Exhibit 10.3
EXECUTION
COPY
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REIMBURSEMENT AGREEMENT
Dated as of January 1, 2002
between
TECHNOLOGY FLAVORS & FRAGRANCES, INC.
and
XXXXX FARGO CREDIT, INC.
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Relating to Town of Babylon Industrial Development Agency
$2,200,000 Original Principal Amount
Variable Rate Demand Industrial Development Revenue Bonds,
Series 2002 (Federally Taxable) (Technology Flavors & Fragrances, Inc. Project)
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REIMBURSEMENT AGREEMENT
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THIS REIMBURSEMENT AGREEMENT is made as of January 1, 2002, between
TECHNOLOGY FLAVORS & FRAGRANCES, INC., a Delaware corporation (the "Company")
and XXXXX FARGO CREDIT, INC. (the "Lender").
BACKGROUND:
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A. Concurrently herewith, the Town of Babylon Industrial Development
Agency (the "Agency" or the "Issuer") is issuing its Variable Rate Demand
Industrial Development Revenue Bonds, Series 2002 (Technology Flavors &
Fragrances, Inc. Project) in the aggregate principal amount of $2,200,000 (the
"Bonds"), pursuant to that certain Indenture of Trust dated as of January 1,
2002 (the "Indenture") between the Issuer and The Bank of New York, as trustee
(in such capacity, the "Trustee").
B. The proceeds of the Bonds will be used in part to finance the
acquisition or cost of certain real estate situated at 00 Xxxxxx Xxxxxx Xxxx,
Xxxxxxxxxx, Xxx Xxxx (the "Real Estate"), the buildings and improvements located
thereon (the "Buildings"), certain machinery and equipment used, or to be
acquired for use, in connection therewith (the "Equipment") and certain
improvements to be made thereto (the "Improvements").
C. The Company and the Lender, as assignee of Foothill Capital
Corporation, are parties to a Loan and Security Agreement dated as of June 29,
1999 (as amended through the date hereof, and as the same may be hereafter
amended, modified, supplemented or restated from time to time, including without
limitation any amendment and restatement thereof in its entirety, the "Loan
Agreement").
D. As security for the payment of the Bonds, the Company has requested
the Lender to arrange for the issuance by its affiliate, Xxxxx Fargo Bank,
National Association (the "Bank"), for the account of the Company and for the
benefit of the Trustee, of a direct pay letter of credit in the form of Annex A
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attached hereto (such Letter of Credit and any successor or substitute letter(s)
of credit being individually and collectively referred to as the "Letter of
Credit"), in respect of which the Lender has agreed to indemnify the Bank and
hold it harmless from and against any and all payments made by it under the
Letter of Credit, and for all other losses and liabilities suffered or incurred
by the Bank in connection therewith (the "Indemnity").
E. It is a condition of the obligation of the Bank to issue the Letter of
Credit and the Lender to issue the Indemnity that this Reimbursement Agreement
shall have been executed and delivered by the Company to the Lender.
F. Capitalized terms used herein without being defined herein shall have
the meanings ascribed to them in the Indenture.
ARTICLE I
DEFINITIONS
For the purpose of this Reimbursement Agreement, in addition to terms
defined elsewhere herein, the following terms shall have the following meanings:
"Adjusted Cash Flow" shall have the meaning specified in Section 8.1(i).
"Agency" or "Issuer" shall have the meaning given such term in the recitals
hereof.
"Bank" shall mean Xxxxx Fargo Bank, National Association.
"Bank Rate" shall mean the fluctuating interest rate per annum equal to the
rate of interest publicly announced from time to time by the Bank as its "prime
rate" or "prime lending rate" as a means of pricing some loans to its customers,
adjusted on and as of the announced effective date of any change in the Bank
Rate. The Bank Rate does not necessarily reflect the lowest rate of interest
actually charged to any particular class or category of customers or in
connection with extensions of credit.
"Banking Day" shall mean (x) in the case of the Bank, any day of the year
on which the Bank's San Francisco Letter of Credit Operations Department is open
for business, and (y) in all other cases, any day other than (i) a Saturday or
Sunday, or (ii) a legal holiday on which banking institutions in San Francisco,
California, Minneapolis, Minnesota or New York, New York are authorized or
required by law to close.
"Beneficiary" shall mean the party named as payee under the Letter of
Credit and any permitted transferee thereof.
"Bonds" shall have the meaning given such term in the recitals hereof.
"Capital Expenditures" shall have the meaning specified in Section 8.1(f).
"Cash Flow" shall have the meaning specified in Section 8.1 (i).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collateral" shall mean the collateral described in and evidenced by the
Security Documents and all other property, rights and interests now or hereafter
pledged to the Lender hereunder, under the Operative Documents or otherwise to
secure the Letter of Credit Obligations or the Working Capital Obligations.
"Company" shall mean Technology Flavors & Fragrances, Inc., a Delaware
corporation.
"Date of Issuance" shall mean the date of issuance of the Letter of Credit.
"Default" shall mean any event which with notice or lapse of time, or both,
would become an Event of Default.
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"Drawing" shall mean an "A Drawing", "B Drawing", "C Drawing", "D Drawing",
"E Drawing" or an "F Drawing", as the case may be, as such terms are defined in
the Letter of Credit.
"Effective Date" shall mean the date on which all of the conditions
contained in Article IV shall have been satisfied.
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"Event of Default" shall have the meaning specified in Article IX.
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"Expiration Date" shall have the meaning given such term in the Letter of
Credit, and "Initial Expiry Date" "Interim Expiry Date" and "Final Expiry Date"
shall have the respective meanings specified in Section 2.1.
"GAAP" shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"Guaranty Agreement" shall mean the Guaranty Agreement dated as of January
1, 2002, executed by the Company in favor of the Lender, the Bank and the
Trustee, and any amendments and supplements thereto relating to the Bonds or the
Project.
"Indenture" shall mean the Indenture of Trust dated as of January 1, 2002
between the Agency and the Trustee, and any amendments and supplements thereto,
relating to the Bonds.
"Lease Agreement" shall mean the Lease Agreement dated as of January 1,
2002 between the Agency and the Company, and any amendments and supplements
thereto relating to the Bonds or the Project.
"Letter of Credit" shall have the meaning given such term in the recitals
hereof in the form of Annex A attached hereto, and all future amendments to,
renewals of, and substitutions for, the Letter of Credit.
"Letter of Credit Obligations" shall mean all loans, advances, debts,
liabilities, obligations, fees, interest, covenants and duties owing by the
Company to the Bank and the Lender of any kind and description, direct or
indirect, absolute or contingent and due or to become due, arising out of this
Reimbursement Agreement or any other Operative Documents, by law or otherwise,
including without limitation, all interest and other costs and expenses
(including reasonable attorneys' fees) for which the Company is obligated under
this Reimbursement Agreement.
"Lien" shall mean any interest in any real or personal property securing an
obligation owed to, or a claim by, a Person other than the owner of such
property, whether such interest is based on common law, statute or contract. The
term "Lien" shall also include reservations, exceptions, encroachments,
easements, rights-of-way, covenants, conditions, restrictions, releases and
other title exceptions and encumbrances affecting any such property.
"Loan Agreement" shall have the meaning given such term in the recitals
hereof.
"Mortgage" and "Mortgages" shall have the meanings given such terms in the
Indenture.
"Net Income" shall have the meaning specified in Section 8.1(h).
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"Operative Documents" shall mean, collectively, this Reimbursement
Agreement, the Indenture, the Lease Agreement, the Security Documents, the
Guaranty Agreement, the Remarketing Agreement and all other documents ancillary
thereto, as described in Section 4.1 hereof.
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"Person" shall mean an individual, corporation, partnership, association,
limited liability entity, joint venture, trust, unincorporated organization or
any other juridical entity, or a foreign state or any agency or political
subdivision thereof.
"Pledge Agreement" shall mean the Pledge and Security Agreement dated as of
January 1, 2002, executed by the Company in favor of the Lender, and any
amendments and supplements thereto relating to the Bonds or the Project.
"Project" shall mean, collectively, the Real Estate, the Building, the
Equipment and the Improvements.
"Projections" shall have the meaning specified in Section 8.1(h).
"Regulation" shall mean any laws, ordinances, regulations, judgments,
decrees, orders, licenses, rules or requirements of any federal, state, local or
other government or governmental body, including without limitation, all
standards of licensure.
"Reimbursement Agreement" shall mean this Reimbursement Agreement, as the
same may be hereafter amended, modified, supplemented or restated from time to
time.
"Remarketing Agent" means (singly or collectively, as the case may be) the
remarketing agent(s) appointed by the Company and approved in writing by the
Agency and at the time serving as such under the Remarketing Agreement.
"Remarketing Agreement" shall mean the Remarketing Agreement dated as of
January 1, 2002 by and among the Company and Roosevelt and Cross, Incorporated.
"Security Documents" means the Loan Agreement, the Mortgages, financing
statements, the Pledge Agreement, Assignment, and all other documents and
instruments delivered by or on behalf of the Company to secure the Company's
obligations under this Reimbursement Agreement and under the Loan Agreement.
"Stated Amount" shall mean, as of any date of determination, the maximum
aggregate amount available for Drawing under the Letter of Credit, including
without limitation on account of interest on or principal of the Bonds, and
fees, costs and expenses payable in connection therewith.
"Tangible Net Worth" shall have the meaning specified in Section 8.1(g).
"Tender Agent" means the Person acting as tender agent pursuant to the
Indenture.
"Trustee" shall have the meaning given such term in the recitals hereof.
"Working Capital Obligations" shall have the same meaning as the meaning
given to the term "Obligations" in the Loan Agreement, except that Working
Capital Obligations shall not include Letter of Credit Obligations.
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ARTICLE II
ISSUANCE OF LETTERS OF CREDIT; FEES
SECTION 2.1 Amount and Terms of Letter of Credit.
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(a) Subject to the conditions hereinafter set forth, the Lender shall
arrange for the issuance of the Letter of Credit by the Bank on the Effective
Date for the account of the Company, in favor of the Trustee. The Letter of
Credit shall have an initial expiry date of January 14, 2007 (the "Initial
Expiry Date"), shall be automatically extended thereafter for successive terms
of 365 days each, unless, at least one hundred twenty (120) days prior to the
last day of the then current term (such last day, an "Interim Expiry Date"), the
Bank shall have delivered to the Company and the Beneficiary a notice of its
election not to extend the Interim Expiry Date then in effect, and shall have a
final expiry date of January 14, 2022 (the "Final Expiry Date"). If the Initial
Expiry Date, any Interim Expiry Date, or the Final Expiry Date falls on a day
that is not a Banking Day, such day shall be extended automatically to the next
succeeding Banking Day.
(b) The Letter of Credit shall be in the form of Annex A attached
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hereto and made a part hereof with only such insertions as to amounts, dates,
notices, addresses and related matters as shall be consistent with this
Reimbursement Agreement.
SECTION 2.2 L/C Fees. The Company shall pay to the Lender, in cash, the
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following fees, each of which is non-refundable and deemed to be fully earned
when due: (a) for the Lender's own account, an annual fee on the Effective Date,
and on each yearly anniversary date thereafter, for each consecutive period of
365 days (or any portion thereof) that the Letter of Credit is outstanding, in
an amount equal to one and one quarter percent (1 1/4%) of the Stated Amount of
the Letter of Credit, calculated as of the opening of business on the Business
Day on which such fee is payable and (b) promptly upon written demand, for the
Bank's account, all of the Bank's usual and customary charges, fees and expenses
related to the issuance, amendment, extension, replacement, transfer,
cancellation or termination of, and draws and processing of draws and other
requests under, the Letter of Credit. There shall be no reduction or refund of
any fee or charge described herein in the event the Letter of Credit expires, is
drawn upon, reduced, terminated or otherwise modified or altered after the date
any such fee or charge is due and payable.
ARTICLE III
PAYMENT OBLIGATIONS
AND OTHER SECURITY
SECTION 3.1 Drawings Under the Letter of Credit. The Company agrees to
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reimburse the Lender, in its individual capacity, and, without duplication, the
Lender for the benefit of the Bank, without further notice or demand, for each
Drawing made under the Letter of Credit on the date on which the Bank makes a
payment under the Letter of Credit pursuant to such Drawing, by making payment
of the required amount, or causing the Trustee to make payment of the required
amount, directly to the Bank.
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SECTION 3.2 Payments to the Bank; Sinking Fund Payments.
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(a) Notwithstanding, without impairing, and subject in any event to,
the Company's reimbursement obligation described in Section 3.1 above, the
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Company agrees to pay, or cause the Trustee to pay, to the Bank directly (with
all amounts and any bank account in which such amounts are maintained, whether
by the Trustee or any other financial institution, to serve as collateral
security for all of the Company's Letter of Credit Obligations hereunder)
amounts equal to the amount of each Drawing made under the Letter of Credit, no
later than 2:00 p.m., San Francisco time, on the Banking Day on which any such
Drawing is made, provided, however, that in the case of an "A Drawing", a "B
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Drawing", or an "E Drawing" under the Letter of Credit (other than an "E
Drawing" made on account of an acceleration following an event of default), the
Company shall pay, or cause the Trustee to pay, to the Bank directly such
amounts in advance, at least five (5) Banking Days prior to the date on which
any such A Drawing, B Drawing or E Drawing is anticipated to be made.
(b) Upon the Bank's receipt of any Drawing, and without restricting
any other rights or options of the Lender, the Lender shall be entitled to
charge the account or accounts into which payments made under this Section 3.2
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shall have been deposited for the purpose of paying the Company's obligation to
the Lender under Section 3.1 hereof with respect to such Drawing.
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(c) The Company agrees to redeem annually portions of the Bonds in
aggregate principal amounts and on the dates set forth in Section 2.04 (c) of
the Indenture, as in effect on the Effective Date, and agrees to make rental
payments quarterly under Section 3.3 of the Lease Agreement, as in effect on the
Effective Date, in the amounts and on the dates set forth therein. The Company
further agrees to cause the Trustee to release from the Reimbursement Account of
the Lease Payments Fund, and to deliver to the Bank, at least five Banking Days
prior to the date of any mandatory Sinking Fund Installment, funds in an
aggregate amount not less than the sum of (i) the amount of such mandatory
Sinking Fund Installment and (ii) interest accrued on the Bonds to the date of
the redemption thereof.
SECTION 3.3 Interest. The Company agrees to pay interest to the Lender,
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for its own account, on the amount of any Letter of Credit Obligations not paid
when due at the default rate of interest then in effect under the Loan
Agreement.
SECTION 3.4 Security. The Letter of Credit Obligations are secured by
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the Collateral, and the Working Capital Obligations are secured by the
Collateral (other than the Facility Realty), as more fully set forth in the
Security Documents. The Lender, the Company and the Issuer intend that, in the
event of one or more draws under the Letter of Credit, the Lender will be
subrogated pro rata to the rights of the Trustee and the registered owners of
the Bonds in and to (i) all funds and security held by the Trustee for the
payment of the principal of and interest on the Bonds, including without
limitation, all bond funds, escrow funds, revenue funds, debt service funds,
construction funds, redemption funds, operation funds, reserve funds, and other
funds and securities and other instruments comprising investments thereof, and
(ii) all assignments and security interests, if any, granted to the Trustee
pursuant to the Indenture, and (iii) all other property and interests in
property granted by the Issuer or the Company to the Trustee as security in
connection with the issuance of the Bonds. To further secure both the Letter of
Credit Obligations and the Working Capital Obligations, the Company hereby
grants to the Lender a security interest in and to all the Company's right,
title and interest in and to all of the funds and other security described in
clauses (i)
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through (iii) of the preceding sentence, now or hereafter held by the Agency
and/or Trustee as security in connection with the issuance of the Bonds. To
further secure the Letter of Letter of Credit Obligations, the Company hereby
grants to the Lender a security interest in and to all of the Company's right,
title and interest in and to the "Collateral" as defined in the Loan Agreement.
The Company acknowledges and confirms that all Collateral described in the Loan
Agreement secures and is intended to secure all of the Obligations described in
the Loan Agreement, including without limitation the Letter of Credit
Obligations.
SECTION 3.5 Time of Payments. All payments made by the Company, or by
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the Trustee on behalf of the Company, to the Bank or to the Lender hereunder
shall be made in lawful currency of the United States before 10:00 A.M., New
York City time, on the date when due in immediately available funds. In the
event the date specified for any payment hereunder is not a Banking Day, such
payment shall be made on the next following Banking Day.
SECTION 3.6 Increased Costs Due to change in Law. If after the date
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hereof any enactment or promulgation of or change in any law or regulation or in
the interpretation of any such law or regulation by any court or administrative
or governmental agency charged with the administration thereof shall either (i)
impose, modify or deem applicable any reserve, special deposit, minimum capital
or similar requirement against or with respect to letters of credit issued by
the Bank or (ii) impose on the Bank any other condition regarding this
Reimbursement Agreement or the Letter of Credit, and the result of any event
referred to in clause (i) and (ii) of this sentence shall be to increase the
direct actual cost to the Bank of issuing or maintaining the Letter of Credit
(which increase in actual cost shall be the result of the Bank's reasonable
allocation of the aggregate of such actual cost increases resulting from such
events), in excess of the direct cost to the Bank on the date hereof, then (1)
the Lender shall so notify the Company and (2) within thirty (30) days after
receipt of such notice and the certificate described below in this section from
the Lender, the Company shall pay to the Lender all additional amounts that are
necessary to compensate the Bank for such increased actual cost incurred by the
Bank. A certificate as to such increased cost incurred by the Lender as a result
of any event referred to in clause (i) or (ii) of the immediately preceding
sentence showing the manner of calculation thereof in reasonable detail shall be
submitted by the Lender to the Company and shall be conclusive (absent manifest
error) as to the amount thereof.
SECTION 3.7 Advances by the Lender. If the Company fails to make or
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cause to be made when due any payment, or fails to perform, observe or comply
with any of the Company's Letter of Credit Obligations, or any obligations of
the Company under the Operative Documents, the Lender, without the requirement
of notice or demand upon the Company, without waiving any default or releasing
the Company from any of the Company's Letter of Credit Obligations, and without
being under any obligation to do so, may make such payment or perform any of
such obligations, and shall endeavor to give the Company notice promptly after
the Lender shall have made any such payment or performed any such obligation.
All amounts so paid by the Lender, and all reasonable costs, fees and expenses
incurred by the Lender in connection with such payment or performance shall be
immediately due and payable by the Company as additional payments, together with
interest thereon from the date the same are paid or incurred at the default rate
of interest then in effect under the Loan Agreement.
SECTION 3.8 Appointment of Bank as Lender's Agent. The Company
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re-confirms its request that the Lender cause the Bank, as the Lender's agent
and in the Bank's
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name, to issue the Letter of Credit pursuant to the terms and conditions of this
Reimbursement Agreement. The Company hereby authorizes the Lender to use the
Bank as the Lender's agent to issue the Letter of Credit or to perform any of
the Lender's obligations or exercise any of the Lender's rights under any of the
Operative Documents, with the understanding that (a) the Bank will be the
Lender's agent, having obligations only to the Lender and not to the Company,
(b) the Letter of Credit will be deemed to be a letter of credit issued by the
Lender pursuant to this Reimbursement Agreement, (c) any of the Lender's
obligations performed or any of the Lender's rights acquired or exercised
pursuant to, or in connection with, the Operative Documents by the Bank in the
Lender's name or in the Bank's name shall be deemed to be obligations performed
or rights acquired or exercised by the Lender pursuant to or in connection with
the Operative Documents and (d) any collateral heretofore, now or at any time
hereafter granted or pledged to the Lender as security for any credit extended
to the Company will also secure all of the Company's obligations to the Lender
under this Reimbursement Agreement and the other Operative Documents.
ARTICLE IV
CONDITIONS PRECEDENT TO ISSUANCE OF THE LETTER OF CREDIT
This Reimbursement Agreement shall become effective, and the Bank will
issue the Letter of Credit, on the date the Bonds are issued and sold to the
purchaser(s) thereof, provided that all of the following conditions shall have
been met on or before such date.
SECTION 4.1 Delivery of the Bonds, Operative Documents, and Financing
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Statements. The Operative Documents shall have been duly executed and delivered
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by the parties thereto, each in form and substance reasonably satisfactory to
the Lender, and financing statements and fixture filings, each on form UCC-1,
naming the Agency and the Company as debtor and the Lender as secured party,
suitable for recordation in all appropriate jurisdictions, shall have been
executed and delivered to the Lender.
SECTION 4.2 No Default. On the Date of Issuance of, and after giving
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effect to the issuance of, the Letter of Credit, there shall exist no Event of
Default.
SECTION 4.3 Representations and Warranties. On the Date of Issuance of,
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and after giving effect to the issuance of, the Letter of Credit, all
representations and warranties of the Company contained herein, in the Loan
Agreement and in the other Operative Documents shall be true and correct in all
material respects with the same force and effect as though such representations
and warranties had been made on and as of such date.
SECTION 4.4 Opinions of Counsel. There shall have been delivered to the
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Lender an opinion or opinions of counsel to the Company, dated the Date of
Issuance, in form reasonably satisfactory to the Lender and its counsel.
SECTION 4.5 Certificates of Compliance. There shall have been delivered
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to the Lender a certificate of duly authorized officers of the Company, dated
the Date of Issuance, to the effect that all of the conditions specified herein
have been satisfied as of such date and covering such additional matters as the
Lender may reasonably request.
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SECTION 4.6 Opinion of Bond Counsel. There shall have been delivered to
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the Lender an opinion of Bond Counsel (as defined in the Indenture), dated the
Date of Issuance and in form and substance reasonably satisfactory to the
Lender, to the effect that the Bonds are legal, valid and binding obligations of
the Agency.
SECTION 4.7 Property Insurance. There shall have been delivered to the
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Lender copies of, or certificates of the issuing company with respect to,
policies of insurance owned by the Company covering or in any manner relating to
the Collateral, together with endorsements thereto which comply with the terms
of the Indenture and the Lease Agreement and are otherwise in form and substance
reasonably satisfactory to the Lender, naming the Lender as additional insured,
as its interests may appear, and as loss payee, as applicable.
SECTION 4.8 Title Insurance; Property Survey. There shall have been
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delivered to the Lender such mortgagee title insurance policies, or commitments
to issue such policies, issued by such title insurance company, in such amounts
and with only such exceptions, all as shall be required by and reasonably
satisfactory to the Lender, together with an original guaranteed survey
certified to the Lender and the title insurance company.
SECTION 4.9 Other Documents. There shall have been delivered to the
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Lender such other information, documents, instruments, approvals (and if
requested by the Lender, certified duplicates of executed copies thereof) or
opinions as the Lender or its counsel may reasonably request to evidence the due
execution, delivery and performance of this Reimbursement Agreement and the
other Operative Documents.
SECTION 4.10 Documentation and Proceedings.
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(a) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Reimbursement Agreement
and the other Operative Documents shall be reasonably satisfactory in form and
substance to the Lender and its counsel and the Lender shall have received all
information and copies of all documents, including records of corporate
proceedings, governmental approvals and incumbency certificates which it may
have reasonably requested in connection with the transactions contemplated by
this Reimbursement Agreement, and the other Operative Documents, such documents
where appropriate to be certified by proper officers;
(b) The Lender shall have received certified copies of the charter
and by-laws of the Company and certified copies of all resolutions of the Board
of Directors of the Company authorizing the execution, delivery and performance
of this Reimbursement Agreement, the other Operative Documents to which the
Company is a party and all other documents ancillary thereto and the
transactions contemplated hereby and thereby, including distribution of a copy
of the placement memorandum and a placement agreement with respect to the Bonds
certified by the Secretary or Assistant Secretary of the Company (which
certificates shall state that such resolutions are in full force and effect on
the Date of Issuance); and
(c) There shall have been delivered to the Lender a written
certificate by the Secretary of the Company as to the names and true signatures
of its officers authorized to sign this Reimbursement Agreement, the other
Operative Documents to which it is a party, and the
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other documents or certificates of the Company to be executed and delivered
pursuant hereto and pursuant to any of the other Operative Documents.
ARTICLE V
UNCONDITIONAL OBLIGATIONS
SECTION 5.1 Obligations Absolute. The Letter of Credit Obligations of
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the Company under this Reimbursement Agreement shall be absolute, unconditional
and irrevocable, and shall be performed strictly in accordance with the terms of
this Reimbursement Agreement, under all circumstances whatsoever, including
without limitation, the following circumstances:
(a) any lack of validity or enforceability of the Letter of Credit,
the Bonds, the other Operative Documents or any other agreement or instrument
related thereto;
(b) any amendment or waiver of or any consent to departure from the
terms of the Letter of Credit, the Bonds, the other Operative Documents or any
other agreement or instrument related thereto;
(c) the existence of any claim, set-off, defense (other than payment)
or other right which the Company may have at any time against the Agency, any
Beneficiary or any transferee of the Letter of Credit (or any Person for whom
the Agency, any such Beneficiary or any such transferee may be acting), the
Lender, the Bank or any other Person, whether in connection with this
Reimbursement Agreement, the Letter of Credit, the other Operative Documents,
the Project or any unrelated transaction;
(d) the occurrence of an Event of Default by the Company hereunder;
(e) the surrender or impairment of any security for the performance
or observance of any of the agreements or terms of this Reimbursement Agreement;
and
(f) any of the circumstances contemplated in clauses (i) through
(vii) of Section 10.4(a) hereof.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 6.1 Representations and Warranties. The Company makes the
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following representations and warranties to the Lender and the Bank to induce
the Lender to enter into this Reimbursement Agreement and to induce the Bank to
issue the Letter of Credit:
(a) Organization; Power; Qualification. The Company is a corporation
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duly organized and in good standing under the laws of its state of incorporation
and is duly qualified to do business and is in good standing in New York,
California, and each other state where the nature of its business requires such
qualification, except where the failure to so qualify would not have a material
adverse effect on the Company. The Company is not in violation of its Articles
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of Incorporation or its By-laws and has the power and authority to own its
properties and to carry on its businesses as now being and hereafter proposed to
be conducted.
(b) Authorization of Agreement and Operative Documents. The Company
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has the power and the authority, and has taken all necessary action to authorize
it to execute, deliver and perform its obligations under this Reimbursement
Agreement and each of the other Operative Documents to which it is a party in
accordance with their respective terms. This Reimbursement Agreement and each of
the other Operative Documents to which the Company is a party have been duly
executed and delivered by the Company and each is a legal, valid and binding
obligation thereof, enforceable in accordance with its terms.
(c) Compliance with Agreement and Related Documents. The execution,
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delivery and performance of this Reimbursement Agreement and each of the other
Operative Documents to which the Company is a party does not and will not (i)
contravene its Articles of Incorporation or its By-Laws, (ii) require any
consent or approval of any Person that has not been obtained, (iii) require any
governmental approval that has not been obtained, (iv) violate or conflict with,
result in a breach of, or constitute a default under (A) any of the terms,
conditions or provisions of any contract, agreement or indenture which is
material in nature to which it is a party or by which it or its properties may
be bound or (B) any applicable law, or (v) result in or require the creation or
imposition of any Lien upon any of its assets, other than to the Lender or Bank
or as otherwise contemplated by the Indenture.
(d) Regulatory Approval. All authorizations and approvals necessary
-------------------
for the Company to enter into this Reimbursement Agreement and the other
Operative Documents to which it is a party and perform the transactions
contemplated hereby and thereby have been obtained and remain in full force and
effect and are subject to no further administrative or judicial review. No other
authorization or approval or other action by, and no notice to or filing with,
any governmental Agency or regulatory body is required for the due execution,
delivery and performance by the Company of this Reimbursement Agreement or the
other Operative Documents to which it is a party.
(e) Litigation. Except as set forth in Schedule 6.1 (e) to this
----------
Reimbursement Agreement, there are not, in any court, board, commission, agency,
instrumentality or before any arbitrator of any kind or before or by any
governmental or nongovernmental body, any actions, suits, judgments, orders,
proceedings, inquiries or investigations, pending or, to the best knowledge of
the Company threatened against it, in any way relating to or affecting (i) the
Company or any of its business or property, or (ii) this Reimbursement
Agreement, any other Operative Document, the issuance of the Bonds or the
issuance of the Letter of Credit. The Company warrants and represents that in
its reasonable business judgment, the litigation set forth in Schedule 6.1 (e)
will not materially or adversely affect the Company's business, property,
condition (financial or otherwise) or prospects, or this Reimbursement
Agreement, the issuance of the Bonds, the issuance of the Letter of Credit or
any other Operative Document.
(f) Financial Statements. The Company has furnished to the Lender
--------------------
copies of its balance sheet as of September 30, 2001, and the related statements
of income and cash flows for the nine month period ended on such date. Such
financial statements present fairly the financial condition and results of
operations of the Company as at and for the period ended
-11-
September 30, 2001 in accordance with generally accepted accounting principles
consistently applied. Except as disclosed or reflected in such statements, as at
September 30, 2001, the Company had no liabilities, contingent or otherwise,
which, individually or in the aggregate, have or may have a material adverse
effect on the business, financial condition, property or prospects of the
Company. Since the date of the above described financial statements, no material
adverse change has occurred in the business, financial condition, property or
prospects of the Company.
(g) Absence of Defaults. No Default or Event of Default has occurred
-------------------
and is continuing under the Loan Agreement and no event or condition has
occurred which would constitute any Event of Default hereunder.
(h) Accuracy and Completeness of Information. All information,
----------------------------------------
reports and other papers and data furnished by the Company to the Lender or the
Bank were, at the time the same were so furnished, complete and correct in all
material respects. No fact is known to the Company which has had or in the
reasonable judgment of the Company may in the future have a material adverse
effect on the Company which has not been set forth in such information, reports
or other papers or data or otherwise disclosed in writing to the Lender prior to
the Date of Issuance. No document furnished or other written statement made to
the Lender or the Bank by the Company in connection with the negotiation,
preparation or execution of this Reimbursement Agreement or the other Operative
Documents to which the Company is a party or by which it is bound contains or
will contain any untrue statement of a fact material to the financial condition
of the Company or omits or will omit to state such a material fact necessary in
order to make the statements contained therein not misleading in light of the
circumstances under which they were made.
(i) Representations and Warranties in Loan Agreement. The Company
------------------------------------------------
hereby restates each of the warranties and representations made by it in the
Loan Agreement for the benefit of the Lender and Bank as if the same were set
forth herein at length.
SECTION 6.2 Incorporation of Representations and Warranties, Etc. In
----------------------------------------------------
addition to the representations and warranties set forth in this Reimbursement
Agreement, all statements contained in any certificate, financial statement or
other instrument required to be delivered as a condition to the issuance of the
Letter of Credit, and all statements required to be delivered from time to time
after the Date of Issuance under this Reimbursement Agreement by or on behalf of
the Company that are material in nature (including, but not limited to, any such
statements made in or in connection with any amendment hereto), in each case,
shall constitute representations and warranties made under this Agreement.
ARTICLE VII
AFFIRMATIVE COVENANTS OF THE COMPANY
SECTION 7.1 Affirmative Covenants. The Company hereby covenants and
---------------------
agrees that until the Letter of Credit has expired or been terminated and until
all of the Letter of Credit Obligations of the Company shall have been fully
paid and performed to the satisfaction of the Lender, the Company shall comply
with all of its covenants and obligations in the Loan Agreement, including,
without limitation, all affirmative covenants set forth in the Loan Agreement,
as the same
-12-
may from time to time be amended, as if all of said covenants were set forth
herein at length (regardless of whether the Revolving Loans remain outstanding).
Any and all amendments to any of the covenants and obligations set forth in the
Loan Agreement shall, automatically and whether or not any specific reference is
made to this Reimbursement Agreement, operate as an amendment of this Section 7,
---------
except to the extent that the Company and the Lender otherwise expressly agree
in writing, and only to such extent.
SECTION 7.2 Incorporation of Selected Mortgage Terms. The Company
----------------------------------------
covenants and agrees that provisions of the Mortgage relating to requirements
concerning casualty insurance and condemnation, the treatment of the proceeds
thereof, and the Lender's rights and the Company's obligations with respect
thereto are incorporated herein by reference.
ARTICLE VIII
NEGATIVE AND FINANCIAL COVENANTS OF THE COMPANY
SECTION 8.1 Negative and Financial Covenants. The Company hereby
--------------------------------
covenants and agrees that until the Letter of Credit have expired or been
terminated and until all of the Letter of Credit Obligations of the Company
shall have been fully paid and performed to the satisfaction of the Lender,
unless the Lender shall otherwise consent in writing:
(a) Loan Agreement. The Company shall comply with all of its
--------------
covenants and obligations in the Loan Agreement, including, without limitation,
all negative and financial covenants set forth in of the Loan Agreement, as the
same may from time to time be amended, as if all of said covenants were set
forth herein at length (regardless of whether the Revolving Loans remain
outstanding). Any and all amendments to any of the covenants and obligations set
forth in of the Loan Agreement shall, automatically and whether or not any
specific reference is made to this Reimbursement Agreement, operate as an
amendment of this Section 8.1(a), except to the extent that the Company and the
--------------
Lender otherwise expressly agree in writing, and only to such extent.
(b) No Disposition of Collateral. The Company shall not sell, assign,
----------------------------
transfer, exchange or otherwise dispose of, or grant any option with respect to
the Collateral, or create, incur or permit to exist any pledge, lien, mortgage,
hypothecation, security interest, charge, option or other encumbrance with
respect to any of the Collateral, or any interest therein or any proceeds
thereof except for (i) the lien and security interest granted to the Lender
hereunder or the Mortgages, the Pledge Agreement or as contemplated by the
Indenture and (ii) Liens permitted by the Loan Agreement.
(c) Corporate Structure. The Company will not merge into or
-------------------
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, provided, however, that on not less than thirty (30) days
-------- -------
prior written notice to the Lender, the Company may merge or consolidate with,
or effect a similar business combination with, Belmay Holding Corporation, a New
York corporation, so long as the terms and conditions thereof are reasonably
satisfactory to the Lender, and, in the event that the Company ceases to exist
as a separate legal entity as a result of any such business combination, then,
in such event, the Letter of Credit Obligations and the Working Capital
Obligations shall have been assumed in writing on terms and by a Person, in each
case, reasonably satisfactory to the Lender.
-13-
(d) [reserved]
(e) Redemption. The Company shall not direct the Trustee to call the
----------
Bonds for optional redemption pursuant to the terms of the Indenture without
demonstrating to the Lender, in its sole judgment, that funds sufficient to pay
the amount set forth in Section 3.1 hereof, and all fees, expenses and charges
-----------
of the Bank in connection therewith, will be available to pay the Lender and
Bank as set forth herein.
(f) Capital Expenditures. The Company shall not make or incur, or
--------------------
contract to make or incur, Capital Expenditures, other than Capital Expenditures
made in connection with the Project and financed with the proceeds of the Bonds,
during or at the end of any period set forth below, in an aggregate amount
greater than the amount set forth below each such period. As used herein, the
term Capital Expenditures shall mean, as to any Person, with respect to any
period of determination, the aggregate of all expenditures (whether paid in cash
or accrued as liabilities and including expenditures for capitalized lease
obligations) made by such Person during such period that are required by GAAP,
consistently applied, to be included in or reflected by the property, plant and
equipment or similar fixed asset accounts (or intangible accounts subject to
amortization) on the balance sheet of such Person.
measuring period maximum capital expenditures
---------------- ----------------------------
(i) January 1, 2002 through and including $400,000
December 31, 2002
(ii) January 1, 2003 through and including $500,000
December 31, 2003, and each fiscal year thereafter
(g) Tangible Net Worth. The Company and its consolidated subsidiaries
------------------
shall maintain at all times a Tangible Net Worth, on a consolidated basis, of
not less than $3,200,000. As used herein, the term Tangible Net Worth shall
mean, as to any Person, as of any date of determination, the net worth of such
Person, calculated in accordance with GAAP, consistently applied, minus all of
-----
the assets of such Person which would be classified as intangible assets, in
accordance with GAAP, consistently applied, including without limitation prepaid
expenses and intercompany loans and advances.
(h) Net Income. The Company and its consolidated subsidiaries shall
----------
have Net Income, on a consolidated basis, for the first three fiscal months of
each fiscal year, the first six fiscal months of each fiscal year, the first
nine fiscal months of each fiscal year, and the twelve fiscal months of each
fiscal year, commencing with the first three fiscal months ending in March 2002,
of not less than (or not worse than, in the case of negative Net Income) an
amount equal to the product of (i) the projected Net Income for such period, as
reflected in the Projections for the fiscal year during which such period
occurs, multiplied by (ii) 0.33. As used herein, the term (x) Net Income shall
mean, as to any Person, with respect to any period of determination, the net
income before taxes of such Person for such period, calculated in accordance
with GAAP, consistently applied, and (y) Projections shall mean a forecast of
the Company's financial performance and results of operations for a referenced
fiscal year (beginning with the fiscal year ending in December 2003), delivered
by the Company to the Lender not later than the last day of the prior fiscal
year, to be prepared on a quarter-to-quarter
-14-
and year-to-date basis, in accordance with reasonable assumptions and historical
practices, certified by the chief financial officer of the Company, and shall
include a projected balance sheet and income statement for each referenced
fiscal year, prepared on the aforedescribed basis.
(i) Adjusted Cash Flow. The Company and its consolidated subsidiaries
------------------
shall have Adjusted Cash Flow, on a consolidated basis, for the fiscal year
ending in December 2001 of at least $1.00. As used herein, the term (x) Cash
Flow shall mean as to any Person, with respect to any period of determination,
the net income before taxes of such Person for such period, calculated in
accordance with GAAP, consistently applied, plus depreciation and amortization
expenses of such Person for such period (to the extent the same are deducted
from net revenues in determining Net Income for such period) minus the aggregate
amount of all payments of principal made during such year with respect to
indebtedness scheduled to mature in more than one year from the date of
calculation, minus the aggregate amount of all dividends and other similar
distributions made in cash to the holders of the equity interests of such Person
during such period, minus the aggregate amount of non-financed Capital
Expenditures made by such Person during such period, and (y) Adjusted Cash Flow
shall mean, as to the Company and its consolidated subsidiaries, with respect to
the fiscal year ended on December 31, 2001, Cash Flow on a consolidated basis
for such period minus one-time, non-recurring charges, severance charges and
other cash charges and costs related to the Company's Comprehensive
Restructuring and Cost Reduction Program, as set forth in that certain
informational package dated September 17, 2001, prepared by the Company and
delivered by it to the Lender on or about such date.
(j) Cash Flow. The Company and its consolidated subsidiaries shall
---------
have Cash Flow on a consolidated basis for each fiscal year, commencing with the
fiscal year ending in December 2002, of at least $1.00.
ARTICLE IX
EVENTS OF DEFAULT
SECTION 9.1 Events of Default. The occurrence of any one or more of the
-----------------
following events shall constitute an "Event of Default" hereunder:
(a) any representation or warranty made by the Company pursuant to
Section 6.1 hereof shall at any time prove to have been false, incorrect or
-----------
misleading in any material respect when made; or
(b) the Company shall fail to pay to the Lender when due hereunder
any payment required by any provision hereof, and such failure shall continue
without cure for five (5) days or more; or
(c) the Company shall fail to perform or observe any other term,
covenant or agreement contained herein or in any other Operative Document, and
such failure shall continue without cure for a period of fifteen (15) days or
more from the earlier to occur of (i) the date on which the Lender gives notice
of such failure or (ii) the date on which a member of the Company's senior
management knows, or reasonably should have known, of such failure; or
-15-
(d) any provision materially affecting the validity of the Company's
obligation to make payments hereunder or under any other Operative Document
shall at any time for any reason cease to be valid and binding on the Company or
shall be declared to be null and void, or the validity or enforceability of any
material provision of this Reimbursement Agreement or any other Operative
Document shall be contested by the Company or any governmental agency or Agency,
or the Company shall deny that it has any or further liability or obligation
thereunder; or
(e) (i) an "Event of Default" as defined in the Loan Agreement shall
have occurred and be continuing; or (ii) any credit facility established under
the Loan Agreement is terminated for any reason (including without limitation
non-renewal thereof by the Lender or the voluntary termination thereof by the
Company); or
(f) an "Event of Default" as defined in the Indenture or the Lease
Agreement shall have occurred and be continuing or the Company shall have
breached or violated or be in default under any other Operative Document that is
material in nature.
SECTION 9.2 Remedies.
--------
(a) If an Event of Default has occurred and is continuing, the Lender
may, in its sole discretion, but shall not be obligated to, (1) by notice to the
Company, the Trustee and the Agency, require the Trustee to declare the
principal amount of all of the Bonds then outstanding, together with all
interest accrued and unpaid thereon, to be immediately due and payable whereupon
such amounts shall be immediately due and payable pursuant to the Indenture, and
the Company shall be obligated to reimburse the Bank and the Lender pursuant to
this Reimbursement Agreement for all amounts drawn by the Trustee under the
Letter of Credit as a result of such acceleration of the Bonds, and all such
amounts for which the Company is obligated to reimburse the Bank and the Lender,
together with all other amounts payable by the Company hereunder, shall be
forthwith due and payable, and the same shall thereupon become due and payable
without demand, presentment, protest or further notice of any kind, all of which
are hereby expressly waived, and/or (2) require that the Company pay to the
Lender, and the Company will upon Lender's demand pay to Lender, cash in an
amount equal to one hundred ten percent (110%) of the then Stated Amount of the
Letter of Credit, to be held by the Lender (without interest) as cash collateral
for the Company's obligations, and/or (3) exercise all of its rights and
remedies under the Operative Documents.
(b) No remedy herein conferred or reserved 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 Reimbursement Agreement, the Loan Agreement, the Loan Documents (as
defined in the Loan Agreement) or any other Operative Document or now or
hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default, omission or failure of
performance hereunder 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 exercise any remedy
reserved to the Lender in this Reimbursement Agreement it shall not be necessary
to give any notice, other than such notice as may be herein expressly required.
In the event any provision contained in this Reimbursement Agreement
-16-
should be breached by any party and thereafter duly waived by the other party so
empowered to act, such waiver shall be limited to the particular breach so
waived and shall not be deemed to waive any other breach hereunder. No waiver,
amendment, release or modification of this Reimbursement Agreement shall be
established by conduct, custom or course of dealing, but solely by an instrument
in writing duly executed by the parties thereunto duly authorized by this
Reimbursement Agreement.
ARTICLE X
SPECIAL TERMS AND PROVISIONS
SECTION 10.1 Payment of Drafts Under the Letter of Credit. The Company
--------------------------------------------
instructs the Bank to pay any draft appearing on its face to comply with the
terms of the Letter of Credit irrespective of any instructions of the Company at
any time to the contrary. The Company authorizes the Bank to receive, accept
and/or pay as complying with the terms of the Letter of Credit, any drafts
and/or other documents under or purported to be under the Letter of Credit which
are otherwise in order but are signed by, or issued to, any administrator,
executor, assignee for the benefit of creditors, trustee in bankruptcy or
receiver for any property of the beneficiary or any other party in whose name it
is provided in the Letter of Credit that any drafts, acceptances and/or other
documents thereunder should be drawn.
SECTION 10.2 Amendment of Letter of Credit. The Letter of Credit may be
-----------------------------
amended, modified or terminated only upon the receipt by the Lender from the
Company and the Beneficiary (including any transferee(s) of the original
Beneficiary), of a written consent and request therefor, and then only upon such
terms and conditions as the Lender and Bank may reasonably prescribe, except
that no consent from the Company or the Beneficiary is required where the Letter
of Credit are extended by amendment in accordance with the provisions of this
Agreement. In the event of (a) the extension of the expiration date of the
Letter of Credit, (b) the extension of the time for the drawing, negotiation,
acceptance, presentation of or the maturity of any drafts, acceptances or other
documents under or purported to be under the Letter of Credit, (c) an increase
in the amount of the Letter of Credit, (d) any extension of the Letter of Credit
in accordance with the provisions hereof, and/or (e) any other modification of
the terms of the Letter of Credit of any nature whatsoever, this Reimbursement
Agreement shall be binding upon the Company with regard to the Letter of Credit
so extended, increased or otherwise modified.
SECTION 10.3 Indemnification. The Company hereby indemnifies and agrees
---------------
to hold harmless the Lender, the Bank (and its directors, officers, employees
and agents) from and against any and all claims, damages, losses, and
liabilities, and reasonable costs or expenses (including reasonable attorneys'
fees) whatsoever which the Lender or the Bank may incur (or which may be claimed
against the Lender or the Bank by any Person whatsoever) by reason of or in
connection with (a) the issuance or a transfer of, or payment or failure to pay
(other than the Bank's default in the payment under the Letter of Credit in
accordance with its terms) under, the Letter of Credit, (b) any breach by the
Company of any representation, warranty, covenant, term or condition in, or the
occurrence of any default under, this Reimbursement Agreement or the other
Operative Documents, including all reasonable fees or expenses resulting from
the settlement or defense of any claims or liabilities arising as a result of
any such breach or default, (c) involvement of the Lender or the Bank in any
legal suit, investigation, proceeding, inquiry or action as a consequence,
direct or indirect, of the Bank's issuance of the Letter of Credit, or the
Lender or Bank entering into this
-17-
Reimbursement Agreement or any other event or transaction contemplated by any of
the foregoing, and (d) any invalidity or alleged invalidity of the Bonds;
provided the Company shall not be required to indemnify the Lender or the Bank
for any claims, damages, losses, liabilities, costs or expenses to the extent,
but only to the extent, caused by (i) the willful misconduct or gross negligence
of the Lender or the Bank or (ii) the Bank's willful failure to pay under the
Letter of Credit after the presentation to it by the Trustee of a sight draft
and certificate strictly complying with the terms and conditions of the Letter
of Credit. Nothing in this section is intended to limit the Company's
obligations contained in Section 3.1. The obligations of the Company under this
-----------
section shall survive the termination of this Reimbursement Agreement.
SECTION 10.4 Obligations of Company.
----------------------
(a) As among the Company, the Lender and the Bank, the Company
assumes all risks of the acts or omissions of the Trustee with respect to the
Trustee's use of the Letter of Credit. Neither the Lender, the Bank nor any of
its officers or directors shall be liable or responsible for (i) the use which
may be made of the Letter of Credit or for any acts or omissions of the Trustee
in connection therewith; (ii) the form, validity, sufficiency, accuracy or
genuineness of any documents (including without limitation any documents
presented under the Letter of Credit), or of any statement therein or
endorsement thereon, even if any such documents, statements or endorsements
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent, forged, inaccurate or untrue; (iii) the payment by the Bank against
presentation of documents which do not comply with the terms of the Letter of
Credit (provided that the Bank has exercised diligence and applied prudent
banking standards in its determination to accept noncomplying documents),
including failure of any documents to bear any reference or adequate reference
to the Letter of Credit; or any other failure by the Trustee to comply fully
with conditions required in order to effect a drawing under the Letter of
Credit; (iv) the validity or sufficiency of any instrument transferring or
assigning or purporting to transfer or assign the Letter of Credit or the rights
or benefit thereunder or proceeds thereof, in whole or in part, which may prove
to be invalid or ineffective for any reason; (v) errors, omissions,
interruptions or delays in transmission or delivery of any messages by mail,
cable, telecopy, telegraph, telex, telephone or otherwise; (vi) any loss or
delay in the transmission or delivery of any document or draft required in order
to make a drawing under the Letter of Credit; or (vii) any other circumstances
whatsoever in making or failing to make payment under the Letter of Credit;
except only that the Company shall have a claim against the Bank, and the Bank
shall be liable to the Company, to the extent, but only to the extent, of any
direct, as opposed to consequential, damages suffered by the Company which the
Company proves were caused by (x) the Bank's willful misconduct or gross
negligence or (y) the Bank's willful failure to pay under the Letter of Credit
after the presentation to it by the Trustee of a draft and certificate strictly
complying with the terms and conditions of the Letter of Credit. In furtherance
and not in limitation of the foregoing, the Bank may accept documents that
appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
(b) Except for the Bank's obligations under the Letter of Credit,
neither the Lender nor the Bank shall have any liability to the Company or any
other Person as a result of any redemption of Bonds resulting from a reduction
of the credit rating of the Bank or any deterioration in the Bank's financial
condition. No such redemption of Bonds shall reduce or in
-18-
any way diminish the obligations of the Company to the Lender or the Bank under
this Agreement.
SECTION 10.5 Indemnity Against Claims.
------------------------
(a) The Company agrees to and does hereby indemnify and hold harmless
the Lender and the Bank and any officer, director, official, employee, and
attorney of the Lender and the Bank (collectively called the "Indemnified
Parties") against any and all losses, claims, damages or liabilities (including
all costs, expenses and reasonable counsel fees incurred in investigating or
defending such claim) suffered by any of the Indemnified Parties and caused by,
relating to, arising out of, resulting from, or in any way connected with (i)
the issuance of the Bonds, or the condition, use, possession, conduct,
management, planning, design, acquisition, construction, installation, financing
or sale of the Project or any part thereof including the payment of rebate to
the federal government; or (ii) any untrue statement of a material fact
contained in any Operative Document that is material in nature or any other
information that is material in nature provided by the Company with respect to
the transactions contemplated hereby; or (iii) any omission of a material fact
necessary to be stated therein in order to make such statement not misleading or
incomplete. In case any action shall be brought against one or more of the
Indemnified Parties based upon any of the above and in respect to which
indemnity may be sought against the Company, such Indemnified Party shall
promptly notify the Company in writing, and the Company shall assume the defense
thereof, including the employment of counsel satisfactory to the Indemnified
Party, the payment of all costs and expenses and the right to negotiate and
consent to settlement. Any one or more of the Indemnified Parties shall have the
right to employ separate counsel at the Company's expense in any such action and
to participate in the defense thereof. The Company shall not be liable for any
settlement of any such action effected without Company's consent, but if settled
with the consent of the Company, or at such time as an Event of Default is
outstanding, or if there is a final judgment for the claimant on any such
action, the Company agrees to indemnify and hold harmless the Indemnified
Parties from and against any loss or liability by reason of such settlement or
judgment. Notwithstanding anything in this Agreement to the contrary which may
limit recourse to the Company or may otherwise purport to limit the Company's
liability, the provisions of this Section shall control the Company's
obligations with respect to this indemnity and shall survive repayment of the
Bonds.
(b) The Company also will pay and discharge and indemnify and hold
harmless the Lender and the Bank from: (1) any lien or charge upon payments by
the Company to the Lender or the Bank under this Agreement; and (2) any taxes
(including, without limitation, any ad valorem taxes and sales taxes,
assessments, impositions and other charges in respect of any portion of the
Project), other than income tax obligations of the Lender and the Bank. If any
such lien or charge upon payments, or any such taxes, assessments, impositions
or other charges are sought to be imposed, the Lender will give prompt notice to
the Company, and the Company will have the sole right and duty to assume, and
will assume, the defense thereof, with full power to litigate, compromise or
settle the same in its sole discretion (if no Event of Default is outstanding;
otherwise the Lender shall also have the option to effect a settlement subject
to the indemnification obligations of the Company hereunder). The Company's
obligations, liabilities and duties hereunder shall not be diminished or altered
by: (i) reason of the assumption of any
-19-
defense required hereby; or (ii) the outcome of any proceeding, investigation or
litigation with respect to the validity or enforceability of the matters
described in this Section 10.5.
------------
SECTION 10.6 Consent to Jurisdiction; Venue. The Company, the Lender and
------------------------------
the Bank hereby irrevocably (a) agree that any suit, action or other legal
proceeding arising out of or relating to this Reimbursement Agreement or the
Letter of Credit may be brought in any state court located in San Francisco,
California or New York, New York or in any federal court located in the Northern
District of California or the Southern District of New York and consent to the
jurisdiction of such court in any such suit, action or proceeding (subject in
all respects to the application of the rules of diversity of citizenship and
other jurisdictional rules appertaining in such Federal District Court) and (b)
waive any objection which any of them may have to the laying of venue of any
such suit, action or proceeding in any such court and any claim that any such
suit, action or proceeding has been brought in an inconvenient forum. The
Company hereby irrevocably consents to the service of any and all process in any
suit, action or proceeding by mailing of copies of such process to the Company
at its address provided in Section 11.5. The Company agrees that a final
------------
non-appealable judgment by a court with proper jurisdiction in any such action
or proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. All mailings under
this Section shall be by certified mail, return receipt requested. Nothing in
this Section shall affect the right of the Lender, the Bank or the Company to
serve legal process in any other manner permitted by law or affect the right of
the Lender, the Bank or the Company to bring any suit, action or proceeding
against each other or their property in the courts of any other jurisdiction.
SECTION 10.7 Payment Due On A Day Other Than A Banking Day. If any
---------------------------------------------
payment due or action to be taken under this Agreement or any other Operative
Documents falls due or is required to be taken on a day which is not a Banking
Day, such payment or action shall be due or taken on the next succeeding Banking
Day and such extended time shall be included in the computation of interest.
SECTION 10.8 Waiver of Jury Trial and Right to Punitive Damages. Each
--------------------------------------------------
party to this Reimbursement Agreement agrees that any suit, action or
proceeding, whether claim or counterclaim, brought or instituted by any party
hereto or any successor or assign of any party, on or with respect to this
Agreement or any of the other Operative Documents or the dealings of the parties
with respect hereto, or thereto, shall be tried only by a court and not by a
jury. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR PROCEEDING. Further, each
party waives any right it may have to claim or recover, in any such suit, action
or proceeding, any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. THE COMPANY ACKNOWLEDGES
AND AGREES THAT THIS SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT
AND THAT THE LENDER AND THE BANK WOULD NOT EXTEND CREDIT TO THE COMPANY IF THE
WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS REIMBURSEMENT
AGREEMENT.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Amendments. This Reimbursement Agreement may be amended only
----------
by written agreement signed by the parties hereto. No course of dealing between
the Company,
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the Lender and the Bank, nor any delay in exercising any rights hereunder shall
operate as a waiver of any rights of the Lender or the Bank hereunder.
SECTION 11.2 Survival of Representations and Warranties. All
------------------------------------------
representations and warranties contained herein or made in writing by the
Company in connection herewith shall survive the execution and delivery of this
Reimbursement Agreement, regardless of any investigation made by the Bank or on
its behalf.
SECTION 11.3 Expenses. The Company hereby agrees to pay promptly all
--------
costs and expenses in connection with the preparation, issuance, delivery,
filing and recording of, and all reasonable costs and expenses in connection
with the administration of, the Letter of Credit, this Reimbursement Agreement,
the other Operative Documents, the Bonds and any other documents which may be
delivered in connection with this Reimbursement Agreement, including, without
limitation, the reasonable fees and expenses of counsel for the Lender or the
Bank, and all reasonable costs and expenses (including reasonable counsel fees
and expenses) in connection with (i) the transfer, drawing upon, change in
terms, maintenance, renewal or cancellation of the Letter of Credit, (ii) any
amendment of this Reimbursement Agreement or waiver of the terms hereof
requested or approved by the Company, or (iii) the enforcement of, and analysis
(after the occurrence of a Default), protection and defense of the Lender's or
the Bank's rights under this Reimbursement Agreement. In addition, the Company
hereby agrees to pay any and all stamp and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of the Letter of Credit, this Reimbursement Agreement, any other
Operative Documents or the Bonds, or any other documents which may be delivered
in connection with this Reimbursement Agreement, and agrees to save the Lender
and the Bank harmless from and against any and all liabilities with respect to
or resulting from any delay in paying or omission to pay such taxes and fees.
SECTION 11.4 Set-off. In addition to any rights now or hereafter granted
-------
under applicable law and not by way of limitation of any such rights, during the
continuance of any Event of Default hereunder the Lender or the Bank is hereby
authorized at any time and from time to time, without notice to the Company or
to any other Person, any such notice being hereby expressly waived, to set-off
and to appropriate and apply any and all deposits (general or special) and any
other indebtedness at any time held or owing by the Lender or the Bank to or for
the credit or the account of the company against and on account of the Company's
obligations to the Lender or the Bank, irrespective of whether or not the Lender
or the Bank shall have made any demand hereunder and although said obligations
shall be contingent or unmatured.
SECTION 11.5 Notices. All notices and other communications provided for
-------
hereunder shall be in writing and sent by certified or registered mail, return
receipt required, or by telegraph, telex, telecopier or private delivery service
addressed as follows:
If to the Bank such notice shall refer to this Agreement and the Letter of
Credit and shall be sent to:
Xxxxx Fargo Bank, National Association:
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Letter of Credit Operations Office
Fax: 000 000-0000.
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If to the Lender:
Xxxxx Fargo Credit, Inc
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxx
Fax: 000 000-0000.
If to the Company:
Technology Flavors & Fragrances, Inc.
00 Xxxxxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
Fax: 000 000-0000
Either party hereto may change the address to which notices to it are to be sent
by written notice given to the other persons listed in this Section. All notices
shall, when mailed as aforesaid, be effective on the date indicated on the
return receipt, and all notice given by other means shall be effective when
received.
SECTION 11.6 Binding Effect; Assignment; Participations. This
------------------------------------------
Reimbursement Agreement is a continuing obligation and shall (i) be binding upon
the Company and its respective successors and assigns and, (ii) inure to the
benefit of and be enforceable by the Lender, the Bank and their successors and
assigns; provided, however, that the Company may not assign all or any part of
this Reimbursement Agreement without the prior written consent of the Lender.
Upon prior notice to the Company, the Lender and the Bank may assign, negotiate,
pledge or otherwise hypothecate all or any portion of this Reimbursement
Agreement, or grant participations herein in addition to the participations
referred to in Section 10.8 hereof, in the Letter of Credit or in any of its
------------
rights or security hereunder, including, without limitation, the instruments,
securing the Company's obligations hereunder. In connection with any assignment
or participation, the Lender or the Bank may disclose to the proposed assignee
or participant any information that the Company is require to deliver to the
Lender or the Bank pursuant to this Reimbursement Agreement. In the event that
the Company elects to obtain and deliver to the Trustee a Substitute Letter of
Credit, then, in such event, upon the Company's request, the Lender shall assign
to the issuer of the Substitute Letter of Credit, or its designee, without
recourse and without representation or warranty of any kind, pursuant to an
assignment agreement in form and substance reasonably satisfactory to the
Lender, all of the Lender's right, title and interest in and to this
Reimbursement Agreement, so long as, on or before the effective date of such
assignment (i) all Letter of Credit Obligations shall have been paid and
satisfied in full, in cash and (ii) the Company shall have complied with all of
the terms and conditions contained in Section 2.12(b) of the Indenture.
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SECTION 11.7 Further Assurances. The Company shall execute and deliver to
------------------
the Lender or the Bank such further instruments, provide it with such further
data and information and take such further action as the Lender or the Bank may
reasonably request or as may be necessary to further effect the purposes of this
Reimbursement Agreement, or the other Operative Documents.
SECTION 11.8 Governing Law. This Reimbursement Agreement is being
-------------
delivered and is intended to be performed in the State of New York and shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the laws of the State of New York.
SECTION 11.9 Counterparts. This Reimbursement Agreement may be executed
------------
simultaneously in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Reimbursement
Agreement to produce or account for more than one such counterpart.
SECTION 11.10 Lender and Bank. The indemnity obligations in respect of the
---------------
Letter of Credit owing by the Lender to the Bank shall be governed by a separate
agreement to be entered into between such parties.
[SIGNATURES ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Reimbursement
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the day and year first above written.
COMPANY:
TECHNOLOGY FLAVORS & FRAGRANCES
By:______________________________
Name:
Title:
LENDER:
XXXXX FARGO CREDIT, INC.
By:______________________________
Name:
Title:
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Schedule 6.1 (e)
Xxxxxx Xxxxxx, et. al. vs. Technology Flavors & Fragrances et. al. -- Case No
-----------------------------------------------------------------
BC256799 filed in the Superior Court of the State of California for the County
of Los Angeles on August 24, 2001. The complaint seeks damages for a wrongful
death claim of an employee of the Neutrogena Corporation which complaint alleges
that chemicals used by Neutrogena as well as chemicals allegedly supplied to
Neutrogena for its production by other entities (including Technology Flavors &
Fragrances, Inc. ("TFF")) were the cause of said employee's death. TFF has
submitted this claim to Chubb Group of Insurance Companies, its insurance
carrier, on December 27, 2001 and is awaiting determination whether such claim
is covered by the Company's insurance coverage. TFF denies any liability and
disputes supplying product at the time in question. TFF believes that this
action will not result in any material award against the Company.
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ANNEX A
Form of Letter of Credit
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