LETTER OF CREDIT REIMBURSEMENT AGREEMENT
HSBC
BANK USA, NATIONAL ASSOCIATION
AND
LUMINESCENT
SYSTEMS, INC.
LETTER
OF CREDIT
Dated
as of April 1, 2007
$6,000,000
Erie
County Industrial Development Agency
Variable
Rate Demand Industrial Development Revenue Bonds
(Luminescent
Systems, Inc. Project - Letter of Credit Secured)
Series
2007
TABLE
OF CONTENTS
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Page
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SECTION
1.
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DEFINITIONS
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1
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1.1
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Defined
Terms
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1
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1.2
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Accounting
Terms
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1
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SECTION
2.
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APPLICATION
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1
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SECTION
3.
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REIMBURSEMENT
AND OTHER PAYMENTS
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1
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3.1
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Letter
of Credit Draws
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1
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3.2
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Letter
of Credit Fees
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2
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3.3
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Interest
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2
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3.4
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Expenses
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2
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3.5
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Additional
Costs
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2
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3.6
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Other
Amounts
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3
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3.7
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Form
of Payments
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3
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SECTION
4.
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INTEREST
PAYMENTS AND PREPAYMENTS
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4
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4.1
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Interest
Payments
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4
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4.2
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Mandatory
Prepayments
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4
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4.3
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Optional
Prepayments
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4
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SECTION
5.
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CONDITIONS
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4
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5.1
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Corporate
Action
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4
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5.2
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Bond
Documents
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5
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5.3
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Collateral
Documents
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5
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5.4
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Opinions
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5
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5.5
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Other
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5
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5.6
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Costs
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6
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SECTION
6.
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REPRESENTATIONS
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6
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6.1
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Organization;
Power and Authority
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6
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6.2
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Valid
and Binding Obligation
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6
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6.3
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Approvals
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6
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6.4
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Other
Documents
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6
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6.5
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Litigation
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7
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6.6
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Financial
Statements
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7
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6.7
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ERISA
Matters
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7
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6.8
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Environmental
Matters
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7
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6.9
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Leases
and Management Agreements
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8
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6.10
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Good
Title
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8
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6.11
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No
Violations
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9
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6.12
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Tax
Returns
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9
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6.13
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Federal
Regulations
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9
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6.14
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Subsidiaries;
Affiliates
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9
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-i-
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6.15
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Fiscal
Year
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9
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6.16
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Securities
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9
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6.17
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Anti-Terrorism
Laws
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10
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SECTION
7.
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AFFIRMATIVE
COVENANTS
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10
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7.1
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Certain
Agreements
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10
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7.2
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Reporting
Requirements
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11
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7.3
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Taxes
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12
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7.4
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Insurance
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12
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7.5
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Existence;
Conduct of Business
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12
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7.6
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Maintenance
of Properties; Books and Records
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12
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7.7
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Compliance
with Law
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13
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7.8
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Litigation
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13
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7.9
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Judgments
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13
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7.10
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Notice
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13
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7.11
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Pension
Default
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14
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7.12
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Inspections
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14
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7.13
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Environmental
Compliance
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14
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7.14
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Equity
Contribution
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14
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7.15
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Other
Acts
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14
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SECTION
8.
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NEGATIVE
COVENANTS
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15
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8.1
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Bond
Documents
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15
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8.2
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Borrowed
Money
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15
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8.3
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Encumbrances
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15
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8.4
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Guaranties
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16
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8.5
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Sale
of Assets
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16
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8.6
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Investments
and Loans
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16
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8.7
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Merger
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16
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8.8
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Disposal
of Hazardous Substances
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16
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8.9
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Change
Fiscal Year
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16
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SECTION
9.
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EVENTS
OF DEFAULT AND REMEDIES.
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17
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9.1
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Events
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17
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9.2
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Remedies
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19
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SECTION
10.
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MISCELLANEOUS
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20
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10.1
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Entire
Agreement; Amendments
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20
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10.2
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Additional
Bonds
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20
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10.3
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Delays
and Omissions
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20
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10.4
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Notices
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20
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10.5
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Governing
Laws
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21
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10.6
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Term
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21
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10.7
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Joint
and Several
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21
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10.8
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Counterparts
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21
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SECTION
11.
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INDEMNIFICATION
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21
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-ii-
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SECTION
12.
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LIMITATION
OF LIABILITY
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22
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SECTION
13.
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JURY
TRIAL WAIVER
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22
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SECTION
14.
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CONSENT
TO JURISDICTION
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22
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EXHIBIT
A
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LETTER
OF CREDIT
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EXHIBIT
B
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COMPLIANCE
CERTIFICATE
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SCHEDULE
1
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DEFINITIONS
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SCHEDULE
2
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PENSION
PLANS
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SCHEDULE
3
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LIABILITIES
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SCHEDULE
4
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PERMITTED
ENCUMBRANCES
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-iii-
LETTER
OF CREDIT REIMBURSEMENT AGREEMENT
THIS
LETTER OF CREDIT REIMBURSEMENT AGREEMENT (“Letter of Credit Reimbursement
Agreement”) dated as of April 1, 2007 is between HSBC
BANK USA, NATIONAL ASSOCIATION,
a bank
organized under the laws of the United States of America (“Bank”),
and
LUMINESCENT SYSTEMS, INC., a
business corporation
organized under the laws of the State of New York, having an office at
000 Xxxxxxxx Xxx, Xxxx Xxxxxx, Xxx Xxxx 00000
(“Applicant”).
RECITALS
The
Applicant has requested the Agency to issue its Variable Rate Demand Industrial
Development Revenue Bonds (Luminescent Systems, Inc. Project - Letter
of Credit Secured) Series 2007 (collectively, “Bonds”) to finance a portion of
the costs of the Project. As a condition precedent to the issuance and
sale of
the Bonds, the Applicant has requested the Bank to issue its irrevocable
direct
pay letter of credit in accordance with the terms and conditions of this
Letter
of Credit Reimbursement Agreement.
SECTION
1. DEFINITIONS.
1.1 Defined
Terms.
Terms
used and not otherwise defined in this Letter of Credit Reimbursement Agreement
are defined in Schedule 1
annexed
hereto and shall have the meanings specified therein or in the Indenture
or the
Letter of Credit unless the context otherwise requires.
1.2 Accounting
Terms.
Each
accounting term not defined in Schedule 1
annexed
hereto, and each accounting term partly defined therein to the extent not
defined, shall have the meaning given to it under generally accepted accounting
principles consistent with those applied in the preparation of the financial
statements referred to in Section 6.6 hereof.
SECTION
2. APPLICATION.
The
Applicant hereby applies to the Bank and requests the Bank to issue, execute
and
deliver on the date of the issuance of the Bonds to the Trustee for its
account
an Irrevocable Direct Pay Letter of Credit in substantially the form attached
hereto as Exhibit A
(“Letter
of Credit”). The initial term of the Letter of Credit shall be approximately ten
(10) years. The Applicant may request the Bank to extend the expiration
date of
the Letter of Credit with respect to any period following such initial
term,
which request the Bank may approve, reject or condition, in its sole and
absolute discretion. In the event that the Bank agrees, in its sole and
absolute
discretion, to extend the expiration date of the Letter of Credit, each
of the
terms, covenants and conditions of this Letter of Credit Reimbursement
Agreement
shall apply to each such extension, absent written agreement to the
contrary.
SECTION
3. REIMBURSEMENT
AND OTHER PAYMENTS.
The
Applicant hereby agrees to pay the Bank (collectively,
“Indebtedness”):
3.1 Letter
of Credit Draws.
A sum
equal to any and all amounts which are drawn under the Letter of Credit,
payable
(a) with respect to each portion of the total Indebtedness resulting from a
Bond Purchase Drawing - Principal (as defined in the Letter of Credit)
on the earliest of (i) the stated expiration of the Letter of Credit,
(ii) any earlier date on which the Bank, pursuant to Section 9.2
hereof, has declared such Indebtedness or portion thereof to be immediately
due
and payable, or (iii) any earlier date on which such Indebtedness or
portion thereof is subject to prepayment pursuant to Sections 4.2 or 4.3
hereof, and (b) with respect to all other draws on the Letter of Credit, on
the same Business Day on which the Bank honors any Bond Purchase
Drawing - Interest, Interest Drawing or Principal Drawing (as those
terms are defined in the Letter of Credit).
3.2 Letter
of Credit Fees.
A sum
equal to (a) the Bank’s reasonable and customary administrative, issuance,
amendment, drawing and negotiation charges in connection with letters of
credit,
which shall be payable upon demand, and (b) a letter of credit fee computed
from the date of issuance of the Letter of Credit at the rate of seven-tenths
of
one percent (0.70%) per annum of the Stated Amount (as defined in the Letter
of
Credit), payable in advance for a one-year period on the date of the issuance
of
the Letter of Credit and annually in advance on each anniversary of such
date
while the Letter of Credit remains in existence, which fee shall be fully
earned
upon payment thereof and shall be non-refundable (“Letter of Credit Fee”). Such
Letter of Credit Fee shall be computed on the basis of a 360-day year for
the
actual number of days elapsed and is subject to adjustment as provided
in
Section 9.2(v). Upon the occurrence and during the continuance of an Event
of Default (as hereinafter defined), the Letter of Credit Fee shall be
increased
to two percent (2%) per annum of the Stated Amount, payable as
aforesaid.
3.3 Interest.
Interest on Indebtedness (a) with respect to any Bond Purchase
Drawing from the date such Indebtedness is incurred until payment (unless
such Indebtedness is paid to the Bank on the same Business Day as incurred,
in
which case no interest is payable) at a rate per annum equal to the Bank’s Prime
Rate, payable when and as interest is due and payable on the Bonds, and
(b) with respect to all other Indebtedness from the date such Indebtedness
is incurred (unless such Indebtedness is paid to the Bank on the same Business
Day as incurred, in which case no interest is payable) at a per annum rate
equal
to the Bank’s Prime Rate plus two percent (2%), payable on demand.
3.4 Expenses.
Any and
all out-of-pocket costs and expenses reasonably incurred by or on behalf
of the
Bank in connection with the preparation, negotiation, administration or
enforcement of this Letter of Credit Reimbursement Agreement, the Letter
of
Credit, the Bond Documents and the Collateral Documents, any sale or other
disposition of the collateral granted to the Bank pursuant to the Collateral
Documents, and any consent or action requested or necessitated by the Applicant,
the Agency, the Trustee or any other party in connection with the subject
transaction, including, without limitation, reasonable attorneys’ fees and
disbursements, title examination and insurance fees, UCC search fees, appraisal,
inspecting engineer, environmental report and survey costs, mortgage taxes,
and
recording and filing fees, all payable on demand.
3.5 Additional
Costs.
If any
law, regulation, guideline or change in any law or regulation or in the
interpretation thereof or any ruling, decree, judgment or recommendation
by any
regulatory body, court or any administrative or governmental authority
charged
or claiming to be charged with the administration thereof, shall either
(i) impose upon, modify, require, make or deem applicable to the Bank or
any of its affiliates any reserve requirement based upon the deeming of
letters
of credit to be deposits held by the Bank, special deposit requirement,
insurance assessment or similar costs or requirements against or affecting
letters of credit issued or to be issued hereunder or (ii) subject the Bank
or any of its affiliates to any tax (other than taxes based on the overall
net
income of the Bank), charge, fee, deduction, withholding or similar costs
of any
kind whatsoever or (iii) impose any condition upon or cause in any manner
the addition of any supplement to or increase of any kind to the Bank’s or an
affiliate’s capital or cost base for issuing such letters of credit which
results in an increase in the capital requirement supporting such letters
of
credit or (iv) impose upon, modify, require, make or deem applicable to the
Bank or any of its affiliates any capital requirement, increased capital
requirement or similar requirement such as the deeming of such letters
of credit
to be assets held by the Bank or any of its affiliates for capital calculation
or other purposes, and the result of any events referred to in (i), (ii),
(iii)
or (iv) above shall be to increase the costs or decrease the benefit in
any way
to the Bank or any affiliate of issuing, maintaining or participating in
such
letters of credit, then the Applicant shall, thirty (30) days after the
mailing
of written notice of such increased costs or decreased benefits or both
to the
Applicant by the Bank, pay to the Bank all such additional amounts which
in the
Bank’s sole good faith calculation, as allocated to such letters of
credit,
-2-
(a) in
the
case of events referred to in (i) and (ii) above, shall be sufficient to
compensate the Bank for all such increased costs, decreased benefits or
both,
and/or
(b) in
the
case of events referred to in (iii) and (iv) above, shall be an amount
as the
Bank shall reasonably determine is necessary to compensate the Bank for
any
decreased benefit caused by such events.
For
any
amounts arising under (a) and (b) above, the Bank shall deliver to the
Applicant
a certificate as to such increased costs or decreased benefit incurred
or
suffered by the Bank as a result of such event or events, setting forth
in
reasonable detail the basis therefor and the manner of calculation thereof,
as
soon as practicable after the Bank becomes aware of such event or events,
which
certificate shall be conclusive, absent manifest error, as to any amounts
set
forth therein. In determining such amounts, the Bank may use any reasonable
averaging and attribution methods.
3.6 Other
Amounts. All
amounts due to the Bank pursuant to any of the Bond Documents, Collateral
Documents or SWAP Documents, payable as provided for therein.
3.7 Form
of Payments.
All
payments under this Letter of Credit Reimbursement Agreement shall be in
lawful
currency of the United States and in immediately available funds at the
Bank’s
office at Xxx XXXX Xxxxxx, Xxxxxxx, Xxx Xxxx 00000 (or such other office
or
address as Bank shall direct), with interest calculated on the basis of
a
360-day year for the actual number of days elapsed, which will result in
a
higher effective annual rate.
-3-
SECTION
4. INTEREST
PAYMENTS AND PREPAYMENTS.
4.1 Interest
Payments.
Whenever a payment of interest is due pursuant to Section 3.3 on
Indebtedness with respect to a Bond Purchase Drawing - Principal, the
Applicant shall be deemed to have made such payment in full so long as
the
payment of interest due on the Bonds held pursuant to the pledge created
pursuant to the Pledge Agreement has been made and received by the Bank
on a
timely basis, and the Applicant has paid to the Bank the difference between
the
interest payable pursuant to Section 3.3 and the interest received by the
Bank on such Bonds.
4.2 Mandatory
Prepayments.
On each
and every date on which principal is payable, whether by means of a redemption
pursuant to Section 3.1 of the Indenture or otherwise, on any Bonds pledged
to the Bank pursuant to the Pledge Agreement in connection with Bond Purchase
Drawings, the Applicant will prepay Indebtedness in an amount equal to
the total
of such principal due and payable on such Bonds, together with accrued
interest
to the date of such prepayment. The Bank shall release to the Applicant
or its
designee from the security interest created under the Pledge Agreement
a
principal amount of Bonds equal to the amount of such prepayment and deliver
such Bonds or, if the Bonds are in book-entry form, cause the beneficial
ownership of such Bonds to be reflected in the records of DTC or other
designated securities depository, pursuant to the instructions of the
Applicant.
4.3 Optional
Prepayments.
Indebtedness payable pursuant to Section 3.1(a) hereof, and interest
thereon, arising from Bond Purchase Drawings may be prepaid by the Applicant
or
its designee at any time on three (3) Business Days’ notice to the Bank
stating the amount to be prepaid (which shall be $100,000 or increments
of
$5,000 in excess thereof ) upon payment of immediately available funds
to the
Bank of the amount to be prepaid, together with accrued interest to the
date of
such prepayment on the amount to be prepaid. The Bank shall release to
the
Applicant or its designee from the security interest created under the
Pledge
Agreement a principal amount of Bonds equal to the amount of such prepayment
and
deliver such Bonds or, if the Bonds are in book-entry form, cause the beneficial
ownership of such Bonds to be reflected in the records of DTC or other
designated securities depository, pursuant to the instructions of the
Applicant.
SECTION
5. CONDITIONS.
The
Bank’s agreement to issue the Letter of Credit shall be effective only upon
the
fulfillment of the following conditions precedent:
5.1 Corporate
Action.
The
Applicant shall have taken all necessary and appropriate corporate action
and
the Board of Directors of the Applicant shall have authorized the execution
and
delivery of this Letter of Credit Reimbursement Agreement, the form and
content
of the Letter of Credit, the Bond Documents, the Collateral Documents and
the
taking of all action required of the Applicant by this Letter of Credit
Reimbursement Agreement; and the Applicant shall have furnished to the
Bank
certified copies of such corporate action and such other corporate documents
as
the Bank shall reasonably request.
-4-
5.2 Bond
Documents.
The
Applicant shall have executed and delivered to the Bank the Bond Documents
to
which the Applicant is a party, all in form and content satisfactory to
the
Bank.
5.3 Collateral
Documents.
The
Applicant shall have executed and delivered to the Bank the Collateral
Documents
in form and content satisfactory to the Bank.
5.4 Opinions.
Counsel
to the Applicant and the Guarantor shall have executed and delivered to
the Bank
a favorable opinion in form and content satisfactory to the Bank and its
counsel
as to such matters as the Bank may reasonably request.
5.5 Other.
The
Applicant shall have delivered to the Bank such other documents, instruments
and
approvals as the Bank may reasonably request, including, but not limited
to:
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(a)
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Evidence
of insurance policies in amounts and form and with insurers acceptable
to
the Bank, including (i) Extended coverage casualty insurance in the
form of a “Builder’s Risk” nonreporting policy in an amount to be
determined by the Bank as the insurable value of the improvements
to the
Premises, with a New York Mortgagee endorsement or its equivalent,
naming
the Bank as mortgagee and loss payee, without subjecting the
mortgagee to
defenses which may be available against the Applicant and providing
for
mandatory 30-day notice to the Bank of cancellation; (ii) Public
liability and property damage insurance in amounts acceptable
to the Bank
naming the Bank as an additional insured party; (iii) Worker’s
Compensation insurance; (iv) Flood Insurance, naming the Bank as
mortgagee, if required; and (v) such other coverage as the Bank may
require, including such coverage as is available for similar
projects in
the same locality;
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(b)
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A
Mortgagee title insurance policy in a minimum amount not less
than
$4,815,484, insuring the Building Loan Mortgage and the Project
Loan
Mortgage as a $1,184,516 priority lien on the Premises subject
only to
existing liens and encumbrances satisfactory to the
Bank;
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(c)
|
A
current “As-Built” survey of the Premises acceptable to the Bank, which
survey shall be certified to the Bank, together with evidence
satisfactory
to the Bank that the Premises contains no designated
“wetlands;”
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(d)
|
A
current site plan of the Premises illustrating the Project and
showing all
required municipal approvals;
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(e)
|
A
completed Environmental Questionnaire, in form and content satisfactory
to
the Bank;
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-5-
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(f)
|
Evidence
from the Agency that the Applicant and the Project have been
approved by
the Agency;
|
|
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(g)
|
Receipt
and approval by the Bank and its counsel of the terms of the
Bonds and all
Bond documentation; and
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|
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(h)
|
The
other matters and documents described in the Bank’s November 22, 2006
commitment letter to the Applicant.
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5.6 Costs.
The
Applicant shall have reimbursed the Bank for or paid all costs and expenses
incurred by the Bank in connection with the preparation, execution and
delivery
of this Letter of Credit Reimbursement Agreement, the Bond Documents and
the
Collateral Documents, including, without limitation, reasonable attorneys’ fees
and disbursements, title examination and insurance fees, UCC search fees,
appraisal, inspecting engineer, survey costs, mortgage taxes, and recording
and
filing fees.
SECTION
6. REPRESENTATIONS.
The
Applicant hereby represents and warrants as follows:
6.1 Organization;
Power and Authority.
The
Applicant is a business corporation duly organized, validly existing and
in good
standing under the laws of the State of New York. The Applicant is qualified
and
in good standing in each state where the nature of its business or ownership
of
its property requires such qualification, except where failure to qualify
would
not reasonably be expected to have a Material Adverse Effect; and has all
necessary power and authority to execute and perform, and to consummate
all
transactions contemplated by this Letter of Credit Reimbursement Agreement,
and
each of the Bond Documents and Collateral Documents, all of which have
been duly
authorized by all proper and necessary corporate and shareholder
action.
6.2 Valid
and Binding Obligation.
This
Letter of Credit Reimbursement Agreement and each of the Bond Documents
and the
Collateral Documents to which the Applicant is a party have been duly executed
and delivered by the Applicant, constitute the legal, valid and binding
obligations of the Applicant, enforceable against the Applicant in accordance
with their respective terms.
6.3 Approvals.
All
authorizations, approvals, notices and filings required for the Applicant
to
enter into this Letter of Credit Reimbursement Agreement and each of the
Bond
Documents and the Collateral Documents and to take all actions contemplated
hereby or thereby or in connection herewith or therewith, have been obtained,
copies thereof have been delivered to the Bank, and such authorizations,
approvals, notices and filings remain in full force and effect.
6.4 Other
Documents.
The
execution, delivery and performance by the Applicant of this Letter of
Credit
Reimbursement Agreement do not and will not contravene, conflict with or
constitute a breach of or default under (i) the Applicant’s organizational
documents, or (ii) any note, mortgage, borrowing agreement or other
material instrument or agreement binding on the Applicant, or (iii) any
order, writ, judgment, injunction or decree of any court of competent
jurisdiction to which the Applicant is a party or by which the Applicant
is
otherwise bound.
-6-
6.5 Litigation.
There
are not any actions, suits, proceedings (whether or not purportedly on
behalf of
the Applicant) or investigations pending or, to the knowledge of the Applicant,
threatened against the Applicant or any basis therefor, which, reasonably
could
be expected to have a Material Adverse Effect, or which question the validity
of
this Letter of Credit Reimbursement Agreement, the Bonds or any of the
Bond
Documents or the Collateral Documents.
6.6 Financial
Statements.
All
financial statements of the Applicant heretofore given and hereafter to
be given
to the Bank are and will be true and complete in all material respects
as of
their respective dates and prepared in accordance with generally accepted
accounting principles consistently applied, and fairly represent the financial
conditions of the business to which they pertain, and no materially adverse
change has occurred in the financial conditions reflected therein since
the
respective dates thereof. None of the property or assets shown in the financial
statements heretofore delivered to the Bank has been materially adversely
affected as a result of any fire, explosion, accident, flood, drought,
storm,
earthquake, condemnation, requisition, statutory or regulatory change,
act of
God, or act of public enemy or other casualty, whether or not
insured.
6.7 ERISA
Matters.
All
Plans to which the Applicant or any Subsidiary is a party are listed on
Schedule 2
annexed
hereto; no Plan has been terminated or partially terminated or is insolvent
or
in reorganization, nor have any proceedings been instituted to terminate
or
reorganize any Plan; neither the Applicant nor any Subsidiary has withdrawn
from
any Plan in a complete or partial withdrawal, nor has a condition occurred
which
if continued would result in a complete or partial withdrawal; neither
the
Applicant nor any Subsidiary has incurred any withdrawal liability, including
contingent withdrawal liability, to any Plan pursuant to Title IV of ERISA;
neither the Applicant nor any Subsidiary has incurred any liability to
the
Pension Benefit Guaranty Corporation other than for required insurance
premiums
which have been paid when due; no Reportable Event has occurred and no
Plan or
other “employee pension benefit plan”, as defined in Section 3(2) of ERISA
to which the Applicant or any Subsidiary is a party has an “accumulated funding
deficiency” (whether or not waived) as defined in Section 302 of ERISA or
in Section 412 of the Code. Each Plan and each other “employee benefit
plan” as defined in Section 3(3) of ERISA to which the Applicant or any
Subsidiary is a party is in substantial compliance with ERISA, and no such
plan,
nor any administrator, trustee or fiduciary thereof, to the best knowledge
of
the Applicant, has engaged in a prohibited transaction described in
Section 406 of ERISA or in Section 4975 of the Code.
6.8 Environmental
Matters.
To the
best of Applicant’s knowledge, after due inquiry and investigation:
(a) Any
Environmental Questionnaire previously provided to the Bank was and is
accurate
and complete and does not omit any material fact the omission of which
would
make the information contained therein materially misleading;
-7-
(b) No
above
ground or underground storage tanks containing Hazardous Substances are
or have
been located on any property owned, leased or operated by the Applicant
or any
Subsidiary, except for storage tanks containing diesel fuel, gasoline or
waste
oil, which tanks are in material compliance with all applicable laws, rules
and
regulations;
(c) No
property owned, leased or operated by the Applicant or any Subsidiary is
or has
been used for the storage or Disposal of any Hazardous Substance, except
in the
ordinary course of its business in material compliance with applicable
Environmental Laws, or for the treatment or Disposal of Hazardous
Substances;
(d) No
unpermitted Release of a Hazardous Substance has occurred or is threatened
on,
at, from or near any property owned, leased or operated by the Applicant
or any
Subsidiary, except where such unpermitted Release does not have, and could
not
reasonably be expected to have, a Material Adverse Effect;
(e) Neither
the Applicant nor any Subsidiary is subject to any existing, pending or
threatened suit, claim, notice of material violation or request for information
under any Environmental Law;
(f) The
Applicant and each Subsidiary are in compliance with all Environmental
Laws,
except where noncompliance does not have, and could not be reasonably expected
to have, a Material Adverse Effect;
(g) All
Environmental Permits have been obtained and are in full force and effect,
except where the failure to obtain such Environmental Permit is not likely
to
have a Material Adverse Effect; and
(h) There
are
no agreements, consents, orders, decrees, judgment, license or permit conditions
or other orders or directives of any federal, state or local court, governmental
agency or authority relating to the past, present or future ownership,
use,
operation, sale, transfer or conveyance of any property owned, leased or
operated by the Applicant or any Subsidiary which required any change in
condition or any work, repairs, construction, containment, clean up,
investigation, study, removal or other remedial action or capital
expenditures.
6.9 Leases
and Management Agreements.
The
Applicant has not entered into (i) any lease with respect to all or any
portion of the Project, or (ii) any management agreement with respect to
the operation or management of the Project.
6.10 Good
Title.
Each of
the Applicant and each Subsidiary has good and marketable title to all
of its
assets, none of which is subject to any mortgage, indenture, pledge, lien,
conditional sale contract, security interest, encumbrance, claim, trust
or
charge except as set forth on Schedule 4
annexed
hereto or in favor of the Bank or HSBC Bank Canada.
-8-
6.11 No
Violations.
Neither
the Applicant nor any Subsidiary is in violation of any term of its certificate
of incorporation or by-laws, or of any mortgage, borrowing agreement
or other
instrument or agreement pertaining to indebtedness for borrowed money
which
might reasonably be expected to result in a Material Adverse Effect.
Neither the
Applicant nor any Subsidiary is in violation of any term of any other
indenture,
instrument, or agreement to which it is a party or by which it may be
bound,
resulting, or which might reasonably be expected to result, in a Material
Adverse Effect. Neither the Applicant nor any Subsidiary is in violation
of any
order, writ, judgment, injunction or decree of any court of competent
jurisdiction or of any statute, rule or regulation of any competent governmental
authority which might reasonably be expected to result in a Material
Adverse
Effect. The execution and delivery of this Letter of Credit Reimbursement
Agreement and other documents required by this Letter of Credit Reimbursement
Agreement and the performance of all of the same is and will be in compliance
with the foregoing and will not result in any violation or result in
the
creation of any mortgage, lien, security interest, charge or encumbrance
upon
any properties or assets except in favor of the Bank. There exists no
fact or
circumstance not disclosed in this Letter of Credit Reimbursement Agreement,
in
the documents furnished in connection herewith, the Applicant’s filings under
the Securities Exchange Act of 1934, or in the financial projections
furnished
to the Bank which has, or could reasonably be expected to have, a Material
Adverse Effect, except those facts and circumstances which generally
affect all
Persons engaged in the Applicant’s lines of business.
6.12 Tax
Returns.
The
Applicant has duly filed all federal and other tax returns required to
be filed
for itself and all Subsidiaries except where an extension has been obtained
and
has duly paid all taxes required by such returns through its fiscal year
ending
[December 31, 2006]. Federal income tax liability of the Applicant and the
Subsidiaries has been reviewed by the United States Internal Revenue Service
through its fiscal year ending December 31, 2003, and the Applicant has not
received any assessments by the Internal Revenue Service or other taxing
authority for additional unpaid taxes.
6.13 Federal
Regulations.
Neither
the Applicant nor any Subsidiary is engaged principally, or as one of its
important activities, in the business of extending or arranging for the
extension of credit for the purpose of purchasing or carrying “margin stock” (as
defined in Regulation U issued by the Board of Governors of the Federal
Reserve
System). Neither the Applicant nor any Subsidiary owns nor intends to carry
or
purchase any such “margin stock”, and the Applicant will not use the proceeds of
the Letter of Credit to purchase or carry (or refinance any borrowing the
proceeds of which were used to purchase or carry) any such “margin stock”.
Neither the Applicant nor any Subsidiary is an “investment company” within the
meaning of the Investment Company Act of 1940, as amended, or a “holding
company,” or a “subsidiary company” of a “holding company” or of a “subsidiary
company” of a “holding company,” within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
6.14 Subsidiaries;
Affiliates.
The
Applicant has no Subsidiaries except Luminescent Systems of Canada
Inc.
6.15 Fiscal
Year.
The
fiscal year of the Applicant is the year ending December 31.
6.16 Securities.
Each
outstanding share of stock, debenture, bond, note and other security of
the
Applicant has been validly issued in full compliance with each statute,
regulation and other law, and, if a share of stock, is fully paid and
nonassessable.
-9-
6.17 Anti-Terrorism
Laws.
(a) General.
Neither
the Applicant, the Guarantor, nor any of their Subsidiaries, is in violation
of
any Anti-Terrorism Law or engages in or conspires to engage in any transaction
that evades or avoids, or has the purpose of evading or avoiding, or attempts
to
violate, any of the prohibitions set forth in any Anti-Terrorism
Law.
(b) Executive
Order No. 13224.
Neither
the Applicant, the Guarantor nor any of their Subsidiaries or their respective
agents acting or benefiting in any capacity in connection with the Letter
of
Credit or other transactions hereunder, is any of the following (each a
“Blocked
Person”):
(1) a
Person
that is listed in the annex to, or is otherwise subject to the provisions
of,
the Executive Order No. 13224;
(2) a
Person
owned or controlled by, or acting for or on behalf of, any Person that
is listed
in the annex to, or is otherwise subject to the provisions of, the Executive
Order No. 13224;
(3) a
Person
or entity with which any bank is prohibited from dealing or otherwise engaging
in any transaction by any Anti-Terrorism Law;
(4) a
Person
or entity that commits, threatens or conspires to commit or supports “terrorism”
as defined in the Executive Order No. 13224;
(5) a
Person
or entity that is named as a “specially designated national” on the most current
list published by the U.S. Treasury Department Office of Foreign Asset
Control
at its official website or any replacement website or other replacement
official
publication of such list; or
(6) a
Person
or entity who is affiliated or associated with a Person or entity listed
above.
Neither
the Applicant, the Guarantor nor any Subsidiary of the Applicant or, to
the
knowledge of the Applicant, any of its agents acting in any capacity in
connection with the Letter of Credit or other transactions hereunder (i)
conducts any business or engages in making or receiving any contributions
of
funds, goods or services to or for the benefit of any Blocked Person, or
(ii) deals in, or otherwise engages in any transaction relating to, any
property or interests in property blocked pursuant to the Executive Order
No.
13224.
SECTION
7. AFFIRMATIVE
COVENANTS.
Until
the
expiration of the Letter of Credit and the payment in full of all sums
due under
this Letter of Credit Reimbursement Agreement, the Applicant will:
7.1 Certain
Agreements.
Perform
and comply with all terms, covenants and conditions of each of the Bond
Documents and the Collateral Documents.
-10-
7.2 Reporting
Requirements.
Furnish, or cause the Trustee or the Guarantor, as applicable, to furnish,
to
the Bank the following:
(i) as
soon
as possible and in any event within ten (10) days after the occurrence
of any
default or Event of Default, notice of such default or Event of Default
together
with a statement of the Applicant describing the facts giving rise to the
occurrence(s) and the action which the Applicant proposes to take with
respect
thereto;
(ii) as
soon
as such notices are required to be given, copies of each of the notices,
reports
and certificates which are required to be given (a) to the Trustee by the
Applicant under any of the Bond Documents and (b) to the Bondholders under
the Indenture by the Trustee;
(iii) as
soon
as available, and in any event within ninety (90) days after the end of
each
fiscal year of the Guarantor, a consolidating and consolidated statement
of
financial position for the Guarantor and its Subsidiaries for such fiscal
year,
including statements of activities and cash flows through the end of such
fiscal
year, all audited by Ernst & Young LLP, Certified Public
Accountants, or such other independent certified public accountants as
may from
time to time be selected by the Guarantor and reasonably approved by the
Bank,
together with a satisfactory, unqualified opinion of such
accountants;
(iv) within
forty-five (45) days after the end of each quarter of each of its fiscal
years,
unaudited financial statements of the Guarantor and its Subsidiaries, which
statements shall consist of Consolidated and summary consolidating balance
sheets as of the end of such quarter, and related statements of income,
covering
the period from the end of the Guarantor’s immediately preceding fiscal year to
the end of such quarter certified to be correct by the President or chief
fiscal
officer of the Guarantor;
(v) within
twenty-five (25) days after each month-end which is not the end of a fiscal
quarter of Guarantor, monthly year-to-date consolidating internally prepared
financial statements of Guarantor and its Subsidiaries;
(vi) accompanying
each set of financial statements specified in (iii) and (iv) above, a
certificate of a responsible officer of the Applicant substantially in
the form
of Exhibit B
attached
hereto to the effect that (a) the Applicant has complied with and is in
compliance with all the terms and covenants of this Letter of Credit
Reimbursement Agreement binding upon it, including, without limitation,
demonstration of compliance with the financial covenants set forth in the
Parent
Guaranty, and (b) there exists no Event of Default, and no event which with
the giving of notice or passage of time, or both, would constitute such
an Event
of Default has occurred or if this is not the case, that one or more specified
Events of Default has occurred or is occurring and the specific steps the
Applicant is taking to cure same;
(vii) promptly
after their preparation, copies of all such proxy statements, financial
statements and reports which the Applicant sends to its stockholders, and
copies
of all regular, periodic and special reports, as well as all registration
statements, which the Applicant files with the Securities and Exchange
Commission;
-11-
(viii) promptly
after the filing thereof with the Pension Benefit Guaranty Corporation,
a copy
of each annual report filed with respect to each Plan;
(ix) by
the
end of each of its fiscal years, a forecast of the statements of income
and cash
flows as of and through the close of the following fiscal year of the Applicant
and its Subsidiaries; and
(x) such
other information respecting the business or the condition or operations,
financial or otherwise, of the Applicant as the Bank may from time to time
reasonably request.
7.3 Taxes.
Promptly pay and discharge all of its taxes, assessments and other governmental
charges (including any charged or assessed on the issuance of the Bonds)
prior
to the date on which penalties are attached thereto, establish adequate
reserves
for the payment of taxes and assessments and make all required withholding
and
other tax deposits; provided, however, that nothing herein contained shall
be
interpreted to require the payment of any tax, assessment or charge so
long as
its validity is being contested in good faith and by appropriate proceedings
diligently conducted.
7.4 Insurance.
(a) Keep, and cause any Subsidiary to keep, all its property insured at all
times with responsible insurance carriers against fire, theft and other
risks in
coverage, in form and amount consistent with industry standards and reasonably
satisfactory to the Bank; (b) keep, and cause any Subsidiary to keep,
adequately insured at all times in reasonable amounts with responsible
insurance
carriers against liability on account of damage to persons or property,
and
under all applicable worker’s compensation laws; (c) promptly deliver to
the Bank certificates of insurance or any of those insurance policies required
to be carried by the Applicant pursuant hereto, with appropriate endorsements
designating the Bank as a named insured, mortgagee and loss payee as requested
by the Bank; (d) deliver to the Bank evidence of flood insurance, if the
Project is located in an area identified as a special flood hazard area,
naming
the Bank as mortgagee and an additional insured; and (e) cause each such
insurance policy to contain a notice of cancellation clause providing for
a
mandatory 30-day notice to the Bank of cancellation, in form satisfactory
to the
Bank.
7.5 Existence;
Conduct of Business.
Preserve and maintain, and cause any Subsidiary to preserve and maintain,
its
corporate existence, in good standing and all of its rights, privileges
and
franchises necessary or desirable in the normal conduct of its operations,
except where failure to preserve and maintain any such right, privilege
or
franchise would not have a Material Adverse Effect.
7.6 Maintenance
of Properties; Books and Records.
Keep
all of its properties in good working condition, keep proper books and
records
in accordance with GAAP, and permit representatives of the Bank to inspect
such
properties and to examine and make reasonable extracts from its books and
records during normal business hours upon reasonable prior notice, and
notify
the Bank promptly in writing of any proposed change in the location at
which
such books and records are maintained.
-12-
7.7 Compliance
with Law.
Comply
with all applicable laws, rules, regulations and orders of all governmental
authorities, except where failure to so comply does not have, and would
not
reasonably be expected to have, a Material Adverse Effect. Maintain all
licenses, approvals, etc., necessary or proper for the Applicant to construct
and operate the Project consistent with the Applicant’s past
operations.
7.8 Litigation.
Promptly notify the Bank in writing as soon as the Applicant has knowledge
thereof, of the institution or filing of any litigation, action, suit,
claim,
counterclaim, or administrative proceeding against, or investigation of,
the
Applicant or any Subsidiary or to which the Applicant or any Subsidiary
is a
party by or before any regulatory body or governmental agency (i) the
outcome of which (A) could reasonably be expected to have a Material
Adverse Effect or could reasonably be expected to materially and adversely
affect the Applicant’s ability to fulfill its obligations hereunder, or
(B) involves more than $1,000,000 and is not covered by insurance carried
by Applicant in accordance with Section 7.4 hereof, or (ii) which
questions the validity of this Letter of Credit Reimbursement Agreement,
the
Letter of Credit, the Bonds, the Bond Documents or the Collateral Documents,
or
any action taken or to be taken pursuant to the foregoing; and furnish
or cause
to be furnished to the Bank such information regarding the same as the
Bank may
request from time to time.
7.9 Judgments.
Promptly notify the Bank in writing as soon as the Applicant has knowledge
thereof, of any judgment, order or award of any court, agency or other
governmental agency or any arbitrator, (a) the outcome of which could reasonably
be expected to have a Material Adverse Effect or could reasonably be expected
to
materially and adversely affect the Applicant’s ability to fulfill its
obligations hereunder or which involves more than $1,000,000 unless adequately
covered by insurance, or (b) renders invalid this Letter of Credit Reimbursement
Agreement, the Letter of Credit or any action taken or to be taken pursuant
to
any of the foregoing, and furnish or cause to be furnished to the Bank
such
information regarding the same as the Bank may request.
7.10 Notice.
Promptly notify the Bank in writing of (a) any pending or future audits of
the Applicant’s or any Subsidiary’s federal income tax returns by the Internal
Revenue Service as soon as the Applicant has knowledge thereof, and the
results
of each such audit upon its completion; (b) any default by the Applicant or
any Subsidiary in the performance of, or any material modifications of,
any of
the terms or conditions contained in any agreement, mortgage, indenture
or
instrument relating to borrowed money to which the Applicant or any Subsidiary
is a party or which is binding upon the Applicant or any Subsidiary and
of any
default by the Applicant or any Subsidiary in the payment of any of its
indebtedness; (c) any default by the Applicant in the performance of any of
the terms or conditions contained in any of the Collateral Documents or
any of
the Bond Documents. The Applicant shall not, however, be required to so
notify
the Bank of potential or actual defaults under, or of modifications of
terms or
provisions of, those documents or agreements pertaining to its transactions
in
the ordinary course of business which do not have a Material Adverse Effect
or
constitute a Potential Default or an Event of Default.
-13-
7.11 Pension
Default.
With
respect to each Plan, the Applicant will furnish the following to the
Bank as
soon as possible and in any event within thirty (30) days after the Applicant
knows or has reason to know of (a) the occurrence of any Reportable Event
with respect to such Plan or (b) the institution of proceedings or the
taking of any other action by the Pension Benefit Guaranty Corporation
or the
Applicant or any Subsidiary to terminate, withdraw or partially withdraw
from
any Plan and, with respect to a Multiemployer Plan, the reorganization
(as
defined in Section 4241 of ERISA) or insolvency (as defined in
Section 4245 of ERISA) of such Plan, and in addition to such notice,
deliver to the Bank whichever of the following may be applicable: (i) a
certificate of the President or chief fiscal officer of the Applicant
setting
forth details known to the Applicant as to such Reportable Event, together
with
a copy of any notice thereof that is required to be filed with the Pension
Benefit Guaranty Corporation, or (ii) any notice delivered by the Pension
Benefit Guaranty Corporation evidencing its intent to institute such
proceedings
or any notice to the Pension Benefit Guaranty Corporation that such Plan
is to
be terminated, as the case may be.
7.12 Inspections.
Upon
request of the Bank, permit any officer, employee, accountant, attorney
or other
agent of the Bank upon reasonable notice and during regular business hours
to
(a) visit and inspect each of the premises of the Applicant and each
Subsidiary, (b) examine, audit, copy and make extracts from each accounting
record of the Applicant, and (c) discuss the business, operations, assets,
affairs and condition (financial or other) of the Applicant and each Subsidiary
with a responsible officer of the Applicant and with the independent accountants
of the Applicant.
7.13 Environmental
Compliance.
(a) Comply
with all Environmental Laws except where the failure to comply could not
reasonably be expected to have a Material Adverse Effect.
(b) Promptly
notify the Bank in the event of the Disposal of any Hazardous Substance
at any
property owned, leased or operated by the Applicant or any Subsidiary,
or in the
event of any Release, or threatened Release, of a Hazardous Substance,
on, at or
from any such Property, except when such Disposal or Release is in the
ordinary
course of the Applicant’s business and in compliance with all applicable
Environmental Laws or could not reasonably be expected to have a Material
Adverse Effect.
(c) Deliver
promptly to the Bank (i) copies of any non-routine, material documents
received
from the United States Environmental Protection Agency or any state, county
or
municipal environmental or health agency concerning the Applicant’s operations
except documents of general applicability; and (ii) copies of any documents
submitted by the Applicant to the United States Environmental Protection
Agency
or any state, county or municipal environmental or health agency concerning
its
operations, except submissions in the ordinary course of business.
7.14 Equity
Contribution.
Agrees
to make an equity contribution to the Project equal to the difference between
the total cost of the Project and the aggregate amount of the Bonds and
the
Mortgage Loan with such equity contributions to be made not later than
the date
the Project is completed.
7.15 Other
Acts.
Execute
and deliver, or cause to be executed and delivered, to the Bank all further
documents and perform all other acts and things which the Bank deems necessary
or appropriate to protect or perfect any mortgage or security interests
in any
property directly or indirectly securing payment of any indebtedness, or
other
obligations of the Applicant to the Bank, or to otherwise carry out the
intent
hereof.
-14-
SECTION
8. NEGATIVE
COVENANTS.
Until
the
expiration of the Letter of Credit and the payment in full of all sums
due under
this Letter of Credit Reimbursement Agreement, the Applicant shall not,
and it
shall cause each Subsidiary of the Applicant not to, without the prior
written
consent of the Bank, in each instance:
8.1 Bond
Documents.
Enter
into or consent to any amendments, modifications or changes to any of the
Bond
Documents or any of the Collateral Documents.
8.2 Borrowed
Money.
Create,
incur, assume or suffer to exist any liability for borrowed money except
(i) to the Bank or HSBC Bank Canada, (ii) the Bonds and the Existing
Bonds, (iii) the liabilities set forth on Schedule
3
annexed
hereto, (iv) indebtedness owed by a Subsidiary of the Applicant or the
Applicant to the Guarantor or any of the Guarantor’s Subsidiaries,
(v) indebtedness which when aggregated with the indebtedness of the
Subsidiaries of Applicant and the Guarantor and the Guarantor’s Subsidiaries
will not be in excess of $3,000,000 outstanding at any one time incurred
for
capital leases of fixed assets or fixed asset purchases, and (vi) unsecured
indebtedness that is subordinated to the Indebtedness of the Applicant
to the
Bank under this Letter of Credit Reimbursement Agreement in a manner reasonably
satisfactory to the Bank.
8.3 Encumbrances.
Create,
incur, assume or suffer to exist any mortgage, lien, security interest,
pledge
or other encumbrance on any of its property or assets, whether now owned
or
hereafter owned or acquired, except in favor of the Bank or a trustee for
the
benefit of the Bank and except for (a) any lease of any asset as a lessor
in the
ordinary course of its business and without interference with the conduct
of its
business or operations, (b) any pledge or deposit made by the Applicant or
any Subsidiary of the Applicant in the ordinary course of its business
(i) in connection with any workers’ compensation, unemployment insurance,
social security or similar statute, regulation or other law or (ii) to
secure the payment of any indebtedness, liability or obligation in connection
with any letter of credit, bid, tender, trade or government contract, lease,
surety, appeal or performance bond or statute, regulation or other law,
or of
any similar indebtedness, liability or obligation, not incurred in connection
with the borrowing of any money or in connection with the deferral of the
payment of the purchase price of any asset, (c) any attachment, levy or
similar lien with respect to the Applicant or any Subsidiary of the Applicant
arising in connection with any action or other legal proceeding so long
as
(i) the validity of the claim or judgment secured thereby is being
contested in good faith by appropriate proceedings promptly instituted
and
diligently conducted, (ii) adequate reserves have been appropriately
established for such claim or judgment, (iii) the execution or other
enforcement of such attachment, levy or similar lien is effectively stayed
and
(iv) neither such claim or judgment nor such attachment, levy or similar
lien has a Material Adverse Effect, (d) any statutory lien in favor of the
United States for any amount paid to the Applicant or any Subsidiary of
the
Applicant as a progress payment pursuant to any government contract,
(e) any statutory lien securing the payment of any tax, assessment, fee,
charge, fine or penalty imposed by any government or political subdivision
upon
the Applicant or any Subsidiary of the Applicant or upon any of its respective
assets but not yet due to be paid (excluding any lien arising under ERISA),
(f)
any statutory lien securing the payment of any claim or demand of any
materialman, mechanic, carrier, warehouseman, garageman or landlord against
the
Applicant or any Subsidiary of the Applicant, but not yet due to be paid,
(g) any reservation, exception, encroachment, easement, right-of-way,
covenant, condition, restriction, lease or similar title exception or
encumbrance affecting title to any real property of the Applicant or any
Subsidiary of the Applicant but not interfering with the conduct of its
business
or operations, (h) liens listed on Schedule
4
hereto
and (i) liens securing indebtedness permitted by clause (v) of
Section 8.2 hereof.
-15-
8.4 Guaranties.
Become
a guarantor, surety or otherwise liable for the debts or other obligations
of
any other Person, whether by agreement to purchase the indebtedness of
any other
Person, or agreement for the furnishing of funds to any other Person through
the
purchase of goods, supplies or services (or by way of stock purchase, capital
contribution, advance or loan) for the purpose of paying or discharging
the
indebtedness of any other Person or otherwise, except (i) as an endorser of
instruments for the payment of money deposited to its bank account for
collection in the ordinary course of business, (ii) as related to this
transaction, (iii) guaranties of indebtedness to the Bank, and
(iv) guaranties granted in the ordinary course of business by the Applicant
in connection with ordinary course of business purchase or sale obligations
of
Applicant’s Subsidiaries under contracts for the purchase or sale of
goods.
8.5 Sale
of Assets.
Convey,
sell, transfer, lease, lease and buyback, or sell and lease back during
the term
of this Letter of Credit Reimbursement Agreement the Project Facility (as
defined within the definition of Project) or more than five percent (5%)
in the
aggregate of other property, assets or business of the Guarantor and its
Subsidiaries on a Consolidated basis to any other Person except for the
sales of
inventory in the ordinary course of business, and sales of fixed assets
no
longer needed or in use.
8.6 Investments
and Loans.
Make or
suffer to exist any investments in, or loans or advances to, any other
person,
firm or corporation, including, without limitation, loans or advances to
members, shareholders, directors, officers or employees, except
(i) investments in the form of obligations of the United States of America
or any agency thereof, (ii) advance payments or deposits for purchases in
the ordinary course of business, (iii) any existing investments in, or
existing
or future advances to, any Subsidiary, and (iv) investments which are
classified as Cash or Cash Equivalents under GAAP.
8.7 Merger.
Merge
or consolidate with or into any other Person unless the Applicant or the
Guarantor is the entity surviving after the merger or consolidation, or
enter
into any joint venture or partnership with any other Person.
8.8 Disposal
of Hazardous Substances.
Suffer,
cause or permit the Disposal of Hazardous Substances at any property owned,
leased or operated by the Applicant or any Subsidiary of Applicant, except
in
the ordinary course of business in accordance with applicable Environmental
Laws.
8.9 Change
Fiscal Year.
Change
the fiscal year of the Applicant.
-16-
SECTION
9. EVENTS
OF DEFAULT AND REMEDIES.
9.1 Events.
Any of
the following events or conditions shall constitute an Event of Default
hereunder:
(i) Nonpayment.
Nonpayment within ten (10) days after the same becomes due, whether by
acceleration or otherwise, of (A) principal of or interest on the Indebtedness
or, (B) any fees, expenses or other amounts payable under this Letter of
Credit
Reimbursement Agreement.
(ii) Certain
Covenants.
A
default by the Applicant in the observance of any of the covenants or agreements
set forth in Section 8 of this Letter of Credit Reimbursement
Agreement.
(iii) Insurance.
A
default by the Applicant in the performance of any obligation, term or
condition
set forth in Section 7.4 of this Letter of Credit Reimbursement
Agreement.
(iv) Noncompliance.
Other
than as set forth in subparagraphs (i), (ii) and (iii) above, default by
the
Applicant in the performance of any obligation, term or condition of this
Letter
of Credit Reimbursement Agreement which is not remedied within thirty (30)
days
after notice thereof by the Bank to the Applicant.
(v) Voluntary
Insolvency Proceedings.
If the
Applicant or any Subsidiary (i) shall file a petition or request for
liquidation, reorganization, arrangement, adjudication as a bankrupt, relief
as
a debtor or other relief under the bankruptcy, insolvency or similar laws
of the
United States of America or any state or territory thereof or any foreign
jurisdiction, now or hereafter in effect; (ii) shall make a general assignment
for the benefit of creditors; (iii) shall consent to the appointment of a
receiver or trustee for the Applicant or any Subsidiary or any of the
Applicant’s or any Subsidiary’s assets, including, without limitation, the
appointment of or taking possession by a “custodian” as defined in the federal
Bankruptcy Code; (iv) shall make any, or send notice of any intended, bulk
sale;
or (v) shall execute a consent to any other type of insolvency proceeding
(under
the federal Bankruptcy Code or otherwise) or any formal or informal proceeding
for the dissolution or liquidation of, or settlement of claims against
or
winding up of affairs of, the Applicant or any Subsidiary.
(vi) Involuntary
Insolvency Proceedings.
The
appointment of a receiver, trustee, custodian or officer performing similar
functions for the Applicant or any Subsidiary or any of the Applicant’s or any
Subsidiary’s assets, including, without limitation, the appointment of or taking
possession by a “custodian” as defined in the federal Bankruptcy Code; or the
filing against the Applicant or any Subsidiary of a request or petition
for
liquidation, reorganization, arrangement, adjudication as a bankrupt or
other
relief under the bankruptcy, insolvency or similar laws of the United States
of
America or any state or territory thereof or any foreign jurisdiction,
now or
hereafter in effect; or the institution against the Applicant or any Subsidiary
of any other type of insolvency proceeding (under the federal Bankruptcy
Code or
otherwise) or of any formal or informal proceeding for the dissolution
or
liquidation of, settlement of claims against or winding up of affairs of
the
Applicant or any Subsidiary, and the failure to have such appointment vacated
or
such filing, petition or proceeding dismissed within ninety (90) days after
such
appointment, filing or institution.
-17-
(vii) Sale.
The
sale, assignment, transfer or delivery of all or substantially all of the
assets
of the Applicant; or the cessation by the Applicant as a going business
concern.
(viii) Other
Indebtedness.
Nonpayment by the Applicant or the Guarantor when due of any indebtedness
for
borrowed money owing to the Bank or any indebtedness owing to any third
party by
the Applicant or any Subsidiary or the Guarantor in an amount equal to
or
exceeding $1,000,000 when due (or, if permitted by the terms of the applicable
document, within any applicable grace period), whether such indebtedness
shall
become due by scheduled maturity, by required prepayment, by acceleration,
by
demand or otherwise, or the failure to perform any term, covenant or agreement
on its part to be performed under any agreement or instrument (other than
this
Letter of Credit Reimbursement Agreement) evidencing or securing or relating
to
any indebtedness owing by the Applicant or any Subsidiary or the Guarantor
in an
amount equal to or exceeding $1,000,000 when required to be performed if
the
effect of such failure is to permit the holder to accelerate the maturity
of
such indebtedness.
(ix) Bond
and Mortgage Loan Documents.
The
occurrence of an Event of Default under, or as defined in, any of the Bond
Documents, any of the Existing Bond Documents, or under any mortgage loan
documents hereafter entered into between the Applicant and the Bank providing
for a three-year term loan secured, in whole or in part, by liens on the
Project
Facility (as defined within the definition of “Project”).
(x) Collateral,
SWAP and Guaranty Documents.
The
occurrence of an Event of Default as defined in any of the Collateral Documents,
any of the SWAP Documents, or the Parent Guaranty or termination of the
Parent
Guaranty.
(xi) Pension
Default.
(i) the
Applicant or any of its Subsidiaries (or any officer or director thereof)
shall
engage in any “prohibited transaction” (as defined in Section 406 of ERISA
or Section 4975 of the Code) involving any Plan,
(ii) any
“accumulated funding deficiency” (as defined in Section 302 of ERISA),
shall exist with respect to any Plan,
(iii) with
respect to any Multiemployer Plan, the Applicant or any Commonly Controlled
Entity fails to make a contribution required to be made thereto, or withdraws
therefrom, where in either event the liability of Applicant or such Commonly
Controlled Entity is in excess of $100,000.00,
(iv) a
Reportable Event shall occur with respect to, or proceedings shall commence
to
have a trustee appointed, or a trustee shall be appointed, to administer
or to
terminate, any Plan which is not a Multiemployer Plan, which Reportable
Event or
institution of proceedings is, in the reasonable opinion of the Bank, likely
to
result in the termination of such Plan for purposes of Title IV of ERISA
and, in the case of a Reportable Event, the continuance of such Reportable
Event
unremedied for ten (10) days after notice of such Reportable Event pursuant
to Section 4043(a), (c) or (d) of ERISA is given or the continuance of such
proceedings for ten (10) days after commencement thereof, as the case may
be,
-18-
(v) any
Plan
shall terminate for purposes of Title IV or ERISA, or
(vi) any
other
similar event or condition shall exist which, together with all other events
or
conditions in clauses (i) through (v) above, if any, would subject
Applicant or any of its Subsidiaries to any tax, penalty or other liabilities
under ERISA which, in the aggregate, are material in relation to the business,
operations, property or financial or other condition of Applicant and its
Subsidiaries taken as a whole.
(xii) Representations.
If any
certificate, statement, representation, warranty or financial statement
furnished by or on behalf of the Applicant or any Subsidiary pursuant to
or in
connection with this Letter of Credit Reimbursement Agreement or as an
inducement to the Bank to enter into this Letter of Credit Reimbursement
Agreement or any other lending agreement with the Applicant shall prove
to have
been false in any material respect at the time as of which the facts therein
set
forth were represented, or to have omitted any substantial contingent or
unliquidated liability or claim against the Applicant or any Subsidiary
required
to be stated therein, or if on the date of the execution of this Letter
of
Credit Reimbursement Agreement there shall have been any materially adverse
change in any of the facts disclosed by any such statement or certificate,
which
change shall not have been disclosed by the Applicant to the Bank at or
prior to
the time of such execution.
(xiii) Judgments.
If any
judgment or judgments (other than any judgment for which it is fully insured)
against the Applicant or any Subsidiary in an aggregate amount in excess
of
$1,000,000 remains unpaid, unstayed on appeal, undischarged, unbonded or
undismissed for a period of thirty (30) days after entry thereof.
9.2 Remedies.
Upon
the happening of any Event of Default:
(i) The
Bank
may deliver to the Trustee, with a copy to the Applicant, a notice stating
that
an Event of Default has occurred and has not been cured by the Applicant
or
waived by the Bank, which notice will cause the acceleration of the
Bonds.
(ii) The
Bank
may, in its sole discretion, by notice to the Applicant, declare all amounts
in
respect of the Indebtedness not then payable to be forthwith due and payable,
and the same shall be due and payable without demand, presentment, protest
or
further notice of any kind, all of which are hereby expressly waived by
the
Applicant.
(iii) Upon
the
happening of an Event of Default under Section 9.1(v) or 9.1(vi) hereof,
all amounts in respect of the Indebtedness shall immediately become due
and
payable without demand, presentment, protest or further notice of any kind,
all
of which are hereby expressly waived by the Applicant.
-19-
(iv) The
Bank’s rights and remedies with respect to the collateral granted to the Bank
pursuant to the Collateral Documents shall be those of a secured party
under the
Uniform Commercial Code and under any other applicable law, as the same
may from
time to time be in effect, in addition to those rights granted herein and
in any
other agreement now or hereafter in effect between the Applicant and the
Bank or
relating to such collateral.
(v) The
letter of credit fee specified in Section 3.2 of this Letter of Credit
Reimbursement Agreement shall be increased to two percent (2%) of the Stated
Amount effective as of the date of the occurrence of the Event of Default
and
without further notice to the Applicant by the Bank.
SECTION
10. MISCELLANEOUS.
10.1 Entire
Agreement; Amendments.
This
Letter of Credit Reimbursement Agreement constitutes the entire agreement,
and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and no
modification, rescission, waiver, release or amendment of any provision
of this
Letter of Credit Reimbursement Agreement shall be made except by written
agreement subscribed by duly authorized officers of the Applicant and the
Bank.
10.2 Additional
Bonds.
The
Applicant shall not permit the issuance of any additional bonds under the
Indenture without the prior written consent of the Bank.
10.3 Delays
and Omissions.
No
course of dealing and no delay or omission by the Bank in exercising any
right
or remedy hereunder or with respect to any Indebtedness shall operate as
a
waiver thereof or of any other right or remedy. The Bank may remedy any
default
by the Applicant hereunder or with respect to any other person, firm or
corporation in a reasonable manner without waiving the default remedied
and
without waiving any other prior or subsequent default by the Applicant
and shall
be reimbursed for its expenses in so remedying such default. All rights
and
remedies of the Bank hereunder are cumulative and shall be in addition
to any
other remedy given under this Letter of Credit Reimbursement Agreement,
any Bond
Document or Collateral Document, or now or hereafter existing at law or
in
equity or by statute.
10.4 Notices.
Any
notice or demand to be given hereunder shall be duly given if delivered
or
mailed as follows:
| To the Applicant - |
Luminescent
Systems, Inc.
000
Xxxxxxxx Xxx
Xxxx
Xxxxxx, XX 00000
Attn:
Xxxxx X. Xxxxxx
Vice
President-Finance and
Treasurer
|
| with a copy to - |
Xxxxxxx
Xxxx LLP
Xxx
X&X Xxxxx, Xxxxx 0000
Xxxxxxx,
XX 00000
Attn:
Xxxxxxxx X. Xxxxx
|
-20-
| To the Bank - |
HSBC
Bank USA, National Association
Xxx
XXXX Xxxxxx, Xxxxx Xxxxx
Xxxxxxx,
XX 00000
Attn:
Xxxx X. Xxxx
Senior
Vice President
|
| with a copy to - |
Xxxxxxxx
Xxxxx LLP
0000
XXXX Xxxxxx
Xxxxxxx,
XX 00000
Attn:
Xxxxxxx X. Xxxxx
|
and
shall
be deemed effective, if delivered, upon delivery, three (3) Business Days
after
being delivered to a courier for overnight delivery, or, if mailed, five
(5)
Business Days after deposit in an official depository maintained by the
United
States Post Office for the collection of mail.
10.5 Governing
Laws.
This
Letter of Credit Reimbursement Agreement, the transaction described herein
and
the obligations of the Bank and the Applicant shall be governed by, and
construed and interpreted in accordance with, the laws of the State of
New York,
as in effect from time to time, without regard to principles of conflicts
of
law.
10.6 Term.
This
Letter of Credit Reimbursement Agreement shall remain in full force and
effect
until the later of the payment in full of the Bonds, the Indebtedness,
any
accrued and unpaid interest and all costs and expenses incurred by the
Bank in
connection with this Letter of Credit Reimbursement Agreement or the expiration
of the Letter of Credit.
10.7 Joint
and Several.
If more
than one entity executes this Letter of Credit Reimbursement Agreement
as the
Applicant, any and all obligations hereunder shall be joint and
several.
10.8 Counterparts.
This
Letter of Credit Reimbursement Agreement may be executed simultaneously
in two
or more counterparts, each of which shall be deemed an original, and it
shall
not be necessary in making proof of this Letter of Credit Reimbursement
Agreement to produce or account for more than one such counterpart.
SECTION
11. INDEMNIFICATION.
The
Applicant hereby agrees to indemnify the Bank and hold the Bank harmless
from
and against any and all claims, damages, losses, liabilities, costs or
expenses
which may arise or be asserted against the Bank in connection with the
Letter of
Credit, other than claims, damages, losses, liabilities, costs and expenses
arising from the Bank’s gross negligence or willful misconduct or arising out of
a material misrepresentation or omission by the Bank with respect to the
information set forth under the caption “THE LETTER OF CREDIT” in the Official
Statement or in Appendix A
to the
Official Statement. The Applicant has reviewed and approved the Official
Statement prepared by Prager, Sealy & Co. LLC and certifies to the Bank and
Prager, Sealy & Co. LLC that such Official Statement contains no material
errors or omissions with respect to the Company or the Project.
-21-
SECTION
12. LIMITATION
OF LIABILITY.
The
Bank
shall not be liable for:
(i) the
validity, sufficiency or genuineness of any document or instrument presented
to
the Bank in connection with the Letter of Credit, even if such document
or
instrument should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; or
(ii) any
action taken or omitted by the Bank in good faith in connection with making
or
not making payment under the Letter of Credit, except if the Bank pays
a
materially non-conforming draw under the Letter of Credit.
SECTION
13. JURY
TRIAL WAIVER.
THE
APPLICANT AND THE BANK HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY
RIGHT TO TRIAL BY JURY THAT THE APPLICANT OR THE BANK MAY HAVE IN ANY ACTION
OR
PROCEEDING, IN LAW OR IN EQUITY, IN CONNECTION WITH THIS LETTER OF CREDIT
REIMBURSEMENT AGREEMENT OR THE TRANSACTIONS RELATED HERETO. THE APPLICANT
REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF THE BANK HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE BANK WILL NOT, IN THE EVENT
OF
LITIGATION, SEEK TO ENFORCE THIS JURY TRIAL WAIVER. THE APPLICANT ACKNOWLEDGES
THAT THE BANK HAS BEEN INDUCED TO ENTER INTO THIS LETTER OF CREDIT REIMBURSEMENT
AGREEMENT BY, AMONG OTHER THINGS, THE PROVISIONS OF THIS SECTION 13.
SECTION
14. CONSENT
TO JURISDICTION.
THE
APPLICANT AND THE BANK AGREE THAT ANY ACTION OR PROCEEDING TO ENFORCE OR
ARISING
OUT OF THIS AGREEMENT MAY BE COMMENCED IN THE SUPREME COURT OF NEW YORK
IN ERIE
COUNTY, OR IN XXX XXXXXXXX XXXXX XX XXX XXXXXX XXXXXX IN THE WESTERN DISTRICT
OF
NEW YORK, AND THE APPLICANT WAIVES PERSONAL SERVICE OF PROCESS AND AGREES
THAT A
SUMMONS AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING IN ANY SUCH COURT
SHALL
BE PROPERLY SERVED AND SHALL CONFER PERSONAL JURISDICTION IF SERVED BY
REGISTERED OR CERTIFIED MAIL TO THE APPLICANT, OR AS OTHERWISE PROVIDED
BY THE
LAWS OF THE STATE OF NEW YORK OR THE UNITED STATES.
[This
Space Intentionally Left Blank]
-22-
IN
WITNESS WHEREOF,
the
parties hereto have caused this Letter of Credit Reimbursement Agreement
to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
|
LUMINESCENT
SYSTEMS, INC.
|
||
| |
|
|
| By: | ||
|
Name: Xxxxx
X. Xxxxxx
Title: Vice
President-Finance and
Treasurer
|
||
|
HSBC
BANK USA, NATIONAL ASSOCIATION
|
||
| |
|
|
| By: | ||
|
Name: Xxxx
X. Xxxx
Title: Senior
Vice President
|
||
-23-
EXHIBIT
A
HSBC
BANK
USA, NATIONAL ASSOCIATION
000
Xxxxx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
ATTN:
TRADE SERVICES
IRREVOCABLE
DIRECT PAY LETTER OF CREDIT XX. XXXXXX000000
April
, 2007
HSBC
Bank
USA, National Association,
as
Trustee under Trust Indenture
with
the
Erie County Industrial Development Agency
dated
as
of April 1, 2007
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
XX 00000-0000
Attn:
Issuer Services
(hereinafter
“you” or “your”)
Dear
Sirs:
At
the
request and on the instructions of our customer, Luminescent Systems, Inc.
(“Applicant”), as account party, HSBC Bank USA, National Association
(hereinafter “we” or “us”) hereby establishes this irrevocable letter of credit
(“Letter of Credit”) in your favor as the trustee for the benefit of the holders
of $6,000,000 Variable Rate Demand Industrial Development Revenue Bonds
(Luminescent Systems, Inc. Project - Letter of Credit Secured) Series
2007 (“Bonds”), issued by the Erie County Industrial Development Agency
(“Issuer”) pursuant to a Trust Indenture, dated as of April 1, 2007 between
the Issuer and HSBC Bank USA, National Association, as Trustee (“Indenture”).
All capitalized terms used but not defined herein shall have the meanings
set
forth in the Indenture.
We
hereby
irrevocably authorize you to draw on us in accordance with the terms and
conditions hereinafter set forth, by one or more sight drafts in the form
of
Exhibit 1
(“Draft(s)”) in an aggregate amount not exceeding $6,084,000 as reduced and
reinstated from time to time in accordance with the provisions hereof (“Stated
Amount”), of which an aggregate amount not exceeding (i) $6,000,000 may be
drawn with respect to (a) the unpaid principal amount of Bonds Outstanding,
whether at maturity, acceleration or upon redemption (“Principal Drawing”) or
(b) that portion of the purchase price corresponding to principal of Bonds
Outstanding tendered for purchase or subject to mandatory purchase pursuant
to
Section 4.1 or 4.2 of the Indenture (“Bond Purchase Drawing - Principal”)
and (ii) $84,000 may be drawn with respect to (a) the payment of up to
fifty-one (51) days accrued interest on Bonds Outstanding calculated at
the
maximum interest rate of 10% based on a 365 or 366-day year for the actual
number of days elapsed (“Interest Drawing”) or (b) that portion of the
purchase price corresponding to interest on Bonds Outstanding tendered
for
purchase or subject to mandatory purchase pursuant to the
Indenture (individually, a “Bond Purchase Drawing - Interest”,
and collectively, with a Bond Purchase Drawing - Principal, a “Bond
Purchase Drawing”).
Each
drawing honored by us shall reduce the Stated Amount, subject only to
reinstatement with respect to drawings as hereinafter provided.
The
Stated Amount with respect to an Interest Drawing shall be automatically
and
irrevocably reinstated by the amount of a Draft so drawn so long as you
have not
received from us, within seven (7) days from the date of the presentation
to us
of a Draft, written notice to the effect that an Event of Default under
the
Letter of Credit Reimbursement Agreement dated as of April 1, 2007, between
the Applicant and us (“Reimbursement Agreement”), has occurred, and that the
Stated Amount is not being reinstated.
Upon
receipt by us or by the Trustee as our agent of Bonds pledged in connection
with
any Bond Purchase Drawing pursuant to Section 4.1 or 4.2 of the Indenture,
the Stated Amount shall be automatically and irrevocably reinstated by
the
amount of such Bond Purchase Drawing, and we will send you written notice
confirming such receipt and reinstatement.
The
Stated Amount shall be decreased, and not reinstated, from time to time
upon
payment under this Letter of Credit for the redemption of the Bonds as
provided
in Article III of the Indenture by (i) with respect to principal, the
aggregate principal amount of the Bonds so redeemed, and (ii) with respect
to interest, the amount that bears the same proportion to $6,084,000 as
the
amount specified in the immediately preceding clause (i) bears to
$6,000,000.
Each
Draft for each drawing under this Letter of Credit must bear on its face
the
clause “Drawn under HSBC Bank USA, National Association Irrevocable Direct Pay
Letter of Credit Xx. XXXXXX000000,” be dated the Business Day of
presentation and be accompanied by (i) if the drawing being made is a Bond
Purchase Drawing pursuant to the Indenture, your completed and signed
certificate in the form of Exhibit 2,
dated
the date of the accompanying Draft; or (ii) if the drawing being made is a
Principal Drawing or an Interest Drawing, your completed and signed certificate
in the form of Exhibit 3,
dated
the date of the accompanying Draft. Presentation of Draft(s) and such
Certificate(s) shall be made at our office specified above or at any other
office as may be designated by us by written notice delivered to you.
Notwithstanding the provisions of applicable law, if you draw on this Letter
of
Credit at or prior to 1:00 p.m., New York City time, on a Business Day, and
provided that such drawing conforms to the terms and conditions hereof,
we shall
pay you the amount specified, in immediately available funds, not later
than
1:00 p.m., New York City time, on the immediately following Business Day.
If you draw on this Letter of Credit after 1:00 p.m., New York City time,
on a Business Day, and provided that such drawing conforms to the terms
and
conditions hereof, we shall pay you the amount specified, in immediately
available funds, not later than 1:00 p.m. on the second succeeding Business
Day. Provided, however, if a drawing is a Bond Purchase Drawing, and is
made by
11:00 a.m., New York City time, on a Business Day, and conforms to the
terms and conditions hereof, we shall pay you the amount specified, in
immediately available funds, not later than 2:00 p.m. on the same Business
Day.
-2-
Your
Drafts and Certificates may be presented to us by telecopier if sent to
telecopier number (000) 000-0000 (or to such other number as may be
designated by us by written notice to you).
This
Letter of Credit shall automatically terminate at our aforesaid address
on the
close of business on the first to occur of the following dates (“Termination
Date”): (i) the Stated Expiration Date, (ii) the date of the receipt
of a certificate signed by the Trustee and the Applicant that none of the
Bonds
are Outstanding under the Indenture, (iii) the date a Substitute Letter of
Credit is delivered to and accepted by the Trustee or (iv) fifteen (15)
calendar days after the final maturity date of the Bonds. The Stated Expiration
Date shall initially be April 1, 2017 and may be extended by us in our sole
discretion at any time or from time to time, by our giving written notice
of
such extension to you specifying a new Stated Expiration Date.
If
a
drawing by you hereunder does not, in any instance, conform to the terms
and
conditions of this Letter of Credit, we shall attempt to give you prompt
notice
that the purported drawing was not effected in accordance with the terms
and
conditions of this Letter of Credit, stating the reasons therefor and that
we
are holding the documents at your disposal or are returning the same to
you, as
we may elect. Upon being notified that the purported drawing was not effected
in
accordance with this Letter of Credit, you may attempt to correct any such
nonconforming drawing if, and to the extent that, you are entitled (without
regard to the provisions of this sentence) and able to do so.
All
payments by us hereunder will be with our own funds.
This
Letter of Credit sets forth in full the terms of our undertaking, and such
undertaking shall not in any way be modified, amended, amplified or limited
by
reference to any document, instrument or agreement referred to herein or
in
which this Letter of Credit is referred to or to which this Letter of Credit
relates, except for the draft certificates referred to herein (Exhibits 1,
2, 3 and 4)
and,
for the purpose of certain definitions, the Indenture, and any such reference
shall not be deemed to incorporate herein by reference, any document, instrument
or agreement except for such draft certificates and definitions.
This
Letter of Credit is transferable in its entirety (but not in part) to any
transferee who has succeeded you as Trustee under the Indenture. Transfer
of
this Letter of Credit to such transferee shall be evidenced by the presentation
to us of this Letter of Credit accompanied by a certificate substantially
in the
form of Exhibit 4.
Only
you
(or a transferee as permitted by the terms of this Letter of Credit) may
make a
drawing under this Letter of Credit.
This
Letter of Credit is subject to the Uniform Customs and Practice for Documentary
Credits, (1993 Revision) International Chamber of Commerce Publication
No. 500 (“UCP”) and, to the extent not in conflict with the UCP, by the
laws of the State of New York (including, without limitation, the provisions
of
the Uniform Commercial Code) from time to time in effect.
-3-
Communications
and notices with respect to this Letter of Credit shall be in writing and
shall
be addressed to us at our office specified above, specifically referring
to the
Irrevocable Direct Pay Letter of Credit Number of this Letter of Credit,
and
shall be addressed to you at your address specified above.
We
hereby
agree with the drawer that each Draft drawn in compliance with the terms
of this
Letter of Credit will be duly honored on delivery of documents as specified
herein if presented at our office indicated above on or before the Termination
Date.
|
Very
truly yours,
HSBC
BANK USA, NATIONAL ASSOCIATION
|
||
| |
|
|
| By: | ||
|
|
||
|
Title:
|
||
|
and
|
||
| |
|
|
| By: | ||
|
|
||
|
Title:
|
||
-4-
EXHIBIT
1
SIGHT
DRAFT
| TO: |
HSBC
Bank USA, National Association
000
Xxxxx Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx, XX 00000
_____________________,
________
|
For
Value
Received
Pay
on
sight to
__________________________________________________________________________________
U.S. ______________________________________________ Dollars (U.S.
$_____).
Drawn
under HSBC Bank USA, National Association Irrevocable Direct Pay Letter
of
Credit Xx. XXXXXX000000 dated April __, 2007.
|
as
Trustee
|
||
| |
|
|
| By: | ||
|
Authorized
Trust Officer
|
||
EXHIBIT
2
CERTIFICATE
FOR PURCHASE OF BONDS OUTSTANDING TENDERED FOR PURCHASE OR SUBJECT TO MANDATORY
PURCHASE PURSUANT TO THE TRUST INDENTURE DATED AS OF APRIL 1, 2007 OF THE
ERIE
COUNTY INDUSTRIAL DEVELOPMENT AGENCY WITH RESPECT TO ITS VARIABLE RATE
DEMAND
INDUSTRIAL DEVELOPMENT REVENUE BONDS (LUMINESCENT SYSTEMS, INC. PROJECT
- LETTER
OF CREDIT SECURED) SERIES 2007, UNDER IRREVOCABLE DIRECT PAY LETTER OF
CREDIT
XX. XXXXXX000000
Any
capitalized term used, but not defined herein, shall have its respective
meaning
as set forth in the Letter of Credit referred to above.
The
undersigned, a duly authorized trust officer of
________________________________, Trustee under the Trust Indenture (the
“Trustee”, hereby certifies to HSBC Bank USA, National Association, as issuer of
the Letter of Credit referred to above (“Bank”), that:
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(a)
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The
Trustee is the Trustee under the Trust Indenture for the holders
of the
Bonds.
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(b)
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The
Trustee is making a drawing under the Letter of Credit in the
amount of
(i) $______ with respect to payment of the principal portion of,
and
(ii) $______ with respect to payment of the interest portion of, the
purchase price of Bonds tendered for purchase or subject to mandatory
purchase pursuant to the Indenture.
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(c)
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The
amount of the Draft accompanying this Certificate does not exceed
the
Stated Amount in respect of principal or interest as set forth
in this
Certificate.
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(d)
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The
amount of the Draft accompanying this Certificate was computed
in
accordance with the terms and conditions of the Bonds and the
Indenture.
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(e)
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The
Letter of Credit referred to above has not expired pursuant to
its
terms.
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IN
WITNESS WHEREOF, the Trustee has executed and delivered this Certificate,
dated
the___ day of ______________, 20___.
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[Name
and Title]
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* Trustee
shall send a copy of each certificate to the Applicant at the address specified
in the Reimbursement Agreement.
-2-
EXHIBIT
3
CERTIFICATE
FOR PAYMENT OF PRINCIPAL OR INTEREST ON THE ERIE COUNTY INDUSTRIAL DEVELOPMENT
AGENCY VARIABLE RATE DEMAND INDUSTRIAL DEVELOPMENT REVENUE BONDS (LUMINESCENT
SYSTEMS, INC. PROJECT - LETTER OF CREDIT SECURED) SERIES 2007, UNDER IRREVOCABLE
DIRECT PAY LETTER OF CREDIT XX. XXXXXX000000
Any
capitalized term used, but not defined herein, shall have its respective meaning
as set forth in the Letter of Credit referred to above.
The
undersigned, a duly authorized trust officer of ______________________________,
as Trustee under the Trust Indenture (the “Trustee”), hereby certifies to HSBC
Bank USA, National Association, as issuer of the Letter of Credit referred
to
above (“Bank”), that:
(a) The
Trustee is the Trustee under the Trust Indenture for the holders of the
Bonds.
(b) [Complete
the applicable Section(s) below and strike the inapplicable
Sections]
A. Periodic
Interest Drawing.
The
amount of the Interest Drawing is $_______ which equals the amount of interest
on the Bonds which is due and payable with Letter of Credit proceeds on the
payment date specified in the Draft accompanying this Certificate.
B. Default
Interest Drawing.
An
Event of Default as defined in the Indenture has occurred, and the amount of
the
Interest Drawing is $_________, which is the [lesser of (1) the amount of
interest that is unpaid on the Bonds or (2)] the maximum amount permitted
under the Letter of Credit for the payment of interest on Bonds outstanding
on
the date of the Draft.
C. Periodic
Principal Drawing.
The
amount of the Principal Drawing is $________,which equals the amount of
principal of the Bonds which is due and payable on the payment date specified
in
the Draft accompanying this Certificate.
D. Default
Principal Drawing.
An
Event of Default as defined in the Indenture has occurred, and the amount of
Principal Drawing is $___________, which is the amount of the principal of
the
Bonds which is due and unpaid.
(c) The
amount of the Draft accompanying this Certificate does not exceed the Stated
Amount in respect of principal or interest as set forth in this
Certificate.
(d) The
amount of the Draft accompanying this Certificate was computed in accordance
with the terms and conditions of the Bonds and the Indenture.
(e) The
Letter of Credit referred to above has not expired pursuant to its
terms.
IN
WITNESS WHEREOF, the Trustee has executed and delivered this Certificate, dated
the date of the accompanying Draft, to wit the _________ day of
20__.
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[Name
and Title]
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* Trustee
shall send a copy of each certificate to the Applicant at the address specified
in the Reimbursement Agreement.
-2-
EXHIBIT
4
NOTICE
OF
TRANSFER TO SUCCESSOR TRUSTEE
OF
IRREVOCABLE DIRECT PAY LETTER
OF
CREDIT
NO. SDCMTN552148
HSBC
Bank
USA, National Association
000
Xxxxx
Xxxxxx, 00xx
Xxxxx
Xxx
Xxxx,
XX 00000
Attention: Trade
Services Department
Ladies/Gentlemen:
Reference
is made to that certain Irrevocable Direct Pay Letter of Credit
Xx. XXXXXX000000 dated April __, 2007 which has been established by
HSBC Bank USA, National Association, in favor of HSBC Bank USA, National
Association, as Trustee (“Transferor”).
The
undersigned Transferor has transferred (and hereby confirms to you said
transfer) all of its rights and obligations in and under said Letter of Credit
to [Name and Address of Transferee] and confirms that Transferor no longer
has
any rights under or interest in said Letter of Credit.
Transferor
and Transferee have attached the dated, completed and signed instrument of
transfer to the Letter of Credit and a copy of said instrument of transfer
is
attached hereto.
Transferee
hereby certifies that it is a duly authorized transferee under the terms of
said
Letter of Credit and is accordingly entitled, upon presentation of the documents
called for therein, to receive payment thereunder.
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[Name
of Transferor]
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| Dated:________________ | By: | |
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[Name
and Title of authorized
Trust
Officer of
Transferor]
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[Name
of Transferee]
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| Dated:________________ | By: | |
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[Name
and Title of authorized
Trust
Officer of
Transferee]
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EXHIBIT
B
COMPLIANCE
CERTIFICATE
LUMINESCENT
SYSTEMS, INC.
(“Applicant’) hereby certifies to HSBC
BANK USA, NATIONAL ASSOCIATION (“Bank”)
pursuant to the Letter of Credit Reimbursement Agreement between the Applicant
and the Bank dated as of April 1, 2007 (“Agreement”), that:
1. Capitalized
terms not defined herein shall have the meanings set forth in the
Agreement.
2. The
Applicant has complied with all the terms, covenants and conditions to be
performed or observed by it contained in the Agreement.
3. There
exists no Potential Default or Event of Default on the date hereof.
4. The
representations and warranties contained in the Agreement, or in any
certificate, document or financial or other statement furnished at any time
thereunder are true, correct and complete in all material respects with the
same
effect as though such representations and warranties had been made on the date
hereof, except to the extent that any such representation and warranty relates
solely to an earlier date (in which case such representation and warranty shall
be true, correct and complete on and as of such earlier date).
5. There
is
no unsatisfied reimbursement obligation of the Applicant in connection with
the
Letter of Credit.
6. As
of the
date hereof and for the period ending date set forth below, the computations,
ratios and calculations set forth in this Certificate (which are the financial
covenants set forth in the Parent Guaranty) are true and
correct:
Period
Ending Date: _____________
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Minimum
Debt Service Coverage Ratio
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Guarantor’s
Debt Service Coverage Ratio
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=
_____:1.0
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Required:
 2.50
to 1.0 |
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Maximum
Debt-to-Worth Ratio
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Consolidated
Debt-to-Worth Ratio of the
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=
_____:1.0
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Guarantor
and its Subsidiaries
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Required:
2.75
to 1.0 |
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Minimum
Interest Coverage Ratio
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Ratio
of Guarantor’s EBITDA to
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Consolidated
interest expense
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=
_____:1.0
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Required:
4.00
to 1.0 |
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Minimum
Current Ratio
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Ratio
of the Guarantor’s Consolidated Current
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=
_____:1.0
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Assets
to Consolidated Current Liabilities
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Required:
1.25
to 1.0 |
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Maximum
Capital Expenditures
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Capital
expenditures in the in the aggregate for the
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$__________
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Guarantor
and its Subsidiaries
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Required:
In
Guarantor’s fiscal year 2007: $10,000,000; and in fiscal years 2008 and
thereafter: $5,000,000 in any one year |
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Maximum
Leverage Ratio
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Guarantor’s
Leverage Ratio
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=
_____:1.0
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Required:
2.50
to 1.0 |
WITNESS
the
signature of a duly authorized officer of the Applicant on __________,
20__.
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LUMINESCENT
SYSTEMS, INC.
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Title:
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SCHEDULE 1
to
Letter
of Credit Reimbursement Agreement
between
HSBC
BANK USA, NATIONAL ASSOCIATION
and
LUMINESCENT
SYTEMS, INC.
Definitions
The
following terms shall, for all purposes of this Letter of Credit Reimbursement
Agreement, have the following meanings unless the context otherwise requires
another meaning:
“Agency”
-
Erie
County Industrial Development Agency, a corporate governmental agency
constituting a body corporate and politic and a public benefit corporation
of
the State.
“Agency
Mortgage”
-
collectively, the Building Loan Mortgage and the Project Loan
Mortgage.
“Anti-Terrorism
Laws”
-
any
laws relating to terrorism or money laundering, including Executive Order
No. 13224, the USA Patriot Act, the laws comprising or implementing the
Bank Secrecy Act, and the laws administered by the United States Treasury
Department’s Office of Foreign Asset Control (as any of the forgoing laws may
from time to time be amended, renewed, extended or replaced).
“Assignment
of Agreements”
-
the
Assignment of Agreements made as of April 1, 2007 from the Applicant to the
Bank, together with any modifications or amendments thereto.
“Bank”
-
HSBC
Bank USA, National Association, and its successors and/or assigns.
“Bank’s
Prime Rate”
-
the
rate of interest publicly announced by the Bank from time to time as its prime
rate and as a base rate for calculating interest on certain loans. The Bank’s
Prime Rate may or may not be the most favorable rate charged by the Bank to
its
customers from time to time.
“Bond
Documents”
-
collectively, the Indenture, the Tax Regulatory Agreement, the Guaranty
Agreement, the Sale Agreement, the Building Loan Agreement, the Pledge
Agreement, the Pledge and Assignment, the Agency Mortgage, the Letter of
Representation and Indemnity Agreement, the Tax Compliance Agreement, the
Official Statement, and the Bond Purchase Agreement and the Remarketing
Agreement.
“Bond
Purchase Agreement”
-
the
Bond Purchase Agreement dated as of April 23, 2007 among the Agency, the
Applicant and the Underwriter.
“Bonds”
-
Variable Rate Demand Industrial Development Revenue Bonds (Luminescent
Systems, Inc. Project - Letter of Credit Secured) Series 2007, issued
by the Agency in the aggregate principal amount of $6,000,000.00.
“Building
Loan Agreement”
-
the
Building Loan Agreement among the Agency, the Trustee, the Bank and the
Applicant, dated as of April 1, 2007, together with any modifications or
amendments thereto.
“Building
Loan Mortgage”
-
the
Building Loan Mortgage, Assignment of Rents and Security Agreement, dated as
of
April 1, 2007, made by the Applicant and the Agency in favor of the Bank,
together with any modifications or amendments thereto.
“Code”
-
the
Internal Revenue Code of 1986, as amended.
“Collateral
Documents”
-
the
Pledge Agreement, the Agency Mortgage, the Assignment of Agreements, the
Environmental Compliance and Indemnification Agreement and the Security
Agreement.
“Commonly
Controlled Equity”
-
an
entity, whether or not incorporated, which is under common control with the
Applicant within the meaning of Section 414(b) or (c) of the
Code.
“Consolidated” -
the
consolidation of the accounts of the Guarantor and its Subsidiaries in
accordance with GAAP, including principles of consolidation, consistent with
those applied in the preparation of the Consolidated audited financial
statements heretofore provided to the Bank.
“Disposal”
-
the
intentional or unintentional abandonment, discharge, deposit, injection,
dumping, spilling, leaking, storing, or placing of any Hazardous Substance
so
that such Hazardous Substance or any related constituent thereof may enter
the
Environment. The term “Disposal” also means the thermal destruction of the
Hazardous Substance and the burning of such fuel for the purpose of recovering
useable energy.
“EBITDA”
-
For the
relevant period, the Guarantor’s Consolidated earnings before interest, taxes,
depreciation and amortization expenses.
“Environmental
Questionnaire”
-
one
or more questionnaires and all attachments thereto prepared by the Applicant
and
heretofore delivered to the Bank concerning (i) activities and conditions
affecting the environment at the Property or (ii) the enforcement or
possible enforcement of any of the Environmental Laws against the
Applicant.
-2-
“Environmental
Compliance and Indemnification Agreement”
-
the
Environmental Compliance and Indemnification Agreement from the Applicant to
the
Bank and the Trustee dated as of April 1, 2007, together with any
modifications or amendments thereto.
“Environmental
Laws”
-
All
federal, state and local environmental, land use, zoning, health, chemical
use,
safety and sanitation laws, statutes, ordinances, regulations, codes and rules
relating to the protection of the Environment and/or governing the use, storage,
treatment, generation, transportation, processing, handling, production or
disposal of Hazardous Substances and the policies, guidelines, procedures,
interpretations, decisions, orders and directives of federal, state and local
governmental agencies and authorities with respect thereto to the extent that
such rules, regulations, policies, guidelines, interpretations, decisions,
orders and directives are published or otherwise available to the public or
are
otherwise known by or available to the Applicant or any of its
Subsidiaries.
“Environmental
Permits”
-
All
licenses, permits, approvals, authorizations, consents or registrations required
by any applicable Environmental Laws and all applicable judicial and
administrative orders in connection with ownership, lease, purchase, transfer,
closure, use and/or operation of any property for the storage, treatment,
generation, transportation, processing, handling, production or disposal of
Hazardous Substances or the sale, transfer or conveyance of any such
property.
“ERISA”
-
Employee Retirement Income Security Act of 1974, as amended.
“Event
of Default”
-
an
event or condition as specified in Section 9.1 of this Letter of Credit
Reimbursement Agreement.
“Executive
Order No. 00000”
-
xxx
Xxxxxxxxx Xxxxx Xx. 00000 xn Terrorist Financing, effective
September 24, 2001, as the same has been, or shall hereafter be, amended,
renewed, extended or replaced.
“Existing
Bonds”
-
the
following currently outstanding bond issues:
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(i)
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The
$7,000,000 Adjustable Rate Demand Industrial Development Revenue
Bonds
(1999 Luminescent Systems, Inc. Project) issued by the Erie County
Industrial Development Agency; and
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(ii)
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The
$7,250,000 Industrial Facility Revenue Bonds (Luminescent Systems,
Inc.
Issue - Series 1998) issued by the Business Finance Authority of
the State
of New Hampshire.
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“Existing
Bond Documents”
-
the
bond, collateral, letter of credit reimbursement agreement and other documents
executed and delivered in connection with the issuance of the Existing
Bonds.
“Facility”
-
the
Premises together with the improvements made thereto and the furniture, fixtures
and equipment installed thereon in connection with the Project.
-3-
“GAAP”
-
as of
the date of any determination, generally accepted accounting principles as
promulgated by the Financial Accounting Standard’s Board and/or the American
Institute of Certified Public Accountants, consistently applied and maintained
throughout the relevant periods and from period to period.
“Guarantor”
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Astronics Corporation.
“Guaranty
Agreement”
-
the
Guaranty Agreement from the Applicant to the Trustee dated as of April 1,
2007, together with any modifications or amendments thereto.
“Hazardous
Substance”
-
without limitation, any explosives, radon, radioactive materials, asbestos,
urea
formaldehyde foam insulation, polychlorinated biphenyls, petroleum and petroleum
products, methane, hazardous materials, hazardous wastes, hazardous or toxic
substances or related materials as defined in the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section
9601, et
seq.),
the
Hazardous Materials Transportation Act, as amended (49 U.S.C. Section 1801,
et
seq.),
the
Resource Conservation and Recovery Act, as amended (42 U.S.C. Sections 6901,
et
seq.),
Articles 15 and 27 of the New York State Environmental Conservation Act or
any other applicable Environmental Law, and in the regulations promulgated
pursuant thereto.
“Indenture”
-
the
Trust Indenture dated as of April 1, 2007 between the Agency and the
Trustee entered into in connection with the issuance, delivery and payment
of
the Bonds and the security for the Bonds, together with any modifications or
amendments thereto.
“Letter
of Representation and Indemnity Agreement”
-
the
Letter of Representation and Indemnity Agreement dated the date of delivery
of
the Bonds by the Applicant to the Agency, the Underwriter, the Trustee and
the
Bank.
“Material
Adverse Effect”
-
A
material adverse effect on the business, operations or financial condition
of
the Applicant and its Subsidiaries taken as a whole.
“Multiemployer
Plan”
-
A
Plan which is a multiemployer plan as defined in Section 4001(a)(3) of
ERISA.
“Official
Statement”
-
the
Official Statement dated April 23, 2007 delivered in connection with the
issuance and delivery of the Bonds.
“Parent
Guaranty”
-
The
guaranty agreement from Astronics Corporation to the Bank dated as of
April 1, 2007, together with any modifications or amendments
thereto.
“Person”
-
Any
individual, corporation, partnership, limited liability company, joint venture,
trust, unincorporated association, government or political subdivision or other
entity, body, organization or group.
-4-
“Plan”
-
any
employee benefits plan which is covered by Title IV of ERISA and in respect
of which the Applicant or a Common Controlled Entity is an “employer” as defined
in Section 3(5) of ERISA, each of which Plans is listed on Schedule 2
to this
Letter of Credit Reimbursement Agreement.
“Pledge
Agreement”
-
the
Pledge and Security Agreement given by the Applicant to the Bank dated as of
April 1, 2007, together with any modifications or amendments
thereto.
“Pledge
and Assignment”
-
the
Pledge and Assignment given by the Agency to the Trustee and the Bank dated
as
of April 1, 2007, together with any modifications or amendments
thereto.
“Potential
Default”
-
Any
event or occurrence which with the giving of notice, or passage of time, or
both, constitutes an Event of Default.
“Premises”
-
the
real property owned by the Agency, and in which Applicant has an interest,
located at 130 Xxxxxxxx Xxx, Xxxx Xxxxxx, Xxxx Xxxxxx, Xxx Xxxx, as more
particularly described in Exhibit ”A”
to the
Agency Mortgage.
“Project”
-
(a)
(i) the acquisition of an interest in a portion of an approximately
14.9 acre parcel of improved real property (the “Land”) located at
130 Xxxxxxxx Xxx, in the Village of East Aurora, Erie County, (ii) the
construction of an approximately 57,600 square foot addition to the existing
industrial facility located on the Land and expansion of parking areas for
use
for the design and manufacturing of aerospace lighting and electronics and
related purposes (the “Facility”), and (iii) the acquisition of and
installation in the Facility of various machinery, equipment and furnishings
(the “Equipment”) (the Land, Facility and Equipment are hereinafter collectively
referred to as the “Project Facility”); (b) the financing of all or a
portion of the costs of the foregoing by the issuance of the Agency’s tax-exempt
and taxable industrial development revenue the bonds; (c) the granting of
certain other financial assistance in the form of exemptions from real property
tax, mortgage recording tax and sales and use tax (collectively with the bonds,
the “Financial Assistance”); and (d) the sale of the Project Facility to
the Applicant pursuant to an agreement, all for use by the Applicant in the
manufacture of aircraft lighting and keyboards.
“Project
Loan Mortgage”
-
the
Project Loan Mortgage, Assignment of Rents and Security Agreement, dated as
of
April 1, 2007, made by the Applicant and the Agency in favor of the Bank,
together with any modifications or amendments thereto.
“Release”
-
Release as defined in Section 101(22) of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C.
Section 9601(22), and the regulations promulgated thereunder.
“Remarketing
Agreement”
-
the
Remarketing Agreement dated as of April 1, 2007 between the Applicant and
the Underwriter.
-5-
“Reportable
Event”
-
any
event described in Section 4043 of ERISA or in regulations issued
thereunder.
“Sale
Agreement”
-
the
Installment Sale Agreement dated as of April 1, 2007 between the Agency and
the Applicant pursuant to which the Agency has agreed to sell substantially
all
of its right, title and interest in the Facility to the Applicant, together
with
any modifications or amendments thereto.
“Securities”
-
as
defined in the Uniform Commercial Code of the State, as in effect from time
to
time.
“Security
Agreement”
-
the
Security Agreement, dated as of April 1, 2007, made by the Applicant in
favor of the Bank, together with any modifications or amendments
thereto.
“State”
-
State
of New York.
“Stated
Amount” -
as such
term is defined in the Letter of Credit, a form of which is attached hereto
as
Exhibit A.
“Subsidiary”
-
Any
corporation of which at least 50% of the voting stock is owned by a Person
directly or indirectly through one or more Subsidiaries, and any limited
liability company of which at least 50% of the membership interests are owned
by
a Person directly or indirectly through one or more Subsidiaries.
“SWAP
Documents”
-
any
SWAP Agreement now or hereafter entered into between the Bank and the Applicant,
together with the schedules, exhibits, confirmations and other documents
executed or delivered in connection therewith.
“Tax
Compliance Agreement”
-
the
Tax Compliance Agreement among the Agency, the Applicant and the Trustee dated
as of the date of issuance of the Bonds, together with any modifications or
amendments thereto.
“Trustee”
-
HSBC
Bank USA, National Association, in its capacity as trustee.
“Underwriter”
-
Prager, Sealy & Co., LLC, in its capacity as remarketing agent.
“USA
Patriot Act”
-
The
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the
same has been, or shall hereafter be, renewed, extended, amended or
replaced.
-6-
SCHEDULE
2
PENSION
PLANS
Atro
Companies Profit Sharing/401K Plan
SCHEDULE
3
LIABILITIES
Unsecured
loan owed by Astronics Corporation to Empire State Development Corporation
in
the outstanding principal amount of $65,965.73.
SCHEDULE
4
PERMITTED
ENCUMBRANCES
“Permitted
Encumbrances”
means
(A) exceptions to title set forth in the title insurance policy delivered to
the
Bank on the date of issuance and delivery of the Bonds including the liens
securing the Existing Bonds; (B) the Agency Mortgage; (C) the Sale
Agreement; (D) the Pledge and Assignment; (E) utility, access and
other easements and rights-of-way, restrictions and exceptions that do not
materially impair the utility or the value of the property affected thereby
for
the purposes for which it is intended; (F) mechanics’, materialmen’s,
warehousemen’s carriers’ and other similar liens to the extent permitted by
Section 6.8 of the Sale Agreement; (G) liens and encumbrances that are
approved in writing by the Bank; and (H) liens for taxes not yet
delinquent.
