EXHIBIT 10.8
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LOAN AGREEMENT
BETWEEN
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY,
(Issuer)
AND
EPITAXX, INC.
(Borrower)
Dated as of August 15, 1991
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The interests of the New Jersey Economic Development Authority ("lssuer") under
this Loan Agreement have been assigned (except for amounts payable under
Sections 6.1(b), 6.1(d), 7.4(e), 7.4(f), 7.8(g), 7.15, 7.16, 8.2 and 9.4 hereof)
pursuant to a certain Bond Indenture dated as of the date hereof between the
Issuer and Sumitomo Bank of New York Trust Company, as trustee ("Trustee"), and
is subject to the security interest of the Trustee.
LOAN AGREEMENT
TABLE OF CONTENTS
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PARTIES.........................................................................1
PREAMBLES.......................................................................1
ARTICLE I DEFINITIONS...........................................................3
ARTICLE II REPRESENTATIONS, COVENANTS AND WARRANTIES............................4
Section 2.1. Representations, Covenants and Warranties of Borrower............4
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Section 2.2. Representations, Covenants and Warranties of the Issuer..........7
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ARTICLE III TERM, NATURE AND BENEFITS OF LOAN AGREEMENT.........................9
Section 3.1. Term.............................................................9
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Section 3.2. Nature and Benefits of Obligations...............................9
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ARTICLE IV CONDITIONS PRECEDENT................................................10
Section 4.1. Conditions......................................................10
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ARTICLE V ISSUANCE OF THE BONDS; APPLICATION OF BOND PROCEEDS..................11
Section 5.1. Agreement to Issue Bonds; Application of Bond Proceeds..........11
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Section 5.2. Projects Undertaking............................................12
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Section 5.3. Projects Completion.............................................12
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Section 5.4. Borrower Required to Pay if Project Fund Insufficient...........13
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Section 5.5. Investment of Moneys............................................13
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Section 5.6. Special Arbitrage Covenant......................................14
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ARTICLE VI PAYMENT PROVISIONS; OPTIONS TO PREPAY; OBLIGATIONS TO
TERMINATE AGREEMENT; NOTICES TO ISSUER.........................................15
Section 6.1. Amounts Payable.................................................15
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Section 6.2. Obligation to Make Payments Unconditional.......................17
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Section 6.3. Substitute Letter of Credit and Substitute Support Facility.....18
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Section 6.4. Prepayment......................................................18
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Section 6.5. Obligation to Prepay............................................19
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Section 6.6. Place of Payment................................................19
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Section 6.7. Change in Interest Rate Mode Notice.............................19
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Section 6.8. Optional Conversion Notice......................................19
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ARTICLE VII GENERAL COVENANTS..................................................20
Section 7.1. No Warranty of Condition of Suitability by Issuer...............20
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Section 7.2. Further Assurances and Corrective Instruments...................20
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Section 7.3. Issuer and Borrower Representatives.............................20
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Section 7.4. General Covenants of Borrower...................................20
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Section 7.5. Risk of Loss....................................................22
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Section 7.6. Security Interests..............................................22
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Section 7.7. Borrower May Improve or Alter...................................22
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Section 7.8. Covenants Regarding Operation and Maintenance...................22
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Section 7.9. Damage Destruction and Condemnation.............................23
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Section 7.10. Financial Statements and Information...........................25
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Section 7.11. Reorganization or Fundamental Change...........................25
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Section 7.12. Maintenance of Tax-Exempt Status of Bonds......................26
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Section 7.13. Compliance with Applicable Laws................................30
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Section 7.14. Environmental Compliance.......................................30
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Section 7.15. Assignment of Loan Agreement...................................31
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Section 7.16. Lease or Transfer of Project...................................31
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Section 7.17. Inspection of the Project......................................31
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Section 7.18. Relocation of the Project......................................31
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Section 7.19. Payment of Prevailing Wage.....................................31
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Section 7.20. Affirmative Action.............................................32
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Section 7.21. Annual Certificate.............................................32
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Section 7.22. Project Sign...................................................33
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ARTICLE VIII ASSIGNMENT; INDEMNIFICATION; REDEMPTION; RESERVATION OF
INTERESTS......................................................................34
Section 8.1. No Assignments Except as Permitted..............................34
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Section 8.2. Release and Indemnification Covenants...........................34
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Section 8.3. Redemption of Bonds.............................................35
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Section 8.4. References to Bonds Ineffective After Bonds Paid................35
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Section 8.5. Issuer to Grant Security Interest to Trustee....................35
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ARTICLE IX DEFAULTS AND REMEDIES...............................................36
Section 9.1. Defaults Defined................................................36
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Section 9.2. Remedies on Default.............................................37
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Section 9.3. No Remedy Exclusive.............................................37
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Section 9.4. Agreement to Pay Attorneys' Fees and Expenses...................38
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Section 9.5. No Additional Waiver Implied by One Waiver......................38
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ARTICLE X SUPPLEMENTS AND AMENDMENTS...........................................39
Section 10.1. Amendment Without Consent......................................39
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Section 10.2. Amendment Upon Approval of Two-Thirds of Owners of Bonds.......39
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ARTICLE XI MISCELLANEOUS.......................................................41
Section 11.1. Notices........................................................41
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Section 11.2. Binding Effect.................................................43
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Section 11.3. Severability...................................................43
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Section 11.4. Amounts Remaining in Funds.....................................43
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Section 11.5. Execution in Counterparts......................................43
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Section 11.6. Applicable Law.................................................43
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Section 11.7. Cautions.......................................................43
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TESTIMONIUM....................................................................44
SIGNATORIES....................................................................44
EXHIBIT A Form of Requisition
EXHIBIT B Form of Borrower's Note
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THIS LOAN AGREEMENT dated as of the fifteenth day of August, 1991, by and
among the NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (the "Issuer"), a public
body corporate and politic constituting an instrumentality of the State of New
Jersey and EPITAXX, INC. (the "Borrower").
WHEREAS, the New Jersey Economic Development Authority Act, constituting
Chapter 80 of the Pamphlet Laws of 1974 of the State of New Jersey, approved on
August 7, 1974, as amended and supplemented, (the "Act") declares it to be in
the public interest and to be the policy of the State of New Jersey (the
"State") to xxxxxx and promote the economy of the State, increase opportunities
for gainful employment and improve living conditions, assist in the economic
development or redevelopment of political subdivisions within the State, and
otherwise contribute to the prosperity, health and general welfare of the State
and its inhabitants by inducing manufacturing, industrial, commercial,
recreational, retail, service and other employment promoting enterprises to
locate, remain or expand within the State by making available financial
assistance; and
WHEREAS, the Issuer, to accomplish the purposes of the Act, is empowered to
extend credit to such employment promoting enterprises in the name of the Issuer
on such terms and conditions and in such manner as it may deem proper for such
consideration and upon such terms and conditions as the Issuer may determine to
be reasonable; and
WHEREAS, the Borrower has applied to the Issuer for financial assistance in
the principal amount of $5,000,000 for financing the acquisition of land and a
42,000 square foot building, machinery and equipment for use in a manufacturing
facility (the "Project") to be located in the Township of Xxxxx, County of
Xxxxxx, State of New Jersey, and the Issuer has, by resolution duly adopted in
accordance with the Act, accepted the application of the Borrower for assistance
in financing the Project, which application was approved by resolution of the
Authority at its meeting of July 2, 1991; and
WHEREAS, the Issuer has by resolution, duly adopted in accordance with the
Act, on August 6, 1991, authorized the issuance of $5,000,000 principal amount
of its Economic Development Revenue Bonds (Epitaxx, Inc. Project) Series 1991
for the purpose of making a loan to the Borrower; and
WHEREAS, the Issuer contemporaneously with the execution and delivery of
this Loan Agreement shall enter into a Bond Indenture dated as of August 15,
1991 (the "Indenture") wherein the Issuer has assigned certain of its rights
under this Loan Agreement to Sumitomo Bank of New York Trust Company, as Trustee
for the benefit of the Owners from time to time of the Bonds; and
WHEREAS, the execution and delivery of this Loan Agreement have been duly
authorized by the parties and all conditions, acts and things necessary and
required by the Constitution or statutes of the State of New Jersey or otherwise
to exist, to have happened, or to have been performed precedent to or in the
execution and delivery of this Loan Agreement do exist, have happened and have
been performed.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration paid by each of the
parties to the other, the receipt of which is hereby acknowledged, the Issuer
and the Borrower hereby agree as follows:
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ARTICLE I
DEFINITIONS
In addition to and except as elsewhere defined in this Agreement, the words
and terms as used in this Agreement shall have the same meaning and be subject
to the same construction as set forth and provided in the Indenture.
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ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations, Covenants and Warranties of Borrower.
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The Borrower represents, covenants and warrants that:
(a) The Borrower is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware, is duly authorized
to do business in the State, is duly authorized to acquire, construct,
equip and operate the Project, has power to execute and deliver this
Agreement, the Borrower's Note, the Remarketing Agreement, the Tender Agent
Agreement, the Credit Agreement, the Pledge Agreement and the Bond Purchase
Agreement (said instruments and agreements, collectively, the "Bond
Documents"), and by proper action has been duly authorized to execute and
deliver the Bond Documents;
(b) The Borrower is not in material breach of or in material default under
any of the provisions of (i) its articles of incorporation or bylaws, (ii)
any judgment, decree, order, statute, rule or regulation applicable to it
or to its properties, or (iii) any material provision of any indenture,
mortgage, loan agreement or other contract or instrument to which it is a
party or by which it or any of its properties is bound;
(c) The Borrower is not required in connection with the transactions
contemplated by the Bond Documents to obtain, as the case may be, the
consent of any creditor not already obtained;
(d) Neither the execution and delivery of the Bond Documents, the
consummation of the transactions contemplated hereby and thereby, nor the
fulfillment of or compliance with the terms and conditions of any thereof
conflicts with or results in a material breach of the terms, conditions or
provisions of or will constitute a default under any restriction or any
agreement or instrument to which any is now a party or by which any is
bound, or result in the creation or imposition of any lien, charge or
encumbrance whatsoever upon any of the property or assets of either under
the terms of any such instrument or agreement except as provided or
permitted under this Agreement;
(e) There is no action, suit, proceeding, inquiry or investigation, at law
or in equity, before or by any court, public board or body, known to be
pending or threatened against or affecting the Borrower or any officers
thereof, or to the best of the knowledge of the Borrower is there any basis
therefor, wherein an unfavorable decision, ruling or finding would
materially adversely affect the transactions contemplated by this Agreement
or which would adversely affect, in any way, the validity or enforceability
of the Bonds or of the Bond Documents, or any thereof, or any agreement or
instrument to which the Borrower is a party, used or contemplated for use
in the consummation of the transactions contemplated hereby;
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(f) All Costs of the Project to be reimbursed with the proceeds of the
Bonds were paid or incurred or will be paid or incurred after July 2, 1991;
(g) The Borrower will fully and faithfully perform all the duties and
obligations which the Issuer has agreed in the Indenture to cause the
Borrower to perform and any duties and obligations that the Borrower is
required in the Indenture to perform;
(h) Each of the representations and warranties of the Borrower contained
in the Tax Certificate of the Borrower dated and delivered on the Closing
Date and hereby incorporated by reference is true, correct and complete and
the Borrower covenants that it will comply with the undertakings therein
set forth, to the same extent and manner as if all and several thereof were
fully set forth and contained herein, and that it otherwise will not take
or omit to take any action which would impair the exclusion of interest on
the Bonds from gross income of the Owners thereof for purposes of federal
income taxation;
(i) There has been no material adverse change in the financial condition
of the Borrower since the date of the financial statements submitted with
the Application;
(j) The availability of the financial assistance by the Issuer as provided
herein has been an important inducement to the Borrower to locate the
Project in the State;
(k) The Bond Documents, the Application, or any other document,
certificate or statement furnished to the Trustee, the Issuer or the Bank
by or on behalf of the Borrower do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements contained herein and therein not misleading or incomplete.
It is specifically understood by the Borrower that all such statements,
representations and warranties shall be deemed to have been relied upon by
the Issuer as an inducement to make the loan and by the Bank as an
inducement to issue the Letter of Credit and that if any such statements,
representations and warranties were false at the time they were made, the
Issuer or the Bank may, in its sole discretion, consider any such
misrepresentation or breach of warranty an Event of Default and exercise
the remedies provided for in this Loan Agreement;
(1) The operation of the Project in the manner presently contemplated and
as described in the Application will not conflict with any current zoning,
water, air pollution or other ordinances, orders, laws or regulations
applicable thereto. The Borrower has caused the Project to be designed in
accordance with all Federal, State and local laws or ordinances (including
rules and regulations) relating to zoning, building, safety and
environmental quality. The Borrower will complete the Project pursuant to
this Loan Agreement;
(m) The Project is located wholly within the borders of the Project
Municipality and the Premises are not contiguous with the borders of any
portion of the Project Municipality. The operation of the Project is not
integrated with any other facility in any neighboring municipality operated
by any Principal User of the Project. All of the
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facilities financed by the Bond Proceeds of the Bonds are located within
one state, and neither the Borrower nor any Related Person is a user of any
facility financed by the proceeds of the Bonds other than the Project;
(n) No Principal User of the Project is a tenant in any facility in the
Project Municipality, the landlord of which is a Person other than a
Principal User of the Project;
(o) No Person (or any Related Person within the meaning of Section
144(a)(3) of the Code) who was a substantial user of the Project, within
the meaning of Treas. Reg. Sec. 1.103-8(a)(5)(iv), at any time during the
five (5) year period immediately preceding the date hereof, and who will
receive, directly or indirectly, Bond Proceeds of the Bonds in an amount
equal to five per centum (5%) or more of the face amount of the Bonds in
payment for his interest in the Project, will be a Substantial User of the
Project or a Related Person at any time during the five (5) year period
beginning on the date of issuance of the Bonds;
(p) The Project was not acquired or placed in service by the Borrower
(determined in accordance with the provisions of Section 103 of the Code
and applicable regulations thereunder) more than one (1) year prior to the
date of issuance of the Bonds;
(q) Subsequent to thirty-one (31) days prior to the date hereof, the
Borrower or any Related Person (or group of related persons which includes
the Borrower) has not guarantied, arranged, participated in, assisted with,
borrowed the proceeds of, or leased facilities financed by obligations
issued under Section 103 of the Code by any state or local governmental
unit or any constituted authority empowered to issue obligations by or on
behalf of any state or local governmental unit other than the Issuer.
During the period commencing on the date of issuance of the Bonds and
ending thirty-one (31) days thereafter, there will be no obligations issued
under Section 103 of the Code which are guarantied by the Borrower or any
Related Person (or group of related persons which includes the Borrower) or
which are issued with the assistance or participation of, or by arrangement
with the Borrower or any Related Person (or group of related persons which
includes the Borrower) without the written opinion of Xxxxxxxx, St. Xxxx &
Xxxxx, Esqs. or other nationally recognized bond counsel acceptable to
Xxxxxxxx, St. Xxxx & Xxxxx, Esqs. to the effect that the issuance of such
obligation will not adversely affect their opinion as to exemption from
present Federal income taxes of interest on the Bonds. Other than the
Borrower or any Related Person (or group of related persons including the
Borrower), no person has (i) guarantied, arranged, participated in,
assisted with the issuance of, or paid any portion of the cost of the
issuance of the Bonds, or (ii) provided any property or any franchise,
trademark or trade name (within the meaning of Code Section 1253) which is
to be used in connection with the Project;
(r) The Project does not share "substantial common facilities", within the
meaning of Section 144 (a) (9) of the Code, with any other facility
financed by an outstanding tax-exempt bond; and
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(s) (i) There have been no claims, litigation, administrative
proceedings, whether actual or threatened, or judgments or orders,
relating to any hazardous substances, hazardous wastes, discharges,
emissions or other forms of pollution relating in any way to any
property or activities of the Borrower, including without limitation,
the real property and improvements located at the Premises.
(ii) To the best of the Borrower's knowledge, after due inquiry and
investigation, there have been no hazardous substances or hazardous
wastes, as defined by the Environmental Cleanup Responsibility Act
(N.J.S.A. 13:lk-6 et seq.) ("E.C.R.A."), Spill Compensation and
Control Act (N.J.S.A 58:10-23.11 et seq.), Resource Conservation and
Recovery Act (42 U.S.C. Subsection 6901 et seq.) and the Comprehensive
Environmental Responsibility Compensation and Liability Act (42 U.S.C.
Subsection 9601 et seq.) generated, manufactured, refined,
transported, treated, stored, handled or disposed of on the Premises
by the Borrower or at any other location owned by the Borrower in the
State.
(iii) To the best of the Borrower's knowledge, after due inquiry and
investigation, there have been no discharges, spillages or disposals
of hazardous substances or hazardous wastes (as described in the prior
paragraph) on the Premises or at any other location owned by the
Borrower in the State.
(iv) The Project is not subject to the requirements of Section 13:lk-
9 of E.C.R.A. or, if it is subject to such requirements, the Borrower
or Borrower's transferor has complied with such provisions.
Section 2.2. Representations, Covenants and Warranties of the Issuer.
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The Issuer represents, warrants and covenants that:
(a) it is a public body corporate and politic constituting an
instrumentality of the State, duly organized and existing under the laws of the
State, particularly the Act. The Issuer is authorized to issue the Bonds in
accordance with the Act and to use the proceeds from the sale of the Bonds to
make the loan to the Borrower;
(b) the Issuer has complied with the provisions of the Act and has full
power and authority pursuant to the Act to consummate all transactions
contemplated by this Loan Agreement, the Bonds, the Indenture, the Resolutions,
and any and all other agreements relating thereto and to issue, sell and deliver
the Bonds as provided in the Indenture;
(c) by the Resolutions duly adopted by the Issuer and still in full force
and, effect, the Issuer has duly authorized the execution, delivery and due
performance of this Loan Agreement, the Indenture and the Bonds, and the taking
of any and all actions as may be required on the date hereof on the part of the
Issuer to carry out, give effect to and consummate the transactions contemplated
by this Loan Agreement and the Indenture. All approvals of the Issuer necessary
in connection with the foregoing have been received;
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(d) the Bonds have been duly authorized, executed, issued and delivered
and constitute the valid and binding special obligation of the Issuer, the
principal of, premium, if any, and interest on which are payable solely from the
revenues and other moneys derived pursuant to this Loan Agreement and pledged
therefor by the Resolutions. The Bonds shall not be in any way a debt or
liability of the State or of any political subdivision thereof, except the
Issuer, and shall not create or constitute any indebtedness, liability or
obligation of the State or of any political subdivision thereof, except the
Issuer, whether legal, moral or otherwise;
(e) the execution and delivery of this Loan Agreement, the Indenture and
the Bonds, and compliance with the provisions hereof and thereof, do not
conflict with or constitute on the part of the Issuer a violation of the
Constitution of the State or a violation or breach of or default under its by-
laws or any statute, indenture, mortgage, deed of trust, note agreement or other
agreement or instrument to which the Issuer is a party or by which the Issuer is
bound or, to the knowledge of the Issuer, any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the Issuer or any
of its activities or properties. All consents, approvals, authorizations and
orders of governmental or regulatory authorities which are required to be
obtained by the Issuer for the consummation of the transactions contemplated
hereby and thereby have been obtained;
(f) the Issuer shall apply the proceeds from the sale of the Bonds and the
revenues derived under this Loan Agreement for the purposes specified and in the
manner provided in this Loan Agreement;
(g) to the best knowledge of the Issuer, there is no action, suit,
proceeding or investigation at law or in equity or before or by any court,
public board or body pending or threatened against or affecting the Issuer, or
any basis therefor, wherein an unfavorable decision, ruling or finding would
materially adversely affect the transactions contemplated hereby, or which in
any way would materially adversely affect the validity of the Bonds, the
Indenture, the Resolutions, this Loan Agreement, any agreement or instrument to
which the Issuer is a party and which is used or contemplated for use in
consummation of the transactions contemplated hereby or the exemption from
taxation as set forth herein; and
(h) any certificate signed by an Authorized Issuer Representative and
delivered to the Bank, the Trustee or the Borrower shall be deemed a
representation and warranty by the Issuer to the Bank, the Trustee or the
Borrower, as the case may be, as to the statements made therein.
It is specifically understood and agreed that the Issuer makes no
representation as to the financial position or business condition of the
Borrower and does not represent or warrant as to any of the statements,
materials (financial or otherwise), representations or certifications furnished
or to be made and furnished by the Borrower in connection with the sale of the
Bonds, or as to the correctness, completeness or accuracy of such statements.
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ARTICLE III
TERM, NATURE AND BENEFITS OF LOAN AGREEMENT
Section 3.1. Term. The term of this Agreement shall commence on the
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date of its delivery (the "Closing Date"), and shall terminate (unless
discharged upon prepayment of all sums due hereunder by the Borrower prior
thereto as hereinafter provided) on the date on which the Bonds and all other
sums due under the Indenture, and hereunder by the Borrower, shall have been
paid or provision for their payment has been made in accordance herewith.
Section 3.2. Nature and Benefits of Obligations. This Agreement and
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the Borrower's Note, securing, inter alia, the Borrower's obligations hereunder
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and thereunder, have been executed and delivered in part to induce concurrently
herewith the purchase by others of the Bonds, and, accordingly, all covenants
and agreements on the part of the Borrower and the Issuer, as set forth therein
and herein, are hereby declared to be for the benefit of the Trustee for the
benefit of the Owners from time to time of the Bonds and the Bank. The Borrower
consents and agrees to the assignment by the Issuer to the Trustee under the
Indenture of all of the Issuer's, right, title and interest in, to and under
this Agreement and the Borrower's Note and agrees that the provisions thereof
may be enforced by the Trustee under the provisions of the Indenture. The
Borrower agrees to do all things within its power in order to comply with, and
to enable the Issuer to comply with, all requirements and to fulfill, and to
enable the Issuer to fulfill, all covenants of the Indenture and the Bonds.
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ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1. Conditions. The obligation of the Issuer to make the
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loan to the Borrower pursuant to this Agreement is subject to (i) there being no
Default hereunder or event which with notice or lapse of time, or both, would
become a Default hereunder, and (ii) the receipt by the Issuer, the Trustee and
the Bank, as hereinafter set forth, of the following (all of which shall be in
form and substance satisfactory thereto):
(1) original duly executed counterparts of:
(a) the Indenture;
(b) the Borrower's Note;
(c) this Agreement;
(d) the Credit Agreement;
(e) the Pledge Agreement;
(f) the Remarketing Agreement; and
(g) the Tender Agent Agreement;
(2) such certificates and documents respecting the Borrower and its
undertakings in connection herewith as counsel for Trustee or bond counsel
shall reasonably require;
(3) such opinions of counsel for the Borrower as counsel for the Trustee
or bond counsel shall reasonably require;
(4) appropriate certifications by the Borrower with respect to the use of
the proceeds of the Bonds in consideration of Section 103 of the Code;
(5) satisfactory evidence respecting the Borrower's compliance with the
insurance requirements of this Agreement;
(6) such other and further materials as the Issuer, the Trustee or the
Bank may reasonably require;
(7) the Letter of Credit.
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ARTICLE V
ISSUANCE OF THE BONDS;
APPLICATION OF BOND PROCEEDS
Section 5.1. Agreement to Issue Bonds; Application of Bond Proceeds.
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In order to provide for the payment of costs of and related to the issuance of
the Bonds and the Costs of the Project incurred to date and hereafter to be
incurred by the Borrower, subject to the provisions of Article IV hereof and
concurrently with the execution and delivery of this Agreement, the Issuer will
initially issue, sell and deliver Bonds in the aggregate original principal
amount of $5,000,000 and deposit the net proceeds thereof to the credit of the
Project Fund, as established and provided in Article VI of the Indenture. The
Issuer authorizes, and directs the Trustee to make disbursements from the
Project Fund of Bond proceeds from the sale of the Bonds for work performed on
the Project or to reimburse the Borrower for any costs and expenses of the
Project paid by it. Each disbursement shall constitute a Proper Charge and
shall be disbursed upon delivery to the Trustee of the following:
(a) a Requisition signed by an authorized Borrower Representative.
The Requisition Form shall state: (i) the requisition number; (ii) the name
and address of the Person to whom payment is to be made by the Trustee or,
if the payment is to be made to the Borrower for a reimbursable advance,
the name and address of the Person to whom such advance was made together
with proof of payment by the Borrower; (iii) the amount to be paid; (iv)
that each obligation for which payment is sought is a Proper Charge against
the Project Fund, is unpaid or unreimbursed, and has not been the basis of
any previously paid requisition; (v) if such payment is a reimbursement to
the Borrower for costs or expenses incurred by reason of work performed or
supervised by officer's or employees of the Borrower or any of its
affiliates, that the amount to be paid does not exceed the actual cost
thereof to the Borrower or any of its affiliates; (vi) that no Event of
Default has occurred under this Loan Agreement; and (vii) the Borrower has
received no written notice of any lien, right to lien or attachment upon,
or other claim affecting the right to receive payment of, any of the moneys
payable under such Requisition Form to any of the Persons named therein or,
if any of the foregoing has been received, it has been released or
discharged or will be released or discharged upon payment of the
Requisition Form;
(b) prior to the first disbursement from the Project Fund either (i) a
certificate of an authorized Borrower Representative stating that, for
purposes of the Prevailing Wage Provision and the Affirmative Action
Program, none of the moneys disbursed at any time from the Project Fund
will be used to pay or reimburse a payment for work done in performance of
any Construction Contract unless prior thereto there shall be submitted to
the Trustee an executed Contractor's Certificate and Agreement or (ii) a
Contractor's Certificate and Agreement executed by the Contractor.
Nevertheless, prior to the initial disbursement from the Project Fund for
payment of any Construction Contract, if not theretofore furnished, a
Contractor's Certificate and Agreement shall be submitted.
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There shall be retained in the Project Fund an amount equal to ten per
centum (10%) of each sum requisitioned for payment or reimbursement for payment
of a Construction Contract for purposes of the Affirmative Action Program (a
"holdback"); provided, however, if any such requisitioned sum is for
reimbursement of a payment by the Borrower, which payment itself was for only
ninety per centum (90%) of the payment requested by the Contractor or
Subcontractor pursuant to such Construction Contract, then such requisitioned
sum may be reimbursed without regard to the aforementioned holdback, but the
remaining ten per centum (10%), when requisitioned by the Borrower, shall only
be disbursed upon the holdback conditions hereinafter set forth. Said holdback
shall be disbursed from the Project Fund upon compliance with the preceding
terms and conditions of this Section and (i) the execution and filing of the
Contractor's Completion Certificate, (ii) the execution and filing of the
Borrower's Completion Certificate and (iii) receipt by the Borrower of a written
notice issued by the Issuer's Office of Affirmative Action that the Contractor
has complied with the requirements of the Affirmative Action Program.
Nothing contained herein or in any documents and agreements contemplated
hereby or in any other Loan Document shall impose upon the Trustee or the Issuer
any obligation to see to the proper application of such disbursements by the
Borrower or any other recipient thereof, and, in making such disbursements from
the Project Fund, the Trustee may rely on such Requisition Forms and proof
delivered to it. The Trustee and the Issuer shall be relieved of any liability
with respect to making such disbursements in accordance with the foregoing.
Thereafter and in the event of the issuance of additional Bonds as provided
in Section 2.19(B) of the Indenture, the Issuer will sell and deliver such Bonds
and deposit the net proceeds thereof to the credit of the Project Fund for
application as set forth above
Section 5.2. Projects Undertaking. The Borrower agrees that it shall
--------------------
proceed with due diligence and reasonable dispatch, delays caused by force
majeure, as defined in Section 9.1 hereof, alone excepted, to undertake and
complete the acquisition, construction, installation and equipping of the
Facilities.
In the event of the issuance of Additional Bonds, as provided in Section
2.19(B) of the Indenture, the Borrower agrees that it shall proceed with due
diligence and reasonable dispatch, delays caused by force majeure alone
excepted, to undertake and complete the next phase of the acquisition,
installation and equipping of the Facilities, as contemplated for the issuance
of the Additional Bonds.
Section 5.3. Projects Completion. Not later than August 1, 1994, or
-------------------
upon the completion of the Borrower's Project (the "Completion Date") and the
payment or provision for the payment of all of the Costs thereof, the Borrower
shall cause to be furnished to the Trustee the Borrower's Completion Certificate
signed by an authorized Borrower Representative stating the date of completion
of the Project and that, as of such date, except for amounts retained by the
Trustee at the Borrower's direction for any cost of the Project not then due and
payable or, if due and payable not then paid: (i) the Project has been
completed; (ii) the cost of all labor, services, materials and supplies used in
the Project have been paid, or will be paid from amounts retained
12
by the Trustee at the Borrower's direction for any cost of the Project not then
due and payable or, if due and payable, not then paid; (iii) the Project
equipment, if any, has been installed to the Borrower's satisfaction, such
Project equipment so installed is suitable and sufficient for the efficient
operation of the Project for the intended purposes and all costs and expenses
incurred in the acquisition and installation of such equipment have been paid,
or will be paid from amounts retained by the Trustee at the Borrower's direction
for any cost of the Project not then due and payable or, if due and payable, not
then paid; (iv) the Project is being operated as an authorized "project" under
the Act and substantially as proposed in the Application; (v) the Borrower has
reviewed the Contractor's Completion Certificate and the Borrower has no
knowledge or information that the representations contained therein are false or
misleading; and (vi) the Borrower has required in all Construction Contracts
that wages paid to workers employed in the performance of Construction Contracts
be paid at a rate not less than the Prevailing Wage Rate. Notwithstanding the
foregoing, the Borrower's Completion Certificate may state that it is given
without prejudice to any rights against third parties which exist at the date of
the Borrower's Completion Certificate or which may subsequently come into being.
Any amount remaining in the Project Fund thereafter (except for amounts therein
sufficient to cover costs of the Project not then due and payable or not then
paid) shall be transferred by the Trustee to the Principal Account in accordance
with Section 4.01 of the Indenture and shall not be invested at a yield
materially higher than the yield on the Bond
Section 5.4. Borrower Required to Pay if Project Fund Insufficient.
-----------------------------------------------------
In the event the moneys in the Project Fund available for payment of the costs
of the Project are not sufficient to pay all costs of the Project in full, the
Borrower agrees to complete the Project and to pay that portion of the cost in
excess of the moneys available therefor in the Project Fund. The Issuer, the
Bank and the Trustee make no warranty, either express or implied, that the
moneys paid into the Project Fund and available for payment of the costs of the
Project will be sufficient to pay all of such costs. The Borrower agrees that
if, after disbursement of all the money in the Project Fund available for
payment of costs of the Project, the Borrower should pay any portion of the
costs of the Project pursuant to the provisions of this Section, it shall not be
entitled to any reimbursement therefor from the Issuer, the Bank or the Trustee.
Section 5.5. Investment of Moneys. Any moneys held under the
--------------------
Indenture as a part of any fund or account, other than the Bond Fund, shall,
subject to Section 4.01(d) of the Indenture, be invested or reinvested by
Trustee, to the extent permitted by law, at the written request (or verbal
request if confirmed in writing) of and as directed by the Borrower
Representative, in Authorized Investments as provided in the Indenture.
The Trustee may make any and all such investments through departments of
any bank or trust company under common control with the Trustee. All such
investments shall at all times be a part of the Fund or Account from which the
moneys used to acquire such investments shall have come and all income and
profits on such investments shall be credited to, and losses thereon shall be
charged against, the Earnings Sub-Accounts of such Funds and Accounts. Such
investments shall be registered in the name of the Trustee, as Trustee under the
Indenture.
13
Section 5.6. Special Arbitrage Covenant. The Borrower covenants not
--------------------------
to cause or direct any moneys on deposit in any fund or account to be used in a
manner which would cause the Bonds to be classified as "arbitrage bonds" within
the meaning of Section 148 of the Code, and the Borrower certifies and covenants
to and for the benefit of the Issuer and the Owners of the Bonds Outstanding
that so long as there are any Bonds Outstanding, moneys on deposit in any Fund
or Account in connection with the Bonds, whether such moneys were derived from
the proceeds of the sale of the Bonds or from any other sources, will not be
used in a manner which will cause the Bonds to be classified as "arbitrage
bonds" within the meaning of Section 148 of the Code. The event of
classification of the Bonds as "arbitrage bonds" under Section 148 of the Code
shall be treated as a "Determination of Taxability" under Section 6.5 hereof and
shall not constitute a Default by the Borrower.
In connection herewith and for purposes of insuring compliance with the
provisions of Section 148 of the Code, as the same may from time to time be
amended and the application thereof interpreted, the Borrower acknowledges that
its financial officers, Borrower's Representative and its accountant have read
and are familiar with the requirements of Sections 4.01(d), 4.01(e) and 5.04 of
the Indenture and hereby agrees (i) to timely make or cause to be made the
annual determinations required under Section 4.01(e) of the Indenture, (ii) to
furnish the Trustee such statements and instructions as are required under said
Section 4.01(e), (iii) to timely make or to cause, to be made the determinations
required under said Section 4.01(d) (1) of the Indenture, (iv) to furnish to the
Trustee such forms, statements, instructions and funds, if any, as are required
under subparagraph (i), (ii) and (iii) of said subsection 4.01(d)(1), (v) as
required, to secure and furnish to the Trustee a statement of its Accountant as
provided for under Section 4.01(d)(4) of the Indenture, (vi) to keep and retain
such records as are required under Section 4.01(d)(6) thereof. In addition, the
Borrower shall keep or cause to be kept such records as shall enable it to
fulfill its obligations and responsibilities under this Section and Section 148
of the Code and shall retain such records for a period of six (6) years
following the final payment of principal on the Bonds. In further connection
herewith, the Borrower expressly agrees that any failure, for any reason
whatever, of the Trustee to give any notice, determination, report or statement
required or provided for in said Section 4.01(d), shall not cause the Trustee or
the Issuer to comply with the requirements of Section 148 of the Code, and,
further, that the Borrower, shall pay all such costs as may be incurred by the
Trustee in engaging a firm of certified public accountants or other firm having
expertise in the subject matter to make such calculations and prepare such
certifications as are or may be required under said Sections 4.01(d) or 4.01(e)
in the event of the Borrower's failure to cause or secure the same; provided,
however, that this provision shall in no manner be deemed to require such an
engagement by the Trustee in the event of the Borrower's failure to perform all
its obligations under this Section 5.6
14
ARTICLE VI
PAYMENT PROVISIONS; OPTIONS TO PREPAY;
OBLIGATIONS TO TERMINATE AGREEMENT; NOTICES TO ISSUER
Section 6.1. Amounts Payable. The Borrower, for and in consideration
---------------
of the issuance of the Bonds under and pursuant to Sections 2.19(A) and 2.19(B)
of the Indenture by the Issuer and the lending of the proceeds thereof by the
Issuer to the Borrower through the application of such proceeds as provided in
the Indenture and Article V hereof for the benefit of the Borrower, hereby
covenants and agrees to make the following payments (collectively called the
"Payments"):
(a) Payments, in advance, in the aggregate an amount sufficient for:
(A) Prior to the Conversion Date (as defined in the Indenture), the
payment in full of the Bonds Outstanding, including (i) on or before
the fifth (5th) Business Day preceding each Interest Payment Date,
payment of an amount equal to the estimated interest to become due on
the Bonds on such Interest Payment Date and on each Interest Payment
Date such additional amount, if any, as together with the aforesaid
payment shall equal all interest becoming due on the Bonds on such
Interest Payment Date, (ii) on each date such amounts become due (or
earlier as provided in Section 3.02 of the Indenture), principal and
redemption payments with respect to the Bonds and (iii) when due, such
amounts as are required to be paid by the Borrower to pay or cause to
be paid to the Trustee such amounts as shall be necessary to enable
the Trustee to pay the Purchase Price of the Bonds delivered to the
Tender Agent for purchase pursuant to the provisions of Section 2.12,
3.05, 3.06 or 3.07 of the Indenture, provided, however, that the
obligation of the Borrower to make any such payment required under
this clause (iii) shall be reduced by the amount of moneys available
for such payment described in Section 2.13(A) and (C) of the
Indenture; and, provided further, that the obligation of the Borrower
to make the payments required under clauses (i), (ii) and (iii) hereof
shall be deemed to be satisfied and discharged to the extent of any
corresponding payment made by the Bank to the Trustee under the Letter
of Credit; and
(B) From and after the Conversion Date, the payment in full of the
Bonds then outstanding, including (i) the total interest becoming due
and payable on such Bonds to the respective dates of payment thereof,
(ii) the total principal amount of such Bonds, and (iii) the
redemption premium, if any, that shall be payable on the redemption of
such Bonds prior to their stated maturity date, and (iv) such amounts,
if any, as shall be required to be paid by the Borrower for deposit to
the credit of the Bond Reserve Fund Account as provided in the
Indenture.
The obligation of the Borrower to make payments equal to the aggregate amount of
the principal and interest requirements of the Bonds is evidenced by the
Borrower's Note, the form of which is attached hereto as Exhibit B and made a
---------
part hereof, which shall be executed and delivered by
15
the Borrower concurrently with the execution and delivery of this Agreement and
thereupon assigned by the Issuer to and to be held by the Trustee. All such
payments shall be payable directly to the Trustee for the account of the Issuer
and shall be applied by the Trustee in the manner provided in Section 4.01 of
the Indenture. It is understood and agreed that all payments payable by the
Borrower under this subsection (a) are assigned by the Issuer to the Trustee for
the benefit of the Owners of the Bonds and the Bank. The Borrower assents to
such assignment. The Issuer hereby directs the Borrower and the Borrower hereby
agrees to pay to the Trustee at the Principal Office of the Trustee all payments
payable by the Borrower pursuant to this subsection (a);
(b) Default or delay payments, upon being invoiced therefor, consisting of
-------------------------
the amounts, fees and expenses which the Issuer may incur or be or become
legally obligated to pay under the terms of the Indenture by reason of any
default hereunder or thereunder or any default or delay in payment of the
sums due hereunder or thereunder (provided that such default or delay shall
have resulted from the Borrower's default or breach of covenant under this
Agreement) and the amounts expended or indebtedness incurred by the Issuer
or the Trustee for the purpose of curing the Borrower's defaults hereunder
or thereunder or in connection with any defaults under the Indenture, and
all costs, expenses and charges, including reasonable attorneys' fees,
incurred by the Issuer or the Trustee in collecting the Payments or in
enforcing any covenant or agreement of the Borrower contained in this
Agreement or incurred in pursuing any remedy provided under this Agreement
or under the Indenture;
(c) Expense Payments consisting of the fees, charges and expenses of the
----------------
Issuer, Trustee, the Tender Agent, the Remarketing Agent and any other
person required to be paid under the terms of the Indenture and the Bonds,
such fees, charges and expenses to be paid directly to such person,
provided that the Borrower may, without creating a Default hereunder,
contest in good faith the reasonableness of any such fees, charges or
expenses;
(d) Issuer's Fee. The Issuer's fee of $25,000 payable on the issuance date
------------
of the Bonds.
(e) Rebate payments consisting of such amounts as are required to be paid
---------------
by the Borrower into the Rebate Fund pursuant to Section 4.01(d) of the
Indenture.
In the event the Borrower should fail to make any installment of the Payments
described in clauses (a), (b) and (c) above, or any portion thereof, the
installment or portion thereof so in default shall continue as an obligation of
the Borrower until the amount in default shall have been fully paid, and the
Borrower agrees to pay the same with interest thereon (to the extent permitted
by law) at the Late Payment Rate.
The Payments paid by the Borrower shall be applied in the following order of
priority:
A. Payments due under clause (a);
16
B. Payments due under clauses (b) and (c); and
C. Payments due under clause (e).
Credits against and reduction of the Payments shall be derived from the
following sources:
A. surplus moneys (including investment earnings) contained in any funds
or accounts which are Available Moneys;
B. advance payments or prepayments on the Note or hereunder, provided the
same are Available Moneys; and
C. reductions in principal and interest requirements of Bonds due to the
purchase or redemption of Bonds as provided in the Indenture.
Section 6.2. Obligation to Make Payments Unconditional. The
-----------------------------------------
obligation of the Borrower to make the Payments shall be absolute, certain and
unconditional and shall not be subject to, nor shall the Borrower be entitled to
assert any rights of abatement, deduction, reduction, deferment, recoupment,
setoff or counterclaim by the Borrower or any other person, nor shall the
Payments be abated, abrogated, waived, diminished, postponed, delayed or
otherwise modified under or by reason of any circumstance or occurrence that may
arise or take place, irrespective of what statutory rights the Borrower may have
to the contrary, including but without limiting the generality of the foregoing
(none of which shall bar the Borrower from bringing any action or suit arising
therefrom):
A. any damage to or destruction of part or all of the Project or the
Facilities;
B. the taking or damaging of part or all of the Facilities or any
temporary or partial use thereof by any public authority or agency in the
exercise of the power of eminent domain, sequestration or otherwise;
C. any assignment, merger, consolidation, transfer of assets, leasing or
other similar transaction of or affecting Borrower, except as otherwise
provided in this Agreement;
D. any change in the tax or other laws of the United States, the State or
other governmental authority;
E. any lawful or unlawful prohibition of the Borrower's use of the
Facilities or any portion thereof or the interference with such use by any
person or commercial frustration or loss or revocation of any permits,
licenses or other authorizations required in connection with the
Facilities; and
F. any failure of the Issuer, the Trustee or the Bank to perform and
observe any agreement or covenant, expressed or implied, or any duty,
liability or obligation arising
17
out of or in connection with this Agreement, the invalidity,
unenforceability or disaffirmance of any provisions of the Borrower's Note,
the Letter of Credit, the Credit Agreement or any instruments contemplated
thereunder, this Agreement, the Indenture, the Bonds, or for any other
cause similar or dissimilar to the foregoing.
Furthermore, the Borrower covenants and agrees that it will remain obligated
under this Agreement in accordance, with its terms and that it will not take or
participate or acquiesce in any action to terminate, rescind or avoid this
Agreement.
Section 6.3. Substitute Letter of Credit and Substitute Support
--------------------------------------------------
Facility. The Borrower may provide for the delivery to the Trustee of a
Substitute Letter of Credit and/or a Substitute Support Facility as a
replacement for the then effective Letter of Credit as described in the
Indenture.
Section 6.4. Prepayment. So long as all amounts which have become due
----------
under the Borrower's Note have been paid, the Borrower may at any time and from
time to time pay in advance and in any order of due dates all or part of the
amounts to become due under this Agreement if, not less than 60 days prior to
the redemption date set forth in such notice (which date shall be an Interest
Payment Date if prepayment is in part and any Business Day if in whole), the
Borrower gives notice to the Issuer, the Trustee and the Bank of the intention
to make a prepayment and of the amount thereof and if, not later than the date
of the prepayment, the Borrower directs the Trustee as to the application of the
amounts prepaid to retire Bonds by purchase, redemption or both purchase and
redemption prior to or on the next succeeding redemption date in accordance with
Section 3.01 of the Indenture. Any such prepayment shall be made not less than
60 days prior to the redemption date unless a conditional notice of redemption
is given to the Trustee, in which case prepayment shall be made on or prior to
11 A.M. on the date set for redemption, and in either event prepayment shall be
in an amount sufficient to accomplish any such redemption or reasonably
estimated to be sufficient to accomplish any such purchase. Prepayments made
under this Section shall be credited against amounts to become due on this
Agreement as provided in Section 6.1 hereof.
To exercise such option, the Borrower shall give written notice to the
Issuer, the Bank and the Trustee and shall specify therein the date of
redemption of Bonds pursuant to Section 3.02 of the Indenture, which date shall
be the date in respect of which the required notice of redemption can be given,
and shall make arrangements satisfactory to the Trustee for the giving of the
required notice of redemption. In order to exercise such option, the Borrower
shall pay, or cause to be paid, on or prior to the applicable redemption date at
the time or times required by Section 3.01 of the Indenture, to the Trustee, an
amount equal to the sum of the following:
(1) an amount of money which, when added to the amount then on deposit and
available in the Bond Fund, will be sufficient to retire and redeem, as
provided and/or required under Section 3.01 of the Indenture, all or that
portion of the Bonds outstanding that are to be redeemed on the earliest
possible redemption date after the giving of notice as provided in the
Indenture, plus
18
(2) if all of the Bonds are to be redeemed, such sums as may be due and
payable by the Borrower under Section 4.01(d) of the Indenture, together
with an amount of money equal to the Trustee's fees and expenses under the
Indenture accrued and to accrue until final payment and redemption of the
Bonds, plus
(3) if all of the Bonds are to be redeemed, an amount of money equal to the
Issuer's fees and expenses under this Agreement accrued and to accrue until
final payment and redemption of the Bonds.
Section 6.5. Obligation to Prepay. The Borrower shall be required to
--------------------
prepay its obligations under Section 6.1 hereof on the Automatic Conversion
Date, if the Bonds are to be redeemed pursuant to Section 3.01(C) of the
Indenture, and on the applicable redemption date if the Bonds are to be redeemed
pursuant to Section 3.01(E) or 3.01(F) of the Indenture. In addition, the
Borrower shall be required to prepay that portion of its obligations under
Section 6.1 hereof to the extent such obligations relate to Bonds redeemed or to
be redeemed pursuant to Section 3.01(G) of the Indenture.
Section 6.6. Place of Payment. All payments hereunder and all
----------------
payments of principal and Purchase Price of and premium, if any, and interest on
and with respect to the Bonds, including the redemption price thereof and all
other fees and charges under this Agreement to be made to the Issuer or the
Trustee shall be made in lawful money of the United States of America and shall
be made at the principal corporate trust office of the Trustee not later than
11:00 o'clock a.m. on the date due. If any such payment falls due on a day
other than a Business Day, then such due date shall be extended to the next
succeeding full Business Day and interest shall accrue and be payable in respect
of such extension. Notwithstanding the foregoing, amounts payable to the Issuer
pursuant to Section 6.1(d) hereof shall be made at the Issuer's principal
office.
Section 6.7. Change in Interest Rate Mode Notice. The Borrower, if it
-----------------------------------
so elects, may cause the Issuer to effect a Change in Interest Rate Mode (as
defined in the Indenture) by giving the Issuer the notice and meeting the
conditions set forth in Section 2.02(A)(v) of the Indenture.
Section 6.8. Optional Conversion Notice. The Borrower, if it so elects,
--------------------------
may exercise the Conversion Option by giving the notice and meeting the
conditions set forth in Section 3.06 of the Indenture.
19
ARTICLE VII
GENERAL COVENANTS
Section 7.1. No Warranty of Condition of Suitability by Issuer. THE
-------------------------------------------------
BORROWER ACKNOWLEDGES AND AGREES THAT THE ISSUER MAKES (i) NO WARRANTY, EITHER
EXPRESS OR IMPLIED AS TO THE PROJECT OR THE FACILITIES, OR THE CONDITION OF
EITHER THEREOF, OR THAT THE FACILITIES OR PROJECT WILL BE SUITABLE FOR THE
PURPOSES OR NEEDS OF THE BORROWER; (ii) NO REPRESENTATION OR WARRANTY, EXPRESS
OR IMPLIED, THAT THE BORROWER WILL HAVE QUIET AND PEACEFUL POSSESSION OF THE
FACILITIES OR PROJECT; (iii) NO REPRESENTATION AS TO THE FACILITIES OR THE
PROJECT; AND (iv) NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH
RESPECT TO THE MERCHANTABILITY, CONDITION OR WORKMANSHIP OF ANY PART OF THE
FACILITIES OR PROJECT OR THEIR SUITABILITY FOR THE BORROWER'S PURPOSES.
Section 7.2. Further Assurances and Corrective Instruments. The
---------------------------------------------
Issuer and the Borrower agree that they will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as may reasonably be
required for correcting any inadequate or incorrect description of the Project
or for carrying out the expressed intention of this Agreement.
Section 7.3. Issuer and Borrower Representatives. Whenever under the
-----------------------------------
provisions of this Agreement, the approval of the Issuer or the Borrower is
required, or the Issuer or the Borrower is required to take some action at the
request of the other, such approval or such request shall be given for the
Issuer by the Issuer Representative and for the Borrower by the Borrower
Representative; the Trustee, and any party hereto shall be authorized to act on
any such approvals or requests.
Section 7.4. General Covenants of Borrower. Borrower further
-----------------------------
expressly covenants and agrees:
(a) to comply with the terms, covenants and provisions, expressed or
implied, of all contracts pertaining to, affecting or involving the Project
and the Facilities or the business of the Borrower the violation or breach
of, which would materially and adversely affect the ability of the Borrower
to fulfill its obligations hereunder;
(b) to comply with the terms, covenants and provisions, expressed or
implied, of all rules and regulations and all contracts pertaining to,
affecting or involving the continual qualification of the business of the
Borrower the violation or breach of which would materially and adversely
affect the ability of the Borrower to fulfill its obligations hereunder;
20
(c) whenever and so often as requested so to do by the Trustee or the
Issuer, promptly to execute and deliver or cause to be executed and
delivered all such other and further instruments and documents, and to
promptly do or cause to be done all such other and further things, as may
be necessary or reasonably required in order to further and more fully vest
in the Issuer, the Trustee and the Owners of the Bonds all rights,
interests, powers, benefits, privileges and advantages conferred upon them
by this Agreement and by the Indenture;
(d) promptly, upon the request of the Issuer or the Trustee from time to
time, to take such action as may be necessary or proper to remedy or cure
any material defect in or cloud upon the title to the Facilities, or any
part thereof, whether now existing or hereafter developing, and to
prosecute all such suits, actions and other proceedings as may be
appropriate for such purpose and to indemnify and save the Issuer and the
Trustee harmless from all loss, cost, damage and expense, including
attorneys' fees, which they or either of them may ever incur by reason of
any such defect, cloud, suit, action or proceeding;
(e) to defend against every suit, action or proceeding at any time brought
against the Issuer or the Trustee based on any claim arising out of the
receipt, application or disbursement of any of the Trust Estate, revenues,
income or proceeds from the Facilities, or involving the Issuer's or the
Trustee's rights under this Agreement or the Indenture; to indemnify and
save harmless the Issuer and the Trustee against any and all liability
claimed or asserted by any person whomsoever, arising out of such receipt,
application or disbursement, excepting gross negligence, willful
malfeasance and bad faith on the part of the Issuer or the Trustee;
provided, further, that the Trustee or any Owner of Bonds at its or his
election and expense may appear in and defend against any such suit, action
or proceeding; and notwithstanding any contrary provision hereof, this
covenant shall continue and remain in full force and effect until all
indebtedness, liabilities, obligations and other sums secured hereby may
have been released of record and the lien hereof discharged;
(f) to fulfill its obligations and to perform punctually its duties and
obligations under this Agreement and to otherwise administer the Project an
the Facilities in accordance with the terms hereof to assure the continued
proper operation, management repair and maintenance of the Facilities, the
Payment and all other amounts due and payable under this Agreement and
under the Indenture and payment of the operation and maintenance expenses
of the Facilities; and
(g) that it will pay and discharge and indemnify an save the Issuer and
the Trustee harmless of, from and against, any and all costs, claims,
damages, expenses, liabilities, liens, obligations, penalties and taxes of
every character and nature, by or on behalf of any person, firm,
corporation, entity or governmental, authority regardless or by whom
advanced, asserted held, imposed or made, which may be imposed upon
incurred by or asserted against the Issuer and/or the Trustee arising out
of, resulting from or in any way connected with this Agreement, the Bonds
or the Indenture, excepting gross negligence,
21
willful malfeasance and bad faith on the part of the Issuer or the Trustee.
The Borrower also covenants and agrees at its expense, to pay and to
indemnify and to save the Issuer and the Trustee harmless of, from and
against, all costs, reasonable counsel fees, expense and liabilities
incurred in any action or proceeding brought by reason of any such claim or
demand
Section 7.5. Risk of Loss. The risk of loss or of decrease in the
------------
enjoyment and beneficial use of the Facilities in consequence of the damage or
destruction thereof by acts of God, fire, the elements, casualties, thefts,
riots, civil strife, war, nuclear explosion or otherwise or in consequence of
foreclosures, attachments, levies or executions is expressly assumed by the
Borrower, and the Issuer and the Trustee shall in no event be answerable,
accountable or liable therefor, nor shall any of the foregoing events entitle
the Borrower to any abatement of its obligations hereunder.
Section 7.6. Security Interests. The Borrower agrees to execute and
------------------
file any and all financing statements or amendments thereof or continuation
statements thereto necessary to perfect and continue the perfection of the
security interests granted in the Indenture. The Borrower shall pay all costs
of filing such instruments.
Section 7.7. Borrower May Improve or Alter. The Borrower at its own
-----------------------------
cost and expense may make such additions, improvements or alterations to the
Facilities or may install such furnishings or equipment as it deems desirable;
provided, that such additions, improvements, alterations or installation of
furnishings or equipment will neither impair nor adversely affect the structural
integrity or operational utility value of the Facilities.
Section 7.8. Covenants Regarding Operation and Maintenance. The
---------------------------------------------
Borrower expressly covenants and agrees that it shall pay all costs of operating
and maintaining the Facilities and further:
(a) That it shall operate and maintain the Facilities and each and every
portion thereof, including all additions and improvements and all
facilities adjoining and/or appurtenant thereto and otherwise in good
operating order and condition, reasonable and ordinary wear and tear alone
excepted, and make all necessary repairs thereto, interior and exterior,
structural and nonstructural, ordinary and extraordinary, foreseen and
unforeseen, and otherwise to make all replacements, alterations,
improvements and modifications to the Facilities necessary to insure that
the same shall not be materially impaired or diminished, and, in connection
therewith, shall cause the Facilities and the operation and utilization
thereof to be insured under such terms of coverage and at such limits with
respect to facilities of the same nature and type as the Facilities,
whether similar in whole or in part, due regard being given to the type of
Facilities and their use provided that any liability insurance issued
pursuant hereto shall name the Issuer and the Trustee as additional
insureds;
(b) That it shall have full and sole responsibility for the condition,
operation, repair, replacement, maintenance and management of the
Facilities; provided, however, the
22
Issuer, the Trustee and their agents shall have the right to inspect the
Facilities at any reasonable time in a manner which will not interfere
unreasonably with the Borrower's use thereof;
(c) That it shall pay as the same respectively becomes due, all taxes and
assessments, whether general or special, and governmental charges of any
kind whatsoever that may at any time be lawfully assessed or levied against
or with respect to the Facilities; provided the Borrower may contest any
such item of tax, assessment, other governmental charge, lien or other
encumbrance and, in the event of such contest, may permit the item so
contested to remain unpaid during the period of such contest and appeal
therefrom if the Borrower shall first notify the Trustee and the Bank of
its intention to do so;
(d) That it shall comply with all present and future laws, ordinances,
orders, rules, regulations and requirements of every duly constituted
governmental authority or agency and all orders, rules and regulations of
any regulatory body exercising similar functions, which pertain to the
Project and the Facilities, and shall likewise perform and comply in all
material respects with all duties and obligations of any kind imposed by
law, covenant, condition, agreement or easement with respect to the Project
or the Facilities; the foregoing obligations shall include, but not be
limited to, the duty of the Borrower to obtain any certificates of
occupancy with respect to all or any portion of the Facilities which may at
any time be required by any governmental agency having jurisdiction thereof
and to procure, maintain and comply with all licenses and other
authorizations required for the use of the Facilities then being made; and
(e) That it shall not use or allow the Facilities to be used or occupied
for any unlawful purpose or in violation of any private covenant,
restriction, condition, easement or agreement covering or affecting the use
of the Facilities, or suffer any act to be done or any condition to exist
in the Facilities or any article to be brought therein or thereon which may
be dangerous, unless safeguarded as required by law, or which, under law,
constitutes a nuisance, public or private, or which may make void or
voidable any insurance then in force with respect thereto;
(f) That it shall operate or cause the Project to be operated as an
authorized project for a purpose and use as provided for under the Act
until the expiration or earlier termination of this Loan Agreement. The
Project is of a character included within the definition of "project" in
the Act, and its estimated cost is $5,000,000. The Borrower will complete
and operate the Project substantially in: the form represented in the
Application and will neither (a) materially alter the operation of the
Project without the prior written consent of the Issuer, nor (b) cause a
change in the use of the Project such that the Bonds would cease to be
qualified small issue bonds (within the meaning of Section 144(a) of the
Code).
Section 7.9. Damage Destruction and Condemnation. Unless the Borrower
-----------------------------------
shall have exercised its option to prepay pursuant to the provisions of Section
6.4 of this Agreement, if prior to full payment of the Bonds (or prior to
provision for payment thereof having been made in
23
accordance with the provisions of the Indenture) (i) the Facilities or any
portion thereof are destroyed (in whole or in part) or damaged by fire or other
casualty or (ii) title to or any interest in, or the temporary use of, the
Facilities or any part thereof shall be taken under the exercise of the power of
eminent domain by any governmental body or by any person, firm or corporation
acting under governmental authority, the Borrower shall be obligated to continue
to pay the amounts specified in Section 6.1 of this Agreement.
The Issuer, the Trustee and the Borrower will cause the Net Proceeds of any
insurance proceeds or condemnation award resulting from any event described
above involving $100,000 or more per occasion or event to be deposited in a
separate trust fund within the Project Fund held the Trustee. All such Net
Proceeds so deposited shall be applied in one or more of the following ways as
shall be elected by the Borrower in a written notice to the Issuer and the
Trustee:
(a) To the prompt repair, restoration, modification or improvement of the
Project or the Facilities by the Borrower. (The Issuer has, in the
Indenture, authorized and directed the Trustee to make disbursements from
such separate fund for such purposes or to reimburse the Borrower for costs
paid by it in connection therewith.) Any balance of the Net Proceeds
remaining after such work has been completed shall be transferred to the
Bond Fund to be applied to the reimbursement of the Bank for amounts owing
under the Credit Agreement and/or otherwise in accordance with Section
4.01(a) of the Indenture.
(b) To the transfer into the Redemption Account of the Bond Fund for
application for redemption of the Bonds on the next succeeding redemption
date as specified in a written notice by the Borrower to the Trustee in
accordance with the Indenture, provided that no part of the Net Proceeds
may be applied for such redemption unless (1) all of the Bonds are to be
redeemed in accordance with the Indenture upon termination of this
Agreement or (2) in the event that less than all of the Bonds are to be
redeemed, the Borrower shall furnish to the Issuer, the Bank and the
Trustee, a certificate of Borrower Representative acceptable to the Issuer,
the Bank and the Trustee stating that (i) the property forming the part of
the Project and the Facilities that was damaged or destroyed by such
casualty or was taken by such condemnation proceedings is not essential to
the use or possession of the Project and the Facilities by the Borrower or
(ii) the Project and the Facilities has been repaired, restored, modified
or improved to operate as designated.
If such Net Proceeds are insufficient to pay in full the cost of any
repair, restoration, modification or improvement referred to in this Section
7.9, the Borrower will nonetheless complete the work and will pay any cost in
excess of the amount of the Net Proceeds held by the Trustee. The Borrower
agrees that if by reason of any such insufficiency of such Net Proceeds, the
Borrower shall make any payments pursuant to the provisions of this Section, the
Borrower shall not be entitled to any reimbursement therefor from the Issuer,
the Trustee or the Owners of any of the Bonds, nor shall the Borrower be
entitled to any diminution of the amounts payable under Section 6.1 of this
Agreement.
24
Section 7.10. Financial Statements and Information. (a) The Borrower
------------------------------------
will, upon request, furnish to the Issuer and the Trustee copies of the
following financial statements, reports and information: within 120 days after
the close of each fiscal year of the Borrower (a "Fiscal Year"), a balance sheet
as of the end of such Fiscal Year and statements of changes in cash flows,
revenue and expenses and changes in financial position of the Borrower for such
Fiscal Year, each prepared in accordance with generally accepted accounting
principles consistently applied, in reasonable detail and certified by a firm of
independent certified public accountants, together with a statement of the chief
financial officer of the Borrower to the effect that no event which constitutes
a Default under this Agreement has occurred and is continuing or if such an
event has occurred and is continuing a statement specifying the nature and
period of existence thereof.
(b) The Borrower shall promptly, from time to time, furnish to the Issuer
and the Trustee such information regarding the business, operations and
financial condition of the Borrower, as the Issuer may reasonably request.
Section 7.11. Reorganization or Fundamental Change. The Borrower
------------------------------------
shall not initiate any proceedings to dissolve or liquidate without making prior
provisions for the payment in full of its Indebtedness (as such term is defined
in the Credit Agreement). The Borrower will not consolidate with, merge into or
permit any other corporation or entity to consolidate with, merge into it,
unless the following conditions are met:
(i) the successor formed by or resulting from such consolidation
or merger (the "Successor Corporation") is a corporation, or similar
entity, organized under the laws of the United States or any state,
district or territory of the United States and qualified to do business in
the State and in such other states as the Borrower conducts business;
(ii) the Successor Corporation (if other than the Borrower) shall
expressly assume in writing the full and faithful performance of the
duties, obligations and covenants of the Borrower under this Agreement and
the Borrower's Note, and any and all such other agreements and instruments
as the Borrower may execute and deliver in connection with any of the
foregoing (collectively, the "Bond Documents");
(iii) both before and immediately after such consolidation or
merger, neither the Borrower nor the Successor Corporation shall be in
default in the performance or observance of any duties, obligations or
covenants of the Borrower under any of the Bond Documents;
(iv) the Borrower shall have furnished to the Issuer and the
Trustee an opinion of counsel experienced in matters relating to tax
exemption of interest on bonds issued by states and their political
subdivision, and/or a letter of ruling of the Internal Revenue Service,
satisfactory to the Issuer and the Trustee, to the effect that the interest
on the Bonds will not become, by reason of the merger or consolidation,
includable in the gross income of the recipients thereof for purposes of
federal income taxation;
25
(v) the Borrower shall have furnished to the Issuer and the
Trustee evidence in the form of financial statements prepared by an
independent certified public accountant or firm of such accountants showing
that the net assets of the Successor Corporation are at least equal to the
net assets of the Borrower prior to such merger or consolidation as shown
by the last previous audited financial statement of the Borrower prior to
such merger or consolidation; and
(vi) the Successor Corporation shall not be subject to any pending
or threatened litigation or other contingent liabilities which, in the
opinion of counsel to the Borrower (which may be rendered in reliance upon
the opinion of counsel to the Successor Corporation), would result in any
material adverse change in the financial condition or operations of such
successor or which might materially adversely affect the obligations
hereunder or in connection with the transactions contemplated hereby.
If a merger or consolidation is effected as provided in this Section 7.11,
the provisions of this Section 7.11 shall continue in full force and effect and
no further merger, consolidation, sale or transfer shall be effected except in
accordance with the provisions of this Section 7.11.
Section 7.12. Maintenance of Tax-Exempt Status of Bonds.
-----------------------------------------
(a) Neither the Borrower nor the Issuer shall use, permit the use of, or
omit to use Gross Proceeds or any other amounts (or any property acquired,
constructed, or improved with Gross Proceeds) in a manner which, if made or
omitted, respectively, would cause interest on any Bond to become includable in
the gross income, as defined in Section 61 of the Code, of the owners thereof
for federal income tax purposes. Without limiting the generality of the
foregoing, unless and until the Borrower and the Issuer shall have received an
Opinion of Counsel to the effect that failure to comply with such covenant will
not adversely affect any exemption from federal income tax of interest on any
Bond, the Borrower and the Issuer shall comply with each of the specific
covenants in this Section.
(b) The Borrower covenants and agrees that at least 95% of the proceeds of
the Bonds actually expended will be used to pay costs of the Project incurred
subsequent to July 2, 1991, (in respect of work performed or items purchased
after such date) which are costs of land or property subject to the allowance
for depreciation provided by Section 167 of the Code and are chargeable to the
capital account of the Borrower for federal income tax purposes or would be so
chargeable either with a proper election by the Borrower under the Code or but
for a proper election by the Borrower under, the Code to deduct such amounts.
For purposes of this paragraph, "proceeds of the Bonds" means the proceeds
derived by the Issuer from the sale of the Bonds plus earnings from the
investment of amounts deposited in the Project Fund. In the event that proceeds
of the Bonds remain unspent after the completion of the Project, the Borrower
covenants and agrees that all of such unspent proceeds will be used to redeem
the largest portion of the Bonds callable under the terms of the Indenture
without premium or penalty that does not exceed the amount of such unspent
proceeds. Pending such redemption, the Borrower covenants and agrees that any
such unspent proceeds will be deposited in escrow as soon as possible after the
completion of the Project and invested to produce a yield no greater than the
yield on the Bonds.
26
(c) The Borrower covenants and agrees that costs of issuance of the Bonds
financed directly or indirectly from the proceeds of the Bonds shall not, exceed
2% of the proceeds of the Bonds.
(d) The Borrower covenants and agrees that the weighted average maturity
of the Bonds will not exceed 120 percent of the average reasonably expected
economic life of the Project, both as calculated pursuant to Section 147(b) of
the Code.
(e) The Borrower represents and covenants that, except for the Bonds,
there are no obligations issued by or on behalf of any state, territory, or
possession of the United States, or political subdivision of the foregoing, or
of the District of Columbia which constitute "private activity bonds" within the
meaning of Section 141 of the Code:
(i) which are secured by any financial commitment on the part of
the Borrower or any related person to the Borrower, within the meaning of
Section 144(a)(3) of the Code, and which were or will be issued within the
period beginning 60 days prior to the Closing Date and ending 60 days
thereafter; or
(ii) the proceeds of which were or will be used with respect to the
Project or any other facility using substantial common facilities with the
Project (e.g., in the same building, enclosed shopping mall, or strip of
stores, offices, or warehouses), within the meaning of Section 144(a)(9) of
the Code; or
(iii) the proceeds of which are or will be used primarily with
respect to facilities the principal user of which is or will be the
Borrower or any related person to the Borrower, within the meaning of
Section 144 (a) (3) of the Code, and which are located in the Township of
Ewing, New Jersey or if located outside of the Township of Ewing, New
Jersey which are contiguous to or integrated with such facilities.
(f) The Borrower covenants and agrees that:
(i) no proceeds of the Bonds will be used to provide:
(A) any private or commercial golf course, country club,
massage parlor, tennis club, skating facility (including roller
skating, skateboard, and ice skating), racquet sports facilities
(including handball and racquetball), hot tub facility, suntan
facility, or racetrack, or
(B) any airplane, skybox or other private luxury box, any
health club facility, any facility primarily used for gambling, or any
store the principal business of which is the sale of alcoholic
beverages for consumption off premises,
(ii) not more than 5 percent of the proceeds of the Bonds will be
used directly or indirectly, to provide real property for family units,
27
(iii) not more than 25 percent of the proceeds of the Bonds will be
used to provide a facility the primary purpose of which is (or so long as
any Bonds remain Outstanding will be):
(A) retail food and beverage services (including all eating
and drinking places but excluding grocery stores),
(B) automobile sales or services, or
(C) the provision of recreation or entertainment,
(iv) less than 25 percent of the proceeds of the Bonds will be used
(directly or indirectly) for the acquisition of land (or an interest
therein) and none of such land shall be used (directly or indirectly) for
farming purposes,
(v) with respect to any building and the equipment therefor (or an
interest therein) acquired with the proceeds of the Bonds, the first use of
which is not pursuant to such acquisition, rehabilitation expenditures (as
defined in Section 147(d) of the Code) for such building will equal or
exceed 15 percent of the portion of the cost of acquiring such building
(and equipment) financed with the proceeds of the Bonds, and such
rehabilitation expenditures will be incurred within two years after the
later of the date such building was acquired or the Closing Date, and
(vi) with respect to any facilities other than buildings acquired
with proceeds of the Bonds, the first use of which is not pursuant to such
acquisition, rehabilitation expenditures (as defined in Section 147(d) of
the Code) for such facility will equal or exceed 100 percent of the portion
of the cost of acquiring such facility financed with the proceeds of the
Bonds, and such rehabilitation expenditures will be incurred within two
years after the later of the date such facility was acquired or the Closing
Date.
(g) The Borrower shall comply with all effective rules, rulings or
regulations promulgated by the Department of the Treasury or the Internal
Revenue Service with respect to obligations issued under Section 144(a) of the
Code as a "qualified small issue bond" the interest on which is exempt from
federal income taxation.
(h) The Borrower covenants that it will refrain, and it will cause all
principal users, as defined in Prop. Treas. Reg. (S)1.103-10(h), of the Project
and all related persons, as defined in Section 144(a)(3) of the Code, to
refrain, from incurring or paying for capital expenditures during the six-year
period commencing three years prior and ending three years after the Closing
Date, which would cause the $10,000,000 limitation contained in Section
144(a)(4) of the Code to be exceeded.
(i) The Borrower also covenants that it will not cause, or will not take
or omit to take or permit any person to take or omit to take any action which
would cause, the "aggregate
28
authorized face amount" of the Bonds and any exempt facility bonds, as defined
in Section 142 of the Code, qualified small issue bonds or qualified
redevelopment bonds, as defined in Section 144 of the Code, and any industrial
development bonds, as described in Section 103(b)(4), (5), and (6) of the
Internal Revenue Code of 1954, as in effect on the day prior to the adoption of
the Tax Reform Act of 1986, allocated to any owner or "principal user", as
defined in Prop. Treas. Reg. (S)1.103-10(h), including all persons related
thereto within the meaning of Section 144(a)(3) of the Code, of the Project at
any time during the three year period beginning on the later of the date the
Project is placed in service or the Closing Date, as described in Section
144(a)(10) of the Code, to exceed $40,000,000.
(j) Neither the Issuer nor the Borrower shall take any action or omit to
take any action with respect to the proceeds of sale of the Bonds or of any
amounts expected to be used to pay the principal (and premium, if any) thereof
and the interest thereon which, if taken or omitted, respectively, and if
reasonably expected on the date of the initial delivery of the Bonds, would
result in constituting the Bonds "arbitrage bonds" within the meaning of Section
148 of the Code, or take any deliberate action motivated by arbitrage which
would have such result, nor shall the Borrower take or omit to take any other
action which would otherwise adversely affect any exemption under the Code from
federal income taxation of the interest on any Bond. Further, neither the
Borrower nor the Issuer shall, at any time prior to the final maturity of the
Bonds, directly or indirectly invest Gross Proceeds in any Investment (or use
Gross proceeds to replace money so invested), if as a result of such investment
the Yield from the Closing Date of all Investments acquired with Gross proceeds
(or with money replaced thereby) whether then held or previously disposed of,
exceeds the Yield of the Bonds. Notwithstanding the foregoing, however, the
following investments shall be excluded from the limitation and calculation
described in this Subsection (j):
(i) Investments acquired with proceeds from the sale of the Bonds
or income from the investment, to the extent such Investments are held
during the first three years after the Closing Date or prior to the date on
which the Project has been completed, whichever is shorter;
(ii) Investments acquired with income from investment of proceeds
from the sale of the Bonds, to the extent such Investments are held during
the first year after receipt of such income;
(iii) Investments acquired with amounts held for the credit of the
Bond Fund, to the extent such Investments are held during the first 13
months after the date of deposit of such amounts to the Bond Fund; and
(iv) any other Investments to the extent the aggregate cost thereof,
adjusted upward by the amortized portion (calculated on a straight-line
basis) of any discount at which such Investments were acquired, does not
exceed the lesser of 5% of the proceeds from the sale of the Bonds of
$100,000.
29
The Borrower shall pursue work on the Project with due diligence until
completion. Neither the Borrower nor the Issuer shall (a) use any money to pay
principal or interest on the Bonds, or pledge (or permit to be pledged) or
otherwise restrict any money, funds or Investments so as to give reasonable
assurance of their availability for such purpose, except in each case amounts
deposited to the Bond Fund, or (b) apply any proceeds from the sale of the Bonds
or income from the investment thereof, directly or indirectly, to pay principal
of or interest on any other indebtedness of the Issuer.
(k) The Borrower shall not take any action or willfully omit to take any
action with respect to the proceeds of the loan made hereunder or the Project
which, if taken or omitted, respectively, would adversely affect any exemption
from inclusion in gross income for purposes of income taxation of interest on
any Bond under the Code. All parties hereto agree to execute such amendments
and supplements hereto (and to comply with the provisions thereof) as may, in
the Opinion of Counsel, be necessary to preserve or perfect any exemption from
inclusion in gross income for purposes of federal income taxation of interest on
any Bond under the Code.
(1) The Issuer and the Borrower covenant that, no later than the 15th day
of the second calendar month after the close of the calendar quarter in which
the Bonds are issued, the Issuer shall file with the Secretary of the Treasury
the information required to be filed pursuant to Section 149(e) of the Code.
The Borrower covenants that it shall furnish to the Issuer in a timely manner
whatever information is necessary for the Issuer to make such filing.
(m) Neither the Issuer nor the Borrower shall take, or omit to take any
action which, if taken or omitted, would cause the Bonds to be "federally
guaranteed" within the meaning of Section 149 of the Code.
Section 7.13. Compliance with Applicable Laws. The Borrower agrees to
-------------------------------
construct, operate and maintain the Project in accordance with all applicable
Federal, State, county and municipal laws, ordinances, rules and regulations now
in force or that may be enacted hereafter including, but not limited to such
environmental protection, workers' compensation, sanitary, safety, non-
discrimination and zoning laws, ordinances, rules and regulations as shall be
binding upon the Borrower.
Section 7.14. Environmental Compliance. The Borrower shall not permit
------------------------
any action to occur which would be in direct violation of any and all applicable
Federal, State, county and municipal laws, ordinances, rules and regulations now
in force or hereinafter enacted, including the regulations of the Issuer and the
regulations of the Department of Environmental Protection.
The Borrower shall give immediate written notice to the Issuer and the
Trustee of any inquiry, notices of investigation or any similar communication,
from the Department of Environmental Protection regarding potential violations
of the Environmental Cleanup Responsibility Act (N.J.S.A. 13:lK-6 et seq.)
and/or the Spill Compensation and Control Act (N.J.S.A. 58:10-23.11 et seq.).
30
Section 7.15. Assignment of Loan Agreement. The Borrower may not
----------------------------
assign or transfer the whole or any part of this Loan Agreement without the
prior express written consent of the Issuer. Any assignment of this Loan
Agreement by the Borrower without the prior express written consent of the
Issuer shall be void.
Section 7.16. Lease or Transfer of Project. The Borrower shall not
----------------------------
lease, sublease, sell or otherwise dispose of any possessory interest in whole
or part of the Project without the prior express written consent of the Issuer.
In the event that the Borrower proposes to lease or sublease the Project or any
portion thereof, the Borrower and the proposed lessee shall submit to the Issuer
an application for project occupants in the form currently in use by the Issuer
and a copy of the proposed lease. The Issuer may review the proposed lease and
application to determine if it tends to further the public purposes for which
the Issuer was created, and if the Issuer determines that the lease would not
promote these purposes, it may disapprove the proposed lease.
In making the determination described above, the Issuer may consider, among
other criteria, (i) if the proposed occupancy complies with the conditions
specified in the Act for the Issuer's assistance to "projects" as defined in the
Act; (ii) if the proposed occupancy is consistent with the provisions respecting
tax-exempt qualified small issue bond financings set forth in Section 144 of the
Code; and (iii) if the proposed lease will result in the loss of employment for
a substantial number of New Jersey workers by reason of relocating the business
of the lessee from one part of the State to another or for any other reason
If the Issuer fails to deliver notice of either approval or disapproval of
a proposed lease within twenty (20) days from the day the Issuer receives a
proposal for the lease, including all of the information identified above and
such other information as the Issuer may reasonably require, the proposed lease
shall be deemed to be approved by the Issuer. The Borrower shall promptly send
a copy of each executed lease to the Issuer.
Section 7.17. Inspection of the Project. The Borrower agrees that the
-------------------------
Issuer and its duly authorized agents shall have the right, at all reasonable
times and upon prior notice, to enter upon and to examine and inspect the
Project. The Issuer and its respective officers and agents shall also be
permitted, at all reasonable times and upon prior notice, to examine the books
and records of the Borrower with respect to the Project and to make copies or
abstracts thereof.
Section 7.18. Relocation of the Project. The Borrower covenants and
-------------------------
agrees that during the term of this Loan Agreement it will not relocate the
Project or a substantial number of its employees to another location either
within or without the State without first obtaining the prior express written
consent of the Issuer.
Section 7.19. Payment of Prevailing Wage. Notwithstanding the
--------------------------
provisions of Section 7.9 hereof, the Borrower shall, in every Construction
Contract to which it is a party, require the Contractor to pay workers engaged
in the performance of such Construction Contract a wage rate not less than the
Prevailing Wage Rate. The Borrower shall further require, in every Construction
Contract to which it is a party, that the Contractor execute the Contractor's
31
Certificate and Agreement, submit certified copies of payroll records to the
Issuer as required by the Issuer, and execute and file the Contractor's
Completion Certificate.
Section 7.20. Affirmative Action. The Borrower shall require, in
------------------
every Construction Contract to which it is a party, that the Contractor make a
good faith effort to hire, or cause to be hired, minority workers in such job
classifications, trades and crafts and for such percentages of the total hours
of construction work in each trade or craft as shall be necessary to satisfy the
minority employment goals established in the Affirmative Action Program. The
Borrower shall further require, in every Construction Contract to which it is a
party, that the Contractor or Contractors execute the Contractor's Certificate
and Agreement and submit to the Issuer any certificates, reports and records as
may be necessary to demonstrate the Contractor's compliance with the Affirmative
Action Program.
The Borrower agrees to include in all construction bid specifications for
the Project and in every Construction Contract to which it is a party, such
terms, conditions and provisions as are prescribed in the Affirmative Action
Program.
The Borrower agrees to include or cause to be included in every
Construction Contract to which it is a party, a provision, term or condition
authorizing and allowing a holdback equal to ten per centum (10%) of the total
amount agreed to be paid to the Contractor for the work done pursuant to the
Construction Contract, said sum to be disbursed to the Contractor only upon: (i)
the execution and filing of the Contractor's Completion Certificate; (ii) the
execution and filing of the Borrower's Completion Certificate; and (iii) receipt
by the Borrower of a written notice issued by the Issuer's Office of Affirmative
Action that the Contractor has complied with the requirements of the Affirmative
Action Program.
The Borrower shall designate, and shall require each Contractor to
designate, an officer or employee who will supervise and coordinate the
operations of the Affirmative Action Program for the Project.
Section 7.21. Annual Certificate. On each anniversary date of the
------------------
loan, the Borrower shall furnish to the Issuer and the Trustee the following:
(a) a certificate of an authorized Borrower Representative to the effect
that he is not aware of any condition, event or act which constitutes an Event
of Default under any of the Bond Documents; and
(b) a written description of the present use of the Project and a
description of any anticipated material change in the use of the Project or in
the number of employees employed at the Project.
The Borrower shall also furnish to the Issuer upon request, which request
shall not be made more frequently than once a year, an employment report on a
form to be supplied by the Issuer.
32
Section 7.22. Project Sign. During the period from the effective date
------------
of this Loan Agreement and until thirty (30) days after the Completion Date, the
Borrower shall cause to be posted and maintained at the site of the Project, a
sign to be provided to the Borrower by the Issuer indicating that financial
assistance for the Project has been provided by the Issuer. The cost of the
sign and the maintenance of the sign shall be at the expense of the Borrower.
33
ARTICLE VIII
ASSIGNMENT; INDEMNIFICATION; REDEMPTION;
RESERVATION OF INTERESTS
Section 8.1. No Assignments Except as Permitted. The Borrower shall
----------------------------------
not, without the prior written consent of the Issuer, the Trustee and the Bank,
assign its interests under this Agreement.
In addition, prior to any assignment and as a condition precedent to the
validity thereof, the Issuer shall cause to be filed with the Trustee an opinion
of an attorney or firm of attorneys experienced in matters relating to municipal
bonds to the effect that such assignment will not adversely affect the status of
the interest on the Bonds as exempt from inclusion in the gross income of the
recipients thereof for purposes of federal income taxation.
Notwithstanding the foregoing, this Agreement shall be expressly subject
and subordinate to the assignment and pledge by the Issuer to the Trustee
pursuant to the Indenture of its interests in this Agreement and any moneys
receivable under this Agreement.
Section 8.2. Release and Indemnification Covenants.
-------------------------------------
(a) The Borrower shall and hereby agrees to defend and indemnify and save
the Issuer and the Trustee harmless against and from all claims by or on
behalf of any person, firm, corporation or other legal entity arising from
the conduct or management of, or from any work or thing done on, the
Project or the Facilities during the term of this Agreement, including
without limitation, (i) any condition of the Project or the Facilities,
(ii) any breach or default on the part of the Borrower in the performance
of any of its obligations under this Agreement, (iii) any act or negligence
of the Borrower or of any of its agents, contractors, servants, employees
or licensees or (iv) any act or negligence of any assignee or lessee of the
Borrower, or of any agents, contractors, servants, employees or licensees
of any assignee or lessee of the Borrower. The Borrower shall defend and
indemnify and save the Issuer and the Trustee harmless from any such claim
arising as aforesaid, or in connection with any action or proceeding
brought thereon, and upon notice from the Issuer or the Trustee, the
Borrower shall defend them or either of them in any such action or
proceeding; provided that such defense shall be undertaken by counsel
reasonably acceptable to the party being defended, such counsel to be
deemed approved if not disapproved by such party within twenty (20) days of
notice by the Borrower of the name of such counsel.
(b) Notwithstanding the fact that it is the intention of the parties
hereto that the Issuer shall not incur any pecuniary liability by reason of
the terms of this Agreement or the undertakings, required of the Issuer
hereunder, by reason of the issuance of the Bonds, by reason of the
execution of the Indenture or by reason of the performance of any act
requested of the Issuer by the Borrower, including all claims, liabilities
or losses arising in connection with the violation of any statutes or
regulation pertaining to the foregoing;
34
nevertheless, if the Issuer should incur any such pecuniary liability, then
in such event the Borrower shall indemnify and hold the Issuer harmless
against all claims, demands or causes of action whatsoever, by or on behalf
of any person, firm or corporation or other legal entity arising out of the
same or out of any offering statement or lack of offering statement in
connection with the sale or resale of the Bonds and all costs and expenses
incurred in connection with any such claim or in connection with any action
or proceeding brought thereon, and upon notice from the Issuer, the
Borrower shall defend the Issuer in any such action or proceeding. All
references to the Issuer in this Section 8.2 shall be deemed to include its
members, officers, employees and agents.
Notwithstanding anything to the contrary contained herein, the Borrower
shall have no liability to indemnify the Issuer or the Trustee against claims or
damages resulting from the Issuer's or the Trustee's own gross negligence or
willful misconduct.
Section 8.3. Redemption of Bonds. The Borrower shall have and is
-------------------
hereby granted the option to cause all or a portion of the Bonds to be redeemed
at the times permitted by the Indenture. The Issuer, at the request of the
Borrower, shall forthwith take all steps (other than the payment of any money
required for such redemption and other than such as are reserved unto the
Trustee) necessary under the applicable redemption provisions of the Indenture
to effect redemption of all or part of the Outstanding Bonds, as may be
specified by the Borrower, on the date established for such redemption.
Section 8.4. References to Bonds Ineffective After Bonds Paid. Upon
------------------------------------------------
payment in full of the Bonds (or provision for payment thereof having been made
in accordance with the provisions of the Indenture), payment of all fees and
charges of the Trustee and payment of all amounts payable to the Bank under the
Credit Agreement, all references in this Agreement to the Bonds, the Bank and
the Trustee shall be ineffective, and neither the Trustee, the Bank nor the
Owners of any of the Bonds shall thereafter have any rights hereunder, saving
and excepting those that shall have theretofore vested or would affect the tax-
exempt status of the Bonds.
Section 8.5. Issuer to Grant Security Interest to Trustee. The
--------------------------------------------
parties hereto agree that pursuant to the Indenture, the Issuer shall pledge,
assign and transfer to the Trustee in order to secure payment of the Bonds and
of amounts payable to Bank in respect of the Letter of Credit and the Credit
Agreement, all of the Issuer's rights, titles and interests in, to and under
this Agreement, excepting Issuer's rights under Section 6.1(b), 6.1(d), 7.4(e),
7.4(g), 7.8(f), 7.15, 7.16, 8.2 and 9.4 hereof, and in, to and under the
Borrower's Note.
35
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.1. Defaults Defined. The following shall be "Defaults"
----------------
under this Agreement and the term "Default" shall mean, whenever it is used in
this Agreement, any one or more of the following events:
(a) failure by the Borrower to pay any amount required to be paid under
subsection (a) of Section 6.1 hereof or under Section 6.5 hereof, in either
case, as and when due, or failure by the Borrower to pay any amount
required to be paid under subsection (b) or (c) of Section 6.1 hereof
within five (5) days of written notice of such amount; or
(b) failure by the Borrower to observe and perform any covenant, condition
or agreement on its part to be observed or performed, other than as
referred to in Subsection 9.1(a) above, for a period of thirty (30)
Business Days after written notice specifying such failure and requesting
that it be remedied shall have been given the Borrower by the Issuer or the
Trustee (and if by the Issuer with the approval of the Trustee and the
Bank), unless the Issuer and the Trustee shall agree in writing to an
extension of such time prior to its expiration; provided, however, if the
failure stated in the notice cannot be corrected within the applicable
period, neither the Issuer nor the Trustee, as the case may be, will
unreasonably withhold consent to an extension of such time if corrective
action is instituted by the Borrower within the applicable period and
diligently pursued until such failure is corrected; or
(c) the dissolution or liquidation of the Borrower, or the voluntary
initiation by the Borrower of any proceeding under any federal or state law
relating to the bankruptcy, insolvency, arrangement, reorganization,
readjustment of debt or any other form of debtor relief, or the initiation
against the Borrower of any such proceeding which shall remain undismissed
for sixty (60) days, or failure of the Borrower to promptly have discharged
any execution, garnishment or attachment of such consequence as would
impair the ability of the Borrower to carry on its business operations, or
assignment by the Borrower for the benefit of creditors, or the entry of
the Borrower into an agreement of composition with creditors or the failure
generally by the Borrower to pay its debts as they become due; or
(d) the occurrence of a Default under the Indenture.
The provisions of subsection (b) of this Section are subject to the following
limitation: if by reason of force majeure the Borrower is unable in whole or in
----- -------
part to carry out any of its agreements contained herein (other than its
obligations contained in Article VI hereof), the Borrower shall not be deemed in
Default during the continuance of such inability. The term "force majeure" as
-------------
used herein shall mean, without limitation, the following: acts of God; strikes
or other industrial disturbances; acts of public enemies; orders or restraints
of any kind of the government of the United States of America or of the State or
of any of their departments,
36
agencies or officials, or of any civil or military authority; insurrections;
riots; landslides; earthquakes; fires; storms; droughts; floods; explosions;
breakage or accident to machinery, transmission pipes or canals; and any other
cause or event not reasonably within the control of the Borrower. The Borrower
agrees, however, to remedy with all reasonable dispatch the cause or causes
preventing the Borrower from carrying out its agreement, provided that the
Borrower shall not be unreasonably required to settle any strike or industrial
disturbance.
Nothing contained in this Section 9.1 shall limit the rights and remedies
of the Bank under the Credit Agreement in respect of defaults thereunder.
Section 9.2. Remedies on Default. Whenever any Default referred to in
-------------------
Section 9.1 hereof shall have happened and be continuing, then, subject to the
proviso of the final paragraph of Section 9.3 hereof, the Trustee or the Issuer
with the written consent of the Trustee may take one or any combination of the
following remedial steps:
(a) if the Trustee has declared the Bonds immediately due and payable
pursuant to Section 6.02 of the Indenture, by written notice to the
Borrower, declare an amount equal to all amounts then due and payable on
the Bonds, whether by acceleration or maturity (as provided in the
Indenture) or otherwise, to be immediately due and payable as liquidated
damages under this Agreement and not as a penalty, whereupon the same shall
become immediately due and payable;
(b) have reasonable access to and inspect, examine and make copies of the
books and records and any and all accounts, data and income tax and other
tax returns of the, Borrower during regular business hours of the Borrower
(except books, records, accounts and other information which the Borrower
is required by law to keep confidential) if reasonably necessary in the
opinion of the Trustee; or
(c) take whatever action at law or in equity may appear necessary or
desirable to collect the amounts then due and thereafter to become due, or
to enforce performance and observance of any obligation, agreement or
covenant of Borrower under this Agreement or the Borrower's Note.
Any amounts collected pursuant to action taken under this Section shall be
paid into the Bond Fund and applied in accordance with the provisions of the
Indenture.
Section 9.3. No Remedy Exclusive. Subject to Section 6.02 of the
-------------------
Indenture, no remedy herein conferred upon or reserved to the Issuer or the
Trustee is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Agreement or now or hereafter existing at
law or in equity.
No delay or omission to exercise any right or power accruing upon any
Default shall impair any such right or power or shall be construed to be a
waiver thereof, but any such right or power may be exercised from time to time
and as often as may be deemed expedient. In order to
37
entitle the Issuer or the Trustee to exercise any remedy reserved to it in this
Article, it shall not be necessary to give any notice, other than such notice as
may be required in this Article; PROVIDED, HOWEVER, that prior to the Letter of
Credit Termination Date and so long as the Bank shall not have failed to make
lawful payment under the Letter of Credit in accordance with the terms and
conditions of the Letter of Credit, neither the Issuer nor the Trustee shall
exercise any such remedy without the prior consent of the Bank. Such rights and
remedies as are given the Issuer hereunder shall also extend to the Trustee, and
the Trustee and the Owners of the Bonds, subject to the provisions of the
Indenture, shall be entitled to the benefit of all covenants and agreements
herein contained.
Section 9.4. Agreement to Pay Attorneys' Fees and Expenses. In the
--------------------------------------------- -
event the Borrower should Default under any of the provisions of this Agreement,
and the Issuer or the Trustee should employ attorneys or incur other expenses
for the collection of payments required hereunder or the enforcement of
performance or observance of any obligation or agreement on the part of the
Borrower herein contained, the Borrower agrees that it will on demand therefor
pay to the Issuer and the Trustee, as the case may be, the reasonable fee of
such attorneys and such other expenses so incurred, and any such amounts paid by
the Issuer and the Trustee shall be added to the indebtedness secured by the
Indenture.
Section 9.5. No Additional Waiver Implied by One Waiver. In the event
------------------------------------------
any agreement contained in this Agreement should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
38
ARTICLE X
SUPPLEMENTS AND AMENDMENTS
Section 10.1. Amendment Without Consent. The Issuer and the Borrower
-------------------------
with the consent of the Trustee and the Bank, but without the consent of the
Owners of any of the Bonds Outstanding, may enter into supplements to this
Agreement and the Note which shall not be inconsistent with the terms and
provisions hereof for any of the purposes heretofore specifically authorized in
this Agreement or the Indenture, and in addition thereto for any one or more of
the following purposes:
(a) so as to more precisely identify the Project or the Facilities, or to
substitute or add additional improvements or equipment to the Protect, or
additional rights or interests in property acquired in accordance with the
terms of this Agreement;
(b) to cure any ambiguity or formal defect or omission in this Agreement or
the Borrower's Note or, if required or otherwise appropriate, to conform
the provisions or requirements of this Agreement or the Borrower's Note to
the terms of, including any subsequent change therein, the Indenture;
(c) to enter into an indenture or indentures supplemental to the Indenture
as provided in Article VIII of the Indenture;
(d) so as to obtain or maintain from Moody's a securities rating on the
Bonds of at least Xx0, XXXX-0 or P-1, or from S&P a securities rating on
the Bonds of at least AA/A-1;
(e) by addition or deletion, to conform to the requirements of or
procedures authorized under this Agreement, to such additional
requirements, limitations or prohibitions as may be made under the Code
with respect to obligations of the character of the Bonds, the use of
proceeds of the Bonds and investment earnings thereon and the conversion of
the interest rate on the Bonds;
(f) by addition, to include covenants governing the Borrower's financial
affairs to the extent reasonably required in connection with the Borrower's
exercise of its Conversion Option; or
(g) to effect any other change herein which, in the judgment of the
Trustee, is not to the prejudice of the Trustee or the Owners of the Bonds.
Section 10.2. Amendment Upon Approval of Two-Thirds of Owners of
--------------------------------------------------
Bonds. Except for the amendments, changes or modifications as provided in
Section 10.1 hereof, no other amendment, change or modification of this
Agreement or the Borrower's, Note shall be undertaken without the mailing of
notice of such proposed amendment, change or modification to and the written
approval or consent of the Bank and the Owners of at least two-thirds (2/3) in
39
aggregate principal amount of the Outstanding Bonds given as in this Section
provided, provided that the consent of the Bank and the Owners of all Bonds
Outstanding is required for any amendment, change or modification of this
Agreement that would permit the termination or cancellation of this Agreement or
a reduction in or postponement of the payments under this Agreement or the
Borrower's Note or any change in the provisions relating to payment hereunder or
thereunder.
If at any time the Issuer and the Borrower shall request the consent of the
Trustee to any such proposed amendment, change or modification of this Agreement
or the Borrower's Note, the Trustee shall, upon being satisfactorily indemnified
with respect to expenses, cause notice of such proposed amendment, change or
modification to be given to the Bank, and each national rating agency by which
any of the Bonds are then rated and to the Owners of the Bonds by mailing notice
by registered or certified mail to the Owner of each Bond at the address shown
on the registration books. Such notice shall briefly set forth the nature of
such amendment, change or modification and shall state that copies thereof are
on file at the Principal Office of the Trustee for inspection by all Owners of
Bonds. If, within sixty (60) days or such longer period as shall be prescribed
by Issuer following such notice, the Owners of not less than (a) two-thirds
(2/3rds) in aggregate principal amount of or, as may be required, (b) all the
Outstanding Bonds at the time of the execution of any such proposed amendment,
change or modification shall have consented to and approved the execution
thereof as herein provided, no Owner of any Bond shall have any right to object
to any of the terms and provisions contained therein, or the operation thereof,
or in any manner to question the propriety of the execution thereof, or to
enjoin or restrain the Trustee, the Borrower or the Issuer from executing the
same or from taking any action pursuant to the provisions thereof. Upon the
execution of any such proposed amendment, change or modification as in this
Section permitted and provided, this Agreement or the Borrower's Note shall be
and be deemed to be modified and amended in accordance therewith.
The Issuer, the Borrower and the Trustee shall be entitled to receive, and
shall be fully protected in relying upon the opinion of counsel, who may be
counsel for the Issuer, as conclusive evidence that any such proposed supplement
or amendment, change or modification complies with the provisions of this
Agreement and the Indenture and that it is proper for the Issuer, and the
Trustee under the provisions of this Article to execute and approve the same.
40
ARTICLE XI
MISCELLANEOUS
Section 11.1. Notices. (a) Unless otherwise expressly specified or
-------
permitted by the terms hereof, all notices, consents or other communications
required or permitted hereunder shall be deemed sufficiently given or served if
given in writing, hand delivered or mailed by first class mail, postage prepaid
and addressed as follows (to be effective upon first receipt by the addressee or
its counsel):
(1) if to the Issuer, addressed to:
New Jersey Economic Development Authority
000 Xxxxx Xxxxxx Xxxxxx
Capital Place One
Trenton, New Jersey 08625
with a copy to their attorneys, addressed to:
Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxx, St. Xxxx & Xxxxx
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
(2) if to the Trustee, addressed to:
Sumitomo Bank of New York Trust Company
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
with a copy to their attorneys, addressed to:
The Sumitomo Bank, Limited, New York Branch
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Vice President and Corporate Counsel
(3) if to the Borrower, addressed to:
Epitaxx, Inc.
0000 X.X. Xxxxx 0
00
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Vice President
with a copy to:
Xxxxx F. X. Xxxx, Esq.
Katzenbach, Gildea & Xxxxxx
Princeton Pike Corporate Center
000 Xxxxx Xxxxx, Xxxxxxxx 0
Xxxxxxxxxxxxx, Xxx Xxxxxx 00000-0000
(4) if to the Bank, addressed to:
The Sumitomo Bank, Limited, New York Branch
One World Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
with a copy to:
Xxxxx, Xxxx, Xxxxxxx, Xxxxxxxxx & Xxxxxx
000 Xxxxxx Xxxx
Xxx Xxxx, Xxx Xxxx 00000
(5) if to Remarketing Agent, addressed to:
BT Securities Corporation
One Bankers Trust Plaza
New York, New York .10015
Attention: Municipal Capital Markets Group
(6) if to Tender Agent, addressed to:
Sumitomo Bank of New York Trust Company
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
A duplicate copy of each notice required to be given hereunder by the
Trustee to either the Issuer or the Borrower shall also be given to the other
and to the Bank. The Issuer, the Borrower, the Trustee, the Bank, the
Remarketing Agent and the Tender Agent may designate any further or different
addresses to which subsequent notices, certificates or other communications
shall be sent. Any notice to an Owner of Bonds shall also be made to the Bank.
42
Section 11.2. Binding Effect. This Agreement shall inure to the
--------------
benefit of and shall be binding upon the Issuer, the Borrower, the Bank, the
Trustee, the Owners of Bonds and their respective successors and assigns,
subject, however, to the limitations contained in Section 8.1 hereof.
Section 11.3. Severability In the event any provision of this
------------
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 11.4. Amounts Remaining in Funds. Subject to the provisions
--------------------------
of the Indenture, it is agreed by the parties hereto that any amounts remaining
in the Bond Fund or any other Fund or Account created under the Indenture upon
expiration or earlier termination of this Agreement, as provided herein, payment
in full of the Bonds (or provision for payment thereof having been made in
accordance with provisions of the Indenture) and the fees and expenses of the
Issuer and the Trustee in accordance with the Indenture, shall be paid
immediately to the Bank to the extent of any indebtedness of the Borrower to the
Bank under the Credit Agreement, and, after payment or repayment of all such
indebtedness, such amounts shall belong to the Borrower and shall be paid to the
Borrower by the Trustee.
Section 11.5. Execution in Counterparts. This Agreement may be
-------------------------
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
Section 11.6. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State.
Section 11.7. Cautions. The captions and headings in this Agreement
--------
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or Sections of this Agreement.
43
IN WITNESS WHEREOF, the Issuer has caused this Agreement to be executed by
its Executive Director or Deputy Director and attested by its Secretary or
Assistant Secretary and has caused its official seal to be affixed hereto and
the Borrower for itself, its successors or assigns, has caused this Agreement to
be executed by its duly authorized officers, all as of the day and year above
written.
ATTEST: NEW JERSEY ECONOMIC DEVELOPMENT
AUTHORITY
/s/ Xxxxx X. Xxxxxxx, Xx. By:/s/ Xxxx X. Xxxxx
----------------------------- ------------------------------
Xxxxx X. Xxxxxxx, Xx. Xxxx X. Xxxxx
Assistant Secretary Deputy Director
44
ATTEST: EPITAXX, INC.
/s/ Xxxxx X. Xxxxxxx, Secretary By /s/ Xxxxxxxx X. Ban, Vice President
------------------------------- -----------------------------------
45
EXHIBIT A TO LOAN AGREEMENT
TO: Sumitomo Bank of New York Trust Company
Xxx Xxxxx Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
REQUISITION NO.
The undersigned, a Borrower Representative of Epitaxx, Inc., pursuant to
the Loan Agreement by and among Epitaxx, Inc. (the "Borrower") and the New
Jersey Economic Development Authority dated as of August 15, 1991 (the "Loan
Agreement") makes the following requisition for payment from the Project Fund
established pursuant to the Loan Agreement entered into with regard to the
(Epitaxx, Inc. Project) Series 1991.
Payment to:
Amount:
Reason for Payment:
Such amount is based on an obligation properly incurred pursuant to the
provisions of the Loan Agreement, is a Proper Charge against said Project Fund,
is unpaid or unreimbursed from the Project Fund and has not been the basis of
any previous withdrawal. The amount requested, to the extent it represents work
performed or supervised by officers or employees of the Borrower, does not
exceed the actual cost to the Borrower of any cost or expense incurred by reason
of work performed or supervised by officers or employees of the Borrower or any
of its affiliates. The Borrower is not in default under any provision of the
Loan Agreement.
I further certify that no written notice of any lien, right to lien,
attachment upon or claim, affecting the right to receive payment of, any of the
monies payable under this requisition has been received, or if any notice of any
such lien, attachment or claim has been received, such lien, attachment or claim
has been released or discharged or will be released or discharged upon payment
of this requisition.
IN WITNESS WHEREOF, I have hereunto set my hand this __________ day of
____, 19__.
EPITAXX, INC.
By
----------------------------------
Borrower Representative
46
EXHIBIT B
BORROWER NOTE
-------------
$5,000,000 Newark, New Jersey
August 29, 1991
FOR VALUE RECEIVED, EPITAXX, INC. (the "Borrower") promises to pay to the
order of the NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (the "Issuer") at its
offices located at 000 Xxxxx Xxxxxx Street, Capital Place One, Trenton, New
Jersey, the sum of Five Million Dollars ($5,000,000) in lawful money of the
United States. The Borrower will make payments, in advance, in an aggregate
amount sufficient for:
(a) Prior to the Conversion Date (as defined in the Indenture), the
payment in full of the Bonds Outstanding, including (i) on or before the fifth
(5th) Business Day preceding each Interest Payment Date, payment of an amount
equal to the estimated interest to become due on the Bonds on such Interest
Payment Date and on each Interest Payment Date such additional amount, if any,
as together with the aforesaid payment shall equal all interest becoming due on
the Bonds on such Interest Payment Date, (ii) on each date such amounts become
due (or earlier as provided in Section 3.02 of the Indenture), principal and
reception payments with respect to the Bonds and (iii) when due such amounts are
as required to be paid by the Borrower to pay or cause to be paid to the Trustee
such amounts as shall be necessary to enable the Trustee to pay the Purchase
Price of the Bonds delivered to the Tender Agent for purchase pursuant to the
provisions of Section 2.12, 3.05, 3.06 or 3.07 of the Indenture, provided,
however, that the obligation of the Borrower to make any such payment required
under this clause (iii) shall be reduced by the amount of moneys available for
such payment described in Section 2.13(A) and (C) of the Indenture; and,
provided further, that the obligation of the Borrower to make the payments
required under clauses (i), (ii) and (iii) hereof shall be deemed to be
satisfied and discharged to the extent of any corresponding payment made by the
Bank to the Trustee under the Letter of Credit; and
(b) From and after,, the Conversion Date, the payment in full of the Bonds
then Outstanding, including (i) the total interest becoming due and payable on
such Bonds to the respective dates of payment thereof, (ii) the total principal
amount of such Bonds, and (iii) the redemption premium, if any, that shall be
payable on the redemption of such Bonds prior to their stated maturity date, and
(iv) such amounts, if any, as shall be required to be paid by the Borrower for
deposit to the credit of the Bond Reserve Fund Account as provided in the
Indenture.
In the event that interest on the Bonds issued by the Issuer in connection
with the Project (as defined in the Loan Agreement hereinafter referred to) ever
ceases to be excludable from the gross income of the recipients thereof within
the meaning of Section 103 of the Internal Revenue Code of 1986, as amended (the
"Code") (except if the reason for such inclusion is because the
47
recipient is a "substantial user" or "related person", as provided for in
Section 147(a) of the Code) (a "Determination of Taxability") the interest rate
on this Note shall, from the date of such inclusion (the "Taxable Date"), be
increased to the Taxable Rate as determined under the Indenture (the "Taxable
Rate").
This Note is the Note referred to in the Loan Agreement dated as of August
15, 1991 by and between the parties hereto and is subject to all the terms and
provisions of said Loan Agreement.
Undersigned and all endorsers (if any) of this Note waive presentment,
demand for payment, protest and notice of dishonor of this Note, and authorize
the holder, without notice or further consent, to grant extensions of time in
the payment of any moneys payable under this Note and to waive compliance with
any of the provisions of this Note.
IN WITNESS WHEREOF, the undersigned has caused this Note to be duly
executed by its proper corporate officer and its seal to be affixed and
attested, pursuant to the resolution of its Board of Directors, the day and year
first above written.
[SEAL] EPITAXX, INC.
ATTEST:
------------------------------- -------------------------------
48
