EXECUTION COPY
LOAN AGREEMENT
between
FAYETTE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
and
DYNAMIC MATERIALS CORPORATION
$6,850,000
FAYETTE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
MULTI-MODE VARIABLE RATE INDUSTRIAL
DEVELOPMENT REVENUE BONDS, SERIES 1998
(DYNAMIC MATERIALS CORPORATION PROJECT)
Dated
as of
September 1, 1998
Pursuant to the Indenture (defined herein), the Issuer has assigned to Star
Bank, N.A., as Trustee, for the benefit of the holders of the Bonds all right,
title and interest of the Issuer in this Loan Agreement except for the
Unassigned Issuer's Rights herein described.
LOAN AGREEMENT
THIS LOAN AGREEMENT (this "Agreement") made and entered into as of
September 1, 1998 between the FAYETTE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, a
duly organized and validly existing public instrumentality of the Commonwealth
of Pennsylvania and a public body corporate and politic (the "Issuer"), and
DYNAMIC MATERIALS CORPORATION, a Delaware corporation (the "Borrower") (the
capitalized terms not defined in the recitals being used therein as defined in
Article I hereof),
WITNESSETH:
WHEREAS, the Fayette County Industrial Development Authority (the
"Issuer") is a duly organized and validly existing public instrumentality of the
Commonwealth of Pennsylvania (the "Commonwealth") and a public body corporate
and politic authorized pursuant to the Economic Development Financing Law, the
Act of August 23, 1967, P.L. 251, as amended (the "Act") to issue revenue bonds
for the purpose of financing the cost of projects, including industrial
facilities, as defined in the Act; and
WHEREAS, Dynamic Materials Corporation (the "Borrower") is a Delaware
corporation that has requested the Issuer to issue revenue bonds to assist the
Borrower in financing (i) the acquisition, construction and equipping of a new
manufacturing facility in North Union Township, Pennsylvania (the land and
improvements constituting such facility, the "Project"), (ii) the cost of credit
enhancement for the bond issue, (iii) capitalized interest during the
construction period, and (iv) certain costs of issuance related to the bond
issue (items (i) through (iv) collectively and as described further in Section
3.4 hereof, the "Project Costs"); and
WHEREAS, the revenue bonds are to be issued in an aggregate principal
amount of $6,850,000 and designated as the Issuer's "Multi-Mode Variable Rate
Industrial Development Revenue Bonds, Series 1998 (Dynamic Materials Corporation
Project)" (the "Bonds"); and
WHEREAS, in connection with the issuance of the Bonds, the Borrower seeks
the Issuer's execution, delivery and performance of this Agreement providing for
the loan of the proceeds of the Bonds to the Borrower to finance the Project
Costs; and
WHEREAS, the Bonds will be special limited obligations of the Issuer
payable solely from and secured by amounts received from the Borrower under this
Agreement and other amounts pledged therefor under the Indenture; and
WHEREAS, the Bonds are expected to be additionally secured by a Letter of
Credit issued by KeyBank National Association (the "Bank"); and
WHEREAS, the Bonds are expected to be privately placed with one or more
institutional investors by Key Capital Markets, Inc. (the "Placement Agent");
and
WHEREAS, the Issuer has determined that it is consistent with the purposes
of the Act to
authorize the issuance of the Bonds to finance the Project Costs and to loan the
proceeds of the Bonds pursuant to this Agreement to the Borrower to accomplish
the same;
NOW, THEREFORE, in consideration of the premises and the mutual
representations and agreements hereinafter contained, the Issuer and the
Borrower agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. USE OF DEFINED TERMS. In addition to the words and terms
defined elsewhere in this Agreement or by reference to another document, the
words and terms set forth in Section 1.2 hereof shall have the meanings set
forth therein unless the context or use clearly indicates another meaning or
intent. Such definitions shall be equally applicable to both the singular and
plural forms of any of the words and terms defined therein. Capitalized terms
used and not defined in this Agreement shall have the meanings assigned to them
in the Indenture.
SECTION 1.2. DEFINITIONS. As used herein:
"Act" means the Economic Development Financing Law, the Act of August
23, 1967, P.L. 251, as amended.
"Additional Payments" means the amounts required to be paid by the
Borrower pursuant to the provisions of Section 4.2 hereof.
"Agreement" means this Loan Agreement as amended or supplemented from
time to time.
"Alternate Credit Facility" means any direct pay letter of credit or
other credit enhancement or support facility that has terms which are the same
in all material respects (except for the term and maximum interest rate but
including coverage of accrued interest on the Bonds for 98 days if the Bonds
bear interest at the Weekly Rate or for 183 days if the Bonds bear interest at
the Semi-Annual Rate or the Long-Term Rate) as the then current Credit Facility
and (i) shall have a term of not less than one year (except if the Long-Term
Rate shall then be in effect, the term of such Alternate Credit Facility shall
not expire prior to (a) the first par redemption date plus 15 days or (b) the
first redemption date plus 15 days if the Alternate Credit Facility covers the
redemption premium), (ii) shall be issued by a bank, a trust company or other
financial institution or credit provider, and (iii) the Trustee shall have
received the opinions required by Section 6.03 of the Indenture.
"Authenticating Agent" means the Authenticating Agent as defined in
the Indenture.
"Bank" means, initially, KeyBank National Association, and its
successors and assigns in its capacity as issuer of the Credit Facility and, in
the event an Alternate Credit Facility is outstanding, the issuer of the
Alternate Credit Facility.
"Bond Fund" means the Bond Fund created in the Indenture.
"Bond Pledge Agreement" means the Bond Pledge Agreement, dated as of
even date herewith, between the Borrower, the Trustee and the Bank, as amended
or supplemented from time to time.
2
"Bonds" means the $6,850,000 Fayette County Industrial Development
Authority Multi-Mode Variable Rate Industrial Development Revenue Bonds, Series
1998 (Dynamic Materials Corporation Project).
"Bond Service Charges" means, for any period or payable at any time,
the principal of, premium, if any, and interest due on the Bonds for that period
or payable at that time whether due at maturity or upon acceleration or
redemption.
"Bond Year" means Bond Year, as defined in the Indenture.
"Borrower" means Dynamic Materials Corporation, a Delaware
corporation, and its lawful successors and assigns to the extent permitted by
this Agreement.
"Business Day" means any day of the year other than (i) a Saturday or
Sunday, (ii) any day on which banks located in either New York, New York, or the
principal corporate trust office of the Trustee or the designated office of the
Bank is located are required or authorized by law to remain closed, or (iii) any
day on which the New York Stock Exchange is closed.
"Code" means the Internal Revenue Code of 1986, as amended, including,
when appropriate, the statutory predecessor of the Code, and all applicable
regulations (whether proposed, temporary or final) under that Code and the
statutory predecessor of the Code, and any official rulings and judicial
determinations under the foregoing applicable to the Bonds.
"Completion Date" means the date of completion of the Project
evidenced in accordance with the requirements of Section 3.6 hereof.
"Construction Period" means the period between the beginning of the
acquisition, construction, installation, equipment or improvement of the Project
or the date on which the Bonds are delivered to the Original Purchaser,
whichever is earlier, and the Completion Date.
"Conversion" means (a) any conversion from time to time in accordance
with the terms of the Indenture of the Bonds from one Interest Rate Mode to
another Interest Rate Mode and (b) the end of any Long-Term Rate Period.
"Conversion Date" means the first date any Conversion becomes
effective.
"Counsel" means Counsel as defined in the Indenture.
"Credit Facility" means the Credit Facility as defined in the
Indenture.
"Credit Facility Account" means the Credit Facility Account created
under Section 5.01 of the Indenture.
"Defeasance Account" means the Defeasance Account created under
Section 5.01 of the Indenture.
3
"Designated Representative" means each person at the time designated
to act on behalf of the Borrower by written certificate furnished to the Issuer,
the Bank, and the Trustee, containing the specimen signature of that person and
signed on behalf of the Borrower by a duly authorized officer. That certificate
may designate an alternate or alternates. In the event that all persons so
designated become unavailable or unable to act and the Borrower fail to
designate a replacement within 10 days after such unavailability or inability to
act, the Trustee may appoint an interim Designated Representative until such
time as the Borrower designates that person.
"Eligible Investments" means Eligible Investments as defined in the
Indenture.
"Engineer" means an individual or firm acceptable to the Trustee and
qualified to practice the profession of engineering or architecture under the
laws of the State.
"Event of Default" means any of the events described as an Event of
Default in Section 7.1 hereof.
"Force Majeure" means any of the causes, circumstances or events
described as constituting Force Majeure in Section 7.1. hereof.
"Holder" or "Holder of a Bond" means the Person in whose name a Bond
is registered on the Register.
"Indenture" means the Trust Indenture, dated as of even date herewith,
between the Issuer and the Trustee, as amended or supplemented from time to
time.
"Issuer" means the Fayette County Industrial Development Authority.
"Interest Rate Mode" means the Weekly Rate, the Semi-Annual Rate or
the Long-Term Rate.
"Loan" means the loan by the Issuer to the Borrower of the proceeds
received from the sale of the Bonds.
"Loan Payment Date" means, (a) while the Bonds bear interest at the
Weekly Rate, each Interest Payment Date, (b) while the Bonds bear interest at
the Semi-Annual or Long-Term Rate, the first day of each March, June, September
and December, or (c) any other date on which any principal of or interest or any
premium on the Bonds shall be due and payable, whether at maturity, upon
acceleration, call for redemption or otherwise.
"Loan Payments" means the amounts required to be paid by the Borrower
in repayment of the Loan pursuant to the provisions of the Note and of Section
4.1 hereof.
"Long-Term Rate" means the Long-Term Rate on the Bonds established in
accordance with Section 2.02(c)(iii) of the Indenture.
"Long-Term Rate Period" means the Long-Term Rate Period as defined in
the
4
Indenture.
"Note" means the non-negotiable promissory note of the Borrower, dated
as of even date with the Bonds, in the form attached hereto as Exhibit A and in
the principal amount of $6,850,000, evidencing the obligation of the Borrower to
make Loan Payments (as defined in the Agreement).
"Notice Address" means:
(a) As to the Issuer: Fayette County Industrial
Development Authority
c/o Radcliffe, XxXxxx & Xxxxxxxx
00 Xxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxx X. XxXxxx, III, Esq.
(b) As to the Borrower: Dynamic Materials Corporation
000 Xxxxx Xxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Chief Financial Officer
(c) As to the Trustee: Star Bank, N.A. 6th
Floor 000 Xxxxxx Xxxxxx, XX 0000
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Services
(d) As to the Bank: KeyBank National
Association 000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000 Attention:
International Dept.
With a copy to: KeyBank National Association
CO-02-CP-1000
000 X. Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, XX 00000
Attention: Corporate Banking
(e) As to the Key Capital Markets, Inc.
Remarketing Agent: 000 Xxxxxx Xxxxxx
Structured Capital Markets Group
OH-01-27-0419
Xxxxxxxxx, Xxxx 00000
Attention: Trading and Underwriting
5
(f) As to the Tender Star Bank, N.A.
Agent: 6th Floor
000 Xxxxxx Xxxxxx, XX 0000
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Services
or such additional or different address, notice of which is given under Section
8.3 hereof.
"Original Purchaser" means the Person or Persons who purchase the
Bonds upon their initial issuance and delivery.
"Paying Agent" means the Paying Agent as defined in the Indenture.
"Person" or words importing persons mean firms, associations,
partnerships (including without limitation, general and limited partnerships),
joint ventures, societies, estates, trusts, corporations, public or governmental
bodies, other legal entities and natural persons.
"Placement Agent" means Key Capital Markets, Inc., Cleveland, Ohio.
"Placement Agreement" means the Placement Agreement dated as of
September 10, 1998 among the Issuer, the Placement Agent and the Borrower.
"Plans and Specifications" means the Borrower's plans and
specifications describing the Project Facilities as now prepared and as they may
be changed as hereinafter provided.
"Private Placement Memorandum" means the Private Placement Memorandum
dated as of September 17, 1998 and distributed by the Placement Agent in
connection with the sale of the Bonds.
"Project" means, collectively, the Project Site and the Project
Facilities, together constituting a "project" as defined in the Act.
"Project Costs" means the costs of the Project specified in Section
3.4 hereof.
"Project Facilities" means the Project Facilities described in Exhibit
B hereto, together with any additions, modifications and substitutions to those
facilities.
"Project Fund" means the Project Fund created in the Indenture.
"Project Purposes" means the acquisition, construction, and equipping
and improving of a new manufacturing facility in North Union Township,
Pennsylvania, for use by the Borrower or its designee or assignee in the high
energy metal working business and any other use which may be permitted by the
Act and this Agreement.
"Project Site" means the real estate described in Exhibit C hereto,
and any additions thereto, less any removals therefrom.
6
"Rebate Fund" means the Rebate Fund created under Section 5.05 of the
Indenture.
"Redemption Premium Account" means the Redemption Premium Account
created in the Indenture.
"Register" means the books kept and maintained by the Registrar for
the registration and transfer of Bonds pursuant to Section 2.04 of the
Indenture.
"Registrar" means the Registrar as defined in the Indenture.
"Reimbursement Agreement" means the Reimbursement Agreement, dated as
of September 1, 1998, between the Borrower and the Bank, as amended or
supplemented from time to time.
"Remarketing Agent" means, initially, Key Capital Markets, Inc.,
Cleveland, Ohio and any Person meeting the qualifications of, and designated
from time to time to act as Remarketing Agent under, Section 12.01 of the
Indenture.
"Remarketing Agreement" means the Remarketing Agreement, dated as of
September 1, 1998, among the Borrower, the Remarketing Agent and the Issuer in
connection with the remarketing of the Bonds.
"Remarketing Proceeds Account" means the Remarketing Proceeds Account
created in the Indenture.
"Resolution" means the resolution of the Issuer dated July 27, 1998
providing for the issuance of the Bonds and approving this Agreement, the
Indenture and related matters.
"Revenues" means (a) the Loan Payments, (b) all amounts payable to the
Trustee with respect to the principal or redemption price of, or interest on,
the Bonds (i) by the Borrower as required hereunder, (ii) upon deposit in the
Bond Fund from the proceeds of the Bonds; and (iii) by the Credit Facility
Issuer under a Credit Facility, and (c) investment income with respect to any
moneys held by the Trustee in the Bond Fund. The term "Revenues" does not
include any moneys or investments in the Rebate Fund.
"Semi-Annual Rate" means the semi-annual interest rate on the Bonds
established in accordance with Section 2.02(c)(ii) of the Indenture.
"State" means the Commonwealth of Pennsylvania.
"Tender Agent" means, initially, Star Bank, N.A., Cincinnati, Ohio and
any successor Tender Agent as determined or designated under or pursuant to the
Indenture.
"Trustee" means Star Bank, N.A., Cincinnati, Ohio, until a successor
Trustee shall have become such pursuant to the applicable provisions of the
Indenture, and thereafter "Trustee" shall mean the successor Trustee.
7
"Unassigned Issuer's Rights" means all of the rights of the Issuer to
receive Additional Payments under Section 4.2 hereof, to be held harmless and
indemnified under Section 5.3 hereof, to be reimbursed for attorneys' fees and
expenses under Section 7.4 hereof, and to give or withhold consent to
amendments, changes, modifications, alterations and termination of this
Agreement under Section 8.6 hereof.
"Weekly Rate" means the weekly rate of interest on the Bonds
established in accordance with Section 2.02(c)(i) of the Indenture.
SECTION 1.3. INTERPRETATION. Any reference herein to the Issuer or to
any member or officer of the Issuer includes entities or officials succeeding to
their respective functions, duties or responsibilities pursuant to or by
operation of law or lawfully performing their functions.
Any reference to a section or provision of the Act, or to a section,
provision or chapter of any other laws, includes that section, provision or
chapter or statute as amended, modified, revised, supplemented or superseded
from time to time; provided, that no amendment, modification, revision,
supplement or superseding section, provision or chapter or statute shall be
applicable solely by reason of this provision, if it constitutes in any way an
impairment of the rights or obligations of the Issuer, the Holders, the Trustee,
the Bank or the Borrower under this Agreement.
Unless the context indicates otherwise, words importing the singular
number include the plural number, and vice versa; the terms "hereof", "hereby",
"herein", "hereto", "hereunder" and similar terms refer to this Agreement; and
the term "hereafter" means after, and the term "heretofore" means before, the
date of delivery of the Bonds. Words of any gender include the correlative words
of the other genders, unless the sense indicates otherwise.
SECTION 1.4. CAPTIONS AND HEADINGS. The captions and headings in this
Agreement are solely for convenience of reference and in no way define, limit or
describe the scope or intent of any Articles, Sections, subsections, paragraphs,
subparagraphs or clauses hereof.
(End of Article I)
8
ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS OF THE ISSUER. The Issuer makes the
following representations, covenants and warranties as the basis for the
undertakings on the part of the Borrower contained herein:
(a) The Issuer is a duly organized and validly existing public
instrumentality of the State and a public body corporate and politic.
(b) The Issuer has the power to enter into this Agreement and the
Indenture and to perform and observe the agreements and covenants on its
part contained herein and in the Indenture, including without limitation
the power to issue and sell the Bonds as contemplated herein and in the
Indenture, and by proper corporate action has duly authorized the execution
and delivery hereof.
(c) The execution and delivery of this Agreement and the Indenture by
the Issuer do not, and consummation of the transactions contemplated hereby
and fulfillment of the terms hereof by the Issuer will not, result in a
breach of any of the terms or provisions of, or constitute a default under,
any indenture, mortgage, deed of trust or other agreement or instrument to
which the Issuer is now a party or by which it is now bound.
(d) The Issuer has duly authorized, executed and delivered this
Agreement and the Indenture, and assuming due authorization, execution and
delivery by the other parties thereto, such documents will constitute valid
and binding obligations of the Issuer enforceable in accordance with their
respective terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
creditors' rights generally and to the exercise of judicial discretion in
accordance with general equitable principles. The Issuer has duly
authorized the issuance of the Bonds. When executed, authenticated and
delivered in accordance with the Indenture, the Bonds will constitute valid
and binding special obligations of the Issuer enforceable in accordance
with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting
creditors' rights generally and to the exercise of judicial discretion in
accordance with general equitable principles.
(e) The Issuer has not previously pledged and covenants that it will
not in the future pledge the amounts derived from this Agreement other than
to secure the Bonds.
SECTION 2.2. REPRESENTATIONS AND COVENANTS OF THE BORROWER. The
Borrower represents and covenants that:
(a) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, and is in good
standing and duly qualified to do business in the State and the State of
Colorado, and in all other jurisdictions in which
9
the ownership or lease of its property or the conduct of its business shall
require qualification.
(b) The Borrower has full power and authority to execute, deliver and
perform this Agreement, the Reimbursement Agreement, the Remarketing
Agreement, the Bond Pledge Agreement and the Note and to enter into and
carry out the transactions contemplated by those documents; and that the
execution, delivery and performance of those documents do not, and will
not, violate any provision of law applicable to it, and do not, and will
not, conflict with its certificate of incorporation or by-laws nor conflict
with or result in a default under any agreement or instrument to which it
is a party or by which it is bound, a violation of which would cause a
material adverse effect to the Borrower. This Agreement, the Reimbursement
Agreement, the Remarketing Agreement, the Bond Pledge Agreement and the
Note have, by proper action, been duly authorized, executed and delivered
by the Borrower and all steps necessary have been taken to constitute this
Agreement, the Reimbursement Agreement, the Remarketing Agreement, the Bond
Pledge Agreement, and the Note valid and binding obligations of the
Borrower. Assuming due authorization, execution and delivery by the other
parties thereto, each such document constitutes a valid and binding
obligation of the Borrower enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other laws affecting creditors' rights generally and the
exercise of judicial discretion in accordance with general equitable
principles.
(c) The Project will be completed in accordance with the Plans and
Specifications and the Project will be operated and maintained in such
manner as to conform with all applicable zoning, planning, building,
environmental and other applicable governmental regulations and as to be
consistent with the Act.
(d) The Borrower shall not use or operate the Project in any way or
take any other action which would affect the qualification of the Project
under the Act or impair the exclusion from gross income for federal income
tax purposes of the interest on the Bonds.
(e) The Borrower intends to use or operate the Project in a manner
consistent with the Project Purposes until the date on which the Bonds have
been fully paid and know of no reason why the Project will not be so used
or operated. If, in the future, there is a cessation of that use or
operation, it will use its best efforts to resume that use or operation or
accomplish an alternate use or operation by the Borrower or others which
will be consistent with the Act and this Agreement. If the Borrower
voluntarily moves all or substantially all of the equipment which is
included in the Project from within the boundaries of the Issuer, the
Borrower will promptly prepay the Loan and cause the Bonds to be redeemed.
(f) In no event will it provide collateral to the Bank which bears a
yield higher than the yield on the Bonds within the meaning of Section 148
of the Code and any lawful regulations promulgated thereunder, except upon
receipt by the Borrower of an opinion of
10
nationally recognized bond counsel to the effect that the pledge of such
collateral shall not cause the interest on the Bonds to be included in
gross income for federal income tax purposes; provided, however, that no
such yield restriction or opinion is required with respect to the pledge of
any collateral that consists of "tax-exempt bonds" within the meaning of
Section 150(a)(6) of the Code.
(g) The zoning for the Project Site is appropriate for the Project and
its use.
(h) No litigation at law or in equity nor any proceeding before any
governmental agency or other tribunal involving the Borrower is pending or,
to the knowledge of the Borrower threatened, in which any liability of the
Borrower is not adequately covered by insurance and in which any judgment
or order would have a material and adverse effect upon the business or
assets of the Borrower or would materially and adversely affect the
Project, the validity of this Agreement, the Bond Pledge Agreement, the
Reimbursement Agreement, the Remarketing Agreement and the Note or the
performance of the Borrower's obligations thereunder or the transactions
contemplated hereby.
(i) The Borrower shall timely pay all real estate taxes levied against
the Project or make payments in lieu of taxes equal to the ad valorem taxes
and assessments with respect to the Project.
(End of Article II)
11
ARTICLE III
COMPLETION OF THE PROJECT; ISSUANCE OF THE BONDS
SECTION 3.1. ACQUISITION, CONSTRUCTION, INSTALLATION, EQUIPMENT AND
IMPROVEMENT. The Borrower shall acquire, construct, furnish, equip and improve
the Project Facilities on the Project Site with all reasonable dispatch and in
accordance with the Plans and Specifications, (b) shall pay when due all fees,
costs and expenses incurred in connection with that acquisition, construction,
installation, equipment and improvement from funds made available therefor in
accordance with this Agreement or otherwise, and (c) shall 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,
construction, furnishing, equipment and improvement of the Project, and shall
enforce the provisions of any contract, agreement, obligation, bond or other
performance security with respect thereto. It is understood that the Project is
that of the Borrower and any contracts made by the Borrower with respect
thereto, whether construction contracts or otherwise, or any work to be done by
the Borrower on the Project are made or done by the Borrower in its own behalf
and not as agent or contractor for the Issuer.
SECTION 3.2. PLANS AND SPECIFICATIONS. The Plans and Specifications
have been filed with the Issuer. The Borrower may revise the Plans and
Specifications from time to time, provided that no revision shall be made which
would change the Project Purposes, without the approval of the Issuer, and no
revision shall be made which would change the Project Purposes to other than
purposes permitted by the Act and the Code.
SECTION 3.3. ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS. To
provide funds to make the Loan for the purposes of paying the Project Costs, the
Issuer shall issue, sell and deliver the Bonds to the Original Purchaser. The
Bonds will be issued pursuant to the Indenture in the aggregate principal
amount, will bear interest, will mature and will be subject to redemption as set
forth therein. The Borrower hereby approves the terms and conditions of the
Indenture and the Bonds, and of the terms and conditions under which the Bonds
will be issued, sold and delivered.
The proceeds from the sale of the Bonds shall be loaned to the
Borrower and paid as follows: (a) a sum equal to any accrued interest, if any,
paid by the Original Purchaser shall be deposited with the Trustee and deposited
in the Bond Fund, and (b) the balance of the proceeds from the sale of the Bonds
shall be deposited in Project Fund. Pending disbursement pursuant to Section 3.4
hereof, the proceeds deposited in the Project Fund, together with any investment
earnings thereon, shall constitute a part of the Revenues assigned by the Issuer
to the payment of Bond Service Charges as provided in the Indenture.
Neither the Issuer nor the Borrower have or shall have any interest in
the Credit Facility, the Credit Facility Account, the Defeasance Account, the
Redemption Premium Account or the Remarketing Proceeds Account created under
Section 5.01 of the Indenture or the proceeds of the remarketing of the Bonds
from whatever source and wherever deposited.
12
SECTION 3.4. DISBURSEMENTS FROM THE PROJECT FUND. Subject to the
provisions below, disbursements from the Project Fund shall be made only to
reimburse or pay the Borrower, or any person designated by the Borrower, for the
following Project Costs:
(a) Costs incurred directly or indirectly for or in connection with
the acquisition, construction, furnishing, equipment or improvement of the
Project, including costs incurred in respect of the Project for preliminary
planning and studies; architectural, legal, engineering, accounting,
consulting, supervisory and other services; labor, services and materials;
and recording of documents and title work.
(b) Premiums attributable to any surety bonds and insurance required
to be taken out and maintained during the Construction Period with respect
to the Project Site and the Project Facilities.
(c) Taxes, assessments and other governmental charges in respect of
the Project that may become due and payable during the Construction Period.
(d) Costs incurred directly or indirectly in seeking to enforce any
remedy against any contractor or subcontractor in respect of any actual or
claimed default under any contract relating to the Project Facilities.
(e) Financial, legal, accounting, printing and engraving fees, charges
and expenses, and all other such fees, charges and expenses incurred in
connection with the authorization, sale, issuance and delivery of the
Bonds, including, without limitation, the fees and expenses of the Trustee
and any paying agent properly incurred under the Indenture that may become
due and payable during the Construction Period; provided that the amount of
the proceeds of the Bonds used to finance issuance costs shall not exceed
2% of the aggregate face amount of the Bonds within the meaning of Section
147(g) of the Code.
(f) Any other costs, expenses, fees and charges properly chargeable to
the cost of construction, furnishing, equipment or improvement of the
Project.
(g) Payment of interest on the Bonds or fees for credit enhancement
devices applicable to the Bonds, to the extent such fees constitute a
reasonable charge for the transfer of credit risk, during the Construction
Period.
(h) Payments made to the Rebate Fund.
Any disbursements from the Project Fund for the payment of the Project
Costs shall be made by the Trustee only upon the written order of the Designated
Representative with written approval of the Bank. Each such written order shall
be in substantially the form of the disbursement request attached hereto as
Exhibit D and shall be consecutively numbered and accompanied by invoices or
other appropriate documentation supporting the payments or reimbursements
requested. Any disbursement for any item not described in, or the cost for which
item is other than as described in, the information statement filed by the
Issuer in connection with the issuance of the Bonds as
13
required by Section 149(e) of the Code shall be accompanied by evidence
satisfactory to the Trustee that the average reasonably expected economic life
of the facilities being financed by the Bonds is not less than 5/6ths of the
average maturity of the Bonds or, if such evidence is not presented with the
disbursement or at the request of the Trustee, by an opinion of nationally
recognized bond counsel to the effect that such disbursement will not result in
the interest on the Bonds becoming included in the gross income of the Holders
for federal income tax purposes. At or prior to submitting a request for
disbursement pursuant to Exhibit D to this Agreement, the Designated
Representative shall provide the Trustee with either appropriate mechanics' lien
affidavits or waivers from each payee under each such prior disbursement request
or with evidence or documentation satisfactory to the Trustee that provision
against the filing of any mechanics' or similar liens with respect to the
payment being made has been taken by the Borrower by deposit or bonding. In case
any contract provides for the retention by the Borrower of a portion of the
contract price, there shall be paid from the Project Fund only the net amount
remaining after deduction of any such portion, and only when that retained
amount is due and payable, may it be paid from the Project Fund.
Any moneys in the Project Fund remaining after the Completion Date and
payment, or provision for payment, in full of the Project Costs, at the
direction of the Designated Representative, promptly shall be
(i) used to acquire, construct, install, equip and improve such
additional real or personal property in connection with the Project as is
designated by the Designated Representative and the acquisition,
construction, installation, equipment and improvement of which will be
permitted under the Act, provided that any such use shall be accompanied by
an opinion of nationally recognized bond counsel to the effect that such
use will not result in the interest on the Bonds becoming included in the
gross income of the Holders for federal income tax purposes;
(ii) used for the purchase of Bonds in the open market for the purpose
of cancellation at prices not exceeding the full market value thereof plus
accrued interest thereon to the date of payment therefor;
(iii) paid into the Bond Fund to be applied to the redemption of the
Bonds; or
(iv) used for a combination of the foregoing as is provided in that
direction.
Notwithstanding the foregoing, upon the occurrence and continuance of
an "Event of Default" as defined in Section 7.01 of the Indenture because of
which acceleration of the principal amount of the Bonds has been declared
pursuant to Section 7.03 of the Indenture, any moneys remaining in the Project
Fund shall be promptly transferred by the Trustee to the Bond Fund.
SECTION 3.5. BORROWER REQUIRED TO PAY COSTS IN EVENT PROJECT FUND
INSUFFICIENT. If moneys in the Project Fund are not sufficient to pay all
Project Costs, the Borrower nonetheless will complete the Project in accordance
with the Plans and Specifications and shall pay all such additional Project
Costs from their own funds. The Borrower shall not be entitled to any
reimbursement for any such additional Project Costs from the Issuer, the
Trustee, the Bank or any
14
Holder; nor shall they be entitled to any abatement, diminution or postponement
of the Loan Payments. This Section shall not be operative if and to the extent
that compliance with it would, or reasonably might be anticipated by the
Borrower to, involve a violation of any provision of the Agreement including,
without limitation, Sections 2.2 and 5.4 of the Agreement.
SECTION 3.6. COMPLETION DATE. The Borrower shall notify the Issuer,
the Trustee and the Bank of the Completion Date by a certificate signed by the
Designated Representative stating
(a) the date on which the Project Facilities were substantially
completed,
(b) that all other facilities necessary in connection with the Project
have been acquired, constructed, furnished, equipped and improved,
(c) that the acquisition, construction, furnishing, equipment and
improvement of the Project Facilities and those other facilities have been
accomplished in such a manner as to conform with all applicable zoning,
planning, building, environmental and other similar governmental
regulations,
(d) that except as provided in subsection (e) of this Section, all
costs of that acquisition, construction, furnishing, equipment and
improvement then or theretofore due and payable have been paid, and
(e) the amounts which the Trustee shall retain in the Project Fund for
the payment of Project Costs not yet due or for liabilities which the
Borrower is contesting or which otherwise should be retained and the
reasons such amounts should be retained.
That certificate may state that it is given without prejudice to any rights
against third parties which then exist or subsequently may come into being. The
Designated Representative shall include with that certificate a statement
specifically describing all items of personal property comprising a part of the
Project Facilities. The certificate shall be delivered as promptly as
practicable after the occurrence of the events and conditions referred to in
subsections (a) through (d) of this Section.
SECTION 3.7. INVESTMENT OF FUND MONEYS. At the oral (promptly
confirmed in writing) or written request of the Designated Representative, any
moneys held as part of the Bond Fund (except moneys in the Credit Facility
Account, Defeasance Account, Remarketing Proceeds Account, or Redemption Premium
Account created under Section 5.01 of the Indenture), the Project Fund or the
Rebate Fund shall be invested or reinvested by the Trustee in Eligible
Investments. The Issuer and the Borrower each hereby covenant that they will
restrict that investment and reinvestment and the use of the proceeds of the
Bonds in such manner and to such extent, if any, as may be necessary, after
taking into account reasonable expectations at the time of delivery of and
payment for the Bonds, so that the Bonds will not constitute arbitrage bonds
under Section 148 of the Code.
Any officer of the Issuer having responsibility for issuing the Bonds
is authorized and directed, alone or in conjunction with any of the foregoing or
with any other officer, employee or
15
agent of or consultant to the Issuer, or with the Borrower or any officer,
employee or agent of or consultant to the Borrower, to give an appropriate
certificate of the Issuer pursuant to said Section 148, for inclusion in the
transcript of proceedings for the Bonds, setting forth the reasonable
expectations of the Issuer regarding the amount and use of the proceeds of the
Bonds and the facts, estimates and circumstances on which those expectations are
based, that certificate to be premised on the reasonable expectations and the
facts, estimates and circumstances on which those expectations are based, as
provided by the Borrower, all as of the date of delivery of and payment for the
Bonds. The Borrower shall provide the Issuer with, and the Issuer's certificate
may be based on, a certificate of an appropriate officer, employee or agent of
or consultant to the Borrower setting forth the reasonable expectations of the
Borrower on the date of delivery of and payment for the Bonds regarding the
amount and use of the proceeds of the Bonds and the facts, estimates and
circumstances on which they are based.
SECTION 3.8. REBATE FUND. The Borrower agrees to make such payments to
the Trustee as are required of it under Section 5.05 of the Indenture and to pay
the costs and expenses of the independent certified public accounting firm or
firm of attorneys engaged in accordance with Section 5.05 of the Indenture. The
obligation of the Borrower to make such payments shall remain in effect and be
binding upon the Borrower notwithstanding the release and discharge of the
Indenture.
(End of Article III)
16
ARTICLE IV
LOAN BY ISSUER; REPAYMENT OF THE LOAN;
LOAN PAYMENTS AND ADDITIONAL PAYMENTS
SECTION 4.1. LOAN REPAYMENT; DELIVERY OF NOTE AND CREDIT FACILITY.
Upon the terms and conditions of this Agreement, the Issuer will make the Loan
to the Borrower. In consideration of and in repayment of the Loan, the Borrower
shall make, as Loan Payments, payments sufficient in amount to pay when due the
Bond Service Charges payable on the Bonds. All such Loan Payments shall be paid
to the Trustee in accordance with the terms of the Note for the account of the
Issuer on the Loan Payment Dates and shall be held and disbursed in accordance
with the provisions of the Indenture and this Agreement for application to the
payment of Bond Service Charges. Notwithstanding the foregoing, while the Credit
Facility is in effect, the Borrower shall deposit all such Loan Payments
directly with the Credit Facility Issuer to reimburse the Credit Facility Issuer
for draws on the Credit Facility, and the Credit Facility Issuer shall apply
such amounts to the reimbursement obligation of the Borrower. The obligations of
the Borrower to make any payment referred to in this Section 4.1 shall be deemed
satisfied and discharged to the extent of the corresponding payment made by the
Credit Facility Issuer to the Trustee under the Credit Facility. It is
understood, however, that such payment by the Credit Facility Issuer shall not
relieve the Borrower of any of its obligations under the Reimbursement
Agreement, including the obligation to reimburse the Credit Facility Issuer for
any draw on the Credit Facility.
The Borrower shall be entitled to a credit against the Loan Payments
next required to be made to the extent that the balance of the Bond Fund (other
than any balance in the Credit Facility Account, Defeasance Account, Redemption
Premium Account or Remarketing Proceeds Account) is then in excess of amounts
required (a) for payment of Bonds theretofore matured or theretofore called for
redemption, (b) for payment of interest for which checks or drafts have been
drawn and mailed by the Trustee, and (c) for deposit in the Bond Fund for use
other than for the payment of Bond Service Charges on the Interest Payment Date
next following the applicable Loan Payment Date. In any event, however, if on
any Interest Payment Date, the balance in the Bond Fund is insufficient to make
required payments of Bond Service Charges, the Borrower forthwith will pay to
the Trustee, for the account of the Issuer and for deposit into the Bond Fund,
any deficiency.
To secure the Borrower's performance of their obligation under this
Agreement, the Borrower shall execute and deliver to the Trustee, concurrently
with the issuance and delivery of the Bonds, the Note.
The Note shall secure equally and ratably all outstanding Bonds.
Upon payment in full, in accordance with the Indenture, of the Bond
Service Charges on any or all Bonds, whether at maturity or by redemption or
otherwise, or upon provision for the payment thereof having been made in
accordance with the provisions of the Indenture, an appropriate notation shall
be endorsed thereon evidencing the date and amount of the principal
17
payment or prepayment equal to the Bonds so paid, or with respect to which
provision for payment has been made, and that Note shall be surrendered by the
Trustee to the Borrower for cancellation if all Bonds shall have been paid (or
provision made therefor) and cancelled as aforesaid. Unless the Borrower is
entitled to a credit under express terms of this Agreement or the Note, all
payments on the Note shall be in the full amount required thereunder.
Except for such interest of the Borrower as may hereafter arise
pursuant to Section 8.2 hereof or Section 5.06 of the Indenture, the Borrower
and the Issuer each acknowledge that neither the Borrower nor the Issuer have
any interest in the Credit Facility Account, the Redemption Premium Account, the
Remarketing Proceeds Account and the Defeasance Account of the Bond Fund and any
moneys deposited therein shall be in the custody of and held by the Trustee in
trust for the benefit of the Holders and, to the extent of draws under the
Credit Facility, the Bank.
SECTION 4.2. ADDITIONAL PAYMENTS. The Borrower shall pay to the
Issuer, as Additional Payments hereunder, within five (5) days after request
therefor made in writing, any and all costs and expenses incurred or to be paid
by the Issuer in connection with the issuance and delivery of the Bonds, the
remarketing of the Bonds and the Conversion of the Bonds or otherwise related to
actions taken by the Issuer under this Agreement or the Indenture. The Borrower
shall also pay to the Issuer on each January 1 during the term of the Loan,
commencing January 1, 1999, an annual fee of $750.
The Borrower shall pay to the Trustee, the Registrar and any Paying
Agent or Authenticating Agent, their reasonable fees, charges and expenses for
acting as such under the Indenture.
The Borrower shall pay the Remarketing Agent and Tender Agent, as
Additional Payments hereunder, the fees and expenses of the Remarketing Agent
and Tender Agent under the Indenture for services rendered in connection with
the Bonds.
The Borrower shall pay to the Tender Agent in federal or other
immediately available funds not later than 3:00 p.m., New York City time, an
amount equal to the amount the Tender Agent requires in order to purchase on
behalf of the Borrower Bonds pursuant to Article III of the Indenture on the
date payment is to be made; provided, however, that the amount required to be
paid under this paragraph shall be reduced by an amount equal to the sum of the
amounts made available to the Tender Agent for such purpose from the proceeds of
the remarketing of such Bonds by the Remarketing Agent or proceeds of a draw
under the Credit Facility. The Borrower hereby authorizes the Trustee to draw
such moneys under the Credit Facility, as are necessary for the purchase of
Bonds pursuant to said Article III.
SECTION 4.3. PLACE OF PAYMENTS. The Borrower shall make all Loan
Payments as provided in Section 4.1. Additional Payments shall be made directly
to the person or entity to whom or to which they are due.
SECTION 4.4. OBLIGATIONS UNCONDITIONAL. The obligations of the
Borrower to make Loan Payments, Additional Payments and any payments required of
the Borrower under Section
18
5.05 of the Indenture shall be absolute and unconditional, and the Borrower
shall make such payments without abatement, diminution or deduction regardless
of any cause or circumstances whatsoever including, without limitation, any
defense, set-off, recoupment or counterclaim which the Borrower may have or
assert against the Issuer, the Trustee, the Remarketing Agent, the Tender Agent,
the Bank or any other Person.
SECTION 4.5. ASSIGNMENT OF AGREEMENT AND REVENUES. To secure, first,
the payment of Bond Service Charges on, and the purchase of, the Bonds, and,
second, the payment to the Bank and performance by the Borrower under the
Reimbursement Agreement, the Issuer shall assign to the Trustee, by the
Indenture, any of its rights, title and interest in this Agreement (except for
the Unassigned Issuer's Rights), and the Credit Facility Account, Redemption
Premium Account, Remarketing Proceeds Account and Defeasance Account of the Bond
Fund and all moneys and investments therein (including without limitation the
proceeds of the Credit Facility) and shall grant to the Trustee, by the
Indenture, a security interest in its rights under and interest in (i) the
Project Fund and all moneys and investments therein, and (ii) the Revenues
(other than such accounts of the Bond Fund, all investments therein and the
proceeds of the Credit Facility). The Borrower hereby agrees and consent to that
assignment and grant.
SECTION 4.6. CREDIT FACILITY. Prior to the initial delivery of the
Bonds to the Original Purchaser pursuant to Section 2.01 of the Indenture, the
Borrower shall obtain and deliver, to the Trustee, the Credit Facility. The
Credit Facility shall be issued initially by the Bank pursuant to the
Reimbursement Agreement; shall be dated the date of delivery of the Bonds; shall
obligate the Bank to pay (a) an amount equal to the principal amount of the
Bonds (i) to pay the principal of the Bonds when due whether at stated maturity,
upon redemption or acceleration or (ii) to enable the Tender Agent to pay the
purchase price or portion of the purchase price equal to the principal amount of
Bonds purchased pursuant to Section 3.01 of the Indenture to the extent
remarketing proceeds are not available for such purpose, plus (b) an amount
equal to 98 days' interest accrued on the Bonds at a rate of eight percent (8%)
per annum (i) to pay interest on the Bonds when due or (ii) to enable the Tender
Agent to pay the portion of the purchase price of the Bonds purchased pursuant
to Section 3.01 of the Indenture equal to the interest accrued, if any, on such
Bonds to the extent remarketing proceeds are not available for such purpose; and
shall be in substantially the same form as the exhibit attached to the
Reimbursement Agreement and made a part thereof.
The Borrower shall take whatever action may be reasonably necessary to
maintain the Credit Facility in full force and effect during the period required
by the Indenture, including the payment of any reasonable and documented
transfer fees required by the Bank upon any transfer of the Credit Facility to
any successor Trustee pursuant to Section 11.12 of the Indenture.
(End of Article IV)
19
ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
SECTION 5.1. RIGHT OF INSPECTION. Subject to reasonable security and
safety regulations and upon reasonable notice, the Issuer and the Trustee, and
their respective agents, shall have the right during normal business hours to
inspect the Project.
SECTION 5.2. LEASE, SALE OR GRANT OF USE BY BORROWER. Subject to the
provisions of the Reimbursement Agreement and with the written consent of the
Bank, the Borrower may lease or sell the Project or grant the right to occupy
and use the Project, in whole or in part, to others; provided (i) that no such
grant, sale or lease shall relieve the Borrower from its obligations under this
Agreement or the Note and (ii) that prior to any such action, the Borrower shall
deliver to the Trustee an opinion for nationally recognized bond counsel that
such action shall not adversely affect the exclusion from gross income of
interest on the Bonds.
SECTION 5.3. INDEMNIFICATION. The Borrower releases the Issuer from,
agrees that the Issuer shall not be liable for, and indemnifies the Issuer
against, all liabilities, claims, costs and expenses, including attorneys fees
and expenses, imposed upon, incurred or asserted against the Issuer, on account
of: (a) any loss or damage to property or injury to or death of or loss by any
person that may be occasioned by any cause whatsoever pertaining to the
construction, maintenance, operation and use of the Project; (b) any breach or
default on the part of the Borrower in the performance of any covenant or
agreement of the Borrower under this Agreement, the Reimbursement Agreement, the
Note or any related document, or arising from any act or failure to act by the
Borrower, or any of its agents, contractors, servants, employees or licensees;
(c) the authorization, issuance, sale, trading, redemption or servicing of the
Bonds, and the provision of any information or certification furnished in
connection therewith concerning, the Bonds, the Project, or the Borrower
including, without limitation, the Private Placement Memorandum, any information
furnished by the Borrower for, and included in, or used as a basis for
preparation of, any certifications, information statements or reports furnished
by the Issuer, and any other information or certification obtained from the
Borrower to assure the exclusion of the interest on the Bonds from gross income
for federal income tax purposes; (d) the Borrower s failure to comply with any
requirement of this Agreement or the Code pertaining to such exclusion of that
interest including the covenants in Section 5.4 hereof; and (e) any claim,
action or proceeding brought with respect to the matters set forth in (a), (b),
(c) and (d) above.
The Borrower agrees to indemnify the Trustee and the Tender Agent for,
and to hold them harmless against, all liabilities, claims, costs and expenses
incurred without negligence or bad faith on the part of the Trustee and the
Tender Agent on account of any action taken or omitted to be taken by the
Trustee and the Tender Agent in accordance with the terms of this Agreement, the
Bonds, the Reimbursement Agreement, the Credit Facility, the Note or the
Indenture or any action taken at the request of or with the consent of the
Borrower, including the reasonable and documented costs and expenses of the
Trustee and the Tender Agent in defending themselves against any such claim,
action or proceeding brought in connection with the exercise or performance of
any of their
20
powers or duties under this Agreement, the Bonds, the Indenture, the
Reimbursement Agreement, the Credit Facility or the Note.
In case any action or proceeding is brought against the Issuer, the
Tender Agent or the Trustee in respect of which indemnity may be sought
hereunder, the party seeking indemnity promptly shall give notice of that action
or proceeding to the Borrower, and the Borrower upon receipt of that notice
shall have the obligation and the right to assume the defense of the action or
proceeding; provided, that failure of a party to give that notice shall not
relieve the Borrower from any of their obligations under this Section unless
that failure prejudices the defense of the action or proceeding by the Borrower.
At its own expense, an indemnified party may employ separate counsel and
participate in the defense. The Borrower shall not be liable for any settlement
made without their consent.
The indemnification set forth above is intended to and shall include
the indemnification of all affected officials, directors, officers and employees
of the Issuer, the Tender Agent and the Trustee, respectively. That
indemnification is intended to and shall be enforceable by the Issuer, the
Tender Agent and the Trustee, respectively, to the full extent permitted by law.
SECTION 5.4. BORROWER NOT TO ADVERSELY AFFECT EXCLUSION FROM GROSS
INCOME OF INTEREST ON BONDS. The Borrower hereby represents that it has taken
and caused to be taken, and covenant that they will take and cause to be taken,
all actions that may be required of them, alone or in conjunction with the
Issuer, for the interest on the Bonds to be and remain excluded from gross
income for federal income tax purposes, and represents that they have not taken
or permitted to be taken on their behalf, and covenant that they will not take
or permit to be taken on their behalf, any actions that would adversely affect
such exclusion under the provisions of the Code.
SECTION 5.5. BORROWER TO MAINTAIN ITS EXISTENCE; MERGER AND
CONSOLIDATION. The Borrower shall do all things necessary to preserve and keep
in full force and effect its existence, rights and franchises. The Borrower will
not merge into or consolidate with any other Person or permit any other Person
to merge into or consolidate with it, or sell all or substantially all of its
assets, except that the Borrower may merge into or consolidate with any other
Person or permit any other Person to merge into or consolidate with it;
PROVIDED, HOWEVER, that (i) the Borrower shall be the corporation which survives
such merger or results from such consolidation; (ii) prior to such action the
Borrower must deliver to the Trustee an opinion of nationally recognized bond
counsel that such action shall not adversely affect the tax-exempt status of the
Bonds; and (iii) before and immediately after the consummation of the
transaction, and after giving effect thereto, no Event of Default, or event
which with notice or lapse of time or both would become an Event of Default,
exists or would exist.
SECTION 5.6. ONGOING DISCLOSURE. On or before any Conversion or
remarketing that would subject the Bonds to the continuing disclosure
requirements of Section (b)(5)(i) of Securities and Exchange Commission Rule
15c2-12 under the Securities Exchange Act of 1934, as amended, the Borrower
shall enter for the benefit of the Bondholders and beneficial owners of the
Bonds into a continuing disclosure undertaking satisfying the requirements of
such Rule.
(End of Article V)
21
ARTICLE VI
REDEMPTION AND PURCHASE OF BONDS
SECTION 6.1. OPTIONAL REDEMPTION. Provided no Event of Default shall
have occurred and be subsisting, at any time and from time to time, the Borrower
may deliver moneys to the Trustee in addition to Loan Payments or Additional
Payments required to be made and direct the Trustee to use the moneys so
delivered for the purpose of purchasing Bonds or of calling Bonds for optional
redemption in accordance with the applicable provisions of the Indenture
providing for optional redemption at the redemption price stated in the
Indenture; provided, however, that any moneys so used for optional redemption
shall be from the sources set forth in paragraphs (i) and (ii) of Section
5.01(c) of the Indenture. Pending application for those purposes, any moneys so
delivered shall be held by the Trustee in a special account in the Bond Fund and
delivery of those moneys shall not operate to xxxxx or postpone Loan Payments or
Additional Payments otherwise becoming due or to alter or suspend any other
obligations of the Borrower under this Agreement.
SECTION 6.2. EXTRAORDINARY OPTIONAL REDEMPTION. The Borrower shall
have, subject to the conditions hereinafter imposed, the option to direct the
redemption of the entire unpaid principal balance of the Bonds in accordance
with the applicable provisions of the Indenture upon the occurrence of any of
the following events:
(a) The Project shall have been damaged or destroyed to such an extent
that (1) they cannot reasonably be expected to be restored, within a period
of 6 months, to the condition thereof immediately preceding such damage or
destruction or (2) their normal use and operation is reasonably expected to
be prevented for a period of 6 consecutive months.
(b) Title to, or the temporary use of, all or a significant part of
the Project shall have been taken under the exercise of the power of
eminent domain (1) to such extent that the Project cannot reasonably be
expected to be restored within a period of 6 months to a condition of
usefulness comparable to that existing prior to the taking or (2) as a
result of the taking, normal use and operation of the Project is reasonably
expected to be prevented for a period of 6 consecutive months.
(c) As a result of any changes in the Constitution of the State, the
Constitution of the United States of America, or state or federal laws or
as a result of legislative or administrative action (whether state or
federal) or by final decree, judgment or order of any court or
administrative body (whether state or federal) entered after the contest
thereof by the Issuer or the Borrower in good faith, this Agreement shall
have become void or unenforceable or impossible of performance in
accordance with the intent and purpose of the parties as expressed in this
Agreement, or if unreasonable burdens or excessive liabilities shall have
been imposed with respect to the Project or the operation thereof,
including, without limitation, federal, state or other ad valorem,
property, income or other taxes not being imposed on the date of this
Agreement other than ad valorem taxes presently levied upon privately owned
property used for the same general purpose as the Project.
22
(d) Changes in the economic availability of raw materials, operating
supplies, energy sources or supplies, or facilities (including, but not
limited to, facilities in connection with the disposal of industrial
wastes) necessary for the operation of the Project for the Project
Purposes shall have occurred or technological or other changes shall have
occurred which the Borrower cannot reasonably overcome or control and
which in the Borrower's reasonable judgment render the Project uneconomic
for the Project Purposes.
To exercise that option, the Borrower shall, within 90 days following the event
authorizing the exercise of that option, or at any time during the continuation
of the condition referred to in clause (d) above, give notice to the Issuer and
to the Trustee specifying the date on which the Borrower will deliver the funds
required for that redemption, which date shall be not more than 90 days from the
date that notice is mailed and shall make arrangements satisfactory to the
Trustee for the giving of the required notice of redemption.
The amount payable by the Borrower in the event of their exercise of
the option granted in this Section shall be the sum of the following:
(i) An amount of money which, when added to the moneys and investments
held to the credit of the Bond Fund, will be sufficient pursuant to the
provisions of the Indenture to pay, at par, and discharge all then
outstanding Bonds on the earliest applicable redemption date, that amount
to be paid to the Trustee, plus
(ii) An amount of money equal to the Additional Payments relating to
the Bonds accrued and to accrue until actual final payment and redemption
of the Bonds, that amount or applicable portions thereof to be paid to the
Trustee or to the Persons to whom those Additional Payments are or will be
due.
The requirement of (ii) above with respect to Additional Payments to accrue may
be met if provisions satisfactory to the Trustee and the Issuer are made for
paying those amounts as they accrue.
The Borrower also shall have the option, in the event that title to or
the temporary use of a portion of the Project shall be taken under the exercise
of the power of eminent domain, even if the taking is not of such nature as to
permit the exercise of the redemption option upon an event specified in (b)
above, to direct the redemption, at a redemption price of 100% of the principal
amount thereof prepaid, plus accrued interest to the redemption date, of that
part of the outstanding principal balance of the Bonds as may be payable from
the proceeds received by the Borrower (after the payment of costs and expenses
incurred in the collection thereof) received in the eminent domain proceeding,
provided, that, the Borrower shall furnish to the Issuer and the Trustee a
certificate of an Engineer stating that (1) the property comprising the part of
the Project taken is not essential to continued operations of the Project in the
manner existing prior to that taking, (2) the Project has been restored to a
condition substantially equivalent to that existing prior to the taking, or (3)
other improvements have been acquired or made which are suitable for the
continued operation of the Project.
23
The rights and options granted to the Borrower in this Section may be
exercised whether or not the Borrower is in default hereunder; provided, that
such default will not relieve the Borrower from performing those actions which
are necessary to exercise any such right or option granted hereunder.
SECTION 6.3. MANDATORY REDEMPTION IN EVENT OF INCLUSION IN GROSS
INCOME OF INTEREST ON BONDS. If, as provided in the Bonds and the Indenture, the
Bonds become subject to mandatory redemption because interest on any of the
Bonds is determined to be included for federal income tax purposes in the gross
income of the Holder of any Bonds (other than because a Holder is a "substantial
user" of the Project or a "related person", as those terms are used in Section
147(a) of the Code), the Borrower shall deliver to the Trustee, upon the date
requested by the Trustee, the moneys needed to pay in full the Bonds in
accordance with the mandatory redemption provisions relating thereto set forth
in the Bonds and the Indenture.
SECTION 6.4. MANDATORY REDEMPTION. The Borrower shall deliver to the
Trustee the moneys needed to redeem the Bonds in accordance with any mandatory
redemption provisions relating thereto as may be set forth in the Indenture.
SECTION 6.5. ACTIONS BY ISSUER. At the request of the Borrower or the
Trustee, the Issuer shall take all steps required of it under the applicable
provisions of the Indenture or the Bonds to effect the redemption of all or a
portion of the Bonds pursuant to this Article VI.
(End of Article VI)
24
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1. EVENTS OF DEFAULT. Each of the following shall be an
Event of Default:
(a) The Borrower shall fail to pay any Loan Payment on or prior to the
Loan Payment Date on which that Loan Payment is due and payable;
(b) The Borrower shall fail to deliver to the Trustee, or cause to be
delivered on their behalf, the moneys needed (i) to redeem any outstanding
Bonds in the manner and upon the date requested in writing by the Trustee
as provided in Section 6.1, 6.2, 6.3 or 6.4 of this Agreement or (ii) to
purchase any Bonds in the manner and upon the date as provided in Section
4.2 of this Agreement;
(c) The Borrower shall fail to observe and perform any other
agreement, term or condition contained in this Agreement (other than with
respect to Section 5.4 hereof), and the continuation of such failure for a
period of 30 days after notice thereof shall have been given to the
Borrower by the Issuer or the Trustee, or for such longer period as the
Issuer and the Trustee may agree to in writing; provided, that if the
failure is other than the payment of money and is of such nature that it
can be corrected but not within the applicable period, that failure shall
not constitute an Event of Default so long as the Borrower institute
curative action within the applicable period and diligently pursues that
action to completion;
(d) The Borrower shall: (i) admit in writing its inability to pay its
debts generally as they become due; (ii) have an order for relief entered
in any case commenced by or against them under the federal bankruptcy laws,
as now or hereafter in effect; (iii) commence a proceeding under any other
federal or state bankruptcy, insolvency, reorganization or similar law, or
have such a proceeding commenced against it and either have an order of
insolvency or reorganization entered against it or have the proceeding
remain undismissed and unstayed for ninety days; (iv) make an assignment
for the benefit of creditors; or (v) have a receiver or trustee appointed
for them or for the whole or any substantial part of their property;
(e) There shall occur an "Event of Default" as defined in Section
10.01 of the Indenture.
Notwithstanding the foregoing, if, by reason of Force Majeure, the
Borrower is unable to perform or observe any agreement, term or condition hereof
which would give rise to an Event of Default under subsection (c) hereof, the
Borrower shall not be deemed in default during the continuance of such
inability. However, the Borrower shall promptly give notice to the Trustee and
the Issuer of the existence of an event of Force Majeure and shall use their
best efforts to remove the effects thereof; provided that the settlement of
strikes or other industrial disturbances shall be entirely within their
discretion.
25
The term Force Majeure shall mean, without limitation, the following:
(i) acts of God; strikes, lockouts or other industrial disturbances;
acts of public enemies; orders or restraints of any kind of the government
of the United States of America or of the State or any of their
departments, agencies, political subdivisions or officials, or any civil or
military authority; insurrections; civil disturbances; riots; epidemics;
landslides; lightning; earthquakes; fires; hurricanes; tornadoes; storms;
droughts; floods; arrests; restraint of government and people; explosions;
breakage, malfunction or accident to facilities, machinery, transmission
pipes or canals; partial or entire failure of utilities; shortages of
labor, materials, supplies or transportation; or
(ii) any cause, circumstance or event not reasonably within the
control of the Borrower.
The declaration of an Event of Default under subsection (d) above, and
the exercise of remedies upon any such declaration, shall be subject to any
applicable limitations of federal bankruptcy law affecting or precluding that
declaration or exercise during the pendency of or immediately following any
bankruptcy, liquidation or reorganization proceedings.
SECTION 7.2. REMEDIES ON DEFAULT. Whenever an Event of Default shall
have happened and be subsisting, any one or more of the following remedial steps
may be taken:
(a) If acceleration of the principal amount of the Bonds has been
declared pursuant to Section 7.03 of the Indenture, the Trustee shall
declare all Loan Payments to be immediately due and payable, whereupon the
same shall become immediately due and payable;
(b) The Issuer, the Bank or the Trustee may have access to, inspect,
examine and make copies of the books, records, accounts and financial data
of the Borrower pertaining to the Project; or
(c) The Issuer or the Trustee may pursue all remedies now or hereafter
existing at law or in equity to collect all amounts then due and thereafter
to become due under this Agreement, the Credit Facility or the Note or to
enforce the performance and observance of any other obligation or agreement
of the Borrower under those instruments.
Notwithstanding the foregoing, the Issuer shall not be obligated to take any
step which in its opinion will or might cause it to expend time or money or
otherwise incur liability unless and until a satisfactory indemnity bond has
been furnished to the Issuer at no cost or expense to the Issuer. Any amounts
collected as Loan Payments or applicable to Loan Payments and any other amounts
which would be applicable to the payment of Bond Service Charges collected
pursuant to action taken under this Section shall be paid into the Bond Fund and
applied in accordance with the provisions of the Indenture or, if the
outstanding Bonds have been paid and discharged in accordance with the
provisions of the Indenture, shall be paid as provided in Section 5.06 of the
Indenture for transfers of remaining amounts in the Bond Fund.
26
The provisions of this Section are subject to the further limitation
that the rescission by the Trustee of its declaration that all of the Bonds are
immediately due and payable also shall constitute an annulment of any
corresponding declaration made pursuant to paragraph (a) of this Section and a
waiver and rescission of the consequences of that declaration and of the Event
of Default with respect to which that declaration has been made, provided that
no such waiver or rescission shall extend to or affect any subsequent or other
default or impair any right consequent thereon.
SECTION 7.3. NO REMEDY EXCLUSIVE. No remedy conferred upon or reserved
to the Issuer or the Trustee by this Agreement is intended to be exclusive of
any other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement, the Credit Facility or the Note, or now or hereafter existing at law,
in equity or by statute. No delay or omission to exercise any right or power
accruing upon any default shall impair that right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient. In order to entitle the Issuer
or the Trustee to exercise any remedy reserved to it in this Article, it shall
not be necessary to give any notice, other than any notice required by law or
for which express provision is made herein.
SECTION 7.4. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. If an
Event of Default should occur and the Issuer or the Trustee should incur
expenses, including attorneys' fees, in connection with the enforcement of this
Agreement, the Credit Facility or the Note or the collection of sums due
thereunder, the Borrower shall reimburse the Issuer and the Trustee, as
applicable, for the reasonable expenses so incurred upon demand.
SECTION 7.5. NO WAIVER. No failure by the Issuer or the Trustee to
insist upon the strict performance by the Borrower of any provision hereof shall
constitute a waiver of their right to strict performance and no express waiver
shall be deemed to apply to any other existing or subsequent right to remedy the
failure by the Borrower to observe or comply with any provision hereof.
The Issuer and the Trustee may waive any Event of Default hereunder
only with the prior written consent of the Bank.
SECTION 7.6. NOTICE OF DEFAULT. The Borrower or the Issuer shall
notify the Trustee and the Bank immediately if they become aware of the
occurrence of any Event of Default hereunder or of any fact, condition or event
which, with the giving of notice or passage of time or both, would become an
Event of Default.
(End of Article VII)
27
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. TERM OF AGREEMENT. This Agreement shall be and remain in
full force and effect from the date of delivery of the Bonds to the Placement
Agent until such time as all of the Bonds shall have been fully paid (or
provision made for such payment) pursuant to the Indenture and all other sums
payable by the Borrower under this Agreement and the Note shall have been paid,
except for obligations of the Borrower under Sections 4.2 and 5.3 hereof, which
shall survive any termination of this Agreement.
SECTION 8.2. AMOUNTS REMAINING IN FUNDS. Any amounts in the Bond Fund
remaining unclaimed by the Holders of Bonds for 2 years after the due date
thereof (whether at stated maturity, by redemption or pursuant to any mandatory
sinking fund requirements or otherwise), shall be paid to the Borrower; provided
that if the Trustee shall have drawn on the Credit Facility, and the Bank has
not been reimbursed by the Borrower pursuant to the Reimbursement Agreement,
such amounts remaining in the Bond Fund shall belong and be paid first to the
Bank to the extent it has not been so reimbursed. With respect to that principal
of and any premium and interest on the Bonds to be paid from moneys paid to the
Borrower or the Bank pursuant to the preceding sentence, the Holders of the
Bonds entitled to those moneys shall look solely to the Borrower for the payment
of those moneys.
Further, any other amounts remaining in the Bond Fund (other than in
the Credit Facility Account, the Remarketing Proceeds Account, the Redemption
Premium Account and the Defeasance Account) and any amounts remaining in any
other special funds or accounts (other than the Project Fund and the Rebate
Fund) created under this Agreement or the Indenture after all of the outstanding
Bonds shall be deemed to have been paid and discharged under the provisions of
the Indenture and all other amounts required to be paid under this Agreement,
the Note and the Indenture have been paid, shall be paid to the Borrower to the
extent that those moneys are in excess of the amounts necessary to effect the
payment and discharge of the outstanding Bonds; provided that if the Trustee
shall have drawn on the Credit Facility, and the Bank has not been reimbursed by
the Borrower pursuant to the Reimbursement Agreement, such amounts shall belong
and be paid first to the Bank to the extent it has not been so reimbursed.
SECTION 8.3. NOTICES. All notices, certificates, requests or other
communications hereunder shall be in writing and shall be deemed to be
sufficiently given when mailed by registered or certified mail, postage prepaid,
and addressed to the appropriate Notice Address. A duplicate copy of each
notice, certificate, request or other communication given hereunder to the
Issuer, the Borrower, the Bank, the Remarketing Agent, the Tender Agent or the
Trustee shall also be given to the others. The Borrower, the Issuer, the Bank,
the Remarketing Agent, the Tender Agent and the Trustee, by notice given
hereunder, may designate any further or different addresses to which subsequent
notices, certificates, requests or other communications shall be sent.
SECTION 8.4. EXTENT OF COVENANTS OF THE ISSUER; NO PERSONAL LIABILITY.
All
28
covenants, obligations and agreements of the Issuer contained in this Agreement
or the Indenture shall be effective to the extent authorized and permitted by
applicable law. No such covenant, obligation or agreement shall be deemed to be
a covenant, obligation or agreement of any present or future member, officer,
agent or employee of the Issuer in other than his official capacity, and neither
the members of the Issuer nor any official executing the Bonds shall be liable
personally on the Bonds or be subject to any personal liability or
accountability by reason of the issuance thereof or by reason of the covenants,
obligations or agreements of the Issuer contained in this Agreement or in the
Indenture.
SECTION 8.5. BINDING EFFECT. This Agreement shall inure to the benefit
of and shall be binding in accordance with its terms upon the Issuer, the
Borrower and their respective permitted successors and assigns provided that
this Agreement may not be assigned by the Borrower (except in connection with a
lease, sale or grant of use pursuant to Section 5.2 hereof or sale or transfer
of assets pursuant to the Reimbursement Agreement) and may not be assigned by
the Issuer except to the Trustee pursuant to the Indenture or as otherwise may
be necessary to enforce or secure payment of Bond Service Charges. This
Agreement may be enforced only by the parties, their assignees and others who
may, by law, stand in their respective places.
SECTION 8.6. AMENDMENTS AND SUPPLEMENTS. Except as otherwise expressly
provided in this Agreement or the Indenture, subsequent to the issuance of the
Bonds and prior to all conditions provided for in the Indenture for release of
the Indenture having been met, this Agreement may not be effectively amended,
changed, modified, altered or terminated except in accordance with the
provisions of Article XI of the Indenture, as applicable.
SECTION 8.7. EXECUTION COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be regarded as an original and
all of which shall constitute but one and the same instrument.
SECTION 8.8. SEVERABILITY. If any provision of this Agreement, or any
covenant, obligation or agreement contained herein is determined by a court to
be invalid or unenforceable, that determination shall not affect any other
provision, covenant, obligation or agreement, each of which shall be construed
and enforced as if the invalid or unenforceable portion were not contained
herein. That invalidity or unenforceability shall not affect any valid and
enforceable application thereof, and each such provision, covenant, obligation
or agreement shall be deemed to be effective, operative, made, entered into or
taken in the manner and to the full extent permitted by law.
SECTION 8.9. GOVERNING LAW. This Agreement shall be deemed to be a
contract made under the laws of the State and for all purposes shall be governed
by and construed in accordance with the laws of the State.
(End of Article VIII)
29
IN WITNESS WHEREOF, the Issuer and the Borrower have caused this
Agreement to be duly executed in their respective names, all as of the date
first above written.
FAYETTE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------
Xxxxxxx X. Xxxxx
Vice Chairman
DYNAMIC MATERIALS CORPORATION
By: /s/ Xxxxxxx X. Santa
------------------------------------
Xxxxxxx X. Santa
Vice President, Finance
EXHIBIT A
NOTE
DYNAMIC MATERIALS CORPORATION, a Delaware corporation (the
"Borrower"), for value received, promises to pay to Star Bank, N.A., as Trustee
(the "Trustee") under the Indenture hereinafter referred to, the principal sum
of
SIX MILLION EIGHT HUNDRED AND FIFTY THOUSAND DOLLARS
($6,850,000)
and to pay interest on the unpaid balance of such principal sum from and after
September 1, 1998 (the date of delivery of this Note) at the Applicable Rate
until the payment of such principal sum has been made or provided for. As used
herein, "Applicable Rate" means the interest rates specified in Appendix I to
this Note.
This Note has been executed and delivered by the Borrower to the
Trustee pursuant to a certain Loan Agreement (the "Agreement"), dated as of
September 1, 1998, between the Fayette County Industrial Development Authority
(the "Issuer") and the Borrower. Under the Agreement, the Issuer has loaned the
Borrower the principal proceeds received from the sale of the Issuer's
$6,850,000 aggregate principal amount of Fayette County Industrial Development
Authority Multi-Mode Variable Rate Industrial Development Refunding Revenue
Bonds, Series 1998 (Dynamic Materials Corporation Project), dated the date of
their initial delivery to the original purchasers thereof (the "Bonds"), to
assist in the financing of the Project (as defined in the Agreement), and the
Borrower have agreed to repay such loan by making payments (the "Loan Payments")
at the times and in the amounts set forth in this Note for application to the
payment of the principal of and redemption premium, if any, and interest on the
Bonds as and when due. The Bonds have been issued, concurrently with the
execution and delivery of this Note, pursuant to, and are secured by, the Trust
Indenture (the "Indenture"), dated as of September 1, 1998, between the Issuer
and the Trustee. The Bonds also bear interest from their date at the Applicable
Rate payable as specified below and in Appendix I to this Note and mature on
September 1, 2013.
To provide funds to pay the principal of and redemption premium, if
any, and interest on the Bonds (the "Bond Service Charges") as and when due as
above-specified, the Borrower hereby agrees to and shall make Loan Payments on
each Loan Payment Date (as defined in the Agreement) as follows: (i) while the
Bonds bear interest at the Weekly Rate, the total interest due on the Bonds on
such Loan Payment Date and (b) on the Loan Payment Date on September 1, 2013
(i.e. the maturity date of the Bonds) all principal of the Bonds then
outstanding, and (ii) while the Bonds bear interest at the Semi-Annual Rate or
Long-Term Rate, in an amount equal to (a) prior to the first Interest Payment
Date in such Interest Rate Mode, that portion of the total interest due on the
Bonds on such first Interest Payment Date multiplied by a fraction, the
numerator of which shall be one and the denominator of which shall be the number
of Loan Payment Dates prior to such Interest Payment Date, (b) from and after
the first Interest Payment Date in such Interest Rate Mode, 1/2 of the total
interest due on the Bonds on the next succeeding Interest Payment Date, and (c)
on
A-1
the Loan Payment Date on September 1, 2013 (i.e., the maturity date of the
Bonds) all principal of the Bonds then outstanding. In addition, to provide
funds sufficient to pay the principal of and premium, if any, and interest on
the Bonds as and when due at any other time, whether by redemption or
acceleration or otherwise, the Borrower hereby agrees to and shall make Loan
Payments in an amount sufficient to pay such principal of and premium, if any,
and interest when due and payable.
If payment or provision for payment in accordance with the Indenture
is made in respect of the principal of, and redemption premium, if any, and
interest on the Bonds from moneys other than Loan Payments, this Note shall be
deemed paid to the extent such payments or provision for payment of Bonds has
been made. To provide for payment of the Bond Service Charges, the Borrower has
arranged to deliver to the Trustee the Credit Facility. Drawings on the Credit
Facility shall not reduce in any manner Loan Payments due hereunder. However,
the Trustee shall apply such Loan Payments to the reimbursement obligation of
the Borrower to the Bank in accordance with Section 5.01 of the Indenture.
Subject to the foregoing, all Loan Payments shall be in the full amount required
hereunder.
All Loan Payments shall be payable in lawful money of the United
States of America and shall be made to the Trustee at its corporate trust office
for the account of the Issuer and deposited in the Bond Fund created by the
Indenture. Except as otherwise provided in the Indenture, such Loan Payments
shall be used by the Trustee to pay the principal of, redemption premium, if
any, and interest on the Bonds as and when due.
The obligation of the Borrower to make the payments required hereunder
shall be absolute and unconditional and the Borrower shall make such payments
without abatement, diminution or deduction regardless of any cause or
circumstances whatsoever including, without limitation, any defense, set-off,
recoupment or counterclaim which the Borrower may have or assert against the
Issuer, the Trustee, the Remarketing Agent (as defined in Appendix I) and the
Bank (as defined in Appendix I) or any other person.
This Note is subject to optional, extraordinary optional and mandatory
prepayment in whole or in part, at the prepayment price, in the amounts and upon
the conditions that the Bonds are subject to, respectively, optional and
extraordinary optional redemption. The Borrower will deliver or cause to be
delivered to the Trustee, for the account of the Issuer, such moneys as are
required to effect such prepayment under the applicable terms of the Bonds.
Whenever an Event of Default under Section 10.01 of the Indenture
shall have occurred and, as a result thereof, the principal of and any premium
on all Bonds then outstanding, and interest accrued thereon, shall have been
declared to be immediately due and payable pursuant to Section 10.03 of the
Indenture, the unpaid principal amount of and any premium and accrued interest
on this Note shall also be due and payable on the date on which the principal of
and premium and interest on the Bonds shall have been declared due and payable;
provided that the annulment of a declaration of acceleration with respect to the
Bonds shall also constitute an annulment of any corresponding declaration with
respect to this Note.
A-2
IN WITNESS WHEREOF, the Borrower has caused this Note to be executed
in its name by its duly authorized officer as of September 1, 1998.
DYNAMIC MATERIALS CORPORATION
By:
-------------------------------------
Name:
Title:
A-3
APPENDIX I
A. DEFINITIONS
As used herein and in the Note, the following terms shall have the
following meanings:
"Applicable Rate" means, from the date hereof to and including,
September 22, 1998, 3.50% per annum, and thereafter, for each Weekly Rate Period
and so long as there is not a Semi-Annual Rate or Long-Term Rate, the Weekly
Rate established therefor, computed on the basis of a 365 or 366-day year, as
applicable, and, during a Semi-Annual Rate Period or Long-Term Rate Period, the
Semi-Annual Rate or the Long-Term Rate, respectively, computed on the basis of a
360-day year, consisting of twelve-30 day months.
"Bank" means initially, KeyBank National Association, and its
successors and assigns in its capacity as issuer of a Credit Facility and in the
event an Alternate Credit Facility is outstanding, the issuer of the Alternate
Credit Facility.
"Business Day" means any day of the year other than (i) a Saturday or
Sunday, (ii) any day on which banks located in either New York, New York, or the
principal corporate trust office of the Trustee or the designated office of the
Bank is located are required or authorized by law to remain closed, or (iii) any
day on which the New York Stock Exchange is closed.
"Conversion Date" means the first date any Conversion becomes
effective.
"Interest Payment Date" means (a) while the Bonds bear interest at the
Weekly Rate, the first Wednesday of each March, June, September and December,
and (b) while the Bonds bear interest at the Semi-Annual Rate or the Long-Term
Rate, March 1 and September 1 of each year. The first Interest Payment Date
shall be the Interest Payment Date in December, 1998. In any case, the final
Interest Payment Date shall be the maturity date.
"Interest Period" means for all Bonds the period from and including
each Interest Payment Date to and including the day next preceding the next
Interest Payment Date. The first Interest Period for the Bonds shall begin on
(and include) the date of the initial delivery of the Bonds. The final Interest
Period shall end on the maturity (or redemption) date for each Bond.
"Interest Rate Mode" means the Weekly Rate, the Semi-Annual Rate or
the Long-Term Rate.
"Long-Term Rate" means the Interest Rate Mode for the Bonds in which
the interest rate on the Bonds is determined in accordance with Section
2.02(c)(iii) of the Indenture.
"Long-Term Rate Period" means any period beginning on, and including,
the Conversion Date to the Long-Term Rate and ending on, and including, the day
preceding the Interest
I-1
Payment Date selected by the Borrower and each period of the same duration (or
as close as possible) ending on an Interest Payment Date thereafter until the
earliest of the day preceding the change to a different Long-Term Rate Period,
the Conversion to a different Interest Rate Mode or the maturity of the Bonds.
"Purchase Date" means (a) if the Interest Rate Mode is the Weekly
Rate, any Business Day as set forth in Section 3.01(a)(i), Section 3.01(a)(iii)
and Section 3.01(a)(iv) of the Indenture, respectively, (b) if the Interest Rate
Mode is the Semi-Annual Rate, any Interest Payment Date, (c) if the Interest
Rate Mode is the Long-Term Rate, the final Interest Payment Date for each
Long-Term Rate Period, and (d) each day that Bonds are subject to mandatory
purchase pursuant to Section 3.01(b) of the Indenture.
"Rate Period" means any period during which a single interest rate is
in effect for a Bond.
"Remarketing Agent" means Key Capital Markets, Inc. and its successors
as provided in Section 12.01 of the Indenture. "Principal Office" of the
Remarketing Agent means the office designated as such in writing to the
Borrower, the Trustee and the Tender Agent.
"Semi-Annual Rate" means the Interest Rate Mode for the Bonds in which
the interest rate on the Bonds is determined in accordance with Section 2.02(b)
of the Indenture.
"Semi-Annual Rate Period" means any period beginning on, and
including, the Conversion Date to the Semi-Annual Rate and ending on, and
including, the day preceding the next Interest Payment Date thereafter and each
successive six (6) month period thereafter until the day preceding Conversion to
a different Interest Rate Mode or the maturity of the Bonds.
"Weekly Rate" means the Interest Rate for the Bonds in which the
interest rate on the Bonds is determined weekly in accordance with Section
2.02(c)(iii) of the Indenture.
"Weekly Rate Period" means the period beginning on, and including, the
date of issuance of the Bonds, and ending on, and including, the next Tuesday
and thereafter the period beginning on, and including, any Wednesday and ending
on, and including, the next Tuesday.
B. INTEREST RATE PROVISIONS
Words and terms used in this Part B as defined words and terms and not
otherwise defined in this Note or Appendix I thereto shall have the meanings
assigned to them in the Indenture.
(1) INTEREST RATES ON THE BONDS. The Bonds shall bear interest at the
Weekly Rate for the period from their original issuance date until converted to
a different Interest Rate Mode. The first Interest Payment Date shall be the
Interest Payment Date in December, 1998. During each Interest Period for each
Interest Rate Mode, the interest rate for the Bonds shall be determined in
accordance with Section 2.02(c) of the Indenture and shall be payable on the
Interest Payment Date for such Interest Period; provided that the interest rate
borne by the Bonds shall not exceed the lesser
I-2
of (i) fifteen percent (15%) per annum or (ii) so long as the Bonds are entitled
to the benefits of a Credit Facility, the maximum interest rate with respect to
the Bonds specified in the Credit Facility. Interest on the Bonds at the
interest rate or rates for the Weekly Rate shall be computed upon the basis of a
365 or 366-day year, as applicable, for the actual number of days elapsed.
Interest on the Bonds at the interest rate or rates for the Semi-Annual Rate and
the Long-Term Rate shall be computed upon the basis of a 360-day year,
consisting of twelve 30-day months. Each Bond shall bear interest on overdue
principal and, to the extent permitted by law, on overdue interest at the
Default Rate computed from the date of the Default or Event of Default.
(2) INTEREST RATE MODES. Interest Rates on the Bonds shall be
determined as follows:
(i) If the Interest Rate Mode for the Bonds is the Weekly Rate, the
interest rate on the Bonds for a particular Weekly Rate Period shall be the
rate established by the Remarketing Agent no later than 3:00 p.m.
(Cleveland, Ohio time) on the Tuesday preceding the Weekly Rate Period (or
the day preceding the Conversion of the Interest Rate Mode to the Weekly
Rate), or, if such day is not a Business Day, on the next succeeding
Business Day, as the minimum rate of interest necessary, in the judgment of
the Remarketing Agent, to enable the Remarketing Agent to sell the Bonds on
such Business Day at a price equal to the principal amount thereof, plus
accrued interest, if any, thereon.
(ii) If the Interest Rate Mode for the Bonds is the Semi-Annual Rate,
the interest rate on the Bonds for a particular Semi-Annual Rate Period
shall be the rate established by the Remarketing Agent no later than 3:00
p.m. (Cleveland, Ohio time) on the 10th Business Day next preceding the
first day of such Semi-Annual Rate Period as the minimum rate of interest
necessary, in the judgment of the Remarketing Agent, to enable the
Remarketing Agent to sell the Bonds on such first day at a price equal to
the principal amount thereof.
(iii) If the Interest Rate Mode for the Bonds is the Long-Term Rate,
the interest rate on the Bonds for a particular Long-Term Rate Period shall
be the rate established by the Remarketing Agent not later than the 15th
Business Day preceding the first day of such Long-Term Rate Period as the
minimum rate of interest necessary, in the judgment of the Remarketing
Agent, to enable the Remarketing Agent to sell the Bonds on such first day
at a price equal to the principal amount thereof
(iv) The Remarketing Agent shall provide the Trustee, the Borrower and
the Tender Agent with Immediate Notice of all interest rates.
(v) If for any reason the interest rate on a Bond is not determined by
the Remarketing Agent pursuant to (i), (ii) or (iii) above, the interest
rate for such Bond for the next succeeding Rate Period shall be the
interest rate in effect for such Bond for the preceding Rate Period.
(3) LONG-TERM RATE PERIODS.
I-3
(i) SELECTION OF LONG-TERM RATE PERIOD. The Long-Term Rate Period
shall be established by the Borrower in the notice given pursuant to
Section 2.02(e) of the Indenture (the first such Long-Term Rate Period
commencing on the Conversion Date for the Bonds to a Long-Term Rate) and
thereafter each successive Long-Term Rate Period shall be the same as that
so established by the Borrower until a different Long-Term Rate Period is
specified by the Borrower in accordance with Section 2.02 of the Indenture
or until the occurrence of a Conversion Date. Each Long-Term Rate Period
shall be one year or more in duration and shall end on the day next
preceding an Interest Payment Date; provided that if the first Long-Term
Rate Period commences on a Conversion Date other than a March 1 and
September 1, such first Long-Term Rate Period shall be of a duration as
close as possible to (but not in excess of) such Long-Term Rate Period and
shall terminate on a day preceding an Interest Payment Date; and further
provided that no Long-Term Rate Period shall extend beyond the maturity
date of the Bonds.
(ii) CHANGE OF LONG-TERM RATE PERIOD. The Borrower may change from one
Long-Term Rate Period to another Long-Term Rate Period on any Business Day
on which the Bonds are subject to optional redemption pursuant to Section
8.01(b) of the Indenture by notifying the Trustee, the Issuer, the Credit
Facility Issuer, the Tender Agent and the Remarketing Agent at least 4
Business Days prior to the 30th day prior to the proposed effective date of
the change. Such notice shall specify the last day of the next Long-Term
Rate Period which shall be the earlier of the day before the maturity date
of the Bonds or the day immediately preceding a March 1 or September 1 and
which is one year or more after the effective date and, if such change is
conditional, the interest rate limitations. Any such notice shall be
accompanied by an opinion of nationally recognized bond counsel stating
that such change is authorized by the Indenture and, if the change is from
a Long-Term Rate Period of one year to a Long-Term Rate Period of more than
one year, an opinion of nationally recognized bond counsel that such change
will not affect the exclusion from gross income for federal income tax
purposes of the interest on the Bonds. Any change by the Borrower of the
Long-Term Rate Period may be made conditional on the interest rate being
within certain limits established by the Borrower. The Remarketing Agent
shall establish what would be the interest rate for the proposed Long-Term
Rate Period in accordance with Section 2.02(c) of the Indenture. If the
interest rate established by the Remarketing Agent is not within the limits
established, then the change in the Long-Term Rate Period may be cancelled
by the Borrower, in which case the Borrower's notice of the proposed change
shall be of no effect and the Bonds shall not be subject to any mandatory
purchase pursuant to Section 3.01(b) of the Indenture. Notice of such
cancellation shall be promptly given to all Bondholders.
(4) CONVERSION OF INTEREST RATE.
(i) CONVERSION DIRECTED BY THE BORROWER. The Interest Rate Mode for
the Bonds is subject to Conversion to a different Interest Rate Mode from
time to time in whole (and not in part) by the Borrower, such right to be
exercised by notifying the Trustee, the Credit Facility Issuer, the Tender
Agent and the Remarketing Agent at least 4 Business Days
I-4
prior to the 15th day (the 30th day in the case of Conversion from or to
the Long-Term Rate) prior to the effective date of such proposed
Conversion. Such notice shall specify (A) the effective date, (B) the
proposed Interest Rate Mode, (C) if the Conversion is to the Long-Term
Rate, the end of the Long-Term Rate Period and (D) if such Conversion is
conditional, the interest rate limitations. The notice must be accompanied
by (i) an opinion of nationally recognized bond counsel stating that the
Conversion is authorized by the Indenture and, if the Conversion is from a
Rate Period of one year or less to a Rate Period of more than one year or
from a Rate Period of more than one year to a Rate Period of one year or
less, an opinion of nationally recognized bond counsel that such Conversion
will not affect the exclusion from gross income for federal income tax
purposes of the interest on the Bonds, and (ii) if the stated amount of the
Credit Facility, if any, to be held by the Trustee after such Conversion is
increased over that of the then current Credit Facility an opinion of
reputable bankruptcy counsel stating that payments of principal and
interest on the Bonds from funds drawn on such Credit Facility will not
constitute avoidable preferences with respect to the bankruptcy of the
Borrower under the Bankruptcy Code. Any Conversion by the Borrower of the
Interest Rate Mode to the Long-Term Rate may be made conditional on the
initial interest rate determined for such Interest Rate Mode being within
certain limits established by the Borrower. The Remarketing Agent shall
establish what would be the interest rate for the proposed Interest Rate
Mode in accordance with Section 2.02(c) of the Indenture. If the interest
rate established by the Remarketing Agent is not within the limits
established, then such Conversion may be cancelled by the Borrower, in
which case, the Borrower's notice of Conversion shall be of no effect and
the Bonds shall not be subject to any mandatory purchase pursuant to
Section 3.01(b) of the Indenture. Notice of such cancellation shall be
given promptly to all Bondholders.
(ii) LIMITATIONS. Any Conversion of the Interest Rate Mode for the
Bonds pursuant to paragraph (i) above must comply with the following:
(A) the Conversion Date must be an Interest Payment Date which is
a date on which the Bonds are subject to optional redemption pursuant
to Section 8.01(a), (b) or (c) of the Indenture;
(B) the Conversion Date must be a Business Day; and
(C) the Credit Facility, if any, to be held by the Trustee must
cover accrued interest for the Bonds for 98 days, if the Conversion is
to the Weekly Rate, or for 183 days, if the Conversion is to the
Semi-Annual Rate or the Long-Term Rate. If a Credit Facility will not
support the Bonds after the Conversion Date, the Borrower may only
convert the Interest Rate Mode for the Bond to a Long-Term Rate Period
which Long-Term Rate Period shall expire on the maturity date of the
Bonds.
(iii) CANCELLATION OF CONVERSION OF INTEREST RATE MODE.
Notwithstanding any provision of Section 2.02 of the Indenture, the
Interest Rate Mode shall not be converted
I-5
if (A) the Remarketing Agent has not determined the initial interest rate
for the new Interest Rate Mode in accordance with Section 2.02 of the
Indenture or (B) the Trustee shall receive written notice prior to such
Conversion that either of the opinions required under Section 2.02(e)(i) of
the Indenture has been rescinded. If the Trustee shall have sent any notice
to the Bondholders regarding a Conversion of the Interest Rate Mode under
Section 2.02(e)(iii) of the Indenture, the Trustee shall promptly notify
all Bondholders of such rescission and the cancellation of any mandatory
purchase pursuant to Section 3.01(b) of the Indenture.
I-6
EXHIBIT B
PROJECT FACILITIES
Upon completion of construction, the Project Facilities will consist
of a manufacturing facility including building, equipment and office space. The
manufacturing building will be approximately 48,000 square feet under roof and
the office building will be approximately 6,000 square feet. The machinery and
equipment will be used to perform prebond and postbond processing of material
explosively bonded at the Borrower's Dunbar, Pennsylvania bonding site.
B-1
EXHIBIT C
PROJECT SITE
LEGAL DESCRIPTION
[13.7 acres known as Xxx Xx. 00 in a resubdivision of Industrial Park
No. 1, Mount Xxxxxxxx, North Union Township, Pennsylvania.]
C-1
EXHIBIT D
FORM OF DISBURSEMENT REQUEST
STATEMENT NO. REQUESTING DISBURSEMENT OF FUNDS
------
FROM PROJECT FUND PURSUANT TO SECTION 3.4 OF THE
LOAN AGREEMENT DATED AS OF SEPTEMBER 1, 1998 BETWEEN
THE FAYETTE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
AND
DYNAMIC MATERIALS CORPORATION
---------------------------------
Pursuant to Section 3.4 of the Loan Agreement (the "Agreement") between the
Fayette County Industrial Development Authority (the "Issuer") and Dynamic
Materials Corporation (the "Borrower") dated as of September 1, 1998, the
undersigned Designated Representative hereby requests and authorizes Star Bank,
N.A., as trustee (the "Trustee"), as depository of the Project Fund created by
the Indenture and defined in the Agreement, to pay to the Borrower or to the
person(s) listed on the Disbursement Schedule hereto out of the moneys deposited
in the Project Fund the aggregate sum of $ to pay such person(s) or
-----------
to reimburse the Borrower in full, as indicated in the Disbursement Schedule,
for the advances, payments and expenditures made by it in connection with the
items listed in the Disbursement Schedule.
In connection with the foregoing request and authorization, the undersigned
hereby certifies that:
(a) Each item for which disbursement is requested hereunder is
properly payable out of the Project Fund in accordance with the terms and
conditions of the Agreement and none of those items has formed the basis
for any disbursement heretofore made from said Project Fund.
(b) Each such item is or was necessary in connection with the
construction, furnishing, equipment or improvement of the Project, as
defined in the Agreement.
(c) The Borrower has received, or will concurrently with payment
hereunder receive and deliver to the Trustee, appropriate waivers of any
mechanics' or other liens with respect to each item which has been paid
pursuant to a prior disbursement request.
(d) Each item for which disbursement is requested hereunder, and the
cost for each such item, is as described in the information statement filed
by the Issuer in connection with the issuance of the Bonds (as defined in
the Agreement), as required by Section 149(e) of the Code; provided that if
any such item is not as described in that information statement, attached
hereto is a computation evidencing that the average reasonably expected
economic life of the facilities which have been and will be paid for with
moneys in the Project Fund is not less than 5/6ths of the average maturity
of the Bonds.
D-1
(e) This statement and all exhibits hereto, including the Disbursement
Schedule, shall be conclusive evidence of the facts and statements set
forth herein and shall constitute full warrant, protection and authority to
the Trustee for its actions taken pursuant hereto.
(f) This statement constitutes the approval of the Borrower of each
disbursement hereby requested and authorized.
This day of , 19 .
----- ---------------- ---
Pursuant to Section 3.4 of the ----------------------------------
Agreement the foregoing Designated Representative
disbursement request is hereby
approved:
KEYBANK NATIONAL ASSOCIATION, as issuer
of the Credit Facility
By:
-----------------------
Title:
--------------------
Dated:
--------------------
D-2
DISBURSEMENT SCHEDULE
TO STATEMENT NO. REQUESTING AND AUTHORIZING DISBURSEMENT OF FUNDS
----------
FROM PROJECT FUND PURSUANT TO SECTION 3.4 OF THE LOAN AGREEMENT DATED AS OF
SEPTEMBER 1, 1998 BETWEEN THE FAYETTE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
AND DYNAMIC MATERIALS CORPORATION.
PAYEE AMOUNT PURPOSE
D-3
ARTICLE I
DEFINITIONS
SECTION 1.1 USE OF DEFINED TERMS......................................... 3
SECTION 1.2 DEFINITIONS.................................................. 3
SECTION 1.3 INTERPRETATION............................................... 9
SECTION 1.4 CAPTIONS AND HEADINGS........................................ 9
ARTICLE II
REPRESENTATIONS
SECTION 2.1 REPRESENTATIONS OF THE ISSUER............................... 10
SECTION 2.2 REPRESENTATIONS AND COVENANTS OF THE BORROWER............... 10
ARTICLE III
COMPLETION OF THE PROJECT; ISSUANCE OF THE BONDS
SECTION 3.1 ACQUISITION, CONSTRUCTION, INSTALLATION, EQUIPMENT
AND IMPROVEMENT............................................. 13
SECTION 3.2 PLANS AND SPECIFICATIONS.................................... 13
SECTION 3.3 ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS.............. 13
SECTION 3.4 DISBURSEMENTS FROM THE PROJECT FUND......................... 14
SECTION 3.5 BORROWER REQUIRED TO PAY COSTS IN EVENT PROJECT
FUND INSUFFICIENT........................................... 15
SECTION 3.6 COMPLETION DATE............................................. 16
SECTION 3.7 INVESTMENT OF FUND MONEYS................................... 16
SECTION 3.8 REBATE FUND................................................. 17
i
ARTICLE IV
LOAN BY ISSUER; REPAYMENT OF THE LOAN;
LOAN PAYMENTS AND ADDITIONAL PAYMENTS
SECTION 4.1 LOAN REPAYMENT; DELIVERY OF NOTE AND CREDIT
FACILITY.................................................... 18
SECTION 4.2 ADDITIONAL PAYMENTS......................................... 19
SECTION 4.3 PLACE OF PAYMENTS........................................... 19
SECTION 4.4 OBLIGATIONS UNCONDITIONAL................................... 19
SECTION 4.5 ASSIGNMENT OF AGREEMENT AND REVENUES........................ 20
SECTION 4.6 CREDIT FACILITY............................................. 20
ARTICLE V
ADDITIONAL AGREEMENTS AND COVENANTS
SECTION 5.1 RIGHT OF INSPECTION......................................... 21
SECTION 5.2 LEASE, SALE OR GRANT OF USE BY BORROWER..................... 21
SECTION 5.3 INDEMNIFICATION............................................. 21
SECTION 5.4 BORROWER NOT TO ADVERSELY AFFECT EXCLUSION FROM
GROSS INCOME OF INTEREST ON BONDS........................... 22
SECTION 5.5 BORROWER TO MAINTAIN ITS EXISTENCE; MERGER AND
CONSOLIDATION............................................... 22
SECTION 5.6 ONGOING DISCLOSURE.......................................... 22
ARTICLE VI
REDEMPTION AND PURCHASE OF BONDS
SECTION 6.1 OPTIONAL REDEMPTION......................................... 23
SECTION 6.2 EXTRAORDINARY OPTIONAL REDEMPTION........................... 23
SECTION 6.3 MANDATORY REDEMPTION IN EVENT OF INCLUSION IN
GROSS INCOME OF INTEREST ON BONDS........................... 25
ii
SECTION 6.4 MANDATORY REDEMPTION........................................ 25
SECTION 6.5 ACTIONS BY ISSUER........................................... 25
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1 EVENTS OF DEFAULT........................................... 26
SECTION 7.2 REMEDIES ON DEFAULT......................................... 27
SECTION 7.3 NO REMEDY EXCLUSIVE......................................... 28
SECTION 7.4 AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES............... 28
SECTION 7.5 NO WAIVER................................................... 28
SECTION 7.6 NOTICE OF DEFAULT........................................... 28
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 TERM OF AGREEMENT........................................... 29
SECTION 8.2 AMOUNTS REMAINING IN FUNDS.................................. 29
SECTION 8.3 NOTICES..................................................... 29
SECTION 8.4 EXTENT OF COVENANTS OF THE ISSUER; NO PERSONAL
LIABILITY................................................... 29
SECTION 8.5 BINDING EFFECT.............................................. 30
SECTION 8.6 AMENDMENTS AND SUPPLEMENTS.................................. 30
SECTION 8.7 EXECUTION COUNTERPARTS...................................... 30
SECTION 8.8 SEVERABILITY................................................ 30
SECTION 8.9 GOVERNING LAW............................................... 30
EXHIBIT A--NOTE
iii
EXHIBIT B--PROJECT FACILITIES
EXHIBIT C--PROJECT SITE LEGAL DESCRIPTION
EXHIBIT D--FORM OF DISBURSEMENT REQUEST
iv
