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LOAN AGREEMENT
Dated as of July 1, 1997
Between
The Buncombe County Industrial Facilities
and
Pollution Control Financing Authority
("Issuer")
and
Medical Action Industries Inc.
("Borrower")
$5,500,000
The Buncombe County Industrial Facilities
and
Pollution Control Financing Authority
Industrial Development Revenue Bonds
(Medical Action Industries Inc. Project)
Series 1997
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CERTAIN RIGHTS OF THE ISSUER UNDER THIS AGREEMENT HAVE BEEN ASSIGNED TO, AND
ARE SUBJECT TO A SECURITY INTEREST IN FAVOR OF, BRANCH BANKING AND TRUST
COMPANY, AS TRUSTEE, UNDER A TRUST INDENTURE OF EVEN DATE HEREWITH BETWEEN THE
ISSUER, THE TRUSTEE AND FIRST UNION NATIONAL BANK, AS PAYING AGENT, AS AMENDED
OR SUPPLEMENTED FROM TIME TO TIME.
TABLE OF CONTENTS
Page
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PARTIES........................................................................................1
RECITALS.......................................................................................1
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1. Definitions...................................................................1
Section 1.2. Rules of Construction.........................................................9
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Issuer................................................11
Section 2.2. Representations, Warranties and Covenants by the Borrower....................12
ARTICLE III
ACQUISITION OF THE PROJECT
Section 3.1. Acquisition of the Project...................................................15
Section 3.2. Borrower to Obtain Approvals Required for the Project and the Plant..........15
Section 3.3. Plans and Specifications.....................................................15
ARTICLE IV
ISSUANCE OF THE BONDS; PROJECT FUND
Section 4.1. Agreement to Issue the Bonds.................................................16
Section 4.2. Disbursement from the Project Fund...........................................16
Section 4.3. Closeout of the Project Fund.................................................16
Section 4.4. Disposition of the Balance in the Project Fund...............................16
Section 4.5. Borrower Required to Pay in Event Project Fund Insufficient..................17
Section 4.6. No Third Party Beneficiary...................................................17
ARTICLE V
LOAN BY THE ISSUER TO THE BORROWER; REPAYMENT
Section 5.1. Loan by the Issuer; Repayment................................................18
Section 5.2. No Set-Off...................................................................18
Section 5.3. Prepayments..................................................................18
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Section 5.4. Credits Against the Note.....................................................18
Section 5.5. Letter of Credit and Reimbursement Agreement.................................19
ARTICLE VI
GENERAL COVENANTS
Section 6.1. Maintenance and Modification of the Plant by Borrower........................20
Section 6.2. Taxes and Utility Charges....................................................20
Section 6.3. Insurance....................................................................21
Section 6.4. General Requirements Applicable to Insurance.................................22
Section 6.5. Advances by the Issuer or the Trustee........................................22
Section 6.6. Borrower to Make up Deficiency in Insurance Coverage.........................23
Section 6.7. Eminent Domain...............................................................23
Section 6.8. Application of Net Proceeds of Insurance and Eminent Domain..................23
Section 6.9. Parties to Give Notice.......................................................24
ARTICLE VII
SPECIAL COVENANTS
Section 7.1. Access to the Project and Inspection.........................................25
Section 7.2. Further Assurances and Corrective Instruments................................25
Section 7.3. Recording and Filing; Other Instruments......................................25
Section 7.4. Non-Arbitrage Covenants: Notice of Event of Taxability.......................26
Section 7.5. Administrative Expenses......................................................26
Section 7.6. Indemnity Against Claims.....................................................26
Section 7.7. Release and Indemnification..................................................27
Section 7.8. Additional Information.......................................................27
Section 7.9. Corporate Existence, Sale of Assets, Consolidation or Merger.................27
Section 7.10. Default Certificates.........................................................28
Section 7.11. Notification to Trustee......................................................28
Section 7.12. Additional Reporting Requirements............................................28
Section 7.13. Observe Laws.................................................................28
ARTICLE VIII
ASSIGNMENT, LEASING AND SELLING
Section 8.1. Assignment...................................................................29
Section 8.2. Restrictions on Transfer of Issuer's Rights..................................29
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ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default Defined....................................................30
Section 9.2. Remedies on Default..........................................................31
Section 9.3. Application of Amounts Realized in Enforcement of Remedies...................31
Section 9.4. No Remedy Exclusive..........................................................32
Section 9.5. Agreement to Pay Attorneys' Fees and Expenses................................32
Section 9.6. Correlative Waivers..........................................................32
ARTICLE X
PREPAYMENTS
Section 10.1. Optional Prepayments.........................................................33
Section 10.2. Mandatory Prepayments........................................................33
Section 10.3. Other Mandatory Prepayments..................................................34
ARTICLE XI
MISCELLANEOUS
Section 11.1. References to the Bonds Ineffective After Bonds Paid.........................35
Section 11.2. No Implied Waiver............................................................35
Section 11.3. Issuer Representative........................................................35
Section 11.4. Borrower Representative......................................................35
Section 11.5. Notices......................................................................35
Section 11.6. If Payment or Performance Date Is Other Than a Business Day..................36
Section 11.7. Binding Effect...............................................................36
Section 11.8. Severability.................................................................36
Section 11.9. Amendments, Changes and Modifications........................................36
Section 11.10. Execution in Counterparts....................................................37
Section 11.11. Applicable Law...............................................................37
Section 11.12. No Charge Against Issuer Credit..............................................37
Section 11.13. Issuer and Local Government Commission Not Liable............................37
Section 11.14. Expenses.....................................................................37
Section 11.15. Amounts Remaining with the Trustee...........................................38
Execution by the Issuer........................................................................37
Execution by the Borrower......................................................................38
Exhibit A Promissory Note
Exhibit B The Project Site
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of July 1, 1997, between The Buncombe
County Industrial Facilities and Pollution Control Financing Authority, a
political subdivision and body corporate and politic of the State of North
Carolina (the "Issuer"), and Medical Action Industries Inc., a Delaware
corporation (the "Borrower"),
W I T N E S S E T H:
In consideration of the respective representations and agreements
contained herein, the parties hereto, recognizing that under the Act (as
hereinafter defined) this Loan Agreement shall not in any way obligate the
State of North Carolina or any political subdivision thereof, including,
without limitation, the Issuer or any political subdivision thereof, to raise
any money by taxation or use other public moneys for any purpose in relation to
the Project (as hereinafter defined) and that neither the State of North
Carolina nor any political subdivision thereof, including, without limitation,
the Issuer, shall pay or promise to pay any debt or meet any financial
obligation to any person at any time in relation to the Project, except from
moneys received or to be received under the provisions of this Loan Agreement,
the Note and from the Credit Facility Issuer under a Credit Facility (each as
hereinafter defined) or derived from the exercise of the rights of the Issuer
thereunder, agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1. Definitions. In addition to words and terms elsewhere
defined in this Loan Agreement or in the Indenture, the following words and
terms shall have the following meanings:
"Acquisition", when used in connection with the Project, shall mean,
without limitation, the acquisition, construction, installation and equipping
of the Project.
"Act" shall mean the Industrial and Pollution Control Facilities
Financing Act, which as codified appears as Chapter 159C of the General
Statutes of North Carolina, as amended.
"Administrative Expenses" shall mean the amounts payable pursuant to
Section 7.5 hereof by the Borrower to or for the account of the Issuer to
provide for payment of the costs and expenses incurred by the Issuer.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control"
when used with respect to a Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Alternate Credit Facility" shall mean an irrevocable direct pay
letter of credit, insurance policy or similar credit enhancement or support
facility for the benefit of the Trustee, the terms of which Alternate Credit
Facility shall in all respects material to the Bondholders be the same (except
for the term set forth in such Alternate Credit Facility) as the Letter of
Credit.
"Bank" shall mean First Union National Bank, the issuer of the Letter
of Credit.
"Bond" or "Bonds" shall mean The Buncombe County Industrial Facilities
and Pollution Control Financing Authority Industrial Development Revenue Bonds
(Medical Action Industries Inc. Project), Series 1997, authorized to be issued
pursuant to a resolution of the Issuer in accordance with the Indenture in the
aggregate principal amount of $5,500,000 including such Bonds issued in
replacement for mutilated, destroyed, lost or stolen Bonds pursuant to Section
211 of the Indenture, and any amendments and supplements thereto, and any
renewals and extensions thereof, permitted by the Indenture.
"Bond Counsel" shall mean an attorney-at-law or a firm of attorneys of
nationally recognized standing in matters pertaining to the tax-exempt nature
of interest on bonds issued by states and their political subdivisions, duly
admitted to the practice of law before the highest court of any state of the
United States of America and approved by the Issuer and the Trustee.
"Bond Documents" shall mean collectively the Indenture, the Bonds,
this Loan Agreement, the Note, the Letter of Credit Documents, the Placement
Agreement, the Tender Agency Agreement and the Remarketing Agreement.
"Bondholder" or "Bondholders" or "owner of Bonds" or "owners of Bonds"
shall mean the initial owner or owners and any future owner or owners of the
Bond or Bonds as registered on the books and records of the Bond Registrar
pursuant to Section 204 of the Indenture.
"Bond Fund" shall mean the fund created under Section 502 of the
Indenture.
"Borrower" shall mean Medical Action Industries Inc., a Delaware
corporation, and its successors and assigns and any surviving, resulting or
transferee corporation or other entity.
"Borrower Representative" shall mean any one of the persons at the
time designated to act on behalf of the Borrower by the written certificate
furnished to the Issuer, the Trustee, the Paying Agent and the Project Fund
Custodian containing the specimen signatures of such persons and signed on
behalf of the Borrower by the President or any duly authorized Vice President
of the Borrower.
"Business Day" shall mean a day upon which banks in the State are open
for the transaction of business of the nature required pursuant to this Loan
Agreement and the Indenture.
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"Cessation of Operation" shall mean that the Borrower (or an assignee,
lessee or buyer pursuant to Section 8.1 hereof) has, in the opinion of the
Issuer, ceased to operate the Project as an "industrial project for industry"
within the meaning of the Act. A Cessation of Operation shall not be deemed to
have occurred until 60 days shall have elapsed after written notice has been
given to the Borrower (or an assignee, lessee or buyer pursuant to Section 8.1
hereof) by the Issuer that operations at the Project shall have ceased and the
Borrower (or an assignee, lessee or buyer pursuant to Section 8.1 hereof) shall
not have demonstrated to the satisfaction of the Issuer and the Trustee that
the Borrower (or an assignee, lessee or buyer pursuant to Section 8.1 hereof)
has resumed, or has caused to be resumed, the operations of the Project as an
"industrial project for industry" within the meaning of the Act or that the
Borrower (or an assignee, lessee or buyer pursuant to Section 8.1 hereof) is,
in good faith, seeking to arrange resumption of an economically reasonable
operation of the Project as an "industrial project for industry"; provided that
a temporary shutdown due to a strike or other labor dispute, lack of fuel or
similar occurrence shall not be deemed a Cessation of Operation.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the related regulations, rulings and procedures issued by the Internal Revenue
Service or its successors.
"Completion Date" shall mean that date certified by the Borrower under
Section 4.3 hereof.
"Consistent Basis" shall mean, in reference to the application of
Generally Accepted Accounting Principles, that the accounting principles
observed in the period referred to are comparable in all material respects to
those applied in the preceding period, except as to any changes consented to by
the Trustee and the Credit Facility Issuer.
"Cost of Acquisition of the Project" shall mean the costs and
allowances for the Acquisition of the Project which are permitted under Section
159C of the Act and which include, but are not limited to, all capital costs of
the Project, including the following:
1. The Acquisition, construction and installation of the Project
at the Project Site;
2. Preparation of the plans and specifications, if any, for the
Project (including any preliminary study or plan of the
Project or any aspect thereof), any labor, services,
materials and supplies used or furnished in the Acquisition
of the Project, the acquisition and installation necessary to
provide utility services or other services and all real and
tangible personal property deemed necessary by the Borrower
in connection with the Project;
3. The fees for architectural, engineering, supervisory and
consulting, services in connection with the Acquisition of
the Project;
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4. To the extent they shall not be paid by a contractor, the
premiums of all insurance and surety and performance bonds
required to be maintained in connection with the Acquisition
of the Project;
5. Any fees and expenses in connection with the acquisition,
perfection and protection of title to the Project Site and
any fees and expenses incurred in connection with the
preparation, recording or filing of such documents,
instruments or financing statements as either the Borrower,
the Issuer or the Trustee may deem desirable to perfect or
protect the rights of the Issuer or the Trustee under this
Loan Agreement, the Note, the Indenture, the Bonds and the
Letter of Credit Documents;
6. The legal, accounting and financial advisory fees and
expenses, filing fees, and printing and engraving costs
incurred in connection with the authorization, issuance, sale
and purchase of the Bonds, and the preparation of this Loan
Agreement, the Note, the Indenture, the Bonds, the Letter of
Credit Documents, the Tender Agency Agreement and the
Remarketing Agreement and all other documents in connection
with the authorization, issuance and sale of the Bonds;
7. Interest prior to, during and for a period not exceeding one
year after completion of construction of the Project; and
8. Any administrative or other fees charged by the Issuer,
Governing Board, the State Board or reimbursement thereto of
expenses, in connection with the Project to the Completion
Date.
"Counsel" shall mean an attorney or a firm of attorneys acceptable to
the Trustee, and may, but need not, be counsel to the Issuer, the Credit
Facility Issuer or the Borrower.
"Credit Facility" shall mean the Letter of Credit or any Alternate
Credit Facility delivered to the Trustee.
"Credit Facility Issuer" shall mean the Bank with respect to the
Letter of Credit and the institution issuing any Alternate Credit Facility.
"Determination of Taxability" shall be defined as and shall be deemed
to have occurred on the first to occur of the following:
(1) on that date when the Borrower files any statement,
supplemental statement or other tax schedule, return or document
(whether pursuant to Treasury Regulations ss. 1.103-10(b)(2)(vi), as
the same may be amended or supplemented, or otherwise) which discloses
that an Event of Taxability shall have in fact occurred;
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(2) on that date when any Bondholder or former Bondholder
notifies the Borrower or the Trustee that it has received a written
opinion of Bond Counsel to the effect that an Event of Taxability
shall have occurred unless, within 180 days after receipt by the
Borrower of such notification from the Trustee, any Bondholder or any
former Bondholder, the Borrower shall obtain and deliver to the
Trustee and each Bondholder and former Bondholder a favorable ruling
or determination letter issued to or on behalf of the Borrower by the
Commissioner or any District Director of Internal Revenue (or any
other government official exercising the same or a substantially
similar function from time to time) to the effect that, after taking
into consideration such facts as form the basis for the opinion that
an Event of Taxability has occurred, an Event of Taxability shall not
have occurred;
(3) on that date when the Borrower shall be advised in
writing by the Commissioner or any District Director of Internal
Revenue (or any other government official or agent exercising the same
or a substantially similar function from time to time) that, based
upon filings of the Borrower, or upon any review or audit of the
Borrower, or upon any other grounds whatsoever, an Event of Taxability
shall have occurred;
(4) on that date when the Borrower shall receive notice in
writing from any Bondholder or former Bondholder, or from the Trustee,
that the Internal Revenue Service (or any other government agency
exercising the same or a substantially similar function from time to
time) has assessed as includable in the gross income of any Bondholder
or former Bondholder the interest on such Bondholder's or former
Bondholder's Bond due to the occurrence of an Event of Taxability;
provided, however, no Determination of Taxability shall occur under
subparagraph (3) or (4) hereof unless the Borrower has been afforded
the opportunity, at its expense, to contest any such assessment or
unfavorable ruling and, further, no Determination of Taxability shall
occur until such contest, if made, has been finally determined.
"Eminent Domain" shall mean the taking of title to, or the temporary
use of, the Project or any part thereof pursuant to eminent domain or
condemnation proceedings, or any voluntary conveyance of any part of the
Project during the pendency of, or as a result of a threat of, such
proceedings.
"Equipment" shall mean all of the fixtures (including all leasehold
improvements), machinery, equipment and other items of tangible personal
property now owned or hereafter acquired by the Borrower and located or to be
located on or affixed to the Project Site, together with all substitutions
therefor and all repairs, renewals and replacements thereof.
"Event of Default" or "Default" shall have the meaning set forth in
Section 9.1 hereof.
"Event of Taxability" shall mean a change in law or fact or the
interpretation thereof, or the occurrence or existence of any fact, event or
circumstance (including, without limitation, the
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issuance of obligations or the incurring of capital expenditures in excess of
those permitted by Section 144(a)(4)(A) of the Code, or the taking of any
action by the Borrower, or the failure to take any action, by the Borrower, or
the making by the Borrower of any misrepresentation herein or in any
certificate required to be given in connection with the issuance, sale or
delivery of the Bonds) which has the effect of causing the interest paid or
payable on any Bond to become includable in the gross income of any Bondholder
or former Bondholder other than a Bondholder or former Bondholder who is or was
a "substantial user" or "related person" as such terms are used in Section
147(a) of the Code.
"Generally Accepted Accounting Principles" shall mean those principles
of accounting set forth in pronouncements of the Financial Accounting Standards
Board and its predecessors or pronouncements of the American Institute of
Certified Public Accountants or those principles of accounting which have other
substantial authoritative support and are applicable in the circumstances as of
the date of application, as such principles are from time to time supplemented
and amended.
"Governing Board" shall mean the Board of Commissioners of The
Buncombe County Industrial Facilities and Pollution Control Financing Authority
and any successor thereto as the governing body of the Issuer.
"Government Obligations" shall mean (i) direct obligations of the
United States of America, (ii) obligations unconditionally guaranteed by the
United States of America, and (iii) securities or receipts evidencing ownership
interests in obligations or specified portions (such as principal or interest)
of obligations described in clause (i) or (ii) above the full and timely
payment of which securities, receipts or obligations is unconditionally
guaranteed by the United States of America.
"Indenture" shall mean the Trust Indenture of even date herewith by
and between the Issuer, the Trustee and the Paying Agent, together with any
amendments or supplements thereto permitted thereby.
"Inducement Contract" shall mean the Memorandum of Agreement between
the Issuer and the Borrower pursuant to which the Issuer agreed to finance the
cost of acquiring, constructing and installing the Project.
"Issuer" shall mean The Buncombe County Industrial Facilities and
Pollution Control Financing Authority, a political subdivision and body
corporate and politic of the State, and its successors and assigns and any body
resulting from or surviving any consolidation or merger to which it or its
successors may be a party.
"Issuer Representative" shall mean any one of the persons at the time
designated to act on behalf of the Issuer by written certificate furnished to
the Borrower, the Trustee and the Paying Agent containing the specimen
signatures of such persons and signed on behalf of the Issuer by its Chairman
or Vice Chairman.
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"Letter of Credit" shall mean the irrevocable direct pay letter of
credit dated July __, 1997 in the amount of $5,771,233 issued by the Bank,
including any extensions thereof.
"Letter of Credit Documents" shall mean the Letter of Credit, the
Reimbursement Agreement and the Pledge Agreement.
"Loan Agreement" shall mean this Loan Agreement and any amendments and
supplements hereto permitted by the Indenture.
"Local Government Commission" shall mean the North Carolina Local
Government Commission.
"Mortgage" shall mean the Deed of Trust and Security Agreement dated
as of July 1, 1997, from the Borrower to the Bank.
"Net Proceeds" when used with respect to any insurance proceeds or
award resulting from, or other amount received in connection with, Eminent
Domain shall mean the gross proceeds from such proceeds, award or other amount,
less all expenses (including attorneys' fees) incurred in the realization
thereof.
"Note" shall mean the promissory note given by the Borrower pursuant
to Section 5.1 of this Loan Agreement, substantially in the form of Exhibit A
attached hereto.
"Official Action" shall mean the action taken by the Governing Board
on January 15, 1997 in adopting a resolution authorizing the execution and
delivery of the Inducement Contract.
"Overdue Rate" shall mean the Prime Rate plus two percent.
"Paying Agent" shall mean the Paying Agent acting in such capacity
under the Indenture; the initial Paying Agent shall be First Union National
Bank.
"Payment of the Bonds" shall mean payment of (i) the principal of and
interest on the Bonds in accordance with their terms whether through payment at
maturity, upon acceleration or prepayment, (ii) all amounts due as
Administrative Expenses or otherwise, and (iii) any and all other liabilities
and obligations arising under the Indenture and this Loan Agreement; in any
case, in such a manner that all such amounts due and owing with respect to the
Bonds shall have been paid.
"Permitted Encumbrances" shall mean, as of any particular time,
"Permitted Liens," as defined in the Reimbursement Agreement.
"Person" shall mean an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture, joint-stock company,
or a government or agency or political subdivision thereof.
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"Placement Agent" shall mean First Union National Bank, acting through
its Capital Markets Group, and its successors or any other person designated by
the Borrower meeting the requirements of Section 1203 of the Indenture.
"Placement Agreement" shall mean the letter agreement of even date
herewith between the Borrower and the Placement Agent, providing for the
introducing of the Bonds by the Placement Agent to prospective purchasers.
"Placement Memorandum" shall mean the Private Placement Memorandum
dated the date of issuance of the Bonds, including the cover page and all
appendices thereto.
"Plans and Specifications" shall mean the plans and specifications
used in the Acquisition of the Project, as the same may be revised from time to
time by the Borrower in accordance with Section 3.3 hereof.
"Plant" shall mean all buildings, structures, improvements, fixtures,
furniture, machinery, equipment or other property (excluding inventory) of the
Borrower, now or hereafter located at or affixed to the Project Site, including
without limitation the Project.
"Pledge Agreement" shall mean the Pledge Agreement of even date
herewith between the Borrower and the Bank, and any amendments or supplements
thereto.
"Prime Rate" shall mean the rate of interest per annum announced by
First Union National Bank at its principal office in Charlotte, North Carolina
from time to time to be its prime rate.
"Project" shall mean the acquisition of approximately 32 acres of land
located at the corner of Old Shoals and Heywood Roads, in Arden, North
Carolina, and an existing approximately 205,000 square foot building located
thereon known as the Xxxxxxxx Electronics Facility, the rehabilitation of such
facility and the acquisition of machinery and equipment, all to be used for the
purpose of manufacturing medical products, located in Buncombe County, North
Carolina.
"Project Fund Custodian" means the Project Fund Custodian acting under
the Indenture.
"Project Site" shall mean the real property located in Buncombe
County, more particularly described in Exhibit B attached hereto and by
reference made a part hereof, upon which the Plant and Equipment is located.
"Reimbursement Agreement" shall mean the Letter of Credit and
Reimbursement Agreement of even date herewith between the Borrower and the
Bank, as the same may be amended from time to time and filed with the Trustee,
and any agreement of the Borrower with a Credit Facility Issuer setting forth
the obligations of the Borrower to such Credit Facility Issuer arising out of
any payments under a Credit Facility and which provides that it shall be deemed
to be a Reimbursement Agreement for the purposes of the Indenture.
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"Remarketing Agent" shall mean First Union National Bank, acting
through its Capital Markets Group, as remarketing agent, or any successor in
such capacity.
"Remarketing Agreement" shall mean the Remarketing Agreement of even
date herewith between the Borrower and the Remarketing Agent.
"State" shall mean the State of North Carolina.
"Tax Certificate" shall mean the Tax Certificate delivered by the
Borrower as of the date of, and in connection with, the issuance and sale of
the Bonds.
"Tender Agency Agreement" shall mean the Tender Agency Agreement of
even date herewith among the Borrower, the Trustee and the Tender Agent.
"Tender Agent" means First Union National Bank and its successors as
provided in Section 1202 of the Indenture.
"Trustee" shall mean the banking institution at the time serving as
Trustee under the Indenture.
Section 1.2. Rules of Construction.
(a) Words of the masculine gender shall be deemed and construed to
include correlative words of the feminine and neuter genders, and words of the
neuter gender shall be deemed and construed to include correlative words of the
masculine and feminine genders.
(b) The table of contents, captions and headings in this Loan
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Loan Agreement.
(c) All references herein to particular articles or sections are
references to articles or sections of this Loan Agreement unless some other
reference is established.
(d) All accounting terms not specifically defined herein shall be
construed in accordance with Generally Accepted Accounting Principles applied
on a Consistent Basis.
(e) All references herein to the Borrower shall be deemed to refer to
each of the Persons if more than one, as described by such term, and any
agreement, obligation, duty or liability of the Borrower shall be a joint and
several agreement, obligation, duty or liability of each of the Persons so
described by such term.
(f) Any terms not defined herein but defined in any of the other Bond
Documents shall have the same meaning herein.
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(g) All references herein to the Code or any particular provision or
section thereof shall be deemed to refer to any successor, or successor
provision or section, thereof, as the case may be.
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ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Issuer. The Issuer represents and
warrants as follows:
(a) The Issuer is a duly constituted public body corporate and politic
of the State created under the Act.
(b) Under the provisions of the Act, the Issuer is duly authorized to
enter into, execute and deliver the Bond Documents to which it is a party, to
undertake the transactions contemplated by the Bond Documents to which it is a
party and to carry out its obligations hereunder and thereunder.
(c) The Issuer proposes to issue the Bonds in the aggregate principal
amount of $5,500,000 to finance all or a portion of the Project.
(d) By duly adopted resolution, the Issuer has duly authorized the
execution, delivery and performance of the Bond Documents to which it is a
party, including the borrowing under, issuance and performance of the Bonds and
(as security for the Bonds) the pledge of the Note, endorsed without recourse
to the order of the Trustee, to the Trustee. The Issuer also has duly
authorized the execution, delivery and performance of the Placement Agreement
and has approved the section which describes the Issuer in the Private
Placement Memorandum.
(e) The Bonds will be issued under and pursuant to the Indenture and
will mature, bear interest, and have the other terms and provisions set forth
or provided for in the Indenture.
(f) The execution and delivery of and performance under the Bond
Documents to which the Issuer is a party and the Placement Agreement will not
conflict with, or constitute a breach of or default under, or require any
consent pursuant to any law or regulation presently applicable to the Issuer
(except for such consents and approvals as have heretofore been obtained), the
bylaws of the Issuer, any order of any court, regulatory body or arbitral
tribunal or any agreement or instrument to which the Issuer is party or by
which it is bound.
(g) To the knowledge of the Issuer, there are no judicial, regulatory
or arbitral proceedings pending or threatened against the Issuer which, if
decided adversely to the Issuer, would have a material adverse effect on the
issuance and sale of the Bonds or any of the transactions of the Issuer in
connection therewith.
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(h) When duly executed and delivered on behalf of the Issuer, and
assuming the due authorization, execution and delivery by the other parties
hereto and thereto, each of the Bond Documents to which the Issuer is a party
will constitute a valid and binding obligation of the Issuer enforceable
against the Issuer in accordance with its terms.
(i) The Issuer has obtained from the governing body of the county of
the State in which the Project is to be located approval of the issuance of the
Bonds required by Section 159C- 4(d) of the Act, from the Secretary of the
Department of Commerce of the State approval of the Project required by Section
159C-7 of the Act and from the Local Government Commission the approvals
required by Section 159C-6, 8 and 9 of the Act.
Section 2.2. Representations, Warranties and Covenants by the
Borrower.
The Borrower represents, warrants and covenants as follows:
(a) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and is qualified to
do business in the State, has legal authority to enter into and to perform the
agreements and covenants on its part contained in the Bond Documents to which
it is a party and to approve the section of the Private Placement Memorandum
entitled "The Borrower," and has duly authorized the execution, delivery and
performance of the Bond Documents to which it is a party.
(b) The borrowing under the Note, the execution and delivery of this
Loan Agreement and the other Bond Documents to which it is a party and the
approval of the section of the Private Placement Memorandum entitled "The
Borrower," the consummation of the transactions contemplated hereby and
thereby, and the fulfillment of or compliance with the terms and conditions
hereof and thereof do not and will not violate, conflict with or constitute a
breach of or default under or require any consent (except for such consents and
approvals as have heretofore been obtained) pursuant to the Articles of
Incorporation or Bylaws of the Borrower, any law or regulation of the United
States or the State or, to the best knowledge of the Borrower, of any other
jurisdiction presently applicable to the Borrower, any order of any court,
regulatory body or arbitral tribunal or any agreement or instrument to which
the Borrower is a party or by which it or any of its property is bound.
(c) The Borrower will cause the proceeds of the Bonds to be applied to
the Project.
(d) The commencement of the Acquisition of the Project, including the
letting of purchase orders for components thereof, did not occur prior to
Official Action.
(e) The descriptions of the Project and the Project Site in Exhibit B
hereto are substantially the same in all material respects as those contained
in the Issuer's application to the Secretary of the Department of Commerce of
the State pursuant to Section 159C-7 of the Act.
12
(f) The Borrower has operated and presently expects to operate the
Project as a facility to be used for the purpose of manufacturing medical
products in Buncombe County, North Carolina until Payment of the Bonds.
(g) On the Completion Date, the Project is a "project," and more
specifically an "industrial project for industry," within the meaning of the
Act.
(h) The Project is located wholly within Buncombe County, North
Carolina.
(i) Assuming due authorization, execution and delivery by the other
parties thereto, when executed and delivered, the Bond Documents to which the
Borrower is a party will be the valid and binding obligations or agreements of
the Borrower enforceable in accordance with their respective terms, subject to
limitations imposed by general principles of equity affecting the remedies
provided for in the Bond Documents.
(j) There is no action, suit or proceeding at law or in equity or by
or before any governmental instrumentality or agency or arbitral body now
pending, or to the knowledge of the Borrower, threatened against or affecting
the Borrower or any properties or rights of the Borrower which, if adversely
determined, would materially impair the right of the Borrower to carry on its
business substantially as now conducted or would materially adversely affect
the financial condition, business or operations of the Borrower or the
transactions contemplated by, or the validity of, any of the Bond Documents.
(k) The Borrower has filed all federal, state and local tax returns
which are required to be filed by it and has paid or caused to be paid all
taxes as shown on said returns or on any assessment received by it, to the
extent that such taxes have become due, and no controversy in respect of
additional income taxes, state or federal, of the Borrower is pending or, to
the knowledge of the Borrower, threatened which has not heretofore been
disclosed in writing to the Trustee or the Paying Agent and which, if adversely
determined, would materially and adversely affect the financial condition or
operations of the Borrower.
(l) Neither the Bond Documents to which the Borrower is a party nor
the Tax Certificate contains any misrepresentation or untrue statement of fact
or omits to state a material fact necessary in order to make any such
representation or statement contained therein not misleading.
(m) The Borrower possesses all necessary patents, licenses,
trademarks, trademark rights, trade names, trade name rights and copyrights to
conduct its business as now conducted, without known conflict with any patent,
license, trademark, trade name or copyrights of any other Person.
(n) The Project Site is properly zoned, and its intended use and the
operation of the Project comply with the uses permitted by applicable zoning
regulations.
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(o) No approval, consent or authorization of, or registration,
declaration or filing with, any governmental or public body or authority is
required in connection with the valid execution, delivery and performance by
the Borrower of the Bond Documents to which it is a party which has not
heretofore been obtained.
(p) The Borrower will not take or omit to take any action which would
impair the exemption of interest on the Bonds from federal income taxation.
(q) All of the representations, warranties and covenants of the
Borrower contained in the Tax Certificate are hereby reaffirmed and
incorporated herein by reference.
(r) The Borrower presently in good faith estimates the Cost of
Acquisition of the Project to equal or exceed the original principal amount of
the Bonds.
All of the above representations, warranties and covenants shall
survive the execution of this Loan Agreement and the issuance of the Note.
14
ARTICLE III
ACQUISITION OF THE PROJECT
Section 3.1. Acquisition of the Project. The Borrower shall complete
the Acquisition of the Project with all reasonable dispatch, delays incident to
strikes, riots, acts of God or the public enemy or any delay beyond its
reasonable control only excepted, in accordance with the Plans and
Specifications; provided, however, that if completion of such Acquisition is
delayed for any reason, there shall be no diminution in or postponement of the
payments to be made by the Borrower pursuant to the Note or Section 5.1 hereof.
Section 3.2. Borrower to Obtain Approvals Required for the Project and
the Plant. The Borrower shall obtain or cause to be obtained all necessary
permits and approvals for the Acquisition of the Project and the operation and
maintenance of the Plant and the Equipment and shall comply with all lawful
requirements of any governmental body regarding the use or condition of the
Equipment, the Project Site and the Plant. The Borrower may, however, contest
any such requirement by an appropriate proceeding diligently prosecuted.
Section 3.3. Plans and Specifications. The Borrower shall maintain a
set of Plans and Specifications at the Project Site which shall be available to
the Issuer, the Trustee, the Paying Agent and the Bondholders for inspection
and examination during the Borrower's regular business hours, and the Issuer
and the Borrower agree that the Borrower may supplement, amend and add to the
Plans and Specifications, and that the Borrower shall be authorized to omit or
make substitutions for components of the Project, without approval of the
Issuer, provided that no such change shall be made which shall be contrary to
subsections (c), (d), (e), (f), (g), (h), (i) and (j) of Section 2.2 hereof or
the provisions of Article IX hereof, and provided further that if any such
change would render materially incorrect or incomplete the description of the
initial components of the Project or the description of the Project Site as set
forth in Exhibit B to this Loan Agreement, the Borrower and the Issuer shall
amend such Exhibit B to reflect such change, upon receipt by the Issuer and the
Trustee of an opinion of Bond Counsel that such change will not result in an
Event of Taxability. No approval of the Issuer, the Trustee or the Paying Agent
shall be required for the acquisition of the Project or for the solicitation,
negotiation, award or execution of contracts relating thereto.
15
ARTICLE IV
ISSUANCE OF THE BONDS; PROJECT FUND
Section 4.1. Agreement to Issue the Bonds.
(a) To provide funds for Project, the Issuer agrees that it will sell,
issue and deliver the Bonds in the aggregate principal amount of $5,500,000 in
the manner set forth in the Indenture and cause the proceeds of the Bonds to be
applied as provided in the Indenture.
(b) In connection with the issuance of the Bonds, in accordance with
Section 144(a)(4) of the Code and Section 1.103-10(b)(2)(vi) of the regulations
promulgated under the Internal Revenue Code of 1954, as amended, the Issuer,
pursuant to the authority contained in a resolution adopted by its Governing
Board, hereby elects to have the provisions of Section 144(a)(4) of the Code
apply to the Bonds.
Section 4.2. Disbursement from the Project Fund. All payments from the
Project Fund to pay the Cost of Acquisition of the Project or to reimburse the
Borrower for any Cost of Acquisition of the Project paid or incurred by the
Borrower before or after the execution and delivery of this Agreement and the
issuance and delivery of the Bonds, but only after Official Action, shall be
made by the Project Fund Custodian pursuant to the Indenture upon receipt by
the Project Fund Custodian of a requisition and certificate substantially in
the form of Exhibit A attached to the Indenture.
Section 4.3. Closeout of the Project Fund. The Completion Date for the
Project shall be promptly established and evidenced to the Trustee and the
Project Fund Custodian shall be the date on which the Borrower Representative
delivers to the Trustee and the Project Fund Custodian a certificate stating
that, except for the amounts retained by the Project Fund Custodian at the
Borrower's direction for any Cost of Acquisition of the Project not then due
and payable, the Acquisition of the Project has been completed substantially in
accordance with the Plans and Specifications, if any, and all costs and
expenses incurred in connection therewith have been paid. Notwithstanding the
foregoing, such certificate may state that it is given without prejudice to any
rights against third parties that exist at the date of such certificate or that
may subsequently come into being.
Section 4.4. Disposition of the Balance in the Project Fund. Pursuant
to the Indenture, as soon as practicable after, and in any event within sixty
(60) days from, the Project Fund Custodian's receipt of the certificate
mentioned in Section 4.3 hereof, all amounts remaining in the Project Fund,
including any unliquidated investments made with money theretofore deposited in
the Project Fund except for amounts to be retained in the Project Fund for any
Cost of Acquisition of the Project not then due and payable as provided in
Section 4.3 hereof, shall be deposited in the Bond Fund by the Project Fund
Custodian and shall be applied to the prepayment of the principal installments
of the Bonds in accordance with the terms of the Indenture.
16
Section 4.5. Borrower Required to Pay in Event Project Fund
Insufficient. In the event the moneys in the Project Fund should not be
sufficient to pay the total cost of the Project, the Borrower agrees to
complete the Project and to pay that portion of such cost in excess of the
moneys available therefor in the Project Fund. THE ISSUER MAKES NO WARRANTY,
EITHER EXPRESS OR IMPLIED, THAT THE MONEYS PAID INTO THE PROJECT FUND AND
AVAILABLE FOR PAYMENT OF THE COST OF THE PROJECT WILL BE SUFFICIENT TO PAY THE
TOTAL COST OF THE PROJECT. The Borrower agrees that if, after exhaustion of the
moneys in the Project Fund, the Borrower should pay any portion of the total
cost of Project pursuant to the provisions of this Section, it shall not be
entitled to any reimbursement therefor from the Issuer, the Trustee, the Paying
Agent, the Project Fund Custodian or any Bondholder and it shall not be
entitled to any abatement or diminution of the payments required to be made by
the Borrower pursuant to the Note or Section 5.1 hereof.
Section 4.6. No Third Party Beneficiary. It is specifically agreed
between the parties executing this Loan Agreement that it is not intended by
any of the provisions of any part of this Loan Agreement to create the public
or any member thereof, other than as may be expressly provided herein or as
contemplated in the Indenture, a third party beneficiary hereunder, or to
authorize anyone not a party to this Loan Agreement to maintain a suit for
personal injuries or property damage pursuant to the terms or provisions of
this Loan Agreement. The duties, obligations, and responsibilities of the
parties to this Loan Agreement with respect to third parties shall remain as
imposed by law.
17
ARTICLE V
LOAN BY THE ISSUER TO THE BORROWER; REPAYMENT
Section 5.1. Loan by the Issuer; Repayment. Upon the terms and
conditions of this Loan Agreement, the Issuer shall lend to the Borrower the
proceeds of the sale of the Bonds. The loan shall be evidenced by and repayable
as set forth in the Note. The loan shall be made by depositing said proceeds in
the Project Fund in accordance with the terms of the Indenture.
As consideration for the issuance of the Bonds and the making of the
loan to the Borrower by the Issuer, the Borrower will execute and deliver this
Loan Agreement and the Note, in the form attached as Exhibit A hereto, and the
Issuer will endorse the Note without recourse to the order of, and pledge the
Note and assign this Loan Agreement and the Note to, the Trustee, as the
assignee of the Issuer under the Indenture, contemporaneously with the issuance
of the Bonds. The Borrower shall repay the loan in accordance with the
provisions of the Note and of this Loan Agreement.
Section 5.2. No Set-Off. The obligation of the Borrower to make the
payments required by the Note shall be absolute and unconditional. The Borrower
will pay without abatement, diminution or deduction (whether for taxes or
otherwise) all such amounts regardless of any cause or circumstance whatsoever
including, without limitation, any defense, set-off, recoupment or counterclaim
that the Borrower may have or assert against the Issuer, the Trustee, the
Paying Agent, the Project Fund Custodian, any Bondholder or any other Person.
Section 5.3. Prepayments. The Borrower may prepay all or any part of
the amounts the Note obligates it to pay as provided in Section 701 of the
Indenture with respect to prepayment of the Bonds. Except as provided in this
Section 5.3 and in Section 4.4 and Article X hereof, the Borrower shall not be
entitled to prepay the Note or cause the Bonds to be prepaid. The Borrower
shall prepay all of the amounts it is required to prepay as provided Article X
hereof.
Section 5.4. Credits Against the Note. To the extent that principal of
or interest on the Bonds shall be paid, including those payments made pursuant
to a draw under a Credit Facility, there shall be credited against the unpaid
principal of or interest on the Note, as the case may be, an amount equal to
the principal of or interest on the Bonds so paid. If the principal of and
interest on and other amounts payable under the Bonds shall have been paid
sufficiently that Payment of the Bonds shall have occurred, then the Note, ipso
facto, shall be deemed to have been paid in full, the Borrower's obligations
thereon shall be discharged (with the exception of the obligation of the
Borrower to make certain payments which may subsequently arise as a result of a
Determination of Taxability which shall survive (notwithstanding Payment of the
Bonds), and the Note shall be canceled and surrendered to the Borrower.
18
Section 5.5. Letter of Credit and Reimbursement Agreement. As a
further condition to the Issuer's making the loan hereunder, the Borrower
shall:
(a) cause the Letter of Credit to be issued and delivered to the
Trustee as security for the Bonds. The Borrower shall cause a Credit Facility
meeting the requirements of Section 603 of the Indenture to be maintained, at
all times while the Bonds are outstanding, with the Trustee; and
(b) enter into the Reimbursement Agreement in form and substance
satisfactory to the Bank and execute and deliver the other Letter of Credit
Documents required by the Bank.
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ARTICLE VI
GENERAL COVENANTS
The provisions of Sections 6.1 and 6.2 shall become effective upon
issuance of the Bonds. The provisions of Sections 6.3 through 6.9 shall become
effective at such time as neither the Borrower nor the Bank has any further
obligation under the Reimbursement Agreement or the Letter of Credit.
Section 6.1. Maintenance and Modification of the Plant by Borrower.
The Borrower agrees that, until Payment of the Bonds shall be made, it will at
its own expense, (i) keep the Plant and the Project Site or cause the Plant and
the Project Site to be kept in as reasonably safe condition as its operations
shall permit, (ii) make or cause to be made from time to time all necessary
repairs thereto and renewals and replacements thereof and otherwise keep the
Plant in good repair and in good operating condition and (iii) not permit or
suffer others to commit a nuisance on or about the Plant or the Project Site.
The Borrower shall pay or cause to be paid all costs and expenses of operation
and maintenance of the Plant.
The Borrower may, at its own expense, make from time to time any
additions, modifications or improvements to the Plant that it may deem
desirable for its business purposes and that do not materially impair the
effective use, or decrease the value, of the Project.
Section 6.2. Taxes and Utility Charges.
(a) The Borrower shall pay as the same respectively become due, all
taxes, assessments, levies, claims and charges of any kind whatsoever that may
at any time be lawfully assessed or levied against or with respect to the
Project (including, without limiting the generality of the foregoing, any tax
upon or with respect to the income or profits of the Borrower from the Plant
and that, if not paid, would become a charge on the payments to be made under
this Loan Agreement or the Note prior to or on a parity with the charge thereof
created by the Indenture and including ad valorem, sales and excise taxes,
assessments and charges upon the Borrower's interest in the Plant), all utility
and other charges incurred in the operation, maintenance, use, occupancy and
upkeep of the Project and all assessments and charges lawfully made by any
governmental body for public improvements that may be secured by lien on any
portion of the Project.
(b) The Borrower may, at its expense, contest in good faith any such
levy, tax, assessment, claim or other charge, but the Borrower may permit the
items so contested to remain undischarged and unsatisfied during the period of
such contest and any appeal therefrom only if the Borrower shall notify the
Issuer and the Trustee that in the opinion of Counsel, in form satisfactory to
the Issuer and the Trustee, by non-payment of any such items, the rights of the
Trustee with respect to this Loan Agreement and the Note created by the
assignment under the Indenture, as to the rights assigned under this Loan
Agreement, or any part of the payments to be made under this Loan Agreement or
the Note, will not be materially endangered nor will the Project or any part
thereof be subject to loss or forfeiture. If the Borrower is unable to deliver
20
such an opinion of Counsel, the Borrower shall promptly pay or bond and cause
to be satisfied or discharged all such unpaid items or furnish, at the expense
of the Borrower, indemnity satisfactory to the Trustee; but provided further,
that any tax assessment, charge, levy or claim shall be paid forthwith upon the
commencement of proceedings to foreclose any lien securing the same. The Issuer
and the Trustee, at the expense of the Borrower, will cooperate fully in any
such permitted contest. If the Borrower shall fail to pay any of the foregoing
items, the Issuer or the Trustee may (but shall be under no obligation to) pay
the same and any amounts so advanced therefor by the Issuer or the Trustee
shall become an additional obligation of the Borrower to the one making the
advancement, which amounts, together with interest thereon at the Overdue Rate,
or the maximum contract rate permitted by law, whichever is lower, from the
date of payment, the Borrower agrees to pay on demand therefor.
(c) The Borrower shall furnish the Issuer, the Credit Facility Issuer
and the Trustee, upon request, with proof of payment of any taxes, governmental
charges, utility charges, insurance premiums or other charges required to be
paid by the Borrower under this Loan Agreement.
Section 6.3. Insurance. Until Payment of the Bonds shall be made in
full, the Borrower will keep the Plant and the Project Site continuously
insured against such risks as are customarily insured against by businesses of
like size and type engaged in the same or similar operations (other than
business interruption insurance) including, without limiting the generality of
the foregoing:
(a) casualty insurance on the Plant in an amount not less than the
full insurable value of all property located at, and all improvements to, the
Project Site, against loss or damage by fire and lightning and other hazards
ordinarily included under uniform broad form extended coverage policies,
limited only as may be provided in the uniform broad form of extended coverage
endorsement. at the time in use in the State;
(b) general comprehensive liability insurance against claims for
bodily injury, death or property damage occurring on, in or about the Plant or
the Project Site (such coverage to include provisions waiving subrogation
against the Issuer and the Trustee) in amounts not less than $1,000,000 with
respect to bodily injury to any one person, $1,000,000 with respect to bodily
injury to two or more persons in any one accident and $1,000,000, with respect
to property damage resulting from any one occurrence;
(c) liability insurance with respect to the Plant and the Project Site
under the workers' compensation laws of the State; provided, however, that the
insurance so required may be provided by blanket policies now or hereafter
maintained by the Borrower; and
(d) if at any time any portion of the Project Site is in an area that
has been identified by the Secretary of Housing and Urban Development as having
special flood and mud slide hazards, a policy of flood insurance covering
improvements located on such portion of the Project Site with amounts and
coverage satisfactory to the Trustee.
21
Section 6.4. General Requirements Applicable to Insurance.
(a) Each insurance policy obtained in satisfaction of the requirements
of Section 6.3 hereof:
(i) shall be by such insurer (or insurers) as shall be
financially responsible, qualified to do business in the State and of
recognized standing;
(ii) shall be in such form and have such provisions
(including, without limitation, the lenders long-form loss payable
clause, the waiver of subrogation clause, the deductible amount, if
any, and the standard mortgagee endorsement clause), as are generally
considered standard provisions for the type of insurance involved and
are acceptable in all respects to the Trustee;
(iii) shall prohibit cancellation or substantial
modification, termination or lapse in coverage by the insurer without
at least 30 days' prior written notice to the Issuer and the Trustee;
(iv) shall provide that losses thereunder shall be adjusted
with the insurer by the Borrower at its expense on behalf of the
insured parties and the decision of the Borrower as to any adjustment
shall be final and conclusive; and
(v) without limiting the generality of the foregoing, all
insurance policies carried on the Plant shall name the Borrower, the
Issuer and the Trustee as parties insured thereunder as the respective
interests of each may appear, and any loss thereunder shall be made
payable and shall be applied as provided in Section 6.8 hereof.
(b) Prior to expiration of any such policy, the Borrower shall furnish
the Trustee with evidence satisfactory to the Trustee that the policy or
certificate has been renewed or replaced in compliance with this Loan Agreement
or is no longer required by this Loan Agreement.
Section 6.5. Advances by the Issuer or the Trustee. In the event the
Borrower shall fail to maintain, or cause to be maintained, the full insurance
coverage required by this Loan Agreement or shall fail to keep or cause to be
kept the Plant in good repair and good operating condition, the Issuer or the
Trustee may (but shall be under no obligation to), after 10 days' written
notice to the Borrower, contract for the required policies of insurance and pay
the premiums on the same and make any required repairs, renewals and
replacements, and the Borrower agrees to reimburse the Issuer and the Trustee
to the extent of the amounts so advanced by them or any of them with interest
thereon at the Overdue Rate or the maximum rate permitted by law, whichever is
lower, from the date of advance to the date of reimbursement. Any amounts so
advanced by the Issuer or the Trustee shall become an additional obligation of
the Borrower, shall be payable on demand, and shall be deemed a part of the
obligation of the Borrower evidenced by the Note.
22
Section 6.6. Borrower to Make up Deficiency in Insurance Coverage. The
Borrower agrees that to the extent that it shall not carry insurance required
by Section 6.3 hereof, it shall pay promptly to the Trustee for application in
accordance with the provisions of Section 6.8 hereof, such amount as would have
been received as Net Proceeds by the Trustee under the provisions of Section
6.8 hereof had such insurance been carried to the extent required.
Section 6.7. Eminent Domain. Unless the Borrower shall have prepaid
the Note pursuant to the provisions of Article X hereof, in the event that
title to, or temporary use of, the Project Site, the Plant or any part thereof
shall be taken by Eminent Domain, the Borrower shall be obligated to continue
to make the payments required to be made pursuant to the Note and the Net
Proceeds received as a result of such Eminent Domain shall be applied as
provided in Section 6.8(b) hereof.
Section 6.8. Application of Net Proceeds of Insurance and Eminent
Domain.
(a) The Net Proceeds of the insurance carried pursuant to the
provisions of Sections 6.3(b) and 6.3(c) hereof shall be applied by the
Borrower toward extinguishment of the defect or claim or satisfaction of the
liability with respect to which such insurance proceeds may be paid.
(b) The Net Proceeds of the insurance carried with respect to the
Plant pursuant to the provisions of Sections 6.3(a) and 6.3(d) hereof
(excluding the Net Proceeds of any business interruption insurance, which shall
be paid to the Borrower), and the Net Proceeds resulting from Eminent Domain
shall be paid to the Trustee and applied as follows:
(i) If the amount of the Net Proceeds does not exceed
$100,000, the Net Proceeds shall be paid to the Borrower and shall be
applied to the repair, replacement, renewal or improvement of the
Plant as necessary.
(ii) If the amount of the Net Proceeds exceeds $100,000, the
Net Proceeds shall be paid to and held by the Trustee as a special
trust fund and invested in accordance with Section 602 of the
Indenture pending receipt of written instructions from the Borrower.
At the option of the Borrower, to be exercised within the period of 90
days from the receipt by the Trustee of such Net Proceeds, the
Borrower shall advise the Trustee that (A) the Borrower will use the
Net Proceeds for the repair, replacement, renewal or improvement of
the Plant (such funds to be delivered by the Trustee to the Borrower),
or (B) the Net Proceeds shall be applied to the prepayment of the
Bonds as provided in Article X hereof. If the Borrower does not advise
the Trustee within said period of 90 days that it elects to proceed
under clause (A) to use such Net Proceeds for the repair, replacement,
renewal or improvement of the Plant, such Net Proceeds shall be
applied to the prepayment of the bonds pursuant to Article X hereof.
Any prepayment pursuant to the preceding sentence shall be effected on
the next interest payment date not less than 45 days after the earlier
of notice of the Borrower's
23
election to prepay the Bonds or expiration of said period of 90 days
without an election by the Borrower.
The Borrower agrees that if it shall elect to use the moneys paid to
the Trustee pursuant to subsection (b)(ii) of this Section 6.8 for the repair,
replacement, renewal or improvement of the Plant, it will restore the Plant, or
cause the same to be done, to a condition substantially equivalent to its
condition prior to the occurrence of the event to which the Net Proceeds were
attributable. To the extent that the Net Proceeds are not sufficient to restore
or replace the Plant, the Borrower shall use its own funds to restore or
replace the Plant. Prior to the commencement of such work, the Trustee may
require the Borrower to furnish a completion bond, escrow deposit, or other
satisfactory evidence of the Borrower's ability to pay or provide for the
payment of any estimated costs in excess of the amount of the Net Proceeds. Any
balance remaining after any such application of such Net Proceeds shall be paid
to the Borrower. The Borrower shall be entitled to the Net Proceeds of any
insurance or resulting from Eminent Domain relating to property of the Borrower
not included in the Plant or the Project Site and not providing security for
the Note or this Loan Agreement.
Section 6.9. Parties to Give Notice. In case of any material damage to
or destruction of all or any part of the Plant, the Borrower shall give prompt
notice thereof to the Issuer, the Paying Agent and the Trustee. In case of a
taking or proposed taking of all or any part of the Plant, the Project Site or
any right therein by Eminent Domain, the Borrower shall give prompt notice
thereof to the Issuer, the Paying Agent and the Trustee. Each such notice shall
describe generally the nature and extent of such damage, destruction, taking,
loss, proceeding or negotiations.
24
ARTICLE VII
SPECIAL COVENANTS
Section 7.1. Access to the Project and Inspection. The Credit Facility
Issuer, the Trustee, the Paying Agent and the Issuer and their duly authorized
agents shall have the right, at all reasonable times upon the furnishing of
reasonable notice to the Borrower under the circumstances, to enter upon the
Project Site and to examine and inspect the Plant and the Equipment. The
Trustee, the Credit Facility Issuer, the Paying Agent, the Issuer and their
duly authorized agents shall also have such right of access to the Project as
may be reasonably necessary to cause to be completed the construction,
acquisition and installation of the Project, and thereafter for its proper
maintenance, in the event of failure by the Borrower to perform its obligations
relating to maintenance under this Loan Agreement. The Borrower hereby
covenants to execute, acknowledge and deliver all such further documents, and
do all such other acts and things as may be necessary to grant to the Issuer,
the Credit Facility Issuer, the Paying Agent, the Trustee and their duly
authorized agents such right of entry. The Issuer, the Credit Issuer, the
Trustee, the Paying Agent and their duly authorized agents shall also be
permitted, at all reasonable times, to examine the books and records of the
Borrower with respect to the Project and the obligations of the Borrower
hereunder, but none of them shall be entitled to access to trade secrets or
other proprietary information (other than financial information) of the
Borrower.
Section 7.2. Further Assurances and Corrective Instruments. Subject to
the provisions of the Indenture, the Issuer and the Borrower agree that they
will, from time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, such supplements and amendments hereto
and such further instruments as may reasonably be required for carrying out the
intention or facilitating the performance of this Loan Agreement. All such
supplements, amendments and further instruments shall require the approval of
the Credit Facility Issuer.
Section 7.3. Recording and Filing; Other Instruments.
(a) The Borrower covenants that it will, at its expense, cause Counsel
in the State to take all steps as are reasonably necessary to render an
opinion, in form satisfactory to the Issuer and the Trustee, and to render an
opinion to the Issuer and the Trustee not earlier than 60 days nor later than
30 days prior to each anniversary date occurring at five-year intervals after
the issuance of the Bonds, to the effect that all financing statements,
continuation statements, notices and other instruments required by applicable
law have been recorded or filed or re-recorded or re-filed in such manner and
in such places required by law in order fully to preserve and protect the
rights of the Trustee in the granting by the Issuer of certain rights of the
Issuer, pursuant to the Indenture, under this Loan Agreement and the Note.
(b) The Borrower and the Issuer shall execute and deliver all
instruments and shall furnish all information and evidence deemed necessary or
advisable by such Counsel to enable him to render the opinion referred to in
subsection (a) of this Section. The Borrower shall file and re-file and record
and re-record or cause to be filed and re-filed and recorded and re-recorded
all
25
instruments required to be filed and re-filed and recorded or re-recorded
pursuant to the opinion of such Counsel and shall continue or cause to be
continued the liens of such instruments for so long as the Bonds shall be
outstanding, except as otherwise required by this Agreement.
Section 7.4. Non-Arbitrage Covenants: Notice of Event of Taxability.
(a) Neither the Borrower nor the Issuer shall take any action nor fail
to take any action, and the Borrower covenants that it will not approve the
taking any action or making any investment or use of the proceeds of the Bonds
by the Trustee or the Project Fund Custodian, which would cause any of the
Bonds to be an "arbitrage bond" within the meaning of Section 148 of the Code
and applicable regulations thereunder.
(b) The Borrower's obligation to make any payments of rebate amounts
required by this Loan Agreement and the Indenture and to prepare and furnish to
the Issuer and the Trustee the statements and forms described herein and
therein shall survive Payment of the Bonds notwithstanding any provision of
this Loan Agreement to the contrary.
(c) The Borrower shall give immediate telephonic notice, promptly
confirmed in writing, to the Issuer, the Paying Agent and the Trustee of any
Event of Taxability whether the Borrower is on Notice of such Event of
Taxability by its own filing of any statement, tax schedule, return or document
with the Internal Revenue Service which discloses that an Event of Taxability
shall have occurred, by its receipt of any oral or written advice from the
Internal Revenue Service that an Event of Taxability shall have occurred, or
otherwise.
Section 7.5. Administrative Expenses. The Borrower shall pay to or for
the account of the Issuer within 30 days after notice thereof all reasonable
costs and expenses incurred by the Issuer in connection with the financing and
administration of the Project, including, without limitation, any fees
associated with the calculation of rebate, except such as may be paid out of
the proceeds of the Bonds, including, without limitation, the costs of
administering this Loan Agreement and the fees and expenses of attorneys,
consultants and others.
Section 7.6. Indemnity Against Claims. The Borrower will pay and
discharge and will indemnify and hold harmless the Issuer, the Trustee and the
Paying Agent from (a) any lien or charge upon amounts payable hereunder by the
Borrower to the Issuer (other than the lien of the Indenture), and (b) any
taxes, assessments, impositions and other charges in respect of the Project
Site, the Plant or the Equipment. If any claim of any such lien or charge upon
payments, or any such taxes, assessments, impositions or other charges, are
sought to be imposed, the Issuer, the Trustee or the Paying Agent, as the case
may be, will give prompt notice to the Borrower, and the Borrower shall have
the sole right and duty to assume, and shall assume, the defense thereof, with
full power to litigate, compromise or settle the same in its sole discretion.
26
Section 7.7. Release and Indemnification. The Borrower shall at all
times protect and hold the Issuer, the Governing Board, the Local Government
Commission, the Paying Agent, the Trustee and their respective members,
officers, employees and agents harmless against any claims or liability
resulting from any loss or damage to property or any injury to or death of any
person that may be occasioned by any cause whatsoever pertaining to the
Project, the Project Site, the Plant and the Equipment or the use thereof,
including without limitation any lease thereof or assignment of its interest in
this Agreement, such indemnification to include reasonable expenses and
attorneys' fees incurred by the Issuer, the Governing Board, the Local
Government Commission, the Paying Agent, the Trustee and their respective
members, officers, employees and agents in connection therewith, provided that
such indemnity shall be effective only to the extent of any loss that may be
sustained by the Issuer, the Governing Board, the Local Government Commission,
the Paying Agent, the Trustee or their respective members, officers, employees
and agents in excess of the Net Proceeds received by it or them from any
insurance carrier with respect to such loss and provided further that the
benefits of this Section 7.7 shall not inure to any person other than the
Issuer, the Governing Board, the Local Government Commission, the Paying Agent,
the Trustee or their respective members, officers, employees and agents.
The Borrower shall also at all times protect and hold the Local
Government Commission and its respective members, officers, employees and
agents harmless against any claims or liability resulting from the transaction
contemplated by this Loan Agreement and the Indenture, such indemnification to
include reasonable expenses and attorneys, fees incurred by the Local
Government Commission and its respective members, officers, employees and
agents in connection therewith.
Section 7.8. Additional Information. Until Payment of the Bonds shall
have occurred, the Borrower shall promptly, from time to time, deliver to the
Trustee and the Paying Agent such information regarding the operations,
business affairs and financial condition of the Borrower as the Trustee or the
Paying Agent may reasonably request. The Trustee and the Paying Agent are
hereby authorized to deliver a copy of any such financial information delivered
hereunder, or otherwise obtained by the Trustee, to any Bondholder or
prospective Bondholder, to any regulatory authority having jurisdiction over
the Trustee and to any other Person as may be required by law. The Issuer, the
Paying Agent and the Trustee are authorized to provide information concerning
the outstanding principal amount and payment history of, and other information
pertaining to, the Bonds or the Note to any agency or regulatory authority of
the State requesting such information.
Section 7.9. Corporate Existence, Sale of Assets, Consolidation or
Merger. Unless the Trustee and the Issuer consent in writing, such consent not
to be unreasonably withheld, the Borrower will maintain its corporate
existence, will not dissolve or otherwise dispose of all or substantially all
of its assets and will not enter into any transaction of merger or
consolidation; provided that, if a Reimbursement Agreement is in effect, the
Trustee shall consent to such action if it is permitted by the terms of the
Reimbursement Agreement. If the Reimbursement Agreement permits such action,
the Borrower shall promptly notify the Trustee thereof.
27
Section 7.10. Default Certificates. The Borrower shall deliver to the
Trustee annually, within 120 days of the close of each fiscal year, a
certificate that no Event of Default hereunder or under the Note, the
Indenture, or the Reimbursement Agreement, or an event which would constitute
such an Event of Default but for the requirement that notice be given or time
elapse or both has occurred and is continuing, or if such an event has occurred
or is continuing, a certificate of the Borrower specifying the nature and
period of existence thereof and what action the Borrower proposes to take with
respect thereto.
Section 7.11. Notification to Trustee. The Borrower shall notify the
Trustee in writing promptly, but in any event within five Business Days, of the
occurrence of any of the following, with respect to the Borrower:
(i) any levy of an attachment, execution or other process
against its assets, which may materially adversely affect the
financial condition or operation of the Borrower;
(ii) any change in any existing agreement or contract which
may materially adversely affect its business or affairs, financial or
otherwise; and
(iii) any change in the ownership or control of the Borrower.
Section 7.12. Additional Reporting Requirements. The Borrower shall
deliver on or prior to September 30 of each year to the Issuer, the Local
Government Commission, the Paying Agent and the Trustee a certificate stating
the principal amount of the Bonds outstanding and the Registered Owners of such
Bonds as of June 30 of such year.
Section 7.13. Observe Laws. The Borrower shall observe all applicable
laws, regulations and other valid requirements of any regulatory authority with
respect to the operations at the Plant and the Project Site.
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ARTICLE VIII
ASSIGNMENT, LEASING AND SELLING
Section 8.1. Assignment of Loan Agreement or Lease or Sale of Project
by the Borrower. Except with the prior written consent of the Issuer, the
Credit Facility Issuer and the Trustee, the rights of the Borrower under this
Loan Agreement may not be assigned, and the Project may not be leased or sold
as a whole or in part. Following any approved lease, sale or other disposition
of the Project, the Project must continue to be operated in compliance with the
Bond Documents as an "industrial project for industry" within the meaning of
the Act, so long as any of the Bonds are outstanding. The Borrower shall
continue to be responsible for its liabilities and obligations under this Loan
Agreement after any lease, sale or other disposition of the Project, except
with the prior written consent of the Issuer, the Credit Facility Issuer, the
Trustee and the Local Government Commission.
Section 8.2. Restrictions on Transfer of Issuer's Rights. Except for
the assignment made pursuant to the Indenture of certain of its rights under
this Loan Agreement and its pledge of the Note, endorsed without recourse to
the order of the Trustee, to the Trustee as security pursuant to the Indenture,
the Issuer will not, during the term of this Loan Agreement, sell, assign,
transfer or convey any of its interests in this Loan Agreement or the Note. The
Borrower hereby assents to such assignment and pledge of the Issuer's rights
under the Loan Agreement and the pledge of the Note to the Trustee.
29
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section 9.1. Events of Default Defined. The term "Event of Default"
shall mean any one or more of the following events:
(a) The failure by the Borrower to pay when due any payment of
principal or interest on or other amount payable under the Note.
(b) The failure of the Issuer to pay when due any payment of principal
of or interest on or other amount payable under the Bonds.
(c) The failure of the Borrower to perform any of its obligations
under Sections 7.4, 7.11 or 7.12 hereof.
(d) The occurrence of an "Event of Default" or "event of default"
under any of the other Bond Documents or the Letter of Credit Documents.
(e) Any representation or warranty of the Borrower contained in
Section 2.2 hereof, or in any document, instrument or certificate delivered
pursuant hereto or to the Indenture or in connection with the issuance and sale
of the Bonds, including but not limited to the Tax Certificate, shall be false,
misleading or incomplete in any material respect on the date as of which made.
(f) Failure by the Borrower to observe and perform any covenant,
condition or agreement on the part of the Borrower under the Note or this Loan
Agreement, other than as referred to in the preceding paragraphs of this
Section 9.1, for a period of 30 days after written notice, specifying such
failure and requesting that it be remedied, is given to the Borrower by the
Issuer or the Trustee.
(g) The commencement against the Borrower of an involuntary case under
the federal bankruptcy laws, as now constituted or hereafter amended, or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or of any action or proceeding for the appointment of a receiver, liquidator,
assignee, custodian, trustee, sequestrator (or similar official) of the
Borrower or for any substantial part of its property, or for the winding-up or
liquidation of its affairs and the continuance of any such case, action, or
proceeding unstayed and in effect for a period of 60 consecutive days.
(h) The commencement by the Borrower of a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or the
consent by it to, or its acquiescence in the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Borrower or of any substantial
part of its property,
30
or the making by it of or the consent by it to any assignment for the benefit
of creditors, or the taking of any action by the Borrower in furtherance of any
of the foregoing.
(i) Failure by the Borrower to pay, when due or within any applicable
grace period, any amount owing on account of indebtedness for money borrowed or
for deferred purchases of property, or the failure by the Borrower to observe
or perform any covenant or undertaking on its part to be observed or performed
in any agreement evidencing, securing or relating to such indebtedness, if the
effect of such default is to cause, or permit the holder or holders of such
obligation (or a trustee for such holder or holders) to cause such obligation
to become due prior to its stated maturity and the acceleration of such
obligation would have a material and adverse effect on the business or
financial condition of the Borrower and its subsidiaries as a whole.
(j) The entry of a judgment or decree against the Borrower in an
amount in excess of $100,000 which remains undischarged and unstayed for a
period of 30 consecutive days.
Section 9.2. Remedies on Default. If Payment of the Bonds shall not
have been made, whenever any Event of Default referred to in Section 9.1 hereof
shall have happened and shall not have been cured or waived:
(a) The Issuer, or the Trustee on behalf of the Issuer, may by written
notice declare all installments of principal repayable pursuant to the Note for
the remainder of the term thereof to be immediately due and payable, whereupon
the same, together with accrued interest thereon as provided for in the Note,
shall become immediately due and payable without presentment, demand, protest
or any other notice whatsoever, all of which are hereby expressly waived by the
Borrower; provided, however, all such amounts shall automatically be and become
immediately due and payable without notice upon the occurrence of any event
described in Section 9.1(g) or 9.1(h) hereof, which notice the Borrower hereby
expressly waives.
(b) The Issuer may take whatever other action at law or in equity may
appear necessary or desirable to collect the amounts payable pursuant to the
Note then due and thereafter to become due, or to enforce the performance and
observance of any obligation, agreement or covenant of the Borrower under this
Loan Agreement or under any of the other Bond Documents.
In the enforcement of the remedies provided in this Section 9.2, the
Issuer may treat all reasonable expenses of enforcement, including, without
limitation, legal, accounting and advertising fees and expenses, as additional
amounts payable by the Borrower then due and owing and the Borrower agrees to
pay such additional amounts upon demand, the amount of such legal fees to be
without regard to any statutory presumption.
Section 9.3. Application of Amounts Realized in Enforcement of
Remedies. Any amounts collected pursuant to action taken under Section 9.2
hereof shall be paid to the Trustee and applied to the payment of, first, any
costs, expenses and fees incurred by the Issuer and the Trustee as a result of
taking such action; second, any interest which shall have accrued on any
overdue interest and any accrued interest on any overdue principal of the Bonds
at the rate set
31
forth in the Bonds; third, any overdue interest on the Bonds; fourth, any
overdue principal of the Bonds; fifth, the outstanding principal balance of the
Bonds; and sixth, if Payment of the Bonds shall have been made, all remaining
moneys as set forth in Article IX of the Indenture.
Section 9.4. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Issuer is intended to be exclusive of any other available
remedy or remedies, but each and every such remedy shall be cumulative and
shall be in addition to every other remedy given under this Loan Agreement or
now or hereafter existing at law or in equity or by statute. No delay or
omission to exercise any right or power accruing upon default shall impair any
such right or power or shall be construed to be a waiver thereof, but any such
right and power may be exercised from time to time and as often as may be
deemed expedient.
Section 9.5. Agreement to Pay Attorneys' Fees and Expenses. In any
Event of Default, if the Issuer, the Trustee, the Paying Agent, the Credit
Facility Issuer or any Bondholder employs attorneys or incurs other expenses
for the collection of amounts payable hereunder or for the enforcement of the
performance or observance of any covenants or agreements on the part of the
Borrower contained herein or in the Indenture (in the case of the Issuer, the
Trustee, the Paying Agent or the Credit Facility Issuer) or contained in the
Indenture (on the part of any Bondholder), the Borrower agrees that it will on
demand therefor pay to the Issuer, the Trustee, the Paying Agent, the Credit
Facility Issuer or such Bondholder the reasonable fees of such attorneys and
such other reasonable expenses so incurred by the Issuer, the Trustee, the
Paying Agent, the Credit Facility Issuer or such Bondholder, the amount of such
fees of attorneys to be without regard to any statutory presumption.
Section 9.6. Correlative Waivers. If an event of default under Section
901 of the Indenture shall be cured or waived and any remedial action by the
Trustee rescinded, any correlative default under this Loan Agreement shall be
deemed to have been cured or waived.
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ARTICLE X
PREPAYMENTS
Section 10.1. Optional Prepayments.
(a) The Borrower is hereby granted, and shall have, the option to
prepay the unpaid principal of the Note in whole or in part in accordance with
and as set forth in Section 701 of the Indenture with respect to the prepayment
of the Bonds; provided, all prepayments shall be made in immediately available
funds and with accrued interest to the date of prepayment and that any
prepayment of the Note in part shall be applied to unpaid installments of
principal in inverse order of maturity. Any prepayment pursuant to this
subsection (a) shall be made by the Borrower taking, or causing the Issuer to
take, the actions required (i) for Payment of the Bonds, in the case of
prepayment of the Note in whole, or (ii) to effect prepayment of less than all
of the Bonds according to their terms in the case of a partial prepayment of
the Note.
(b) In the event of damage, destruction, or condemnation of the Plant
or any part thereof, the Borrower may, at its option, pursuant to Section 6.8
hereof (if it is then effective) and without penalty or premium, prepay the
Note in whole or in part; provided that any such prepayment shall be made in
immediately available funds with accrued interest to the date of whole or
partial prepayment. Any prepayment pursuant to this subsection (b) shall be
made by the Borrower taking, or causing the Issuer to take, the actions
required for the full or partial prepayment of the Bond as provided for in
subsection (a) hereof.
(c) To exercise the option granted in subsection (a) or (b) of this
Section 10.1, the Borrower shall give written notice to the Issuer, the Paying
Agent and the Trustee which shall specify therein (i) the date of the intended
prepayment of the Note, which shall not be less than 30 nor more than 60 days
from the date the notice is mailed and (ii) the principal amount of the Note to
be prepaid. When given such notice shall be irrevocable by the Borrower.
Section 10.2. Mandatory Prepayments.
(a) In the event of a Determination of Taxability, the Borrower shall,
on a date selected by the Borrower not more than 180 days following the date of
written notice to the Trustee of a Determination of Taxability, prepay the
entire unpaid principal balance of the Note in full, plus accrued interest to
such date. Immediately upon the occurrence of a Determination of Taxability,
the Borrower shall notify the Issuer, the Trustee and the Paying Agent of the
date selected for payment pursuant to this Section 10.2.
(b) If any Credit Facility is not renewed and an Alternate Credit
Facility has not been provided in accordance with Section 603 of the Indenture,
the Borrower shall on or before the Interest Payment Date occurring closest but
not less than 15 days prior to the expiration date of the then current Credit
Facility, prepay the entire unpaid principal balance of the Note in full.
During the Fixed Rate Period, the Borrower shall on or before the Interest
Payment Date
33
occurring closest to but not less than 15 days prior to the expiration date of
the then current Credit Facility, prepay the entire unpaid principal balance of
the Note in full unless (1) the then current Credit Facility is renewed or (2)
an Alternate Credit Facility has been provided in accordance with Article VI
hereof. If payment of the Note is required pursuant to this paragraph, the
Borrower shall promptly notify the Issuer, the Trustee and the Paying Agent of
the date selected for such payment.
(c) In the event of a Cessation of Operation of the Project by the
Borrower (or an assignee, lessee or buyer pursuant to Section 8.1 hereof), the
Borrower shall, on a date selected by the Borrower within 90 days after the
date of the Cessation of Operation, pay to or for the account of the then
Bondholders the entire unpaid principal balance of the Note, if any,
outstanding at the date of payment hereunder, plus accrued interest thereon to
the date of such payment plus all other amounts otherwise due under the Note
and the Bonds.
Section 10.3. Other Mandatory Prepayments. The amounts required to be
applied to the prepayment of the Note by Sections 4.4, 5.3 and 6.8 hereof shall
be applied by the Borrower to prepay, together with accrued interest, all or a
portion of the unpaid principal of the Note. Such prepayment shall be made by
the Borrower taking, or causing the Issuer to take, the actions required (i)
for payment of the Bonds, whether by redemption prior to the maturity or by
payment at maturity, or (ii) to effect the purchase, redemption or payment at
maturity of less than all of the installments of principal on the Bonds in
inverse order of their maturities. Any amounts required to be paid pursuant to
Section 6.8 that would result in the redemption or purchase of Bonds in amounts
less than $5,000 shall be paid into the Loan Repayments Account of the Bond
Fund.
34
ARTICLE XI
MISCELLANEOUS
Section 11.1. References to the Bonds Ineffective After Bonds Paid.
Upon payment of the Bonds, all references in this Loan Agreement to the Bonds
shall be ineffective and the Issuer and any holder of the Bonds shall not
thereafter have any rights hereunder, excepting reporting and payment of rebate
amounts and other payments under the Tax Certificate.
Section 11.2. No Implied Waiver. In the event any agreement contained
in the Note or this Loan Agreement should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
thereunder or hereunder. Neither any failure nor any delay on the part of the
Trustee to exercise any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude any other or further exercise thereof, or the
exercise of any other right, power or privilege.
Section 11.3. Issuer Representative. Whenever under the provisions of
this Loan Agreement the approval of the Issuer is required or the Issuer is
required to take some action at the request of the Borrower, such approval
shall be made, if at all, or such action shall be taken, if at all, by the
Issuer Representative; and the Borrower, the Trustee, the Paying Agent and the
Bondholders shall be authorized to rely on any such approval or action.
Section 11.4. Borrower Representative. Whenever under the provisions
of this Loan Agreement the approval of the Borrower is required or the Borrower
is required to take some action at the request of the Issuer, such approval
shall be made or such action shall be taken by the Borrower Representative; and
the Issuer, the Trustee, the Paying Agent and the Bondholders shall be
authorized to act on any such approval or action.
Section 11.5. Notices. All notices, certificates or other
communications hereunder shall be sufficiently given and shall be deemed given
when delivered by hand delivery or mailed by first class, postage prepaid,
registered or certified mail, addressed as follows:
If to the Issuer: The Buncombe County Industrial Facilities and
Pollution Control Financing Authority
Xxx Xxx Xxxxx
Xxxxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
35
If to the Borrower: Medical Action Industries Inc.
000 Xxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Satin, Esq.
If to the
Paying Agent: First Union National Bank
000 Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Corporate Trust Bond Administration
If to the Trustee: Branch Banking and Trust Company
000 Xxxx Xxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: Corporate Trust Department
If to the Bank: First Union National Bank
Two First Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000-0000
Attention: International Operations
The Issuer, the Borrower, the Paying Agent, the Bank or the Trustee may,
by notice given hereunder, designate from time to time any further or different
addresses to which subsequent notices, certificates or other communications
shall be sent.
Section 11.6. If Payment or Performance Date Is Other Than a Business
Day. If the specified or last date for the making of any payment, the
performance of any act or the exercising of any right, as provided in this Loan
Agreement, shall be a day other than a Business Day, such payment may be made
or act performed or right exercised on the next succeeding Business Day with
the same effect as if made, performed or exercised on the specified date;
provided that interest shall accrue during any such period during which payment
shall not occur.
Section 11.7. Binding Effect. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Borrower and their
respective successors and assigns.
Section 11.8. Severability. In the event any provision of this Loan
Agreement or the Note shall be held invalid or unenforceable by any court of
competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof or thereof.
Section 11.9. Amendments, Changes and Modifications. Subsequent to the
issuance of the Bonds and prior to Payment of the Bonds, this Loan Agreement
and the other Bond Documents may not be effectively amended, changed, modified,
altered or terminated except in accordance with the Indenture.
36
Section 11.10. Execution in Counterparts. This Loan Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument, and no one counterpart
of which need be executed by all parties, except that, to the extent that this
Loan Agreement shall constitute personal property under the Uniform Commercial
Code of North Carolina, no security interest in this Loan Agreement may be
created or perfected through the transfer or possession of any counterpart of
this Loan Agreement other than the original counterpart, which shall be the
counterpart containing the receipt therefor executed by the Trustee following
the signatures to this Loan Agreement.
Section 11.11. Applicable Law. This Loan Agreement shall be governed
by and construed in accordance with the laws of the State.
Section 11.12. No Charge Against Issuer Credit. No provision hereof
shall be construed to impose a charge against the general credit of the Issuer
or any personal or pecuniary liability upon any commissioner, official,
employee or agent of the Issuer.
Section 11.13. Issuer and Local Government Commission Not Liable.
Notwithstanding any other provision of this Loan Agreement (a) neither the
Issuer nor the Local Government Commission shall be liable to the Borrower, the
Trustee, the Paying Agent, any Bondholder or any other Person for any failure
of the Issuer or the Local Government Commission to take action under this Loan
Agreement unless the Issuer or the Local Government Commission (i) is requested
in writing by an appropriate Person to take such action, (ii) is assured of
payment of or reimbursement for any expense in such action, and (iii) is
afforded, under the existing circumstances, a reasonable period to take such
action, and (b) except with respect to any action for specific performance or
any action in the nature of a prohibitory or mandatory injunction, neither the
Issuer, the Local Government Commission nor any commissioner of either nor any
other official, employee or agent of either shall be liable to the Borrower,
the Trustee, the Paying Agent, any Bondholder or any other Person for any
action taken by the Issuer or by its officers, servants, agents or employees,
or for any failure to take action under this Loan Agreement or the other Bond
Documents to which the Issuer is a party. In acting under this Loan Agreement,
or in refraining from acting under this Loan Agreement, the Issuer and the
Local Government Commission may conclusively rely on the advice of their
respective counsel.
Section 11.14. Expenses. The Borrower agrees to pay all reasonable
fees and expenses incurred in connection with the preparation, execution,
delivery, modification, waiver, and amendment of this Loan Agreement, the other
Bond Documents and related documents, and the fees and expenses of Bond
Counsel, Counsel for the Issuer and, in connection with any amendments, any
Counsel, if any, for any Bondholder who owns more than 25% of the aggregate
principal amount of the Bonds Outstanding. The Borrower also agrees to pay all
expenses incurred by the Trustee or the Issuer in collection of any
indebtedness incurred hereunder in the Event of Default by the Borrower,
provided that the amount of any legal fees so incurred shall be without regard
to any statutory presumption.
37
Section 11.15. Amounts Remaining with the Trustee or Paying Agent. Any
amounts remaining in the Bond Fund or otherwise in trust with the Trustee or
the Paying Agent under the Indenture or this Loan Agreement shall, after
Payment of the Bonds and all Administrative Expenses in accordance with this
Loan Agreement, be disbursed by the Trustee or the Paying Agent in accordance
with the provisions of the Indenture or otherwise as may be required by law.
IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Loan
Agreement to be duly executed in their respective legal names, all as of the
date first above written.
THE BUNCOMBE COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY, the Issuer
By:_____________________________
Title:__________________________
MEDICAL ACTION INDUSTRIES INC.,
the Borrower
By:_____________________________
Title:__________________________
38
RECEIPT
Receipt of the foregoing original counterpart of the Loan Agreement, dated as
of July 1, 1997 between The Buncombe County Industrial Facilities and Pollution
Control Financing Authority, as Issuer, and Medical Action Industries Inc., as
Borrower, is hereby acknowledged.
BRANCH BANKING AND TRUST COMPANY,
as Trustee
By:______________________________
Title:___________________________
EXHIBIT A
AFTER THE ENDORSEMENT OF THIS NOTE AS HEREIN PROVIDED, THIS NOTE MAY NOT BE
ASSIGNED, PLEDGED, ENDORSED OR OTHERWISE TRANSFERRED EXCEPT TO A SUCCESSOR OF
THE TRUSTEE UNDER THE TRUST INDENTURE REFERRED TO IN THE LOAN AGREEMENT
REFERRED TO HEREIN.
PROMISSORY NOTE
$5,500,000 July 1, 1997
FOR VALUE RECEIVED, Medical Action Industries Inc., a Delaware
corporation (the "Borrower"), by this promissory note promises to pay to the
order of The Buncombe County Industrial Facilities and Pollution Control
Financing Authority (the "Issuer") the principal sum of Five and One-Half
Million Dollars ($5,500,000) which principal amount shall be due and payable in
60 consecutive quarterly installments on each October 1, January 1, April 1 and
July 1, commencing October 1, 1998, as more specifically set forth below:
Date Amount
---- ------
October, 1998 $90,000
January, 1999 90,000
April, 1999 90,000
July, 1999 90,000
October, 1999 90,000
January, 2000 90,000
April, 2000 90,000
July, 2000 90,000
October, 2000 90,000
January, 2001 90,000
April, 2001 90,000
July, 2001 90,000
October, 2001 90,000
January, 2002 90,000
April, 2002 90,000
July, 2002 90,000
October, 2002 90,000
January, 2003 90,000
April, 2003 90,000
July, 2003 90,000
October, 2003 90,000
January, 2004 90,000
April, 2004 90,000
July, 2004 90,000
October, 2004 90,000
January, 2005 90,000
April, 2005 90,000
July, 2005 90,000
October, 2005 90,000
January, 2006 90,000
April, 2006 90,000
July, 2006 90,000
October, 2006 90,000
January, 2007 90,000
April, 2007 90,000
July, 2007 90,000
October, 2007 90,000
January, 2008 90,000
April, 2008 90,000
July, 2008 90,000
October, 2008 90,000
January, 2009 90,000
April, 2009 90,000
July, 2009 90,000
October, 2009 90,000
January, 2010 90,000
April, 2010 90,000
July, 2010 90,000
October, 2010 90,000
January, 2011 90,000
April, 2011 90,000
July, 2011 90,000
October, 2011 90,000
January, 2012 90,000
April, 2012 90,000
July, 2012 90,000
October, 2012 90,000
January, 2013 90,000
April, 2013 90,000
July, 2013* 190,000
* Final Maturity
2
The Borrower further agrees to pay interest on the unpaid principal
amount from the date of authentication and delivery of the Bonds (as defined in
the Loan Agreement referred to below) until the principal amount and all
interest thereon is paid in full which shall be paid on the first Business Day
of each October, January, April and July (the "Interest Payment Dates"), at the
rate of interest equal to the Variable Rate (as defined in the Indenture
hereinafter mentioned) or the Fixed Rate (as defined in the Indenture).
This Promissory Note is the "Note" referred to in the Loan Agreement
of even date herewith (the "Loan Agreement"), between the Borrower and the
Issuer and is entitled to the benefits thereof and subject to the conditions
thereof. Terms not otherwise defined herein shall have the definitions set
forth in the Loan Agreement.
Under the Loan Agreement, the Issuer has loaned to the Borrower the
proceeds received from the sale of the Issuer's $5,500,000 Industrial
Development Revenue Bonds (Medical Action Industries Inc., Project) Series
1997, dated as of the date hereof (the "Bonds"). The Bonds have been issued,
concurrently with the execution and delivery of this Note, pursuant to, and are
secured by, the Trust Indenture between the Issuer, Branch Banking and Trust
Company, as Trustee (the "Trustee") and First Union National Bank, as Paying
Agent (the "Paying Agent"), dated as of the date hereof (the "Indenture"). The
Bonds bear interest at the Variable Rate prior to the Conversion Date (as
defined in the Indenture) and at the Fixed Rate on or subsequent to the
Conversion Date. Such interest is payable on the Interest Payment Dates. This
Note shall bear interest at the Variable Rate and the Fixed Rate during the
respective periods as such rates are borne by the Bonds.
Each payment of principal of and interest on this Note will be
sufficient to enable the Issuer to pay when due the total amount of principal
of (whether at maturity, upon acceleration or otherwise), premium, if any, and
interest on the Bonds, as required by the Indenture. To the extent that
principal of, premium, if any, or interest on the Bonds shall be paid, there
shall be credited against unpaid principal of or interest on this Note, as the
case may be, an amount equal to the principal of or interest on the Bonds so
paid. The principal of, premium, if any, and interest on this Note are payable
in immediately available funds of any coin or currency of the United States of
America which on the respective dates of payment thereof shall be legal tender
for the payment of public and private debts.
In addition, the Borrower agrees to pay when due in immediately
available funds all other amounts at the time the Issuer may be required to pay
the same pursuant to the Bonds or the Indenture.
The obligation of the Borrower to make the payments required hereunder
shall be absolute and unconditional without any defense, recoupment or right of
set-off by reason of any default by the Issuer under the Loan Agreement or for
any other reason.
3
Upon the occurrence of an Event of Default specified in the Loan
Agreement, the unpaid principal hereof and accrued interest and additional
interest hereon may become forthwith due and payable as provided in the Loan
Agreement, and in the event the Borrower shall fail to pay any amount, whether
principal or interest, required to be paid under this Note when due, the
Borrower shall pay interest on such amount at a rate per annum equal to the
Overdue Rate (as defined in the Loan Agreement) or the maximum rate permitted
by law, whichever is lower.
The Borrower may at its option, and may under certain circumstances be
required to, prepay all or any part of the unpaid principal of this Note upon
the terms provided in the Loan Agreement.
The Borrower hereby promises to pay all costs of collection, including
reasonable attorneys' fees and disbursements, without regard to any statutory
presumption, in the case of a default under this Note or the Loan Agreement.
The Borrower hereby waives presentment, protest and notice of protest or
dishonor.
This Note shall be construed in accordance with the laws of the State
of North Carolina.
IN WITNESS WHEREOF, the Borrower has caused this instrument to be
executed in its corporate name by its duly authorized officers and its
corporate seal to be affixed hereto all as of the date first above written.
MEDICAL ACTION INDUSTRIES INC.
ATTEST:
By:___________________________
Title:________________________
___________________________
Secretary
(CORPORATE SEAL)
4
ENDORSEMENT
Pay to the order of Branch Banking and Trust Company, as Trustee for
the benefit of the Bondholders under the Trust Indenture dated as of July 1,
1997, between the Issuer, the Trustee and the Paying Agent, without recourse.
This endorsement is given and made without any warranty as to the authority and
genuineness of the signature of the maker of the foregoing Promissory Note.
This the ______ day of July, 1997.
THE BUNCOMBE COUNTY INDUSTRIAL
FACILITIES AND POLLUTION CONTROL
FINANCING AUTHORITY, as Issuer
By:_____________________________
Title:__________________________
EXHIBIT B
Project Site
The project will be located at Arden, Buncombe County, North Carolina.
[Property Description to be added.]
