EXHIBIT 10.60
CITY OF GAINESVILLE, FLORIDA
AND
EXACTECH, INC.
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LOAN AGREEMENT
------------------------------------
Dated as of November 1, 1997
The interest of the City of Gainesville, Florida (the
"Issuer") in this Loan Agreement has been assigned (except for amounts payable
under Sections 4.2(b), 7.2 and 8.4 hereof) pursuant to the Indenture of Trust
dated as of the date hereof from the Issuer to SunTrust Bank, Central Florida,
National Association, as trustee (the "Trustee"), and is subject to the security
interest of the Trustee thereunder.
LOAN AGREEMENT
TABLE OF CONTENTS
(This Table of Contents is not a part of the Loan Agreement
and is only for convenience of reference.)
PAGE
ARTICLE I
DEFINITIONS
Section 1.1. Definitions....................................................................................... 1
Section 1.2. Uses of Phrases................................................................................... 3
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Agreements of the Parties......................................................................... 4
Section 2.2. Representations, Covenants and Warranties of
the Issuer...................................................................................... 4
Section 2.3. Representations, Covenants and Warranties of
the Company..................................................................................... 5
Section 2.4. Notice of Determination of Taxability............................................................. 11
ARTICLE III
ACQUISITION AND CONSTRUCTION OF THE
PROJECT; ISSUANCE OF THE BONDS
Section 3.1. Agreement to Acquire, Construct, Improve and
Equip the Project............................................................................... 11
Section 3.2. Agreement to Issue the Bonds; Application of
Bond Proceeds................................................................................... 12
Section 3.3. Disbursements from the Construction Fund.......................................................... 12
Section 3.4. Furnishing Documents to the Trustee............................................................... 12
Section 3.5. Establishment of Completion Date.................................................................. 12
Section 3.6. Company Required to Pay in Event Construction
Fund Insufficient............................................................................... 13
Section 3.7. Arbitrage; Preservation of Tax-Exemption.......................................................... 14
Section 3.8. Certain Covenants with Respect to Compliance
with Arbitrage Requirements for Investments
in Nonpurpose Investments and Rebate to the
United States of America........................................................................ 14
Section 3.9. Covenants as to Use of Bond Proceeds and Other
Matters, Payback Provision...................................................................... 15
Section 3.10. Damage, Destruction or Loss of Property;
Obligation to Rebuild; Use of Insurance
Proceeds and Condemnation Awards................................................................ 18
Section 3.11. Pursuit of Remedies Against Contractors,
Subcontractors and Sureties..................................................................... 18
Section 3.12. Certain Covenants with Respect to Capital
Expenditures and Use of Proceeds of the Bonds................................................... 19
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ARTICLE IV
LOAN PROVISIONS; SUBSTITUTE LETTER OF CREDIT
Section 4.1. Loan of Proceeds.................................................................................. 22
Section 4.2. Amounts Payable................................................................................... 22
Section 4.3. Obligations of Company Unconditional.............................................................. 23
Section 4.4. Substitute Letter of Credit....................................................................... 24
ARTICLE V
PREPAYMENT AND REDEMPTION
Section 5.1. Prepayment and Redemption......................................................................... 25
ARTICLE VI
SPECIAL COVENANTS
Section 6.1. No Warranty of Condition or Suitability by
Issuer.............................................................................. 25
Section 6.2. Access to the Project............................................................................. 25
Section 6.3. Further Assurances and Corrective Instruments..................................................... 25
Section 6.4. Issuer and Company Representatives................................................................ 26
Section 6.5. Financial Reports................................................................................. 26
Section 6.6. Financing Statements.............................................................................. 26
Section 6.7. Maintenance of Project............................................................................ 26
Section 6.8. Undertaking to Provide Ongoing Disclosure......................................................... 27
ARTICLE VII
ASSIGNMENT, SELLING, LEASING;
INDEMNIFICATION; REDEMPTION
Section 7.1. Assignment, Selling and Leasing................................................................... 31
Section 7.2. Release and Indemnification Covenants............................................................. 31
Section 7.3. Issuer to Grant Security Interest to Trustee...................................................... 33
Section 7.4. Indemnification of Trustee........................................................................ 33
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.1. Defaults Defined.................................................................................. 33
Section 8.2. Remedies on Default............................................................................... 35
Section 8.3. No Remedy Exclusive............................................................................... 35
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses..................................................... 35
Section 8.5. No Additional Waiver Implied by One Waiver........................................................ 36
ARTICLE IX
MISCELLANEOUS
Section 9.1. Term of Agreement................................................................................. 36
Section 9.2. Notices........................................................................................... 36
Section 9.3. Binding Effect.................................................................................... 37
Section 9.4. Severability...................................................................................... 38
Section 9.5. Amounts Remaining in Funds........................................................................ 38
Section 9.6. Amendments, Changes and Modifications............................................................. 38
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Section 9.7. Execution in Counterparts......................................................................... 38
Section 9.8. Applicable Law.................................................................................... 38
Section 9.9. Captions.......................................................................................... 38
EXHIBIT A Project Facilities
EXHIBIT B Form of Requisition
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of November 1, 1997, between the
CITY OF GAINESVILLE, FLORIDA, a municipal corporation of the State of Florida
(the "Issuer") and EXACTECH, INC., a corporation organized and existing under
the laws of the State of Florida (the "Company");
W I T N E S S E T H:
That the parties hereto, intending to be legally bound hereby,
and for and in consideration of the premises and the mutual covenants
hereinafter contained, do hereby covenant, agree and bind themselves as follows:
provided, that any obligation of the Issuer created by or arising out of this
Agreement shall never constitute a debt or a pledge of the faith and credit or
the taxing power of the Issuer or any political subdivision or taxing district
of the State of Florida but shall be payable solely out of the Trust Estate (as
defined in the Indenture), anything herein contained to the contrary by
implication or otherwise notwithstanding:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS. All capitalized, undefined terms
used herein shall have the same meanings as used in Article I of the hereinafter
defined Indenture. In addition, the following words and phrases shall have the
following meanings:
"Cost" with respect to the Project shall be deemed to include
all items permitted to be financed under the provisions of the Code and the Act.
"Default" means any Default under this Agreement as specified
in and defined by Section 8.1 hereof.
"Indenture" means the Indenture of Trust dated as of this date
between the Issuer and the Trustee, pursuant to which the Bonds are authorized
to be issued, and any amendments and supplements thereto.
"Issuance Costs" shall have the meaning provided in Section
1.150-1(b) of the Income Tax Regulations and means, therefore, costs to the
extent incurred in connection with, and allocable to, the issuance of the Bonds,
including, but not limited to, (a) underwriter's spread (whether realized
directly or derived through purchase of the Bonds at a discount below the price
at which they are expected to be sold to the public); (b) counsel fees
(including bond counsel, underwriter's counsel, Issuer's counsel, Company
counsel, as well as any other specialized counsel fees incurred in connection
with the issuance of the Bonds;
(c) financial advisory fees incurred in connection with the issuance of the
Bonds; (d) rating agency fees; (e) Trustee fees incurred in connection with the
issuance of the Bonds; (f) paying agent fees; (g) registrar, certification and
authentication fees related to issuance of the Bonds; (h) accounting fees
related to the issuance of the Bonds; (i) printing costs of the Bonds and of the
preliminary and final offering materials; (j) publication costs associated with
the financing proceedings; (k) costs of engineering and feasibility studies
necessary to the issuance of the Bonds; and (l) bond insurance premiums, letter
of credit fees, or other forms of guarantee fees except to the extent such fees
are for qualified guarantees (as defined in Section 1.148-4(f) of the Income Tax
Regulations).
"Net Proceeds" means the proceeds from the sale of the Bonds
reduced by any portion thereof deposited in a debt service reserve fund.
"Plans and Specifications" means the plans and specifications
for the Project submitted to the Bank and the Trustee.
"Project" means the Project Site and the Project Facilities.
"Project Facilities" means those certain buildings or
improvements to buildings and all other facilities and improvements and any
items of machinery, equipment, or other tangible property forming a part of the
Project to be constructed on the Project Site, all as described generally in
Exhibit "A" hereto and all renewals and replacements thereof and substitutions
therefor.
"Project Site" means the approximately 7.5-acre tract of land
located in the Northwest Commercial Park in the City of Gainesville, Florida on
which the Project Facilities will be situated, and any other interests in real
property, leasehold interests, easements, licenses, and rights in real property
hereafter acquired by the Company with proceeds of the Bonds for use in
connection with the Project.
"Qualified Project Costs" means Costs paid or incurred with
respect to the Project:
(a) for the acquisition, construction, reconstruction, or
improvement (i) of land or (ii) of property that is subject to exhaustion, wear
and tear, or obsolescence, that has a useful life in the hands of the Company of
more than one year, and that is otherwise of a character subject to the
allowance for depreciation under the Code; and
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(b) that, under the Code, are chargeable to the Project's
capital account or would be so chargeable either (i) with a proper election by
the Company (for example, under Section 266 of the Code), or (ii) but for a
proper election by the Company to deduct such amounts.
However, Costs paid prior to December 27, 1996, other than "preliminary
expenditures" as defined in Section 1.150-2(f) of the Income Tax Regulations,
are not Qualified Project Costs. Further, neither working capital expenditures
nor the financing of inventory nor Issuance Costs are Qualified Project Costs.
Interest costs accruing during the construction period shall be allocated
between Qualified Project Costs and other Costs to be paid from the proceeds of
the Bonds. Interest costs accruing after the Construction Period are not
Qualified Project Costs.
"Requisition" means a written request for a disbursement from
the Construction Fund, signed by a Company Representative, substantially in the
form attached hereto as Exhibit "B" and satisfactorily completed as contemplated
by said form.
"State" means the State of Florida.
"Substantially All" means ninety-five percent (95%) or more,
unless an opinion of Bond Counsel is rendered indicating that such term, as used
herein, shall have a different meaning.
"Tender Agent Agreement" means the Tender Agent Agreement
dated as of November 1, 1997, among the Company, the Trustee and the Tender
Agent, and any amendments or supplements thereto.
"Term of Agreement" means the term of this Agreement as
specified in Section 9.1 hereof.
Section 1.2. USES OF PHRASES. Words of the masculine gender
shall be deemed and construed to include correlative words of the feminine and
neuter genders. Unless the context shall otherwise indicate, the words "Bond,"
"Bondholder," "registered owner" and "person" shall include the plural as well
as the singular number and the word "person" shall include corporations and
associations, including public bodies, as well as persons. "Herein," "hereby,"
"hereunder," "hereof," "hereinbefore," "hereinafter" and other equivalent words
refer to this Agreement and not solely to the particular portion thereof in
which any such word is used. Any percentage of Bonds, specified herein for any
purpose, is to be figured on the unpaid principal amount thereof then
outstanding. All references herein to specific Sections of the Code refer to
such Sections of the Code and all successor or replacement provisions thereto.
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ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. AGREEMENTS OF THE PARTIES. It is hereby agreed by
and between the Issuer and the Company that:
(a) The Company proposes to acquire, construct and equip the
Project. The Issuer proposes to loan money to the Company for the
construction and equipping of a manufacturing facility pursuant to the
terms and conditions expressed herein, all for the purposes of
fostering the industrial and business development of, and improving
living conditions in, the City of Gainesville, Florida and otherwise
contributing to the welfare of the State of Florida and its
inhabitants.
(b) To finance a portion of the Cost of the Project, the
Issuer proposes to issue the Bonds in the original aggregate principal
amount of $3,900,000, and to loan the proceeds of the Bonds to the
Company.
(c) All of the Bonds will be issued under the Indenture and
will mature, bear interest, be redeemable and have the other terms and
provisions set forth in the Indenture, pursuant to which the Issuer's
interest in this Agreement and the revenues and receipts thereunder
derived by the Issuer will be pledged and conveyed to the Trustee as
security for payment of the principal of, premium, if any, and interest
on the Bonds.
Section 2.2. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE
ISSUER. The Issuer represents, covenants and warrants that:
(a) The Issuer is a municipal corporation of the State of
Florida. The Issuer is authorized to enter into the transactions
contemplated by this Agreement and the Indenture and to carry out its
obligations hereunder and thereunder. The Issuer has been duly
authorized to execute and deliver this Agreement and the Indenture.
(b) The Issuer duly adopted its Resolution No. 960876 on
February 24, 1997, to induce the Company to acquire, construct and
equip the Project in the City of Gainesville, Florida.
(c) The Issuer covenants that it will not pledge the amounts
derived from this Agreement other than as contemplated by the
Indenture.
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(d) After reasonable public notice given by publication in THE
GAINESVILLE SUN, a newspaper published and of general circulation in
the City of Gainesville, Florida on February 7, 1997, the Issuer held a
public hearing concerning the issuance of the Bonds and the nature and
location of the Project, and after such hearing, the City Commission,
the elected legislative body of the Issuer, approved the issuance of
the Bonds by duly adopting Resolution No. 960876. The Issuer has
jurisdiction over the entire area in which the Project will be located.
(e) As of the date hereof, the Issuer has received from the
Division of Bond Finance of the State Board of Administration written
confirmation of an allocation to the Bonds of $3,900,000 of the total
yearly state allocation of private activity bonds, in accordance with
Part VI, Chapter 159, Florida Statutes, as amended.
Section 2.3. REPRESENTATIONS, COVENANTS AND WARRANTIES OF THE
COMPANY. The Company represents, covenants and warrants that:
(a) The Company is a corporation duly organized and validly
existing under the laws of the State of Florida. The Company is not in
violation of any provision of its Articles of Incorporation, as
amended, has the corporate power to enter into and perform this
Agreement, and has duly authorized by proper corporate action the
execution and delivery of this Agreement, and is qualified to do
business and is in good standing under the laws of the State.
(b) The Company agrees that during the Term of Agreement it
will maintain its existence, will not directly or indirectly (whether
in one transaction or a series of transactions), (i) enter into any
merger, consolidation or amalgamation; (ii) liquidate, wind up or
dissolve itself (or suffer any liquidation or dissolution); (iii)
acquire by purchase or otherwise all or substantially all the business
or assets, or stock or other evidence of beneficial ownership, of any
Person; (iv) sell, transfer or pledge all or substantially all of its
assets to any other Person; (v) make any material change in its present
method of conducting business; or (vi) enter into any agreement or
transaction to do or permit any of the foregoing, unless (A) the
survivor of such transaction, if other than the Company, assumes all of
the obligations of the Company hereunder, the Company or such other
survivor shall immediately upon the conclusion of any such transaction
be in compliance with all obligations of the Company hereunder, and
such survivor, if other than the Company, shall have a Net Worth at
least equal to the Net
5
Worth of the Company immediately preceding such transaction, or (B)
the Bank shall have consented thereto in writing, which consent shall
not be withheld unreasonably. As used herein, the term "Net Worth"
means the aggregate depreciated book value of all assets, both
tangible and intangible, less all liabilities, all as determined in
accordance with generally accepted accounting principles.
(c) Neither the execution and delivery of this Agreement, the
Remarketing Agreement, the Credit Agreement, the Tender Agent Agreement
or the Pledge Agreement, nor the consummation of the transactions
contemplated hereby and thereby, nor the fulfillment of or compliance
with the terms and conditions hereof or thereof conflicts with or
results in a breach of the articles of incorporation or the bylaws of
the Company or the terms, conditions, or provisions of any agreement or
instrument to which the Company is now a party or by which the Company
is bound, or constitutes a default under any of the foregoing, or
results in the creation or imposition of any lien, charge or
encumbrance whatsoever upon any of the property or assets of the
Company under the terms of any such instrument or agreement, except
such liens as are created or imposed by this Agreement, the Remarketing
Agreement, the Credit Agreement, the Tender Agent Agreement or the
Pledge Agreement.
(d) There is no action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public
board or body, known to be pending or, to the best knowledge of the
Company, threatened against or affecting the Company or any of its
officers, nor to the best knowledge of the Company is there any basis
therefor, wherein an unfavorable decision, ruling, or finding would
materially adversely affect the transactions contemplated by this
Agreement or which would adversely affect, in any way, the validity or
enforceability of the Bonds, this Agreement, the Pledge Agreement, the
Tender Agent Agreement, the Credit Agreement, the Remarketing
Agreement, or any agreement or instrument to which the Company is a
party, used or contemplated for use in the consummation of the
transactions contemplated hereby.
(e) The Project is of the type authorized and permitted by the
Act, and its estimated Cost is not less than $3,900,000.
(f) The Net Proceeds from the sale of the Bonds will be used
only for payment of Costs of the Project. None of the Net Proceeds from
the sale of the Bonds will be used as working capital or to finance
inventory.
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(g) The Company will use due diligence to cause the Project to
be operated in accordance with the laws, rulings, regulations and
ordinances of the State and the departments, agencies and political
subdivisions thereof. The Company has obtained or will cause to be
obtained all requisite approvals of the State and of other federal,
state, regional and local governmental bodies for the acquisition,
construction, improving and equipping of the Project.
(h) The Company will fully and faithfully perform all the
duties and obligations which the Issuer has covenanted and agreed in
the Indenture to cause the Company to perform, any duties and
obligations which the Company is required in the Indenture to perform
and any delegable or assignable duties and obligations which the Issuer
is required in the Indenture to perform and which have been delegated
or assigned to the Company. The foregoing shall not apply to any duty
or undertaking of the Issuer which by its nature cannot be delegated or
assigned.
(i) Except for any architectural, engineering, surveying, soil
testing, or similar preliminary activities occurring earlier, the
commencement of the acquisition and construction of the Project, and
each of the several components thereof, occurred subsequent to December
27, 1996, which is sixty days prior to the date of adoption by the
Issuer of Resolution No. 960876. No proceeds of any Bonds will be used
to reimburse the Company for amounts paid prior to December 27, 1996,
other than for "preliminary expenditures" as defined in Section
1.150-2(f) of the Income Tax Regulations.
(j) The Project presently constitutes, and at the completion
thereof and until the expiration of the Term of Agreement will
constitute, a "project" and a "manufacturing plant" within the meaning
of Section 159.27(5), Florida Statutes.
(k) The Company has entered into various contracts providing
for the acquisition, construction, improvement and equipping of the
Project that collectively create a substantial binding commitment on
the Company's part to expend at least five percent (5%) of the Net
Proceeds of the Bonds on the Project.
(l) The Project consists of land and/or property subject to
the allowance for depreciation under the Code, and Substantially All of
the Net Proceeds of the Bonds, including earnings from the investment
thereof, will be used to pay Qualified Project Costs.
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(m) No changes shall be made in the Project and no actions
will be taken by the Company that shall in any way cause interest on
the Bonds to be included in gross income for federal income tax
purposes.
(n) Based on current facts, estimates and circumstances, the
Company currently expects:
(1) that the acquisition, construction and equipping
of the Project and the expenditure of all of the net sale
proceeds of the Bonds will be completed by October 31, 1998;
(2) to proceed with due diligence toward completion
of the Project (the work on which has already commenced) and
the expenditure of the Net Proceeds of the Bonds in connection
with the Project;
(3) the Net Proceeds of the Bonds are needed for the
purpose of paying all or a part of the Cost of the Project;
and
(4) the Project will not be sold or disposed of in a
manner producing sale proceeds which, together with
accumulated proceeds of the Bonds or earnings thereon, would
be sufficient to enable the Company to retire substantially
all of the Bonds prior to the maturity of the Bonds.
(o) As of the date of execution and delivery of this
Agreement, there exists no Default or any condition or event which
would constitute, or with the passage of time or the giving of notice,
or both, would constitute a Default hereunder.
(p) The average maturity of the Bonds does not exceed one
hundred twenty percent (120%) of the average reasonably expected
economic life of the assets being financed with the proceeds of the
Bonds, with the average reasonably expected economic life of each asset
being measured from the later of the date of issuance of the Bonds or
the date such asset is reasonably expected to be placed in service and
by taking into account the respective cost of each asset being
financed. The information furnished by the Company and used by the
Issuer to verify the average reasonably expected economic life of each
asset of the Project to be financed with the proceeds of the Bonds is
true, accurate and complete.
(q) (i) The payment of principal or interest with
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respect to the Bonds will not be guaranteed (in whole or in part) by
the United States (or any agency or instrumentality thereof); (ii)
less than five percent (5%) of the proceeds of the Bonds will be (A)
used in making loans the payment of principal and interest with
respect to which are to be guaranteed (in whole or in part) by the
United States (or any agency or instrumentality thereof), or (B)
invested (directly or indirectly) in federally insured deposits or
accounts as defined in Section 149(b) of the Code; and (iii) the
payment of principal or interest on the Bonds will not otherwise be
indirectly guaranteed (in whole or in part) by the United States (or
any agency or instrumentality thereof).
The foregoing provisions of this subsection shall not apply to
proceeds of the Bonds being (u) invested for an initial temporary
period until such proceeds are needed for the purpose for which such
issue was issued; (v) held in a bona fide debt service fund; (w) held
in a debt service reserve fund that meets the requirements of Section
148(d) of the Code with respect to reasonably required reserve or
replacement funds; (x) invested in obligations issued by the United
States Treasury; or (y) held in a refunding escrow (I.E., a fund
containing proceeds of a refunding bond issue established to provide
for the payment of principal or interest on one or more prior bond
issues); or (z) invested in other investments permitted under
regulations promulgated pursuant to Section 149(b)(3)(B) of the Code.
(r) Any information has been or will be supplied by the
Company that has been or will be relied upon by the Issuer, the Trustee
and by Bond Counsel with respect to the eligibility of the Project and
the exclusion from gross income for federal income tax purposes of
interest on the Bonds is true and correct.
(s) All proceeds of the Bonds will be used to pay the "cost"
(within the meaning of Section 159.44(5), Florida Statutes) of the
Project.
(t) The Company shall promptly provide written notice to the
Issuer and the Trustee if the Company becomes aware of a Default as
such term is used in Section 8.1 hereof.
(u) All components of the Project are or will be located
wholly within the boundaries of the Project Site, and the Project Site
is located completely within the incorporated limits of the City of
Gainesville, Florida.
(v) This Agreement constitutes a valid and binding obligation
of the Company enforceable against the Company in
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accordance with its terms, except to the extent that enforceability
thereof may be limited by bankruptcy, reorganization, insolvency or
similar laws relating to enforcement of creditors' rights generally and
applicable laws or equitable principles that may affect remedies.
(w) There is no other bond or issue of bonds, the interest on
which is tax exempt pursuant to Section 144(a) of the Code or Section
103(b)(6) of the Internal Revenue Code of 1954, as amended, part or all
of the net proceeds of which are to be used with part or all of the net
proceeds of the Bonds with respect to a single building, an enclosed
shopping mall, or a strip of offices, stores or warehouses using
substantial common facilities, as contemplated by Section 144(a)(9) of
the Code. There are no common heating, cooling or other facilities
shared by the Project and by any other facility financed with
tax-exempt bonds. There are no common entrances, plazas, malls,
lobbies, parking, elevators or stairways shared by the Project and any
other facility financed with tax-exempt bonds for use by employees or
patrons of the Project and such facility.
(x) Neither the Company nor persons related (as such term is
used in the Code) to the Company are owners or principal users (as such
term is used in the Code) of any facility (other than the Project) in
the incorporated limits of the City of Gainesville, Florida, or outside
of, but contiguous with, the incorporated limits of the City of
Gainesville, Florida.
(y) The Project is not integrated with any facility located
outside of the incorporated limits of the City of Gainesville, Florida.
(z)(i) The aggregate authorized face amount of the Bonds
allocated to any test-period beneficiary (as such term is used in the
Code), when increased by the outstanding tax-exempt facility-related
bonds (within the meaning of Section 144(a)(10) of the Code) of such
beneficiary, does not exceed $40,000,000. (ii) For purposes of
applying subparagraph (i) above, with respect to any issue, the
outstanding tax-exempt facility-related bonds of any person who is a
test-period beneficiary, as such term is used in the Code, with
respect to such issue is the aggregate face amount of all tax-exempt
bonds which, within the meaning of Section 144(a)(10)(B)(ii) of the
Code, are exempt facility bonds, qualified small issue bonds and
qualified redevelopment bonds or industrial development bonds (as
defined in Section 103(b)(2) of the Internal Revenue Code of 1954, as
in effect on the date before the date of enactment of the Tax Reform
Act of 1986) to which
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Section 141(a) of the Code does not apply: (A) which are allocated to
such beneficiary, and (B) which are outstanding on the date of issuance
of the Bonds (not including as outstanding any obligation which is to
be redeemed from the proceeds of the Bonds). (iii) The amount of any
issue shall be allocated so that: (y) except as may otherwise be
provided in regulations promulgated under Section 144(a)(10)(C) of the
Code, the portion of the face amount of any issue allocated to any
test-period beneficiary of the facility financed by the proceeds of
such issue (other than an owner of such facility) is an amount which
bears the same relationship to the entire face amount of such issue as
the portion of such facility used by such beneficiary bears to the
entire facility; and (z) except as otherwise provided in regulations
promulgated under Section 144(a)(10)(C) of the Code, the portion of the
face amount of an issue allocated to any test period beneficiary who is
an owner of a facility financed by the proceeds of such issue is an
amount which bears the same relationship to the entire face amount of
such issue as the portion of such facility owned by such beneficiary
bears to the entire facility.
(aa) The information furnished by the Company and used by the
Issuer in making its election to issue the Bonds pursuant to Section
144(a)(4) of the Code was true and complete as of the date hereof.
(bb) No customer of the Company is expected to purchase ten percent
(10%) or more of the Company's annual output from the Project during
the first three years after the initial issuance of Bonds.
(cc) The Project constitutes a "manufacturing facility" within the
meaning and contemplation of Section 144(a)(12) of the Code, and any
office space included as part of the Project will be (i) located at or
within the Project, (ii) directly related to the day-to-day
manufacturing operations at the Project, and (iii) DE MINIMIS in size
and cost in relation to the size and cost of the Project.
Section 2.4. NOTICE OF DETERMINATION OF TAXABILITY. Promptly
after the Company first becomes aware of any Determination of Taxability, the
Company shall give written notice thereof to the Issuer and the Trustee.
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ARTICLE III
ACQUISITION AND CONSTRUCTION OF THE
PROJECT; ISSUANCE OF THE BONDS
Section 3.1. AGREEMENT TO ACQUIRE, CONSTRUCT, IMPROVE AND
EQUIP THE PROJECT. The Company agrees to make all contracts and do all things
necessary for the acquisition, construction, improving, and equipping of the
Project, with or without advertising for bids, and the Company agrees that it
will cause the Project Facilities to be constructed on the Project Site
substantially in accordance with the Plans and Specifications. The Company may
make such change orders as it deems necessary or desirable provided, however,
that any change orders the cost of which, either individually or in the
aggregate, shall exceed $25,000 shall be subject to the prior written approval
of the Bank.
The Company further agrees that it will acquire, construct,
improve, and equip the Project with all reasonable dispatch and use its best
efforts to cause acquisition, construction, improving, equipping, and occupancy
of the Project to be completed by October 31, 1998, or as soon thereafter as may
be practicable, delays caused by FORCE MAJEURE as defined in Section 8.1 hereof
only excepted; but if for any reason such acquisition, construction, improving
and equipping is not completed by said date there shall be no resulting
liability on the part of the Company and no diminution in or postponement of the
payments required in Section 4.2 hereof to be paid by the Company.
Section 3.2. AGREEMENT TO ISSUE THE BONDS; APPLICATION OF BOND
PROCEEDS. In order to provide funds for the payment of the Cost of the Project,
the Issuer, concurrently with the execution of this Agreement, will issue, sell,
and deliver the Bonds and deposit the net proceeds thereof (after payment of the
fees and expenses of the placement agent) with the Trustee in the Construction
Fund.
Section 3.3. DISBURSEMENTS FROM THE CONSTRUCTION FUND. The
Issuer has, in the Indenture, authorized and directed the Trustee to make
disbursements from the Construction Fund to pay the Costs of the Project, or to
reimburse the Company for any Cost of the Project paid by the Company, or to
deposit funds to any debt service reserve fund. The Trustee shall not make any
disbursement from the Construction Fund (other than for a deposit to any debt
service reserve fund) until the Company shall have provided the Trustee with a
Requisition, which Requisition shall be approved by the Bank; provided that the
Trustee may transfer amounts from the Construction Fund to the Bond Fund related
to the payment of interest on the Bonds through the Completion Date without a
Requisition.
12
Section 3.4. FURNISHING DOCUMENTS TO THE TRUSTEE. The Company
agrees to cause such Requisitions to be directed to the Trustee as may be
necessary to effect payments out of the Construction Fund in accordance with
Section 3.3 hereof.
Section 3.5. ESTABLISHMENT OF COMPLETION DATE.
(a) The Completion Date as to the Project shall be evidenced
to the Issuer and the Trustee by a certificate signed by a Company
Representative stating that, except for amounts retained by the Trustee at the
Company's direction to pay any Cost of the Project not then due and payable, (i)
construction of the Project has been completed and all costs of labor, services,
materials and supplies used in such construction have been paid, (ii) all
equipment for the Project has been installed, such equipment so installed is
suitable and sufficient for the operation of the Project, and all costs and
expenses incurred in the acquisition and installation of such equipment have
been paid, and (iii) all other facilities necessary in connection with the
Project have been acquired, constructed, improved, and equipped and all costs
and expenses incurred in connection therewith have been paid. Notwithstanding
the foregoing, such certificate shall state that it is given without prejudice
to any rights against third parties which exist at the date of such certificate
or which may subsequently come into being. Forthwith upon completion of the
acquisition, construction, improving, and equipping of the Project, the Company
agrees to cause such a certificate to be furnished to the Issuer and the
Trustee. Upon receipt of such certificate, the Trustee shall retain in the
applicable account in the Construction Fund a sum equal to the amounts necessary
for payment of the Costs of the Project not then due and payable according to
such certificate. If any such amounts so retained are not subsequently used,
prior to any transfer of said amounts to the General Account of the Bond Fund as
provided below, the Trustee shall give notice to the Company of the failure to
apply said funds for payment of the Costs of the Project. Any amount not to be
retained in the Construction Fund for payment of the Costs of the Project, and
all amounts so retained but not subsequently used, shall be transferred by the
Trustee into the General Account of the Bond Fund.
(b) If less than Substantially All of the Net Proceeds of the
Bonds then Outstanding has been used to pay Qualified Project Costs, any amount
(exclusive of amounts retained by the Trustee in the applicable account in the
Construction Fund for payment of Costs of the Project not then due and payable)
remaining in the Construction Fund shall be transferred by the Trustee into the
General Account of the Bond Fund and used by the Trustee (a) to redeem, or to
cause the redemption of, Bonds on the earliest redemption date permitted by the
Indenture without a premium, (b) to purchase Bonds on the open market prior to
such redemption date
13
at prices not in excess of one hundred percent (100%) of the principal amount of
such Bonds, or (c) for any other purpose provided that the Trustee is furnished
with an opinion of Bond Counsel to the effect that such use is lawful under the
Act, if applicable, and will not require that interest on the Bonds be included
in gross income for federal income tax purposes. Until used for one or more of
the foregoing purposes, such segregated amount may be invested as permitted by
the Indenture provided that prior to any such investment, if applicable, the
Trustee is provided with an opinion of Bond Counsel to the effect that such
investment will not cause interest on the Bonds to be included in gross income
for federal income tax purposes.
Section 3.6. COMPANY REQUIRED TO PAY IN EVENT CONSTRUCTION
FUND INSUFFICIENT. In the event the moneys in the Construction Fund available
for payment of the Costs of the Project should not be sufficient to pay the
Costs of the Project in full, the Company agrees to complete the Project and to
pay that portion of the Costs of the Project in excess of the moneys available
therefor in the Construction Fund. The Issuer does not make any warranty, either
express or implied, that the moneys paid into the Construction Fund and
available for payment of the Costs of the Project will be sufficient to pay all
of the Costs of the Project. The Company agrees that if after exhaustion of the
moneys in the Construction Fund, the Company should pay any portion of the Costs
of the Project pursuant to the provisions of this Section, the Company shall not
be entitled to any reimbursement therefor from the Issuer, the Trustee or the
Owners of any of the Bonds, nor shall the Company be entitled to any diminution
of the amounts payable under Section 4.2 hereof.
Section 3.7. ARBITRAGE; PRESERVATION OF TAX-EXEMPTION. The
Issuer and the Company each agree and covenant that neither the proceeds of the
Bonds nor the funds held by the Trustee under the Indenture will be used in such
manner as to cause any Bond to be an "arbitrage bond" within the meaning of
Section 148 of the Code, as amended, as implemented by such proposed, temporary
and final Regulations as have been or may hereafter be adopted by the United
States Treasury Department thereunder. The Company further agrees and covenants
not to take any action, the result of which would cause or be likely to cause
the interest payable with respect to the Bonds not to be excluded from gross
income for federal income tax purposes, other than those Bonds held by any
person who, within the meaning of Section 147(a) of the Code, shall be deemed a
"substantial user" of the Project or a "related person" to a "substantial user."
The Company will comply with the applicable requirements of Section 103 and Part
IV of Subchapter B of Chapter 1 of Subtitle A of the Code to the extent
necessary to preserve the exclusion of interest on the Bonds from gross income
of the Bondholders thereof for federal income tax purposes.
14
Section 3.8. CERTAIN COVENANTS WITH RESPECT TO COMPLIANCE WITH
ARBITRAGE REQUIREMENTS FOR INVESTMENTS IN NONPURPOSE INVESTMENTS AND REBATE TO
THE UNITED STATES OF AMERICA. Section 148(f) of the Code, as implemented by
Section 1.148-1 to 1.148-11 of the Income Tax Regulations (the "Rebate
Provisions"), requires that, with certain exceptions, the Issuer pay to the
United States of America the Rebate Amount. The Company hereby assumes and
agrees to make all payments for deposit into the Rebate Fund, in accordance with
the terms of Section 6.13 of the Indenture, to pay the Rebate Amount, consents
to the payment of the Rebate Amount by the Trustee in accordance with the terms
and provisions of Section 6.13 of the Indenture, and agrees to pay any amounts
in addition to the Rebate Amount, including all interest and penalties, if any,
related thereto to the extent that funds available therefor held by the Trustee
under the Indenture are not sufficient for such purpose. The Company agrees to
indemnify, protect and hold harmless the Issuer and the Trustee with respect to
any nonpayment of the Rebate Amount and such interest and penalties, and the
Trustee with respect to the unavailability or insufficiency of funds with which
to make such payments, and with respect to any expenses or costs incurred by the
Trustee in complying with the terms of Section 6.13 of the Indenture. The
Company hereby agrees to fully and timely comply with the requirements of
Section 6.13 of the Indenture.
Section 3.9. COVENANTS AS TO USE OF BOND PROCEEDS AND OTHER
MATTERS, PAYBACK PROVISION. (a) The Company covenants and agrees that:
(i) Substantially All of the Net Proceeds received from the
sale of the Bonds actually disbursed from the Construction Fund, and
investment earnings thereon, will be used for payment of Qualified
Project Costs;
(ii) (A) until disbursements from the Construction Fund have been
made of all Issuance Costs to be paid from proceeds of the Bonds, the
Company will not submit to the Trustee any requisition for a
disbursement from the Construction Fund unless the expenditure of such
disbursement will either be for Qualified Project Costs or for Issuance
Costs;
(B) after all Issuance Costs to be paid with proceeds
of the Bonds have been requisitioned and until the date on which the
aggregate Qualified Project Costs paid as of that date equals or
exceeds Substantially All of the Costs of the Project paid as of that
date from proceeds of the Bonds, including investment earnings thereon,
the Company will not submit to the Trustee any requisition for a
disbursement from the Construction Fund
15
unless the expenditure of such disbursement will be for Qualified
Project Costs; and
(C) after such date, the Company will not submit to
the Trustee any requisition for a disbursement from the Construction
Fund if, after the expenditure of such disbursement, less than
Substantially All of the Net Proceeds of the Bonds and investment
earnings thereon actually disbursed to that time would have been used
to pay Qualified Project Costs;
(iii) the Company will not submit to the Trustee any requisition for
a disbursement from the Construction Fund for Issuance Costs if, after
the expenditure of such disbursement, more than two percent (2%) of the
proceeds of the Bonds actually disbursed to that time would have been
used to pay Issuance Costs;
(iv) in the event a disbursement from the Construction Fund is made
which results in the covenants in paragraphs (i), (ii) or (iii) above
being violated, the Company will promptly repay to the Trustee for
deposit in the Construction Fund such amount as may be necessary for
the Company to again be in compliance with paragraphs (i), (ii) or
(iii) above;
(v) less than twenty-five percent (25%) of the Net Proceeds of
the Bonds shall be used (either directly or indirectly) to acquire land
or an interest therein;
(vi) no more than twenty-five percent (25%) of the Net Proceeds of
the Bonds shall be used (either directly or indirectly) to provide a
facility the primary purpose of which is retail food and beverage
services, automobile sales or service, or the provision of recreation
or entertainment or any combination thereof;
(vii) none of the proceeds from the issuance of the Bonds shall be
used to provide, any private or commercial golf course, country club,
massage parlor, tennis club, skating facility (including roller
skating, skateboard and ice skating), racquet sports facility
(including any handball or racquetball court), hot tub facility, suntan
facility, racetrack, airplane, skybox or other private luxury box,
health club facility, any facility primarily used for gambling, or any
store the principal business of which is the sale of alcoholic
beverages for consumption off premises, or land (or any interest
therein) to be used for farming purposes;
16
(viii) less than five percent (5%) of the Net Proceeds of the Bonds
shall be used directly or indirectly to provide residential real
property for family units;
(ix) the Company shall not allow any portion of the Net Proceeds of
the Bonds to be used for the acquisition of any property or an interest
therein (other than land) unless the first use of such property is
pursuant to such acquisition; and provided further, that this covenant
shall not apply with respect to any building (and the equipment
therefor), if (A) the rehabilitation expenditures, as such term is used
in section 147(d)(2) of the Code, with respect to such building equal
or exceed (B) fifteen percent (15%) of the portion of the cost of the
acquiring such building (and equipment) financed with the proceeds of
the Bonds;
(x) no "test-period beneficiary" (as defined in Section
144(a)(10) of the Code) with respect to the Bonds has been allocated
portions of the face amounts of "tax-exempt facility-related bonds"
(as defined in Section 144(a)(10) of the Code) outstanding on the date
hereof (but not including any obligations which are to be redeemed
from the proceeds of the Bonds), the aggregate amount of which, when
increased by the portion of the face amount of the Bonds allocable to
that test-period beneficiary, would exceed $40,000,000;
(xi) at no time within three years after the later of the date the
Bonds are issued or the date the Project is placed in service shall the
Company become an owner or a principal user, or permit or suffer a
related person (within the meaning of Section 144(a)(3) of the Code) to
become an owner or a principal user, or permit or suffer an owner or a
principal user of the Project or a related person thereto, to become an
owner or principal user of a facility financed with tax-exempt
facility-related bonds outstanding on the date of issuance of the Bonds
if the sum of (A) the portion allocated to the Company, a related
person thereto, or other owner or principal user of the Project (or
related person thereto) of the outstanding aggregate amount of the
tax-exempt facility-related bonds financing such facility, (B) the
portion allocated to the Company, related person thereto, or other
owner or principal user of the Project (or related person thereto) on
the date of issuance of the Bonds of the aggregate amount of other
then-outstanding tax-exempt facility-related bonds, and (C) the portion
allocated to the Company, related person thereto, or other owner or
principal user of the Project (or related person thereto)
17
of the outstanding aggregate authorized face amount of the Bonds,
exceeds $40,000,000, all within the meaning of Section 144(a)(10) of
the Code and any Regulations promulgated thereunder; and
(xii) at no time within three years after the later of the date the
Bonds are issued or the date the Project is placed in service shall the
Company become a related person (within the meaning of Section
144(a)(3) of the Code) to an owner or a principal user of a facility
financed with tax-exempt facility-related bonds outstanding on the date
of issuance of the Bonds or permit or suffer any other owner or
principal user of the Project to become a related person to an owner or
principal user of such a facility if the sum of (A) the principal
allocated to such person of the outstanding aggregate amount of the
tax-exempt facility-related bonds financing such facility, (B) the
portion allocated to the Company or other owner or principal user of
the Project on the date of issuance of the Bonds of the aggregate
amount of other then-outstanding tax-exempt facility-related bonds, and
(C) the portion allocated to the Company or other owner or principal
user of the Project of the outstanding aggregate authorized face amount
of the Bonds, exceeds $40,000,000, all within the meaning of Section
144(a)(10) of the Code and any Regulations promulgated thereunder.
Section 3.10. DAMAGE, DESTRUCTION OR LOSS OF PROPERTY;
OBLIGATION TO REBUILD; USE OF INSURANCE PROCEEDS AND CONDEMNATION AWARDS. If
prior to full payment of all Bonds (or provision for payment thereof having been
made in accordance with the provisions of the Indenture), the Project, or any
part or component of the Project shall be damaged or destroyed, by whatever
cause, or shall be taken by any public authority or entity in the exercise of or
acquired under the threat of the exercise of its power of eminent domain, there
shall be no abatement or reduction in the Loan Installments payable under this
Agreement, and the Company will apply any insurance proceeds or condemnation
awards resulting from claims for such losses or takings as provided in this
Section.
If prior to full payment of all Bonds (or provision for
payment thereof having been made in accordance with the provisions of the
Indenture), the Project, or any part or component of the Project shall be
damaged, destroyed, or the Project or any part or component of the Project, the
Project Site shall be taken by eminent domain or the threat of exercise of
eminent domain, the Company shall promptly give, or cause to be given, written
notice thereof to the Issuer, the Bank and the Trustee. All proceeds received
from such property insurance with respect to the Project
18
and all condemnation awards with respect to the Project shall be deposited with
the Trustee to the credit of the Construction Fund. Following the occurrence of
such an event with respect to the Project, the Company shall have the option of
(1) continuing to pay all amounts payable hereunder and to the extent permitted
below proceeding promptly to repair, rebuild, restore or replace the property
damaged, destroyed or taken, with such changes, alterations and modifications
(including the substitution and addition of other property) as may be desired by
the Company and, with respect to the Project, and as will comply with the
limitations contained in this Agreement, and the Trustee will deposit such
proceeds to the credit of the Construction Fund and make such disbursements
therefrom, in accordance with Section 3.3 hereof, as may be necessary to pay the
cost of such repair, rebuilding or restoration, either on completion thereof or
as the work progresses or (2) requesting the Issuer to cause the Bonds to be
redeemed in accordance with the terms of the Indenture.
Section 3.11. PURSUIT OF REMEDIES AGAINST CONTRACTORS,
SUBCONTRACTORS AND SURETIES. In the event of default of any contractor or
subcontractor, if any, under any contract made by it in connection with the
Project, the Company will promptly proceed, either separately or in conjunction
with others, to exhaust its remedies against the contractor or subcontractor so
in default and against each surety for the performance of such contract. The
Company agrees forthwith to take such actions as may be necessary or required to
protect the interests of all parties with respect to the Project unless directed
to the contrary by the Trustee. Any amounts recovered by way of damages,
refunds, adjustments or otherwise in connection with the foregoing that are
needed to pay a portion of the cost of the Project shall be paid into the
applicable account in the Construction Fund.
Section 3.12. CERTAIN COVENANTS WITH RESPECT TO CAPITAL
EXPENDITURES AND USE OF PROCEEDS OF THE BONDS. The Issuer is issuing the Bonds
pursuant to an election made by it under Section 144(a)(4) of the Code. It is
the intention of the parties hereto that the interest on the Bonds be and remain
excluded from gross income for federal income tax purposes and to that end the
Issuer and the Company hereby agree and covenant with each other, with the
Trustee, and the present and each of the future holders of the Bonds, as
follows:
(a) The Company and the Issuer represent that there have never
been issued any bonds with respect to "facilities" described in Section
144(a)(2) of the Code which are located in the City of Gainesville,
Florida, or facilities that are located outside of, but contiguous to,
the incorporated limits of the City of Gainesville, Florida, or
facilities that are located outside of the
19
incorporated limits of the City of Gainesville, Florida, but are
integrated with the Project, which bonds would be taken into account
in determining the aggregate face amount of the Bonds as provided in
Section 144(a)(2) of the Code.
(b) The Company further covenants and represents that, for the
purposes of Section 144(a)(4) of the Code, the (i) aggregate principal
amount of the Bonds being issued, plus capital expenditures with
respect to the Project by any person, plus capital expenditures
heretofore made (other than those described in Section 144(a)(4)(C) of
the Code) by the Company, and any other person who is, or may become, a
principal user of the Project, with respect to "facilities" described
in Section 144(a)(4)(B) of the Code (of which the Project is one), have
not and will not exceed $10,000,000 (or any such larger amount as may
hereafter be permitted by the Code without affecting the status of the
interest on the Bonds as excluded from gross income for federal income
tax purposes) during the six-year period beginning three years before
the date of issuance and delivery of the Bonds.
(c) The Issuer and the Company further covenant and agree that
during the three-year period following the date of issuance and
delivery of the Bonds, neither of them shall make or cause or permit to
be made any capital expenditures (other than those mentioned in Section
144(a)(4)(C) of the Code) with respect to "facilities" described in
Section 144(a)(4)(B) of the Code which would cause the interest on the
Bonds to become included in gross income for federal income tax
purposes.
(d) The Company further covenants that, at no time within
three years after the later of the date the Bonds are issued or the
date the Project is placed in service, shall the Company become an
owner or a principal user, or permit or suffer a related person (within
the meaning of Section 144(a)(3) of the Code) to become an owner or a
principal user, or permit or suffer an owner or a principal user of the
Project or a related person thereto, to become an owner or principal
user of "facilities" described in Section 144(a)(4)(B) of the Code, if
the sum of (i) the aggregate face amount outstanding on the date of
issue of the Bonds of any tax-exempt bonds described in Section
144(a)(2) of the Code issued to finance such facilities, (ii) the
capital expenditures that had been made with respect to such
"facilities" during the six-year period beginning three
20
years before the date of issuance and delivery of the Bonds,
(iii) the aggregate principal amount of the Bonds, and (iv) other
capital expenditures taken into account under Section 144(a)(4) of the
Code, would exceed $10,000,000.
(e) The Company further covenants that, at no time within
three years after the later of the date the Bonds are issued or the
date the Project is placed in service, shall the Company permit or
suffer an owner or a principal user of "facilities" described in
Section 144(a)(4)(B) of the Code or a related person thereto (within
the meaning of Section 144(a)(3) of the Code) to become an owner or a
principal user of the Project if the sum of (i) the aggregate face
amount outstanding on the date of issue of the Bonds of any tax-exempt
bonds described in Section 144(a)(2) of the Code issued to finance such
facilities, (ii) the capital expenditures that had been made with
respect to such "facilities" during the six-year period beginning three
years before the date of issuance and delivery of the Bonds, (iii) the
aggregate principal amount of the Bonds, and (iv) other capital
expenditures taken into account under Section 144(a)(4) of the Code,
would exceed $10,000,000.
(f) The Company further covenants that, at no time within
three years after the later of the date the Bonds are issued or the
date the Project is placed in service, shall the Company become a
related person (within the meaning of Section 144(a)(3) of the Code) to
an owner or a principal user of "facilities" described in Section
144(a)(4)(B) of the Code or permit or suffer any other owner or
principal user of the Project to become a related person to an owner or
principal user of such "facilities" if the sum of (i) the aggregate
face amount outstanding on the date of issue of the Bonds of any
tax-exempt bonds described in Section 144(a)(2) of the Code issued to
finance such facilities, (ii) the capital expenditures that had been
made with respect to such "facilities" during the six-year period
beginning three years before the date of issuance and delivery of the
Bonds, (iii) the aggregate principal amount of the Bonds, and (iv)
other capital expenditures taken into account under Section 144(a)(4)
of the Code, would exceed $10,000,000.
(g) The Company further agrees that should the capital
expenditures limitation set forth in Section 144(a)(4) be exceeded
during the six-year period referred to therein, and there shall occur a
"Determination of
21
Taxability" as defined in Section 3.01(b) of the Indenture, the
Company shall promptly comply with the provisions of Section 5.1
hereof.
(h) The Company further covenants and agrees that it will
furnish to the Trustee a certificate of the Company within ninety (90)
days of the first three anniversary dates of closing of the issuance
and delivery of the Bonds which will reflect for the period beginning
three years prior to the date of issuance and delivery of the Bonds and
extending through the applicable date of such certificate, the
aggregate amount of capital expenditures (including as capital
expenditures for this purpose the principal amount of the Bonds) that
have been made or incurred with respect to "facilities" described in
Section 144(a)(4)(B) of the Code (of which the Project is one) that
must be taken into account in determining whether the $10,000,000 limit
applicable to the Bonds pursuant to Section 144(a)(4) of the Code has
been exceeded, and that such capital expenditures have not exceeded
$10,000,000.
(i) The Company represents and warrants that the Company is
expected to be the only principal user of the Project, as the term
"principal user" is utilized in Section 144(a) of the Code.
(j) The Company further covenants that it shall take, or
require to be taken, such further actions as are required of a
principal user of property financed by an issue of obligations which
are subject to the $10,000,000 limitation of Section 144(a)(4) of the
Code, which actions are set forth in Section 144(a) of the Code and the
regulations thereunder, whether said regulations are now or hereafter
adopted, proposed or temporary, including Section 1.103-10(b) of said
regulations.
(k) The Issuer and the Company further agree and covenant to
comply fully, during the term of this Agreement, with all effective
rules, rulings, regulations and decisions promulgated by the Department
of the Treasury or the Internal Revenue Service, with respect to bonds
issued under Section 144(a)(4) of the Code so as to maintain the status
of interest on the Bonds as excluded from gross income for federal
income tax purposes.
22
ARTICLE IV
LOAN PROVISIONS; SUBSTITUTE LETTER OF CREDIT
Section 4.1. LOAN OF PROCEEDS. The Issuer agrees, upon the
terms and conditions contained in this Agreement and the Indenture, to lend to
the Company the proceeds received by the Issuer from the sale of the Bonds. Such
proceeds shall be disbursed to or on behalf of the Company as provided in
Section 3.3 hereof.
Section 4.2. AMOUNTS PAYABLE.
(a) The Company hereby covenants and agrees to repay the loan,
as follows: on or before any Interest Payment Date for the Bonds or any other
date that any payment of interest, premium, if any, or principal or Purchase
Price is required to be made in respect of the Bonds pursuant to the Indenture,
until the principal of, premium, if any, and interest on the Bonds shall have
been fully paid or provision for the payment thereof shall have been made in
accordance with the Indenture, in immediately available funds, a sum which,
together with any other moneys available for such payment in any account of the
Bond Fund, will enable the Trustee to pay the amount payable on such date as
Purchase Price or principal of (whether at maturity or upon redemption or
acceleration or otherwise), premium, if any, and interest on the Bonds as
provided in the Indenture; provided, however, that the obligation of the Company
to make any payment hereunder shall be deemed satisfied and discharged to the
extent of the corresponding payment made by the Bank to the Trustee under the
Letter of Credit.
It is understood and agreed that all payments payable by the
Company under subsection (a) of this Section 4.2 are assigned by the Issuer to
the Trustee for the benefit of the Owners of the Bonds. The Company assents to
such assignment. The Issuer hereby directs the Company and the Company hereby
agrees to pay to the Trustee at the Principal Office of the Trustee all payments
payable by the Company pursuant to this subsection.
(b) The Company will also pay the reasonable expenses of the
Issuer related to the issuance of the Bonds and any and all ongoing costs and
expenses for any continuing duties or obligations of the Issuer related in any
respect to the Bonds, this Agreement, the Indenture or any other documents
executed in connection therewith after the issuance of the Bonds.
(c) The Company will also pay the reasonable fees and expenses
of the Trustee under the Indenture and all other amounts which may be payable to
the Trustee under Section 10.02 of the
23
Indenture, such amounts to be paid directly to the Trustee for the Trustee's own
account as and when such amounts become due and payable.
(d) The Company covenants, for the benefit of the Owners of
the Bonds, to pay or cause to be paid, to the Tender Agent, such amounts as
shall be necessary to enable the Tender Agent to pay the Purchase Price of Bonds
delivered to it for purchase, all as more particularly described in Sections
4.01, 4.02 and 4.04 of the Indenture; PROVIDED, however, that the obligation of
the Company to make any such payment under this subsection (d) shall be reduced
by the amount of moneys available for such payment described in subsection (i)
of Section 4.05 of the Indenture; and PROVIDED, FURTHER, that the obligation of
the Company to make any payment under this subsection (d) shall be deemed to be
satisfied and discharged to the extent of the corresponding payment made by the
Bank under the Letter of Credit.
(e) In the event the Company should fail to make any of the
payments required in this Section 4.2, the item or installment so in default
shall continue as an obligation of the Company until the amount in default shall
have been fully paid, and the Company agrees to pay the same with interest
thereon, to the extent permitted by law, from the date when such payment was
due, at the rate of interest borne by the Bonds.
Section 4.3. OBLIGATIONS OF COMPANY UNCONDITIONAL. The
obligations of the Company to make the payments required in Section 4.2 and to
perform and observe the other agreements contained herein shall be absolute and
unconditional and shall not be subject to any defense or any right of setoff,
counterclaim or recoupment arising out of any breach by the Issuer or the
Trustee of any obligation to the Company, whether hereunder or otherwise, or out
of any indebtedness or liability at any time owing to the Company by the Issuer
or the Trustee, and, until such time as the principal of, premium, if any, and
interest on the Bonds shall have been fully paid or provision for the payment
thereof shall have been made in accordance with the Indenture, the Company (i)
will not suspend or discontinue any payments provided for in Section 4.2 hereof,
(ii) will perform and observe all other agreements contained in this Agreement
and (iii) except as otherwise provided herein, will not terminate the Term of
Agreement for any cause, including, without limiting the generality of the
foregoing, failure of the Company to complete the acquisition, construction,
improving and equipping of the Project, the occurrence of any acts or
circumstances that may constitute failure of consideration, eviction or
constructive eviction, destruction of or damage to the Project, the taking by
eminent domain of title to or temporary use of any or all of the Project,
commercial frustration of purpose, any change in the tax or other laws of the
United States of America
24
or of the State or any political subdivision of either thereof or any failure of
the Issuer or the Trustee to perform and observe any agreement, whether express
or implied, or any duty, liability or obligation arising out of or connected
with this Agreement. Nothing contained in this Section shall be construed to
release the Issuer from the performance of any of the agreements on its part
herein contained, and in the event the Issuer or the Trustee should fail to
perform any such agreement on its part, the Company may institute such action
against the Issuer or the Trustee as the Company may deem necessary to compel
performance so long as such action does not abrogate the obligations of the
Company contained in the first sentence of this Section.
Section 4.4. SUBSTITUTE LETTER OF CREDIT. The Company may
provide for the delivery to the Trustee of a Substitute Letter of Credit. Any
Substitute Letter of Credit shall be delivered to the Trustee not less than
sixty (60) days prior to the expiration of the Letter of Credit it is being
issued to replace, shall be dated as of a date prior to the expiration date of
the Letter of Credit for which the same is to be substituted (which date may be
subsequent to the date of delivery of such Substitute Letter of Credit, but in
all events such Substitute Letter of Credit shall become effective prior to the
expiration of the Letter of Credit for which it is substituted), and shall
expire on a date which is fifteen days after an Interest Payment Date for the
Bonds. On or before the date of such delivery of a Substitute Letter of Credit
to the Trustee, the Company shall furnish to the Trustee (a) written evidence
from each rating agency by which the Bonds are then rated, to the effect that
such rating agency has reviewed the proposed Substitute Letter of Credit and
that the substitution of the proposed Substitute Letter of Credit will not, by
itself, result in the reduction or withdrawal of the then applicable rating(s)
of the Bonds; (b) a written opinion of Bond Counsel stating that the delivery of
such Substitute Letter of Credit will not adversely affect the exclusion from
gross income of interest on the Bonds for federal income tax purposes; and (c) a
written opinion of counsel to the Substitute Bank to the effect that the
Substitute Letter of Credit is a legal, valid, binding and enforceable
obligation of the Substitute Bank in accordance with its terms.
25
ARTICLE V
PREPAYMENT AND REDEMPTION
Section 5.1. PREPAYMENT AND REDEMPTION. The Company shall have
the option to prepay its obligations hereunder at the times and in the amounts
as necessary to exercise its option to cause the Bonds to be redeemed or
purchased as set forth in the Indenture and in the Bonds. The Company hereby
agrees that it shall prepay its obligations hereunder at the times and in the
amounts as necessary to accomplish the mandatory redemption of the Bonds as set
forth in the Indenture and in the Bonds. The Issuer, at the request of the
Company, shall forthwith take all steps (other than the payment of the money
required for such redemption) necessary under the applicable redemption
provisions of the Indenture to effect redemption of all or part of the
Outstanding Bonds, as may be specified by the Company, on the date established
for such redemption.
ARTICLE VI
SPECIAL COVENANTS
Section 6.1. NO WARRANTY OF CONDITION OR SUITABILITY BY
ISSUER. THE ISSUER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE
PROJECT OR THE CONDITION THEREOF, OR THAT THE PROJECT WILL BE SUITABLE FOR THE
PURPOSES OR NEEDS OF THE COMPANY. THE ISSUER MAKES NO REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, THAT THE COMPANY WILL HAVE QUIET AND PEACEFUL
POSSESSION OF THE PROJECT. THE ISSUER MAKES NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, WITH RESPECT TO THE MERCHANTABILITY, CONDITION OR
WORKMANSHIP OF ANY PART OF THE PROJECT OR ITS SUITABILITY FOR THE COMPANY'S
PURPOSES.
Section 6.2. ACCESS TO THE PROJECT. The Company agrees that
the Issuer, the Bank, the Trustee and their duly authorized agents, attorneys,
experts, engineers, accountants and representatives shall have the right to
inspect the Project at all reasonable times and on reasonable notice. The
Issuer, the Bank, the Trustee and their duly authorized agents shall also be
permitted, at all reasonable times and upon reasonable notice, to examine the
books and records of the Company with respect to the Project.
Section 6.3. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS.
The Issuer and the Company agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and
26
such further instruments as may reasonably be required for carrying out the
expressed intention of this Agreement.
Section 6.4. ISSUER AND COMPANY REPRESENTATIVES. Whenever
under the provisions of this Agreement the approval of the Issuer or the Company
is required or the Issuer or the Company is required to take some action at the
request of the other, such approval or such request shall be given for the
Issuer by an Issuer Representative and for the Company by a Company
Representative. The Trustee shall be authorized to act on any such approval or
request.
Section 6.5. FINANCIAL REPORTS. After the Conversion Date, so
long as any of the Bonds are Outstanding, the Company shall furnish or cause to
be furnished to the Trustee the following information:
(a) Within one hundred eighty (180) days after the close of
each fiscal year of the Company, a balance sheet of the Company as of the end of
such fiscal year and statements of income and retained earnings of the Company
for such fiscal year, each prepared in accordance with generally accepted
accounting principles consistently applied, in reasonable detail and certified
by certified public accountants of recognized standing.
(b) Upon request, copies of all such regular or periodic
reports, which are available for public inspection which the Company may be
required to file with any federal or state department, bureau, commission, or
agency.
(c) Within one hundred eighty (180) days after the end of each
fiscal year, a certificate of a Company Representative stating whether the
Company is in compliance with all covenants and agreements made by the Company
in this Agreement.
Section 6.6. FINANCING STATEMENTS. The Company agrees to
execute and file or cause to be executed and filed any and all financing
statements or amendments thereof or continuation statements necessary to perfect
and continue the perfection of the security interests granted in the Indenture.
The Company shall pay all costs of filing such instruments.
Section 6.7. MAINTENANCE OF PROJECT. The Company agrees that
it will (i) maintain, repair and operate the Project; and (ii) pay, as the same
respectively come due, all taxes and governmental charges of any kind whatsoever
that may at any time be lawfully assessed or levied against the Company or the
Issuer with respect to the Project or any portion thereof or with respect to the
original issuance of the Bonds, including, without limiting the generality of
the foregoing, any taxes levied against the Company
27
or the Issuer upon or with respect to the income or profits of the Issuer from
the Project or a charge on the Loan Installments prior to or on a parity with
the charge under the Indenture thereon and the pledge or assignment thereof to
be created and made in the Indenture, and including all ad valorem taxes
lawfully assessed upon the Project, all utility and other charges incurred in
the operation, maintenance, use, occupancy and upkeep of the Project, all
assessments and charges lawfully made by any governmental body against the
Company or the Issuer on the Loan Installments; provided, however, that nothing
in this subsection (ii) shall require the payment of any such tax or charge or
make provision for the payment thereof, so long as the validity thereof shall be
contested in good faith by the Company by appropriate legal or administrative
proceedings, and further provided that, with respect to special assessments or
other governmental charges that may lawfully be paid in installments over a
period of years, the Company shall be obligated to pay only such installments as
are required to be paid during the Agreement Term.
Section 6.8. UNDERTAKING TO PROVIDE ONGOING DISCLOSURE.
(a) This Section 6.8 constitutes the written undertaking for
the benefit of the holders of the Bonds required by Section (b)(5)(i) of
Securities and Exchange Commission Rule 15c2-12 under the Securities Exchange
Act of 1934, as amended (17 CFR Part 240, ss. 240. 15c2-12) (the "Rule"), and
shall apply when and if the Company exercises the Conversion Option. It is the
Company's express intention that this Section 6.8 be assigned pursuant to and in
accordance with the terms of the Indenture to the Trustee for the benefit of the
Bondholders and that the Trustee and each Bondholder be a beneficiary of this
Section 6.8 with the right to enforce this Section 6.8 directly against the
Company. Capitalized terms used in this Section 6.8 and not otherwise defined in
this Agreement shall have the meanings assigned such terms in subsection (d)
hereof.
(b) The Company, as an "obligated person" within the meaning
of the Rule, undertakes to provide the following information as provided in this
Section 6.8:
(1) Annual Financial Information;
(2) Financial Statements, if any; and
(3) Material Event Notices.
(c) (1) Subject to the terms of this Section 6.8, the Company
shall while any Bonds are Outstanding provide the Annual Financial
Information to the Trustee on or before July 1 of each year after the
election of the Conversion Option
28
(the "Submission Date"), and the Trustee shall provide to the
Issuer and to each then existing NRMSIR and the SID, if any, such
Annual Financial Information on or before July 1 of each year (the
"Report Date") while any Bonds are Outstanding or, if not received by
the Trustee by the Submission Date, then within fifteen (15) Business
Days of its receipt by the Trustee. The Company shall include with
each submission of Annual Financial Information to the Trustee and the
Issuer a written representation addressed to the Trustee and the
Issuer to the effect that the Annual Financial Information is the
Annual Financial Information required by this Section 6.8 and that it
complies with the applicable requirements of this Section 6.8. The
Company may adjust the Submission Date and the Report Date if the
Company changes its fiscal year by providing written notice of the
change of fiscal year and the new Submission Date and Report Date to
the Trustee, the Issuer, each then existing NRMSIR and the SID, if
any; provided that the new Report Date shall be one hundred eighty
(180) days after the end of the new fiscal year and the new Submission
Date shall be thirty (30) days prior to the Report Date, and provided
further that the period between the final Report Date relating to the
former fiscal year and the initial Report Date relating to the new
fiscal year shall not exceed one year in duration. It shall be
sufficient if the Company provides to the Trustee and the Issuer and
the Trustee provides to each then existing NRMSIR and the SID, if any,
the Annual Financial Information by specific reference to documents
previously provided to each NRMSIR and the SID, if any, or filed with
the Securities and Exchange Commission and, if such a document is a
final official statement within the meaning of the Rule, available
from the Municipal Securities Rulemaking Board.
(2) If not provided as part of the Annual Financial
Information, the Company shall provide Financial Statements to the
Trustee when and if available while Bonds are Outstanding and the
Trustee shall then promptly provide the Issuer, each then existing
NRMSIR and the SID, if any, with such Financial Statements.
(3) (i) If a Material Event occurs while any Bonds are
Outstanding, the Company shall provide a Material Event Notice to the
Trustee in a timely manner and the Trustee shall promptly provide to
the Issuer, the Municipal Securities Rulemaking Board and the SID, if
any, such Material Event Notice. Each Material Event Notice shall be so
captioned and shall prominently state the date, title and CUSIP numbers
of the Bonds.
(ii) The Trustee shall promptly advise the Company
29
whenever, in the course of performing its duties as Trustee under the
Indenture, the Trustee identifies an occurrence which, if material,
would require the Company to provide a Material Event Notice pursuant
to clause (2)(i); provided that the failure of the Trustee so to advise
the Company shall not constitute a breach by the Trustee of any of its
duties and responsibilities hereunder.
(4) The Trustee shall, without further direction or
instruction from the Company, provide in a timely manner to the
Municipal Securities Rulemaking Board and to the SID, if any, notice of
any failure while any Bonds are Outstanding by the Trustee to provide
to each then existing NRMSIR and the SID, if any, Annual Financial
Information on or before the Report Date (whether caused by failure of
the Company to provide such information to the Trustee by the
Submission Date or for any other reason). For the purposes of
determining whether information received from the Company is Annual
Financial Information, the Trustee shall be entitled conclusively to
rely on the Company's written representation made pursuant to clause
(c)(1) of this Section 6.8.
(5) If the Company provides to the Trustee information
relating to the Company or the Bonds, which information is not
designated as a Material Event Notice, and directs the Trustee to
provide such information to information repositories, the Trustee shall
provide such information in a timely manner to the Issuer, the
Municipal Securities Rulemaking Board and the SID, if any.
(d) The following are the definitions of the capitalized terms
used in this Section and not otherwise defined in this Agreement.
(1) "Annual Financial Information" means the financial
information (which shall be based on financial statements prepared in
accordance with generally accepted accounting principles ("GAAP")) or
operating data with respect to the Company, provided at least annually,
of the type included in the official statement or other offering
document utilized in connection with the remarketing of Bonds after the
Conversion Option, which Annual Financial Information shall include
Financial Statements.
(2) "Financial Statements" means the Company's annual
financial statements, prepared in accordance with GAAP, and if audited,
accompanied by the report of the auditing certified public account.
(3) "Material Event" means any of the following events,
30
if material, with respect to the Bonds.
(i) Principal and interest payment delinquencies;
(ii) Non-payment related defaults;
(iii) Unscheduled draws on debt service reserves reflecting
financial difficulties;
(iv) Unscheduled draws on credit enhancements reflecting financial
difficulties;
(v) Substitution of credit or liquidity providers, or their
failure to perform;
(vi) Adverse tax opinions or events affecting the tax-exempt
status of the security;
(vii) Modifications to rights of security holders;
(viii) Bond calls;
(ix) Defeasances;
(x) Release, substitution, or sale of property securing repayment
of the securities; and
(xi) Rating changes.
(4) "Material Event Notice" means written or electronic notice
of a Material Event.
(5) "NRMSIR" means a nationally recognized municipal
securities information repository, as recognized from time to time by
the Securities and Exchange Commission for the purposes referred to in
the Rule; the NRMSIRs as of the date of this Agreement being as
follows:
Bloomberg Municipal Repository
Thomson NRMSIR
Xxxxx Information Systems, Inc.
Donnelley Financial Municipal Securities
Disclosure Archive
DPC Data Inc.
(6) "SID" means a state information depository as operated or
designated by the State as such for the purposes referred to in the
Rule. (As of the date hereof, no SID is in existence in the State.)
31
(e) Unless otherwise required by law and subject to technical
and economic feasibility, the Company and the Trustee shall employ such methods
of information transmission as shall be requested or recommended by the
designated recipients of the Company's information.
(f) The continuing obligation hereunder of the Company to
provide Annual Financial Information and Material Event Notices and the
Trustee's obligations under this Section 6.8 shall terminate immediately once
the Bonds no longer are Outstanding. This Section 6.8, or any provision hereof,
shall be null and void in the event that the Company delivers to the Trustee and
the Issuer an opinion of nationally recognized bond counsel to the effect that
those portions of the Rule which require this Section 6.8, or any such
provisions, are invalid, have been repealed retroactively or otherwise do not
apply to the Bonds; provided that the Trustee shall have provided notice of such
delivery and the cancellation of this Section 6.8 to each then existing NRMSIR
and the SID, if any. This Section 6.8 may be amended without the consent of the
Bondholders, but only upon the delivery by the Company to the Trustee and the
Issuer of the proposed amendment and an opinion of nationally recognized bond
counsel to the effect that such amendment, and giving effect thereto, will not
adversely affect the compliance of this Section and by the Company with the
Rule; provided that the Trustee shall have provided notice of such delivery and
of the amendment to each then existing NRMSIR and the SID, if any.
(g) Any failure by the Company to perform in accordance with
this Section 6.8 shall not constitute an "Event of Default" under Article VIII
hereof, and the rights and remedies provided by Article VIII upon the occurrence
of an "Event of Default" shall not apply to any such failure. Neither the Issuer
nor the Trustee shall have any power or duty to enforce this Section 6.8.
(h) The Company shall reimburse the Trustee for any reasonable
expenses incurred by the Trustee in complying with the requirements of this
Section 6.8.
32
ARTICLE VII
ASSIGNMENT, SELLING, LEASING;
INDEMNIFICATION; REDEMPTION
Section 7.1. ASSIGNMENT, SELLING AND LEASING. This Agreement
may be assigned and the Project may be sold or leased, as a whole or in part,
with the prior written consent of the Bank, but without the necessity of
obtaining the consent of either the Issuer or the Trustee; PROVIDED, however,
that no such assignment, sale or lease shall, in the opinion of Bond Counsel,
result in interest on any of the Bonds becoming includable in gross income for
federal income tax purposes, or shall otherwise violate any provisions of the
Act; PROVIDED FURTHER, however, that no such assignment, sale or lease shall
relieve the Company of any of its obligations under this Agreement and the
Company shall remain fully liable thereon.
Section 7.2. RELEASE AND INDEMNIFICATION COVENANTS.
(a) The Company shall and hereby agrees to indemnify and save
the Issuer and the Trustee harmless against and from all claims by or on behalf
of any person, firm, corporation or other legal entity arising from the conduct
or management of, or from any work or thing done on, the Project during the Term
of Agreement, including without limitation, (i) any condition of the Project,
(ii) any breach or default on the part of the Company in the performance of any
of its obligations under this Agreement, (iii) any act or negligence of the
Company or of any of its agents, contractors, servants, employees or licensees
or (iv) any act or negligence of any assignee or lessee of the Company, or of
any agents, contractors, servants, employees or licensees of any assignee or
lessee of the Company. The Company shall indemnify and save the Issuer and the
Trustee harmless from any such claim arising as aforesaid, or in connection with
any action or proceeding brought thereon, and upon notice from the Issuer or the
Trustee, the Company shall defend them or either of them in any such action or
proceeding.
(b) Notwithstanding the fact that it is the intention of the
parties hereto that the Issuer shall not incur any pecuniary liability by reason
of the terms of this Agreement or the undertakings required of the Issuer
hereunder, by reason of the issuance of the Bonds, by reason of the execution of
the Indenture or by reason of the performance of any act requested of the Issuer
by the Company, including all claims, liabilities or losses arising in
connection with the violation of any statutes or regulation pertaining to the
foregoing; nevertheless, if the Issuer should incur any such pecuniary
liability, then in such event the Company
33
shall indemnify and hold the Issuer harmless against all claims, demands or
causes of action whatsoever, by or on behalf of any person, firm or corporation
or other legal entity arising out of the same or out of any offering statement
or lack of offering statement in connection with the sale or resale of the Bonds
and all costs and expenses incurred in connection with any such claim or in
connection with any action or proceeding brought thereon, and upon notice from
the Issuer, the Company shall defend the Issuer in any such action or
proceeding. All references to the Issuer in this Section 7.2 shall be deemed to
include its directors, officers, employees, attorneys and agents.
Notwithstanding anything to the contrary contained herein, the
Company shall have no liability to indemnify the Issuer against claims or
damages resulting from the Issuer's own gross negligence or willful misconduct
or to indemnify the Trustee against claims or damages resulting from the
Trustee's own negligence or willful misconduct.
In case any action shall be brought against one or more of the
Trustee, the Issuer, or the directors, officers, agents, attorneys or employees
of either (the "Indemnified Parties") based upon any of the above and in respect
of which indemnity may be sought against the Company, such Indemnified Party
shall promptly notify the Company in writing, enclosing a copy of all papers
served, but the omission so to notify the Company of any such action shall not
relieve it of any liability which it may have to any Indemnified Party otherwise
than under this Section. In case any such action for which indemnification is
sought shall be brought against any Indemnified Party and it shall notify the
Company of the commencement thereof, the Company shall be entitled to
participate in and, to the extent that it shall wish, to assume the defense
thereof with counsel reasonably satisfactory to such Indemnified Party. The
Indemnified Party shall have the right to employ its own counsel in any such
action but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (i) the employment of counsel by such Indemnified Party
has been authorized by the Company, (ii) the Indemnified Party shall have
reasonably concluded, based upon an opinion of counsel reasonably satisfactory
to the Company, that there may be a conflict of interest between the Company and
the Indemnified Party in the conduct of the defense of such action (in which
case the Company shall not have the right to direct the defense of such action
on behalf of the Indemnified Party), or (iii) the Company shall not in fact have
employed counsel reasonably satisfactory to the Indemnified Party to assume the
defense of such action. The Company shall not be liable for any settlement of
any action or claim effected without its consent.
Section 7.3. ISSUER TO GRANT SECURITY INTEREST TO
34
TRUSTEE. The parties hereto agree that pursuant to the Indenture, the Issuer
shall assign to the Trustee, in order to secure payment of the Bonds, all of the
Issuer's right, title, and interest in and to this Agreement, except for the
Issuer's rights under Sections 4.2(b), 7.2 and 8.4 hereof.
Section 7.4. INDEMNIFICATION OF TRUSTEE. The Company shall and
hereby agrees to indemnify the Trustee for, and hold the Trustee harmless
against, any loss, liability or expense (including the costs and expenses of
defending against any claim of liability) incurred without negligence or willful
misconduct by the Trustee and arising out of or in connection with its acting as
Trustee under the Indenture.
ARTICLE VIII
DEFAULTS AND REMEDIES
Section 8.1. DEFAULTS DEFINED. The following shall be
"Defaults" under this Agreement and the term "Default" shall mean, whenever it
is used in this Agreement, any one or more of the following events:
(a) Failure by the Company to pay any amount required to be
paid under subsection (a) or (d) of Section 4.2 hereof.
(b) Failure by the Company to observe and perform any
covenant, condition or agreement on its part to be observed or performed, other
than as referred to in Section 8.1(a), for a period of thirty (30) days after
written notice specifying such failure and requesting that it be remedied shall
have been given to the Company by the Issuer or the Trustee, unless the Issuer
and the Trustee shall agree in writing to an extension of such time prior to its
expiration; PROVIDED, however, if the failure stated in the notice cannot be
corrected within the applicable period, the Issuer and the Trustee will not
unreasonably withhold their consent to an extension of such time if corrective
action is instituted by the Company within the applicable period and diligently
pursued until such failure is corrected.
(c) The dissolution or liquidation of the Company, except as
authorized by Section 2.2 hereof, or the voluntary initiation by the Company of
any proceeding under any federal or state law relating to bankruptcy,
insolvency, arrangement, reorganization, readjustment of debt or any other form
of debtor relief, or the initiation against the Company of any such proceeding
which shall remain undismissed for one hundred twenty (120) days, or failure by
the Company to promptly have discharged any execution, garnishment or attachment
of such consequence as
35
would impair the ability of the Company to carry on its operations at the
Project, or assignment by the Company for the benefit of creditors, or the entry
by the Company into an agreement of composition with its creditors or the
failure generally by the Company to pay its debts as they become due.
(d) The occurrence of a Default under the Indenture.
The provisions of subsection (b) of this Section are subject to the following
limitation: if by reason of FORCE MAJEURE the Company is unable in whole or in
part to carry out any of its agreements contained herein (other than its
obligations contained in Article IV hereof), the Company shall not be deemed in
Default during the continuance of such inability. The term "FORCE MAJEURE" as
used herein shall mean, without limitation, the following: acts of God; strikes
or other industrial disturbances; acts of public enemies; orders or restraints
of any kind of the government of the United States of America or of the State or
of any of their departments, agencies or officials, or of any civil or military
authority; insurrections; riots; landslides; earthquakes; fires; storms;
droughts; floods; explosions; breakage or accident to machinery, transmission
pipes or canals; and any other cause or event not reasonably within the control
of the Company. The Company agrees, however, to remedy with all reasonable
dispatch the cause or causes preventing the Company from carrying out its
agreement, provided that the settlement of strikes and other industrial
disturbances shall be entirely within the discretion of the Company and the
Company shall not be required to settle strikes, lockouts and other industrial
disturbances by acceding to the demands of the opposing party or parties when
such course is in the judgment of the Company unfavorable to the Company.
Section 8.2. REMEDIES ON DEFAULT. Whenever any Default
referred to in Section 8.1 hereof shall have happened and be continuing, the
Trustee, or the Issuer with the written consent of the Trustee, may take one or
any combination of the following remedial steps:
(a) If the Trustee has declared the Bonds immediately due and
payable pursuant to Section 9.02 of the Indenture, by written notice to the
Company, declare an amount equal to all amounts then due and payable on the
Bonds, whether by acceleration of maturity (as provided in the Indenture) or
otherwise, to be immediately due and payable as liquidated damages under this
Agreement and not as a penalty, whereupon the same shall become immediately due
and payable;
(b) Have reasonable access to and inspect, examine and make
copies of the books and records and any and all accounts, data and income tax
and other tax returns of the Company during regular
36
business hours of the Company if reasonably necessary in the opinion of the
Trustee; or
(c) Take whatever action at law or in equity may appear
necessary or desirable to collect the amounts then due and thereafter to become
due, or to enforce performance and observance of any obligation, agreement or
covenant of the Company under this Agreement.
Any amounts collected pursuant to action taken under this
Section shall be paid into the Bond Fund and applied in accordance with the
provisions of the Indenture.
Section 8.3. NO REMEDY EXCLUSIVE. Subject to Section 9.02 of
the Indenture, no remedy herein conferred upon or reserved to the Issuer or the
Trustee 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 Agreement or now or hereafter existing at
law or in equity. No delay or omission to exercise any right or power accruing
upon any Default shall impair any such right or power or shall be construed to
be a waiver thereof, but any such right or power may be exercised from time to
time and as often as may be deemed expedient. In order to entitle the Issuer or
the Trustee to exercise any remedy reserved to it in this Article, it shall not
be necessary to give any notice, other than such notice as may be required in
this Article. Such rights and remedies as are given the Issuer hereunder shall
also extend to the Trustee, and the Trustee and the Owners of the Bonds, subject
to the provisions of the Indenture, shall be entitled to the benefit of all
covenants and agreements herein contained.
Section 8.4. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In
the event the Company should default under any of the provisions of this
Agreement and the Issuer should employ attorneys or incur other expenses for the
collection of payments required hereunder or the enforcement of performance or
observance of any obligation or agreement on the part of the Company herein
contained, the Company agrees that it will on demand therefor pay to the Issuer
the reasonable fee of such attorneys and such other reasonable expenses so
incurred by the Issuer.
Section 8.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In
the event any agreement contained in this 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 hereunder.
37
ARTICLE IX
MISCELLANEOUS
Section 9.1. TERM OF AGREEMENT. This Agreement shall remain in
full force and effect from the date hereof to and including November 1, 2016 or
until such time as all of the Bonds and the fees and expenses of the Issuer and
the Trustee and all amounts payable to the Bank under the Credit Agreement shall
have been fully paid or provision made for such payments, whichever is later;
PROVIDED, however, that this Agreement may be terminated prior to such date
pursuant to Article V of this Agreement, but in no event before all of the
obligations and duties of the Company hereunder have been fully performed,
including, but not limited to, the payment of all costs and fees mandated
hereunder.
Section 9.2. NOTICES. All notices, certificates or other
communications hereunder shall be sufficiently given and shall be deemed given
when delivered or mailed by registered mail, postage prepaid, addressed as
follows:
If to the Issuer: City of Gainesville, Florida
000 X. Xxxxxxxxxx Xxx., 0xx Xxxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Attention: City Attorney
If to the Trustee: SunTrust Bank, Central Florida,
National Association
000 X. Xxxxxxxx Xx., Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Corporate Trust Dept.
If to the Company: Exactech, Inc.
0000 XX 0xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Chief Operating Officer
If to the Bank: SunTrust Bank, North Central Florida
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxx 00000
Attention: Commercial Real Estate
Department
(Xxxxxxx X. Xxxxxxxxxxx)
with a copy to:
SunTrust Bank, North Central Florida
000 Xxxx Xxxxxx Xxxxxxx Xxxxxxxxx
Xxxxx, Xxxxxxx 00000
Attention: Corporate Lending
38
(Xxxxxxxxx Xxxxxxxxx)
If to the issuer of a Its address designated in
Substitute Letter of Credit: writing to the Trustee
If to the Remarketing Agent: Its Principal Office
If to the Tender Agent: SunTrust Bank, Central Florida,
National Association
000 X. Xxxxxxxx Xx., Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Corporate Trust
Department
If to Moody's: Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Department,
Structured Finance Group
If to S&P: Standard & Poor's Ratings Services,
a division of The XxXxxx-Xxxx
Companies, Inc.
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Finance
Department
A duplicate copy of each notice, certificate or other communication given
hereunder by the Issuer or the Company shall also be given to the Trustee and
the Bank. The Issuer, the Company, the Trustee, and the Bank may, by written
notice given hereunder, designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
Section 9.3. BINDING EFFECT. This Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Company, the Bank, the
Trustee, the Owners of Bonds and their respective successors and assigns,
subject, however, to the limitations contained in Section 2.3(b) hereof.
Section 9.4. SEVERABILITY. In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 9.5. AMOUNTS REMAINING IN FUNDS. Subject to the
provisions of Section 6.11 of the Indenture, it is agreed by the parties hereto
that any amounts remaining in any account of the
39
Bond Fund, the Construction Fund, or any other fund (other than the Rebate Fund)
created under the Indenture upon expiration or earlier termination of this
Agreement, as provided in this Agreement, after payment in full of the Bonds (or
provision for payment thereof having been made in accordance with the provisions
of the Indenture) and the fees and expenses of the Trustee in accordance with
the Indenture, shall belong to and be paid to the Company by the Trustee. Moneys
remaining in the Rebate Fund after all payments to the United States of America
required by the terms of Section 6.13 of the Indenture shall also be paid over
to the Company.
Section 9.6. AMENDMENTS, CHANGES AND MODIFICATIONS. Subsequent
to the issuance of Bonds and prior to their payment in full (or provision for
the payment thereof having been made in accordance with the provisions of the
Indenture), and except as otherwise herein expressly provided, this Agreement
may not be effectively amended, changed, modified, altered or terminated without
the written consent of the Trustee and, prior to the Letter of Credit
Termination Date and payment of all amounts payable to the Bank under the Credit
Agreement, the consent of the Bank, in accordance with the provisions of the
Indenture.
Section 9.7. EXECUTION IN COUNTERPARTS. This Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
Section 9.8. APPLICABLE LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State.
Section 9.9. CAPTIONS. The captions and headings in this
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or Sections of this Agreement.
40
IN WITNESS WHEREOF, the Issuer and the Company have caused
this Agreement to be executed in their respective corporate names and their
respective corporate seals to be hereunto affixed and attested by their duly
authorized officers, all as of the date first above written.
CITY OF GAINESVILLE, FLORIDA
(SEAL)
By:__________________________
Mayor-Commissioner
ATTEST:
---------------------------
Clerk of the Commission
EXACTECH, INC.
By:___________________________
President and Chief
Operating Officer
ATTEST:
By:________________________
Secretary
41
EXHIBIT A
PROJECT FACILITIES
The acquisition, construction and equipping on the Project Site of a
facility for the manufacture of orthopedic implants.
A-1
EXHIBIT B
REQUISITION NO. ___
CITY OF GAINESVILLE, FLORIDA
INDUSTRIAL DEVELOPMENT REVENUE BONDS
(Exactech, Inc. Project),
Series 1997
REQUISITION FOR PAYMENT
Exactech, Inc., referred to herein and in the Loan Agreement
(the "Agreement") dated as of November 1, 1997, between the City of Gainesville,
Florida (the "Issuer") and Exactech, Inc., as the Company (the "Company"), does
hereby make application to SunTrust Bank, Central Florida, National Association,
as trustee (the "Trustee") under the Indenture of Trust (the "Indenture")
between the Issuer and the Trustee, dated as of November 1, 1997, for
reimbursement or payment of advances, payments and obligations made or incurred
by the Company in connection with the acquisition, construction and equipping of
the Project (as defined in the Agreement) and the issuance, delivery and sale of
the $3,900,000 City of Gainesville, Florida Industrial Development Revenue Bonds
(Exactech, Inc. Project), Series 1997, as provided for or contemplated in the
Agreement and the Indenture.
All capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to them in the Agreement and the Indenture.
The Company does hereby request disbursement of the amounts as
set forth on Exhibit A attached to this certificate, for reimbursement to the
Company for payments made to, or incurred for, the contractors or payees listed
on Exhibit A or for direct payment to the payees listed on Exhibit A, all as
provided on Exhibit A.
The undersigned further certifies that:
(i) the obligations described in Exhibit A (which includes
a description of the purpose and circumstances of such obligations in
reasonable detail and the name and address of the persons to whom such
obligations are owed and which is accompanied by bills, invoices, or
statements of account for, or other written evidence of, such
obligations) in the stated amounts have been incurred in connection
with the issuance and sale of the Bonds or the financing, planning,
design, acquisition, construction, equipping and/or installation of the
Project;
(ii) such obligations are permitted Costs of the Project,
are proper charges against the account in the
B-1
Construction Fund noted on Exhibit A hereto and have not been the basis
for any previous disbursement from any account in the Construction
Fund;
(iii) no item in Exhibit A represents any portion of an
obligation which the Company is, as of the date hereof, entitled to
retain under any retained percentage agreement;
(iv) insofar as any obligation described in Exhibit A was
incurred for labor, services, materials, supplies or equipment (i) such
labor and services were actually performed in a satisfactory manner in
connection with the acquisition, construction and equipping of the
Project and (ii) such materials, supplies and equipment were actually
used in connection with the acquisition, construction and equipping of
the Project or were delivered to the Project Site (and remain at the
Project Site) for that purpose;
(v) all sums previously advanced by the Trustee have been
used solely for purposes permitted by the Indenture and the specific
items which are the subject of this requisition will be so used;
(vi) there has not been recorded or filed with or served
upon the Company, notice of any lien, right to lien or attachment upon
or claim affecting the right to receive payment of, any moneys payable
to any of the persons or firms named in this requisition, which has not
been released or will not be released simultaneously with the payment
of such obligation;
(vii) each item in Exhibit A is or was appropriate in
connection with the financing, acquisition, construction and equipping
of the Project, as noted in Exhibit A;
(viii) the use of the disbursements requested hereunder will
not result in the covenants made by the Company in Section 3.9 (a) and
(b) of the Agreement being violated. Accordingly, one of the following
statements applies to the requested disbursement:
(a) If all disbursements from the Construction Fund
to be used to pay Issuance Costs have not yet been made, the
disbursement requested hereunder will be used only to pay either
Qualified Project Costs or Issuance Costs.
(b) If all Issuance Costs to be paid with proceeds of
the Bonds have previously been requisitioned but the aggregate
Qualified Project Costs paid with
B-2
previous disbursements and to be paid with the disbursement requested
hereunder do not equal or exceed Substantially All of the Costs of the
Project paid (or to be paid) with the requested and all previous
disbursements, the disbursement requested hereunder will be used only
for Qualified Project Costs.
(c) If all Issuance Costs to be paid with proceeds of
the Bonds have previously been requisitioned and the aggregate
Qualified Project Costs paid with previous disbursements equals or
exceeds Substantially All of the Costs of the Project paid with those
previous disbursements, the disbursement requested hereunder, when
added to all disbursements under previous requisitions, will not result
in less than Substantially All of the total of such disbursements
having been used to pay Qualified Project Costs;
(ix) all disbursements related to Issuance Costs of the
Bonds, requested hereunder, when added to all disbursements for such
Issuance Costs under previous requisitions, will not result in more
than two percent (2%) of the proceeds of the Bonds having been drawn
from the Construction Fund or otherwise used to pay such Issuance
Costs;
(x) no Event of Default under the Indenture has occurred
and is continuing and there exists no event or condition which, with
the giving of notice or the passage of time would constitute an Event
of Default under the Indenture; and
(xi) after payment of such disbursement, sufficient amounts
will remain in the Construction Fund, taking into account investment
earnings thereon, to pay all remaining unpaid costs of the Project.
Dated as of ___________, 199_.
______________________________________________
APPROVED BY:
SUNTRUST BANK, NORTH CENTRAL FLORIDA
By:_________________________________
Authorized Representative
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