LOAN AGREEMENT
between
WILL-KANKAKEE REGIONAL DEVELOPMENT AUTHORITY
and
FLANDERS CORPORATION
Dated as of December 15, 1997
The right, title and interest of the Will-Kankakee Regional Development
Authority in and to this Loan Agreement has been assigned to Norwest Bank
Arizona, N.A., in Phoenix, Arizona, as trustee, pursuant to the Indenture of
Trust, dated as of December 15, 1997, from the Authority to such Trustee.
This document prepared by:
XXXXX & XXXXXX L.L.P.
Xxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000-0000
TABLE OF CONTENTS
Page
RECITALS...................................................................1
ARTICLE 1 DEFINITIONS AND CONSTRUCTION..................................1
Section 1.01 Definition of Terms....................................1
Section 1.02 Rules of Construction..................................2
Section 1.03 Exhibits...............................................3
ARTICLE 2 GENERAL REPRESENTATIONS.......................................3
Section 2.01 Representations of the Issuer..........................3
Section 2.02 Representations of the Company.........................3
ARTICLE 3 COMPLETION OF PROJECT.........................................7
Section 3.01 Acquisition, Rehabilitation and Equipping of
the Project............................................7
Section 3.02 Modifications to the Plans.............................8
Section 3.03 Payment of Cost by the Company.........................9
Section 3.04 Issuance of Series 1997 Bonds and Application
of Proceeds...........................................11
Section 3.05 Items, Documents and Instruments to be
Delivered Prior to Issuance of the Bonds..............11
Section 3.06 Payment or Reimbursement of Cost......................12
Section 3.07 Establishment of Completion Date......................14
Section 3.08 Enforcement of Contracts and Surety Bonds.............15
ARTICLE 4 THE LOAN.....................................................16
Section 4.01 Amount and Source of Loan.............................16
Section 4.02 Repayment of Loan....................................16
Section 4.03 Quarterly Payments....................................16
Section 4.04 Additional Payments...................................16
Section 4.05 Company's Obligations Unconditional...................17
Section 4.06 Company's Remedies....................................17
Section 4.07 Amounts Remaining in Bond Fund........................18
Section 4.08 Notice to the Issuer of Certain Events................18
Section 4.09 Designation by the Company of Application of
Loan Repayments.......................................18
ARTICLE 5 USE, MAINTENANCE, MODIFICATIONS,TAXES AND INSURANCE..........18
Section 5.01 Possession, Use and Prohibition Against
Further Encumbrances..................................18
Section 5.02 Maintenance...........................................19
Section 5.03 Improvements..........................................19
Section 5.04 Liens.................................................19
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Section 5.05 Removal of Project Equipment..........................19
Section 5.06 Taxes and Other Governmental Charges and
Utility Charges.......................................21
Section 5.07 Insurance.............................................21
Section 5.08 Advances..............................................23
Section 5.09 Installation of the Company's Equipment...............23
ARTICLE 6 DAMAGE, DESTRUCTION AND CONDEMNATION.........................24
Section 6.01 Company to Repair, Replace, Rebuild or Restore........24
Section 6.02 Cooperation of the Issuer and Trustee.................26
ARTICLE 7 COMPANY'S COVENANTS;TAX EXEMPT STATUS OF SERIES 1977 BONDS...26
Section 7.01 Covenants for Benefit of Trustee and
Bondholders...........................................26
Section 7.02 Inspection and Access.................................27
Section 7.03 Reports...............................................27
Section 7.04 Indemnity.............................................27
Section 7.05 Continuing Existence and Qualification................28
Section 7.06 Maintenance of Security Interests.....................29
Section 7.07 Mortgage..............................................29
Section 7.08 Indenture.............................................30
Section 7.09 Assignment of Issuer's Rights.........................30
Section 7.10 Operation of Project as a Manufacturing
Facility..............................................30
Section 7.11 Financial Covenants...................................30
Section 7.12 Assurance of Tax Exemption............................32
Section 7.13 Arbitrage Covenant and Compliance.....................34
Section 7.14 Covenant of the Issuer Relating to Tax
Exemption.............................................34
Section 7.15 Compliance with Laws; Environmental Laws..............34
Section 7.16 Annual Certificate....................................35
Section 7.17 Reports on Employment at Project......................35
Section 7.18 No Warranty by Issuer.................................35
Section 7.19 Environmental Immunity and Indemnity..................35
ARTICLE 8 COMPANY'S OPTIONS............................................36
Section 8.01 Sale or Lease or Other Disposition of the
Project...............................................36
Section 8.02 Easements and Release of Real Property for
Access and Utilities..................................37
Section 8.03 Prepayment of Loan Repayments.........................38
Section 8.04 Abatement of Loan Repayments..........................38
Section 8.05 Termination Upon Retirement of Bonds..................39
Section 8.06 Company's Option to Direct Redemption of Bonds........39
ARTICLE 9 EVENTS OF DEFAULT AND REMEDIES...............................40
Section 9.01 Events of Default.....................................40
Section 9.02 Remedies..............................................42
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Section 9.03 Disposition of Funds..................................42
Section 9.04 Manner of Exercise....................................42
Section 9.05 Attorneys' Fees and Expenses..........................43
Section 9.06 Effect of Waiver......................................43
ARTICLE 10 GENERAL.....................................................43
Section 10.01 Notices...............................................43
Section 10.02 Governing Law and Binding Effect......................44
Section 10.03 Severability..........................................44
Section 10.04 Amendments, Changes, Modifications and
Assignments...........................................44
Section 10.05 Execution Counterparts................................44
Section 10.06 Limitation of Issuer's Liability......................44
Section 10.07 Rights Created in Third Parties.......................45
Section 10.08 Payments Due on Saturdays, Sundays and
Holidays..............................................45
Section 10.09 Survival..............................................45
EXHIBIT A - Description and Estimated Cost of the Project
EXHIBIT B - Project Equipment
EXHIBIT C - Form of Acquisition and Construction Fund
Disbursement Request
EXHIBIT D - Form of Issuance Cost Fund Disbursement Request
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of December 15, 1997, between the WILL-KANKAKEE
REGIONAL DEVELOPMENT AUTHORITY, a political subdivision, body politic and
municipal corporation (the "Issuer") duly organized and validly existing
pursuant to 70 Illinois Compiled Statutes, 1996, Section 535/1 et seq., as
supplemented and amended (the "Act"), and FLANDERS CORPORATION, a North Carolina
corporation (the "Company"),which is authorized and qualified to transact
business in the State of Illinois,
W I T N E S S E T H
WHEREAS, the Issuer is authorized by the Act to promote development within the
geographic confines of Will and Kankakee Counties in the State of Illinois and
is directed to use the powers conferred upon it by the Act to assist in the
development, construction and acquisition of "projects" within those counties,
including the issuance of its revenue bonds and the loan of the proceeds thereof
to achieve such purposes; and
WHEREAS, the Company has requested the Issuer to issue its revenue bonds and
loan the proceeds thereof to the Company for the purpose of financing a portion
of the acquisition, construction, rehabilitation and equipping of a project, to
wit, a facility for the manufacture of air filtration products (the "Project"),
located in the City of Momence, Kankakee County, Illinois; and
WHEREAS, the Issuer has determined to assist in the financing of the Project by
issuing its Economic Development Revenue Bonds (Flanders
Corporation/Precisionaire Project), Series 1997 ( the "Series 1997 Bonds"), and
making a loan to the Company of the proceeds of the Series 1997 Bonds in such
aggregate principal amount (the "Loan"), upon the terms and conditions set forth
herein; and
WHEREAS, the Company will secure its obligation to repay the Loan by the
execution and delivery to the Issuer of a Mortgage, Assignment of Rents and
Leases, Security Agreement and Financing Statement, dated as of December 15,
1997 (the "Mortgage") relating to the Project Site, the Project Building and the
Project Equipment (as those terms are hereinafter defined),
NOW THEREFORE, in consideration of the premises and the respective
representations and covenants herein contained, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS AND CONSTRUCTION
Section 1.01 Definition of Terms. Unless the context otherwise requires, the
capitalized terms used in this Loan Agreement shall have the meanings specified
in Section 1.01 of the Indenture of Trust, dated as of December 15, 1997 (the
"Indenture"), between the Issuer and Norwest Bank
Arizona, N.A., as trustee (the "Trustee"), providing for the issuance of and
security for the Bonds, as such Indenture is originally executed or as it may
from time to time be supplemented or amended as provided therein.
In addition, the following terms shall have the following meanings for the
purposes of this Loan Agreement:
Clean-Up: the removal, remediation, or monitoring of and all other response to,
any Contamination to the satisfaction of all applicable governmental agencies,
in compliance with all applicable Environmental Laws and otherwise in compliance
with good commercial practice.
Contamination: the presence of any Hazardous Materials or the Release of any
Hazardous Materials.
Environmental Law: any and all Federal, State and local laws, regulations,
administrative or administrative guidelines relating to Hazardous Materials.
Hazardous Materials: without limitation, tretrachloroethylene, asbestos,
gasoline, petroleum products, explosives, radioactive materials, polychlorinated
biphenyls, chemical liquids, or related or similar materials, or any other
substance or material defined as a hazardous or toxic substance, material or
waste by any applicable Federal, State or local law, ordinance, rule,
regulation, administrative order or administrative guideline.
Release: the intentional or unintentional presence, seepage, spilling, leaking,
disposing, discharging, emitting, depositing, injecting, leaching, escaping or
any other release or threatened release, however defined, of any Hazardous
Materials.
Section 1.02 Rules of Construction.
(a) The singular form of any word used herein, including the terms defined in
Section 1.01 of the Indenture, shall include the plural, and vice versa. The use
herein of a word of any gender shall include correlative words of all genders.
(b) Unless otherwise specified, references to Articles, Sections and other
subdivisions of this Loan Agreement are to the designated Articles, Sections and
other subdivisions of this Loan Agreement as originally executed. The words
"hereof," "herein," "hereunder" and words of similar import refer to this Loan
Agreement as a whole.
(c) The headings or titles of the several articles and sections, and the table
of contents appended to copies hereof, shall be solely for convenience of
reference and shall not affect the meaning, construction or effect of the
provisions hereof.
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Section 1.03 Exhibits.
(a) Exhibit A: Description and Estimated Cost of the Project.
(b) Exhibit B: Project Equipment.
(c) Exhibit C: Form of Acquisition and Construction Fund Disbursement Request.
(d) Exhibit D: Form of Issuance Cost Fund Disbursement Request.
ARTICLE 2
GENERAL REPRESENTATIONS
Section 2.01 Representations of the Issuer. The Issuer makes the following
representations as the basis for its undertakings herein contained:
(a) The Issuer is duly created pursuant to the Act as a political subdivision,
body politic and municipal corporation of the State.
(b) To finance the Cost of the Project, as presently estimated by the Company,
in anticipation of the collection of the Revenues to be received hereunder, the
Issuer has duly authorized the Bonds in the aggregate principal amount of
$6,000,000 to be issued upon the terms set forth in the Indenture, under the
provisions of which certain of the Issuer's rights and interests in, to and
under this Loan Agreement and the Revenues hereunder, together with the
Mortgage, are pledged and assigned to the Trustee as security for the payment of
the principal of, premium, if any, and interest on the Bonds.
(c) The Issuer has not pledged and will not pledge or grant (except as provided
in the Indenture) any security interest in, or assign any of its rights under,
this Loan Agreement or the Loan Repayments, or the Revenues or income to be
derived by the Issuer hereunder or the Mortgage for any purpose other than to
secure the Bonds.
(d) The Issuer makes no representation or warranty that the amount of the Loan
as provided in this Loan Agreement will be adequate or sufficient to finance the
Cost of the Project, or that the Project will be adequate or sufficient for the
purposes of the Company.
Section 2.02 Representations of the Company. The Company makes the following
representations as the basis for its undertakings herein contained:
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(a) The Company has been incorporated and is validly existing as a corporation
under the laws of the State of North Carolina, is in good standing in the State
of North Carolina, is duly qualified to transact business in and is in good
standing in the State, has the corporate power and authority to own its
properties and assets and to carry on its business as now conducted and as
contemplated to be conducted as described in this Loan Agreement, the Indenture,
the Mortgage and the Limited Offering Memorandum, and has the corporate power to
enter into and has duly authorized, by all requisite corporate action, the
execution and delivery of this Loan Agreement and all other documents
contemplated hereby to be executed by the Company, including, without
limitation, the Mortgage and the Limited Offering Memorandum.
(b) Neither the execution and delivery of this Loan Agreement or the Mortgage,
or any other document in connection with the financing of the Project, the
consummation of the transactions contemplated hereby and thereby, nor the
fulfillment of or compliance with the terms and conditions hereof and thereof,
results or will result in a material breach of or conflict with any of the
terms, conditions or provisions of the Company's Articles of Incorporation,
Bylaws, or any statute or order of any court or regulatory agency or of any
material agreement or instrument to which the Company is now a party or by which
it is bound, or constitutes a material default (with due notice or the passage
of time or both) under any of the foregoing, or results in the creation or
imposition of any prohibited lien, charge or encumbrance whatsoever upon any of
the property or assets of the Company under the terms of any instrument or
agreement to which the Company is now a party or by which it is bound.
(c) The Project will be located wholly within corporate boundaries of the City
of Momence (the "City"), and wholly within Kankakee County, Illinois.
(d) The Company has and will have title to the Project sufficient to carry out
the purposes of this Loan Agreement, and such title shall be in and remain in
the Company, except as permitted by Section 8.01 hereof.
(e) The estimated Cost of the Project is as set forth in Exhibit A hereto and
has been determined in accordance with sound architectural and engineering
principles.
(f) The Project consists of a manufacturing facility (i.e., a facility used in
the manufacturing or production of tangible personal property (including
processing resulting in a change in the condition of such property)), as
described in Exhibit A hereto and defined in Section 144(a)(12)(C) of the Code;
the Company will make no changes to the Project or to the operation thereof
which would affect the qualification of the Project under the Act or adversely
affect the exclusion of the interest on the Series 1997 Bonds from the gross
income of the Bondholders for Federal income tax purposes. The Company currently
intends and expects to utilize the Project as a facility for the manufacture of
air filtration products during the entire term of the Bonds.
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(g) All of the proceeds of the Bonds (after payment of certain costs of issuance
thereof) plus income from the investment thereof (subject to the provisions of
Section 7.13 hereof) will be used to pay Costs of the Project.
(h) The average reasonably expected economic life of the Project is at least
years and the weighted average maturity of the Series 1997 Bonds is not more
than 120% of such economic life.
(i) Except as disclosed in the Limited Offering Memorandum relating to the
Series 1997 Bonds, the Project and the Company, there is no action, suit or
proceeding at law or in equity or by or before any governmental instrumentality
or other agency now pending, or, to the best knowledge of the Company,
threatened against or affecting the Company or any of its properties or rights,
which, if determined adversely to the Company, would materially and adversely
impair its ability to carry on its business substantially as now conducted or as
now contemplated to be conducted, or would materially and adversely affect its
financial condition, assets, properties or operations, and the Company is not in
default with respect to any order or decree of any court or any order,
regulation or decree of any federal, state, municipal or other governmental
agency, which default would materially and adversely affect its operation or its
properties or the completion of the acquisition, rehabilitation and equipping of
the Project. The Company is not in material default in the performance,
observance or fulfillment of any obligations, covenants or conditions contained
in any material agreement or instrument to which it is a party.
(j) The operation and design of the Project in the manner presently contemplated
and as described herein will not violate or conflict with any applicable zoning,
soil, water or air pollution or other ordinance, order, law or regulation
relating to zoning, building, safety or environmental quality, which violation
or conflict would materially and adversely affect its completion of the
acquisition, rehabilitation and equipping, or the operation, of the Project. .
(k) The Company has filed or caused to be filed all Federal, state and local tax
returns which are required to be filed, and has paid or caused to be paid all
taxes as shown on said returns or on any assessment received by it, to the
extent that such taxes have become due.
(l) The information contained in the Limited Offering Memorandum with respect to
the Bonds, the Company and the Project is accurate in all material respects and
does not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
(m) To the best of the Company's knowledge, no member, officer or other
official, or relative thereof, of the Issuer has any interest, direct or
indirect, in the Project, the
5
Company, this Loan Agreement, the Mortgage or the Indenture, or in the
transactions contemplated hereby or thereby.
(n) The Company has obtained all necessary certificates, approvals, permits and
authorizations with respect to the rehabilitation of the Project from applicable
local, state, and federal governmental agencies.
(o) Neither the Company nor any "related person" (as defined in Section
144(a)(3) or Section 147(a)(2) of the Code) is, or will be, a party to any
arrangement, formal or informal, pursuant to which it has or will purchase any
of the Bonds.
(p) The participation by the Issuer in the financing of the acquisition,
rehabilitation and equipping of the Project has materially induced the Company
to pursue the acquisition, rehabilitation and equipping of the Project within
the corporate boundaries of the City.
(q) The Project consists, and will at all times consist, of land and property
which are subject to the allowance for depreciation provided in Section 167 of
the Code.
(r) The estimated cost of the acquisition, rehabilitation and equipping of the
Project includes only, and all expenditures for and costs of the Project paid or
reimbursed out of the Acquisition and Construction Fund will be, amounts (i)
which are chargeable to the Company's capital account for Federal income tax
purposes or would be so chargeable either with a proper election by the Company
or but for a proper election by the Company to deduct such amounts, and (ii)
which were incurred subsequent to the Official Action Date, except for legal
fees incurred in connection with the application for approval by the Issuer with
respect to the financing of the Project.
(s) At least 95% of the net proceeds of the Series 1997 Bonds will be used for
the acquisition, rehabilitation and equipping of the Project.
(t) No portion of the proceeds of the Bonds will be used, directly or
indirectly, to provide working capital for the Company or any related person.
(u) Preliminary approval for the issuance of the Bonds was granted by the Issuer
on February 25, 1997, and the Company acquired the Project Site and Project
Building on July 25, 1997. The Bonds are being issued not later than one year
after the date on which the Project was placed in service by the Company.
(v) Neither the Company nor any other person, whether or not related to the
Company, has paid or incurred any "Section 144(a)(4) capital expenditures", as
described in Section 144(a)(4)(A)(ii) of the Code, with respect to the Project
and there are no other facilities located within the City having as principal
users (within the meaning of Section
6
144(a)(2) of the Code) the Company or a related person (within the meaning of
Section 144(a)(3) of the Code). No other person besides the Company or one of
its wholly-owned subsidiaries is or is expected to be a principal user of the
Project.
(w) The Company's Federal employer identification number is 000000000 and the
Company currently files its Federal income tax returns with the Internal Revenue
Service Center in Memphis, Tennessee.
(x) To the extent the first use of any items of property to be acquired as part
of the Project, including the Project Building and any of the Project Equipment,
will not occur pursuant to such acquisition, the Company will incur
rehabilitation expenditures with respect to such property in the amounts of 15%
or 100%, as applicable, in accordance with the provisions of Section 147(d) of
the Code.
(y) The sum of the outstanding principal amount of the Series 1997 Bonds, plus
any "outstanding tax-exempt facility-related bonds" of the Company within the
meaning of Section 144(a)(10) of the Code, does not exceed $40,000,000.
(z) Less than 25% of the proceeds of the Series 1997 Bonds will be used to
acquire land, and no portion of the proceeds of the Series 1997 Bonds will be
used (directly or indirectly) for the acquisition of land, or an interest
therein, to be used for farming purposes.
(aa) The Project will create employment opportunities within the City and within
Kankakee County, Illinois, and will otherwise accomplish the public purposes of
the Act.
ARTICLE 3
COMPLETION OF PROJECT
Section 3.01 Acquisition, Rehabilitation and Equipping of the Project.
The Company:
(a) has acquired title to the Project Site and the
Project Building, and has expended, or will, within two years
following the issuance of the Bonds, expend, not less than
$150,000 of Rehabilitation Expenditures in connection with the
rehabilitation of the Project Building, cause the renovation
and rehabilitation of the Project Building to be completed in
accordance with all applicable building code and zoning
requirements and substantially in accordance with the Plans,
and provide all other improvements, access roads, utilities,
and other items required to make such facilities fully
operable for the purposes specified in Section 2.02(f) hereof;
7
(b) will cause to be acquired and properly installed in the Project such items
of furniture, machinery and equipment and other items of personal property as
may be necessary and desirable in the Company's reasonable judgment for
operation of the Project for the purposes specified in Section 2.02(f) hereof;
(c) will cause insurance relating to the Project to be procured and maintained
in accordance with the provisions of Section 5.07 hereof;
(d) will cause to be paid when due all fees, costs and expenses incurred in
connection with the acquisition, rehabilitation, and equipping of the Project;
and
(e) in the reasonable judgment of the Company, will ask, demand, xxx for, xxxx,
recover and receive all those sums of money, debts and other demands whatsoever
which may be due, owing and payable under the terms of any contract, order,
receipt, writing and instruction in connection with the acquisition,
rehabilitation, furnishing and equipping of the Project, and enforce the
provisions of any contract, agreement, obligation, bond or other performance
security with respect thereto.
Section 3.02 Modifications to the Plans. Modifications to the Plans may be made
only in accordance with this Section 3.02.
(a) No modifications to the Plans may be made which would (i) alter the scope or
character of the Project as a "project" within the meaning of the Act or (ii)
change the scope of the Project, without the prior written consent of the
Trustee and a Majority of Holders. No modifications to the Plans may be made
unless the Company shall first furnish to the Trustee an opinion of Bond Counsel
to the effect that such modifications to the Plans will not cause the interest
on the Series 1997 Bonds to be included in the gross income of the Bondholders
for Federal income tax purposes. Changes in scope shall include changes which
materially adversely impair the marketability of the Project, vary the proposed
use of the Project, impair the suitability for that proposed use, materially
reduce the fair market value of the Project or materially change the quality or
aesthetic appearance of the Project.
(b) Modifications to the Plans may be made without the consent of the Trustee if
they (i) have a cost not more than $250,000, individually or in the aggregate,
(ii) are required by applicable law or governmental order or regulation, or
(iii) are required due to labor disputes, fire, unusual delay in transportation,
adverse weather conditions which could not reasonably be anticipated,
unavoidable casualty, emergency affecting the safety of persons or property,
concealed conditions encountered below the surface of the ground or concealed or
unknown conditions in existing structures of an unusual nature differing
materially from those ordinarily encountered and generally recognized as
inherent in work of similar character under similar circumstances, if beyond the
control of, and not reasonably foreseeable by, the Company and the Company could
not reasonably have taken steps in anticipation thereof so as to avoid the
necessity for the modification.
8
(c) Modifications to the Plans, other than those described in Section 3.02(b),
which will increase the Cost of the Project by more than $250,000, either
singularly or in the aggregate, or extend the time for completion of the
Project, may be made only with the written consent of the Trustee and a Majority
of Holders, which consent shall be given upon the Company furnishing to the
Trustee a report, addressed to the Trustee, verifying that the additional cost
resulting from such modification will not cause the total Cost of the Project to
exceed the amount available therefor, taking into account the amounts available
for such purposes then credited to the Acquisition and Construction Fund the
amounts expected to be received on investments then credited or to be credited
to such fund on or before the expected disbursement date and any amounts
available to and committed by the Company for completion of the Project.
(d) Notwithstanding the foregoing, the Company shall advise the Trustee on a
regular quarterly basis, in writing, of all changes in the Plans, including,
without limitation, those the Company is entitled to implement without the
consent of the Trustee pursuant to Section 3.02(b) above.
(e) Prior to implementing any modifications to the Plans, the Company shall
determine whether such modifications will increase the Cost of the Project. In
the event any such modifications shall increase the Cost of the Project, and in
the event the amount then on deposit in the Acquisition and Construction Fund
shall not be sufficient to complete the Project as modified by such
modifications to the Plans, and pay in full the increased Cost of the Project,
the Company shall deposit with the Trustee, to be held in a separate account of
the Acquisition and Construction Fund, such additional amounts as shall be
necessary to pay in full the increased Cost of the Project.
Section 3.03 Payment of Cost by the Company. The Company agrees that it will
provide promptly any and all sums of money required to complete the Project,
including all of the following items of Cost, which the Issuer agrees shall be
reimbursable to the extent provided in Section 3.06 hereof:
(a) all expenses to be incurred in connection with the subjection of the Project
to the lien of, and the security interest granted by, the Mortgage, acquisition
of all rights-of-way for access and utility connections to and from the Project
Site, the initial or acceptance fee and expenses of the Trustee, and all fees
required for recording the Mortgage and all financing statements and title
curative documents relating to the Project;
(b) the expense of preparation of the Plans and of all other architectural,
engineering and supervisory services incurred and to be incurred in the
planning, rehabilitation and completion of the Project;
(c) all legal, abstracting, title insurance, financial and accounting fees and
expenses, printing and engraving costs and other expenses incurred in connection
with the
9
establishment and insurance of title to the Project Site, the authorization,
sale and issuance of the Bonds, fees and expenses payable to the Underwriter,
and the preparation of this Loan Agreement, the Indenture, the Mortgage, the
Limited Offering Memorandum and all other related documents;
(d) the contract price of all labor, services, materials, supplies and equipment
furnished under any contract for rehabilitation and equipping of the Project and
the cost of all other labor, services, materials, supplies and equipment
necessary to complete the acquisition, rehabilitation, equipping, furnishing and
improving of the Project;
(e) the purchase price for the acquisition of the Project Site and the Project
Building and the cost of acquisition and installation of all items of Project
Equipment included in the Project;
(f) all fees and expenses of the Trustee that become due during the acquisition,
construction, rehabilitation and equipping of the Project;
(g) interest accrued on money borrowed by the Company for temporary financing of
the Cost of the Project, if such money was borrowed by the Company for the
specific purpose of temporarily financing the Cost of the Project and was not
part of a general-purpose open line of credit;
(h) to the extent not paid by a contractor for rehabilitation or installation
with respect to any part of the Project, payment of the premiums on all
insurance required to be taken out and maintained during the period the Project
is under rehabilitation;
(i) payment of, or reimbursement for, interest accruing on the Bonds and taxes
or assessments, if any, that may become payable with respect to the Project
during the period the Project is under construction;
(j) payment of expenses incurred in seeking to enforce any remedy against any
contractor or subcontractor in respect of any default under a contract relating
to the Project;
(k) without limitation by the foregoing, all other expenses which under
generally accepted accounting principles constitute necessary capital
expenditures for the acquisition, rehabilitation and equipping of the Project,
but not including any working capital or expendable supplies or necessary
equipment other than Project Equipment (all of which will nevertheless to be
supplied by the Company from its own funds without reimbursement); and
(l) all advances, payments and expenditures made or to be made by the Issuer,
the Trustee and any other persons with respect to any of the foregoing expenses.
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Anything herein to the contrary notwithstanding, Issuance Costs in excess of two
percent (2%) of the lesser of the face amount of the Series 1997 Bonds or the
proceeds of the Series 1997 Bonds shall not be considered a Cost of the Project
and shall not be eligible to be paid or reimbursed from the proceeds of the
Series 1997 Bonds unless a requisition for such an item is accompanied by an
opinion of Bond Counsel to the effect that the payment of such item will not
result in interest on the Series 1997 Bonds being includable in the gross income
of any owner thereof for Federal income tax purposes.
The Issuer makes no representation or warranty, express or implied, that the
Loan will be sufficient to pay the entire Cost of the Project. If the balance
available for that purpose is not sufficient, the Company will nevertheless
complete the entire Project in accordance with the requirements of Section 3.01
hereof (including the provision of all improvements, access roads, utilities,
machinery, equipment and other items of real and personal property required to
be provided by Sections 3.01(a) and 3.01(b) hereof, regardless of whether such
items are part of the Project or are items of Project Equipment) and pay the
entire Cost, without reimbursement and without abatement or diminution of the
Loan Repayments payable under Article 4 hereof.
Section 3.04 Issuance of Series 1997 Bonds and Application of Proceeds. To
provide funds to finance a portion of the Cost of the Project, all as provided
herein and in the Indenture, the Issuer will issue and sell the Series 1997
Bonds in accordance with the Indenture and the Limited Offering Memorandum and
will cause the proceeds thereof to be received by the Trustee on behalf of the
Issuer as provided in the Indenture.
The Company and the Issuer agree that the proceeds of the Series 1997 Bonds
shall be deposited with the Trustee and applied as provided in the Indenture.
The Company acknowledges and agrees that it shall have no interest in the
proceeds of the Series 1997 Bonds equal to or greater than that of the
Bondholders who shall have a first and prior beneficial interest in such money
and investments until applied in accordance herewith and with the Indenture.
Section 3.05 Items, Documents and Instruments to be Delivered Prior to Issuance
of the Bonds. In addition to those items, documents and instruments required by
Section 2.07 of the Indenture, at or prior to delivery of the Bonds, the Company
shall deliver the following to the Trustee:
(a) certified articles of incorporation of the Company and certificates of good
standing from the State of North Carolina and the State, together with
satisfactory evidence of the Company's qualification to transact business in the
State;
(b) a detailed statement, or estimate, of the Costs of the Project, including
all hard and soft costs, of the entire Project, including, without limitation,
all equipment to be
11
acquired, certified by the Company Representative to the best of his knowledge
and belief, upon due inquiry, to be correct;
(c) copies of all policies of insurance required by this Loan Agreement or the
Mortgage, or a certificate or certificates of the respective insurers or
insurance agents stating that such insurance is in force and effect;
(d) a commitment to issue an ALTA extended coverage lender's policy of title
insurance in favor of the Trustee in a face amount not less than the principal
amount of the Bonds insuring the first lien position of the Mortgage on fee
simple title to the Project Site free and clear of liens and encumbrances except
Permitted Encumbrances, which title insurance shall be issued by a title
insurance company licensed to do business in the State of Illinois; and
(e) copies of all environmental studies or reports in the Company's possession
relating to the Project Site, together with copies of any correspondence,
opinions or recommendations relating thereto.
Section 3.06 Payment or Reimbursement of Cost.
(a) The Issuer has authorized and directed the Trustee to disburse money from
the Acquisition and Construction Fund and the Issuance Costs Fund in payment or
reimbursement of items of Project Costs and Issuance Costs, respectively,
enumerated in Section 3.03 hereof upon compliance with the requirements of this
Section 3.06.
(b) The Indenture authorizes and directs the Trustee to disburse moneys in the
Acquisition and Construction Fund to or upon the order of the Company for
payments of Costs of the Project, including reimbursement for the cost of
acquiring the Project Site and the Project Building and renovating and
rehabilitating the Project Building, upon receipt by the Trustee of a written
requisition for such payment signed by the Company Representative, pursuant to
which the Company Representative shall certify as follows:
(i) That an obligation in the stated amount has been incurred in connection with
the Project;
(ii) That such obligation is a proper charge against the Acquisition and
Construction Fund and has not been the basis of any previous withdrawal from the
Acquisition and Construction Fund, and specifying to whom such obligation is
owed, accompanied by a xxxx or statement of account for such obligation;
(iii) That such requisition is for an item which is properly chargeable to the
capital account of the Company for Federal income tax purposes or would be so
chargeable, either with a proper election by the Company or but for a proper
election
12
by the Company to deduct the costs, and that payment of this item, when added to
all other payments previously made from the Acquisition and Construction Fund,
will not result in less than substantially all (at least 95%) of the Net
Proceeds of the Series 1997 Bonds being used for Qualified Project Costs;
(iv) That such requisition contains no request for payment of an obligation paid
or incurred prior to the Official Action Date;
(v) That payment of the requisition, as requested, will not result in the
provision of any working capital, directly or indirectly, to the Company or any
related person; and
(vi) That no default or Event of Default exists under this Loan Agreement, the
Mortgage or the Indenture.
In making any such payment from the Acquisition and Construction Fund, the
Trustee may rely on any such requisitions and certificates of the Company
delivered to it pursuant to this Section 3.06(b) and the Trustee shall be
relieved of all liability with respect to making such payments in accordance
with any such requisitions and certificates without inspection of the Project or
any other investigation.
(c) The Indenture authorizes and directs the Trustee to disburse monies in the
Issuance Costs Fund for the payment or reimbursement to the Company of Issuance
Costs upon the receipt by the Trustee of a written requisition for such payment
signed by the Company Representative, pursuant to which the Company
Representative shall certify as follows:
(i) That an obligation in the stated amount has been incurred for Issuance Costs
in connection with the issuance of the Bonds;
(ii) That such obligation is a proper charge against the Issuance Costs Fund and
has not been the basis of any previous withdrawal from the Issuance Costs Fund,
and specifying the purpose and circumstances of such obligation and to whom such
obligation is owed, accompanied by a xxxx or statement of account of such
obligation;
(iii) That payment of this item, when added to all other payments previously
made from the Issuance Costs Fund, will not result in more than an amount equal
to two percent (2%) of the lesser of the face amount of the Series 1997 Bonds or
the proceeds of the Series 1997 Bonds having been paid or reimbursed from the
proceeds of the Series 1997 Bonds for costs of issuing and selling the Series
1997 Bonds unless such requisition is accompanied by an opinion of Bond Counsel
to the effect that the payment of such item will not result in any interest on
the Series 1997
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Bonds being includable in the gross income of the owners thereof for Federal
income tax purposes;
(iv) That such requisition contains no request for payment of an obligation
incurred prior to the Official Action Date;
(v) That payment of the requisition, as requested, will not result in the
provision of any working capital, directly or indirectly, to the Company or any
related person; and
(vi) That no Event of Default exists under this Loan Agreement or the Indenture.
In making any such payment from the Issuance Costs Fund, the Trustee may rely on
any such requisitions and certificates of the Company delivered to it pursuant
to this Section 3.06(c) and the Trustee shall be relieved of all liability with
respect to making such payments in accordance with any such requisitions and
certificates without any other investigation.
(d) Each request of the Company for disbursement from the Acquisition and
Construction Fund shall be made pursuant to an Acquisition and Construction Fund
Disbursement Request in substantially the form attached hereto as Exhibit C.
Each request of the Company for disbursement from the Issuance Costs Fund shall
be made pursuant to an Issuance Costs Fund Disbursement Request in substantially
the form attached hereto as Exhibit D.
Section 3.07 Establishment of Completion Date. The Completion Date shall be the
date that the following items have been delivered to the Trustee:
(a) The Certificate of Occupancy.
(b) A certificate of the Company Representative stating that:
(i) the renovations and rehabilitation of the Project has been completed in
substantial accordance with the Plans such that the Project is fully operable
for the purposes specified in Section 2.02(f) hereof;
(ii) all buildings and other improvements comprising the Project have direct
connections to all utilities necessary for the intended use thereof, including,
without limitation, adequate sewer, telephone, gas and/or electric services as
of the date of such certificate;
(iii) adequate ingress and egress to and from the Project is available over
dedicated and accepted public streets and rights of way;
14
(iv) no default or Event of Default under the Loan Agreement has occurred and is
continuing;
(v) all costs and expenses incurred in connection with the acquisition,
rehabilitation, and equipping of the Project have been fully paid or are being
contested and provisions have been made for the payment thereof if such contest
is unsuccessful;
(vi) the Project and all other facilities in connection therewith have been
acquired, rehabilitated and installed to the Company's satisfaction and are
suitable and sufficient for the operation of the Project for the purpose set
forth in Section 2.02(f) hereof;
(vii) at least 95% of the proceeds of the Series 1997 Bonds have been used to
acquire the Project Site, the Project Building and the Project Equipment, and to
pay Rehabilitation Expenditures in connection with the rehabilitation of the
Project; and
(viii) the Trustee may conclusively rely on such certificate.
Notwithstanding the foregoing, such certificate by the Company Representative
shall state that it is given without prejudice to any rights against third
parties which exist on the date of such certificate or which may subsequently
come into being.
Section 3.08 Enforcement of Contracts and Surety Bonds. In the event of material
default of any contractor or subcontractor under any construction contract or
any other contract made in connection with the Project, or in the event of a
material breach of warranty with respect to any materials, workmanship or
performance, the Company will promptly proceed, either separately or in
conjunction with others, to pursue the remedies of the Company and the Trustee
against the contractor or subcontractor in default and against any surety on a
bond securing the performance of such contract in such manner and to the extent
determined by the Company to be reasonable and prudent. If the Company requests
the Trustee, and agrees with the Trustee to pay all costs and expenses incurred
by the Trustee and to indemnify the Trustee and save the Trustee harmless
against any risks, claims or liabilities arising out of such action, the Company
may in the name of the Trustee, or in its own name, prosecute or defend any
action or proceeding or take any other action involving any such contractor,
subcontractor or surety which the Company on the advice of its Counsel deems
reasonably necessary, and in such event the Trustee will cooperate fully with
the Company and will take all action necessary to effect the substitution of the
Company for the Trustee in any such action or proceeding. Any amounts recovered
by way of damages, refunds, adjustments or otherwise in connection with the
foregoing, after deduction of expenses incurred in such recovery, shall be paid
into the Acquisition and Construction Fund if received before the Completion
Date, and otherwise shall be paid into the Bond Fund and used to purchase or pay
interest on the Bonds as directed by the Company.
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ARTICLE 4
THE LOAN
Section 4.01 Amount and Source of Loan. The Issuer agrees, upon the terms and
conditions herein specified, to make the Loan to the Company in an amount equal
to the aggregate principal amount of the Series 1997 Bonds for the purpose of
financing the Costs of the Project.
Section 4.02 Repayment of Loan. The Company agrees to pay as Loan Repayments
during the Term of this Loan Agreement amounts which, together with any balance
held in the Bond Fund, shall at all times be sufficient to pay all principal of,
premium, if any, and interest on the Bonds as such principal, premium, if any,
and interest become due, at maturity, upon acceleration, upon optional or
mandatory redemption or otherwise.
Loan Repayments may be made by means of Company check or otherwise, provided
that all Loan Repayments shall be good funds in the hands of the Trustee on such
dates as are necessary to satisfy the requirements set forth herein for the
payment of the principal of, premium, if any, and interest on the Bonds.
Section 4.03 Quarterly Payments. Payment of principal of and interest on the
Bonds shall be due in Quarterly Payments commencing on March 1, 1998, and
continuing on each March 1, June 1, September 1, and December 1 thereafter, to
and including the date that all such unpaid principal of the Bonds shall be paid
in full. Principal payments on the Bonds are to be paid to the Trustee in the
four Quarterly Payments prior to the Interest Payment Date on which such
principal is to be paid on the Bonds, either at maturity or by mandatory sinking
fund redemption prior thereto. Interest payments on the Bonds are to be paid to
the Trustee in the two Quarterly Payments prior to the Interest Payment Date on
which such interest is to be paid on the Bonds. The Company shall only be
required to make Quarterly Payments to the extent that monies held in the Bond
Fund for the payment of the principal of and interest due on all Outstanding
Bonds on the next succeeding Interest Payment Date are not sufficient for such
purpose.
Section 4.04 Additional Payments. The Company agrees to pay the following
amounts to the following persons as Additional Payments under this Loan
Agreement:
(a) to the Trustee, when due, all reasonable fees of the Trustee for services
rendered under the Indenture and all fees and charges of paying agents,
registrars, Counsel, accountants, engineers and others incurred at the request
of the Trustee in the performance of services under the Indenture for which the
Trustee and such other persons are entitled to payment or reimbursement;
provided that the Company may, without creating a default hereunder, contest in
good faith the reasonableness of any such services, fees or expenses, other than
the Trustee's fees for ordinary services, as set forth in the Indenture; and
16
(b) to the Issuer and its counsel, their fees and expenses in connection with
the authorization, issuance and sale of the Series 1997 Bonds, and all
reasonable costs, expenses and liabilities, including necessary and reasonable
attorneys' fees (i) incurred or paid by the Issuer in satisfaction of any
obligations of the Company hereunder not performed by the Company, (ii) incurred
or paid by the Issuer as a result of a request by the Company or a requirement
of this Loan Agreement or the Indenture, or (iii) incurred by the Issuer in the
defense of any action or proceeding with respect to the Project or this Loan
Agreement or the Indenture or in enforcing this Loan Agreement, the Indenture or
the Mortgage, or arising out of or based upon any other document related to the
issuance of the Bonds including, without limitation, those described in Section
7.04 hereof; provided that, prior to paying any such cost, expense or liability,
the Issuer shall first afford the Company an opportunity to make such payment or
prepayment by giving the Company fifteen (15) days' prior written notice of the
Issuer's intention to do so; provided, however, that the Company shall not be
required to make any such payment under this Section 4.04(b) in the event and to
the extent that such payment would cause the interest on the Series 1997 Bonds
to be includable in the gross income of the owners thereof for Federal income
tax purposes.
(c) to the Bondholders, their reasonable expenses, including reasonable
attorneys' fees, in connection with the occurrence and during the continuation
of an Event of Default hereunder.
Following the payment, prepayment or incurrence of any such cost, expense or
liability, the Additional Payments are payable upon written demand therefor, or
within thirty (30) days following such demand.
Section 4.05 Company's Obligations Unconditional. All Loan Repayments,
Additional Payments and all other payments required of the Company hereunder
shall be paid without set off, counterclaim, abatement, deduction or defense
except as provided in Section 8.05 hereof. The Company will not suspend or
discontinue any Loan Repayments, and will perform and observe all of its other
agreements in this Loan Agreement, and, except as expressly permitted in this
Loan Agreement, will not terminate this Loan Agreement for any cause, including
but not limited to any acts or circumstances that may constitute failure of
consideration, destruction of or damage to the Project, eviction by paramount
title, commercial frustration of purpose, bankruptcy or insolvency of the Issuer
or the Trustee, change in the tax or other laws or administrative rulings or
actions of the United States of America or of the State or any political
subdivision thereof, or failure of the Issuer to perform and observe any
agreement, whether express or implied, or any duty, liability or obligation
arising out of or connected with this Loan Agreement.
Section 4.06 Company's Remedies. Nothing contained in this Article 4 shall be
construed to release the Issuer from the performance of any of its agreements in
this Loan Agreement, and if the Issuer shall fail to perform any such agreement,
the Company may institute such action against the Issuer as the Company may deem
necessary (consistent with the limitations of Section 10.06 hereof), so long as
such action shall not violate the Company's agreements in Section 4.05 hereof.
17
The Company may at its own cost and expense, and in its own name, prosecute or
defend any action or proceeding against third parties or take any other action
which the Company deems reasonably necessary in order to ensure the acquisition,
rehabilitation, furnishing, equipping, improving and completion of the Project
and to secure or protect its right of possession, occupancy and use of the
Project under this Loan Agreement.
Section 4.07 Amounts Remaining in Bond Fund. It is agreed by the parties hereto
that after (a) payment in full of the Bonds, (b) payment of all fees, charges
and expenses of the Trustee and any Paying Agents in accordance with the terms
of the Indenture, and (c) payment of all other amounts required to be paid under
this Loan Agreement and the Indenture (including any amounts owed to the
Issuer), and performance of all other obligations of the Company hereunder, any
amounts remaining in the Bond Fund held by Trustee under the Indenture shall be
paid by the Trustee to the Company, and the Issuer shall have no claims to such
amounts.
Section 4.08 Notice to the Issuer of Certain Events. The Company shall promptly
notify the Issuer in writing (a) at such time as the Bonds have been paid in
full, and (b) if an Event of Default occurs hereunder or (c) if a default or an
event which, with the giving of notice or the passage of time, would constitute
a default occurs under the terms of any long-term debt agreement to which the
Company is a party.
Section 4.09 Designation by the Company of Application of Loan Repayments.
Except as set forth in Section 8.03 hereof, the Company shall not be entitled to
designate or direct the application by the Trustee of Loan Repayments made by
the Company, which Loan Repayments shall be applied as set forth in Section 5.05
of the Indenture.
ARTICLE 5
USE, MAINTENANCE, MODIFICATIONS,
TAXES AND INSURANCE
Section 5.01 Possession, Use and Prohibition Against Further Encumbrances. It is
agreed that, as between the Company and the Issuer, the Company shall have sole
and exclusive possession of the Project, subject to the right of the Issuer, the
Trustee and the Bondholders to enter thereon as contemplated herein, in the
Indenture, or in the Mortgage, or for the purpose of inspection at reasonable
times and upon reasonable notice, and the Issuer covenants and agrees that it
will not take any action other than pursuant to this Loan Agreement, the
Indenture, or the Mortgage to prevent the Company from having quiet and
peaceable possession and enjoyment of the Project during the Term of this Loan
Agreement. The Company agrees that it will not make, do, execute or suffer any
act or thing whereby its interest in any property now or hereafter included in
the Project shall or may be impaired, charged or encumbered in any manner
whatsoever, except by Permitted Encumbrances; any impairment, charge or
encumbrance created in violation of this covenant shall, to the extent permitted
by law, be void and of no effect, unless the Company, the Issuer and the Trustee
shall have
18
consented in writing to its creation. The Company shall have the right to use
the Project throughout the Term of this Loan Agreement in the conduct of the
Company's business, and for all purposes related or incidental to these
purposes, and such other uses as the Company may decide upon, subject to the
right of the Issuer and the Trustee to enter thereon as contemplated herein or
in the Indenture, and provided that all uses shall conform to the policies and
purposes of the Act and are not inconsistent with the purposes specified in
Section 2.02(f) of this Loan Agreement.
Section 5.02 Maintenance. During the Term of the Loan Agreement, the Company
will at its own expense keep the Project and all parts thereof in good repair
and good operating condition and in safe condition, making all repairs thereto
and renewals and replacements thereof necessary for this purpose, so that the
Project will remain suitable and efficient for use as a facility of the
character described in and contemplated by this Loan Agreement, or such other
uses as are not inconsistent with the Act or this Loan Agreement.
Section 5.03 Improvements. The Company may from time to time, at its own
expense, make any Improvements, located wholly within the boundary lines of the
Project Site, or partially within and partially without such boundary lines,
that it may deem desirable for its purposes and that do not adversely affect the
structural integrity or value of the Project. Except as otherwise provided in
Section 5.09, all Improvements made by the Company within the boundary lines of
the Project Site shall become a part of the Project and subject to the
provisions of this Loan Agreement and the Mortgage.
Section 5.04 Liens. The Company will not permit any mechanics' or other liens to
remain outstanding against the Project for labor or materials furnished in
connection with completion of the Project or any Improvements, repairs, renewals
or replacements; provided, that if the Company shall first obtain and cause to
be recorded in the office of the County Recorder of Kankakee County, Illinois, a
surety bond which shall be sufficient in all respects under applicable law to
require the lien claimant to discharge his lien against the Project, the Company
may in good faith contest any mechanics' or other liens filed or established and
in such event may permit the items contested to remain undischarged and/or
unsatisfied during the period of such contest and any appeal therefrom.
Section 5.05 Removal of Project Equipment. The Company may remove or permit the
removal of any Project Equipment from the Project Site in accordance with the
following provisions:
(a) In any instance where the Company in its sound discretion determines that
any item of Project Equipment with a market value of $50,000 or more has become
inadequate, obsolete, worn out, unsuitable, undesirable or unnecessary for the
operation of the Project, the Company may, at its own expense, remove and
dispose of such item of Project Equipment and (except as provided in subsection
(b) hereof) substitute and install other items of machinery, equipment or other
personal property, not necessarily having the same function, provided that such
removal and substitution shall not impair the operating utility of the Project
and, provided, further, that the Company shall not dispose of Project Equipment
having a market value greater than $350,000 in any fiscal year without prior
19
approval of a Majority of Holders. Subject to the provisions of Section 5.09
hereof, all such substituted items shall be installed free of all liens and
encumbrances, other than Permitted Encumbrances, and shall become a part of the
Project as Project Equipment. The Company will cooperate with the Issuer and the
Trustee and will pay all costs, including counsel's fees, incurred in subjecting
to the lien of the Mortgage all items so substituted, and the Trustee and, to
the extent reasonably necessary, the Issuer, will cooperate with the Company at
the Company's expense in securing, if necessary, release of the property for
which the substitution is made under the Mortgage and in providing such bills of
sale or other documents as may be required to facilitate the removal and
substitution. In the event the market value of the substituted items is less
than the market value of the Project Equipment disposed of as reasonably
determined by the Company Representative, the Company shall pay into the
Redemption Account an amount equal to the difference.
(b) Upon removal of items of Project Equipment of the type described in
subsection (a) above, and provided the operating utility of the Project is not
impaired, the Company may decide not to make any substitution and installation
of other items of machinery, equipment or other personal property, provided
(unless the lien of the Indenture has been discharged under Article Eight
thereof or the Company's obligation to make Loan Repayments has been abated
under Article Eight hereof): (1) that in the case of the sale of any such
Project Equipment, the Company shall deposit the sale proceeds in the Redemption
Account, (2) that in the case of a trade-in of any such Project Equipment for
items not to be utilized as a part of the Project, the Company shall account for
the credit received by it in the trade-in by depositing an equivalent amount in
the Redemption Account and (3) that in the case of any other disposition of such
Project Equipment, the Company shall deposit in the Redemption Account an amount
equal to the market value of the removed items as reasonably determined by the
Company Representative. The Issuer and the Trustee will cooperate with the
Company at the Company's expense in securing a release of the property to be
removed if required under the Mortgage and in securing such bills of sale or
other documents as may be required to facilitate the removal and disposition.
(c) The Company shall annually, within ninety (90) days following the end of
each fiscal year of the Company, commencing with the fiscal year ending December
1998, report to the Trustee by Company Representative's certificate the removal
of any Project Equipment pursuant to subsections (a) or (b) above, and amounts
required to be accounted for by the Company, if any, shall promptly be paid to
the Trustee for deposit in the Redemption Account after any substitution, sale,
trade-in or other disposition. When required pursuant to this subsection (c),
the certificate submitted shall specify the items of the Project Equipment
removed, the items of property substituted therefor, if any, and the amount, if
any, required to be paid to the Trustee pursuant to the provisions of this
Section 5.05. Where such certificate indicates that substitute items of property
have been acquired and installed, the certificate shall be accompanied by (i)
the financing statement with respect to such substitute items of property and
(ii) a certificate of the Company Representative stating that all steps
requisite to perfection of the security interests of the Trustee in and to
20
such substitute items of property under the Mortgage have been duly taken. The
Company will execute all instruments advisable in the opinion of Counsel for
perfection of the respective security interests as aforesaid.
(d) Any amounts paid by the Company to the Trustee for deposit in the Redemption
Account pursuant to the provisions of this Section 5.05 shall be deposited by
the Trustee in the Redemption Account and shall be used on the next succeeding
Interest Payment Date on which principal is payable on the Bonds toward the
payment of the principal of the Bonds due and payable, or subject to mandatory
sinking fund redemption or, to the extent the Bonds may then be redeemed prior
to maturity, optional redemptions of the Bonds, on such Interest Payment Date.
(e) In addition to the rights provided in Sections (a) through (d) of this
Section 5.05, the Company shall have the right to remove any items of Project
Equipment from the Project Site, provided that such Project Equipment shall (1)
be removed to and situated on other property adjacent to the Project Site on
which the Company may presently or in the future conduct the same kind of
operation as that to be conducted at the Project, (2) be used by the Company for
the same purpose as contemplated by this Loan Agreement, and (3) remain subject
to the lien of the Mortgage and to no other liens, except for Permitted
Encumbrances.
Section 5.06 Taxes and Other Governmental Charges and Utility Charges. The
Company will make, or will cause to be made, promptly all payments due during
the Term of this Loan Agreement on taxes and special assessments lawfully levied
upon or with respect to the Project, other charges lawfully made by any
governmental body for public improvements that may be or become secured by a
lien on the Project, and utility and other charges incurred in the operation,
maintenance, use, occupancy and upkeep of the Project, including but not limited
to taxes or governmental charges on any property of the Company brought in or
upon the Project, sales and other excise taxes on products thereof, and any
taxes levied upon or with respect to income or profits from the Project which,
if not paid, would become a lien thereon prior to or on a parity with the lien
of the Mortgage or prior to or on a parity with the pledge and assignment of
such revenues and receipts made in the Mortgage. With respect to special
assessments or other governmental charges that may lawfully be paid in
installments over a period of years, with or without interest, the Company shall
be obligated to pay only such installments and interest as are required to be
paid during the Term of this Loan Agreement. Notwithstanding the foregoing, the
Company may, at its own expense, in good faith, contest any such taxes,
assessments and other charges, provided that such contest will not subject the
Project or any part thereof to loss or forfeiture and provided that the Company
shall first deposit with the Trustee a surety bond or cash in the amount of the
taxes, assessments or other charges being contested, pending the outcome of such
contest.
Section 5.07 Insurance. (a) The Company agrees, at its sole cost and expense, to
keep the Project, including all buildings, structures, improvements and personal
property, and all other property of an insurable character, insured at all times
during the Term of this Loan Agreement
21
(including any period or periods of time during which any buildings, structures
and improvements are in the course of remodeling or construction) against the
risks set forth below:
(i) Policies of "all-risk" insurance on the Project in an amount equal to at
least 100% of the full replacement cost of the Project, without deduction for
depreciation, providing for a deductible not to exceed $250,000, and in an
amount sufficient to prevent the Company or the Trustee from becoming a
co-insurer within the terms of the applicable policies.
(ii) Flood hazard insurance or evidence that it is not required for the Project.
(iii) Business interruption insurance with respect to the hazards insured
against by the insurance described in clause (i) above in an amount at least
sufficient to pay debt service, taxes or payments in lieu of taxes, the salaries
and expenses of key employees of the Company required for the operation of the
Project and other unavoidable costs for a least a six-month period.
(iv) Boiler and machinery coverage (direct damage and use and occupancy) on a
replacement cost basis.
(b) The Company will deliver copies of all such policies (or certificates
evidencing insurance if the policies are master policies) to the Trustee, and,
prior to the expiration date of each such policy, will deliver to the Trustee a
copy or copies of a renewal policy or policies (or a certificate or certificates
evidencing such renewal or renewals if the policies are master policies) marked
"premium paid" or accompanied by other evidence of payment satisfactory to the
Trustee. The Company will notify the Trustee of any changes to or cancellation
of any such policy prior to such change or cancellation. The Company will not
permit any condition to exist at the Project which would wholly or partially
invalidate the insurance thereon as set forth herein.
(c) The Company agrees, at its own cost and expense, to provide and keep in
force during the Term of this Loan Agreement, comprehensive general liability
insurance with respect to the Project and automobile liability insurance, with
limits not less than the following:
(i) comprehensive general liability insurance
(A) bodily injury - $1,000,000 each person and $1,000,000 in the aggregate.
(B) property damage - $1,000,000 each occurrence.
(ii) comprehensive automobile liability insurance
22
(A) bodily injury - $500,000 each person and $500,000 each occurrence
(B) property damage - $500,000 each occurrence
Such insurance shall cover the Project, including elevators, hoists, sidewalks,
passageways and other property in or about the adjoining streets.
(d) The Company agrees, at its own cost and expense, to provide and keep (or
cause to be kept) in force during the Term of this Loan Agreement workers'
compensation and employer's liability insurance covering all employees of the
Company employed at the Project in amounts required by law.
(e) The Company agrees, at its own cost and expense, to provide and keep (or
cause to be kept) in force during the Term of this Loan Agreement, excess
liability insurance for comprehensive general liability insurance and automobile
liability insurance with a combined limit not less than $5,000,000.
(f) The Company will deliver copies of all insurance policies (or certificates
evidencing insurance if the policies are master policies) required by
subsections (c) through (e) above to the Trustee when obtained, and, prior to
the expiration date of each such policy, will deliver to the Trustee a copy or
copies of a renewal policy or policies (or a certificate or certificates
evidencing such renewal or renewals if the policies are master policies) marked
"premium paid" or accompanied by other evidence of payment satisfactory to the
Trustee. The Company will notify the Trustee of any changes to or cancellation
of any such policy prior to such change or cancellation.
Section 5.08 Advances. If the Company shall fail to make all repairs, pay all
liens, taxes, assessments and other charges and maintain all insurance required
in this Article 5 after ten days' written notice from the Trustee, the Issuer or
the Trustee may, but shall not be obligated to, take such action as may be
necessary to cure such failure, including advancement of money, and the Company
shall be obligated to repay all such advances within thirty (30) days after
written notice thereof with interest at the Alternative Rate from the date of
each such advance.
Section 5.09 Installation of the Company's Equipment. The Company may, at any
time and from time to time, in its sole discretion and at its own expense,
install items of furniture, movable machinery and equipment or other personal
property in or upon the land, Project Buildings and structures comprising the
Project in addition to the Project Equipment. All such items shall remain the
sole property of the Company, in which the Issuer and the Trustee shall have no
interest, and may be modified or removed by the Company at any time while it is
not in default hereunder and while such items are not in the Company's
reasonable judgment needed for the continuance of the operation of the Project,
provided that the Company shall repair and restore any and all damage to the
Project resulting from the installation, modification or removal of any such
items.
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Nothing in this Loan Agreement or the Mortgage shall prevent the Company, after
delivery of the Mortgage, from purchasing items to be installed pursuant to this
Section 5.09 under a conditional sale or lease-purchase contract, or subject to
a vendor's lien or security agreement, as security for the unpaid portion of the
purchase price thereof, provided that no such lien or security interest shall
attach to any part of the Project.
ARTICLE 6
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 6.01 Company to Repair, Replace, Rebuild or Restore. If all or any part
of the Project is taken by eminent domain, or destroyed or damaged:
(a) The Company shall proceed promptly, subject to the provisions of subsection
(b), to replace, repair, rebuild and restore the Project to substantially the
same condition as existed before the taking or event causing the damage or
destruction, with such changes, alterations and modifications (including
substitution or addition of other property) as may be desired by the Company and
will be suitable for continued operation of the Project for the purposes
specified in Section 2.02(f) hereof and for the business purposes of the Company
and will not impair the Project as a "project" within the meaning of the Act,
and the Company will pay all costs thereof and be entitled to retain the Net
Loss Proceeds of the condemnation award or insurance claim for such purpose.
(b) If the condemnation award or insurance claim is equal to or less than
$750,000, the Company shall be entitled to receive and retain the Net Proceeds
thereof for the purposes described in subsection (a) hereof, provided that if
the Net Proceeds exceed $500,000, the Company shall promptly give notice thereof
to the Issuer, the Trustee and the Bondholders. In the event the condemnation
award or insurance claim exceeds $750,000, the Net Proceeds thereof shall be
payable directly to the Trustee for deposit in the Property Insurance and Award
Fund. The Company shall retain the services of a nationally-recognized
independent insurance consultant and request such consultant to prepare a report
to determine (i) whether the repair, reconstruction, restoration or replacement
of the Project or any portion thereof damaged, destroyed or taken is
economically feasible and will restore the Project to the physical and operating
condition that existed prior to such event and (ii) whether the Net Proceeds
thereof will be sufficient to pay the cost of repairing, reconstructing,
restoring or replacing the portion of the Project affected by such loss, damage
or condemnation (including, without limitation, architects' and attorneys' fees
and expenses), which report shall be delivered to the Trustee and any Bondholder
owning at least ten percent (10%) in aggregate principal amount of Outstanding
Series 1997 Bonds, within thirty (30) days following the occurrence of such
damage, destruction, condemnation or taking. If the report determines that the
foregoing conditions are satisfied, the Company shall have delivered or shall
thereupon deliver to the Trustee, not later than sixty (60) days following the
delivery of the consultant's report:
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(A) plans and specifications, prepared by an architect, necessary to effect such
repair, reconstruction or replacement and an executed construction contract for
such work; and
(B) cash in an amount equal to the funds, if any, in excess of the Net Proceeds
required , as set forth in the report, to complete the repair, reconstruction or
replacement of the damaged, destroyed, condemned or taken portion of the
Project.
Unless a Majority of Holders object, within fifteen (15) days following receipt
of such report and a copy of the plans and specifications, the Company shall be
entitled to proceed, and, if it has not already done so, shall proceed,
promptly, to repair, reconstruct and/or replace the affected portion(s) of the
Project, including all fixtures, furniture and equipment and effects, to its
original condition to the extent possible. Thereafter, moneys payable to the
Trustee for deposit in the Property Insurance and Award Fund shall be disbursed
upon the written request of the Company Representative which shall set forth (i)
the requisition number, (ii) the name and address of the person, firm or
corporation to whom or which payment is to be made, (iii) the amount to be paid,
and (iv) that the obligation described therein has been properly incurred, is a
proper charge against the Property Insurance and Award Fund and has not been the
basis of any previous disbursement, and shall be accompanied by copies of bills,
invoices or receipts (as appropriate) for each disbursement so requested.
If the report of the insurance consultant delivered as provided above concludes
that the conditions set forth above are not satisfied or fail to meet the
requirements relating to repair or reconstruction or replacement, as set forth
above, or if a Majority of the Holders object to such repair, reconstruction or
replacement, the Company shall apply the Net Proceeds, together with any
additional moneys necessary for such purpose, to repay the Loan and the Series
1997 Bonds shall be redeemed in accordance with the provisions of Section
3.01(2)(a) of the Indenture.
(c) If the Net Proceeds are insufficient to pay in full the cost of any repair,
restoration, modification or improvement undertaken pursuant to this Section
6.01, unless the Series 1997 Bonds will be redeemed, as provided herein, the
Company will nevertheless complete the work and will pay any cost in excess of
the Net Proceeds. If, by reason of any such insufficiency of the Net Proceeds,
the Company shall make any payments pursuant to the provisions of this Section,
the Company shall not, by reason of any such payments, be entitled to any
reimbursement therefor from the Trustee or any Bondholder, nor shall the Company
be entitled to any abatement or diminution of any Loan Repayments or any other
amount payable hereunder.
(d) Any balance of Net Loss Proceeds remaining in the Property Insurance and
Award Fund after payment of all costs of any repair, replacement or restoration
shall be paid into the Redemption Account, or, if there are no Outstanding
Bonds, to the Company.
(e) All Project buildings, improvements and equipment acquired in the repair,
replacement or restoration of the Project, together with any interests in real
property necessary for such restoration, shall be deemed a part of the Project
and available for use and occupancy by the
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Company without the payment of any amounts other than those provided in Article
4 hereof, to the same extent as if they had been specifically described in this
Loan Agreement; provided that no real property, interest in real property,
Project Buildings, improvements or equipment shall be acquired subject to any
lien or encumbrance, other than the Mortgage and Permitted Encumbrances.
(f) The Net Loss Proceeds of any (1) insurance or portion thereof attributable
to damage or destruction separately incurred by property of the Company not
constituting part of the Project, or (2) condemnation award or portion thereof
separately awarded for damages to or taking of the property of the Company not
constituting part of the Project, or for damages on account of the taking of or
interference with the Company's rights to possession, use or occupancy of the
Project, shall be and remain at all times the property of the Company not
constituting part of the Project.
Section 6.02 Cooperation of the Issuer and Trustee. The Issuer and Trustee will
cooperate fully with the Company, at the Company's expense, in filing any proof
of loss with respect to any insurance policy covering casualties referred to in
Section 6.01 hereof, in the handling and conduct of any litigation arising with
respect thereto, and in the handling and conduct of any prospective or pending
condemnation proceedings affecting the Project or any part thereof, and will, to
the extent they may lawfully do so, permit the Company to litigate in any such
litigation or proceeding in the name and on behalf of the Issuer and Trustee.
Provided that no Event of Default has occurred and is continuing hereunder,
neither the Trustee nor the Issuer will voluntarily settle or consent to the
settlement of any proceeding arising out of any insurance claim, or any
prospective or pending condemnation proceeding, with respect to the Project or
any part thereof without the prior written consent of the Company.
ARTICLE 7
COMPANY'S COVENANTS;
TAX EXEMPT STATUS OF SERIES 1977 BONDS
Section 7.01 Covenants for Benefit of Trustee and Bondholders. The Company
recognizes the authority of the Issuer to assign certain of its interests in and
pledge all Loan Repayments receivable under this Loan Agreement to the Trustee
as security for the payment of the principal of, redemption premiums, if any,
and interest on the Bonds and the payment of all fees and expenses of the
Trustee and others as provided in the Indenture. Each of the terms and
provisions of this Loan Agreement is a covenant for the use and benefit of the
Trustee and the Bondholders, so long as any thereof shall remain; but upon
payment or provision for payment in full of the Bonds and of all fees and
charges of the Issuer, the Trustee and any Paying Agent in accordance with
Article Eight of the Indenture, and performance of all other obligations of the
Company hereunder, all references in this Loan Agreement to the Bonds and the
Trustee shall be ineffective, and neither the Trustee nor any Bondholder shall
thereafter have any rights hereunder, save and except those that shall have
theretofore vested.
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Section 7.02 Inspection and Access. The Company agrees that the Issuer, the
Trustee, the Bondholders and their duly authorized agents shall have the right
at all reasonable times upon reasonable notice to examine and inspect, and for
that purpose to enter upon, the Project, and shall also have such rights of
access to the Project as may be reasonably necessary to cause the rehabilitation
of the Project to be completed as provided in Article 3 hereof and to cause the
Project to be properly maintained in accordance with Article 5 hereof, in the
event of failure by the Company to perform these obligations. The granting of
these rights to the Issuer shall not create any duty or obligation on the part
of the Issuer to exercise such rights.
Section 7.03 Reports. The Company covenants and agrees that it will furnish, or
cause to be furnished, to the Trustee the reports required by Section 4.07 of
the Indenture as and when required thereby. In addition, the Company covenants
and agrees to give prompt written notice of the occurrence of any of the
following events, to the extent deemed material by the Company, to each national
municipal securities information repository then approved and recognized by the
Securities and Exchange Commission:
(i) Default in the payment by the Company of amounts due hereunder;
(ii) Breach by the Company of any covenant or agreement herein;
(iii) Default by the Company with respect to any covenant or agreement in
connection with indebtedness in excess of $1,000,000 for borrowed money;
(iv) Receipt by the Company of an adverse tax opinion or the occurrence of an
Event of Taxability with respect to the Bonds;
(v) Modifications of the rights of the Bondholders;
(vi) Bond redemptions (other than mandatory sinking fund redemptions);
(vii) Defeasance of all or any portion of the Bonds; or
(viii) Release, substitution or sale of any real property or improvements
thereto securing repayment of the Bonds.
Section 7.04 Indemnity. (a) The Issuer, the Trustee and the Bondholders and
their respective members, officers, agents, employees, successors and assigns or
other elected or appointed officials of the Issuer, past, present or future
(hereinafter the "Indemnified Persons") shall not be liable to the Company by
reason of the Issuer's execution and delivery of this Loan Agreement, the
Trustee's execution and delivery of the Indenture or the Bondholders purchase of
the Bonds. The Company shall defend, indemnify and hold the Indemnified Persons
harmless from any loss, claim, damage, tax, penalty or expense (including
reasonable attorneys' fees), or liability of any nature due to any and all
suits, actions, legal or administrative proceedings, or claims arising or
resulting from,
27
or in any way connected with: (i) the financing, installation, operation, use or
maintenance of the Project (ii) any act, failure to act, or misrepresentation by
any person in connection with the issuance, sale or delivery of the Bonds, or
(iii) any act, failure to act, or misrepresentation by the Issuer in connection
with this Loan Agreement or any other document involving the Issuer, the Trustee
or the Bondholders in this matter. If any suit, action or proceeding is brought
against any Indemnified Person, such suit, action or proceeding shall be
defended by Counsel to the Company and the Company shall immediately, upon
notice thereof, assume the defense thereof at its own cost and expense. None of
the Issuer, the Trustee, the Bondholders or the Company shall be liable for any
settlement of any proceeding made without each of their consent (which consent
shall not be unreasonably withheld).
(b) The Company shall also indemnify the Indemnified Persons for all reasonable
costs and expenses, including reasonable attorneys' fees, incurred in : (i)
enforcing any obligation of the Company under this Loan Agreement, the Mortgage
or any related agreement, (ii) taking any action requested by the Company, (iii)
taking any action required by this Loan Agreement, the Mortgage or any related
agreement, or (iv) taking any action considered necessary in the reasonable
judgment of the Issuer and which is authorized by this Loan Agreement, the
Mortgage or any related agreement.
(c) Any provision of this Loan Agreement, the Mortgage or any other instrument
or document executed and delivered in connection therewith to the contrary
notwithstanding, the Issuer, the Trustee and the Bondholders retain the right to
enforce any rights accorded any of them by Federal or State law or regulation or
ordinance, and nothing in this Loan Agreement shall be construed as an express
or implied waiver thereof.
(d) If the Issuer is required, requested or permitted to take any action
pursuant to this Loan Agreement, the Mortgage or any other instrument executed
in connection herewith for the benefit of the Company, it will do so if, and
only if, (i) the Issuer is a necessary party to any such action or proceeding,
(ii) the Issuer has received specific written direction from the Company, as
required hereunder or under any other instrument executed in connection
herewith, as to the action to be taken by the Issuer, and (iii) a written
agreement of indemnification and payment of costs, liabilities and expenses
satisfactory to the Issuer has been executed by the Company prior to the taking
of any such action by the Issuer.
(e) The obligations of the Company pursuant to this Section 7.04 shall survive
any assignment or termination of this Loan Agreement.
Section 7.05 Continuing Existence and Qualification. The Company is and
throughout the Term of this Loan Agreement will remain duly qualified to do
business in the State and will maintain its existence, will not dissolve or
otherwise dispose of all or substantially all of its assets, and, except as
permitted by this Section or Section 8.01 hereof, will not consolidate with or
merge into another entity or permit any other entity to consolidate with or
merge into it without the express consent of the Trustee and a Majority of
Holders. Notwithstanding the foregoing, the Company shall be
28
permitted to merge or consolidate with any other entity or take any other
similar actions without the consent of the Trustee or the Bondholders, if, (i)
in the opinion of Bond Counsel furnished by the Company to the Issuer and the
Trustee, such merger, consolidation or other action will not subject the
interest payable on the Series 1997 Bonds to inclusion in the gross income of
the owners thereof for Federal income tax purposes, (ii) the surviving or
combined entity will have a net worth at least equal to the net worth of the
Company immediately prior to such consolidation, merger or other similar action,
(iii) the surviving or resulting entity in any such transaction, or the
transferee in any sale or other transfer, shall have assumed the obligations
hereunder in writing, and (iv) immediately after giving effect to such
transaction, no Event of Default, and no event which after notice or lapse of
time, or both, would become an Event of Default, shall occur or be continuing.
Every surviving, resulting or transferee entity and other person referred to in
this Section 7.05 shall be bound by all of the covenants and agreements of the
Company herein with respect to any further consolidation, merger, sale or
transfer and shall execute an appropriate instrument assuming such covenants and
agreements.
Section 7.06 Maintenance of Security Interests. In accordance with the
provisions of Section 5.05 hereof, the Company shall annually, within ninety
(90) days following the end of each fiscal year of the Company, commencing with
the fiscal year ending December 31, 1998, deliver to the Trustee a Company
Representative's certificate describing each item of Project Equipment with a
market value of $50,000 or more which has not been described in the Disbursement
Requests hereof or in a previous certificate required by this Section 7.06,
which has been added to the Project, whether as a substitution, replacement or
addition, and whether or not, when added, it became part of the real property,
and further certifying that, except for such items of Project Equipment which
have been released from this Loan Agreement pursuant to Section 5.05 hereof and
from the Indenture pursuant to Section 6.03 thereof or taken by exercise of the
power of eminent domain as provided in Section 6.01 hereof or substituted or
replaced as described in this Section 7.06, the items of Project Equipment
described in Exhibit B to this Loan Agreement are still in existence and are
still situated on the Project Site, together with an opinion of Counsel that all
steps requisite to perfection of the security interests granted to the Trustee
under the Indenture by the Issuer and under the Mortgage by the Company have
been duly taken, or specifying the further filings and/or refilings and renewals
required in order to continue perfection of such security interests for so long
as any Bonds remain Outstanding. The Company will prepare and execute all
instruments, including financing statements and continuation statements,
necessary or advisable for perfection of and continuance of the perfection of
the respective security interests as aforesaid. However, all obligations of the
Company under this Section 7.06 are subject to the condition that the Issuer and
the Trustee shall promptly execute all instruments, including financing
statements and continuation statements, presented to them by the Company and
required of them for such purpose. Subject to the provisions of Article Ten of
the Indenture, the Trustee will file and record all such instruments or cause
them to be filed and recorded.
Section 7.07 Mortgage. The Company agrees to authorize, execute and deliver the
Mortgage to the Issuer and hereby conveys to and grants a security interest in
favor of the Issuer (to be assigned to the Trustee for the benefit of the
Trustee and the Bondholders from time to time) in
29
and to its interest in the property described in the granting clauses of the
Mortgage (as the same may exist from time to time). In order to perfect such
conveyance and security interest the Company will deliver to the Trustee,
concurrently with the execution and delivery of this Loan Agreement and the
Mortgage, any appropriate financing statements, and thereafter will execute and
deliver to the Trustee, or appropriate public officer or officers, such other
documents, instruments, financing and other continuation statements when and as
the same may be required to perfect and continue to perfect the lien and
security interest granted to the Trustee pursuant to the Mortgage .
Section 7.08 Indenture. The Company agrees to comply with the terms and
provisions of the Indenture applicable to it and accepts each of its obligations
expressed or implied thereunder.
Section 7.09 Assignment of Issuer's Rights. As security for payment of the
Bonds, the Issuer is assigning to the Trustee pursuant to the Indenture certain
of the Issuer's rights under this Loan Agreement, including the right to receive
payments hereunder (excepting amounts payable or rights granted to the Issuer
relating to rebate to the United States of America, payments of the Issuer's
initial and continuing fees and expenses, reimbursement, indemnification,
limited liability, notice, requests, and other communications). The Issuer
directs the Company to make the payments required hereunder (except such
payments relating to rebate to the United States of America and for fees,
expenses and indemnification of the Issuer) directly to the Trustee, and the
Company hereby assents to such assignment and agrees to make payments directly
to the Trustee without defense or set-off by reason of any dispute between the
Company and the Issuer or the Trustee. By virtue of such assignment, the Trustee
shall be a third-party beneficiary of this Loan Agreement and shall have the
right to enforce the obligations of the Company hereunder.
Section 7.10 Operation of Project as a Manufacturing Facility. During the Term
of this Loan Agreement, the Company shall operate the Project as a
"manufacturing facility" within the meaning of Section 144(a)(12)(C) of the Code
(i.e., a facility used in the manufacturing or production of tangible personal
property (including the processing resulting in a change in the condition of
such property)).
Section 7.11 Financial Covenants. So long as this Loan Agreement is in effect,
and until payment in full of the Bonds and performance of all other obligations
of the Company under this Loan Agreement the Company will maintain:
(a) a minimum current ratio at all times greater than or equal to 1.50 to 1.00.
(b) a minimum tangible net worth greater than or equal to $60,000,000 as of
December 31, 1997. In addition, beginning as of December 31, 1998, and on the
last day of each calendar year thereafter during the term of this Loan
Agreement, the required minimum tangible net worth shall be increased
cumulatively by an amount equal to 60% of the net income of the Company (on a
consolidated basis) for the preceding year.
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(c) a ratio of total liabilities to tangible net worth less than or equal to (i)
2.50 to 1.00 during the first year following the date of this Loan Agreement,
and (ii) 2.25 to 1.00 thereafter.
(d) a minimum fixed charge coverage ratio at all times greater than or equal to
1.30 to 1.00.
All such computations shall be made in accordance with generally accepted
accounting principles consistently applied.
The computations required by subsections (a) through (d) above shall be made at
the end of each Quarter and the Company shall file with the Issuer and the
Trustee, within forty-five (45) days following the end of each Quarter, a
written certification from a Company Representative as to compliance with each
of the requirements in subsections (a) through (d) above. At the end of each
fiscal year of the Company, the Company shall file with the Issuer and the
Trustee, within ninety (90) days following the end of such fiscal year, a
certification by an independent certified public accountant verifying compliance
with each of the requirements in subsections (a) through (d) above. In the event
the Company is not in compliance with any of the requirements set forth in
subsections (a) through (d) above at the end of two successive Quarters, the
Company will be required to submit to the Issuer and the Trustee, together with
the certification of compliance by a Company Representative required above, a
plan designed to place the Company in compliance with any of the above
requirements with which the Company has not been in compliance for two
successive Quarters. In the event the Company is unable to comply with any of
the requirements set forth in subsections (a) through (d) above for four
successive Quarters, the Company shall retain a nationally-recognized management
consulting firm acceptable to the Issuer, the Trustee and a Majority of Holders
to prepare a report making recommendations, and establishing a progress schedule
over a period not to exceed six successive Quarters after the date of issuance
of such report, to correct all deficiencies with such requirements, and the
report of such management consulting firm shall be completed and delivered to
the Issuer, the Trustee and the Bondholders no later than one-hundred- twenty
(120) days after the end of the fourth consecutive Quarter of noncompliance. In
the event the Company shall be in compliance with each of the requirements in
subsections (a) through (d) above for four successive Quarters after the Company
has retained a management consulting firm as set forth above, the Company shall
be required to file only the quarterly written certification by a Company
Representative, and the annual certification by an independent certified public
accountant, as to compliance with such requirements as set forth above until
such time as the Company is not in compliance with any of such requirements at
the end of two successive Quarters, at which time the Company shall again be
required to submit to the Issuer, the Trustee and the Bondholders a plan
designed to place the Company in compliance with such requirements.
The provisions of this Section 7.11 shall be subject to modification and
amendment at any time with the written consent of the Issuer and a Majority of
the Holders.
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Section 7.12 Assurance of Tax Exemption. The Company recognizes that the
exclusion of the interest paid on the Series 1997 Bonds from the gross income of
the owners thereof for Federal income tax purposes is dependent upon the
qualification of the Series 1997 Bonds as "qualified small issue bonds" under
Section 144 of the Code and the Regulations. For this purpose, the Company
hereby further represents, covenants, and agrees as follows:
(a) All of the Net Proceeds of the Series 1997 Bonds, after payment of Issuance
Costs to the extent permitted by Section 7.12(b) hereof, shall be used to pay
for Qualified Project Costs.
(b) An amount not in excess of two percent (2%) of the lesser of the face amount
of the Series 1997 Bonds or the proceeds of the Series 1997 Bonds may be used to
pay for, or provide for the payment of, Issuance Costs. For this purpose, if the
fees of the Underwriter are retained as a discount on the purchase of the Series
1997 Bonds, such retention shall be deemed to be an expenditure of proceeds of
the Series 1997 Bonds to pay Issuance Costs.
(c) The Company shall not take any action or permit or suffer any action to be
taken if the result of the same would be to cause the Series 1997 Bonds to be
"Federally guaranteed" within the meaning of Section 149(b) of the Code and the
Regulations promulgated thereunder.
(d) No portion of the proceeds of the Series 1997 Bonds shall be used to provide
any residential real property for family units, private or commercial golf
course, country club, massage parlor, tennis club, skating facility (including
roller skating, skateboard, and ice skating), racket sports facility (including
any handball or racquetball court), hot tub facility, suntan facility,
racetrack, health club facility, airplane, sky box or other private luxury box,
facility primarily used for gambling, or store the principal business of which
is the sale of alcoholic beverages for consumption off premises.
(e) No portion of the proceeds of the Series 1997 Bonds shall be used to provide
a facility, the primary purpose of which is one of the following: retail food
and beverage services, automobile sales or service, or the provision of
recreation or entertainment.
(f) The proceeds of the Bonds will be used with respect to facilities located or
to be located entirely within the City.
(g) The Company, or one or more of its wholly-owned subsidiaries, will be the
only principal user of the land, facilities and equipment to be acquired and
rehabilitated with the proceeds of the Bonds within the meaning of Section
144(a) of the Code.
(h) There are no outstanding obligations of any state, territory or possession
of the United States, or any political subdivision of the foregoing or of the
District of Columbia,
32
the proceeds of which have been or are to be used primarily with respect to
facilities located within the City (or with respect to any contiguous or
integrated facilities within the meaning of the Code) and which are to be used
primarily by the Company (including any person related to the Company within the
meaning of Section 144(a)(3) of the Code) other than the Bonds.
(i) The Project will at all times consist of land and property which is subject
to the allowance for depreciation provided in Section 167 of the Code.
(j) No portion of the proceeds of the Bonds will be used, directly or
indirectly, to provide working capital for the Company or any related person.
(k) The sum of the principal amount of the Series 1997 Bonds, plus capital
expenditures (determined in accordance with Section 144(a)(4) of the Code and
the applicable Regulations) paid or incurred during the six-year period
beginning three years before the date of issuance of the Series 1997 Bonds and
ending three years after the date of issuance of the Series 1997 Bonds for
facilities located within the City having as principal users the Company or any
related person to the Company will not exceed $10,000,000, and the Company
covenants not to sell, lease, or enter into any other arrangement or make any
other capital expenditures with respect to the Project that would cause this
$10,000,000 limitation to be exceeded.
(l) The Company will not allow any other Person to become an owner or principal
user of the Project during the three years following the later of the date of
issuance of the Series 1997 Bonds, or the date the Project is placed in service,
without an opinion of Bond Counsel to the effect that such action will not cause
the Series 1997 Bonds to exceed the $40,000,000 limitation set forth in Section
144(a)(10) of the Code.
(m) Rehabilitation Expenditures with respect to the Project will equal or exceed
15% of the cost of acquiring the Project Building and of the cost of acquiring
any Project Equipment financed with proceeds of the Series 1997 Bonds, the first
use of which will not occur pursuant to such acquisitions, and will be paid
within two years following the issuance date of the Series 1997 Bonds.
(n) The Company will depreciate using the straight line method of depreciation
pursuant to Section 168 of the Code for all costs incurred as Rehabilitation
Expenditures which are paid or reimbursed to the Company from monies in the
Rehabilitation Fund.
The Company further covenants that it (i) will not take any action or permit any
action to be taken which will cause the interest on the Series 1997 Bonds to be
included in the gross income of the owners thereof for Federal income tax
purposes, provided that the Company shall not have violated this covenant if the
interest on any of the Series 1997 Bonds is included in the gross income of any
Person who is a substantial user of the Project or a related person, as provided
in Section
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147(a) of the Code, or if the interest on any of the Series 1997 Bonds is or
becomes subject to an alternative minimum tax or other similar tax, and (ii)
will prepare and file, with copies delivered to the Trustee, and cause to be
prepared and filed by each other principal user of the Project, any statements
required to be filed in accordance with the Regulations promulgated under
Section 144(a)(4) of the Code and applicable to the Series 1997 Bonds.
Section 7.13 Arbitrage Covenant and Compliance.
(a) The Company covenants that it will not take any action, or fail to take any
action, if any such action or failure to take action would adversely affect the
exclusion from gross income of the interest on the Series 1997 Bonds under
Section 103 of the Code. To that end, the Company will comply with all
requirements of Section 148 of the Code to the extent applicable to the Series
1997 Bonds. In the event that at any time the Company is of the opinion that for
purposes of this Section 7.13 it is necessary to restrict or limit the yield on
the investment of any monies held by the Trustee under the Indenture, the
Company shall take such action as may be necessary in accordance with the Tax
Agreement.
(b) Without limiting the generality of the foregoing, the Company agrees that
there shall be paid from time to time to the Trustee all amounts required to be
rebated to the United States pursuant to Section 148(f) of the Code and any
Regulations thereunder as may be applicable to the Series 1997 Bonds from time
to time. This covenant shall survive payment in full or defeasance of the Series
1997 Bonds.
(c) The Company acknowledges having read Section 5.06 of the Indenture and
agrees to perform all duties imposed upon it by such Section and by the Tax
Agreement. Insofar as said Section and the Tax Agreement impose duties and
responsibilities on the Company, they are specifically incorporated herein by
reference.
Section 7.14 Covenant of the Issuer Relating to Tax Exemption. The Issuer
covenants with respect to the exclusion of the interest on the Series 1997 Bonds
from gross income for Federal income tax purposes that, to the extent within its
reasonable control, the Issuer will not knowingly take any action or fail to
take any action which will result in the income of the Issuer to be received
hereunder becoming taxable to it or interest on the Series 1997 Bonds becoming
included in the gross income of the owners of the Series 1997 Bonds for Federal
income tax purposes.
Section 7.15 Compliance with Laws; Environmental Laws. During the Term of this
Loan Agreement, and at no expense to the Issuer, the Company hereby covenants
and agrees promptly to comply or cause compliance with all laws, ordinances,
orders, rules, regulations and requirements of duly constituted authorities
which may be applicable to the Project, including the Project Building and the
Project Equipment, or to the repair or alteration thereof, or to the use or
manner of use of the Project, including the Project Building and the Project
Equipment, including but not limited to the Americans with Disabilities Act, the
Illinois Accessibility Code, all Federal, State and local
34
environmental and health and safety laws, rules, regulations and orders
applicable to or pertaining to the Project, including the Project Building and
the Project Equipment.
Section 7.16 Annual Certificate. The Company shall furnish to the Issuer and the
Trustee, within one hundred twenty (120) days following the end of each fiscal
year of the Company, a certificate signed by the Company Representative stating
that the Company has made a review of its activities during such fiscal year for
the purpose of determining whether or not the Company has complied with all of
the terms, provision and conditions of this Loan Agreement and whether or not
the Company has kept, observed, performed and fulfilled each and every covenant,
provision and condition of this Loan Agreement on its part to be performed and
is not in default in the performance or observance of any of the terms,
covenants, provisions or conditions hereof, or, if the Company shall be in
default, such certificate shall specify the nature of the each such default and
the status thereof.
Section 7.17 Reports on Employment at Project. Not later than ninety (90) days
following the Completion Date, the Company shall deliver to the Issuer a written
report (which may be prepared in reliance upon information furnished by one or
more of the construction manager, general contractor, or subcontractors) setting
forth in reasonable detail the numbers and types of workers employed in the
acquisition, rehabilitation and equipping of the Project. Thereafter, not later
than one hundred twenty (120) days following the end of each fiscal year of the
Company, the Company shall deliver to the Issuer a written report (which may be
prepared in reliance upon information furnished by any manager at the time
engaged by the Company with respect to the Project) setting forth the average
number of workers, on a full-time-equivalent basis, employed by the Project
during such fiscal year.
Section 7.18 No Warranty by Issuer. The Company recognizes that the Issuer has
not made an inspection of the Project, including the Project Building and the
Project Equipment, or of any fixture or other item constituting a portion
thereof, and the Issuer makes no warranty or representation, express or implied
or otherwise, with respect to the same or the location, use, description,
design, merchantability, fitness for any particular purpose, condition or
durability thereof, or as to the title thereto or ownership thereof or
otherwise, it being agreed that all risks incident thereto are to be borne by
the Company. In the event of any defect or deficiency of any nature in the
Project or any fixture or other item constituting a portion thereof, whether
patent or latent, the Issuer shall have no responsibility or liability with
respect thereto. The provisions of this Section 7.18 have been negotiated and
are intended to be a completed exclusion and negation of any warranties or
representations by the Issuer, express or implied, with respect to the Project
or any fixture or other item constituting a portion thereof, whether arising
pursuant to the Uniform Commercial Code of the State or any other law now or
hereafter in effect or otherwise.
Section 7.19. Environmental Immunity and Indemnity.
(a) The Company will pay and will indemnify, defend and hold the Issuer, the
Trustee and any Bondholder (including any Person at any time serving as a
member, director, officer,
35
employee, agent or consultant of the Issuer, the Trustee or any Bondholder in
their capacity as such) harmless from and against all claims, liabilities,
losses, damages, costs, expenses (including reasonable attorneys' fees), suits
and judgments of any kind brought, claimed or rendered against the Issuer, the
Trustee or any Bondholder, as a direct or indirect result of the Issuer's, the
Trustee's or any Bondholder's relationship with the Company or the financing or
refinancing of the Project and arising out of Contamination in any way affecting
the Project or any other property, or any personal injury (including wrongful
death) or property damage (real or personal) arising out of or related to such
Contamination, or any lawsuit brought or threatened, settlement reached or
government order relating to such Contamination, or any violation of laws,
orders, regulations, requirements, or demands of government authorities, which
are based upon or in any way related to such Contamination including, without
limitation, the costs and expenses of any Clean-up or other remedial action, or
monitoring, attorney and consultant fees, investigation and laboratory fees,
court costs, and litigation expenses.
(b) The Issuer, the Trustee or any Bondholder shall promptly, upon receipt of
notice of the existence of a claim or the commencement of a proceeding regarding
which indemnity under this section may be sought, notify the Company in writing
thereof. If such a proceeding is commenced against the Issuer, the Trustee or
any Bondholder, the Company may participate in the proceeding and, to the extent
it elects to do so, may assume the defense thereof with counsel satisfactory to
the Issuer, the Trustee or any such Bondholder, as the case may be. If, however,
the Issuer, the Trustee or any such Bondholder is advised in an opinion of
counsel that there may be legal defenses available to it which are different
from or in addition to those available to the Company, or if the Company fails
to assume the defense of such proceeding or to employ counsel for that purpose
within a reasonable time after notice of commencement of the proceeding, the
Company shall not be entitled to assume the defense of the proceeding on behalf
of the Issuer, the Trustee or any Bondholder, but shall be responsible for the
reasonable fees, costs and expenses of counsel to the Issuer, the Trustee or
such Bondholder, as the case may be, in conducting its defense.
(c) The obligations of the Company pursuant to this Section 7.19 shall survive
any assignment or termination of this Loan Agreement.
ARTICLE 8
COMPANY'S OPTIONS
Section 8.01 Sale or Lease or Other Disposition of the Project. The Company may,
without the prior consent of the Issuer but subject to the approval of a
Majority of Holders, sell, lease or otherwise dispose of all or substantially
all of the Project, subject to the following conditions:
(a) the proposed purchaser must be duly qualified to do business in Illinois and
have a net worth at least equal to the net worth of the Company prior to the
sale;
36
(b) the Company must deliver to the Issuer and the Bondholders prior to the
proposed sale, lease, or disposition of the Project the following:
(i) a copy of any purchase agreement and the instrument(s) of conveyance, and an
opinion of Counsel stating that the same are in appropriate form for execution
by the respective parties;
(ii) an opinion of nationally-recognized Bond Counsel stating that such sale and
the proposed use or application of the sale proceeds will not violate any
provision of the Act or subject the interest on the Series 1997 Bonds to
inclusion in gross income for Federal income tax purposes;
(iii) financial statements prepared in accordance with generally accepted
accounting principles for the proposed purchaser's three most recently completed
fiscal years, except that if the proposed purchaser has been in business for
less than three years, such financial statements for such shorter period; and
(iv) a written agreement of the proposed purchaser that it agrees to assume and
be bound by all of the provisions of this Loan Agreement, the Indenture, and the
Mortgage, and shall execute the appropriate instruments assuming such covenants
or agreement.
(c) Any sale, lease, or other disposition of the Project shall not relieve the
Company from primary liability for the Loan Repayments and other payments due
and for the performance of all other agreements and covenants required under
this Loan Agreement, the Indenture, and the Mortgage; provided, however, that if
the Company obtains the written consent of the Issuer, the Trustee and a
Majority of Holders, it may be released from primary liability for all Loan
Repayments and other payments due and for the performance of all other
agreements and covenants under this Loan Agreement, the Indenture and the
Mortgage upon the sale, lease, or other disposition of the Project.
Section 8.02 Easements and Release of Real Property for Access and Utilities.
The Company may at any time, and from time to time, cause the Project Site to be
platted or replatted or become subject to covenants, conditions and restrictions
or convey an easement affecting, or fee title to, any part of the Project Site
to a railroad, corporate utility or public body, or to the owner of any
contiguous real property in conjunction with the execution of a reciprocal or
mutual easement agreement with such owner, provided that such reciprocal or
mutual easement agreement contains a boundary agreement permitting existing
improvements located on the Company's property to encroach upon the property of
the adjacent owner, upon (i) written certification by an Independent Engineer
that the conveyance will not impair the usefulness of the Project for the
purposes contemplated in this Loan Agreement, (ii) written certification by the
Company Representative that the conveyance will not impair the Project as a
"project" within the meaning of the Act and (iii) written consent of a Majority
of Holders. No such conveyance shall result in any abatement of Loan
37
Repayments or other sums payable by the Company under this Loan Agreement. The
release of such real property from the Mortgage or subordination of the Mortgage
to any such easement shall not become effective until the following items are
filed with the Trustee and the Trustee has executed the instrument described in
paragraph (d) below:
(a) a copy of the conveyance document executed or to be executed by the Company;
(b) a plat or survey of the Project Site, prepared and certified by a registered
Illinois surveyor, showing the real property to be conveyed or subjected to the
easement as described in the conveyance, and the location in relation thereto of
all Project Buildings, structures and permanently installed equipment on the
land, and all other easements, roads, tracks and utility installations;
(c) the certificate of the Independent Engineer referred to above; and
(d) any instrument to be executed by the Trustee, and a copy thereof for the
files of the Trustee, releasing the land from the lien of the Mortgage or
establishing the easement as a Permitted Encumbrance under the Indenture, as the
case may be.
Section 8.03 Prepayment of Loan Repayments. So long as all amounts which have
become due pursuant to Section 4.02 hereof have been paid and the Company is not
in default hereunder, the Company may, on December 15, 2007, and on any December
15th thereafter, pay in advance all or any part of the amounts to become due
pursuant to Section 4.02 hereof, or, in the event a request by the Company for
the consent of a Majority of Holders to any action described in or contemplated
by Section 7.05 or Section 8.01 hereof, is refused, the Company may, within
sixty (60) days thereafter, pay in advance all of the amounts to become due
pursuant to Section 4.02 hereof, if, not less than thirty (30) nor more than
(60) days prior to such prepayment, the Company (i) gives the Trustee notice of
its intent to prepay, (ii) deposits with the Trustee an amount equal to the
redemption price (including any premium) of the Series 1997 Bonds to be redeemed
on such date, and (iii) directs the Trustee to apply such amount to the
redemption of Series 1997 Bonds in accordance with Section 3.01(3) of the
Indenture. In addition, in the event of a Determination of Taxability, the
Company shall pay to the Trustee, not less than thirty (30) days prior to the
next ensuing Interest Payment Date, an amount sufficient to redeem all
Outstanding Bonds on such Interest Payment Date, plus a premium equal to eight
percent (8%) of the principal amount of the Bonds called for redemption.
Section 8.04 Abatement of Loan Repayments. If at any time the Company deposits
with the Trustee for deposit to the Bond Fund an amount of cash or securities as
described in Section 8.02 of the Indenture which, taking into account any
balance which may then be on hand in the Bond Fund, is sufficient to pay all of
the then Outstanding Bands in accordance with Section 8.02 of the Indenture, and
to pay such interest thereon as is required, and to pay all fees and charges of
the Trustee and Paying Agent which are due or to become due on or before the
date on which the last of the Bonds to be so discharged may be redeemed, under
circumstances not otherwise resulting in
38
termination of the Term of this Loan Agreement, and if no Event of Default shall
have occurred and then be continuing hereunder, the Company shall be entitled to
use and occupy the Project from the date on which such aggregate funds are in
the hands of the Trustee until the expiration of the Term of this Loan Agreement
or its earlier termination under the provisions hereof, without the further
payment of Loan Repayments but otherwise on the terms and conditions herein set
forth.
Section 8.05 Termination Upon Retirement of Bonds. At any time when no Bonds
remain Outstanding, or if the conditions specified in Section 8.04 hereof for
the abatement of Loan Repayments then exist and arrangements satisfactory to the
Trustee have been made for the discharge of all other accrued liabilities under
this Loan Agreement, and the Company has fully performed its obligations
hereunder, this Loan Agreement shall terminate, provided, however, that the
Company shall not be relieved of its obligations under Sections 7.04 and 7.16
hereof.
Section 8.06 Company's Option to Direct Redemption of Bonds. The Company shall
have the option to direct the Trustee to call for redemption of all of the
then-Outstanding Bonds if at any time:
(a) the Project is damaged or destroyed to such extent that, in the reasonable
judgment of the Company, evidenced by a resolution adopted by the Board of
Directors of the Company delivered to the Trustee within thirty (30) days of the
event causing the damage or destruction, the Project cannot be repaired or
restored within six (6) months of the event causing the damage or destruction to
a condition permitting conduct of the normal business operations of the Company,
and at a cost not exceeding the Net Loss Proceeds of insurance received or
likely to be received as a result of such damage or destruction; or
(b) a governmental authority or person, firm or corporation acting under
governmental authority, by exercise of the power of eminent domain, takes title
to all or substantially all of the Project, or so much thereof that in the
reasonable judgment of the Company, evidenced by a resolution adopted by the
Board of Directors of the Company delivered to the Trustee, the Project cannot
be restored within six months following completion of the proceedings by which
such title is taken to a condition permitting conduct of the normal business
operations of the Company and at a cost not exceeding the Net Loss Proceeds of
the award in such condemnation proceedings; or
(c) all or substantially all of the Project is damaged or destroyed, or taken by
exercise of the power of eminent domain, to an extent that, in the reasonable
judgment of the Company, evidenced by a resolution adopted by the Board of
Directors of the Company delivered to the Trustee, it is not financially
desirable to repair or restore the Project for the purpose of conducting
business operations similar to those being conducted at the Project immediately
prior to such damage, destruction or condemnation.
To exercise its options under this Section 8.06, the Company must: (1) deliver
the Trustee written notice of the Company's exercise of the option within ninety
(90) days following the event which
39
is the basis of the option, describing the event, and (2) deposit with the
Trustee a sum sufficient, when added to amounts on deposit in the Bond Fund and
the Property Insurance and Award Fund, to redeem the Outstanding Bonds to be
called for redemption at their principal amount plus accrued interest, but
without premium, as provided in Article Three of the Indenture.
ARTICLE 9
EVENTS OF DEFAULT AND REMEDIES
Section 9.01 Events of Default.
(a) If any of the following events occur, it is hereby defined as and declared
to be and shall constitute an Event of Default hereunder:
(i) if any Loan Repayment or any other payment required to be made hereunder
shall not be made to the Trustee in full when the same becomes due and payable;
(ii) if the Company shall fail to duly perform any other covenant or agreement
on its part under this Loan Agreement or the Mortgage for a period of thirty
(30) days after the date on which written notice of such failure, specifying the
failure and requiring same to be remedied, shall have been given to the Company
by the Issuer or the Trustee, or to the Company and the Issuer by the
Bondholders of at least twenty-five percent (25%) in aggregate principal amount
of the Bonds then Outstanding; provided, however, if the breach of covenant or
agreement is one which cannot be completely remedied within the thirty (30) days
after written notice has been given, it shall not be an Event of Default for
such longer period, not exceeding ninety (90) days following such failure,
during which the Company is taking active steps in good faith and is proceeding
with reasonable diligence to remedy such default;
(iii) if any representation or warranty made by the Company hereunder or under
the Indenture or under the Limited Offering Memorandum, or by a representative
of the Company in any document or certificate furnished to the Trustee or the
Issuer in connection herewith or therewith or pursuant hereto or thereto or in
connection with the transactions contemplated herein or therein, including but
not limited to any misstatements or omissions in the Limited Offering Memorandum
relating to the Bonds, shall prove at any time to have been incorrect or
misleading in any material respect when made and is not cured within thirty (30)
days after the Company receives written notice from the Trustee or the Issuer
that any such representation or warranty is incorrect or misleading in a
material respect;
40
(iv) if the Company shall file a petition in bankruptcy or for reorganization or
for an arrangement pursuant to any present or future Federal bankruptcy act or
under any similar Federal or state law, or shall be adjudicated a bankrupt or
insolvent, or shall make an assignment for the benefit of its creditors, or
shall admit in writing its inability to pay its debts generally as they become
due, or if a petition or answer proposing the adjudication of the Company as a
bankrupt or its reorganization under any present or future Federal bankruptcy
act or any similar Federal or state law shall be filed in any court and such
petition or answer shall not be discharged or denied within ninety (90) days
after the filing thereof, or if a receiver, trustee or liquidator of the Company
or of all or substantially all of the assets of the Company or of the Project
shall be appointed in any proceeding brought against the Company and shall not
be discharged within ninety (90) days after such appointment or if the Company
shall consent to or acquiesce in such appointment, or if the estate or interest
of the Company in the Project or any part thereof shall be levied upon or
attached in any proceeding and such process shall not be vacated, discharged or
released with sixty (60) days after such levy or attachment, or if the Project
shall have been abandoned by the Company for a period of sixty (60) consecutive
days, or if the Company shall be dissolved or liquidated (other than as a result
of a merger or consolidation of the Company into or with another entity under
the conditions permitting such actions contained in Section 7.05 hereof);
(v) if the Company is required to retain a management consulting firm with
respect to any noncompliance by the Company with any of the requirements set
forth in Section 7.11(a) through (d) hereof and such noncompliance is not cured
within ninety (90) days thereafter;
(vi) (A) if the Company breaches or defaults in the performance of any material
obligation under the terms of the Credit Agreement, dated as of November 10,
1997, among the Company, SunTrust Bank and Zions First National Bank, as
thereafter amended, or (B) if the Company or any consolidated subsidiary
breaches or defaults in the performance of any agreement relating to long-term
indebtedness of the Company or any consolidated subsidiary in an aggregate
amount exceeding $1,000,000; or
(vii) if an event of default occurs under Section 9.01 of the Indenture and is
continuing.
(b) Notwithstanding the foregoing, a Determination of Taxability with respect to
the Series 1997 Bonds shall not constitute an Event of Default or a default;
provided, however, that in such event the Trustee will be entitled to pursue any
available remedy by suit at law or equity to enforce performance and observance
of any agreement, obligation or covenant of the Issuer or the Company herein
relating to the exclusion of interest on the Series 1997 Bonds from the gross
income of the owners thereof for Federal income tax
41
purposes and the Company shall pay promptly upon demand the amount required to
redeem the Bonds in accordance with Section 3.01(2)(c) of the Indenture.
(c) Upon having actual notice of the existence of a default or Event of Default,
the Trustee shall give written notice thereof to the Issuer and the Company
within three (3) Business Days of having such actual notice. If, in the sole
opinion of the Trustee, the determination of the existence of a default or Event
of Default hereunder requires an opinion of Counsel, the Trustee shall not be
deemed to have actual notice of a default or Event of Default hereunder unless
and until the Trustee receives a written opinion of Counsel with respect to such
default or Event of Default.
Section 9.02 Remedies. Whenever any Event of Default or a Determination of
Taxability shall have occurred and is continuing, any one or more of the
following remedial steps may be taken by the Trustee:
(a) the Trustee may, at its option, and, if the payment of the Bonds has been
accelerated pursuant to the Indenture, shall, declare all installments of Loan
Repayments for the remainder of the Term of this Loan Agreement (being an amount
equal to that necessary to pay in full all Outstanding Bonds assuming
acceleration of the Bonds under the Indenture and to pay all other indebtedness
thereunder and hereunder) to be immediately due and payable, whereupon the same
shall become immediately due and payable by the Company;
(b) the Trustee may require the Company to furnish copies of all books and
records of the Company pertaining to the Project or the Company's operations;
(c) the Trustee may take whatever action at law or in equity may appear
necessary or appropriate to collect the Loan Repayments then due and thereafter
to become due, or to enforce performance and observance of any obligation,
agreement or covenant of the Company under this Loan Agreement or the Mortgage;
and
(d) the Trustee may exercise any or all remedies provided in Article Nine of the
Indenture.
Section 9.03 Disposition of Funds. Any amounts collected pursuant to action
taken under Section 9.02 shall be paid into the Bond Fund and applied in
accordance with the provisions of the Indenture.
Section 9.04 Manner of Exercise. No remedy herein conferred upon or reserved to
the Trustee is intended to be exclusive of any other available remedy or
remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given under this Loan Agreement or now or
hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default shall impair any such
right or power or shall
42
be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient.
Section 9.05 Attorneys' Fees and Expenses. In the event the Company should
default under any of the provisions of this Loan Agreement and the Trustee or
the Issuer should employ attorneys or incur other expenses for the collection of
amounts owed or the enforcement of performance of any obligation or agreement on
the part of the Company, the Company will on demand pay to the Trustee or the
Issuer the reasonable fees of such attorneys and such other expenses so
incurred.
Section 9.06 Effect of Waiver. In the event any agreement contained in this Loan
Agreement should be breached by either party and thereafter waived by the other
party, such waiver shall be limited to the particular breach so waived and shall
not be deemed to waive any other breach hereunder.
ARTICLE 10
GENERAL
Section 10.1 Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when received by
personal delivery or five (5) days after mailing by certified mail, postage
prepaid, return receipt requested, with proper address as indicated below,
unless otherwise provided herein or required under applicable law. The Issuer,
the Company and the Trustee may, by written notice given by each to the others,
designate any other address or addresses to which notices, certificates or other
communications to them shall be sent when required as contemplated by this Loan
Agreement. Until otherwise provided by the respective parties, all notices,
certificates and communications to each of them shall be addressed as follows:
To the Issuer: Will-Kankakee Regional Development Authority
0000 Xxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attn: Executive Director
To the Company: Flanders Corporation
531 Flanders Filters Road
State Road 1427
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
To the Trustee: Norwest Bank Arizona, N.A.
Corporate Trust Department (9030)
0000 Xxxxx Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, XX 00000
43
To the
Underwriter: Xxxxxx Xxxxxxx Incorporated
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Section 10.2 Governing Law and Binding Effect. This Loan Agreement shall be
governed by and construed in accordance with the laws of the State and shall
inure to the benefit of and shall be binding upon the Issuer and the Company and
their respective successors and assigns.
Section 10.3 Severability. Severability. In the event any provision of this Loan
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 10.4 Amendments, Changes, Modifications and Assignments. Except as
otherwise provided in this Loan Agreement or in the Indenture, subsequent to the
initial issuance of Bonds and before the Indenture is satisfied and discharged
in accordance with its terms, this Loan Agreement may not be effectively
amended, changed, modified, altered, assigned or terminated without the written
consent of the Trustee and the Bondholders of a majority in aggregate principal
amount of the Outstanding Bonds.
Section 10.5 Execution Counterparts. This Loan Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 10.6 Limitation of Issuer's Liability. No covenant, agreement or
obligation contained herein shall be deemed to be a covenant, agreement or
obligation of any present or future director, officer, employee or agent of the
Issuer in his or her individual capacity, and none of the members of the Issuer
nor any officer thereof executing this Loan Agreement or the Bonds nor any
member of the staff thereof shall be personally liable hereunder or on the Bonds
or be subject to any personal liability or accountability by reason of the
execution and delivery hereof and the issuance thereof. No present or future
director, officer, employee or agent of the Issuer shall incur any personal
liability with respect to any other action taken by him or her pursuant to this
Loan Agreement or the Act.
No agreements or provisions contained in this Loan Agreement nor any agreement,
covenant or undertaking by the Issuer contained in any document executed by the
Issuer in connection with the Project or the issuance, sale and delivery of the
Bonds shall constitute an indebtedness of the Issuer, the State or any political
subdivision thereof, shall give rise to any pecuniary liability of the Issuer,
the State or any political subdivision thereof, or shall constitute a loan of
credit or a charge against the general credit or taxing power of any of them,
within the meaning of any Constitutional or statutory limitation, or shall
obligate the Issuer financially in any way except with respect to this Loan
Agreement and the application of revenues herefrom and the proceeds of the
Bonds. No failure of the Issuer to comply with any term, condition, covenant or
agreement herein, or in any document
44
executed by the Issuer in connection with the issuance and sale of the Bonds,
shall subject the Issuer to liability for any claim for damages, costs or other
financial or pecuniary charge except to the extent that the same can be paid or
recovered from this Loan Agreement or revenues therefrom or proceeds of the
Bonds. Nothing herein shall preclude a proper party in interest from seeking and
obtaining, to the extent permitted by law, specific performance against the
Issuer for any failure to comply with any term, condition, covenant or agreement
herein; provided, that no costs, expenses or other monetary relief shall be
recoverable from the Issuer except as may be payable from this Loan Agreement or
its revenues or the proceeds of the Bonds.
No recourse shall be had for the payment of the principal of or premium or
interest on any of the Bonds or for any claim based thereon or upon any
obligation, covenant or agreement in this Loan Agreement contained against any
past, present or future officer, director, member, employee or agent of the
Issuer, or of any successor public corporation, as such either directly or
through the Issuer or any successor public corporation, under any rule of law or
equity, statute or constitution or by the enforcement of any assessment or
penalty or otherwise, and all such liability of any such officers, directors,
members, employees or agents as such is hereby expressly waived and released as
a condition of and consideration for the execution of this Indenture, and the
issuance of such Bonds, by the Issuer.
Section 10.7 Rights Created in Third Parties. The terms of this Loan Agreement
are not intended to establish or create any rights in any persons other than the
Issuer, the Company, the Trustee, and the Bondholders and the respective
successors of each.
Section 10.8 Payments Due on Saturdays, Sundays and Holidays. In any case where
the due date of any Loan Repayments or Additional Payments shall be other than a
Business Day, payment of such Loan Repayments or Additional Payments need not be
made on such date but may be made on the next succeeding Business Day with the
same force and effect as if made on the due date.
Section 10.9 Survival. All representations and warranties contained herein and
in the Indenture or in certificates and other instruments delivered pursuant
hereto and thereto shall survive the execution and delivery of this Loan
Agreement and the issue, sale and delivery of the Bonds.
45
IN WITNESS WHEREOF, the Issuer and the Company have caused this Loan Agreement
to be executed in their respective names and attested by their duly authorized
officers, all as of the date first above written.
WILL-KANKAKEE REGIONAL
DEVELOPMENT AUTHORITY
By___________________________
Its Chairman
Attest:
By_______________________________
Its Secretary
FLANDERS CORPORATION
By___________________________
Its Vice President-Finance
46
