EXHIBIT 10.1
EXECUTION COPY
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MINNESOTA AGRICULTURAL AND ECONOMIC
DEVELOPMENT BOARD
AND
EXCELSIOR-XXXXXXXXX MOTORCYCLE MANUFACTURING COMPANY
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LOAN AGREEMENT
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DATED AS OF NOVEMBER 1, 1997
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Relating to: Minnesota Energy and Economic Development Authority's* Minnesota
Small Business Development Loan Program.
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*The Minnesota Agricultural and Economic Development Board is the
statutory successor to the Minnesota Energy and Economic
Development Authority.
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS
Section 1.1. Definitions 3
ARTICLE II - REPRESENTATIONS AND COVENANTS
Section 2.1. Representations and Covenants of the Board 13
Section 2.2. Representations and Covenants of the Borrower 13
Section 2.3. Additional Representations and Covenants of
the Borrower 14
Section 2.4. Covenant with Bondholders 16
Section 2.5. General Guaranty Fund Right of Reimbursement 16
Section 2.6. Board Right of Reimbursement 16
ARTICLE III - AGREEMENT TO ISSUE SINGLE LOT BONDS AND TO LOAN PROCEEDS
THEREOF; BORROWER'S CONTRIBUTION TO COSTS OF PROJECT
Section 3.1. Issuance of Single Lot Bonds; Deposit of Bond Proceeds 17
Section 3.2. Agreement to Make Loan 17
Section 3.3. Need For Borrower's Contribution to Costs of Project 17
ARTICLE IV - DEVELOPMENT OF THE PROJECT; APPLICATION OF MONEYS
IN CONSTRUCTION ACCOUNT, COST OF ISSUANCE ACCOUNT
AND CAPITALIZED INTEREST ACCOUNT
Section 4.1. Prior Acquisition of Land 19
Section 4.2. Acquisition and Installation of the Project 19
Section 4.3. Application of Moneys in Construction Account 20
Section 4.4. Certificate of Completion 22
Section 4.5. Completion by Borrower 22
Section 4.6. Remedies to be Pursued Against Contractors and
Subcontractors And their Sureties 22
Section 4.7. Application of Moneys in Cost of Issuance Account 23
ARTICLE V - REPAYMENT PROVISIONS; SECURITY CLAUSES
Section 5.1. Repayment of Loan 24
Section 5.2. Other Amounts Payable 25
Section 5.3. Obligations of Borrower Hereunder Unconditional 26
Section 5.4. Security Clauses 27
Section 5.5. Investment of Funds and Accounts; Consent to Elections 27
ARTICLE VI - MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE
Section 6.1. Maintenance of Property by Borrower 28
Section 6.2. Installation of Additional Equipment 28
Section 6.3. Taxes, Assessments and Utility Charges 28
Section 6.4. Insurance Required 29
Section 6.5. Additional Provisions Respecting Insurance 30
Section 6.6. Application of Net Proceeds of Insurance 30
Section 6.7. Right of Board to Pay Taxes, Insurance Premiums and
Other Charges 30
ARTICLE VII - DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1. Damage or Destruction 31
Section 7.2. Condemnation 33
Section 7.3. Condemnation of Borrower-Owned Property Other Than
Security Property 35
ARTICLE VIII - SPECIAL COVENANTS
Section 8.1. Qualification in the State 36
Section 8.2. Hold Harmless Provisions 36
Section 8.3. Maintenance of Existence; Conditions Under Which
Exceptions Permitted 36
Section 8.4. Agreement to Provide Information 37
Section 8.5. Books of Record and Account; Financial Statements 37
Section 8.6. Release of Equipment 38
Section 8.7. Certificate of No Default 39
Section 8.8. Notice of Default 40
Section 8.9. Assignment and Leasing 40
Section 8.10. Right to Inspect the Project and Security Property 41
Section 8.11. Compliance With Orders, Ordinances, etc. 41
Section 8.12. Liens and Encumbrances 41
Section 8.13. Identification of Equipment 42
Section 8.14. Relocation of the Equipment 42
Section 8.15. Security Instruments Covenants 42
Section 8.16. Covenant Against Discrimination 42
Section 8.17. Employment Records 42
Section 8.18. Certain Financial Covenants 43
Section 8.19 Covenant Against Loans, Transfers, etc. 43
Section 8.20 Covenant Against Sale, Gift, Purchase or
Redemption of Stock 44
Section 8.21 Vacant Positions 44
Section 8.22 Prevailing Wages 44
Section 8.23 Covenant Against Loans, Dividends, etc. 44
Section 8.24 Covenant Against Unreasonable Compensation 44
Section 8.25 Job Creation 44
ARTICLE IX - PLEDGE OF CERTAIN INTERESTS
Section 9.1. Pledge of Certain Interests to Bondholders 45
ARTICLE X - EVENTS OF DEFAULT AND REMEDIES
Section 10.1. Events of Default Defined 46
Section 10.2. Remedies on Default 47
Section 10.3. Remedies Cumulative 48
Section 10.4. Agreement to Pay Attorneys' Fees and Expenses 49
Section 10.5. No Additional Waiver Implied by One Waiver 49
ARTICLE XI - EARLY TERMINATION OF AGREEMENT; PREPAYMENT OF LOAN
Section 11.1. Early Termination of Agreement 50
Section 11.2. Conditions to Early Termination of Agreement 50
Section 11.3. Discharge of Lien 51
Section 11.4. Prepayment of Loan in Part 51
Section 11.5. Refunding Consent 51
ARTICLE XII - MISCELLANEOUS
Section 12.1. Notices 53
Section 12.2. Binding Effect 53
Section 12.3. Severability 53
Section 12.4. Amendments, Changes and Modifications 54
Section 12.5. Data Privacy Disclosure 54
Section 12.6. Execution of Counterparts 54
Section 12.7. Applicable Law 54
Section 12.8. Recording and Filing 55
Section 12.9. Survival of Obligations 55
Section 12.10. Table of Contents and Section Headings Not Controlling 55
Section 12.11. Limited Liability 55
Schedule I - Promissory Note I-1
Exhibit A - Legal Description of Land A-1
Exhibit B - Description of Equipment B-1
Exhibit C - Draw Request C-1
Exhibit D - Opinion of Counsel D-1
Exhibit E - Consent to Assignment E-1
THIS LOAN AGREEMENT, dated as of November 1, 1997 (the "Agreement"), is by
and between the Minnesota Agricultural and Economic Development Board (as
statutory successor to the Minnesota Energy and Economic Development Authority),
constituted as an authority to act on behalf of the State of Minnesota and
created and existing by virtue of the laws of the State (together with any legal
successor thereto, herein referred to as the "Board"), and Excelsior-Xxxxxxxxx
Motorcycle Manufacturing Company, a Minnesota corporation, which is engaged in
the business of owning and operating a motorcycle manufacturing facility in the
State of Minnesota (as defined herein in more detail, the "Borrower").
W I T N E S S E T H :
WHEREAS, the Board (as the legal successor of the Minnesota Small Business
Finance Agency) was created by the Laws of 1980, Chapter 547, as amended and
supplemented and MINNESOTA STATUTES, 1986 Chapter 116M and presently set forth
in MINNESOTA STATUTES, Chapter 41A (the "Act"), to act on behalf of the State of
Minnesota (the "State") within the scope of powers granted to it in the Act to
implement loan programs and to provide financial assistance under the economic
development fund created under MINNESOTA STATUTES 1986, Section 116M.06 of the
Act (the "Economic Development Fund") by which the Board, alone or in
cooperation with cities, towns, counties and private or public lenders, may
provide adequate funds or incentives to financing such as guarantees or
insurance with respect thereto on sufficiently favorable terms to assist and
encourage the establishment, maintenance and growth of businesses and eligible
small businesses and employment opportunities in the State and to reduce to a
manageable level the cost of the control of pollution and disposal of waste
resulting from the operation of businesses and eligible small businesses; and
WHEREAS, to provide financial assistance to businesses and eligible small
businesses to encourage their establishment, maintenance and growth and to
reduce the cost of the control of pollution and disposal of waste resulting from
the operation of businesses and eligible small businesses, the Board has
established its Minnesota Small Business Development Loan Program (the
"Program"); and
WHEREAS, in accordance with the Program, the Board on September 26, 1984
adopted its Minnesota Small Business Development Loan Program Revenue Bonds
General Bond Resolution, as supplemented and amended (the "General Bond
Resolution"), pursuant to which General Bond Resolution (and lot resolutions to
be adopted from time to time by the Board as supplemented resolutions thereto),
the Board intends to issue revenue bonds (the "Bonds"), and to loan the proceeds
thereof to "businesses" or "eligible small businesses" within the meaning of the
Act to finance capital facilities, as described within MINNESOTA STATUTES 1986,
Section 116M.03, Subd. 11 or Subd. 19 of the Act and "pollution control
facilities" as described within MINNESOTA STATUTES 1986, Section 116M.03, Subd.
14 of the Act, for use by them in connection with their business operations
(such "businesses" and "eligible small businesses" collectively referred to
herein as "Businesses"); and
WHEREAS, such Bonds, as provided in the General Bond Resolution, shall be
special
obligations of the Board, the principal or redemption price, if any, of
and interest on which are payable solely from and secured solely by the
revenues, funds and other property or assets of the Board described in the
General Bond Resolution (and the lot resolutions) and pledged therefor; and
WHEREAS, it is the further purpose of the Board with respect to its Program
to provide additional financial assistance to the Businesses participating
therein by creating an account within the Economic Development Fund to be known
as the "General Guaranty Fund", transferring certain moneys from the Economic
Development Fund and from other sources to the General Guaranty Fund and
pledging and allocating the moneys on deposit in the General Guaranty Fund to
guarantee the payment of debt service payments and certain mandatory prepayments
payable on or with respect to the Bonds; and
WHEREAS, pursuant to a resolution adopted by the Board on September 26,
1984 (the "General Guaranty Fund Resolution"), the Board created and established
the General Guaranty Fund as an account within and of the Economic Development
Fund and pursuant to a General Guaranty Fund Pledge and Escrow Agreement, dated
as of September 26, 1984 (the "General Guaranty Fund Pledge and Escrow
Agreement") by and between the Board and First National Bank of Minneapolis, as
escrow holder (together with U.S. Bank National Association and its successors,
the "Escrow Holder") the Board provided for the holding, investment,
application, disposition of and use of moneys in the General Guaranty Fund and
various other matters related thereto with respect to the governance of the
General Guaranty Fund; and
WHEREAS, the Borrower (referred to herein, together with its permitted
successors and assigns, as the "Borrower") has applied to the Board for
assistance under the Program in connection with the financing of a project to
consist of the acquisition of equipment for a new motorcycle manufacturing
facility (the "Project") to be used primarily for the production of motorcycles
in the City of Belle Xxxxxx, Xxxxx County, Minnesota; and
WHEREAS, by resolution adopted by the Board on October 23, 1996 the Board
has found that the Borrower is an "eligible small business" under the Act and
that the Project qualifies for financial assistance under the Act and has
determined to provide such financial assistance by the inclusion of the Project
in the Program; and
WHEREAS, to implement this determination the Board proposes (i) to issue a
lot of bonds within a series issued under the General Bond Resolution and its
Single Lot Resolution and (ii) to loan the proceeds of the sale of the said
Bonds to the Borrower to finance a portion of the cost of the Project, upon the
terms and conditions hereinafter set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto hereby formally covenant,
agree and bind themselves as follows, and, as to the Borrower,
Excelsior-Xxxxxxxxx Motorcycle Manufacturing Company, agrees and binds itself,
to-wit:
ARTICLE I
DEFINITIONS
Section 1.1. DEFINITIONS. Capitalized terms used herein but not defined
herein shall have the meaning given thereto in the General Bond Resolution
unless the context or use indicates another or different meaning or intent. The
following words and terms as used in this Agreement shall have the following
meanings unless the context or use indicates another or different meaning or
intent:
"ACCOUNTANT" means a firm of independent public accountants of recognized
standing, selected by the Borrower.
"ACT" means the act of the legislature of the State enacted as Chapter 547
of the Laws of Minnesota for 1980, as amended and supplemented from time to
time, known as the "Minnesota Energy and Economic Development Authority Act" and
set forth MINNESOTA STATUTES 1986, Chapter 116M (notwithstanding the repeal
thereof and MINNESOTA STATUTES, Chapter 41A).
"AGREEMENT" means this Loan Agreement, dated as of November 1, 1997, by and
between the Board and the Borrower, as the same may be amended from time to
time.
"APPRAISED VALUE" means the value established by an independent appraiser
acceptable to the Board.
"AUTHORIZED REPRESENTATIVE" means, in the case of the Board, the Chair, the
Administrator or the Executive Director of the Board; in the case of the
Borrower, an officer; and, in the case of both, such additional persons as, at
the time, are designated to act in behalf of the Board or Borrower, as the case
may be, by written certificate furnished to the Trustee and the Board or
Borrower, as the case may be, containing the specimen signature of each such
person and signed on behalf of (i) the Board by the Chair, the Administrator or
the Executive Director of the Board, and (ii) an officer of the Borrower.
"BOARD" means the Minnesota Agricultural and Economic Development Board,
constituted as an authority to act on behalf of the State within the scope of
the powers granted to it in the Act and created by the Act, or any successor
thereto, and constituting the legal successor of the Minnesota Energy and
Economic Development Authority and the Minnesota Small Business Finance Agency.
"BOARD RESOLUTION" means the General Bond Resolution and the Single Lot
Resolution.
"BONDS" means any of the Board's Minnesota Small Business Development Loan
Program Bonds issued from time to time under the General Bond Resolution and
then outstanding.
"BOND COUNSEL" means Xxxxxxxxx & Xxxxxx P.L.L.P., Minneapolis, Minnesota,
or any attorney or firm of attorneys of recognized standing in the field of
municipal law, duly admitted to the practice of law before the highest court of
any state of the United States of America, appointed from time to time by the
Attorney General of the State with respect to the Program.
"BOND PAYMENT DATE" means each date on which interest or both a Principal
Installment and interest shall be payable on the Single Lot Bonds in accordance
with its terms.
"BOND PROCEEDS" means the amount, including accrued interest, if any,
received by the Board as the purchase price of the Single Lot Bonds, and
deposited by the Trustee in accordance with the provisions of the Board
Resolution into certain funds and accounts created thereunder.
"BOND RATE" means, as of any date of calculation and with respect to any
period, the highest rate of interest payable on any of the Single Lot Bonds
determined as of such date with respect to such period (including any
fluctuations of rate, if any).
"BOND YEAR" means, for the Single Lot Bonds, the 12-month period beginning
on August 1 of any year and ending on July 31 of the succeeding year; provided,
however, that the initial Bond Year shall begin on the date in which such Bonds
are delivered and end on the next succeeding July 31.
"BONDHOLDER" or "HOLDER" or "HOLDERS OF BONDS" or similar term, when used
with respect to a Bond or Bonds, means any person who shall be the registered
owner of any outstanding Bond registered as to both principal and interest in
accordance with the provisions of the General Bond Resolution.
"BORROWER" means (i) Excelsior-Xxxxxxxxx Motorcycle Manufacturing Company,
a Minnesota corporation which is engaged in the business of owning and operating
a motorcycle manufacturing company in the State of Minnesota, and its successors
and assigns and (ii) any surviving, resulting or transferee as provided in
Section 8.3 hereof.
"BUILDINGS" means all those buildings, improvements, structures or
renovations to existing buildings, improvements or structures and other related
facilities (i) affixed or attached, or to be affixed or attached, to the Land,
(ii) financed with the proceeds of the Single Lot Bonds or of any payment by any
of the Borrower pursuant to Section 3.3 or Section 4.5 hereof, and (iii) not
part of the Equipment, all as they may exist from time to time.
"BUSINESS LOAN RESERVE ACCOUNT" means the Account so designated which is
created and established by Section 4.1 of the Single Lot Resolution pursuant to
the General Bond Resolution.
"BUSINESS LOAN RESERVE ACCOUNT REQUIREMENT" means, as of any date of
calculation, with respect to the Single Lot Bonds that sum which is equal to the
maximum aggregate
payments of principal and interest for any Bond Year over the period from the
date of calculation to (and including) the final maturity date of such Single
Lot Bonds.
"CAPITALIZED INTEREST ACCOUNT" means the Account so designated which is
created and established by Section 4.1 of the Single Lot Resolution, pursuant to
the General Bond Resolution.
"CAPITALIZED LEASE OBLIGATIONS" means all lease obligations which have been
or should be, in accordance with generally accepted accounting principles,
capitalized on the books of the Borrower.
"CLOSING DATE" means the date of sale and delivery of the Single Lot Bonds.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations, proposed, temporary or final, of the Department of
the Treasury promulgated under the Code from time to time.
"COMPLETION DATE" means the date of completion of the acquisition and
installation of the Project, as certified to pursuant to Section 4.4 of this
Agreement.
"CONDEMNATION" means the taking of title to, or the use of, Property under
the exercise of the power of eminent domain by any governmental entity or other
Person acting under governmental authority.
"CONTINUING DISCLOSURE AGREEMENT" means the Continuing Disclosure Agreement
between the Board and the Trustee relating to the Single Lot Bonds.
"Contractor" means any firm with whom the Borrower enters into an Equipment
supply contract with respect to the Project.
"CONSTRUCTION ACCOUNT" means the Account so designated which is created and
established by Section 4.1 of the Single Lot Resolution, pursuant to the General
Bond Resolution.
"CONSTRUCTION PERIOD" means, with respect to the Project, the period (a)
beginning on the earlier of (i) the date of commencement of acquisition or
construction of such Project, or (ii) the Closing Date with respect to the
Single Lot Bonds, and (b) ending on the Completion Date with respect to such
Project.
"COST OF ISSUANCE" means all items of expense payable or reimbursable
directly or indirectly by the Board and related to the authorization, sale and
issuance of Bonds, which items of expense shall include but not be limited to
printing costs, costs of reproducing documents, filing and recording fees,
initial fees and charges of any fiduciary appointed under the General Bond
Resolution, initial letter of credit fees, surety obligation fees or other
similar fees, municipal bond insurance premiums or the cost of providing any
other credit
enhancement, legal fees and charges, professional consultants' fees, costs of
credit ratings, fees and charges for execution, transportation and
safekeeping of Bonds, underwriter discount or placement fees, costs and
expenses of refunding and other costs, charges and fees in connection with
the original issuance of Bonds.
"COST OF THE PROJECT" means all those items of cost and expenses as set
forth below:
(i) Costs of Equipment;
(ii) Reimbursement to the Borrower for any of the above enumerated
costs and expenses paid by it, whether paid from funds of the Borrower or
from the proceeds of interim construction borrowings.
"CURRENT RATIO" means, as of any date, the ratio of current assets to
current liabilities, all determined in accordance with generally accepted
accounting principles.
"DEBT SERVICE PAYMENT" means, with respect to any Bond Payment Date, (i)
the interest payable on the Single Lot Bonds on such Bond Payment Date, plus
(ii) the principal, if any, payable on the Single Lot Bonds on such Bond Payment
Date, plus (iii) the premium, if any, payable on the Single Lot Bonds on such
Bond Payment Date.
"DISBURSING AGENT" means Procurement Consulting Services, Inc.
"DISBURSING AGREEMENT" means the Disbursing Agreement dated as of November
1, 1997 between the Borrower, the Trustee and the Disbursing Agent.
"EQUIPMENT" means all machinery, equipment and other personal property
described in Exhibits B-1 through B-3 attached to this Agreement, which (a) is
used in connection with the Project on the Land, (b) is (or will be) acquired
with the proceeds of the Single Lot Bonds or of any payment by the Borrower
pursuant to Section 3.3 or Section 4.3 hereof, together with such replacements
and substitutions therefor, pursuant to Section 8.6 hereof, as may exist from
time to time in accordance with the provisions of this Agreement but excluding
additions pursuant to Section 6.2 hereof, and (c) is functionally complete and
operationally independent; provided, however, Equipment shall not include
fixtures affixed or attached to the Buildings unless approved in writing by the
Executive Director, except for items on Exhibit B-1.
"ESCROW HOLDER" means U.S. Bank National Association (formerly First Bank
National Association and First National Bank of Minneapolis) appointed as the
escrow holder under the General Guaranty Fund Pledge and Escrow Agreement, and
its successor and successors, and any other corporation or association which may
at any time be substituted in its place as Escrow Agent pursuant to the General
Guaranty Fund Pledge and Escrow Agreement.
"FUNDED INDEBTEDNESS" means, for any Person, all Indebtedness which matures
by its terms more than one year from the Closing Date or matures within one year
from such date but is unconditionally renewable or extendible, at the option of
the debtor, by its terms or by
the terms of any instrument or agreement relating thereto, to a date more
than one year from such date or arises under a revolving credit or similar
agreement which obligates the lender or lenders to extend credit over a
period of more than one year from such date or, if created after the Closing
Date, matures by its terms more than one year from the date of creation.
"GENERAL BOND RESOLUTION" means the Minnesota Small Business Development
Loan Program Revenue Bonds, General Bond Resolution adopted by the Board on
September 26, 1984, as the same may be amended or supplemented from time to time
by any supplemental resolution thereunder.
"GENERAL GUARANTY FUND" means that account of the Economic Development Fund
that has been created by the Board in accordance with the Act pursuant to the
General Guaranty Fund Resolution of the Board and is governed by the provisions
of the General Guaranty Fund Pledge and Escrow Agreement.
"GENERAL GUARANTY FUND PAYMENTS" means any payments made by the Escrow
Holder to the Trustee for deposit in accordance with the provisions of the
General Bond Resolution to discharge the guaranty obligation of the General
Guaranty Fund with respect to the debt service payments on or the prepayment of
the Bonds that correspond to unpaid payments of principal and interest then due
on the loans to businesses or exempt small businesses financed by such Bonds,
whether due upon scheduled payment dates or upon acceleration prior to the
occurrence of such scheduled payment dates.
"GENERAL GUARANTY FUND PLEDGE AND ESCROW AGREEMENT" means that escrow
agreement dated as of September 26, 1984, by and between the Board and the
Escrow Holder, pursuant to which the Board has provided for the holding,
investment and application, disposition and use of the moneys transferred by the
Board into the General Guaranty Fund from the Economic Development Fund and from
other sources, and pursuant to which the Board has provided for such other
matters as may be provided for with respect to the General Guaranty Fund and the
moneys transferred thereto, all in accordance with the Act.
"GENERAL GUARANTY FUND REIMBURSEMENT AMOUNT" means, as of any date of
calculation, with respect to any Lot of Bonds, an amount equal to the aggregate
of all of the General Guaranty Fund Payments paid from the General Guaranty Fund
to discharge the guarantee obligation of the General Guaranty Fund with respect
to said Bonds less those sums that have been applied, or are then available
under the provisions of the General Bond Resolution to be applied, to reimburse
the General Guaranty Fund for the aggregate of all such General Guaranty Fund
Payments, plus, with respect to such unpaid General Guaranty Fund Payments, such
additional amounts equal to the sum of interest accruing on the amount of such
unpaid General Guaranty Fund Payments at the interest rate borne by said Bonds
for any period during which such General Guaranty Fund Payments are unpaid.
"GENERAL GUARANTY FUND RESOLUTION" means that certain Resolution No. 84-205
of the Board adopted by the Board on September 26, 1984, pursuant to which the
Board created the General Guaranty Fund as an account of the Economic
Development Fund.
"HOLDING ACCOUNT" means the Account so designated which is created and
established by Section 4.1 of the Single Lot Resolution, pursuant to the General
Bond Resolution.
"INDEBTEDNESS" means, for any Person, (i) all indebtedness or other
obligations of such Person for borrowed money or for the deferred purchase price
of property or services (but not including current accounts payable) (ii) all
indebtedness or other obligations of any other person for borrowed money or for
the deferred purchase price of property or services the payment or collection of
which such Person has guaranteed (except by reason of endorsement for collection
in the ordinary course of business) or in respect of which such Person is
liable, contingently or otherwise, including, without limitation, liable by way
of agreement to purchase, to provide funds for payment, to supply funds to or
otherwise to invest in such other persons, or otherwise to assure a creditor
against loss, (iii) all indebtedness or other obligations of any other person
for borrowed money or for the deferred purchase price of property or services
secured by (or for which the holder of such indebtedness has an existing right,
contingent or otherwise, to be secured by) any mortgage, deed of trust, pledge,
lien, security interest or other charge or encumbrance upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, whether or not such Person has assumed or become liable for the payment
of such indebtedness or obligations and (iv) Capitalized Lease Obligations of
such Person.
"INDEMNIFIED PARTIES" means the Board and its members, officers, employees
and agents, the Department of Trade and Economic Development and its
Commissioner, employees and agents, the Trustee and the Disbursing Agent and
their respective employers and agents.
"INDEPENDENT COUNSEL" means an attorney or attorneys or firm or firms of
attorneys duly admitted to practice law before the highest court of any state of
the United States of America or in the District of Columbia and not an employee
of the Board, the Borrower or the Trustee.
"LAND" means the land described on Exhibit A to the Security Agreement.
"LIEN" means any interest in Property securing an obligation owed to a
Person, whether such interest is based on the common law, statute or contract,
and including but not limited to the security interest arising from a mortgage,
encumbrance, pledge, conditional sale or trust receipt or a Uniform Commercial
Code security interest, lease, consignment or bailment for security purposes.
The term "Lien" includes reservations, exceptions, encroachments, easements,
rights of way, covenants, conditions, restrictions, leases and other similar
title exceptions and encumbrances, including but not limited to mechanics',
materialmen's, warehousemen's, carriers' and other similar encumbrances,
affecting real property. For the purposes of this Agreement, a Person shall be
deemed to be the owner of any Property which it has acquired or holds subject to
a conditional sale agreement or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for security
purposes.
"LOAN" means the loan made by the Board to the Borrower pursuant to Section
3.2 of this Agreement and as evidenced by the Note.
"LOAN TERM" means the period commencing with the Closing Date and
continuing until all the Single Lot Bonds and interest thereon have been paid in
full or provision for such payment has been made pursuant to Article XI of the
General Bond Resolution.
"LOT LOAN FIDUCIARY PAYMENTS" means, for any Bond Year (or any ratable
portion thereof), the reasonable fees and expenses of the Trustee (and
Depositaries and Paying Agents, as defined in the General Bond Resolution) for
the Bond Year in connection with duties performed by them with respect to the
Single Lot Resolution, this Agreement, the Security Agreement, the Project and
the Borrower and under the General Bond Resolution and the General Guaranty Fund
Pledge and Escrow Agreement with respect to the foregoing.
"NET PROCEEDS" means so much of the gross proceeds with respect to which
such term is used as remain after payment of all expenses, costs and taxes
(including attorneys' fees) incurred in obtaining such gross proceeds.
"NET WORTH" means, at any date, the Tangible Assets of a Person which would
be shown, in accordance with generally accepted accounting principles, on its
balance sheet, minus liabilities (other than capital stock and surplus or its
equivalent but including all reserves for contingencies and other potential
liabilities) which would be shown, in accordance with generally accepted
accounting principles, on such balance sheet.
"NOTE" means the promissory note of the Borrower dated as of the date of
the Single Lot Bonds, evidencing the Borrower's obligations pursuant to this
Agreement, substantially in the form of Appendix I hereto.
"OFFICIAL ACTION RESOLUTION" means that resolution adopted by the Board on
October 23, 1996, with respect to the Borrower and entitled "RESOLUTION GIVING
PRELIMINARY APPROVAL TO A PROJECT WITH EXCELSIOR-XXXXXXXXX MOTORCYCLE
MANUFACTURING COMPANY, A MINNESOTA CORPORATION AND GIVING PRELIMINARY APPROVAL,
WITH CONDITIONS, FOR THE ISSUANCE OF SMALL BUSINESS DEVELOPMENT LOAN PROGRAM
REVENUE BONDS TO FINANCE THE PROJECT AND PROVIDING FOR OTHER MATTERS RELATED
THERETO."
"OPTIONAL REDEMPTION ACCOUNT" means the Account so designated which is
created and established by Section 4.1 of the Single Lot Resolution, pursuant to
the General Bond Resolution.
"PAINT FINISHING SYSTEM" means that portion of the Equipment described in
Exhibit B-1 attached hereto.
"PERMITTED ENCUMBRANCES" means (i) this Agreement, the Board Resolution and
any security interest created thereunder and (ii) the Primary Lease.
"PERSON" means an individual, partnership, corporation, trust or
unincorporated organization or a government or any agency, instrumentality,
program, account, fund, political subdivision or corporation thereof.
"PLACEMENT AGENTS" means Xxxxxxxxx Summit Securities LLC and Xxxxx Xxxxxxx
Inc.
"PLEDGE" means the pledge by the Board of the rights and interests of the
Board in and to this Agreement, the Note, including all rights to receive
payment thereunder, such pledge by the Board being made pursuant to Section 1.04
of the General Bond Resolution and Section 6.1 of the Single Lot Resolution to
the Trustee on behalf of Bondholders for the payment of the principal or
redemption price of and interest on the Bonds in accordance with their terms.
"PRINCIPAL INSTALLMENT" means an installment of principal payable on the
Single Lot Bonds, whether as the maturity date of serial or term bond or as
sinking fund installments payable with respect to such Bonds.
"PROGRAM" means the Board's program of acquiring business loans under the
General Bond Resolution with the proceeds of Bonds, the repayment of debt
service payments and certain mandatory redemptions which are guaranteed by the
General Guaranty Fund in accordance with the provisions of the General Guaranty
Fund Pledge and Escrow Agreement, which program has been designated by the Board
as the "Minnesota Small Business Development Loan Program".
"PROGRAM EXPENSE FUND" means the Fund so designated, which is created and
established by Section 5.01 of the General Bond Resolution.
"PROJECT" means the Equipment to be used in connection with the Borrower's
manufacturing facility, and to be acquired, constructed and installed by the
Borrower with the Bond Proceeds or any payment by the Borrower pursuant to
either Sections 3.3 or 4.3 hereof, with such additions thereto and substitutions
therefor as may exist from time to time in accordance with the provisions of
this Agreement.
"PROJECT MUNICIPALITY" means the City of Belle Xxxxxx, Xxxxx County,
Minnesota within the corporate borders of which the Project is, or is to be,
located.
"PROPERTY" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"RECONSTRUCTION ACCOUNT" means the Account so designated which is created
and established by Section 4.1 of the Single Lot Resolution, pursuant to the
General Bond Resolution.
"REDEMPTION PRICE" means, when used with respect to the Single Lot Bonds,
the principal amount thereof plus the applicable premium, if any, payable upon
the prior
redemption thereof pursuant to the Single Lot Resolution.
"REIMBURSEMENT ACCOUNT" means the Account so designated which is created
and established by Section 4.1 of the Single Lot Resolution, pursuant to the
General Bond Resolution.
"RESTORATION" means the repair, replacement, restoration or rebuilding of
the Property or any part thereof following any taking, damage to ro destruction
of the same, as nearly as possible to its respective size, floor area, type and
character immediately prior to such taking, damage or destruction, within, in
the case of any restoration by the Borrower, such alterations as may be made at
the Borrower's election, together with any temporary repairs and property
protection pending completion of the work.
"REVENUE ACCOUNT" means the Account so designated which is created and
established by Section 4.1 of the Single Lot Resolution, pursuant to the General
Bond Resolution.
"SECURITY AGREEMENT" means the Security Agreement dated as of November 1,
1997 between the Borrower and the Board.
"SECURITY INSTRUMENTS" means (i) the Security Agreement and (ii) the
Disbursing Agreement.
"SECURITY PROPERTY" means all Property subject to the Security Instruments
and as described in Section 5.4 of this Agreement.
"SERIES 1997B BONDS" means the Bonds of the series designated by the Board
as the "SERIES 1997B BONDS" in the Single Lot Resolution of the Board and
consisting of the Single Lot Bonds plus the additional lots being issued
pursuant to separate lot resolutions.
"SINGLE LOT BONDS" means the Board's Minnesota Small Business Development
Loan Program Revenue Bonds, Series 1997B Taxable, Lot 1 in the aggregate
principal amount of $7,145,000 authorized to be issued by the Board Resolution.
"SINGLE LOT RESOLUTION" means the Single Lot Bonds resolution of the Board
authorizing the issuance of the Single Lot Bonds adopted by the Board on
November 18, 1997 pursuant to the General Bond Resolution.
"SPECIAL REDEMPTION ACCOUNT" means the Account so designated which is
created and established by Section 4.1 of the Single Lot Resolution, pursuant to
the General Bond Resolution.
"STATE" means the State of Minnesota.
"SUBORDINATED INDEBTEDNESS" means, with respect to any Person, all
Indebtedness which by its terms states that payment of principal and interest
thereof is subordinate to the
payment of principal and interest of the Loan. A payment of principal or
interest on Subordinated Indebtedness is subordinate to payment of principal
and interest on the Loan if by its terms such payment shall not be made or
received by or on behalf of the holder of the Subordinated Indebtedness if
and for so long as (a) the Borrower is delinquent in the payment of
principal, premium, if any, or interest on the Loan as and when any such
payment on the Loan is due, whether by reason of regularly scheduled
payments, maturity, mandatory, special or extraordinary redemption or
acceleration, (b) an event of default has occurred and is continuing under
this Agreement.
"TANGIBLE ASSETS" means total assets except: (i) that portion of deferred
assets and prepaid expenses (other than prepaid insurance, prepaid rent and
prepaid taxes) which do not mature or, in accordance with generally accepted
accounting principles, are not amortizable within one year from the date of
calculation, and (ii) trademarks, trade names, good will, and other similar
intangibles.
"TRUSTEE" means U. S. Bank National Association (formerly known as First
Bank National Association and First National Bank of Minneapolis), appointed by
the Board as Trustee under the Board Resolution, and its successor or successors
and any other corporation or association at any time substituted in its place as
trustee pursuant to the General Bond Resolution.
ARTICLE II
REPRESENTATIONS AND COVENANTS
Section 2.1. REPRESENTATIONS AND COVENANTS OF THE BOARD. The Board makes
the following representations and covenants as the basis for the undertakings on
its part herein contained:
(a) The Board is duly established and existing and is constituted as an
authority to act on behalf of the State and created and existing by virtue of
the laws of the State and has the power to enter into the transactions
contemplated by this Agreement and the Security Instruments, and to adopt the
Board Resolution, and to carry out its obligations hereunder and thereunder.
The Project is of a nature that qualifies under the Act for the financial
assistance provided by the Program. By proper official action the Board has
been duly authorized to execute and deliver or accept this Agreement and the
Security Instruments, and has duly adopted the Board Resolution.
(b) Neither the execution and delivery or acceptance of this Agreement and
the Security Instruments, or the adoption of the Board Resolution, the
consummation of the transactions contemplated hereby or thereby nor the
fulfillment of or compliance with the provisions of this Agreement, the Security
Instruments and the Board Resolution will conflict with or result in a breach of
any of the terms, conditions or provisions of the Act, or any restriction,
agreement or instrument to which the Board is a party or by which it is bound,
or will constitute a default under any of the foregoing, or will result in the
creation or imposition of any Lien upon any of the Property of the Board under
the terms of any such instrument or agreement (other than as contemplated by
this Agreement, the Security Instruments and the Board Resolution).
(c) The Board will lend to the Borrower the sum of $7,145,000 pursuant to
this Agreement to finance (i) a portion of the cost of the acquisition and
installation of the Project, (ii) a deposit into the Business Loan Reserve
Account required under the provisions of the General Bond Resolution and (iii)
certain Costs of Issuance with respect to the issuance of the Single Lot Bonds.
(d) To finance a portion of the Cost of the Project and the other costs
described in Section 2.1(c), the Board will issue its Single Lot Bonds which
will mature, bear interest, be redeemable and have the other terms and
conditions as set forth in the Board Resolution.
Section 2.2. REPRESENTATIONS AND COVENANTS OF THE BORROWER. The Borrower
makes the following representations and covenants as the basis for the
undertakings of the Borrower as herein contained:
(a) The Borrower, which is a Minnesota corporation duly created and
validly existing under the laws of the State, is not in violation of any
provision of its articles of incorporation, as amended, has the power to enter
into this Agreement, the Note and the
Security Instruments and to
borrow money pursuant hereto and who has duly executed and delivered this
Agreement and the Note. The Borrower constitutes an "eligible small business"
and a "business" as defined in the Act and is eligible for "special assistance"
as defined in the Act.
(b) Neither the execution and delivery of this Agreement, the Note and the
Security Instruments, the consummation of the transactions contemplated hereby
nor the fulfillment of or compliance with the provisions of this Agreement, the
Note and the Security Instruments will conflict with or result in a material
breach of any of the terms, conditions or provisions of any restriction or any
agreement or instrument to which the Borrower is a party or by which it is
bound, or will constitute an event of default under any of the foregoing, or
result in the creation or imposition of any Lien of any nature upon any of the
Property of the Borrower under the terms of any such instrument or agreement,
which conflict, breach, default or Lien would have a material adverse effect on
the Loan, Note, any Properties of the Borrower or its financial condition. No
event has occurred and no condition exists which, upon the passage of time or
the giving of notice, would constitute such an event of default under any such
agreement or instrument.
(c) There has been no material adverse change in the financial condition
of the Borrower since the last annual and interim financial statements and
reports furnished by the Borrower to the Board in the Borrower's application
dated September 26, 1996 and the information contained in said statements fairly
presents the financial condition of the Borrower as of the dates of such
financial statements and reports.
(d) The Borrower has all requisite power and authority and all necessary
authorizations, licenses and permits, without unusual restrictions or
limitations, to own and operate its Properties and to carry on its business as
now conducted, and are duly authorized to do business in each jurisdiction where
the character of its Properties or the nature of its activities makes such
qualification necessary or in which the failure to qualify will not have a
material adverse affect on the Properties, business, prospects, profits or
condition (financial or otherwise) of the Borrower or the ability of the
Borrower to perform their obligations under this Agreement.
(e) The Borrower has no contingent liabilities other than those disclosed
in the financial statements described in Section 2.2(c) hereof.
(f) No material event of default has occurred and is continuing in any
agreement as to any outstanding indebtedness of the Borrower for money borrowed
and no condition, event or act exists which, with notice or lapse of time, or
both, would constitute such an event of default under any such agreement.
(g) The Borrower is a publicly held corporation.
Section 2.3. ADDITIONAL REPRESENTATIONS AND COVENANTS OF THE BORROWER.
The Borrower makes the following representations and covenants as the basis for
the undertakings of the Borrower herein contained:
(a) So long as any of the Single Lot Bonds shall be outstanding, the
Borrower will not take any action, or fail to take any action, or cause, suffer
or permit others (other than the Board or Trustee) to take or fail to take
action, which would cause the Project not to qualify under the Act for the
financial assistance provided by the Program (as such Act is in effect on the
Closing Date).
(b) To the extent financed with Bond Proceeds, the Project consists, and
will at all times consist, entirely of property owned for federal income tax
purposes by the Borrower and which is of a character subject to the allowance
for depreciation by the Borrower as provided in Section 167 of the Code.
(c) The findings and determinations made by the Board in the Official
Action Resolution concerning the Borrower and the Project are true and correct.
In particular, the financing of the acquisition of the Project will not have the
effect of a transfer of jobs from one area of the State to another.
(d) The availability of the financial assistance by the Board as provided
in this Agreement, in the Board Resolution and the General Guaranty Fund Pledge
and Escrow Agreement and by the Program has been a substantial inducement to the
Borrower to undertake the Project and to locate the Project in the State.
(e) No officer or official of the Board or the State Departments of
Finance or Trade and Economic Development has any interest (financial,
employment or other) in the Borrower or, to the knowledge of the Borrower, the
transactions contemplated by this Agreement except, if any, holdings of publicly
traded stock of the Borrower.
(f) No expense for supervision by the Borrower or any director, officer or
employee of the Borrower and no expense for work done by any such director,
officer or employee in connection with the Project is or will be included in the
Cost of the Project.
(g) The Borrower has not entered into any lease or assignment with respect
to any portion of the Project and no Person other than the Borrower has any
right to the use or possession thereof.
(h) The Project as designed will comply with all presently applicable
environmental, building, zoning and subdivision laws, ordinances, rules and
regulations.
(i) The Borrower reasonably estimates that the aggregate Cost of the
Project will be at least $10,963,750 which sum includes (i) interest on the
Single Lot Bonds to be paid out of Bond Proceeds during the Construction Period
of the Project in the approximate amount of $ -0-, (ii) amounts derived from
Bonds and required to be deposited into the Business Loan Reserve Account
($1,140,325) and (iii) amounts required to pay Costs of Issuance with respect to
the issuance of the Single Lot Bonds (presently estimated as $320,425).
(j) There is no action or proceeding pending or, to the knowledge of the
Borrower
threatened, against the Borrower, before any court, administrative agency or
arbitration board that may materially and adversely affect the Properties,
business, prospects, profits or condition (financial or otherwise) of the
Borrower or the ability of the Borrower to perform their respective joint and
several obligations under this Agreement or which, if determined adversely to
the Borrower, would result in a determination that the Borrower violated
environmental laws, rules or administrative orders.
Section 2.4. COVENANT WITH BONDHOLDERS. The Board and the Borrower agree
that this Agreement is executed in part to induce the purchase by others of the
Single Lot Bonds. Accordingly, subject to the provisions of Section 2.5 and
Section 2.6 of this Agreement, all covenants and agreements on the part of the
Board and the Borrower set forth in this Agreement are hereby declared to be for
the benefit of the holders from time to time of such Single Lot Bonds.
Section 2.5. GENERAL GUARANTY FUND RIGHT OF REIMBURSEMENT. In the
event of the acceleration of the Loan hereunder, if any General Guaranty Fund
Payments are made from the General Guaranty Fund with respect to the Single
Lot Bonds, there shall arise hereunder a right of reimbursement against the
Borrower and accruing to the General Guaranty Fund equal to the sum of the
unsatisfied General Guaranty Fund Reimbursement Amount with respect to the
Single Lot Bonds. Such right of reimbursement in favor of the General
Guaranty Fund shall require payment of such sum by the Borrower to the Board
immediately upon the creation of such right and shall be secured as provided
in Section 5.4 of this Agreement and enforced and reduced as provided in
Section 10.2 of this Agreement and, in each case, as may be provided in the
General Bond Resolution; provided, however, that such right of reimbursement
shall be subordinate to the rights of the Bondholders described in Section
2.4 of this Agreement and as further provided in the General Bond Resolution.
Section 2.6. BOARD RIGHT OF REIMBURSEMENT. In the event of the
acceleration of the Loan hereunder, if the Board elects to redeem the Single Lot
Bonds in whole or in part from any moneys available to the Board for such
purpose from any source other than the General Guaranty Fund (and other than
those sources pledged to pay Bonds pursuant to Section 1.04 of the General Bond
Resolution), there shall arise hereunder a right of reimbursement against the
Borrower and accruing to the Board equal to the amount so paid by the Board with
respect to the Single Lot Bonds. Such right of reimbursement in favor of the
Board requires payment of such sum by the Borrower to the Board immediately upon
the creation of such right and shall be secured as provided in Section 5.4 of
this Agreement and enforced and reduced as provided in Section 10.2 of this
Agreement and, in each case, as provided in the General Bond Resolution;
provided, however, that such right of reimbursement shall be subordinate to the
rights of Bondholders described in Section 2.4 of this Agreement and as further
provided in the General Bond Resolution.
ARTICLE III
AGREEMENT TO ISSUE SINGLE LOT BONDS AND TO LOAN
PROCEEDS THEREOF; BORROWER'S CONTRIBUTION TO COSTS OF PROJECT
Section 3.1. ISSUANCE OF SINGLE LOT BONDS; DEPOSIT OF BOND PROCEEDS. In
order to provide funds for (i) payment of the Cost of the Project, together with
other payments and incidental expenses in connection therewith, (ii) a deposit
into the Business Loan Reserve Account required under the provisions of the
General Bond Resolution, (iii) certain Costs of Issuance with respect to the
issuance of the Single Lot Bonds and (iv) capitalized interest with respect to
the Single Lot Bonds, the Board agrees that it will issue and sell the Single
Lot Bonds and cause the Bond Proceeds to be delivered to the Trustee.
Section 3.2. AGREEMENT TO MAKE LOAN. The Board agrees that, upon (i) the
sale and delivery of the Single Lot Bonds and (ii) satisfaction of the terms and
conditions set forth in this Section, it will and does hereby lend the Borrower
the sum of $7,145,000 in accordance with the provisions of this Agreement, such
loan to be evidenced by the Note. The obligation of the Board to make said loan
shall be discharged and the obligation of the Borrower hereunder and in the Note
shall arise and become effective, when the following sums, totaling $7,145,000
($7,145,000 less $-0- discount) are deposited in the following funds and
accounts established under the Board Resolution in accordance with the
provisions of the Board Resolution, or are otherwise directly applied for
certain purposes, in any case, in the following amounts:
(a) To the Business Loan Reserve Account, $1,140,325;
(b) To the Cost of Issuance Account, $1,675; and
(c) To the Construction Account, $6,003,000 being the cash balance of
the Bond Proceeds (other than amounts representing accrued interest on the
Single Lot Bonds), to pay the Cost of the Project.
Section 3.3. NEED FOR BORROWER'S CONTRIBUTION TO COSTS OF PROJECT.
(a) The Borrower hereby represents that the amount of the Loan deposited
into the Construction Account ($6,003,000) to pay for the Cost of the Project is
less than the total Cost of the Project (other than interest payable on the
Single Lot Bonds during the Construction Period of the Project) by an amount
equal to approximately $3,500,000 $ 1,675of Bond Proceeds will be applied to
pay Cost of Issuance, $-0- of Bond Proceeds will be applied to pay capitalized
interest from the Capitalized Interest Account , and $1,140,325 of Bond Proceeds
will be deposited in the Business Loan Reserve Account as provided in Section
3.2(a), 3.2(b) above. Pursuant to the loan criteria for its Program, the Board
hereby requires the Borrower to make an equity contribution of not less than
$3,500,000 to pay for the remaining deficiency in the Cost of the Project, which
does not include Costs of Issuance, such equity contribution to take the form of
evidence satisfactory to the Board of payment of not less than $3,500,000
of costs of the Project from Borrower's funds derived from a source other
than the Single Lot Bonds. Prior to any disbursement from the Construction
Account, the Borrower shall provide the Trustee with evidence of payment of
not less than $3,500,000 of Costs of the Project.
(b) If the Cost of Issuance Account is insufficient to pay any claim or
cost incurred in connection with the Single Lot Bonds for any reason, the
Borrower shall deposit on demand by the Board's Executive Director an amount
sufficient to pay any remaining Costs of Issuance.
ARTICLE IV
DEVELOPMENT OF THE PROJECT;
APPLICATION OF MONEYS IN CONSTRUCTION ACCOUNT;
COSTS OF ISSUANCE ACCOUNT AND CAPITALIZED INTEREST ACCOUNT
Section 4.1. PRIOR ACQUISITION OF LAND. The Borrower heretofore has
leased the Building on the Land in order to permit the acquisition and
installation of the Project thereon.
Section 4.2. ACQUISITION AND INSTALLATION OF THE PROJECT. The Borrower
agrees to acquire and install the Project or cause the Project to be acquired
and installed on the Land.
(a) The Cost of the Project shall be paid from the Construction Account in
the manner and to the extent provided in Section 4.3 hereof and the General Bond
Resolution. The Borrower shall not be entitled to any moneys in the
Construction Account, nor shall the Borrower submit a requisition, for any item
of property which constitutes collateral under another security agreement, or is
otherwise subject to any other Lien or encumbrance whatsoever.
(b) The Borrower hereby covenants and agrees to proceed with due diligence
to make, execute, acknowledge and deliver any contracts, orders, receipts,
writings and instructions with any other persons, firms or corporations and in
general do all things which may be requisite or proper, all for acquiring and
installing the Project. The Borrower agrees to acquire and to install the
Project with all reasonable dispatch, and to use reasonable efforts to cause
such acquisition and installation to be completed by November 1, 1998, or as
soon thereafter as may be practicable and, in all events by no later than
November 1, 2000; but if for any reason such acquisition and completion are not
completed by either said date, there shall be no resulting liability on the part
of the Board and no diminution in or postponement of the payments required in
Section 5.1 hereof to be paid by the Borrower.
(c) The Borrower shall assign to the Board, contingent upon Borrower's
default as set forth in Article X hereof, all of Borrower's agreements with
Contractors and shall obtain from each Contractor consent to such assignment in
the form attached hereto as Exhibit "E."
(d) The Borrower shall obtain all necessary approvals from any and all
governmental agencies requisite to the acquiring and installation of the
Project, and the Project shall be acquired and installed in compliance with all
federal, State and local laws, ordinances and regulations applicable thereto.
Upon completion of the Project, the Borrower shall obtain all required permits
and authorizations from appropriate authorities, if any be required, authorizing
the uses of the Project for the purpose contemplated hereby.
(e) THE BOARD MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE
CONDITION, TITLE, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS OF THE PROJECT
OR THAT IT IS OR WILL BE SUITABLE FOR ANY OF THE BORROWER'S PURPOSES OR NEEDS.
Section 4.3. APPLICATION OF MONEYS IN CONSTRUCTION ACCOUNT.
(a) Moneys in the Construction Account may be disbursed in order to pay, or
to reimburse the Borrower for the payment of, any item of Cost of the Project
permitted by the Act which, under generally accepted accounting principles,
constitutes necessary capital expenditures in connection with the Project and
subject to the limitations in Section 2.3 hereof and Section 5.02(b) of the
General Bond Resolution.
Provided, however, no moneys in the Construction Account shall be used
directly or indirectly to pay Costs of Issuance.
Notwithstanding anything contained herein to the contrary,
(i) Except as permitted in Section 4.3(a)(ii) or Section 8.12, the
Trustee shall make no advances from the Construction Account (for other
than Costs of Issuance or debt service on the Single Lot Bonds) while there
is any Lien or encumbrance upon the Project, nor will the Trustee make any
advances from the Construction Account while there is any charge, question
or claim of any kind whatsoever, whether of record or not, which, in the
opinion of counsel for Trustee, may have priority over the Board's or
Trustee's interest in the Project or in any way render the Board's or
Trustee's position insecure;
(ii) The Trustee shall make no advances from the Construction Account
with respect to particular items to be acquired as Equipment hereunder
until the Trustee (A) is satisfied that the specific requisitions for
disbursements from the Construction Account to pay for specific items of
property to be acquired as Equipment hereunder correspond in fact to
specific items of Equipment enumerated in Exhibit B; provided, however, if
the specific item of Equipment is not listed on Exhibit B hereto, (1) such
item of Equipment must be approved by the Executive Director of the Board,
which approval shall be solely at the discretion of the Executive Director
based on his determination of its value, and (2) an amendment to the Loan
Agreement and an amendment to the Security Agreement shall be executed to
include such item of Equipment, (B) has received evidence that a valid
UCC-1 covering the Equipment has been properly filed so as to perfect the
Board's security interest in the Equipment and that such security interest
has been assigned of record to the Trustee, (C) is presented with
reasonable proof satisfactory to the Trustee that all of the items to be
acquired as Equipment hereunder have been acquired, installed and accepted
and are all free and clear of all security interests, liens and
encumbrances of any kind whatsoever, the Trustee may rely on the Board's
determination that the Board is satisfied with the above provisions, (D)
has received an opinion of counsel to the Borrower acceptable to the Board
that the Equipment is free and clear of all liens except the lien of the
Security Instruments and the security interest by the Board in the
Equipment has been perfected and is valid, which opinion shall be
substantially in the form attached hereto as Exhibit D, which shall be
approved by Bond Counsel for each advance (E) has received a
UCC search showing no existing interest in such items of Equipment on such
request for advance, (F) has received proof satisfactory to the Trustee
and the Board that the Borrower has satisfied the requirements in this
Section relating to their equity contribution of $3,500,000 including
meeting the requirements of (B), (C), (D) and (E) relating to their
equity contribution and (G) has received evidence satisfactory to the
Board that the Board and its successors and assigns shall own the
exclusive rights to use the Equipment and the use of the Equipment and
the products produced by the Equipment will not violate any tradename,
trademark, patents or use rights of any other Person. Nothing contained
herein shall be deemed to convey or require conveyance to the Board of
any rights in the tradename, trademark, patents or use rights of the
Borrower. No advances will be made with respect to any Equipment in
the Paint Finishing System prior to the time the Paint Finishing System
has passed its acceptance test and evidence thereof has been submitted
to the Disbursing Agent as provided in Section 4.1(f) of the Disbursing
Agreement;
(iii) The Trustee shall make no advances out of Bond Proceeds from
the Construction Account to reimburse the Borrower for any Costs of the
Project paid from the cash deposits paid or equity contribution made
pursuant to Section 3.3(a) or Section 4.3(a)(ii).
In connection with Section 4.3(a)(i), 4.3(a)(ii) and 4.3(a)(iii), above
and the preconditions established therein, the Trustee may request that counsel
to the Borrower certify to the Trustee the existence of such preconditions in
connection with making any advances from the Construction Account and the
Trustee shall be entitled to conclusively rely upon such certification. The
Trustee may rely on an opinion of counsel to the Borrower to the extent such
certification covers matters of law, including the validity and perfection of
any security interest contemplated by the Security Instruments. In addition, in
making any such payment from the Construction Account the Trustee may rely on
such requisitions and proof delivered to it and the Trustee shall be relieved of
all liability with respect to making such payments if such payments are made in
accordance with the foregoing. The Borrower hereby agrees to pay all reasonable
costs of filing or submitting such requisitions and proof delivered to the
Trustee and to its counsel.
The Trustee shall keep and maintain adequate records pertaining to the
Construction Account and all disbursements therefrom, and after the Project has
been completed and the Borrower has filed with the Board a certificate of
completion of the Project as otherwise provided, the Trustee thereafter shall
file an accounting with respect to the Construction Account and all
disbursements therefrom with the Board and with the Borrower.
(b) Upon the earlier of (i) completion of the Project as certified to
pursuant to Section 4.4 hereof; (ii) the acceleration of the Loan pursuant to
Section 10.2(a)(i) of this Agreement; or (iii) failure to satisfy the
requirements for disbursement of moneys from the Construction Account by
November 1, 2000 (or such later date as the Board, in its unilateral
discretion, may designate); any
moneys remaining in the Construction Account, except for amounts to be paid
pursuant to the draw made upon completion or those retained therein for the
payment of incurred and unpaid items of the Cost of the Project, shall be
applied in accordance with Section 5.02(b) of the General Bond Resolution.
Section 4.4. CERTIFICATE OF COMPLETION. Completion of the Project shall
be evidenced by a certificate signed by an Authorized Representative of the
Borrower stating that (i) the acquisition and installation of the Project has
been completed and (ii) except for amounts to be retained in the Construction
Account as provided in Section 4.3(b) hereof, all costs and expenses of
acquiring and installing the Project have been paid or provided for and that
having attached thereto a certificate of the Borrower or such other evidence
satisfactory to the Board to the effect there exist no Liens or encumbrances
with respect to the Project.
Section 4.5. COMPLETION BY BORROWER. To the extent that the Bond
Proceeds that are deposited into the Construction Account are not sufficient to
pay in full all costs of acquiring and installing the Project, the Borrower
agrees to pay all such sums as may be necessary to so complete the Project. At
the Trustee's request, the Borrower will provide the Trustee with evidence
satisfactory to the Trustee as to whether or not the remaining moneys in the
Construction Account available to pay the Costs of the Project shall be
sufficient to pay the remaining Costs of the Project. In the event that the
Trustee shall determine at any time that the remaining moneys in the
Construction Account available for payment of the remaining Costs of the Project
shall not be sufficient to pay the costs thereof in full, the Trustee shall give
written notice thereof to the Borrower and the Borrower shall promptly pay to
the Trustee for deposit into the Construction Account moneys sufficient to pay
the Costs of the Project as may be in excess of the moneys available therefor in
the Construction Account. The Trustee may rely on the Board's determination.
No payment by the Borrower pursuant to this Section 4.5 shall entitle the
Borrower to any diminution or abatement of the other amounts payable by the
Borrower under this Agreement or the Note.
Section 4.6. REMEDIES TO BE PURSUED AGAINST CONTRACTORS AND
SUBCONTRACTORS AND THEIR SURETIES. In the event of default of any contractor or
subcontractor under any contract made by it in connection with the Project or in
the event of a breach of warranty with respect to any materials, workmanship, or
performance guaranty, the Borrower shall promptly proceed, either separately or
in conjunction with others, to exhaust the remedies of the Borrower against the
contractor or subcontractor so in default and against each surety for the
performance of such contract. The Borrower agrees to advise the Board of the
steps they intend to take in connection with any such default. The Borrower may
prosecute or defend any action or proceeding or take any other action involving
any such contractor, subcontractor or surety which the Borrower deems reasonably
necessary. The Net Proceeds of any amounts recovered pursuant to this Section
4.6, if received prior to the Completion Date, shall be delivered to the Trustee
and deposited in the Construction Account and, if received thereafter, shall be
(i) delivered to the Trustee and deposited to the extent attributable to Bond
Proceeds, to the credit of the Special Redemption Account and (ii) to the extent
attributable to the Borrower's equity required by Section 3.3 or Section 4.5
hereof, paid over to the Borrower free and clear of any provision of this
Agreement.
Section 4.7. APPLICATION OF MONEYS IN COST OF ISSUANCE ACCOUNT. $318,750
will be deposited by the Borrower in the Cost of Issuance Account on the Closing
Date. Moneys in the Cost of Issuance Account shall be used to pay Costs of
Issuance on the Single Lot Bonds. If the Cost of Issuance Account is
insufficient to pay any claim or cost incurred in connection with the Single Lot
Bonds for any reason, the Borrower shall deposit on demand by the Trustee or the
Board's Executive Director an amount sufficient to pay any remaining Costs of
Issuance.
ARTICLE V
REPAYMENT PROVISIONS; SECURITY CLAUSES
Section 5.1. REPAYMENT OF LOAN.
(a) Principal on the Loan shall be paid by the Borrower on the dates and
in the amounts provided in the Note. Interest on the unpaid balance of the Loan
shall be payable at the times stated in the Note at the rates provided in the
Note. All such amounts to be so paid shall be paid by the Borrower to the
Trustee on behalf of the Board. It is the intention of the parties hereto that
the Borrower shall be liable hereunder and under the Note.
(b) The Note shall provide that interest thereon shall accrue from the
date thereof and shall be payable thereon on the first day of the following
month and thereafter on the first day of each month until the principal sum
of the Loan is discharged, each such payment to include interest payable in
advance due to and including the first day of the next succeeding month. The
principal amount of the Loan shall be payable thereon at the same times and
manner as interest. Principal and interest payments on the Loan shall be
made in monthly installments through the date of final maturity of the Note,
applied first to the payment of interest then due on the unpaid principal
amount of the Loan, and the remaining balance of each such installment
applied to the payment and reduction of the unpaid principal amount of the
Loan. The monthly installments to be paid on the Loan shall be an amount
equal to (i) one-sixth of the interest installment due on the Single Lot
Bonds on the next succeeding Bond Payment Date (taking into account such
in-advance payments) and (ii) one-twelfth of the Principal Installment due on
the Single Lot Bonds on the next succeeding Bond Payment Date on which a
Principal Installment is due (taking into account such in-advance payments),
such installments to be reduced such that on or before the Bond Payment Date
on which a Principal Installment is due any amounts then on deposit in the
Holding Account plus the monthly installment then to be paid on the Loan
shall equal the Debt Service Payment on the Single Lot Bonds due on such Bond
Payment Date. Notwithstanding the foregoing, amounts in the Capitalized
Interest Account shall reduce the monthly installments set forth above.
Notwithstanding the foregoing, the number and amount of proportional payments
of the monthly installments to be paid on the Loan shall be adjusted in
accordance with the date of the Note and the dates of the initial interest
payment and initial payment of the Principal Installment due on the Single
Lot Bonds. All payments on the Note by the Borrower shall be made to the
Trustee at the address set forth in Section 12.1 of this Agreement.
At the request of the Borrower, pending disbursement or application of
amounts in the Construction Account, such amounts shall be invested so as to
make interest earnings available monthly to be applied as credits against the
required loan repayments.
(c) If on any Bond Payment Date of the Single Lot Bonds the amount then on
deposit in the Holding Account shall not be sufficient to pay the interest and
Principal Installment due on the Single Lot Bonds as of such Bond Payment Date,
the Borrower shall forthwith pay any such deficiency into the Revenue Account
for transfer into the Holding
Account.
(d) The Borrower shall have the option to make payments designated as and
representing advance loan payments on the Note under and pursuant to this
Agreement (or Section 5.2 of this Agreement) to the Trustee for deposit in the
Revenue Account. Such payments shall not in any way alter or suspend any
obligations of the Borrower under the terms of this Agreement (i) except to the
extent that such payment shall be transferred by the Trustee under the
provisions of the Board Resolution to the Holding Account and shall result in a
credit against payments on the Note as provided in Section 5.1(b) of this
Agreement or the retirement of principal amounts of the Single Lot Bonds,
pursuant to these provisions, or (ii) except to the extent that such payments
shall otherwise be transferred by the Trustee in accordance with the provisions
of Section 5.06(a) of the General Bond Resolution and shall result in a credit
against payments as provided in Section 5.2 of this Agreement; and the Borrower
shall, in either case, continue to perform and be responsible for the
performance of all the terms and provisions of this Agreement.
(e) If at any time the amount held by the Trustee in the Holding Account
and the Business Loan Reserve Account shall be sufficient to pay, together with
any interest earning to be realized, at the times required the principal of,
premium, if any, and interest on the Single Lot Bonds then unpaid, the Borrower
shall not be obligated to make any further payments under the foregoing
provisions.
(f) If the Borrower should fail to make the payments of an amount required
under this Section 5.1, the amount so in default shall continue as an obligation
of the Borrower until it shall have been fully paid, and the Borrower shall pay
the same with interest thereon at the Bond Rate until paid.
(g) The Borrower agrees to make the above-mentioned payments without any
further notice, in lawful money of the United States of America which, at the
time of payment, shall be legal tender for the payment of public and private
debts.
Section 5.2. OTHER AMOUNTS PAYABLE.
(a) The Borrower shall pay to the Trustee for deposit by the Trustee in
the Revenue Account, the following amounts (in addition to those amounts
described in Section 5.1(b) of this Agreement) at the times set forth below:
(i) On August 1 and February 1 of each year during the Loan Term,
the Lot Loan Fiduciary Payments due with respect to the Bond Year then
ended; provided, however, that, to the extent that on any August 1 there
are amounts in the Revenue Account in excess of the amounts required to be
deposited therein pursuant to Section 5.1, Section 5.2(a)(i), Section
5.2(a)(ii) and Section 5.2(a)(iii) of this Agreement, the amount required
to be paid by the Borrower pursuant to this Section 5.2(a)(i) shall be
reduced by the amount of such excess;
(ii) On each Bond Payment Date, a sum sufficient to satisfy any
outstanding
General Guaranty Fund Reimbursement Amount with respect to the
Single Lot Bonds as provided in Section 2.5;
(iii) On each Bond Payment Date, a sum sufficient so that amounts
then on deposit in the Business Loan Reserve Account shall not be less than
the Business Loan Reserve Account Requirement with respect to the Single
Lot Bonds.
(b) Notwithstanding anything contained in this Agreement to the contrary,
any amount payable as and for an outstanding General Guaranty Fund Reimbursement
Amount under Section 5.2(a)(ii) of this Agreement shall not be payable as and
for unpaid amounts due under Section 5.1(b) and Section 5.1(f) of this
Agreement.
(c) Notwithstanding anything contained in this Agreement to the contrary,
any amount payable pursuant to Section 5.2(a)(iii) of this Agreement shall not
be payable as and for unpaid amounts due under Section 5.1(b) and Section 5.1(f)
of this Agreement.
(d) In addition to the foregoing payments, the Borrower shall make such
reports and shall pay during the Loan Term the annual fees required to maintain
the secondary market trading of the Single Lot Bonds in the State. Such fees
shall be paid directly by the Borrower to Minnesota State Treasurer by the time
required by law each year, with the Borrower to provide evidence satisfactory to
the Board that each such payment has been made.
(e) In addition to the foregoing payments, the Borrower shall pay any fees
of the Board under the Continuing Disclosure Agreement.
Section 5.3. OBLIGATIONS OF BORROWER HEREUNDER UNCONDITIONAL. The
obligations of the Borrower to make the payments required by this Agreement and
the Note and to perform and observe any and all of the other covenants and
agreements on its part contained herein shall be general obligations of the
Borrower, shall be absolute and unconditional irrespective of any defense or any
rights of setoff, recoupment or counterclaim it may otherwise have against the
Board or the Trustee or any Holders of the Bonds. The Borrower agrees that it
will not (i) suspend, discontinue or xxxxx any payment required by this
Agreement and the Note or (ii) fail to observe any of its other covenants or
agreements in this Agreement, the Note or any Security Instrument, (iii) seek
judicial or other relief from the obligation to make any payment required by, or
to perform any covenant in, this Agreement and the Note or (iv) except as
provided in Section 11.1 hereof, terminate this Agreement for any cause
whatsoever including, without limiting the generality of the foregoing, failure
to complete the Project, failure of the Borrower to use the Project as
contemplated in this Agreement or otherwise, any defect in the title, design,
operation, merchantability, fitness or condition of the Project or in the
suitability of the Project for the Borrower's purposes or needs, failure of
consideration, destruction of or damage to the Project, commercial frustration
of purpose, or the taking by Condemnation of title to or the use of all or any
part of the Project, any change in the tax or other laws of the United States of
America or of the State or any political subdivision of either, or any failure
of the Board to perform and observe any agreement, whether expressed or implied,
or any duty, liability or obligation arising out of or in connection with this
Agreement. Nothing contained in this Section 5.3 shall be construed to release
the Board from the performance of any of the agreements on its part contained in
this Agreement.
Section 5.4. SECURITY CLAUSES. In order to secure the payment of this
Agreement, the Note and the Bonds according to their tenor and effect, and to
secure the right of reimbursement of the General Guaranty Fund provided for in
Section 2.5 of this Agreement and the right of reimbursement of the Board
provided for in Section 2.6 of this Agreement and to secure the performance by
the Borrower of all covenants expressed or implied in this Agreement, as of the
Closing Date, the Borrower shall grant and deliver a validly perfected first
security interest to the Board in the (i) Equipment pursuant to the Security
Instruments, (ii) Equipment purchased with proceeds of the Bonds and (iii)
Equipment purchased by the Borrower as the Borrower's equity contribution, all
of which Equipment is to be pledged by the Board to the Trustee for the benefit
of Bondholders pursuant to the Board Resolution as security for the Bonds and
the Single Lot Bonds. The Borrower shall cause to be delivered a legal opinion
on behalf of the Borrower as to the due authorization and execution of this
Agreement, the Security Instruments, the Note and any other Security Instrument
and as to the legality, validity and enforceability of such instruments in such
form and substance satisfactory to the Board and Bond Counsel.
Section 5.5. INVESTMENT OF FUNDS AND ACCOUNTS; CONSENT TO ELECTIONS.
(a) Notwithstanding anything contained in this Agreement to the contrary, any
moneys at any time in the Business Loan Reserve Account, the Construction
Account, Holding Account, Optional Redemption Account, Reconstruction
Account, the Reimbursement Account, the Revenue Account, the Special
Redemption Account or any other fund or account created under, or authorized
by, the General Bond Resolution or the Single Lot Resolution may be invested
and reinvested by the Board as provided in Section 5.16 of the General Bond
Resolution and any letter of instruction issued by the Board to the Trustee
thereunder, to which such investment and reinvestment, the Borrower hereby
consents. Neither the Board nor its members, officers or employees shall be
liable for any rate of interest achieved or not achieved on such investment
or for any depreciation in the value of, or for any loss arising from, any
such investment. Investment income earned from money deposited in any such
funds and accounts shall be applied by the Trustee in the manner provided for
in the Board Resolution.
(b) The Borrower hereby consents to the elections made by the Board in
Section 5.5 of the Single Lot Resolution with respect to the Series 1997B
Taxable, Lot 1 Bonds.
ARTICLE VI
MAINTENANCE, MODIFICATIONS, TAXES AND INSURANCE
Section 6.1. MAINTENANCE OF PROPERTY BY BORROWER. (a) The Borrower
agrees that during the Loan Term Borrower will, at Borrower's own expense, (i)
keep the Security Property in as reasonably safe condition as its operations
shall permit; (ii) make all necessary repairs and replacements to the Security
Property (whether ordinary or extraordinary, structural or nonstructural,
foreseen or unforeseen); and (iii) operate the Security Property in a sound and
economic manner.
(b) The Borrower from time to time may, at Borrower's own expense, make
any structural additions, modifications or improvements to the Security Property
or any part thereof which it may deem desirable. All such structural additions,
modifications or improvements made by the Borrower shall become a part of the
Security Property. The Borrower agrees to deliver to the Board all documents
which may be necessary or appropriate to convey to the Board a satisfactory
security interest in such Security Property.
Section 6.2. INSTALLATION OF ADDITIONAL EQUIPMENT. Subject to the
provisions of Section 5.4 of this Agreement, the Borrower from time to time may,
at Borrower's own expense, install additional machinery, equipment or other
personal property in the Project (which may be attached or affixed to the
Security Property), and such machinery, equipment or other personal property
shall not become, or be deemed to become, a part of the Security Property. The
Borrower shall keep appropriate records of all of such machinery, equipment or
other personal property installed as Security Property sufficient to identify
the same. The Borrower from time to time may remove or permit the removal of
such machinery, equipment and other personal property from the Security Property
and may create or permit to be created any Lien on such machinery, equipment or
other personal property; provided that any such removal of such machinery,
equipment or other personal property shall not adversely affect the structural
integrity of the Security Property or impair the overall operating efficiency of
the Security Property for the purposes for which it is intended and provided
further that if any damage is occasioned to the Security Property by such
removal, the Borrower agrees to promptly repair such damage at its own expense.
Section 6.3. TAXES, ASSESSMENTS AND UTILITY CHARGES.
(a) The Borrower agrees to pay, as the same respectively become due, and
subject to Section 6.3(b)(i) all taxes and governmental charges of any kind
whatsoever which may at any time be lawfully assessed or levied against or with
respect to (1) the Security Property, (2) any replacement machinery, equipment
or other property installed or brought by the Borrower therein or thereon
(including without limitation any sale or use taxes), (3) worker's compensation
taxes with respect to the employees of the Borrower located at or assigned to
the Project, and (4) the income or revenues of the Borrower from the Project,
(ii) all utility and other charges, including "service charges", incurred or
imposed for the operation, maintenance, use, occupancy, upkeep and improvement
of the Security Property, and (iii) all
assessments and charges of any kind whatsoever lawfully made by any
governmental body for public improvements; provided that, with respect to
special assessments or other governmental charges that may lawfully be paid
in installments over a period of years, the Borrower shall be obligated under
this Agreement to pay only such installments as are required to be paid
during the Loan Term.
(b) The Borrower may in good faith contest any such taxes, assessments and
other charges. In the event of any such contest, the Borrower may permit the
taxes, assessments or other charges so contested to remain unpaid during the
period of such contest and any appeal therefrom, provided that a reserve in an
amount satisfactory to the Board has been established with respect thereto with
the Trustee. If the Board or the Trustee shall notify the Borrower that by
nonpayment of any such items the security interest as to any part of the
Security Property will be materially endangered or the Security Property or any
part thereof will be subject to loss or forfeiture, however, such taxes,
assessments or charges shall be paid promptly or secured by posting a bond in
form and substance satisfactory to the Board and the Trustee.
Section 6.4. INSURANCE REQUIRED. At all times throughout the Loan Term,
including without limitation during any period of acquisition and construction
of the Project, the Borrower shall, at its own expense, maintain or cause to be
maintained insurance against such risks and for such amounts as are customarily
insured against by businesses of like size and type paying, as the same become
due and payable, all premiums in respect thereto, including, but not necessarily
limited to:
(a) Comprehensive general public liability insurance, fire and all risk
coverage insurance insuring the Equipment, boiler and machinery insurance, if
appropriate, including business interruption (including rental interruption), or
use and occupancy coverage for a period of not less than one year and such other
insurance, flood insurance, if the Land is located in a HUD-designated special
flood hazard area, as the Board may reasonably require from time to time. All
such insurance shall be obtained from such companies, in such amounts (which
shall be the amounts as required by this Agreement) and with such provisions as
the Board may deem necessary or desirable to protect its interests and shall
contain a waiver of subrogation clause, non-contributory standard mortgage
clauses and 30-day notice to the Board and the Trustee of cancellation or
material change clause. During any period of construction, repair or
restoration, such insurance shall be in builder's risk form, written on a
non-reporting completed value basis. In the event of loss in excess of $50,000,
the Borrower will give immediate notice by mail to the Board, and each insurance
company concerned is hereby authorized and directed to make payment for such
loss with respect to Security Property in excess of $50,000 directly to the
Board and the Trustee as their interests appear instead of to the Borrower and
the Board jointly, and except as may be hereinafter provided, the application of
the proceeds of any insurance award shall be governed by Article VII hereunder.
(b) Worker's compensation insurance, disability benefits insurance, and
each other form of insurance which the Borrower is required by law to provide,
covering loss resulting
from injury, sickness, disability or death of employees of the Borrower who
are located at or assigned to the Project.
Section 6.5. ADDITIONAL PROVISIONS RESPECTING INSURANCE. (a) All
insurance required by Section 6.4 hereof shall be procured and maintained in
financially sound and generally recognized responsible insurance companies
selected by the Borrower and authorized to write such insurance in the State.
Such insurance may be written with deductible amounts acceptable to the Board.
All policies evidencing such insurance shall provide for (i) payment of the
losses to the Borrower, the Board and the Trustee as their respective interests
may appear, and (ii) at least thirty (30) days written notice of the proposed
cancellation thereof to the Borrower and the Trustee. The policies required by
Section 6.4(a) hereof shall contain standard mortgagee clauses requiring that
all Net Proceeds of insurance resulting from any claim in excess of $50,000 for
loss or damage covered thereby be paid to the Trustee.
(b) All such policies of insurance, or a certificate or certificates of
the insurers that such insurance is in force and effect, shall be deposited with
the Trustee on or before the Closing Date. Prior to expiration of any such
policy, the Borrower shall within thirty (30) days of such expiration furnish
the Trustee evidence that the policy has been renewed or replaced or is no
longer required by this Agreement.
Section 6.6. APPLICATION OF NET PROCEEDS OF INSURANCE. The Net Proceeds
of the insurance carried pursuant to (i) Section 6.4(a) hereof shall be applied
as provided in Section 7.1 hereof and (ii) Section 6.4(b) hereof shall be
applied toward extinguishment or satisfaction of the liability with respect to
which such insurance proceeds may be paid.
Section 6.7. RIGHT OF BOARD TO PAY TAXES, INSURANCE PREMIUMS AND OTHER
CHARGES. If the Borrower fails (i) to pay any tax prior to delinquency,
assessment or other governmental charge required to be paid by Section 6.3
hereof or (ii) to maintain any insurance required to be maintained by Section
6.4 hereof, the Board or the Trustee may pay such tax, assessment or other
governmental charge or the premium for such insurance. No such payment by the
Board or the Trustee shall affect or impair any rights of the Board under this
Agreement, the Security Instruments and the Note or of the Board or the Trustee
under the Board Resolution arising as a consequence of such failure by the
Borrower. The Borrower shall reimburse the Board or the Trustee, as the case
may be, for any amount so paid by the Board or the Trustee, as the case may be,
pursuant to this Section 6.7, together with interest thereon from the date of
payment by the Board at the Bond Rate.
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 7.1. DAMAGE OR DESTRUCTION.
(a) If the Security Property shall be damaged or destroyed (in whole or in
part) at any time during the Loan Term:
(i) The Board shall have no obligation to replace, repair, rebuild
or restore the Security Property;
(ii) There shall be no abatement or reduction in the amounts payable
by the Borrower under this Agreement (whether or not the Security Property
is replaced, repaired, rebuilt or restored); and
(iii) Except as otherwise provided in Section 7.1(b), the Borrower
shall promptly replace, repair, rebuild or restore the Security Property to
substantially the same condition and value as an operating entity as
existed prior to such damage or destruction, with such changes, alterations
and modifications as may be desired by the Borrower, provided that such
changes, alterations or modifications do not so change the nature of the
Project that it does not qualify under the Act for the financial assistance
provided by the Program.
Except as otherwise provided in Section 7.1(b), the Borrower shall apply to
the replacement, repair, rebuilding or restoration of the Project so much as may
be necessary of any Net Proceeds of insurance resulting from claims for such
losses.
If the claim for loss resulting from such damage or destruction exceeds
$50,000, all Net Proceeds of insurance shall be paid to and held by the Trustee
in the Reconstruction Account. All Net Proceeds so deposited shall be applied
as provided below.
If the Borrower determines that the Security Property shall be repaired,
replaced or restored in whole, the Board hereby authorizes and directs the
Trustee, subject to the conditions set forth herein, to make payments from the
Reconstruction Account for such purposes or to reimburse the Borrower for costs
paid by it in connection therewith to the extent subject to issuance of
insurance of the absence of mechanics or materialman Liens affecting the
Security Property (all at no cost to the Board or the Trustee).
The Trustee may not make any payments from the Reconstruction Account to
repair, restore, replace, modify or improve the Security Property pursuant to
this Section 7.1 unless the Borrower has (i) first, obtained a fixed price
contract for the repair, restoration, replacement, modification or improvement
of the Security Property, specifying a Completion Date therefore, and (ii)
caused the deposit to the Reconstruction Account an amount which, together with
the Net Proceeds and all interest to be earned thereon through the Completion
Date established in clause (i) above, will be sufficient to pay all costs of
repair, restoration, modification and improvement of the Security Property.
Thereafter the Trustee, upon receipt of a certificate of an Authorized
Representative of the Borrower that payments are required for such purpose,
shall apply so much as may be necessary of the Net Proceeds of such insurance to
the payment of the costs of such replacement, repair, rebuilding or restoration,
such moneys to be applied either on completion thereof or as the work
progresses, at the option of the Board.
In the event the Borrower has elected to rebuild or restore, and amounts in
the Reconstruction Account are not sufficient to pay in full the costs of such
replacement, repair, rebuilding or restoration, the Trustee shall request the
Borrower to pay into the Reconstruction Account an amount which, together with
Net Proceeds available for such purposes, shall be sufficient to pay all such
costs, and, upon receipt of such request, the Borrower shall forthwith pay such
amount to the Trustee. In the event that the Borrower fails to pay any such
amounts into the Reconstruction Account, then the Single Lot Bonds shall be
prepaid in accordance with Section 7.1(b) of this Agreement.
All such replacements, repairs, rebuilding or restoration made pursuant to
this Section 7.1, whether or not requiring the expenditure of the Borrower's
contribution, shall automatically become a part of the Security Property as if
the same were specifically described herein.
Any balance of such Net Proceeds remaining after payment of all the costs
of such replacement, repair, rebuilding or restoration shall be deposited in the
Special Redemption Account held by the Trustee and used only to prepay the
Single Lot Bonds as provided in Section 5.11(a) of the General Bond Resolution.
(b) In the event that the Borrower shall fail or elect not to replace,
repair or restore the Security Property, or if an Event of Default under Section
10.1 hereof shall have occurred and be continuing and the Single Lot Bonds have
been accelerated, then at the direction of the Board the Net Proceeds of the
insurance shall be transferred from the Reconstruction Account to the Special
Redemption Account or otherwise paid to the Trustee for deposit into the Special
Redemption Account. To the extent that such Net Proceeds so transferred into
the Special Redemption Account are not sufficient to pay the Single Lot Bonds in
whole pursuant to Section 2.8 of the Single Lot Resolution, the Borrower shall
forthwith pay the sum of such deficiency to the Trustee for deposit into the
Special Redemption Account.
(c) The Borrower shall not be obligated to replace, repair, rebuild or
restore the Project, and all such Net Proceeds shall be paid to the Borrower for
its purposes, if the Single Lot Bonds and interest thereon have been paid in
full and all other amounts due and owing hereunder, under the Note and the
Security Instruments have been paid in full.
(d) The Borrower may adjust all claims under any policies of insurance
required by Section 6.4(a) hereof; provided, however, that no such claim with
respect to an insured event as to which the Board or the Trustee may be or is
alleged to be liable may be adjusted without
the prior written consent of the Board or the Trustee, as the case may be.
Section 7.2. CONDEMNATION.
(a) If at any time during the Loan Term the whole or any part of title to,
or the use of, the Security Property shall be taken by Condemnation, the Board
shall have no obligation to restore or replace the Security Property and there
shall be no abatement or reduction in the amounts payable by the Borrower under
this Agreement (whether or not the Security Property is restored or replaced).
Except as otherwise provided in this Section 7.2(b), the Borrower shall
promptly:
(i) Restore the Security Property to substantially the same
condition and value as an operating entity as existed prior to such
Condemnation; or
(ii) Upon receipt by the Borrower of written approval of the Trustee
and the Board as to the location thereof (which approval shall not be
unreasonably withheld), acquire, by construction or otherwise, facilities
of substantially the same nature and value as an operating entity as the
Security Property (hereinafter referred to in this Section 7.2 as
"Substitute Facilities"). Such Substitute Facilities shall (A) be of such
nature so as to qualify under the Act for the financial assistance provided
by the Program and (B) be subject to no Liens prior to the Security
Instruments or the security interest created by Sections 5.4(b) and 5.4(c)
of this Agreement.
The Borrower shall cause all Net Proceeds of any award in any Condemnation
proceeding to be paid to the Trustee which shall hold such moneys in the
Reconstruction Account. All Net Proceeds so deposited shall be applied as
provided below:
If the Borrower determines that the Security Property shall be repaired,
replaced or restored in whole or substitute Equipment is to be acquired, the
Board hereby authorizes and directs the Trustee, subject to the conditions set
forth herein, to make payments from the Reconstruction Account for such purposes
or to reimburse the Borrower for costs paid by it in connection therewith by
disbursements through a title insurance company with commercially reasonable
procedures for payment of costs upon incurrence thereof subject to issuance of
insurance of the absence of mechanics or materialman liens affecting the
Security Property (all at no cost to the Board or the Trustee).
The Trustee may not make any payments from the Reconstruction Account to
repair, restore, replace, modify or improve the Security Property pursuant to
this Section 7.2 unless the Borrower has caused the deposit to the
Reconstruction Account an amount which, together with the Net Proceeds and all
interest to be earned thereon will be sufficient to pay all costs of repair,
restoration, modification and improvement of the Security Property. Thereafter,
the Trustee, upon receipt of a certificate of an Authorized Representative of
the Borrower that payments are required for such purpose, shall apply so much as
may be necessary of such Net Proceeds to the payment of the costs of the
restoration of the Security Property at the option of
the Borrower, such moneys to be applied either on completion thereof or as
the restoration or acquisition progresses, at the option of the Board.
In the event amounts in the Reconstruction Account are not sufficient to
pay in full the costs of such restoration of the Security Property, the Trustee
shall request the Borrower to pay into the Reconstruction Account an amount
sufficient to pay all such costs, and, upon receipt of such request, the
Borrower shall forthwith pay such amount to the Trustee. In the event that the
Borrower fails to pay any such amounts into the Reconstruction Account, then the
Single Lot Bonds shall be prepaid in accordance with Section 7.2(b) of this
Agreement.
The Security Property, as so restored, whether or not requiring the
expenditure of the Borrower's contribution, shall automatically become part of
the Security Property as if the same were specifically described herein.
Any balance of such Net Proceeds of any Condemnation award remaining after
payment of all costs of such restoration or acquisition shall be deposited in
the Special Redemption Account held by the Trustee and used only to prepay the
Single Lot Bonds as provided in Section 5.11(a) of the General Bond Resolution.
(b) In the event that the Borrower shall fail or elect not to replace,
repair or restore the Security Property, or if an Event of Default under Section
10.1 hereof shall have occurred and be continuing and the Single Lot Bonds have
been accelerated, then at the direction of the Board the Net Proceeds of the
Condemnation Award shall be transferred from the Reconstruction Account to the
Special Redemption Account or otherwise paid to the Trustee for deposit into the
Special Redemption Account. To the extent that such Net Proceeds so transferred
into the Special Redemption Account are not sufficient to pay the Single Lot
Bonds in whole pursuant to Section 2.8 of the Single Lot Resolution, the
Borrower shall forthwith pay the sum of such deficiency to the Trustee for
deposit into the Special Redemption Account.
(c) The Borrower shall not be obligated to restore the Project, and all
such Net Proceeds shall be paid to the Borrower, if the Single Lot Bonds and
interest thereon have been paid in full and all other amounts due and owing
hereunder, under the Note and Security Instruments have been paid in full.
(d) The Board shall cooperate fully with the Borrower in the handling and
conduct of any Condemnation proceeding with respect to the Security Property.
Section 7.3. CONDEMNATION OF BORROWER-OWNED PROPERTY OTHER THAN SECURITY
PROPERTY. The Borrower shall be entitled to the proceeds of any Condemnation
award or portion thereof made for damage to or taking of any Property which, at
the time of such damage or taking, is not part of the Security Property and
which is owned by the Borrower.
ARTICLE VIII
SPECIAL COVENANTS
Section 8.1. QUALIFICATION IN THE STATE. Throughout the Loan Term, the
Borrower shall continue to be duly authorized to do business in the State.
Section 8.2. HOLD HARMLESS PROVISIONS. (a) The Borrower during the Loan
Term hereby releases the Indemnified Parties from, agrees that the Indemnified
Parties shall not be liable for and agrees to indemnify and hold the Indemnified
Parties harmless from and against any and all liability arising from or expense
incurred by the Board's making the loan to the Borrower pursuant to this
Agreement, including without limiting the generality of the foregoing, all
causes of action and reasonable attorneys' fees and any other expenses incurred
in defending any suits or actions which may arise as a result thereof, provided
that any such liabilities or expenses of the Indemnified Parties are not
incurred or do not result from the gross negligence, the intentional or willful
wrongdoing of the Indemnified Parties or any of their members, agents or
employees.
(b) Notwithstanding any provision of this Agreement or the Board
Resolution to the contrary, the Borrower specifically agrees that Indemnified
Parties shall not be held liable, or in any way responsible, for any investment
of any Fund or Account or the General Guaranty Fund or other "gross proceeds"
(as defined in Section 148 of the Code) under the control or custody of the
Board, the Trustee or the Escrow Holder.
Section 8.3. MAINTENANCE OF EXISTENCE; CONDITIONS UNDER WHICH
EXCEPTIONS PERMITTED. The Borrower covenants and agrees to maintain its
corporate existence, will not dissolve or otherwise dispose of all or
substantially all of its assets, and will not consolidate with or merge into
another corporation or permit one or more corporations to consolidate with or
merge into it; provided, however, that any mortgages and security interests
in personal property entered into by the Borrower in the ordinary course of
business with respect to any of its Property shall not be deemed to
constitute a disposition of assets for purposes of this Section 8.3 and
provided further that, if no Event of Default under this Agreement shall have
occurred and is continuing, the Borrower may consolidate with or merge into
another domestic corporation organized and existing under the laws of one of
the states of the United States of America, or permit one or more such
domestic corporations to consolidate with or merge into it, or sell or
otherwise transfer to another such domestic corporation all or substantially
all of its assets as an entirety and thereafter dissolve, provided that:
(a) the surviving, resulting, or transferee corporation, as the
case may be, is incorporated under the laws of the State or qualifies to do
business in the State;
(b) the surviving, resulting or transferee corporation, as the case
may be, assumes in writing all of the obligations of and restrictions on
the Borrower hereunder and any other agreement securing the Borrower's
performance of its obligations hereunder;
(c) immediately after the consummation of the transaction, and
after giving effect thereto, the surviving, resulting or transferee
corporation, as the case may be, has a Net Worth at least equal to the Net
Worth of the Borrower immediately prior to the transaction;
(d) as of the date of such consolidation, merger, sale or transfer,
the Board and Trustee shall be furnished with (i) an opinion of Independent
Counsel opining as to the compliance with Sections 8.3(a) and 8.3(b),(ii)
an opinion of an Accountant opining as to the compliance with Section
8.3(c) and (iii) a certificate, dated the effective date of such
consolidation, merger, sale of transfer, signed by the chief executive
officer and the chief financial officer of the Borrower and of the
surviving, resulting of transferee corporation, as the case may be, to the
effect that immediately after the consummation of the transaction, and
after giving effect thereto, no event of default exists under this
Agreement (as set forth in Section 10.1 hereof) and no event exists which,
with notice or lapse of time or both, would become such an Event of Default
and that the provisions of Section 8.3(c) hereof are and will be satisfied;
and
(e) In addition to the foregoing, such financial statements shall
be accompanied by a report containing all of the calculations required by
Section 8.18(a) and (b) of this Agreement to determine whether or not the
Borrower is in compliance with the requirements of Section 8.18(a) and (b)
of this Agreement, such calculations to be prepared by an Accountant from
the then-current audited financial statements of the Borrower or the
financial statements of the Borrower prepared by the Accountant, as the
case may be.
Section 8.4. AGREEMENT TO PROVIDE INFORMATION. The Borrower agrees,
whenever requested by the Trustee or the Board, to provide and certify or cause
to be provided and certified such information concerning the Borrower, its
finances, and such other topics as the Trustee or the Board from time to time
reasonably considers necessary or appropriate, including, but not limited to
such information as may be necessary to enable the Board to make any reports
required by the Act, any other law or governmental regulation or to enable the
Board to issue additional lots of Bonds under the General Bond Resolution and
publicly or privately market the same.
Section 8.5. BOOKS OF RECORD AND ACCOUNT; FINANCIAL STATEMENTS.
(a) The Borrower agrees to maintain proper accounts, records and books in
which full and correct entries shall be made, in accordance with generally
accepted accounting principles, of business and affairs of the Borrower. The
Board, the Legislative Auditor and the Trustee or their designated agents or
representatives shall have the right to inspect such accounts, records and books
upon reasonable advance notice during normal business hours.
(b) Within 120 days after the close of each fiscal year of the Borrower,
during the Loan Term, the Borrower shall furnish to the Board and the Trustee, a
consolidated balance
sheet, a consolidated statement of income and retained earnings and
partnership capital account, and a consolidated statement of changes in
financial position of the Borrower, for the immediately preceding fiscal
year, all in reasonable detail including footnotes to such financial
statements, such financial statements to be audited and accompanied by the
opinion of an Accountant.
Section 8.6. RELEASE OF EQUIPMENT.
(a) The Borrower shall have the right at any time or from time to time to
sell or otherwise dispose of all or any part of the Equipment subject, however,
to all of the following terms and conditions:
(i) The Borrower shall, prior to or simultaneously, with any such
sale or other disposition of any Equipment, cause to be substituted
therefor equipment which is determined by the Board to have a value
substantially equal to the value of the item of Equipment so sold or
otherwise disposed of at the time said item of Equipment was sold or
disposed by the Borrower pursuant to the terms hereof, but which equipment
may, however, be of a different kind or type or have a different function
or purpose;
(ii) The security interest granted pursuant to the Security
Instruments shall attach to the equipment so substituted upon its
acquisition by the Borrower and its installation on and building on the
Land and prior to the sale or other disposition of the Equipment originally
subject to such security interest.
(iii) The Borrower shall execute any and all documents, instruments,
agreements or other writings (including, but not limited to, one or more
Uniform Commercial Code financing statements) and otherwise do all acts and
things which the Board shall reasonably deem necessary or advisable to
perfect or continue perfection of a security interest in the equipment so
substituted;
(iv) The Borrower shall pay any and all reasonable expenses
(including, but not limited to, any applicable filing fees) incurred by the
Board or the Trustee in connection with the perfection or continuation of
such security interest; and
(v) The Borrower shall, not less than fifteen days prior to the
consummation of any such sale or disposition, furnish the Board with a
certificate signed by the Authorized Representative of the Borrower setting
forth (1) a description of the item of Equipment which the Borrower
proposes to sell or otherwise dispose of, which description has been
previously set forth in the copy of Exhibit B hereto maintained by the
Trustee in accordance with the Single Lot Resolution, (2) a description of
the equipment to be proposed to be substituted for the item of Equipment
sold or otherwise disposed of, which description shall be sufficient for
the creation and perfection of a security interest in said equipment under
the Uniform Commercial Code of the State, (3) a statement to the effect
that the equipment proposed to be so substituted is now owned by the
Borrower and in the possession of the Borrower and is free and clear of
all security interests, liens, and encumbrances of any kind whatsoever
and (4) a submission of reasonable proof satisfactory to the Board that
such equipment proposed to be substituted is now owned by the Borrower
and in possession of the Borrower and is free and clear of all
security interest, liens and encumbrances of any kind whatsoever.
The description of substituted equipment provided for in Section 8.6(a)
above shall, when furnished to the Board, constitute an amendment or supplement
to Exhibit B hereof. Items of Equipment replaced and substituted pursuant to
the terms of this Section 8.6(a) shall be deleted from Exhibit B by the Board.
The Borrower shall not substitute or replace any item of Equipment pursuant
to this Section 8.6(a) for any property which is not free and clear of all
security interests, liens and encumbrances of any kind whatsoever.
(b) The Borrower will from time to time, upon the written request of the
Board or the Trustee, file with the Board and the Trustee a list of Equipment
currently on the Land, which list shall further identify said items of equipment
substituted pursuant to Section 8.6(a) hereof and the date and reason for
substitution. The Borrower shall have sixty days in which to respond to each
such request, but shall be obligated to respond to such request no more than
twice each calendar year.
(c) Notwithstanding the provisions set forth in Section 8.6(a) of this
Agreement, the Borrower shall have the right at any time or from time to time to
sell or otherwise dispose of all or any part of the Equipment free and clear of
the security interest created by the Security Instruments, without being
obligated to substitute new equipment therefor, if:
(i) The items of Equipment so disposed from time to time have an
aggregate Appraised Value at the time of disposition of $10,000 (the
Borrower is to furnish to the Board written evidence of such Appraised
Value for each item of Equipment so disposed); or
(ii) The ratio of the outstanding principal amount of the Appraised
Value of the Security Property (excluding the items of Equipment to be so
disposed) at the time of proposed disposition shall exceed one hundred
fifty nine percent (159%) to the Loan (the Borrower is to furnish to the
Board written evidence of such Appraised Value of the Security Property);
or
(iii) The amount of the Appraised Value of the items of Equipment to
be disposed of, to the extent such Appraised Value exceeds the amount
described in clause (i), is deposited in the Special Redemption Account and
is invested and applied in the manner prescribed in Section 8.12 of this
Agreement.
Section 8.7. CERTIFICATE OF NO DEFAULT. The Borrower agrees to deliver
to the Trustee and to the Board within 120 days after the close of each fiscal
year of the Borrower, a
certificate of an Authorized Representative of the Borrower (a) to the effect
that the Borrower is not aware of any condition, event or act which
constitutes an Event of Default hereunder or under the Security Instruments,
and no condition, event or act which, with notice of lapse of time, or both,
would constitute such an Event of Default, or if any such condition, event or
acts exists, specifying the same, and (b) to the effect that it is not aware
of any failure in the payment of any part of the principal of or interest on
any outstanding indebtedness of the Borrower for money borrowed and as the
same shall become due and payable, whether at the stated maturity of such
indebtedness or at a date fixed for redemption or otherwise, or the
acceleration of the maturity of any such indebtedness following a default
under the terms of any agreement or instrument relating to any such
indebtedness.
Section 8.8. NOTICE OF DEFAULT. The Borrower shall forthwith, upon the
occurrence of an Event of Default hereunder or under the Security Instruments or
upon the occurrence of a condition, event or act which, with notice or lapse of
time, or both, would constitute such an Event of Default, notify in writing the
Trustee and the Board of the occurrence of such Event of Default.
Section 8.9. ASSIGNMENT AND LEASING.
(a) This Agreement may be assigned in whole or in part and the Project may
be sold or leased as a whole or in part by the Borrower only with the prior
written consent of the Board and provided further that:
(i) No assignment (other than pursuant to Section 8.3 hereof) or
sale or lease shall relieve the Borrower from primary liability for any of
its obligations hereunder;
(ii) The assignee, transferee or lessee shall assume the obligations
of the Borrower hereunder to the extent of the interest assigned,
transferred or leased, except no such assumption shall be required if the
subject lease is a true lease for federal tax purposes;
(iii) The Borrower shall, within ten (10) days after the delivery
thereof, furnish or cause to be furnished to the Board and to the Trustee a
true and complete copy of each such assignment, instrument of transfer or
lease, as the case may be, and the instrument of assumption (where
required);
(iv) The assignment, transfer or lease shall be subject and
subordinate to the Lien of this Agreement, the Security Instruments and the
Pledge; and
(v) Neither the validity nor the enforceability of this Agreement,
the Security Instruments or any security interest created thereunder shall
be adversely affected thereby.
(b) As of the purported effective date of any assignment, transfer or
lease pursuant
to Section 8.9(a), the Borrower shall furnish the Trustee with an opinion, in
form and substance satisfactory to the Board, (i) of Independent Counsel that
the assignment, transfer or lease is subject and subordinate to the Lien of
the Security Instruments, (ii) of Independent Counsel that neither the
validity nor the enforceability of this Agreement and the Note will be
adversely affected thereby and (iii) of Independent Counsel opining that the
assumption of obligations of the Borrower by any Person pursuant to Section
8.9(a)(ii) hereof will constitute a valid and legally enforceable assumption
by such Person.
(c) Any reassignment, transfer or sublease in turn of any assignment,
transfer or lease entered into pursuant to Section 8.9(a) shall comply with and
be subject to all the provisions of Sections 8.9(a) and 8.9(b). Any sublease in
turn of a lease entered into pursuant to Section 8.9(a) shall be subject and
subordinate to such original lease or sublease.
Section 8.10. RIGHT TO INSPECT THE PROJECT AND SECURITY PROPERTY. The
Board, the Trustee and the duly authorized agents of either of them shall have
the right at all reasonable times and upon reasonable advance notice, to inspect
the Project and the Security Property.
Section 8.11. COMPLIANCE WITH ORDERS, ORDINANCES, ETC.
(a) The Borrower agrees throughout the Loan Term to promptly comply with
all statutes, codes, laws, acts, ordinances, orders, judgments, decrees,
injunctions, rules, regulations, permits, licenses, authorizations, directions
and requirements of all federal, state, county, municipal and other governments,
departments, commissions, boards, companies or associations insuring the
premises, courts, authorities, officials and officers, foreseen or unforeseen,
ordinary or extraordinary, which now or at any time hereafter may be applicable
to the Security Property or any part thereof, or to any use, manner of use or
condition of the Security Property or any part thereof.
(b) Notwithstanding the provisions of Section 8.11(a), the Borrower may in
good faith contest the validity or the applicability of any requirement of the
nature referred to in such subsection (a). In such event, the Borrower may fail
to comply with the requirement or requirements so contested during the period of
such contest and any appeal therefrom, unless the Board or the Trustee shall
notify the Borrower that by failure to comply with such requirement or
requirements the Lien of the Security Instruments or the security interest
created by Section 5.4(a) and 5.4(b) of this Agreement as to any part of the
Security Property may be materially endangered or the Security Property or any
part thereof may be subject to loss or forfeiture, in which event the Borrower
shall promptly take such action with respect thereto as shall be satisfactory to
the Trustee.
Section 8.12. LIENS AND ENCUMBRANCES.
(a) During the Loan Term and subject to the provisions of Section 5.4 of
this Agreement, the Borrower shall not permit or create or suffer to be
permitted or created any Lien upon the Security Property or any part thereof,
nor may the Borrower assign, sell or otherwise dispose of the Security Property
or any part thereof, without the prior written
consent of the Board, which shall not be unreasonably withheld. Any such
Lien, if nonetheless created or permitted, shall be discharged by the
Borrower forthwith.
(b) Notwithstanding the provisions of Section 8.12(a), the Borrower may in
good faith contest any Lien upon the Security Property or any part thereof by
reason of any labor, services or materials rendered or supplied or claimed to be
rendered or supplied with respect to the Project or any part thereof. In such
event, the Borrower may permit the items so contested to remain undischarged and
unsatisfied during the period of such contest and any appeal therefrom, unless
the Board shall notify the Borrower that by nonpayment of any such item or items
the security interest created by Section 5.4(a) and 5.4(b) of this Agreement may
be materially endangered or the Security Property or any part thereof may be
subject to loss or forfeiture, in which event the Borrower shall promptly secure
payment of all such unpaid items by filing a bond, in form and substance and in
such amount satisfactory to the Trustee, thereby causing a Lien to be removed.
(c) Upon the request of the Board or the Trustee, the Borrower shall
provide the Board and the Trustee, within sixty (60) days of such request, with
proof satisfactory to the Trustee that all items of Security Property continue
to be free and clear of all Liens.
Section 8.13. IDENTIFICATION OF EQUIPMENT. All Equipment shall be
properly identified by the Borrower by appropriate records, including
computerized records.
Section 8.14. RELOCATION OF THE EQUIPMENT. The Borrower covenants and
agrees that during the Loan Term it will not remove the Equipment (except in
accordance with the terms of Section 8.6 hereof) from the Land to a new location
either within or outside of the State, without first obtaining the express
written consent of the Board with respect to such removal and relocation.
Section 8.15. SECURITY INSTRUMENTS COVENANTS. The Borrower covenants and
agrees to perform all of the obligations and covenants imposed upon it pursuant
to the Security Instruments and the Borrower agrees that any failure to perform
such covenants shall, after the lapse of any applicable cure periods therein
expressly provided, constitute a default for purposes of this Agreement.
Section 8.16. COVENANT AGAINST DISCRIMINATION. The Borrower covenants and
agrees that in the performance of this Agreement the Borrower will not
discriminate or permit discrimination against any person or group of persons on
the grounds of race, color, religion, national origin or sex in any manner
prohibited by the laws of the United States of America or of the State.
Section 8.17. EMPLOYMENT RECORDS. Within sixty (60) days after the close
of each calendar year, the Borrower shall furnish a written report to the Board
of the total number of employees at the Project, and shall separately indicate:
(a) the number of permanent new jobs which was estimated to be created by the
Project on the Borrower's application to the Board, with job descriptions and
annual salaries; (b) which of these permanent new jobs are currently
filled; and (c) the average number of full-time, part-time or seasonal
employees at the Project within the three (3) categories of (i) professional,
managerial, technical, (ii) skilled, and (iii) semi-skilled or unskilled for
the current reporting period. In addition, such report shall contain
information with respect to employment at the Project that is specified by
the Board as being required to be contained in the employment reports
described in MINNESOTA STATUTES, Section 469.154, Subd. 7.
Section 8.18. CERTAIN FINANCIAL COVENANTS.
(a) For the fiscal year of the Borrower beginning January 1, 2000 and
thereafter, during the Loan Term and as of the date of any calculation, the
Borrower shall maintain a ratio of (i) earnings before paying interest on all
Indebtedness, taxes and making allowances for depreciation and amortization (all
in accordance with generally accepted accounting principles) plus capitalized
interest on the Bonds to (ii) regularly scheduled payments of principal and
interest on all Funded Indebtedness of the Borrower averaged for the last three
(3) full fiscal years for the Borrower of at least 1.5 to 1.0, provided,
however, no years prior to January 1, 2000 will be included in the calculation.
The outstanding principal amount of all Series 1997B Taxable, Lot 1 Bonds shall
constitute Funded Indebtedness of the Borrower for purposes of this Section.
(b) The Borrower shall have a Current Ratio of 2 to 1 for the fiscal years
prior to January 1, 2000 and thereafter 1.5 to 1.
(c) Notwithstanding anything contained herein to the contrary, the failure
by the Borrower to comply with the provisions of either Section 8.18(a) or
Section 8.18(b) of this Agreement shall not constitute an Event of Default under
this Loan Agreement, but shall result in the following requirements of the
Borrower during the continuance of such failure:
(i) The Borrower shall not, without the prior written consent of
the Board, incur any Funded Indebtedness other than Subordinated
Indebtedness and other than purchase money indebtedness for real or
personal property usable in the business of the Borrower.
(ii) The Borrower shall not, without the prior written consent of
the Board, pay any annual increases in total cash compensation (excluding
insurance, health, dental and pension benefits) to the shareholders,
directors and officers of the Borrower, or any person who is related by
blood or marriage, any of such shareholders who own 5% or more of the stock
of the Borrower, directors and officers in excess of 7% per annum.
(d) Failure to comply with the provisions of Sections 8.18(c) shall
constitute an Event of Default hereunder.
(e) The calculations required by Section 8.18 of this Loan Agreement shall
be prepared and certified by an Accountant and submitted to the Board and the
Trustee annually
pursuant to Section 8.5 of this Loan Agreement.
Section 8.19 COVENANT AGAINST LOANS, TRANSFERS, ETC. The Borrower
covenants and agrees that it will not, without the prior written consent of the
Board, make any loans or transfer title to any of its assets to any officer,
member or stockholder of the Borrower unless the loan or transfer is determined
to be the same as if it were at arm's length, between unrelated parties, in an
amount or at fair market value in the aggregate in excess of $100,000 in any
single transaction with the Borrower and $250,000 in the aggregate.
Section 8.20. COVENANT AGAINST SALE, GIFT, PURCHASE OR REDEMPTION OF
STOCK. The Borrower covenants and agrees that it will not, without the prior
written consent of the Board, gift, purchase, sell or redeem any capital stock
of the Borrower or purchase any treasury stock of the Borrower, if, after giving
effect to such transaction, (a) the Borrower would not be in compliance with
Section 8.18(a) or (b) of this Loan Agreement.
Section 8.21. VACANT POSITIONS. The Borrower agrees to list any vacant
new positions with the job services of the Commissioner of Jobs and Training or
a local service units as required by MINNESOTA STATUTES Section 268.66.
Section 8.22. PREVAILING WAGES. The Board hereby notifies the Borrower
that the Loan made pursuant to the Loan Agreement constitutes "financial
assistance" from a "state agency" within the meaning of Article 10, Section 7 of
Chapter 604, MINNESOTA LAWS (1990) and, therefore, the requirements of
subdivision (2) and the penalties of subdivision (3) of such statute apply to
Borrower and the Project except as and to the extent that it is determined that
the exception set forth in subdivision (5) of such statute is applicable. The
Board makes no representation as to the applicability or meaning of such
exception and the Borrower hereby agrees to comply with such statute to the
extent and in the manner provided by law.
Section 8.23. COVENANT AGAINST DIVIDENDS, ETC. The Borrower covenants and
agrees that it will not, without the prior written consent of the Authority, pay
or declare any dividends on any class of its capital stock to any officer or
stockholder of the Borrower, in an amount or at fair market value in the
aggregate in excess of $-0- in any single fiscal year of the Borrower.
Section 8.24. COVENANT AGAINST UNREASONABLE COMPENSATION. The Borrower
covenants and agrees that it will not pay directors' and officers' salaries or
provide any form of compensation to its directors and officers in excess of that
reasonable for services rendered.
Section 8.25. JOB CREATION. The Borrower will create 125 new jobs which
pay more than $10 per hour, exclusive of all benefits and taxes, from November
1, 1996 to the date 12 months after production commences at the Borrower's
motorcycle manufacturing facility in Belle Plaine and shall create 175 new jobs
which pay more than $10 per hour, exclusive of all benefits and taxes, from
November 1, 1996 to the date 24 months after production commences at the
Borrower's motorcycle manufacturing facility in Belle Plaine.
ARTICLE IX
PLEDGE OF CERTAIN INTERESTS
Section 9.1. PLEDGE OF CERTAIN INTERESTS TO BONDHOLDERS. (a) The Board
under Section 1.04 of the General Bond Resolution and under Section 6.1 of the
Single Lot Resolution has Pledged all of its rights and interest and all
provisions of this Agreement, the Security Instruments and the Note (except
pursuant to Section 8.2 hereof) as security for the payment of the principal of,
premium, if any, and interest on the Bonds and the Single Lot Bonds. Such
Pledge shall in no way impair or diminish any obligation of the Borrower under
this Agreement, the Security Instruments or the Note. The Borrower hereby
consent to such Pledge by the Board.
(b) Except as provided in this Section 9.1 and in Article X of this
Agreement and except as otherwise expressly provided in this Agreement, the
Security Instruments and the Note, the Board shall not sell, assign, transfer,
convey or otherwise dispose of its interest in or its rights under this
Agreement, the Security Instruments and the Note, without the prior written
consent of the Borrower.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
Section 10.1. EVENTS OF DEFAULT DEFINED.
(a) The following shall be "Events of Default" under this Agreement and
the terms "Event of Default" or "Default" shall mean, whenever they are used in
this Agreement, any one or more of the following events:
(i) The failure by the Borrower to pay or cause to be paid, when
due, the amounts specified to be paid pursuant to Section 5.1, Section
5.2(a) or Section 11.1 hereof and the Note; or
(ii) The failure by the Borrower to observe and perform any
covenant contained in Section 8.3 hereof; or
(iii) The failure by the Borrower to observe and perform any
covenant, condition or agreement hereunder on its part to be observed or
performed (except obligations referred to in Sections 10.1(a)(i),
10.1(a)(ii), 10.1(a)(iv), 10.1(a)(v) and 10.1(a)(vi) hereof) on the earlier
of (A) written notice thereof specifying such failure in the event that the
failure is not of the type or nature which the Board reasonably believes
can be remedied within thirty (30) days or (B) the thirty-first (31st) day
after written notice, specifying such failure and requesting that it be
remedied, given to the Borrower by the Board or the Trustee; or
(iv) The dissolution or liquidation of the Borrower or the filing by
the Borrower of a voluntary petition in bankruptcy, or the failure by the
Borrower within sixty (60) days to lift any execution, garnishment or
attachment of such consequence as will impair such Person's ability to
carry on its operations at the Project, or the commission by the Borrower
of any act of bankruptcy, or the adjudication of the Borrower as a
bankrupt, or the assignment of assets by the Borrower for the benefit of
its creditors, or the entry by the Borrower into an agreement of
composition with such Person's creditors, or the approval by a court of
competent jurisdiction of a petition applicable to the Borrower in any
proceeding for its reorganization instituted under the provisions of any
state or Federal bankruptcy or similar law, or appointment by final order,
judgment or decree of a court of competent jurisdiction of a receiver of
the whole or a substantial portion of the Properties of the Borrower
(unless such receiver is removed or discharged within sixty (60) days of
the date of his qualification); or
(v) The failure in the payment of any part of the principal of or
interest on any Indebtedness of the Borrower for money borrowed having an
outstanding principal amount of $100,000, when and as the same shall become
due and payable, whether at the stated maturity of such Indebtedness or at
a date fixed for redemption or otherwise, which failure results in the
acceleration of the maturity of any such indebtedness
following a default under the terms of any agreement or instrument
relating to any such indebtedness; or
(vi) The occurrence and continuance of an "event of default" under
the Security Instruments; or
(vii) The failure of Borrower to comply with the requirements of
Section 4.2 or Section 5.4 hereof as and when applicable; or
(b) Notwithstanding the provisions of Section 10.1(a), if by reason of
FORCE MAJEURE either party hereto shall be unable in whole or in part to carry
out its obligations under this Agreement and if such party shall give notice and
full particulars of such FORCE MAJEURE in writing to the other party and to the
Trustee within a reasonable time after the occurrence of the event or cause
relied upon, the obligations under this Agreement of the party giving such
notice, so far as they are affected by such FORCE MAJEURE, shall be suspended
during the continuance of the inability, which shall include a reasonable time
for the removal of the effect thereof. The suspension of such obligations for
such period pursuant to this subsection (b) shall not be deemed an Event of
Default under this Section 10.1. Notwithstanding anything to the contrary in
this subsection (b), an event of FORCE MAJEURE shall not excuse, delay or in any
way diminish the obligations of the Borrower to make the payments required by
Section 5.1, Section 5.2 and Section 11.1(a) hereof, to obtain and continue in
full force and effect the insurance required by Section 6.4 hereof, to provide
the indemnity required by Section 8.2 hereof and to comply with the provisions
of Sections 2.3, 4.3, 5.2(e), 5.3, 6.3, 6.5, 6.6, 6.7, 8.1, 8.3, 8.4, 8.5, 8.6,
8.7, 8.8, 8.9, 8.10, 8.11, 8.12, 8.14, 8.15, 8.16, 8.17, 8.18, 8.19, 8.20, 8.21,
8.22, 8.23, 8.24 and 8.25 hereof. The term "FORCE MAJEURE" as used herein shall
include, without limitation, acts of God, strikes, lockouts or other industrial
disturbances, acts of public enemies, orders of any kind of the government of
the United States of America or of the State or any of their departments,
agencies, governmental subdivisions, or officials, or any civil or military
authority, insurrections, riots, epidemics, landslides, lightning, earthquakes,
fire, hurricanes, storms, floods, washouts, droughts, arrests, restraint of
government and people, civil disturbances, explosions, breakage or accident to
machinery, transmission pipes or canals, partial or entire failure of utilities,
or any other cause or event not reasonably within the control of the party
claiming such inability.
Section 10.2. REMEDIES ON DEFAULT.
(a) Whenever any Event of Default shall have occurred, the Board or the
Trustee may take any one or more of the following remedial steps:
(i) Declare, by written notice to the Borrower, to be immediately
due and payable, whereupon the same shall become immediately due and
payable and so accelerated: (A) all unpaid amounts payable pursuant to
Section 5.1 hereof, and pursuant to the Note (constituting principal on the
Loan and accrued but unpaid interest thereon) and (B) all other payments
due under this Agreement and pursuant to the Note (whether or not
constituting principal on the Loan and accrued but unpaid interest
thereon);
(ii) Terminate the disbursement of any moneys in the Construction
Account in accordance with Section 4.3 hereof and, upon acceleration of the
Loan pursuant to Section 10.2(a)(i) of this Agreement, transfer such moneys
to the Special Redemption Account;
(iii) Enforce the Security Instruments on, and any security interest
in, the Equipment;
(iv) As provided in the Security Instruments, take possession of the
Equipment and for that purpose the Borrower agrees that (a) the Borrower
will, when so requested by the Board or the Trustee assemble the Equipment
and make it available to the Board or the Trustee on the premises on which
it is located and (b) the Board and the Trustee, their employees, agents
and representatives shall have the right to peacefully enter upon any
premises in the possession of the Borrower wherein the Equipment or any
part thereof may be located and take possession of and remove such
Equipment without interference or hindrance from the Borrower, the
officers, agents or employees or any person associated therewith;
(v) Upon fifteen (15) calendar days' notice to the Borrower (which
the Borrower hereby agree is commercially reasonable) the Board or Trustee
may proceed to sell or otherwise dispose of the Equipment or any part
thereof by public or private sale in any commercially reasonable manner
(and without intending to limit the generality of the foregoing, the
Borrower hereby agrees that the sale of such property at a public auction
conducted by a reputable auctioneer in the manner in which such auctions
are usually conducted is commercially reasonable); and
(vi) Take any other action at law or in equity which may appear
necessary or desirable to collect the payments then due or thereafter to
become due and to enforce the obligations, agreements or covenants of the
Borrower under this Agreement, the Security Instruments and the Note.
(b) Any sums realized as a consequence of any action taken pursuant to
Section 10.2(a) shall be paid to the Trustee and shall be applied by the
Trustee, subject to the provisions of Section 7.04 of the General Bond
Resolution, in accordance with the provisions of Section 6.06(d) of the General
Bond Resolution, to which such application the Borrower hereby consents.
Section 10.3. REMEDIES CUMULATIVE. No remedy herein conferred upon or
reserved to the Board is intended to be exclusive of any other available remedy,
but each and every such remedy shall be cumulative and 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 and power may be exercised from time to time
and as
often as may be deemed expedient. In order to entitle the Board to exercise
any remedy reserved to it in this Article X, it shall not be necessary to
give any notice, other than such notice as may be herein expressly required
in this Agreement and the Note or required by law.
Section 10.4. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In the event
the Board or the Trustee should employ attorneys or incur other expenses in
response to any request of the Borrower or for the collection of amounts payable
hereunder or the implementation or enforcement of performance or observance of
any obligations or agreements on the part of the Borrower herein contained,
including without limitation obligations and agreements under this Section, the
Borrower shall, on demand therefor, pay to the Board or the Trustee the
reasonable fees of such attorneys (determined at their usual and customary
rates) and such other expenses so incurred. Commencement of a lawsuit to
recover any amount payable under this Agreement or the Note shall be deemed a
demand for payment of all expenses incurred in the course of such lawsuit,
including without limitation attorneys' fees incurred in connection with such
lawsuit.
Section 10.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the event
any agreement contained herein 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 including
without limitation a subsequent breach or subsequent breaches of the same
provision of this Agreement.
ARTICLE XI
EARLY TERMINATION OF AGREEMENT;
PREPAYMENT OF LOAN
Section 11.1. EARLY TERMINATION OF AGREEMENT. The Borrower shall have an
option to terminate this Agreement upon filing with the Board and the Trustee a
certificate signed by an Authorized Representative of the Borrower stating the
Borrower's intention to do so on the next succeeding Bond Payment Date pursuant
to this Section and complying with the requirements of Section 3.02(b) of the
General Bond Resolution and upon further compliance with the requirements set
forth in Section 11.2 hereof.
Section 11.2. CONDITIONS TO EARLY TERMINATION OF AGREEMENT. In the event
the Borrower exercises its right or is required to terminate this Agreement in
accordance with any provision of Section 11.1 hereof, the Borrower shall comply
with the requirements set forth in the following three subsections:
(a) The following payments shall be made:
(i) TO THE TRUSTEE FOR THE ACCOUNT OF THE BOARD: at least thirty
days prior to the Bond Payment Date, an amount certified by the Trustee
which, when added to the total amount on deposit with the Trustee for the
account of the Board and the Borrower and available for such purpose, will
be sufficient (A) to pay, for deposit into the Special Redemption Account,
the amount required by Section 2.8(a) of the Single Lot Resolution as the
Redemption Price for the Single Lot Bonds in connection with the redemption
in whole of such Bonds, if such termination is pursuant to Section 11.1
hereof, or (B) to pay, for deposit into the Optional Redemption Account,
the Redemption Price of the Single Lot Bonds in connection with the
redemption in whole of such Bonds, in accordance with the terms of Section
2.7(a) of the Single Lot Resolution, together with all interest on such
Single Lot Bonds which will accrue to the date of prepayment (which shall
be the next succeeding Bond Payment Date for which the Trustee may give
notice pursuant to Section 3.03 and Section 3.04 of the General Bond
Resolution), if such termination is pursuant to Section 11.1 hereof;
(ii) TO THE BOARD: an amount certified by the Board sufficient to
pay all unpaid fees and expenses of the Board incurred under this Agreement
and the Board Resolution; and
(iii) TO THE APPROPRIATE PERSON: an amount sufficient to pay all
other fees, expenses or charges, if any, due and payable or to become due
and payable under this Agreement and the Board Resolution and not otherwise
paid or provided for.
(b) The certificate required to be filed pursuant to Section 11.1, shall
specify the date upon which the payments pursuant to Section 11.2(a) shall be
made, which date shall not be less than ninety (90) nor more than one hundred
twenty (120) days from the date such
certificate is filed with the Board and the Trustee.
Section 11.3. DISCHARGE OF LIEN. If the Borrower shall pay or cause to be
paid, or there shall otherwise be paid, to the Holders of all outstanding Single
Lot Bonds or to the Trustee with respect thereto, the principal or Redemption
Price, if applicable, and interest due or to become due at the times and in the
manner stipulated therein, then the rights in the Security Property hereby
granted and all covenants, agreements and other obligations of the Borrower
hereunder to the Board and the Trustee shall thereupon cease, terminate and
become void and be discharged and satisfied. In such event, the Board and the
Trustee shall cancel and discharge the Lien of the Security Instruments and the
security interest in the Equipment created by the Security Instruments and
execute and deliver to the Borrower all such instruments as may be appropriate
to evidence such discharge and satisfaction of such liens. After payment in
full of the Single Lot Bonds and the interest thereon and the payment of all
fees, charges, expenses and other amounts required to be paid under this
Agreement, the Note and the Single Lot Resolution, all amounts on deposit with
the Trustee for the account of the Board and the Borrower under this Agreement,
the Note and the Single Lot Resolution, if any, shall be applied by the Trustee
in accordance with the provisions of Section 5.21 of the General Bond
Resolution.
Section 11.4. PREPAYMENT OF LOAN IN PART.
(a) The Borrower shall have the Option to prepay the Loan in part upon
filing with the Board and Trustee a certificate signed by an Authorized
Representative stating the Borrower's intention to do so pursuant to this
Section and complying with the requirements of Section 2.7(a) of the Single Lot
Resolution and Section 3.02(b) of the General Bond Resolution. Such certificate
shall specify the date (which shall be a Bond Payment Date) and amount of the
partial prepayment of the Loan, which date shall not be more than one hundred
twenty (120) days nor less than ninety (90) days after such notice.
(b) Upon the filing of such certificate, the Borrower shall pay to the
Trustee for the account of the Board a sum sufficient to pay, for deposit into
the Optional Redemption Account, the Redemption Price of the amount of the
Single Lot Bonds to be redeemed (from the amounts to be prepaid on the Loan as
certified in Section 11.4(b) of this Agreement) in accordance with the terms of
Section 2.7(a) of the Single Lot Resolution, together with all interest on such
Single Lot Bonds which will accrue to the date of prepayment.
Section 11.5. REFUNDING CONSENT. If after August 1, 1997 the Board
certifies to the Borrower that it wishes to refund the Single Lot Bonds in order
to permit the Board to amend the provisions of the General Bond Resolution or
the General Guaranty Fund Pledge and Escrow Agreement without the necessity of
obtaining Bondholder consent, the Borrower hereby consents to the issuance of a
Lot of refunding Bonds to refund the Single Lot Bonds at the then prevailing
rates of interest, provided, however, that Borrower will continue to make the
same payments due on the Note as established in the Single Lot Resolution as of
the Date of Issuance and under this Agreement and that any increase or decrease
in payments shall be paid to or received by the Board. In connection with any
such refunding, the Borrower hereby
covenants to amend or supplement this Agreement and the Security Instruments,
to such extent, or to provide substitute documents therefor, as in the
opinion of the Board shall be necessary to effect such refunding, including
the payment of debt service on such refunding Bonds when and as due and at
the rate of interest set forth therein. The Borrower hereby consents, in
connection with such refunding, to any deposit by the Board of all or part of
the proceeds of such refunding Bonds (i) into the Special Redemption Account
to prepay in whole the Single Lot Bonds or (ii) to be held by the Trustee to
defease the Single Lot Bonds in accordance with the provisions of Section
11.02 and Section 11.03 of the General Bond Resolution.
ARTICLE XII
MISCELLANEOUS
Section 12.1. NOTICES. All notices, other than interest billing notices,
certificates or other communications hereunder shall be in writing and shall be
sufficiently given and shall be deemed given when delivered and, if delivered by
mail, shall be sent by certified or registered mail, postage prepaid, return
receipt requested, addressed as follows:
TO THE BOARD: Minnesota Agricultural and
Economic Development Board
000 Xxxxx Xxxxxx
000 0xx Xxxxx Xxxx
Xxxxx Xxxx, Xxxxxxxxx 00000
ATTENTION: Financial Management Division
(Department of Trade and Economic Development)
TO THE BORROWER: Excelsior-Xxxxxxxxx Motorcycle Manufacturing Company
000 Xxxxxx Xxxxx
Xxxxx Xxxxxx, XX 00000
ATTENTION: Chief Executive Officer
TO THE TRUSTEE: U. S. Bank National Association
c/o First Trust National Association
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
ATTENTION: Corporate Trust Administration
A duplicate copy of each notice, certificate and other communication given
hereunder by either the Board or the Borrower to the other shall also be given
to the Trustee. The Board, the Borrower and the Trustee may, by notice given
hereunder, designate any further or different addresses to which subsequent
notices, certificates and other communications shall be sent.
Section 12.2. BINDING EFFECT. This Agreement shall inure to the benefit
of and shall be binding upon the Board, the Borrower and their respective
personal representatives, heirs, devisees, successors and assigns (as
applicable) and shall create no rights in any other parties except as may be
specifically set forth elsewhere in this Agreement.
Section 12.3. 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 12.4. AMENDMENTS, CHANGES AND MODIFICATIONS. This Agreement, the
Security Instruments and the Note may not be amended, changed, modified, altered
or
terminated without the concurring written consent of the Bondholders, except
as provided in Section 6.08 of the General Bond Resolution. Wherever the
consent or approval of the Board or the Trustee is required or permitted under
this Agreement, the Security Instruments or the Note, such consent or approval
shall not be unreasonably withheld (based upon the standards set forth in the
General Bond Resolution) and shall be promptly given (but this provision shall
not be deemed to require any special meetings by the Board).
Section 12.5. DATA PRIVACY DISCLOSURE. The Borrower understands that the
data which the Borrower provides pursuant to the Agreement, including, but not
limited to, information required under Section 8.3, Section 8.4, Section 8.5,
Section 8.7 and Section 8.18 will be used by the Board to:
(a) Assess Borrower's financial status;
(b) Make any reports required by the Act, any other law or
government regulation in accordance with MINNESOTA STATUTES Section 13.71;
(c) Provide such information to the public, including, but not
limited to, potential purchasers of its Bonds, Bondholders, Bond Counsel
and the Board's underwriters and placement agents, as is needed in
connection with the sale, issuance and payments of Bonds;
(d) Enforce this agreement and any mortgage or other security
instrument between the Borrower and the Board; and
(e) Operate and evaluate its Program.
The Borrower further understands that there is a possibility that the data might
constitute a public record and may be examined by anyone. The Borrower hereby
consents to the use of such data as described above and to its public
disclosure. Failure to provide the required data may constitute an Event of
Default under Section 10.1. In the event a Person other than the Trustee,
investment bankers representing the Board or any agent thereof requests the
information described in Sections 8.4, 8.5 or 8.18, the Board shall exercise its
best efforts to provide the Borrower advance notice of its intention to provide
such information to such Person.
Section 12.6. EXECUTION OF COUNTERPARTS. This Agreement may be executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
Section 12.7. APPLICABLE LAW. This Agreement shall be governed
exclusively by the applicable laws of the State.
Section 12.8. RECORDING AND FILING. (a) The financing statements
perfecting the security interests created by the Security Instruments or by this
Agreement in all amounts payable hereunder shall be recorded or filed, as the
case may be, in such office or offices as
may at the time be provided by law as the proper place for the recordation or
filing thereof. The Borrower shall be responsible for such recording and
filing and shall bear the expense associated therewith and in connection with
the continued validity and perfection thereof.
(b) The Board and the Borrower shall execute and deliver all instruments
and shall furnish all information necessary or appropriate to perfect or protect
any security interest created or contemplated by this Agreement, the Security
Instruments or the Board Resolution.
Section 12.9. SURVIVAL OF OBLIGATIONS. This Agreement, the Security
Instruments and the Note shall remain in full force and effect until the Series
1997B Bonds, together with all interest thereon, and all amounts payable under
this Agreement, the Security Instruments and the Note and the Board Resolution
shall have been paid in full. However, the obligations of the Borrower to make
the payments required by Section 5.1 and Section 5.2 hereof and Article XI
hereof, and to provide the indemnity required by Section 8.2 hereof and payment
of attorney fees required by Section 10.4 hereof, shall survive the termination
of this Agreement and the full payment of the Single Lot Bonds.
Section 12.10. TABLE OF CONTENTS AND SECTION HEADINGS NOT CONTROLLING. The
Table of Contents and the headings of the several Sections in this Agreement
have been prepared for convenience of reference only and shall not control,
affect the meaning of or be taken as an interpretation of any provision of this
Agreement.
Section 12.11. LIMITED LIABILITY. The Act prescribes and the parties
intend that by reason of making this Agreement, by reason of the issuance of the
Single Lot Bonds, by reason of the performance of any act required of the Board
by this Agreement, or by reason of the performance of any act requested of the
Board by the Borrower, no indebtedness or charge against the general credit or
taxing powers, if any, of the Board within the meaning of any constitutional or
statutory limitation shall occur.
IN WITNESS WHEREOF, the Board and the Borrower have caused this Loan
Agreement to be executed in their respective names as of November 1, 1997.
MINNESOTA AGRICULTURAL AND
ECONOMIC DEVELOPMENT BOARD
By
Its Chair
ATTEST:
By
--------------------
Its Executive Director
EXCELSIOR-XXXXXXXXX MOTORCYCLE
MANUFACTURING COMPANY
By
Its
----------------------------------
Signature page of the Loan Agreement dated as of November 1, 1997
between the Minnesota Agricultural and Economic Development Board and
Excelsior-Xxxxxxxxx Motorcycle Manufacturing Company
SCHEDULE I
EXCELSIOR-XXXXXXXXX MOTORCYCLE MANUFACTURING COMPANY
PROMISSORY NOTE
No. 1 $7,145,000
Excelsior-Xxxxxxxxx Motorcycle Manufacturing Company, a Minnesota
corporation, acknowledges itself indebted and for value received hereby promises
to pay to the order of the Minnesota Agricultural and Economic Development Board
as the statutory successor to the Minnesota Energy and Economic Development
Authority (the "Board") and its successors and assigns, the principal sum of
SEVEN MILLION ONE HUNDRED FORTY FIVE THOUSAND DOLLARS ($7,145,000) together with
interest on the unpaid principal balance of this Note until the Borrower's
obligation with respect to the payment of such sum shall be discharged at a rate
of interest identical to the stated rates of interest on the Series 1997B Bonds
referred to below (taking into account the different rates for the different
maturities and principal amounts of the Series 1997B Bonds) but payable not as
provided in the Series 1997B Bonds but as provided below and in the Loan
Agreement referred to below.
This Note is issued to evidence the obligation of Excelsior-Xxxxxxxxx
Motorcycle Manufacturing Company under and pursuant to, and shall be governed by
and construed in accordance with the terms and conditions of, the Loan Agreement
dated as of November 1, 1997 (the "Loan Agreement") between the Board and
Excelsior-Xxxxxxxxx Motorcycle Manufacturing Company, for the repayment of the
loan made by the Board to Excelsior-Xxxxxxxxx Motorcycle Manufacturing Company,
thereunder from the proceeds of the Board's $7,145,000 principal amount of
Minnesota Small Business Development Loan Program Taxable Revenue Bonds, Series
1997B, Lot 1 (the "Bonds") and the payment of interest thereon, including
provision for prepayment of said loan in certain cases, and for the satisfaction
of a certain right of reimbursement of the General Guaranty Fund as provided in
the Loan Agreement under certain circumstances and for the satisfaction of a
certain right of reimbursement of the Board as provided in the Loan Agreement
under certain circumstances. This Note is secured by the Security Instruments
(as defined in the Loan Agreement) made by Excelsior-Xxxxxxxxx Motorcycle
Manufacturing Company to the Board and certain other property, as provided in
the Loan Agreement and granted by the maker to the payee as provided in the Loan
Agreement. The Loan Agreement (together with this Note) and the Security
Instruments have been pledged to the Holders of the Bonds from time to time
issued under the Minnesota Small Business Development Loan Program Revenue Bond
General Bond Resolution (the "General Bond Resolution") adopted by the Board on
September 26, 1984 and thereafter amended and restated from time to time
pursuant to its terms.
As provided in the Loan Agreement and subject to the provisions thereof,
payments hereon are to be made in lawful money of the United States of America
at the place and in the manner provided in the Loan Agreement, in monthly
installments of principal and interest, commencing December 1, 1997, and payable
thereafter on the first day of each month, such
installments to be applied first to the payment of interest then due on this
Note, and the remaining balance thereof to reduce the unpaid principal amount
of this Note, with each installment payable as interest to include interest
payable in advance due to and including the first day of the next succeeding
month from the month in which the installment is payable and with each
installment payable as principal to be similarly paid in advance. The
monthly installments to be paid on this Note shall be an amount equal to (A)
on January 1, 1998and (i) an installment of interest (after receiving a
credit for any accrued interest on the Bonds received from the Placement
Agents (as defined in the Loan Agreement) of the Bonds) equal to the
interest due on the Bonds on February 1, 1998; and (ii) an installment of
principal equal to one-half of the principal due on the Bonds on August 1,
1998; and (B) for the period commencing on February 1, 1998 and on the first
day of each month thereafter (1) one-sixth of the interest installment due on
the Bonds on the next succeeding bond payment date thereof (taking into
account such in-advance payments) and (2) one-twelfth of the principal
installment due on the Bonds on the next succeeding bond payment date on
which a principal installment thereon is due (taking into account such
in-advance payments), such installments to be reduced by that sum or sums
such that on or before the bond payment date on which a principal installment
is due thereon any amounts then on deposit in the Holding Account created
with respect to the Bonds pursuant to the provisions of the General Bond
Resolution plus the monthly installment then to be paid on this Note shall
equal the debt service payment on the Bonds due on such bond payment date.
This Note may be prepaid in whole or in part in accordance with the
provisions of the Loan Agreement.
Excelsior-Xxxxxxxxx Motorcycle Manufacturing Company agrees to make the
payments on this Note on the dates and in the amounts specified herein and in
the Loan Agreement and in addition agrees to make such other payments at such
times and upon such conditions as are required pursuant to the Loan
Agreement. In the "Event of Default", as defined in the Loan Agreement, the
principal of and interest on this Note may be declared immediately due and
payable as provided in the Loan Agreement. This Note may be cancelled,
amended or supplemented as provided in the Loan Agreement.
Presentment for payment, notice of dishonor, protest and notice of protest
are hereby waived by the makers hereof.
IN WITNESS WHEREOF, Excelsior-Xxxxxxxxx Motorcycle Manufacturing Company
has caused this Note to be executed in its respective name and on its behalf by
the manual signature of its _______________, all as of December 1, 1997.
EXCELSIOR-XXXXXXXXX MOTORCYCLE
MANUFACTURING COMPANY
By
Its__________________________________
EXHIBIT A TO
LOAN AGREEMENT
LEGAL DESCRIPTION OF LAND
Xxx 0, Xxxxx 0, and Xxx 0, Xxxxx 0, Xxxxxxxxx-Xxxxxxxxx Xxxxxxxxxx Xxxx
Subdivision, according to the recorded plat thereof, Xxxxx County,
Minnesota.
X-00
XXXXXXX X-0 TO
LOAN AGREEMENT
TOTAL
PAINT FINISHING SYSTEM COST
10 Stage Surface Preparation Machine $ 603,280
R.O. Water System 117,706
Electrocoat System 524,351
5 Stage Postrinse Machine 174,761
Electrocoat Bake Oven and Cooling Tunnel 222,360
Dry-Off Oven 85,123
Powder Cure Oven & Cooldown Tunnel 274,655
Tack Booths (2) 54,028
Base Coat Booths (2) 96,893
Demask Booths (2) 62,079
Clear Coat Environmental Room 139,786
Flash Enclosures 57,171
Base Coat/Clear Coat Ovens and Cooldown 432,425
Programmable Logic Control System 73,396
Wastewater Treatment System 273,589
Power & Free Conveyor System 1,966,153
HVAC System 1,350,348
Nordson booths 548,670
Total $7,056,774
B-1
EXHIBIT B-2 TO
LOAN AGREEMENT
B-2
EXHIBIT B-3 TO
LOAN AGREEMENT
B-3
EXHIBIT C
$7,145,000
Minnesota Agricultural and Economic Development Board
Minnesota Small Business Development
Loan Program Revenue Bonds
Series 1997B Taxable, Lot 1
DISBURSEMENT REQUEST NO. ____ FOR DISBURSEMENT
OF FUNDS FROM THE CONSTRUCTION ACCOUNT
TO: U.S. Bank National Association
Corporate Trust Administration
000 Xxxx Xxxxx Xxxxxx
Xx. Xxxx, Xxxxxxxxx 00000
I, a duly authorized representative of Excelsior-Xxxxxxxxx Motorcycle
Manufacturing Company (the "Borrower") and the obligor under a Loan Agreement,
dated as of November 1, 1997 (the "Loan Agreement), between the Minnesota
Agricultural and Economic Development Board (the "Board") and the Borrower,
hereby certify on behalf of the Borrower pursuant to Section 4.3 thereof as
follows:
(a) I have reviewed appropriate records and documents of the Borrower
relating to the matters covered by this Request. All capitalized terms used in
this Request shall have the meaning given them in the Loan Agreement.
(b) The Borrower has provided the Trustee and the Board with proof of
satisfaction of the requirements in Section 4.3(a)(ii)(F) of the Loan Agreement
for $3,500,000 in Equipment.
(c) This certificate accompanies the Borrower's request number ______
for advances under the Loan Agreement dated as of November 1, 1997 between
Borrower and the Minnesota Agricultural and Economic Development Board (the
"Board"). Previous to this request for advance the Borrower has received
advances of $____________ of Bond Proceeds.
(d) The presently pending request for advance seeks $__________ in Bond
Proceeds.
(e) The Trustee may rely upon the foregoing certifications in approving
any advance requested by Borrower.
(f) No item hereby requested to be paid or reimbursed has been included in
any Request previously filed by the Borrower with the Trustee under Section 4.3
of the Loan
C-1
Agreement.
(g) No default by the Borrower under the Loan Agreement or the Security
Instruments has occurred which has not been cured.
(h) The amount remaining in the Construction Account (together with any
anticipated investment income to be credited thereto) will, after payment of the
amount requested by this Request, be sufficient to pay the remaining costs of
the Project.
(i) All costs of issuance have been paid by the Borrower or sufficient
funds have been deposited for such costs of issuance in the Cost of Issuance
Account.
(j) Payment of the amounts requested herein will not result in a violation
by the Borrower of its representations as set forth in the Loan Agreement or the
Security Instruments.
(k) All of the items to be acquired as Equipment on Schedule A hereto have
been acquired, installed and accepted and are free and clear of all security
liens and encumbrances and a filed UCC-1 is attached hereto reflecting the
Board's security interest which has been assigned to U.S. Bank National
Association in the Equipment on Schedule A hereto and a UCC search has been done
which is attached hereto to indicate all security interests in the Borrower.
(l) Attached hereto is an opinion of counsel to the Borrower that the
Equipment on Schedule A hereto is free and clear of all liens except the lien
of the Security Instruments and the security interest of the Board in the
Equipment has been perfected and is valid.
(m) Each item for which payment or reimbursement is hereby requested (a)
has been paid or incurred or is now due and payable and (b) is or was necessary
in connection with the acquisition and installation of the Project.
(n) The Board and any successor has the right to use Equipment and the use
of the Equipment and the products produced by the Equipment will not violate any
trademark, tradename or patent of any Person.
(o) All conditions in Sections 2 and 4 of the Disbursing Agreement have
been met.
You are hereby requested to advance and disburse from the Construction
Account in the Construction Account the amounts shown on Schedules A and B and
make payment to the persons entitled to receipt thereof as shown on said
Schedules.
C-2
WITNESS my hand this ___ day of ___________, 199_.
EXCELSIOR-XXXXXXXXX MOTORCYCLE
MANUFACTURING COMPANY
By
------------------------------------
Its
---------------------------------
Approved:
MINNESOTA AGRICULTURAL AND
ECONOMIC DEVELOPMENT BOARD
By
----------------------------------
Its Executive Director
C-3
SCHEDULE A
The Borrower has incurred the following costs for Equipment:
ITEM AMOUNT INCURRED CONTRACTOR OR SUPPLIER
---- --------------- ----------------------
C-4
SCHEDULE B
NAME AND ADDRESS OF AMOUNT TO
ITEM SUPPLIER OF ITEM BE PAID
---- ------------------- ---------
C-5
EXHIBIT D
[Opinion of Counsel]
D-1
EXHIBIT E
[Consent Form]
E-1
