Agreement have any equitable right against SSA to compel SSA to
consummate the Initial Closing, the Second Closing or the Third
Closing.

     

    19. No
Waiver.  No forbearance, failure or delay in exercising any
right, power or privilege is waiver thereof, nor does any single or partial
exercise thereof preclude any other or future exercise thereof, or the exercise
of any other right, power or privilege.

     

    20. Severability.  If
and to the extent any provision of this Agreement is held invalid or
unenforceable at law, such provision will be deemed stricken from the Agreement
and the remainder of the Agreement will continue in effect and be valid and
enforceable to the fullest extent permitted by law.

     

    21. Binding Agreement; No
Assignment.  This Agreement is binding upon and inures to the
benefit of the parties and their heirs, executors, legal and personal
representatives, successors and assigns, as the case may be.  No party
shall assign this Agreement or its obligations hereunder by operation or law or
otherwise without the prior written consent of all of the remaining
parties.

     

    22. Governing Law and
Venue.  This Agreement shall be deemed executed in the State of
New Jersey, and is to be governed under and construed by New Jersey law, without
regard to its choice of law provisions.  The parties agree that
jurisdiction and venue for any action to enforce this Agreement are properly in
the applicable federal or state court for New Jersey.

     

    23. Attorneys
Fees.  If any party employs attorneys to enforce against any
other party any rights arising out of or relating to this Agreement, the
prevailing party shall be entitled to recover reasonable attorneys’ fees and
costs.

     

    24. Warranty as to
Authority.  Each party represents and warrants that to the
extent necessary, this Agreement has been duly and validly authorized and
approved by all requisite corporate or other official action, that no further
action is necessary to make this Agreement valid and binding on that party, and
that the party representative who signs this Agreement is authorized to bind
that party through his or her signature below.

     

    25. Entire Agreement,
Counterparts.  This Agreement is the entire agreement between
the parties hereunder and may not be modified or amended except by a written
instrument signed by all of the parties.  Each party has read this
Agreement, understands it and agrees to be bound by its terms and
conditions.  There are no understandings or representations with
respect to the subject matter hereof, express or implied, that are not stated
herein.  This Agreement may be executed in counterparts, and
signatures exchanged by facsimile are effective for all purposes hereunder to
the same extent as original signatures.

     

    26. Headings. The descriptive headings
of the sections of this Agreement are inserted for convenience only and shall
not control or affect the meaning or construction of any of the provisions
hereof.

     

    27. Time of the
Essence.  Time shall be of the essence with respect to all
dates and deadlines for performance under this Agreement.

     

    28. Agreement is
Controlling.  In the event that any provision of the
Redevelopment Agreement, the Sale Agreement, any Exhibit to this Agreement or
any other Transaction Document is inconsistent with the provisions of this
Agreement, this Agreement shall be controlling.

     

     [Signature
page follows.]

     

    
      
         

      

      
         

        
          

        

      

      
         

        
           

        

      

    

    IN WITNESS WHEREOF, the
parties hereto have executed this Agreement effective as of the date first above
written.

     

    NL
INDUSTRIES, INC.

    

    By:                                                                

    Name:                                                                           

    Title:                                                                           

    

    

    NL
ENVIRONMENTAL MANAGEMENT SERVICES, INC.

    

    By:                                                                

    Name:                                                                           

    Title:                                                                           

    

    

    SAYREVILLE
ECONOMIC AND REDEVELOPMENT AGENCY

    

    By:                                                                

    Name:                                                                           

    Title:                                                                           

    

    SAYREVILLE
SEAPORT ASSOCIATES, L.P.

    

    By: Sayreville Seaport Associates
Acquisition

    Company, LLC, its General
Partner

    

    By:                                                                

    Name:
Richard Heany

    Title:
President

    

    COUNTY
OF MIDDLESEX

    

    By:                                                                

    Name:                                                                           

    Title:

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