EXHIBIT 10.43
REIMBURSEMENT AGREEMENT
between
XXXXXX-XXXXXX, INC.
and
THE FIRST NATIONAL BANK OF CHICAGO
dated as of November 1, 1996
TABLE OF CONTENTS
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Section Page
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ARTICLE 1.
DEFINITIONS . . . . . . . . . . . . . . . . 2
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2.
AMOUNT AND TERMS OF THE LETTER OF CREDIT . . . . . . . . 13
2.1 The Letter of Credit . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.2 Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.4 Increased Costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.5 Bank Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.6 Payments and Computations. . . . . . . . . . . . . . . . . . . . . . . 18
2.7 Obligations Absolute . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.8 Participations; Confidentiality. . . . . . . . . . . . . . . . . . . . 19
2.9 Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2.10 Extension of the Letter of Credit and Replacement. . . . . . . . . . . 21
2.11 Receipt of Certain Funds by the Bank . . . . . . . . . . . . . . . . . 22
ARTICLE 3.
CONDITIONS OF ISSUANCE . . . . . . . . . . . . . 22
3.1 Conditions Precedent to Issuance of the Letter of Credit . . . . . . . 22
3.2 Additional Conditions Precedent to Issuance of the Letter of Credit. . 24
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . 25
4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 5.
COVENANTS OF THE COMPANY . . . . . . . . . . . . 31
5.1 Affirmative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 31
5.2 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.3 Compliance with ERISA . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE 6.
EVENTS OF DEFAULT . . . . . . . . . . . . . . 38
6.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.2 Upon an Event of Default . . . . . . . . . . . . . . . . . . . . . . . 39
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Section Page
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ARTICLE 7.
MISCELLANEOUS . . . . . . . . . . . . . . . 40
7.1 Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.2 Notice, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.3 No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 41
7.4 Accounting Terms; Change in Accounting Principles. . . . . . . . . . . 41
7.5 Indemnification of the Bank. . . . . . . . . . . . . . . . . . . . . . 41
7.6 Liability of the Bank. . . . . . . . . . . . . . . . . . . . . . . . . 43
7.7 Costs, Expenses and Taxes. . . . . . . . . . . . . . . . . . . . . . . 44
7.8 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.9 Independence of Covenants. . . . . . . . . . . . . . . . . . . . . . . 44
7.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.11 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.12 Governing Law; Terms . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.13 Consent to Jurisdiction and Service of Process . . . . . . . . . . . . 45
7.14 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.15 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Exhibit A - Form of Irrevocable Letter of Credit
Exhibit B - Form of Pledge Agreement
Exhibit C - Form of Custody Agreement
Exhibit D - Form of Opinion of Xxxxx, Day, Xxxxxx & Xxxxx
Exhibit E - Description of Premises
Schedule I - Certain Existing Liens
Schedule II - Certain Indebtedness
Schedule III - Certain Regulatory Matters
Schedule IV - Certain Environmental Matters
Schedule V - ERISA
Appendix I - Covenants and Disbursement Procedures Regarding Insurance or
Condemnation Proceeds
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REIMBURSEMENT AGREEMENT
THIS REIMBURSEMENT AGREEMENT dated as of November 1, 1996, between
XXXXXX-XXXXXX, INC., a corporation duly organized under the laws of the State
of Delaware (the "Company") and THE FIRST NATIONAL BANK OF CHICAGO (the
"Bank"). Unless otherwise indicated, all capitalized terms used herein
without definition shall have the meanings referred to or set forth in
Article One hereof.
R E C I T A L S
A. The Company proposes to undertake the financing of the
acquisition, construction, installation and equipping of a warehouse and
distribution facility located in the City of La Mirada, California (the
"Project").
B. The Company has requested the financial assistance of the La
Mirada Industrial Development Authority (the "Issuer"), in connection with
such financing.
C. The Issuer and Bankers Trust Company of California, N.A., as
trustee (the "Trustee"), propose to enter into an Indenture of Trust dated as
of November 1, 1996 (the "Indenture") pursuant to which the Issuer will issue
and sell $25,900,000 in aggregate principal amount of its Taxable
Variable/Fixed Rate Demand Industrial Development Revenue Bonds
(Xxxxxx-Xxxxxx, Inc. Project) Series 1996 (the "Bonds").
D. The Issuer, the Trustee and the Company propose to enter into a
Loan Agreement dated as of November 1, 1996 (the "Loan Agreement") pursuant
to which the Issuer will loan the Company the proceeds of the issuance and
sale of the Bonds to finance the acquisition and construction of the Project
and for other purposes.
E. The Company has requested the Bank to issue its irrevocable
direct pay letter of credit in substantially the form of Exhibit A annexed
hereto (such letter of credit and any successor letter of credit as provided
in such letter of credit being the "Letter of Credit") in an amount not to
exceed $26,250,000 to secure payment of amounts payable on the Bonds or for
their purchase as provided in the Indenture, which amount is equal to the
principal amount of the Bonds ($25,900,000) plus an amount equal to 41 days
interest on the Bonds at a maximum rate of 12% ($350,000).
NOW THEREFORE, in consideration of the premises and in order to
induce the Bank to issue the Letter of Credit, the parties hereto agree as
follows:
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ARTICLE 1.
DEFINITIONS
SECTION 1.1 DEFINITIONS. Unless otherwise indicated in this
Agreement, the capitalized terms used herein without definition shall have
the following meanings:
"AFFECTED LOANS" has the meaning set forth in Section 2.2(g) of
this Agreement.
"AFFILIATE," as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common
control with, that Person. For purposes of this definition, "control"
(including with correlative meaning, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any
Person, means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of
that Person, whether through the ownership of voting securities or
memberships or by contract or otherwise.
"AGREEMENT" or "REIMBURSEMENT AGREEMENT" means this Reimbursement
Agreement as it may be amended, supplemented or otherwise modified
from time to time.
"ALTERNATE CREDIT FACILITY" means an irrevocable letter of credit,
bank bond purchase agreement, bond insurance policy, revolving credit
agreement, surety bond or other agreement or instrument under which any
Person (other than the Issuer or the Company) undertakes to make or
provide to make payments of the principal and purchase price of and
interest on the Bonds, as and when due and delivered pursuant to the
Indenture in substitution for the Letter of Credit.
"APPLICABLE MARGIN" has the meaning provided in the Bank Facility
for loans then in effect on the date of any determination of Applicable
Margin.
"BANK" has the meaning set forth in the introductory paragraph of
this Agreement.
"BANK BONDS" has the meaning set forth in Section 2.5.
"BANK FACILITY" means the Credit Agreement dated as of May 17, 1996
among Xxxxxx-Xxxxxx, Inc., Bank of America National Trust and Savings
Association, as administrative agent, The Chase Manhattan Bank, N.A. as
documentation agent, BA Securities, Inc., as co-arranger, Chase
Securities, Inc., as co-arranger and certain other financial institutions.
"BANK INFORMATION" has the meaning set forth in Section 7.5(a)
hereof.
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"BANK SECURITY DOCUMENTS" means, collectively, the Deed of Trust, the
Security Agreement, the Financing Statement, the Pledge Agreement, the
Custody Agreement and any other agreement or instrument which recites
that it secures the obligation of the Company under this Agreement.
"BASE RATE" means, for any day, the rate of interest per annum
(calculated on a 360-day year basis for the actual number of days
elapsed) equal to the greater of (a) the rate per annum equal to the
corporate base rate of interest announced by the Bank from time to
time (such rate not necessarily being the lowest rate which the Bank
charges to a borrower or group of borrowers) in effect on such day
or (b) (i) the rate on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business
Day, the next succeeding Business Day) by the Federal Reserve Bank
of New York, or (ii) if such rate is not so published for any day
which is a Business Day, the average of the quotations for such day
on such transactions received by the Bank from three Federal funds
brokers of recognized standing selected by it plus in each case
specified in (i) and (ii) 0.5% per annum, each change in the Base
Rate to be effective as of the opening of business on the day such
change occurs. If for any reason the Bank shall have determined that
it is unable to ascertain the rate on overnight Federal funds
transactions, including, without limitation, the inability or
failure of the Bank to obtain sufficient bids or publications in
accordance with the terms hereof, the Base Rate shall be the prime
lending rate of the Bank until the circumstances giving rise to
such inability no longer exist.
"BONDS" has the meaning set forth in Recital C of this Agreement.
"BUSINESS DAY" means a day which is not (i) a Saturday, Sunday
or day on which banking institutions in the State of Illinois or the
State of New York or in any jurisdiction in which the principal office
of the Tender Agent or the Trustee or the office of the Bank at which
drawings under the Letter of Credit must be presented are authorized
or required to be closed, or (ii) a day on which the New York Stock
Exchange is authorized or required to be closed.
"CODE" means the Internal Revenue Code of 1986, and the regulations
promulgated thereunder and any amendment thereto or any successor
statute and related regulations.
"COMPANY" has the meaning set forth in the introductory paragraph of
this Agreement.
"CONTROLLED GROUP" means the Company and all Persons (whether or not
incorporated) under common control or treated as a single employer with
the Company pursuant to Section 414(b),(c),(m) or (o) of the Code.
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"CREDIT TERMINATION DATE" means the earliest of (i) the date on which
the Final Drawing is honored by the Bank, (ii) the date on which the Bank
is notified by the Trustee as the date on which there are no longer any
Bonds Outstanding, (iii) the date on which any Alternate Credit Facility
becomes effective, and (iv) the Stated Termination Date.
"CUSTODY AGREEMENT" means the Custody Agreement dated as of November
1, 1996 between Bank and the Trustee in form and substance satisfactory
to the Bank substantially in the form of Exhibit E hereto.
"DEED OF TRUST" means the Deed of Trust, Assignment of Rents and
Fixture Filing with respect to the Project, dated of even date herewith,
executed by the Company, as trustor, to the Chicago Title Company, as
trustee, for the benefit of Bank, as beneficiary.
"DEFAULT" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both
would, unless cured or waived, become an Event of Default.
"DISBURSEMENT ACCOUNT" has the meaning set forth in Appendix I.
"ENVIRONMENTAL ACTIVITIES" means the use, generation, transportation,
treatment, storage or disposal of any Hazardous Materials at any time
located on or present on or under the Premises.
"ENVIRONMENTAL INDEMNITY" means the Environmental Indemnity dated as
of November 1, 1996, executed by the Company in favor of Bank.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and regulations promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) under common control with the Company within the meaning of
Section 414(b), 414(c) or 414(m) of the Code.
"ERISA EVENT" means (a) a Reportable Event with respect to a
Qualified Plan or a Multiemployer Plan subject to Title IV of ERISA;
(b) a withdrawal by the Company or any ERISA Affiliate from a Qualified
Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer (as defined in Section 4001(a)(2) of ERISA);
(c) a complete or partial withdrawal by the Company or any ERISA
Affiliate from a Multiemployer Plan; (d) the filing of a notice of
intent to terminate, the treatment of a plan amendment as a termination
under Section 4041 or 4041A of ERISA or the commencement of proceedings
by the PBGC to terminate a Qualified Plan or Multiemployer Plan
subject to Title IV of ERISA; (e) a failure by the Company or any member
of the
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Controlled Group to make required contributions to a Qualified Plan or
Multiemployer Plan; (f) an event or condition which would constitute
grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Qualified Plan or
Multiemployer Plan; (g) the imposition of any liability under Title IV
of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Company or any ERISA Affiliate; (h) an
application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code with respect to any Plan;
(i) a non-exempt prohibited transaction occurs with respect to any
Plan for which the Company or any Subsidiary of the Company may be
directly or indirectly liable; or (j) a violation of the applicable
requirements of Section 404 or 405 of ERISA or the exclusive benefit
rule under Section 401(a) of the Code by any fiduciary or disqualified
person with respect to any Plan for which the Company or any member of
the Controlled Group may be directly or indirectly liable.
"EURODOLLAR RATE LOAN" has the meaning set forth in 2.2(b) of this
Agreement.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.1 of this
Agreement.
"EXCLUDED COLLATERAL" has the meaning set forth in the Security
Agreement.
"FINAL DRAWING" has the meaning set forth in the Letter of Credit.
"FINANCIAL COVENANT DEFAULT" means a Default or failure to satisfy
any of the requirements set forth in Section 5.2(g) of this Agreement
in any Fiscal Year.
"FINANCING STATEMENT" means the UCC-1 financing statement executed
by the Company, as debtor, pursuant to the Security Agreement, and
naming Bank as the secured party.
"FISCAL YEAR" means the period ending on the Saturday of each year
closest to June 30 and beginning on the next day, or any other 12-month
period hereafter selected and designated as the official fiscal year of
the Company.
"GAAP" means, subject to the provisions of Section 7.4, generally
accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such
other statements by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable
to the circumstances as of the date of determination; PROVIDED, HOWEVER,
that with respect to the use of the term GAAP in sections incorporated
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from the Bank Facility, GAAP shall have the meaning set forth in the
Bank Facility.
"GUARANTY", as applied to any Person, means all loan commitments of
that Person and all obligations of that Person guaranteeing in any
manner, whether directly or indirectly, any obligation of any other
Person for the payment of principal or interest with respect to borrowed
money.
"HAZARDOUS MATERIALS" means (a) any oil, flammable substances,
explosives, radioactive materials, hazardous wastes or substances, toxic
wastes or substances or any other materials or pollutants which (i)
pose a hazard to the Premises or to persons on or about the Premises or
(ii) cause the Premises to be in violation of any Hazardous Materials
Laws; (b) asbestos in any form which is or could become friable, urea
formaldehyde foam insulation, transformers or other equipment which
contain dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty (50) parts per million; (c) any chemical,
material or substance defined as or included in the definition of
"hazardous substances," hazardous wastes," "hazardous materials,"
"extremely hazardous waste," "restricted hazardous waste," or "toxic
substances" or words of similar import under any applicable local,
state or federal law or under the regulations adopted or publications
promulgated pursuant thereto, including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, 42 U.S.C. Section 9601, et seq.; the Hazardous
Materials Transportation Act, as amended, 49 U.S.C. Section 1801,
et seq.; the Resource Conservation and Recovery Act, as amended,
42 U.S.C. Section 6901, et seq.; the Federal Water Pollution Control
Act, as amended, 33 U.S.C. Section 1251, et seq.; Sections 25115,
25117, 25122.7, 25140, 25281, 25316, and 25501 of the California
Health and Safety Code; and Article 9 or Article 11 of Title 22 of
the California Administrative Code, Division 4, Chapter 20; and (d)
any other chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority or
may or could pose a hazard to the health and safety of the occupants
of the Premises or the owners and/or occupants of property
adjacent to or surrounding the Premises.
"HAZARDOUS MATERIALS LAWS" shall mean any federal, state or local laws,
ordinances, regulations, or policies relating to the environment, health
and safety, Environmental Activities and Hazardous Materials (including,
without limitation, the use, handling, transportation, production,
disposal, discharge or storage thereof) including, without limitation,
soil or ground water conditions.
"INDEBTEDNESS", as applied to any Person, means (i) any Guaranty,
(ii) any indebtedness or obligation of that Person for the payment of
principal or interest with respect to borrowed moneys or which otherwise
constitutes indebtedness, as determined in accordance with GAAP,
including obligations under conditional sales contracts or other title
retention contracts and rental obligations under
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leases which are considered capital leases under GAAP, (iii) notes payable
and drafts accepted representing extensions of credit to such Person
whether or not representing obligations for borrowed money, (iv) any
obligation owed by that Person for all or any part of the deferred purchase
price of property or services which purchase price is due more than six
months from the date of incurrence of the obligation in respect thereof or
evidenced by a note or other instrument and (v) all indebtedness secured by
a Lien on property of that Person, whether or not with recourse to that
person.
"INDEMNITEE" has the meaning set forth in Section 7.5 of this
Agreement.
"INDENTURE" means the Indenture of Trust dated as of November 1, 1996
between the Issuer and the Trustee pursuant to which the Bonds are to be
executed and delivered.
"INITIAL STATED AMOUNT" has the meaning set forth in Section 2.1 of
this Agreement.
"INTEREST DRAWING" has the meaning set forth in the Letter of Credit.
"INTEREST PERIOD" has the meaning set forth in Section 2.2(c) of this
Agreement.
"ISSUANCE DATE" means November 20, 1996.
"ISSUER" has the meaning set forth in Recital B of this Agreement.
"L/C DOCUMENTS" means this Agreement, the Bank Security Documents, and
any and all other agreements, instruments, certificates, or other documents
now or hereafter given by the Company to Bank pursuant thereto or in
connection therewith, or given to evidence, guaranty, or secure any of the
Company's obligations under the foregoing documents.
"LETTER OF CREDIT" has the meaning set forth in Recital E of this
Agreement.
"LETTER OF CREDIT FEE" has the meaning set forth in Section 2.3(b) of
this Agreement.
"LIBOR" means the rate of interest equal to:
(a) the offered rate for deposits in United States Dollars which
appears on Telerate Page 3750 as of 11:00 a.m. London time, on the
second full Business Day next preceding the first of each date a
rate is set (unless such day is not a Business Day, in which event
the next succeeding Business Day will be used).
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(b) a number equal to 1.0 minus the aggregate (but without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements than in effect on the day which is two (2) Business
Days prior to the beginning of such date a rate is set (including,
without limitation, basic, supplemental, marginal and emergency
reserves under any regulations of the Board of Directors of the
Federal Reserve System or other governmental authority having
jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to a
"Eurocurrency Liabilities" in Regulation D of such Board), which
are required to be maintained by a member bank of the Federal Reserve
System.
If such interest rates shall cease to be available from Telerate
News Service, the LIBOR rate shall be determined from such financial service
selected by the Company and acceptable to the Bank.
"LIEN" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale
or other title retention agreement, any lease in nature thereof, and any
agreement to give any lien or security interest).
"LIQUIDITY DRAWING" has the meaning set forth in the Letter of
Credit.
"LIQUIDITY DRAWING PREMIUM" means a rate of interest per annum
with respect to a Liquidity Drawing equal to 0% for the first 180 days
after the Liquidity Drawing and 1.00% thereafter.
"LIQUIDITY DRAWING REPAYMENT" means the amount to be paid by the
Company to the Bank in the event of (i) a payment made under the Letter
of Credit in respect of a Liquidity Drawing to pay all or any part of the
principal portion of the purchase price of the Bonds tendered for purchase
in accordance with Section 2.03(a) of the Indenture, which shall be equal
to the amount of such drawing or (ii) a payment made under the Letter of
Credit in respect of an Interest Drawing relating to a Liquidity Drawing
to pay accrued interest with respect to such Bonds, which shall be equal
to the amount of such drawing; PROVIDED, HOWEVER, that, at the Company's
option, payment of the amounts set forth in clause (i) related to the
principal amount of the Bonds above may be made on or prior to 18 months
after such drawing and payment of the amounts set forth in clause (ii) with
respect to the interest portion of any such drawing shall be made on or
before the first calendar day of the next succeeding month (but in any
event not later than the Credit Termination Date) and on the Credit
Termination Date.
"LOAN AGREEMENT" has the meaning set forth in Recital D of this
Agreement.
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"MOODY'S" means Xxxxx'x Investors Service, a corporation organized
and existing under the laws of the State of Delaware, its successors and
assigns, or, if such corporation shall be dissolved or liquidated or shall
no longer perform the functions of a securities rating agency, any other
nationally recognized securities rating agency designated by the Issuer,
with the approval of the Company and the Bank.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" (within the
meaning of Section 4001(a)(3) of ERISA) and to which any member of the
Controlled Group makes, is making, or is obligated to make contributions
or, during the preceding six calendar years, has made, or been obligated
to make, contributions.
"NOTICE OF CONVERSION/CONTINUATION" has the meaning set forth in
Section 2.2(f) of this Agreement.
"OBLIGATIONS" means all obligations of the Company to the Bank of
every kind and description (whether or not evidenced by a note or other
instrument and whether or not for the payment of money), direct or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising pursuant to the terms of this Agreement and the other
Related Documents.
"ORIGINATION FEE" has the meaning set forth in Section 2.3(a) of
this Agreement.
"OUTSTANDING," when used as of any particular time in reference to
the Bonds, means all Bonds theretofore, or thereupon being, authenticated
and delivered by the Trustee under the Indenture except:
(a) Bonds theretofore canceled by the Trustee or surrendered
to the Trustee for cancellation;
(b) Bonds with respect to which all liability of the Issuer
shall have been discharged in accordance with Article VII of the Indenture;
(c) Bonds for the transfer or exchange of or in lieu of or in
substitution for which other Bonds shall have been authenticated and
delivered by the Trustee pursuant to the Indenture; and
(d) Bank Bonds.
"PARTICIPANT" has the meaning set forth in Section 2.8 of this
Agreement.
"PAYMENT DATE" means the date when interest and/or principal with
respect to the Bonds due, whether by scheduled payment, redemption or
acceleration and also means the date on which interest with respect to the
Bonds is converted
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to bear interest at a different rate than the rate at which the Bonds are
then bearing interest.
"PAYMENT REQUEST DOCUMENTS" has the meaning set forth in Section A.5(c)
of Appendix I.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any of its principal functions under ERISA.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue
Code or Section 302 or ERISA.
"PERMITTED LIENS" means and includes: (1) Liens permitted pursuant to
the Deed of Trust and the Bank Facility; (2) Liens existing as of the date of
original delivery of the Bonds and which are identified on SCHEDULE I hereto;
(3) Liens granted to Bank of America National Trust and Savings Association,
as administrative agent, under the Bank Facility; and (4) any other Liens
permitted in writing by the Bank.
"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"PLACEMENT AGREEMENT" means the Placement Agreement dated November 19,
1996, among The First National Bank of Chicago, as placement agent, the
Issuer and the Company.
"PLAN" means an employee benefit plan (as defined in Section 3(3) of
ERISA) which the Company or any member of the Controlled Group sponsors or
maintains or to which the Company or any member of the Controlled Group
makes, its making or is obligated to make contributions, and includes any
Multiemployer Plan or Qualified Plan.
"PLEDGE AGREEMENT" means the Pledge Agreement dated as of even date
herewith between the Company and the Bank substantially in the form of
Exhibit B to this Agreement.
"PRELIMINARY PRIVATE PLACEMENT MEMORANDUM" has the meaning set forth in
Section 4.1(i).
"PREMISES" means the real property on which the Project is located in
the City of La Mirada, County of Los Angeles as more particularly described
in Exhibit E and all personal property located on or affixed to such real
property or otherwise used in connection with the business of the Company
conducted on such
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real property; PROVIDE, HOWEVER, that the Premises shall not include the
Excluded Collateral.
"PRINCIPAL OFFICE" means the principal office of the Bank in Chicago,
Illinois.
"PRIVATE PLACEMENT MEMORANDUM" has the meaning set forth in
Section 4.1(i) of this Agreement.
"PROJECT" has the meaning set forth in Recital A of this Agreement.
"QUALIFIED PLAN" means a pension plan (as defined in Section 3(2) of
ERISA) intended to be tax-qualified under Section 401(a) of the Code and
which any member of the Controlled Group sponsors, maintains, or to which it
makes, is making or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding period covering
five (5) plan years, but excluding any Multiemployer Plan.
"RATING AGENCIES" means Xxxxx'x and/or S&P.
"RELATED DOCUMENTS" means the Indenture, the Loan Agreement, the Bonds,
the Letter of Credit, this Agreement, the Bank Security Documents, the
Placement Agreement, the Remarketing Agreement, the Environmental Indemnity,
the Preliminary Private Placement Memorandum, the Private Placement
Memorandum and any instrument, document or agreement relating thereto.
"REMARKETING AGREEMENT" means the Remarketing Agreement dated as of
November 1, 1996 among the Issuer, the Company and The First National Bank of
Chicago, as remarketing agent.
"SECURITY AGREEMENT" means the Security Agreement with respect to the
Project dated as of November 1, 1996, executed by the Company, as debtor, in
favor of Bank, as secured party.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., a corporation organized and existing under the
laws of the State of New York, its successors and assigns, or, if such
corporation shall be dissolved or liquidated or shall no longer perform the
functions of a securities rating agency, any other nationally recognized
securities rating agency designated by the Issuer, with the approval of the
Company and the Bank.
"STATED TERMINATION DATE" has the meaning given thereto in the Letter of
Credit or such later date as may be agreed upon in writing by the Bank and
the Company in accordance with Section 2.10 hereof.
11
"SUBSIDIARY" means any corporation, association, partnership or joint
venture or other business entity of which more than 50% of the voting stock
(other than equity interests in the case of Persons other than corporations)
is owned or controlled, directly or indirectly, by any Person or one or more
of the other Subsidiaries of that Person or a combination thereof.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld
or assessed. "Tax on overall net income" of a Person shall be construed as a
reference to tax imposed by the jurisdiction in which its principal office
(and/or, in the case of the Bank, its lending office) is located on all or
part of the net income, profits or gains of that Person (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in
or to relate to a particular jurisdiction, or otherwise).
"TERMINATION DATE" means the date the Letter of Credit terminates.
"TITLE COMPANY" means Chicago Title Insurance Company.
"TITLE POLICY" means the title policy described below which shall not
contain any survey exceptions or exceptions for rights of parties in
possession, easements not of record, or unpaid installments of special
assessments, or any other exceptions to coverage, except as expressly
provided herein or as otherwise approved by Bank in writing:
an ALTA Loan Policy - 1970 (without revision, modification or
amendment) issued by the Title Company and such direct access reinsurance
agreements as Bank may require, naming Bank as the insured, with liability
in the amount of the Initial Stated Amount, insuring the validity and
priority of the lien of the Deed of Trust subject only to such exceptions
as are approved in writing by Bank, and including CLTA endorsements 100
(unmodified), 103.1, 103.7, 104.6, 104.7, 111.5, 116 and such other
endorsements as Bank may require.
"TRUSTEE" means Bankers Trust Company of California, N.A., and any
successor thereto, as Trustee under the Indenture.
"UNFUNDED PENSION LIABILITIES" means the excess of a Plan's benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of
that Plan's assets (exclusive of any contribution due), determined as of the
most recent valuation date for which a valuation is available in accordance
with the assumptions used by the Plan's actuaries for funding the Plan on an
ongoing basis pursuant to Section 412 of ERISA for the applicable plan year.
12
"USF" means US Foodservice, Inc., A Delaware corporation.
ARTICLE 2.
AMOUNT AND TERMS OF THE LETTER OF CREDIT
SECTION 2.1 THE LETTER OF CREDIT. On the terms and conditions
hereinafter set forth, the Bank agrees, upon 24 hours' prior request of the
Company and satisfaction of the conditions precedent set forth in Section
3.1, to issue the Letter of Credit in an amount not exceeding $26,250,000
(the "INITIAL STATED AMOUNT") and expiring on or before the Stated
Termination Date.
SECTION 2.2 REIMBURSEMENT.
(a) REIMBURSEMENT. The Company hereby agrees to pay to the Bank
(i) immediately and without demand on the date that any amount is drawn
under the Letter of Credit by the Trustee, other than with respect to a
Liquidity Drawing or an Interest Drawing with respect to any Liquidity
Drawing effected pursuant to Section 2.03(a) of the Indenture, a sum equal to
such amount; (ii) the Liquidity Drawing Repayment at such times and in such
amounts as shall be specified in the definition of such term; (iii) on
demand, interest on any amounts unpaid by the Company when due under this
Agreement other than as specified in clause (iv) of this Section 2.2, whether
at maturity, by acceleration, on the date demanded or otherwise, including
post-petition interest in any proceeding under the United States Bankruptcy
Code or other applicable bankruptcy laws, from and including the date such
amounts become due until payment in full, whether before or after judgment, at
a fluctuating interest rate per annum equal to the interest rate then in
effect under this Agreement plus 2.00%; PROVIDED that, in the case of a
Eurodollar Rate Loan, upon the expiration of the Interest Period then in
effect at the time any such increase in interest rate is effective such
Eurodollar Rate Loan shall terminate and thereafter bear interest payable
upon demand at the Base Rate plus Applicable Margin and Liquidity Drawing
Premium then in effect plus 2.25%; (iv) interest on any and all unpaid
amounts payable by the Company under clause (ii) of this Section 2.2, from
and including the date of drawing on the Letter of Credit until payment in
full, at a fluctuating interest rate per annum equal to the Base Rate or
LIBOR (as provided in Section 2.2(b)) plus .25% and the Applicable Margin and
the Liquidity Drawing Premium, if any, payable in arrears on the earlier of
the date of repayment of such unpaid amounts or the first Business Day of
each calendar month; and (v) on demand, any other amounts expressly payable
by the Company to the Bank under this Agreement. Payment by the Company or
acceptance by the Bank of interest provided for herein is not a permitted
alternative to timely payment and shall not constitute a waiver of any Event
of Default or otherwise prejudice or limit any rights or remedies of the Bank.
(b) EURODOLLAR RATE LOAN. At the option of the Company, subject to
the provisions of subsection 2.2(c), unpaid amounts with respect to the
principal portion
13
of a Liquidity Drawing shall bear interest at LIBOR plus .25% and the
Applicable Margin and the Liquidity Drawing Premium payable in arrears on the
earlier of the date of repayment of such unpaid amounts or the first Business
Day of each calendar month (such selection is hereinafter referred to as a
"EURODOLLAR RATE LOAN").
(c) INTEREST PERIODS FOR LIBOR RATE. In connection with each
Eurodollar Rate Loan, the Company may, pursuant to the applicable Notice of
Conversion/Continuation select an interest period (each an "INTEREST PERIOD")
to be applicable to such Loan, which Interest Period shall be, at the
Company's option, either a one, two, three or six month period; PROVIDED that:
(i) in the case of immediately successive Interest Periods
applicable to a Eurodollar Rate Loan continued as such pursuant to a
Notice of Conversion/Continuation, each successive Interest Period shall
commence on the day on which the next preceding Interest Period expires;
(ii) no Interest Period shall extend beyond the Stated
Termination Date;
(iii) no Interest Period shall extend beyond a date on which
the Company is required to make repayment of the Liquidity Drawing
related to such Eurodollar Rate Loan;
(iv) if an Interest Period would otherwise expire on a day
that is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; PROVIDED that, if any Interest Period
would otherwise expire on a day that is not a Business Day but is a day
of the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(v) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of the succeeding calendar
month; and
(vi) in the event the Company fails to specify an Interest
Period for any Eurodollar Rate Loan in the applicable Notice of
Conversion/Continuation, the Company shall be deemed to have selected an
Interest Period of one month.
(d) DETERMINATION OF LIBOR INTEREST RATE. As soon as practicable
after 10:00 A.M. (Chicago time) on the date specified in the Notice of
Conversion/Continuation, Bank shall determine the interest rate that
shall apply to the Eurodollar Rate Loan for which an interest rate is
then being determined for the applicable Interest
14
Period and shall promptly give notice thereof (in writing by facsimile or by
telephone confirmed in writing by facsimile) to the Company.
(e) EURODOLLAR RATE LOANS AFTER DEFAULT. After the occurrence of and
during the continuation of an Event of Default, (i) the Company may not elect
to have an unpaid Liquidity Drawing be maintained as, or converted to, a
Eurodollar Rate Loan after the expiration of any Interest Period then in
effect for such unpaid drawing and (ii) subject to the provisions of
subsection (j), any Notice of Conversion/Continuation given by the Company
with respect to a requested conversion/continuation that has not yet occurred
shall be deemed to be rescinded by the Company.
(f) CONVERSION OR CONTINUATION. The Company shall deliver a notice
regarding such conversion or continuation ( "NOTICE OF
CONVERSION/CONTINUATION") to the Bank no later than 10:00 A.M. (Chicago time)
at least three Business Days in advance of the proposed
conversion/continuation date (in writing by facsimile or by telephone
confirmed in writing by facsimile). A Notice of Conversion/Continuation shall
specify (i) the proposed conversion/continuation date (which shall be a
Business Day), (ii) the amount of the unpaid reimbursement relating to a
Liquidity Drawing to be converted/continued, (iii) the requested Interest
Period, and (iv) that no Event of Default has occurred and is continuing.
(g) ILLEGALITY OR IMPRACTICABILITY OF EURODOLLAR RATE LOANS. In
the event that on any date the Bank shall have determined that the making,
maintaining or continuation of its Eurodollar Rate Loans (i) has become
unlawful as a result of compliance by the Bank in good faith with any law,
treaty, governmental rule, regulation, guideline or order (or would conflict
with any such treaty, governmental rule, regulation, guideline or order not
having the force of law even though the failure to comply therewith would not
be unlawful) or (ii) has become impracticable, or would cause the Bank
material hardship, as a result of contingencies occurring after the date of
this Agreement which materially and adversely affect the London interbank
market or the position of the Bank in that market, then, and in any such
event, the Bank shall give notice (by telefacsimile or by telephone confirmed
in writing) to the Company of such determination. Thereafter (a) the
obligation of the Bank to convert to Eurodollar Rate Loans shall be suspended
until such notice shall be withdrawn by the Bank, (b) to the extent such
determination by the Bank relates to a Eurodollar Rate Loan then being
requested by the Company pursuant to a Notice of Conversion/Continuation,
such unpaid reimbursement shall bear interest as otherwise provided hereunder,
(c) the Bank's obligation to maintain its outstanding Eurodollar Rate Loans
(the "AFFECTED LOANS") shall be terminated at the earlier to occur of the
expiration of the Interest Period then in effect with respect to the Affected
Loans or when required by law, and (d) the Affected Loans shall automatically
bear interest as provided under the Base Rate option on the date of such
termination.
(h) COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST
PERIODS. The Company shall compensate the Bank, upon written request by the
Bank.
15
(which request shall set forth the basis for requesting such amounts), for
all reasonable losses, expenses and liabilities (including any interest paid
by the Bank to lenders of funds borrowed by it to make or carry its
Eurodollar Rate Loans and any loss, expense or liability sustained by the
Bank in connection with the liquidation or re-employment of such funds) which
the Bank may sustain: (i) if for any reason (other than a default by the
Bank) a conversion to or continuation of any Eurodollar Rate Loan does not
occur on a date specified therefor in a Notice of Conversion/Continuation,
(ii) if any repayment or other principal payment or any conversion of any of
its Eurodollar Rate Loans occurs on a date prior to the last day of an
Interest Period applicable to such loan, (iii) if any repayment of any of its
Eurodollar Rate Loans is not made on any date specified in a notice of
repayment given by the Company, or (iv) as a consequence of any other default
by the Company in the repayment of its Eurodollar Rate Loans when required by
the terms of this Agreement.
SECTION 2.3 FEES.
(a) The Company hereby agrees to pay the Bank an
origination fee (the "ORIGINATION FEE") computed at the rate of one quarter
of one percent (.25%) per annum, on the basis of a 360-day year for the
actual number of days elapsed, of the amount available to be drawn under the
Letter of Credit from and including the Issuance Date to but excluding the
Termination Date, payable quarterly in arrears on the 15th day of each March,
June, September and December thereafter commencing March 15, 1997.
(b) The Company hereby agrees to pay to the Bank a letter
of credit fee (the "LETTER OF CREDIT FEE"), computed at the rate of one and
three-quarters percent (1.75%) per annum, on the basis of a 360-day year for
the actual number of days elapsed, of the amount available to be drawn under
the Letter of Credit from and including the Issuance Date to but excluding
the Termination Date, payable quarterly in arrears on the 15th day of each
March, June, September and December thereafter commencing March 15, 1997.
(c) The Company hereby agrees to pay to the Bank, upon
each drawing by the Trustee under the Letter of Credit, a drawing fee equal
to $200 (not to exceed $400 per month).
(d) The Company hereby agrees to pay to the Bank a
transfer fee equal to one-quarter of one percent (.25%) of the Stated Amount
of the Letter of Credit transferred to any successor trustee under the
Indenture, with a minimum fee of one hundred and fifty dollars ($150) and a
maximum fee of eight thousand dollars ($8,000), per transfer payable upon
transfer of the Letter of Credit in accordance with its terms to a successor
trustee under the Indenture.
16
SECTION 2.3 INCREASED COSTS.
If the Bank determines (which determination shall, in the
absence of demonstrable error, be final and conclusive and binding on all
parties) that compliance with any law, rule or regulation, or any request or
directive (whether or not having the force of law) of any governmental
authority, court, central bank or comparable agency shall:
(A) subject the Bank to any additional Tax with respect
to the Letter of Credit, or shall change the amounts due under this
Agreement or any of the Related Documents or its obligation to make any
payment under the Letter of Credit (except for changes in the rate of
Tax on the overall net income of the Bank imposed by the jurisdiction in
which the Bank's Principal Office is located); or
(B) impose, modify or deem applicable any reserve,
capital adequacy, special deposit, insurance or similar requirement
(including, without limitation, any such requirement imposed by the
Board of Governors of the Federal Reserve System) against letters of
credit issued by or assets held by, deposits with or for the account of,
or credit extended by, the Bank or shall impose on the Bank any
condition with respect to the Agreement, the Letter of Credit or any of
the Related Documents;
and the result of any of the foregoing is to increase the cost to the Bank of
the issuance or maintenance of the Letter of Credit, or to reduce the amount
of any sum received or receivable by the Bank under this Agreement or under
any of the Related Documents with respect thereto, by an amount deemed by the
Bank to be material, or to reduce the rate of return on the Bank's capital as
a consequence of it obligations hereunder to a level below which the Bank
could have achieved, but for such compliance, taking into account the Bank's
policies with respect to capital adequacy, then, within ten days after demand
by the Bank, the Company shall pay for the Bank's account such additional
amount or amounts as will compensate the Bank for such increased cost or
reduction together with interest on each such amount at a rate equal to the
Base Rate from the date of such demand by the Bank until payment is full
thereof. The Bank will promptly notify the Company of any event occurring
after the date hereof of which the Bank has knowledge which will entitle the
Bank to compensation pursuant to this Section. A certificate of the Bank
claiming compensation under this Section and setting forth in reasonable
detail the calculation of the additional amount or amounts to be paid to it
hereunder and the basis therefor shall be conclusive in the absence of
demonstrable error. In determining such amount, the Bank may use any
reasonable averaging and attribution methods. The provisions of this Section
shall apply equally to any Person acting as a Participant in the Letter of
Credit, as if such Person were the Bank hereunder.
17
In the event any payment is due under this Section 2.4,
the Company may, within 30 days after notice thereof from the Bank to the
Company, give notice of seeking an Alternate Credit Facility and that such
Alternate Credit Facility shall replace the Letter of Credit within 120 days
after such demand from the Bank. The election by this Company to seek an
Alternate Credit Facility shall not release the Company from its obligation
to make payments as provided in this Section 2.4.
SECTION 2.5 BANK BONDS. As security for the payment of
the Obligations the Company will pledge and grant to the Bank a security
interest in, its right, title and interest in and to Bonds delivered to the
Bank or its designated agent in connection with Liquidity Drawings and
Interest Drawings related to Liquidity Drawings under the Letter of Credit
pursuant to the Pledge Agreement ("Bank Bonds"). Upon failure to remarket
Bonds purchased in accordance with Section 3.08 of the Indenture with funds
derived from a Liquidity Drawing and an Interest Drawing related to such
Liquidity Drawing under the Letter of Credit, such Bonds shall become Bank
Bonds and shall accrue interest at a rate of 0%. Any amounts from time to
time owing to the Bank pursuant to clause (ii) of Section 2.2 may be paid (A)
at any time by the Company stating the amount to be paid (which shall be an
amount not less than $100,000), and (B) at any time on behalf of the Company
on one Business Day's notice from the Company directing the Bank (or the
custodian of the Bank Bonds under the Custody Agreement) to deliver a
specified principal amount of Bank Bonds held by the Bank (or the custodian
of the Bank Bonds under the Custody Agreement) to the Remarketing Agent for
sale by it pursuant to the Indenture and the Remarketing Agreement. Upon
payment to the Bank of the amount to be paid pursuant to clause (A) or (B)
above, together with accrued interest, as set forth in clause (iv) of Section
2.2, to the date of such payment on the amount to be paid, the outstanding
Obligations of the Company under clause (ii) of Section 2.2 shall be reduced
by the amount of such payment, interest shall cease to accrue on the amount
paid and the Bank or its desigated agent shall release to the Company, the
Trustee, or the Remarketing Agent, as the case may be, for sale, from the
pledge and security interest created by the Pledge Agreement a principal
amount of Bank Bonds equal to the amount of such payment.
SECTION 2.6 PAYMENTS AND COMPUTATIONS. All payments by
the Company to the Bank hereunder shall be made in lawful currency of the
United States and in immediately available funds at the Principal Office of
the Bank or at such other address as the Bank may designate in writing to the
Company. Whenever any payment under this Agreement shall be due on a day
which is not a Business Day, the date for payment thereof shall be extended
to the next succeeding Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon
shall be payable for such extended time. Computations of interest hereunder
shall be made by the Bank on the basis of a year of 360 days for the actual
number of days elapsed (including the first day but excluding the last day)
and shall be conclusive with respect to the amount of interest owed by the
Company absent manifest error. Any payments of principal or interest
received by the Bank with respect to the Bank Bonds shall be credited against
the amount payable by the Company from time to time
18
pursuant to Section 2.2; PROVIDED that receipt and application of such
payments shall not relieve the Company from its payment obligations under
Section 2.2 to the extent of any deficiency in the amount so received by the
Bank and the Company shall be obligated to make all of the payments required
from time to time pursuant to Section 2.2 without deduction or offset except
to the extent expressly permitted by the Bank in writing. The Company agrees
that if any amount owing to the Bank under this Agreement is not paid when
due, whether at maturity, by acceleration, on the date demanded or otherwise
including, without limitation, any amount due under Section 2.2, 2.3, 2.4,
7.5 or 7.7 hereof, such amount shall thereafter until paid in full (after as
well as before judgment) bear interest payable on demand at a fluctuating
rate per annum equal to the rate otherwise due under this Agreement plus
2.00%.
SECTION 2.7 OBLIGATIONS ABSOLUTE. The payment Obligations of
the Company under this Agreement shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement under all circumstances whatsoever, including, without limitation,
the following circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit, this Agreement or any other Related Document except if the
Letter of Credit is not enforceable or the Bank has willfully refused
to make payments under the Letter of Credit, in which case this
Section 2.7 shall apply only to such amounts as have been actually
drawn under the Letter of Credit plus interest and fees accrued thereon
prior to the date of determination of unenforceability or willful refusal;
(ii) any amendment or waiver of or any consent to departure from
all or any of the Related Documents;
(iii) the existence of any claim, set-off, defense or other
rights which the Company or any other Person may have at any time
against the Trustee, any beneficiary or any transferee of the
Letter of Credit (or any Persons for whom the Trustee, any such
beneficiary or any such transferee may be acting), the Bank or
any other Person, whether in connection with this Agreement,
the transactions contemplated herein or in the Related Documents
or any unrelated transaction;
(iv) any statement or any other document presented under the
Letter of Credit proving to be forged, fraudulent, invalid or insufficient
in any respect or any statement therein being untrue or inaccurate in any
respect whatsoever;
(v) payment by the Bank under the Letter of Credit against
presentation of a draft or certificate which does not comply with the
terms of the Letter of Credit; or
(vi) any other circumstance or happening whatsoever, whether or
not similar to any of the foregoing.
19
Notwithstanding anything to the contrary in this Section 2.7, the
Company shall be entitled to bring a separate action against the Bank with
respect to any claims it may have against the Bank arising out of or
otherwise relating to this Agreement or the Letter of Credit.
SECTION 2.8 PARTICIPATIONS: CONFIDENTIALITY. The Bank shall
have the right to grant participation rights in this Agreement and the
Security Documents and the Bank's obligations under the Letter of Credit at
any time and from time to time to one or more financial institutions (each a
"PARTICIPANT"); PROVIDED HOWEVER, that, except as provided to the contrary in
this Agreement, such participation rights shall be obligations only of the
Bank and shall not create any direct obligation of the Company to any such
Participant under this Agreement or create any direct liability of any such
Participant under the Letter of Credit. The grant of participation rights
shall not affect or diminish the rights of the Bank to reimbursement or other
payments under Article 2 of this Agreement, such reimbursement or payments to
be calculated as if the Bank had not granted any such participation rights.
The Company acknowledges and agrees that each Participant may be provided
with the right to approve amendments, modifications or waivers affecting such
Participant with respect to this Agreement, including, without limitation, any
decrease in the fees payable hereunder, any change in the stated amount of
the Letter of Credit (other than as set forth in the Letter of Credit), any
change in the rate at which interest is payable on the Obligations hereunder,
any extension of the Stated Termination Date and any release of any
collateral securing the Obligations. The Bank and any Participant shall hold
all non-public information obtained pursuant to the requirements of this
Agreement which has been identified in writing as confidential by the Company
in accordance with their respective customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices; PROVIDED that the Bank and any Participant in any event may
disclose such information to any Participant in connection with its
participation or as required or requested by any governmental agency or
representative thereof or pursuant to legal process; PROVIDED FURTHER that in
no event shall the Bank or a Participant be obligated or required to return
any materials furnished by the Company.
SECTION 2.9 TAXES. All sums payable by the Company under this
Agreement and the Related Documents shall be paid (i) free of any restriction
or condition, (ii) free and clear of and (except to the extent required by
law) without any deduction or withholding on account of any Tax imposed,
levied, collected, withheld or assessed by or within the United States of
America or any political subdivision in or of the United States of America or
any other jurisdiction from or to which a payment is made by or on behalf of
the Company or by any federation or organization of which the United States
of America or any such jurisdiction is a member at the time of payment and
(iii) without deduction or withholding (except to the extent required by law)
on account of any other amount, whether by way of set-off or otherwise.
If the Company or any other Person making a payment to the Bank is
required by law to make any deduction or withholding on account of any such
Tax or
20
other amount as is referred to in the immediately preceding paragraph from
any sum paid or payable by the Company to the Bank under this Agreement or
the Related Documents:
(i) the Company shall notify the Bank of any such requirement
or any change in any such requirement as soon as the Company becomes
aware of it;
(ii) the Company shall pay any such tax or other amount before
the date on which penalties attach thereto, such payment to be made
(if the liability to pay is imposed on the Company) for its own account
or (if that liability is imposed on the Bank) on behalf of and in the
name of the Bank (it being understood that the Company shall not be
required to pay any such tax to both the Bank and a taxing authority);
(iii) the sum payable by the Company in respect of which the
relevant deduction, withholding or payment is required shall be
increased to the extent necessary to ensure that, after the making
of that deduction, withholding or payment, the Bank or any other party
receives on the due date and retains (free from any liability in
respect of any such deduction, withholding or payment) a net sum equal
to what it would have received and so retained had no such deduction,
withholding or payment been required or made; and
(iv) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30 days
after the due date of payment of any Tax or other amount which it is
required by clause (ii) above to pay, the Company shall deliver to the
Bank evidence satisfactory to the Bank of such deduction, withholding
or payment and of the remittance thereof to the relevant taxing or
other authority;
PROVIDED that no such additional amount shall be required to be paid to the
Bank under clause (iii) above except to the extent that any change after the
date hereof in any such requirement for a deduction, withholding or payment as
is mentioned therein shall result in an increase in the rate of such
deduction, withholding or payment from that in effect at the date of this
Agreement in respect of payments to the Bank.
SECTION 2.10 EXTENSION OF THE LETTER OF CREDIT AND REPLACEMENT.
At least 120 (but not more than 455) days before any Stated Termination Date
(including any subsequent Stated Termination Date) the Company may request
the Bank in writing (each such request being irrevocable and binding) to
extend for a one or two year period the Stated Termination Date of the Letter
of Credit. Each such request shall be accompanied or preceded by the
financial statements, certificate and statement called for by Section 5.1(g)
to the extent not previously provided by the Company on a timely basis and
such other information as shall be requested by the Bank. No later than 90
days from the date on which the Bank shall have received notice from the
Company pursuant to the second preceding sentence, the Bank shall notify the
Company in writing
21
of its consent or nonconsent to such extension request (which consent or
nonconsent shall be in the Bank's sole discretion), together with the terms
and conditions, including the Letter of Credit Fee and the interest rate with
respect to the unreimbursed drawings thereunder to be applicable to such
extension required by the Bank in connection with the giving of its consent;
provided that the failure of the Bank to so notify the Company of the Bank's
consent or nonconsent shall be deemed to be a nonconsent. If the Bank shall
have consented to such extension request, and the Company shall have agreed
to the terms and conditions that the Bank may have required in connection
with the giving of its consent, the Bank shall deliver to the Trustee an
amendment of the Letter of Credit which extends the Stated Termination Date
thereof for such one or two year period, as applicable. The Bank's consent
shall be conditional upon the preparation, execution and delivery of legal
documentation in form and substance satisfactory to the Bank and its counsel
incorporating substantially the terms and conditions contained in the
extension request and the Bank's consent thereto.
SECTION 2.11 RECEIPT OF CERTAIN FUNDS BY THE BANK. The Trustee has
agreed that it will transfer the moneys required to be transferred to the
Bank pursuant to the Indenture. All such moneys received by the Bank shall be
credited by the Bank against any Obligations of the Company to the Bank and
any other amounts owing hereunder. The Bank shall also be entitled to retain
all or a portion of such moneys received equal to an amount which it
reasonably anticipates may be necessary to reimburse the Bank for the
Obligations and any other amounts which may be incurred by the Bank in the
future that are then due and payable by the Company. The Bank shall transfer
all such moneys not required to be so credited or retained to the Company or
to whomever may be lawfully entitled to receive the same.
ARTICLE 3.
CONDITIONS OF ISSUANCE
SECTION 3.1 CONDITIONS PRECEDENT TO ISSUANCE OF THE LETTER OF
CREDIT. The obligation of the Bank to issue the Letter of Credit is subject
to the condition precedent that the Bank shall have received on or before the
Issuance Date all of the following, and, in the case of documents, each dated
such day (or such other date as may be specified), in form and substance
satisfactory to the Bank and its counsel:
(a) Copies of each resolution or similar instrument adopted by
the Board of Directors of the Company authorizing the execution,
delivery and performance of this Agreement and each of the other Related
Documents to which the Company is a party, the form and content of the
Letter of Credit and authorizing and approving the other matters
contemplated hereby, certified by the Secretary or an Assistant
Secretary of the Company (which certificate shall state that such
resolution or similar instrument is in full force and effect on the
Issuance Date).
22
(b) Copies, certified by the Secretary of the State of Delaware as
of a recent date, of the articles of incorporation of the Company
together with copies of the bylaws of the Company certified by the
Secretary or Assistant Secretary of the Company and good standing
certificates for the Company from the Secretary of State of the States
of Delaware, Illinois and California.
(c) A certificate of the Secretary or Assistant Secretary of the
Company certifying the names and true signatures of the officer or
officers of the Company authorized to sign this Agreement and the other
documents to be delivered by it hereunder.
(d) Opinions of Xxxxx, Day, Xxxxxx & Xxxxx and Maslon, Edelman,
Xxxxxx and Brand, a Professional Limited Liability Partnership, counsel
for the Company; in form and substance satisfactory to the Bank and its
counsel, substantially in the form attached as Exhibit G to this
Agreement, including written advice from such counsel that all
Participants may rely on such opinions.
(e) An executed copy of this Agreement and each Related Document
(other than the Letter of Credit).
(f) An opinion of Xxxxx Xxxx Xxxx & White, a Professional
Corporation, Bond Counsel, in form and substance satisfactory to the
Bank, including written advice from such counsel that the Bank and all
Participants may rely on such opinion.
(g) An opinion of counsel for the Trustee, in form and substance
satisfactory to the Bank, including written advice from such counsel to
the Bank that the Bank and all Participants may rely on such opinion.
(h) Evidence satisfactory to the Bank of a search of the records
of the filing offices of the Secretary of State of the State of
California and the State of Illinois showing all financing statements
against the Company.
(i) Evidence satisfactory to the Bank of a search of the records
of the County of Los Angeles showing all Liens against the Premises and
the Project.
(j) Certificates or other writing acceptable in form and substance
to the Bank evidencing that the Company has complied with all of its
obligations to obtain and maintain the insurance required by Section
5.1(c) hereof.
(k) A commitment satisfactory to Bank that the Title Company is
prepared to issue the Title Policy;
23
(l) A certification from the Company that the Company has no
knowledge of any pending or threatened condemnation proceedings which
would impair in any way the full utilization of the Project;
(m) Evidence, which may be in the form of a letter from an
insurance broker or municipal engineer or a certificate from a civil
engineer set forth on a survey of the Premises, as to whether the
Premises is located in an area designated by the U.S. Department of
Housing and Urban Development as having special flood hazards;
(n) Certified copies of the resolution or resolutions of the
Issuer authorizing the execution and delivery of, and performance by the
Issuer under the Indenture, the Loan Agreement and the other Related
Documents to which the Issuer is a party.
(o) The results of the Bank's continuing financial and legal due
diligence investigations with respect to the Company, the issuance of
the Bonds, the issuance of the Letter of Credit and the other
transactions contemplated hereby shall be satisfactory in all respects
to the Bank, and any supplemental business or financial due diligence
that the Bank reasonably determines has become necessary shall not have
disclosed information not previously disclosed to the Bank which causes
the results of such diligence not to be satisfactory in all respects to
the Bank. The Bank shall also have received any information reasonably
necessary to conduct its due diligence.
SECTION 3.2 ADDITIONAL CONDITIONS PRECEDENT TO ISSUANCE OF THE
LETTER OF CREDIT. The obligation of the Bank to issue the Letter of Credit
shall be subject to the further conditions precedent that on the Issuance
Date:
(a) the following statements shall be true and the Bank shall have
received a certificate signed by a duly authorized officer of the
Company, dated the Issuance Date, stating that:
(i) The representations and warranties contained in Section 4.1
of this Agreement and Section 8 of the Pledge Agreement are correct on
and as of the Issuance Date as though made on and as of such date; and
(ii) No event has occurred and is continuing, or would result
from the issuance of the Letter of Credit, which constitutes a Default
or an Event of Default;
(b) the definitive documentation evidencing the issuance and sale
of the Bonds shall have been executed and delivered in form and
substance satisfactory to the Bank;
24
(c) the Bank shall have received such other approvals, opinions or
documents as the Bank may reasonably request; and
(d) no legislation, rule, order or decree shall, in the opinion of
counsel for the Bank, prohibit or restrain the issuance of the Letter of
Credit as provided in this Agreement.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES
SECTION 4.1 REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants as follows:
(a) The Company is a corporation duly organized and validly
existing under the laws of the State of Delaware; the Company has the
power and authority to own its properties and to carry on its business
as now conducted; the Company has the power and authority to execute,
deliver and perform its obligations under this Agreement and the Related
Documents to which it is a party; the Company is qualified as a foreign
corporation and in good standing under the laws of such jurisdictions
where the conduct of its present business and operations requires such
qualification, except in jurisdictions in which the failure to be in
good standing has and will have no material adverse effect on the
operations, business, properties, condition (financial or otherwise) or
prospects of the Company; the Company, by appropriate corporate action,
has duly authorized the execution, delivery and performance of this
Agreement and the Related Documents to which it is a party; the Company's
chief executive office is located at 0000 Xxxxxxxxxxx Xxxx, Xxxxx, Xxxxxxxx
00000; the Company is not a "foreign corporation," "foreign
partnership," "foreign trust," or "foreign estate" as those terms are
defined in the Code; and the Company's United States employer
identification number is 00-0000000;
(b) The individual or individuals executing this Agreement and the
Related Documents to which the Company is a party are duly and properly
in office and fully authorized to execute the same on behalf of the
Company.
(c) This Agreement and each Related Document to which the Company
is a party are the legal, valid and binding operations of the Company,
enforceable against the Company in accordance with their respective
terms, subject, however, to the application by a court of general
principles of equity and to the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally.
(d) The execution, delivery and performance by the Company of this
Agreement and the Related Documents to which the Company is a party, the
25
consummation of the transactions herein and therein contemplated and the
fulfillment of or compliance with the terms and conditions hereof and
thereof will not in any material respect conflict with or constitute a
violation or breach of or default (with due notice or the passage of time
or both) under the certificate of incorporation or bylaws of the Company
or any applicable law or administrative rule or regulation, or any
applicable court or administrative decree or order, or any trust
agreement, mortgage, deed or trust, loan agreement, lease, contract or
other agreement or instrument to which the Company is a party or by
which it or its properties are otherwise subject or bound, or result in
the creation or imposition of any Lien of any nature whatsoever, other
than a Permitted Lien, upon any of the property or assets of the Company.
The Company is not in violation of or default under any of the foregoing
to the extent that any such violation or default would materially or
adversely affect the Company's ability to perform its obligations
hereunder, and no condition exists that would, with the giving of notice
or lapse of time or both, constitute such a violation or default.
(e) No consent or approval of any trustee, holder of any
indebtedness of the Company or any other Person, and no consent,
permission, authorization, order or license of, or filing or
registration with, any governmental authority, except for the recording
and filings in connection with the Liens granted to the Bank hereunder and
under the Bank Security Documents is necessary in connection with the
execution, delivery and performance of the Agreement or the Related
Documents, the consummation of any transaction herein or therein
contemplated, or the fulfillment of or compliance with the terms and
conditions hereof or thereof, except as have been obtained or made and as
are in full force and effect.
(f) There is no action, suit, proceeding, inquiry or investigation
before or by any court or federal, state, municipal or other governmental
authority or arbitrator or other Person, pending or, to the best knowledge
of the Company after reasonable inquiry and investigation, threatened
against or affecting the Project, the Company or the assets, properties or
operations of the Company which, if determined adversely to the Company or
its respective interests, could have a material adverse effect upon the
Project or the consummation of the transactions contemplated by or the
fulfillment or compliance with the terms and conditions, or the legality,
validity or enforceability, or this Agreement or the Related Documents, or
upon the operations, business, properties, condition (financial or
otherwise) or prospects of the Company. The Company is not in in default
(and no event has occurred and is continuing which with the giving of
notice or the passage of time or both could constitute a default) with
respect to any order or decree of any court or any order, regulation or
demand of any federal, state, municipal or other governmental authority
or arbitrator or other Person, which default could have a material
adverse effect upon the Project or the consummation of the transactions
contemplated by or the fulfillment or compliance with the terms and
conditions, or the legality, validity or enforceability
26
of this Agreement or the Related Documents, or upon the operations,
business, properties condition (financial or otherwise) or prospects of
the Company, or its respective properties. The Company is not in
violation of any applicable law, which violation materially adversely
affects or may materially adversely affect the operations, business,
properties, condition (financial or otherwise) or prospects of the
Company.
(g) The Company has filed all Federal and other material tax
returns and reports and has paid all Federal and other material taxes,
except such, if any, as are being actively contested by the Company in
good faith, for which adequate reserves in accordance with GAAP have
been made for the payment thereof, which reserves, if any, are reflected
in the financial statements described in subsection (h) of this Section.
(h) The audited consolidated balance sheets of each of (i) the
Company (other than USF) as at April 26, 1996, and (ii) USF as of December
31, 1995, and, in each case, the related consolidated statements of
operations, shareholders' equity and cash flows, together with the notes
thereto (copies of which have been furnished to the Bank) present fairly
the consolidated financial position of the Company (other than USF) and
USF as of the respective dates, and the consolidated results of
operations and changes in cash flow for the annual periods covered by such
financial statements and ending on such date. Since June 29, 1996, the
date of the unaudited financial statements of the Company for the
transition period then ending and which are included in the Company's
Form 10-Q filed August 12, 1996 with the Securities and Exchange
Commission (the "FORM 10-Q"), there has been no material adverse change in
the operations, business, properties, condition (financial or otherwise)
or prospects of the Company. Except as disclosed on Schedule II hereof,
the Form 10-Q or in the Bank Facility, the Company has no material
Guaranty or Indebtedness, contingent obligation, contingent liability or
liability for taxes, long term lease or unusual forward or long-term
commitment that is not reflected in the foregoing financial statements or
the notes thereto and that in any case is material in relation to the
operations, business, properties, condition (financial or otherwise) or
prospects of the Company, or which would materially and adversely affect
the Company's ability to perform fully and timely its obligations under
the L/C Documents.
(i) The information contained in the Private Placement Memorandum
(such Private Placement Memorandum together with the documents
incorporated therein by reference, being the "PRIVATE PLACEMENT
MEMORANDUM") relating to the Bonds is, and the information contained in
the Preliminary Private Placement Memorandum (such Preliminary Private
Placement Memorandum, together with the documents incorporated therein
by reference, being the "PRELIMINARY PRIVATE PLACEMENT MEMORANDUM")
relating to the Bonds as of their date of issue was, and any supplement
or amendment to either thereof with respect to the Company, the use of
proceeds of the Bonds and the Company's obligations, covenants and
27
agreements under the Loan Agreement and the Reimbursement Agreement and the
descriptions of information contained in the Private Placement Memorandum and
the Preliminary Private Placement Memorandum under the captions
"INTRODUCTORY STATEMENT," "THE COMPANY," "THE PROJECT" and, to the extent
applicable to the Company, "NO LITIGATION" shall on the date thereof be,
accurate in all material respects for the purposes for which its use is, was
or shall be, authorized and do not and shall not, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made therein, in the light of the circumstances under
which they are, were or shall be made, not misleading.
(j) (i) SCHEDULE V hereto lists all Plans and separately identifies
Plans intended to be Qualified Plans and Multiemployer Plans.
(ii) Except as disclosed in SCHEDULE V hereto, each Plan sponsored
or maintained by the Company or an ERISA Affiliate is in compliance in
all material respects with the applicable provisions of ERISA, the Code
and other Federal or state law, including all requirements under the
Code or ERISA for filing reports (which are true and correct in all
material respects as of the date filed), and benefits have been paid in
all material respects in accordance with the provisions of the Plan.
(iii) Each Qualified Plan sponsored or maintained by the Company
or an ERISA Affiliate has been determined by the Internal Revenue
Service to qualify under Section 401 of the Code, and the trusts created
thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the Code, or an application for
determination of qualified status has been or will be made to the
Internal Revenue Service prior to the end of the remedial amendment
period under Section 401(b) of the Code, and to the best knowledge of
the Company nothing has occurred which would cause the loss of such
qualification or tax-exempt status.
(iv) Except as specifically disclosed in SCHEDULE V, no Plan
subject to Title IV of ERISA that is sponsored or maintained by the
Company or an ERISA Affiliate has any Unfunded Pension Liability.
(v) Except as specifically disclosed in SCHEDULE V, no member of
the Controlled Group has ever represented, promised or contracted
(whether in oral or written form) to any current or former employee
(either individually or to employees as a group) that such current or
former employee(s) would be provided, at any cost to any member of the
Controlled Group, with life insurance or employee welfare plan benefits
(within the meaning of section 3(1) of ERISA) following retirement or
28
termination of employment. Except as specifically disclosed on SCHEDULE V,
to the extent that any member of the Controlled Group has made any such
representation, promise or contract, such member has expressly reserved
the right to amend or terminate such life insurance or employee welfare
plan benefits with respect to claims not yet incurred.
(vi) All members of the Controlled Group have complied in all
material respects with the notice and continuation coverage requirements
of Section 4980B of the Code.
(vii) Except as specifically disclosed in SCHEDULE V, no ERISA
Event has occurred or is reasonably expected by the Company or any ERISA
Affiliate to occur with respect to any Plan.
(viii) Except as specifically disclosed in SCHEDULE V, there are
no pending or, to the best knowledge of the Company, threatened claims,
actions or lawsuits, other than routine claims for benefits in the usual
and ordinary course, asserted or instituted against (i) any Plan
maintained or sponsored by the Company or its assets, (ii) any member of
the Controlled Group with respect to any Qualified Plan, or (iii) any
fiduciary with respect to any Plan for which the Company may be directly
or indirectly liable, through indemnification obligations or otherwise.
(ix) Except as specifically disclosed in SCHEDULE V, neither the
Company nor any ERISA Affiliate has incurred nor reasonably expects to
incur (i) any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a
Multiemployer Plan or (ii) any liability under Title IV of ERISA (other
than premiums due and not delinquent under Section 4007 of ERISA) with
respect to a Plan.
(x) Except as specifically disclosed in SCHEDULE V, neither the
Company nor any ERISA Affiliate has transferred any Unfunded Pension
Liability to a Person other than the Company or an ERISA Affiliate or
otherwise engaged in a transaction that could be subject to Section 4069
or 4212(c) or ERISA.
(xi) To the best knowledge of the Company, no member of the
Controlled Group has engaged, directly or indirectly, in a non-exempt
prohibited transaction (as defined in Section 4975 of the Code or
Section 406 of ERISA) in connection with any Plan which could reasonably
be expected to have a material adverse effect on the operations,
business, properties, condition (financial or otherwise) or prospects of
the Company.
29
(k) Except as disclosed on Schedule III, the ongoing operations of the
Company with respect solely to the Premises or the Project comply in all
material respects with all statutes, regulations and other laws of all
governmental authorities, including environmental laws and regulations,
applicable to the Premises or the Project, the Company has obtained all
governmental or regulatory orders, consents, permits, authorizations,
approvals, variances for applicable zoning ordinances and easements or
licenses with respect to the ownership, operation and use of the Project as
contemplated in the Private Placement Memorandum and the Loan Agreement
necessary to own and operate the Project.
(l) The Company is not subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce
Act, the Investment Company Act of 1940 or any other federal or state statute
or regulation that may render all or any portion of the Obligations
unenforceable. The Company is not engaged principally, or as one of its
important activities, in the business of extending credit for the purchase of
stock or other securities.
(m) The Company possesses all necessary trade names and licenses that
are reasonably necessary and material to conduct its business as now operated
without any known conflict with the valid trademarks, tradenames, copyrights,
patents, patent rights and licenses or other intangible property rights of
others.
(n) The Company has good and marketable title to the fee interest of
the Premises and the Project (other than the Excluded Collateral) free from
any adverse Lien of any kind whatsoever, excepting only the Permitted Liens.
(o) Except as set forth on Schedule IV, neither the Company nor, to the
best of the Company's knowledge, any previous owner, tenant, occupant or user
of the Premises has engaged in any material Environmental Activities on,
under, in or about the Premises in violation of any Hazardous Materials Laws.
The Company shall not cause or knowingly permit any material Environmental
Activities on, under, in or about the Premises in violation of any Hazardous
Materials Laws.
(p) Except as set forth on Schedule IV, the Premises and its use comply
in all material respects with all applicable laws and governmental
regulations including, without limitation, all Hazardous Materials Laws, all
applicable federal, state and local laws pertaining to air and water quality,
hazardous waste, waste disposal and other environmental matters, including,
but not limited to, the Clean Water, Clean Air, Federal Water Pollution
Control, Solid Waste Disposal, Resource Conservation Recovery and
Comprehensive Environmental Response Compensation and Liability Acts, and the
California Environmental Quality Act, and the rules, regulations and
ordinances of the County, the California Department of Health Services, the
Regional Water Quality Control Board, the State Water Resources Control
Board, the Environmental Protection Agency and
30
all applicable federal, state and local agencies and bureaus.
Notwithstanding the foregoing, the possession by the Company or a tenant
of the Project of minor quantities of Hazardous Material, the presence
of which does not violate any Hazardous Materials Laws and the removal
of which is not mandated by such Hazardous Materials Laws, shall not be
a violation of this Section.
ARTICLE 5.
COVENANTS OF THE COMPANY
SECTION 5.1 AFFIRMATIVE COVENANTS. In consideration of the Bank
entering into this Agreement, the Company agrees that, unless the Bank shall
otherwise consent in writing, it will:
(a) MAINTENANCE OF EXISTENCE. Except as otherwise permitted under
Section 5.2(a) or under the Bank Facility, maintain and preserve its
corporate existence and all rights, privileges, licenses, franchises and
other authority for the conduct of its business in an orderly manner
without voluntary interruption.
(b) COMPLIANCE WITH LAWS. Comply in all material respects with
all applicable laws, rules, regulations and orders of any governmental
authority, the non-compliance with which would have a material and
adverse effect on the business, operations, properties, condition
(financial or otherwise) or prospects of the Company, except such as may
be contested in good faith or as to which a bona fide dispute may exist.
(c) MAINTENANCE OF INSURANCE. The Company shall maintain, and
shall cause each of its Subsidiaries to maintain, with financially sound
and reputable independent insurers (or through self-insurance programs),
insurance with respect to its properties and business against loss or
damage of the kinds customarily insured against by Persons engaged in
the same or similar business, of such types and in such amounts as are
customarily carried under similar circumstances by such other Persons;
including workers' compensation insurance, general liability and
property and casualty insurance. All such insurance with respect to the
Premises and the Project (except for workers' compensation insurance)
shall name the Bank as loss payee/mortgagee and as additional insured
(in the case of general liability), for the benefit of itself and the
Participants, as their interests may appear. Upon request of the Bank,
the Company shall furnish the Bank, at reasonable intervals (but not
more than once per policy year), a certificate of an officer of the
Company (and, if requested by the Bank, any insurance broker of the
Company) setting forth the nature and extent of all insurance maintained
by the Company and its Subsidiaries in accordance with this Section or
any Bank Security Documents (and which, in the case of a certificate of
a broker, were placed through such broker).
31
(d) INSPECTION RIGHTS. At any reasonable time and from time to
time during normal business hours, permit the Bank or any agents or
representatives thereof to examine and make copies of and abstracts from
the financial and operating records and books of account of, and visit
the properties of, the Company and to discuss the affairs, finances and
accounts of the Company with any of its officers or directors upon
reasonable advance written notice to the Company.
(e) KEEPING OF BOOKS. Keep proper books of record and account, in
which entries shall be made of all financial transactions and matters
involving the assets and business of the Company, in accordance with
GAAP.
(f) MAINTENANCE OF PROPERTIES. Maintain and preserve the Premises
and the Project in good working order and condition, ordinary wear and
tear excepted.
(g) REPORTING REQUIREMENTS. Furnish to the Bank (and any
Participant requested in writing by the Bank) those reports and items
required by Sections 6.01, 6.02 and 6.03 of the Bank Facility and the
following:
(i) Concurrently with the delivery of the financial
statements referred to in subsection 6.01(a) of the Bank Facility,
a certificate of the independent certified public accountants
reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any
Default or Event of Default, except as specified in such
certificate;
(ii) Concurrently with the delivery of the financial
statements referred to in subsections 6.01(a) of the Bank Facility,
a certificate of an officer of the Company (i) stating that, to the
best of such officer's knowledge, the Company, during such period,
has observed and performed all of its covenants and other
agreements, and satisfied every condition contained in this
Agreement and the other Related Documents to which the Company is a
party to be observed, performed or satisfied by it, and that such
officer has obtained no knowledge of any Default or Event of
Default except as specified (by applicable subsection reference) in
such certificate; (ii) setting forth in detail the calculations
supporting such statement in respect of Sections 5.2(g), and,
commencing with the fiscal year ended on or about June 30, 1997,
the calculation of "Excess Cash Flow" under the Bank Facility for
such year; and (iii) comparing, for the most recent fiscal quarter,
the actual results of such quarter with the budgeted forecast
figures for such quarter previously furnished to the Lenders (as
such term is defined in the Bank Facility), together with a
narrative discussion and analysis of the actual versus budgeted
forecast results;
32
(iii) Promptly after the same are sent, copies of all
financial statements and reports which the Company sends to its
shareholders; and promptly after the same are filed, copies of all
financial statements, proxy statements and regular, periodical or
special reports which the Company may make to, or file with, the
Securities and Exchange Commission or any successor or similar
governmental authority;
(iv) Forthwith upon the occurrence of any Default or Event of
Default (and in any event within 10 days after the chief financial
officer of the Company knows of the occurrence thereof), a
certificate of the chief financial officer of the Company setting
forth the details thereof and the action which the Company is
taking or proposes to take with respect thereto;
(v) To the extent requested by the Bank, simultaneously with
the delivery of all notices required to be sent by the Company to
the Trustee or the Issuer under the Indenture or the Loan
Agreement, a copy or copies of all such notices;
(vi) Promptly, and in any event within 30 days after receipt
thereof, a copy of any notice, summons, citation, directive, letter
or other form of communication from any governmental authority or
court in any way concerning any action or omission on the part of
the Company in connection with any substance defined as toxic or
hazardous by any applicable federal, state or local law, rule,
regulation, order or directive or any waste or by-product thereof,
or concerning the filing of a Lien upon, against or in connection
with the Premises, in connection with a Hazardous Substance
Superfund as maintained pursuant to Section 9507 of the Code; and
(vii) From time to time, such additional information regarding
the business, operations, properties, prospects or condition
(financial or otherwise) of the Company as the Bank may reasonably
request.
(h) PAYMENT OF TAXES. Promptly pay all lawful taxes, governmental
charges and assessments at any time levied or assessed upon or against
it or the Project and the Premises; PROVIDED, HOWEVER, that it shall
have the right to contest in good faith and by appropriate proceedings
diligently pursued any such sums and pending such contest may delay or
defer payment thereof for which adequate reserves in accordance with
GAAP have been established.
(i) CLAIMS. Promptly pay or otherwise satisfy and discharge all
of its material obligations and all material demands and claims against
it as and when the same become due and payable, other than any of the
foregoing whose validity, amount of collectibility is being contested in
good faith and by appropriate pro-
33
ceedings diligently pursued and for which adequate reserves in accordance
with GAAP have been established; PROVIDED, HOWEVER, that no such contest
shall forgive the requirement of prompt payment and fulfillment of all
Obligations under this Agreement or pursuant to the Bonds or the other
Related Documents.
(j) LICENSES. Procure and maintain all necessary licenses and permits
necessary or advisable in connection with the Company's business.
(k) ENVIRONMENTAL MATTERS. Except as set forth on SCHEDULE IV not engage
in any activity in any part of the Premises or the Project, and shall use
best efforts to prevent others from engaging in any activity therein, which
will result in the Premises or the Project, or any part thereof, containing
any of the following in concentrations or under conditions in violation of
Hazardous Materials Laws: (a) any oil, or Hazardous Materials (excepting only
minor quantities of household and cleaning materials customarily used in the
ordinary course of prudent household or business purposes, as applicable,
and maintained in accordance with all applicable Hazardous Materials Laws);
(b) asbestos in any form which is or could become friable; (c) urea
formaldehyde foam insulation; (d) transformers or other equipment which
contain dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty (50) parts per million. Notwithstanding the foregoing, the
possession by the Company of minor quantities of a Hazardous Material, the
presence of which does not violate any Hazardous Materials Laws and the
removal of which is not mandated by such Hazardous Materials Laws shall not
be a violation of this Subsection (k). If at any time it is determined that
the provisions of this Subsection (k) have been violated, then unless the
Company provides a Hazardous Materials Report (as hereinafter defined)
certifying that the Project does not contain Hazardous Materials in
quantities which require removal or remediation under any Hazardous Materials
Laws, the Company shall be solely responsible for and shall pay for all costs
incurred in connection with the removal of said equipment and/or substances,
and the reasonable cost thereof shall be deemed to be an operating expense.
If Bank reasonably believes that the value of its security interest in the
Premises or the Project has been or may be impaired by the presence, use,
generation, treatment, storage or disposal of any Hazardous Material(s) on,
under or about all or a portion of the Premises in violation of any Hazardous
Materials Laws, then Bank may request and the Company agrees to submit, if
requested by Bank, a report (the "Hazardous Materials Report"), satisfactory
to Bank in its sole and absolute discretion, prepared by a consultant
approved by Bank, certifying that the Project does not contain any Hazardous
Materials in quantities which require removal or remediation under any
Hazardous Materials Laws nor is any part of the Project currently being used
for any Environmental Activities. The expense of the Hazardous Materials
Report shall be deemed to be an operating expense of the Company. Upon the
discovery by the Company or Bank that any part of the Project contains any
Hazardous Materials in quantities which require removal or remediation under
any Hazardous Materials Laws or is being used to conduct Environmental
Activities,
34
Bank may, in its sole and absolute discretion and at the Company's expense,
retain an independent professional consultant to review any Hazardous
Materials Report prepared by the Company and/or to conduct its own
investigation of the Premises and/or the Project, and the reasonable expense
thereof shall be deemed to be an operating expense of the Company. The
Company hereby grants to Bank, its agents, employees, consultants and
contractors the right to enter upon the Project, during normal business hours
after notice and in a manner that will not unreasonably disturb the use and
enjoyment of the Project, and to perform such tests on the Premises and the
Project as are reasonably necessary to conduct such a review and/or
investigation. Any liability of the Company arising out of this Subsection
(k) shall survive the Company's satisfaction of the Obligations or the
exercise by Bank of any of its remedies under any of the Related Documents,
including, without limitation, a transfer of the Premises or any portion
thereof, by foreclosure, by deed in lieu of foreclosure or otherwise.
(l) FURTHER ASSURANCES. From time to time, execute (in a recordable form)
acknowledge, deliver, record, register and file all such notices, statements
and other documents and take such other steps, including, but not limited to,
such permitted amendments of the Related Documents and any instruments
perfecting interests thereunder, as may be necessary or advisable to render
fully valid and enforceable under all applicable laws the rights, Liens and
priorities of the Bank with respect to all security from time to time
furnished under this Agreement or the Security Documents or intended to be so
furnished, in each case in such form and at such times as shall be
satisfactory to the Bank and pay all reasonable fees and expenses (including
reasonable attorneys' fees and expenses) incident to compliance with this
paragraph.
(m) NOTICES. Deliver to Bank notice and a copy of any amendment, consent
or waiver to the Bank Facility.
(n) CONVERSION. Not initiate an interest rate conversion with respect to
the Bonds without prior written consent of Bank.
(o) APPENDIX. Duly, timely and diligently comply with each and every term,
condition and covenant set forth in Appendix I.
SECTION 5.2 NEGATIVE COVENANTS. In consideration of the Bank entering
into this Agreement, the Company agrees that, without the written consent of
the Bank, it will not:
(a) SALES, ASSETS, MERGERS, ETC. Except to a wholly-owned Subsidiary,
sell, lease, transfer or otherwise dispose of (or pledge or otherwise
encumber) all or substantially all of its assets or merge with or into or
consolidate with or into any other corporation or entity, unless (i)
immediately after giving effect thereto, no event shall occur or shall have
occurred and be continuing which constitutes a
35
Default or an Event of Default, (ii) the surviving, resulting, or transferee
Person shall be the Company or a wholly-owned Subsidiary of the Company which
has assumed the Obligations of the Company, and (iii) such sale,
lease, transfer, disposition merger or consolidation shall not result in an
event of default hereunder or under any of the Related Documents or the Bank
Facility.
(b) AMENDMENT OF RELATED DOCUMENTS. Enter into or consent to any amendment
of this Agreement or any Related Document without prior written consent of
the Bank.
(c) REQUISITIONS. Fail to satisfy any condition precedent to a
disbursement set forth in Appendix I to the Bank's satisfaction for more than
[60] days after notice from Bank.
(d) LIENS AND ENCUMBRANCES. Create, incur, assume or permit to exist any
Lien upon any of the Premises or the Project or any other collateral subject
to the Bank Security Documents other than Permitted Liens.
(e) TRANSFER OF PREMISES. Cause nor permit any "transfer" (as that term is
defined in SECTION 1.19 of the Deed of Trust) of all or any portion of the
Premises or the Project or any other property granted under the Deed of Trust
(collectively, the "TRUST ESTATE") without the prior written consent of Bank.
Consent by the Bank to one such transaction shall not be deemed to be a
waiver of the Bank's right to require its separate written consent to future
or successive transactions. The Bank may grant or deny such consent in its
sole discretion, and if such consent is given, any such transferee shall
assume all of the obligations of the transferor under this Agreement and the
other Related Documents and agree to be bound by all provisions contained in
all such documents, and the Company and such transferee shall comply in all
other respects with any requirements set forth in the Related Documents
relating to such transfer. Such assumption shall not, however, release the
transferor or any other party from any liability to the Bank under this
Agreement or any other Related Documents except as otherwise expressly agreed
in writing by the Bank.
(f) RELATED DOCUMENT COVENANTS. Violate any of the covenants of the
Company contained in any Related Document; PROVIDED, HOWEVER that the
covenants of the Company contained herein shall be controlling to the extent
that they apply to the same subject matter as, and are more restrictive than,
any of the covenants contained in any Related Document.
36
(g) FINANCIAL COVENANTS. Violate Sections 7.14, 7.15, 7.16 or
7.17 (the "Financial Covenants") of the Bank Facility, as the same may
be amended from time to time; PROVIDED, HOWEVER that if the Bank
Facility terminates, the Company shall give the Bank notice of such
termination and the Financial Covenants as in effect immediately before
such termination shall be incorporated herein by reference unless the
Bank and Caisse Nationale De Credit Agricole are participating in any
senior bank facility replacing the Bank Facility in which case the
financial covenants comparable to the Financial Covenants contained in
such facility shall be incorporated herein by reference; PROVIDED,
FURTHER, that with the written consent of the Bank, if the Bank Facility
is replaced by another senior bank credit facility to which the Bank and
Caisse Nationale De Credit Agricole are not a party, the financial
covenants comparable to the Financial Covenants contained in such
facility shall replace the Financial Covenants and shall be incorporated
herein by reference.
(h) LIMITATION ON OPTIONAL REDEMPTION OF BONDS. Permit or cause
the Bonds to be redeemed at the option of the Company pursuant to
Article III of the Indenture except to the extent that the redemption
price for any Bonds so redeemed is paid by the Trustee and moneys that
are not derived from drawings under the Letter of Credit which can be
applied under the terms of the Indenture for such redemption.
(i) ALTERNATE CREDIT FACILITY. In the event an Alternate Credit
Facility is obtained and the Letter of Credit shall be returned to the
Bank prior to the Termination Date for cancellation by the Bank, the
Company shall immediately pay to the Bank all amounts owing or to become
due and payable hereunder through the date of such cancellation.
SECTION 5.3 COMPLIANCE WITH ERISA. The Company shall not, and
shall not suffer or permit any of its Subsidiaries to, (i) terminate any Plan
subject to Title IV of ERISA so as to result in any material liability to the
Company or any ERISA Affiliate, (ii) permit to exist any ERISA Event or any
other event or condition with respect to a Plan, which presents the risk of a
material liability to any member of the Controlled Group, (iii) make a
complete or partial withdrawal (within the meaning of ERISA Section 4201)
from any Multiemployer Plan so as to result in any material liability to the
Company or any ERISA Affiliate, (iv) enter into any new Plan or modify any
existing Plan so as to increase its obligations thereunder which could result
in any material liability to any member of the Controlled Group, or (v)
permit the excess (if any) of (x) the present value of all liabilities
(determined by using the actuarial assumptions utilized by the PBGC upon
termination of a single employer plan) under any Plan sponsored or maintained
by the Company or any of its Subsidiaries that is subject to Title IV of
ERISA OVER (y) the fair market value of Plan assets allocable to such benefit
liabilities, to exceed an aggregate amount of $10,000,000 for all such Plans
of the Company and its Subsidiaries, all determined as of the most recent
valuation date for each such Plan for which a valuation is available.
37
ARTICLE 6.
EVENTS OF DEFAULT
SECTION 6.1 EVENTS OF DEFAULT
The occurrence of any of the following events shall be an "EVENT OF
DEFAULT:"
(i) The Company shall fail to pay any amount payable hereunder
when due; or
(ii) Any representation or warranty made by the Company herein, or
by the Company in connection with this Agreement or any Related Document
shall prove to have been incorrect in any material respect when made; or
(iii) The Company shall fail to perform or observe any material
terms, covenants or agreements contained in Sections 5.1(a) or 5.2
hereof; or
(iv) The Company shall fail to perform or observe any other
material term, covenant or agreement contained in this Agreement or any
Bank Security Document and any such failure shall remain unremedied for
30 days after written notice thereof shall have been given to the
Company by the Bank; or
(v) Any material provision of this Agreement shall at any time
for any reason cease to be in full force and effect or shall be declared
to be null and void, or the validity or enforceability thereof shall be
contested by the Company or any government agency or authority, or the
Company shall deny that it has any or further liability or obligation
under this Agreement; or
(vi) The Company shall (A) fail to pay when due (whether by
scheduled maturity, required prepayment, acceleration, demand or
otherwise) any payment of any Indebtedness in an individual principal
amount of $5,000,000 and such failure shall continue after the
applicable grace period, if any, specified in such agreements or
instruments relating to such Indebtedness, or (B) fail to perform or
observe any other term, covenant or condition on its part to be
performed or observed under any agreement or instrument relating to any
Indebtedness when required to be performed or observed, and such failure
shall continue after the applicable grace period, if any, specified in
such agreement or instrument, if the effect of such failure to perform
or observe is to accelerate, or to permit the acceleration of, the
maturity of such Indebtedness, the unpaid principal amount of which then
equals or exceeds $5,000,000; or
38
(vii) The Company shall (A) apply for or consent to the appointment
of a receiver, trustee, liquidator or custodian or the like of itself or
of its property, (B) admit in writing its inability to pay its debts
generally as they become due, (C) make a general assignment for the
benefit of creditors, (D) be adjudicated a bankrupt or insolvent, or (E)
commence a voluntary case under the federal bankruptcy laws of the
United States of America or file a voluntary petition or answer seeking
reorganization, an arrangement with creditors or an order for relief or
seeking to take advantage of any insolvency law or file an answer
admitting the material allegations of a petition filed against it in any
bankruptcy, reorganization or insolvency proceeding; or corporate action
shall be taken by it for the purpose of effecting any of the foregoing;
or if without the application, approval or consent of the Company, a
proceeding shall be instituted in any court of competent jurisdiction,
seeking in respect of the Company, an adjudication in bankruptcy,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of
a trustee, receiver, liquidator or custodian or the like of the Company,
or of all or any substantial part of the assets of the Company, or other
like relief in respect thereof under any bankruptcy, insolvency or
similar law, and, if such proceeding is being contested by the Company,
in good faith, the same shall (1) result in the entry of an order for
relief of any such adjudication or appointment or (2) continue
undismissed, or pending and unstayed, for any period of 60 consecutive
days; or
(viii) Any event of default or event which, with the passage of
time or giving of notice or both, would constitute an event of default
with respect to the Company shall occur under any Related Document or
the Bank Facility (except as such event of default has been waived or
modified); or
(ix) (A) On and after the date hereof, a judgment creditor of the
Company shall obtain possession of any material amount of the collateral
by any lawful means under any of the Bank Security Documents by any
means, including, but without limitation, levy, distraint, replevin or
self-help; or (B) on and after the Issuance Date, any of the Bank
Security Documents shall cease for any reason to be in full force and
effect, or any party thereto (other than the Bank) shall purport to
disavow its obligations thereunder or shall declare that it does not
have any further obligation thereunder or shall contest the validity or
enforceability thereof; or (C) on and after the Issuance Date, the
security interest created in favor of the Bank on any portion of the
collateral under any of the Bank Security Documents shall become
otherwise impaired or unenforceable.
SECTION 6.2 UPON AN EVENT OF DEFAULT.
(a) If an Event of Default described under Section 6.1(vii)
occurs, any and all Obligations then owing or which would become owing
upon a drawing of the full amount available under the Letter of Credit
shall automatically become
39
due and payable (which sum, upon receipt thereof by the Bank, shall
be held by the Bank as collateral security for the reimbursement of
drawings under the Letter of Credit and the payment of any other
amounts due and payable hereunder and under any of the other L/C
Documents) and the commitment of the Bank to issue the Letter of
Credit (or any execution or replacement thereof) shall be
automatically terminated.
(b) If any Event of Default shall have occurred and be
continuing (including under Section 6.1(vii) with respect to clauses
(ii), (iv) and (v) below), the Bank may, in its sole discretion, but
shall not be obligated to, (i) by notice to the Company, declare the
commitment of the Bank to issue the Letter of Credit to be
terminated, whereupon the same shall forthwith terminate, or (ii) if
the Letter of Credit shall have been issued, give written notice to
the Trustee pursuant to Section 2.03(b)(e) of the Indenture
directing the Trustee to effect a mandatory tender of the Bonds or
pursuant to Section 3.01(d) of the Indenture directing the Trustee
to effect a mandatory redemption, or (iii) exercise the remedies
available to it under the Bank Security Documents, or (iv) exercise
any other remedy available to it at law, in equity or otherwise.
ARTICLE 7.
MISCELLANEOUS
SECTION 7.1 AMENDMENTS, ETC. No amendment or waiver of any
provision of this Agreement, nor consent to any departure by the Company
therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Bank and the Company and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.
SECTION 7.2 NOTICE, ETC. All notices, demands and other
communications provided for hereunder shall, unless otherwise stated herein,
be in writing (including telex or facsimile notice with telephonic
confirmation) and mailed, sent or delivered, if to the Company at 0000
Xxxxxxxxxxx Xxxx, Xxxxx, Xxxxxxxx 00000, to the attention of the Chief
Financial Officer, in the case of telecopy to telecopy no.: (000) 000-0000;
if to the Bank, in the case of deliveries or mailings, at its address at 000
Xxxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, in the case
of telecopy, to telecopy no.: (000) 000-0000, in each case Attention: Xxx
Xxxxx; and if to the Trustee, at its address at 0 Xxxx Xxxxx, Xxxxxxxxx
Xxxxx, Xxxxxx, Xxxxxxxxxx 00000, with a copy to: Bankers Trust Company of
California, N.A. 0 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and in
the case of telecopy, to telecopy no.: (000) 000-0000, in each case
Attention: Corporate Trust Department or, as to each party, to such other
Person and/or at such other address or number as shall be designated by such
party in a written notice to each other party. All such notices and
communications shall be effective when mailed or sent, addressed as
aforesaid, except that notices to the Bank pursuant to the provisions of
Article 2 shall not be effective until received by the Bank,
40
and any notice to the Trustee pursuant to Section 6.2 shall not be effective
until received by the Trustee. Notices of any Default shall be sent by the
Company to the Bank by telex or telecopy (with immediate telephonic
confirmation).
SECTION 7.3 NO WAIVER; REMEDIES. No failure or delay on the
part of Bank in the exercise of any power, right or privilege hereunder shall
impair such power, right or privilege or be construed to be a waiver of any
default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude any other or further exercise
thereof or of any other power, right or privilege. All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
SECTION 7.4 ACCOUNTING TERMS; CHANGE IN ACCOUNTING PRINCIPLES.
All accounting terms not specifically defined herein shall be construed in
accordance with GAAP consistently applied, except as otherwise stated herein.
If (i) any changes in accounting principles from those used in the
preparation of the financial statements referred to in Section 4.1(h)
hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting
Standards Board of the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) result in a change in
the standards or terms found herein or (ii) there is any change in the
Company's fiscal quarter or the Fiscal Year, the parties hereto agree to
enter into negotiations in order to amend this Agreement so as to equitably
reflect such changes with the desired result that the criteria for evaluating
the Company's financial condition shall be the same after such changes as if
such changes had not been made.
SECTION 7.5 INDEMNIFICATION OF THE BANK. The Company hereby
indemnifies and holds the Bank and the officers, directors, employees,
agents and Affiliates of Bank (the "INDEMNITEES") harmless from and against
any and all claims, damages, losses, liabilities, costs or expenses
(including reasonable attorneys' fees and expenses) which the Indemnitees may
incur or which may be claimed against the Indemnitees by any Person:
(a) by reason of any inaccuracy, or any untrue statement or
alleged untrue statement of any material fact, contained in the
Preliminary Private Placement Memorandum or the Private Placement
Memorandum or any amendment or supplement thereto, or by reason of
the omission or alleged omission to state therein a material fact
necessary to make such statements, in the light of the circumstances
under which they were made, not misleading; PROVIDED, HOWEVER, that,
in the case of any action or proceeding alleging an inaccuracy, or
an untrue statement, with respect to information supplied by and
describing the Bank in the Preliminary Private Placement Memorandum
or the Private Placement Memorandum (the "BANK INFORMATION"), or an
omission or alleged omission to state therein a material fact
necessary to make the statements in the Bank Information, in the
light of the circumstances under which they were made,
41
not misleading, (i) indemnification by the Company pursuant to this
Section shall be limited to the costs and expenses of the
Indemnitees (including reasonable fees and expenses of the
Indemnitees' counsel) of defending itself against such allegation,
(ii) if in any such action or proceeding it is finally determined
that the Bank Information contained a material inaccuracy or an
untrue statement of a material fact or omitted to state therein a
material fact necessary to make the statements contained therein, in
the light of the circumstances under which they were made, not
misleading, then the Company shall not be required to indemnify the
Indemnitees pursuant to this Section for any claims, damages,
losses, liabilities, costs or expenses to the extent caused by such
inaccuracy, untrue statement or omission, and (iii) if any such
action or proceeding shall be settled by the Indemnitees without
there being a final determination to the effect described in the
preceding clause (ii), then the Company shall be required to
indemnify the Indemnitees pursuant to this Section only if such
action or proceeding is settled with the Company's express written
consent; provided that such consent shall not be unreasonably
withheld and no consent shall be required if an Event of Default has
occurred and is continuing hereunder; or
(b) by reason of or in connection with the execution,
delivery, performance, restructuring, renegotiation or enforcement
of this Agreement or any Related Document, or any transaction
contemplated herein or therein (including the issuance of the Letter
of Credit); PROVIDED, HOWEVER, that the Company shall not be liable
under this Section to indemnify the Indemnitees for any claims,
damages, losses, liabilities, costs or expenses resulting solely
from the Bank's gross negligence or willful misconduct or from other
contracts, agreements or instruments to which the Bank is a party,
not related to this Agreement; or
(c) by reason of or in connection with the execution and
delivery or transfer of, or payment or failure to make lawful
payment under, the Letter of Credit; PROVIDED, HOWEVER, that the
Company shall not be required to indemnify the Indemnitees pursuant
to this Section for any claims, damages, losses, liabilities, costs
or expenses to the extent, but only to the extent, caused by (i) the
willful misconduct or gross negligence of the Bank in determining
whether a draft or certificate presented under the Letter of Credit
complied with the terms of the Letter of Credit or (ii) the Bank's
willful failure to make lawful payment under the Letter of Credit
after the presentation to it by the Trustee or a successor trustee
under the Indenture of a draft and certificate strictly complying
with the terms and conditions of the Letter of Credit; or
(d) the failure of the Bank to honor a drawing under the
Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions
herein called "GOVERNMENTAL ACTS").
42
Nothing in this Section is intended to limit the other Obligations of the
Company hereunder. Without prejudice to the survival of any other Obligation
hereunder, the Obligations contained in this Section shall survive the
payment in full of all amounts payable pursuant to Article 2 and the
termination of the Letter of Credit and this Agreement.
SECTION 7.6 LIABILITY OF THE BANK. Except as otherwise expressly
set forth in this Agreement, the Company assumes all risks of the acts or
omissions of the Trustee and any beneficiary or transferee of the Letter of
Credit with respect to its use of the Letter of Credit. Neither the Bank nor
any of its officers or directors shall be liable or responsible for:
(a) the use or misuse which may be made of the Letter of Credit or
any acts or omissions of the Trustee and any beneficiary or transferee in
connection therewith;
(b) the validity, accuracy, sufficiency or genuineness of
documents, or of any endorsement thereon, even if such documents shall
prove to be in any or all respects invalid, inaccurate, insufficient,
fraudulent or forged;
(c) payment by the Bank against presentation of documents which do
not comply with the terms of the Letter of Credit, including failure of any
documents to bear any reference or adequate reference to the Letter of
Credit; or
(d) failure of the beneficiary of the Letter of Credit to comply
fully with conditions required in order to draw upon the Letter of Credit;
or
(e) omissions, interruptions or delays in transmission or delivery
of any messages, by mail, cable telegraph, telex or otherwise, whether or
not they be in cipher; or
(f) errors in interpretation of technical terms; or
(g) any loss or delay in the transmission or otherwise of any
document required in order to make a drawing under the Letter of Credit or
of the proceeds thereof; or
(h) the misapplication by the beneficiary of the Letter of Credit
of the proceeds of any drawing thereunder; or
(i) any consequences arising from causes beyond the control of the
Bank, including, without limitation, any Governmental Acts (as defined in
Section 7.6); or
43
(j) any other circumstances whatsoever in making or failing to make
payment under the Letter of Credit, EXCEPT that the Company shall have a
claim against the Bank, and the Bank shall be liable to the Company to
the extent of any direct, as opposed to consequential, damages suffered
by the Company which the Company proves were caused by the willful
misconduct or gross negligence of the Bank in determining whether a draft
or certificate presented under the Letter of Credit complied with the
terms of the Letter of Credit.
In furtherance and not in limitation of the foregoing, the Bank may accept
documents that appear on their face to be in order, without responsibility
for further investigation, regardless of any notice or information to the
contrary.
SECTION 7.7 COSTS, EXPENSES AND TAXES. The Company hereby agrees
to pay on demand all reasonable costs and expenses incurred in connection
with the preparation, execution, delivery, filing, recording, administration
of this Agreement and the other Related Documents, including, without
limitation, the reasonable fees and expenses of counsel for the Bank, with
respect to advising the Bank as to its rights and responsibilities under this
Agreement whether or not the Letter of Credit is issued (unless failure to
issue the Letter of Credit is solely the fault of the Bank). The Company also
agrees to pay all reasonable costs and expenses (including reasonable counsel
fees and expenses) incurred in connection with (i) the enforcement,
restructuring or amendment of this Agreement or any Related Document or any
insolvency or bankruptcy proceeding, or (ii) any action or proceeding
relating to a court order, injunction or other process or decree restraining
or seeking to restrain the Bank from paying any amount under the Letter of
Credit. In addition, the Company shall pay any and all stamp and other taxes
and fees payable or determined to be payable in connection with the
execution, delivery, filing and recording of this Agreement and Related
Documents (except as otherwise provided herein), and agrees to save the Bank
harmless from and against any and all liabilities with respect to or
resulting from any delay in paying or omitting to pay such taxes and fees,
except to the extent that such liability results from the gross negligence or
willful misconduct of the Bank.
SECTION 7.8 BINDING EFFECT. This Agreement shall become effective
when it shall have been executed by the Company and the Bank and thereafter
shall be binding upon and inure to the benefit of the Company and the Bank
and their respective successors and assigns, except that the Company shall
not have the right to assign its rights hereunder or any interest herein to
any Person (other than by operation of law or as part of a transaction
permitted under Section 5.2(a)) without the prior written consent of the
Bank. The Bank may assign to any Participant all or any part of, or any
interest (undivided or divided) in, the Bank's rights and benefits under this
Agreement in accordance with Section 2.8.
SECTION 7.9 INDEPENDENCE OF COVENANTS. All covenants hereunder
shall be given independent effect so that if a particular action or condition
is not permitted by any of such covenants, the fact that it would be
permitted by an exception
44
to, or would otherwise be within the limitations of, another covenant should
not avoid the occurrence of a Default or Event of Default if such action is
taken or condition exists.
SECTION 7.10 SEVERABILITY. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 7.11 HEADINGS. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 7.12 GOVERNING LAW: TERMS. THIS AGREEMENT AND THE RIGHTS
AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
SECTION 7.13 CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST THE COMPANY ARISING OUT OF OR RELATING
TO THIS AGREEMENT MAY BE BROUGHT IN ANY FEDERAL OR STATE COURT OF COMPETENT
JURISDICTION IN THE STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, THE COMPANY ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION
WITH THIS AGREEMENT. The Company hereby agrees that service of all process in
any such proceeding in any such court may be made by registered or certified
mail, return receipt requested, to the Company at its address provided in
Section 7.2, such service being hereby acknowledged by the company to be
sufficient for personal jurisdiction in any action against the Company in any
such court and to be otherwise effective and binding service in every
respect. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of the Bank to bring
proceedings against the Company in the courts of any other jurisdiction.
SECTION 7.14 WAIVER OF JURY TRIAL. THE COMPANY AND THE BANK HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of
45
duty claims, and all other common law and statutory claims. The Company and
the Bank each acknowledge that this waiver is a material inducement for the
Company and the Bank to enter into a business relationship, that the Company
and the Bank have already relied on this waiver in entering into this
Agreement and that each will continue to rely on this waiver in their related
future dealings. The Company and the Bank further warrant and represent that
each has reviewed this waiver with its legal counsel, and that each knowingly
and voluntarily waives its jury trial rights following consultation with
legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SECTION 7.14 AND EXECUTED BY EACH OF THE
PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by
the court.
SECTION 7.15 COUNTERPARTS. This Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
46
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
XXXXXX-XXXXXX, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Title: Chief Financial Officer
------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ L. Gene Beuhn
---------------------------------
Title: Senior Vice President
------------------------------
S-1
EXHIBIT A
TO REIMBURSEMENT AGREEMENT
FORM OF IRREVOCABLE DIRECT PAY LETTER OF CREDIT
Date: November 20, 1996
**U.S. $26,250,000.00**
Credit No. 00000000
Bankers Trust Company of California, N.A.,
as Trustee (the "Trustee")
under the Indenture of Trust dated
as of November 1, 1996, between
La Mirada Industrial Development
Financing Authority and the Trustee.
Attention: Corporate Trust Department
Ladies and Gentlemen:
We hereby establish in your favor as Trustee for the benefit of the
holders of the Bonds (as hereinafter defined), our irrevocable Letter of
Credit No. 00000000 for the account of Xxxxxx-Xxxxxx, Inc. (the "Company"),
in the amount of $26,250,000, whereby we hereby irrevocably authorize you to
draw on us from time to time, from and after the date hereof to and including
the earliest to occur of:
(i) our close of business in Chicago, Illinois on December 1, 1999 (the
"Stated Termination Date"), or
(ii) our close of business in Chicago, Illinois on the date which is
five Business Days following receipt from you of a certificate in the form
set forth as Annex A hereto, or
(iii) the date on which an Acceleration Drawing is honored by us, or
(iv) our close of business in Chicago, Illinois on the date which is
ten (10) days after your receipt of written notice from us specifying the
occurrence of an Event of Default under the Reimbursement Agreement (the
"Reimbursement Agreement") dated as of November 1, 1996 between the Company
and us and directing a mandatory tender or redemption of the Bonds,
A-1
(the "Expiration Date"), a maximum aggregate amount not exceeding Twenty-Six
Million Two Hundred and Fifty Thousand Dollars (U.S. $26,250,000.00) the
"Initial Stated Amount"), which amount is equal to the sum of (x) the
principal amount of the Bonds ($25,900,000) and (ii) 41 days interest at a
rate of 12% ($350,000), to pay principal of and accrued interest on, or the
purchase price of, the $25,900,000 Taxable Variable/Fixed Rate Demand
Industrial Development Revenue Bonds (Xxxxxx-Xxxxxx, Inc. Project) Series
1996 (the "Bonds"), which Bonds were issued pursuant to the Indenture of
Trust dated as of November 1, 1996 (the "Indenture") between you and the
Company, in accordance with the terms hereof. Payments hereunder are
available against the following documents (the "Payment Documents") presented
to The First National Bank of Chicago (the "Bank") at our Chicago offices at
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, telecopier:
(000) 000-0000 (or such other place as we may from time to time specify),
attention: Global Trade Services (or such other person as we may from time to
time specify):
A certificate (i) in the form attached as Annex B
hereto to pay accrued interest on the Bonds as provided
for under Section 2.02 and 2.03 of the Indenture (an
"Interest Drawing"), (ii) in the form attached as Annex
C hereto to pay the principal amount of and, in the
event the redemption date does not coincide with the
regularly scheduled Interest Payment Date, accrued
interest on the Bonds in respect of any redemption of
the Bonds as provided for in Section 3.01 of the
Indenture (a "Redemption Drawing"), (iii) in the form
attached as Annex D hereto, to pay the tender price of
Bonds for which you have not received notice that the
Remarketing Agent has delivered the proceeds of the
remarketing therefor by 9:30 a.m., Chicago time, on the
tender date, as the case may be, as provided for in
Section 2.03 of the Indenture (a "Liquidity Drawing"),
(iv) in the form attached as Annex E hereto, to pay the
principal of and accrued interest in respect of any
Bonds the payment of which has been accelerated
pursuant to Section 8.02 of the Indenture (an
"Acceleration Drawing"), or (v) in the form attached
as Annex F hereto to pay the principal amount of the
Bonds on the date specified in such Bonds as the date
on which the principal of such Bonds is due and payable
as provided for under Article II of the Indenture (a
"Stated Maturity Drawing");
each such certificate to state therein that it is given by your duly
authorized officer and dated the date such certificate is presented hereunder.
No drawings shall be made under this Letter of Credit for the
purpose of making payments on Bank Bonds (as such terms are defined in the
Reimbursement Agreement).
A-2
All drawings made by you shall be made by tested telex,
telecopier or other facsimile telecommunication without further need of
documentation, including the original of this Letter of Credit, it being
understood that each Payment Document submitted via such telex, telecopier or
other facsimile telecommunications is to be the sole operative instrument of
drawing.
We agree to honor and pay the amount of any Interest, Redemption,
Liquidity, Acceleration or Stated Maturity Drawing if presented in compliance
with all of the terms of this Letter of Credit. If such drawing is presented
at or prior to 11:00 A.m., Chicago time, on a Business Day, payment shall be
made of the amount specified, in immediately available funds, before 2:00
p.m., Chicago time, on the same Business Day. If any drawing is presented
after 11:00 a.m., Chicago time, on a Business Day, payment shall be made of
the amount specified, in immediately available funds, by 11:00 a.m., Chicago
time, of the following Business Day. "Business Day" means a day which is not
(a) a Saturday or Sunday, (b) a day on which banking institutions in Chicago
Illinois or the State of New York or in any other city where the principal
corporate trust office of the Trustee, or the Chicago office of the Bank is
located are required or authorized by law (including executive order) to be
closed or on which the principal corporate trust office of the Trustee, or the
Chicago office of the Bank is closed for a reason not related to financial
condition, or (c) a day on which the New York Stock Exchange is closed.
The Available Amount of this Letter of Credit will be reduced
automatically by the amount of any drawing hereunder: PROVIDED, HOWEVER, that
the amount of any Interest Drawing hereunder shall be automatically
reinstated effective the 6th calendar day from the date of such drawing
unless you shall have received written notice from the Bank by tested telex
within five (5) calendar days of the date of any Interest Drawing that the
Letter of Credit will not be so reinstated; and PROVIDED FURTHER, however,
that the portion of any Interest Drawing (as indicated on the related
certificate in the form of Annex B) effected to pay interest on Bonds being
concurrently redeemed through a Redemption Drawing shall not be reinstated;
and PROVIDED FURTHER that the Available Amount of this Letter of Credit will
be reduced upon receipt of a Reduction Certificate in the form of Annex G.
Also, to the extent the Available Amount is reduced as contemplated in the
preceding sentence due to payment by us of a Liquidity Drawing, the
obligation of the Bank to honor drawings hereunder will be automatically
reinstated, concurrently with the receipt by the Bank of the purchase price
of Bonds (or portions thereof) previously purchased with the proceeds of a
Liquidity Drawing and which have been resold, by an amount equal to the
Original Purchase Price of such Bonds (or portions thereof) as have been
resold. "Original Purchase Price" shall mean the principal amount of any Bond
purchased with the proceeds of a Liquidity Drawing plus the amount of accrued
interest thereon paid upon the purchase of such Bond with the proceeds of any
such Drawing.
Upon receipt by us of a certificate of the Trustee in the form of
Annex G hereto, the Bank will automatically and permanently reduce the amount
available to be drawn hereunder by the amount specified in such certificate.
Such reduction shall be
A-3
effective as of the second Business Day following the date of delivery of
such certificate. Also, upon receipt by us of a certificate of the Trustee in
the form of Annex C to this Letter of Credit in connection with a Redemption
Drawing, the Bank will automatically and permanently reduce the amount
available to be drawn hereunder by the amount (if any) specified in such
certificate as a decline in the amount of necessary excess interest coverage
resulting from the partial redemption of Bonds affected through such
Redemption Drawing (and taking into account the nonreinstatement, as provided
in the immediately preceding paragraph, of that portion of any Interest
Drawing which may have been effected to pay interest on Bonds being redeemed
through such Redemption Drawing).
Upon any permanent reduction of the amounts available to be
drawn under this Letter of Credit, as provided herein, we may deliver to you
a new Letter of Credit in exchange for this Letter of Credit or an amendment
to this Letter of Credit substantially in the form of Annex H hereto to
reflect any such reduction. The "Stated Amount" of this Letter of Credit
shall be its Initial Stated Amount as such amount may from time to time be
reduced by the Trustee. The "Available Amount" shall mean the Initial Stated
Amount (i) less the amount of all prior reductions pursuant to Interest,
Redemption, Purchase, Acceleration or Stated Maturity Drawings, (ii) less
any reduction in the Stated Amount pursuant to a reduction certificate in the
form of Annex G hereto to the extent such reduction is not already accounted
for by a reduction in the Available Amount pursuant to clause (i) above,
(iii) plus the amount of all reinstatements as above provided.
Prior to the Expiration Date, we may extend the Stated
Termination Date from time to time at the request of the Company for a
period of one or two years (or such greater period as we may agree with the
Company) by delivering to you an amendment to this Letter of Credit in the
form of Annex I hereto designating the date to which the Stated Termination
Date is being extended. Each such extension of the Stated Termination Date
shall become effective on the Business Day following delivery of such
notice to you and thereafter all references in this Letter of Credit to the
Stated Termination Date shall be deemed to be references to the date
designated as such in such notice. Any date to which the Stated Termination
Date has been extended as herein provided may be extended in a like manner.
Upon the Expiration Date this Letter of Credit shall
automatically terminate and you agree to promptly deliver the same to the
Bank for cancellation.
This Letter of Credit is transferable in whole only to your
successor as Trustee. Any such transfer (including any successive transfer)
shall be effective upon receipt by us of a signed copy of the instrument
effecting each such transfer signed by the transferor and by the transferee in
the form of Annex J hereto (which shall be conclusive evidence of such
transfer) and, in such case, the transferee instead of the transferor shall,
without the necessity of further action, be entitled to all the benefits of
and rights under this Letter of Credit in the transferor's place, provided
that, in such
A-4
case, any certificates of the Trustee to be provided hereunder shall be
signed by one who states therein that he is a duly authorized officer or
agent of the transferee.
Communications with respect to this Letter of Credit shall be addressed
to us at The First National Bank of Chicago, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxxx 00000, attention: Global Trade Services,
specifically referring to the number of this Letter of Credit.
To the extent not inconsistent with the express terms hereof, this
Letter of Credit shall be governed by, and construed in accordance with, the
terms of the Uniform Customs and Practice for Documentary Credits (1993
Revision), International Chamber of Commerce Publication No. 500 (the
"Uniform Customs") which terms are incorporated herein; that this Letter of
Credit will not terminate because of a failure to make a permitted drawing
hereunder as provided in Article 44; and for purposes of Article 48(g), this
Letter of Credit may be transferred in accordance with its terms more than
once. As to matters not governed by the Uniform Customs, this Letter of
Credit shall be governed by and construed in accordance with the laws of the
State of Illinois.
All payments made by us hereunder shall be made from our funds; in no
event shall such payment be made with funds obtained from the Company.
This Letter of Credit sets forth in full the terms of our undertaking,
and such undertaking shall not in any way be modified or amended by reference
to any other document whatsoever.
THE FIRST NATIONAL BANK OF CHICAGO
By
------------------------
Title
--------------------
A-5
ANNEX A
to
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
___________, 19__
Credit No. 00320293
NOTICE OF TERMINATION
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Global Trade Services
Dear Sirs:
Reference is hereby made to that certain Irrevocable Letter of Credit
No. 00320293 dated November 20, 1996 (the "Letter of Credit"), which has been
established for the account of Xxxxxx-Xxxxxx, Inc.
Each of the undersigned hereby certify and confirm that [(i) no Bonds (as
defined in the Letter of Credit) remain Outstanding within the meaning of the
Indenture (as defined in said Letter of Credit) or (ii) an Alternate Credit
Facility (as such term is defined in the Indenture) has been delivered to the
Trustee to replace the Letter of Credit in accordance with the Indenture]*
and, accordingly, said Letter of Credit shall be terminated in accordance
with its terms.
XXXXXX-XXXXXX, INC.
By
-------------------------------
[Title of Authorized Officer]
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.
as Trustee
-------------------------------
[Title of Authorized Officer]
-----------------------------------
*insert appropriate statement
A-A-1
ANNEX B
to
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
___________, 19__
Credit No. 00320293
INTEREST DRAWING CERTIFICATE
The undersigned individual, a duly authorized officer of Bankers Trust
Company of California, N.A. (the "Beneficiary") hereby CERTIFIES on behalf of
the Beneficiary as follows with respect to (i) that certain Letter of Credit
No. 00320293 dated November 20, 1996 (the "Letter of Credit"), issued by The
First National Bank of Chicago in favor of the Beneficiary; (ii) those
certain Bonds (as defined in the Letter of Credit); and (iii) that certain
Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of
$________ under the Letter of Credit pursuant to the Indenture with respect
to the payment of interest due on all Bonds outstanding on the Interest
Payment Date occurring on [insert applicable date] (the "Payment Date") other
than Bank Bonds (as such terms are defined in the Letter of Credit).
3. The amount of the drawing is equal to the amount required to be
drawn by the Trustee pursuant to Section 2.02, 2.03, and 3.01 of the
Indenture.
4. The amount of the drawing made by this Certificate was computed in
compliance with the terms of the Indenture and, when added to the amount of
any other drawing under the Letter of Credit made simultaneously herewith,
does not exceed the Available Amount of the Letter of Credit as presently in
effect.
5. $________ of the amount of the drawing made by this Certificate is
to be applied to the payment of interest due on a portion of the outstanding
Bonds being redeemed pursuant to a concurrent Redemption Drawing, the
redemption date of which coincides with the Interest Payment Date referred to
in paragraph (2) above and attached hereto is our reduction certificate.*
-------------------------------------------------------------------------------
*To be included in Certificate only if applicable in the circumstances
described.
A-B-1
In WITNESS WHEREOF, this Certificate has been executed this ___________
day of _______________, 19__.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By
-------------------------------
[Title of Authorized Officer]
A-B-2
Annex C
to
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
, 19
--------- --
Credit No. 00320293
REDEMPTION DRAWING CERTIFICATE
The undersigned individual, a duly authorized officer of Bankers Trust
Company of California, N.A. (the "Beneficiary"), hereby CERTIFIES on behalf
of the Beneficiary as follows with respect to (i) that certain Letter of
Credit No. 00320293 dated November 20, 1996 (the "Letter of Credit"), issued
by The First National Bank of Chicago in favor of the Beneficiary; (ii) those
certain Bonds (as defined in the Letter of Credit); and (iii) that certain
Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of
$________under the Letter of Credit pursuant to Section 3.01 of the Indenture.
3. (a) The amount of this drawing is equal to (i) the principal amount of
Bonds other than Bank Bonds (as such terms are defined in the Letter of
Credit) to be redeemed by the Company (as defined in the Letter of Credit)
pursuant to Section [insert applicable section] of the Indenture on [INSERT
APPLICABLE DATE] (the "Redemption Date"), plus (ii) in the event such
Redemption Date does not coincide with a regularly scheduled Interest Payment
Date, interest accrued on such Bonds from the immediately preceding Interest
Payment Date (as defined in the Indenture) to the Redemption Date.
(b) Of the amount stated in paragraph 2 above:
(i) $_________is demanded in respect of the principal amount of the
Bonds referred to in subparagraph (a) above; and
(ii) $_________is demanded in respect of accrued interest on such
Bonds.
4. The amount of the drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to
the amount of any other drawing under the Letter of Credit made
simultaneously herewith, does not exceed the Available Amount of the Letter
of Credit as presently in effect.
5. Attached hereto is a reduction certificate.
A-C-1
In WITNESS WHEREOF, this Certificate has been executed this______________day
of____________, 19___.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By
-----------------------------
[Title of Authorized Officer]
A-C-2
(i) $______is demanded in respect of the principal portion of the
purchase price of the Bonds referred to in subparagraph (2) above; and
(ii) $______is demanded in respect of payment of the interest portion
of the purchase price of such Bonds.
(4) The amount of the drawing made by this Certificate was computed
in compliance with the terms and conditions of the Indenture and, when
added to the amount of any other drawing under the Letter of Credit made
simultaneously herewith, does not exceed the Available Amount of the
Letter of Credit as presently in effect.
(5) The Beneficiary will register or cause to be registered in the name
of the Company (as defined in the Letter of Credit), but with the Bank
registered as pledgee, upon payment of the amount drawn hereunder, Bonds
in the principal amount of the Bonds being purchased with the amounts
drawn hereunder and will deliver such Bonds to the Custodian (as defined
in the Custody Agreement dated as of November 1, 1996 between Trustee
and Bank) or as the Bank may otherwise direct; PROVIDED, HOWEVER, if DTC
(as such term is defined in the Indenture) or its nominee is the
registered owner of all Bonds, the Beneficiary acknowledges that it will
cause the security interest of the Bank to be recorded by DTC or its
nominee on its books.
IN WITNESS WHEREOF, this Certificate has been executed this______________day
of___________, 19___.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By:
-------------------------------
[Title of Authorized Officer]
A-D-2
Annex E
to
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
, 19
------------- --
Credit No. 00320293
ACCELERATION DRAWING CERTIFICATE
The undersigned individual, a duly authorize officer of Bankers Trust
Company of California, N.A. (the "Beneficiary"), hereby CERTIFIES on behalf
of the Beneficiary as follows with respect to (i) that certain Letter of
Credit No. 00320293 dated November 20, 1996 (the "Letter of Credit"), issued
by The First National Bank of Chicago in favor of the Beneficiary; (ii) those
certain Bonds (as defined in the Letter of Credit); and (iii) that certain
Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. An Event of Default has occurred under subsection [INSERT SUBSECTION]
of the Indenture and the Trustee has declared the principal of and accrued
interest on all Bonds then outstanding immediately due and payable. The
Beneficiary is entitled to make this drawing in the amount of $_________under
the Letter of Credit pursuant to Section 8.02 of the Indenture.
3. (a) The amount of this drawing is equal to (i) the principal amount
of Bonds, other than Bank Bonds (as such terms are defined in the Letter of
Credit), outstanding on [INSERT DATE OF ACCELERATION] (the "Acceleration
Date") plus (ii) interest on such Bonds accrued from the immediately
preceding Interest Payment Date to the Acceleration Date.
(b) Of the amount stated in paragraph 2 above:
(i) $___________is demanded in respect of the principal of the Bonds
referred to in subparagraph (a) above; and
(ii) $___________is demanded in respect of accrued interest on such
Bonds.
A-E-1
IN WITNESS WHEREOF, this Certificate has been executed this______________day
of________________,19__ .
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By:
-------------------------------
[Title of Authorized Officer]
A-E-2
Annex F
to
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
,19
-------------- --
Credit No. 00320293
STATED MATURITY DRAWING CERTIFICATE
The undersigned individual, a duly authorized officer of Bankers Trust
Company of California, N.A. (the "Beneficiary"), hereby CERTIFIES on behalf
of the Beneficiary as follows with respect to (i) that certain Letter of
Credit No. 00320293 dated November 20, 1996 (the "Letter of Credit"), issued
by The First National Bank of Chicago in favor of the Beneficiary; (ii) those
certain Bonds (as defined in the Letter of Credit); and (iii) that certain
Indenture (as defined in the Letter of Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. The Beneficiary is entitled to make this drawing in the amount of
$______________under the Letter of Credit pursuant to Article II of the
Indenture. The amount of this drawing is equal to the principal amount of
Bonds with a stated maturity on [INSERT DATE], other than Bank Bonds (as such
terms are defined in the Letter of Credit).
3. The amount of the drawing made by this Certificate was computed in
compliance with the terms and conditions of the Indenture and, when added to
the amount of any other drawing under the Letter of Credit made
simultaneously herewith, does not exceed the Available Amount of the Letter
of Credit as presently in effect.
4. Attached hereto is a reduction certificate.
In WITNESS WHEREOF, this Certificate has been executed this______________day
of________________ , 19__ .
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By:
-------------------------------
[Title of Authorized Officer]
A-F-1
Annex G
to
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
, 19
------------- --
Credit No. 00320293
REDUCTION CERTIFICATE
Each of the undersigned hereby certifies as follows with respect to (i)
that certain Letter of Credit No. 00320293 dated November 20, 1996 (the
"Letter of Credit"), issued by The First National Bank of Chicago in favor of
the Beneficiary; (ii) those certain Bonds (as defined in the Letter of
Credit); and (iii) that certain Indenture (as defined in the Letter of
Credit):
1. The Beneficiary is the Trustee under the Indenture.
2. Upon receipt by the Bank of this Certificate, the Stated Amount (as
defined in the Letter of Credit) shall be reduced by $____________(effective
the second Business Day following the date of delivery of this Certificate)
and the Stated Amount shall thereupon equal $_____________, all in accordance
with the provisions of the Indenture.
In WITNESS WHEREOF, this Certificate has been executed this______________day
of__________________, 19__ .
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A.,
as Trustee
By:
-------------------------------
[Title of Authorized Officer]
A-G-1
Annex H
to
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
, 19
------------ --
Credit No. 00320293
NOTICE OF AMENDMENT
Bankers Trust Company of
California, N.A.
Attention: Corporate Trust Department
Dear Sirs:
Reference is hereby made to that certain Irrevocable Letter of Credit No.
00320293 dated November 20, 1996 (the "Letter of Credit"), established by us
in your favor as Beneficiary. We hereby notify you that, in accordance with
the terms of the Letter of Credit and that certain Reimbursement Agreement
dated as of November 1, 1996, between Xxxxxx-Xxxxxx, Inc. and us, the Stated
Amount of the Letter of Credit has been reduced to $____________________.
This letter should be attached to the Letter of Credit and made a part
thereof.
The First National Bank of Chicago
By
-------------------------------
[Title of Authorized Officer]
A-H-1
Annex I
to
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
, 19
------------ --
Credit No. 00320293
NOTICE OF AMENDMENT
Bankers Trust Company of
California, N.A.
Attention: Corporate Trust Department
Dear Sirs:
Reference is hereby made to that certain irrevocable Letter of Credit No.
00320293 dated November 20, 1996 (the "Letter of Credit"), established by us
in your favor as Beneficiary. We hereby notify you that, in accordance with
the terms of the Letter of Credit and that certain Reimbursement Agreement
dated as of November 1, 1996, between Xxxxxx-Xxxxxx, Inc. and us, the Stated
Termination Date of the Letter of Credit has been extended to______________,
_____.
This letter should be attached to the Letter of Credit and made a part
thereof.
THE FIRST NATIONAL BANK OF
CHICAGO
By:
------------------------------
[Title of Authorized Officer]
A-I-1
Annex J
to
THE FIRST NATIONAL BANK OF CHICAGO
LETTER OF CREDIT
,19
----------- --
Credit No. 00320293
TRANSFER CERTIFICATE
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Global Trade Services
Dear Sirs:
Reference is made to that certain irrevocable Letter of Credit
No. 00320293 dated November 20, 1996 which has been established by you in
favor of Bankers Trust Company of California, N.A.
The undersigned [Name of Transferor] has transferred and assigned
(and hereby confirms to you said transfer and assignment) all of it rights in
and under said Letter of Credit to [Name of Transferee] and confirms that
[Name of Transferor] no longer has any rights under or interest in said
Letter of Credit.
Transferor and Transferee have indicated on the face of said
Letter of Credit that it has been transferred and assigned to Transferee.
A-J-1
Transferee hereby certifies that it is a duly authorized
Transferee under the terms of said Letter of Credit and is accordingly
entitled, upon presentation of the documents called for therein, to receive
payment thereunder.
------------------------------
Name of Transferor
By
------------------------------
[Name and Title of Authorized
Officer of Transferor]
------------------------------
Name of Transferee
------------------------------
[Name and Title of Authorized
Officer of Transferee]
A-J-2
Exhibit B
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Pledge Agreement") is dated as of
November 1, 1996, and is entered into by and among Xxxxxx-Xxxxxx, Inc., a
Delaware corporation, as pledgor (the "Pledgor") and The First National Bank
of Chicago, as pledgee (the "Pledgee").
W I T N E S S E T H:
WHEREAS, the La Mirada Industrial Development Authority (the
"Issuer") has entered into the Loan Agreement with the Pledgor pursuant to
which the Issuer has agreed to make certain loans to the Pledgor as provided
therein, and the Issuer and Bankers Trust Company of California, N.A. (the
"Trustee") have entered into the Indenture of Trust dated as of November 1,
1996 (the "Indenture") pursuant to which the Issuer's Taxable Variable/Fixed
Rate Demand Industrial Development Revenue Bonds (Xxxxxx-Xxxxxx, Inc.
Project) Series 1996 (the "Bonds") will be executed and delivered;
WHEREAS, The Indenture requires the Pledgor to purchase or arrange
for the purchase of, from the owners thereof, Bonds tendered or required to
be tendered for purchase in certain circumstances set forth in the Indenture
(the "Purchased Bonds"), and the Remarketing Agent named in the Indenture (or
successor remarking agent appointed in accordance with the provisions of the
Indenture), as remarketing agent under the Indenture (the "Remarketing
Agent") has agreed to use its best efforts to remarket such Purchased Bonds
under specified terms and conditions;
WHEREAS, in connection with the issuance of the Bonds, the Pledgor
has agreed to enter into the Reimbursement Agreement dated as of November 1,
1996 with the Pledgee (the "Reimbursement Agreement") in order to cause the
Pledgee to issue a letter of credit thereunder (the "Letter of Credit") which
may be used, INTER ALIA, to pay the purchase price of the Purchased Bonds);
WHEREAS, the Bonds will be issued initially in a book-entry only
system with 100% of the Bonds held by The Depository Trust Company ("DTC") in
the name of Cede & Co.; and, when the Bonds are in DTC book-entry systems, it
is intended that transfers of the Purchased Bonds to the account of the Pledgee
as Bank Bonds (being collateral security for the payment of amounts due to
the Pledgee under the Reimbursement Agreement) will be shown as such on the
books and records of the Trustee in its capacity as a participant in DTC's
central depository system; and
WHEREAS, it is a condition precedent to the obligation of the
Pledgee to enter into the Reimbursement Agreement that the parties hereto
shall have executed and delivered this Pledge Agreement,
1
NOW, THEREFORE, in consideration of the premises and in order to induce
the Pledgee to enter into the Reimbursement Agreement and issue the Letter of
Credit thereunder and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties hereby agree as follows:
1. DEFINED TERMS. Unless otherwise defined herein, terms defined in the
Reimbursement Agreement shall have such defined meanings when used herein.
2. PLEDGE OF THE BONDS. The Pledgor hereby pledges, assigns,
hypothecates, transfers, and delivers to the Pledgee the following: all its
right, title and interest to the Bank Bonds as the same may be from time to
time held (i) by the Trustee for the benefit of the Pledgee or for the
account of the Pledgor subject to the Pledgee's rights hereunder, or (ii) in
the event 100% of the Bonds are held by a depository in a book-entry only
system, held by the depository for the benefit of the Trustee on whose books
and records such Bank Bonds are being held for the benefit of the Pledgee or
for the account of the Pledgor, subject to the Pledgee's rights hereunder. The
Pledgor hereby grants to the Pledgee, a first lien on, and security interest
in, its right, title and interest in and to the Bank Bonds, the interest
thereon and all proceeds thereof, as collateral security for the prompt and
complete payment when due of all amounts owning from the Pledgor to the
Pledgee under the Reimbursement Agreement, including interest on such amounts
as set forth therein (all the foregoing being hereinafter called the
"Obligations").
3. INTEREST ON THE BANK BONDS. If, while this Pledge Agreement is in
effect, the Pledgor shall become entitled to receive or shall receive any
interest payment in respect of the Bank Bonds, the Pledgor agrees to accept
the same as Pledgee's agent and to hold the same in trust on behalf of the
Pledgee and to deliver the same forthwith to the Pledgee to be applied in
accordance with Section 7 below. All sums of money so paid in respect of the
Bank Bonds which are received by the Pledgor and paid to the Pledgee shall be
credited against the obligation of the Pledgor to pay interest to the Pledgee
as set forth in the Reimbursement Agreement.
4. COLLATERAL. All property at any time pledged to the Banks hereunder
and all income therefrom and proceeds thereof, are herein collectively
sometimes called the "Collateral."
5. RELEASE OF BANK BONDS. If the Pledgor makes or causes to be made to
the Pledgee a repayment in respect of its reimbursement obligation under
Section 2.2(ii) of the Reimbursement Agreement pursuant to Section 2.5
thereof, then the Pledgee shall release from the lien of this Pledge
Agreement the principal amount of the Bank Bonds which is equal to either the
principal component of the drawing made under the Letter of Credit, as
provided in Section 2.5 of the Reimbursement Agreement; PROVIDED, HOWEVER,
that the Bank Bonds shall not be delivered or released from the lien of this
Pledge Agreement prior to the receipt of written notice by the holder of such
Bank Bonds of reinstatement by the Pledgee of its obligations to honor
drawing under the Letter of Credit with respect to such Bank Bonds.
2
6. RIGHTS OF THE PLEDGEE. The Pledgee shall not be liable for failure to
collect or realize upon the Collateral or any collateral security or guaranty
therefor, or any part thereof, or for any delay in so doing nor shall the
Pledgee be under any obligation to take any action whatsoever with regard
thereto. If an Event of Default has occurred and is continuing under the
Reimbursement Agreement, the Pledgee may, with any notice by the Pledgee as
provided for in the Reimbursement Agreement, exercise all rights, privileges
or options pertaining to any Bank Bonds as if it were the absolute owner
thereof, upon such terms and conditions as it may determine, all without
liability except to account for property actually received by it, but the
Pledgee shall have no duty to exercise any of the aforesaid rights,
privileges or options and shall not be responsible for any failure to do so
or delay in so doing.
7. REMEDIES. In the event that any portion of the Obligations has been
declared due and payable pursuant to the Reimbursement Agreement as the
result of an Event of Default under the Reimbursement Agreement, the Pledgee,
without demand of performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or
private sale) to or upon the Pledgor or any other person (all and each of
which demands, advertisements and/or notices are hereby expressly waived),
may forthwith collect, receive, appropriate and realize upon the Collateral,
or any part thereof, and/or may forthwith sell, assign, give options or
options to purchase, contract to sell or otherwise dispose of and deliver
said Collateral, or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange, broker's board or at the Pledgee's
office or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem commercially reasonable, for cash or on
credit or for future delivery without assumption of any credit risk, with the
right to the Pledgee, upon any such sale or sales, public or private, to
purchase the whole or any part of said Collateral so sold, free of any right
or equity of redemption in the Pledgor, which right or equity is hereby
expressly waived or released. The Pledgee shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, after
deducting all reasonable costs and expenses of every kind incurred therein or
incidental to the care, safekeeping or otherwise of any and all of the
Collateral or in any way relating to the rights of the Pledgee hereunder,
including reasonable attorneys fees and legal expenses, to the payment in
whole or in part of the Obligations, the Pledgor remaining liable for any
deficiency remaining unpaid after such application, and only after so
applying such net proceeds and after the payment by the Pledgee of any other
amount required to be paid by any provision of law, including, without
limitation Section 9504(1)(c) of the California Uniform Commercial Code, need
the Pledgee account for the surplus, if any, to the Pledgor. The Pledgor
agrees that the Pledgee need not give more than ten days' notice of the time
and place of any public sale or of the time after which a private sale or
other intended disposition is to take place and that such notice is
reasonable notification of such matters. No notification need be given to the
Pledgor if it has signed after default a statement renouncing or modifying
any right to notification of sale or other intended disposition. In addition
to the rights and remedies granted to it in this Pledge Agreement and in any
other instrument or agreement securing, evidencing or relating to any of the
Obligations, the Pledgee shall have all the rights and remedies of a secured
3
party under the Uniform Commercial Code of the State of California. The
Pledgor further agrees to waive and agrees not to assert any rights or
privileges which it may acquire under Section 9112 of the Uniform Commercial
Code and the Pledgor shall be liable for the deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay all
amounts to which the Pledgee is entitled, and the fees of any attorneys
employed by the Banks to collect such deficiency. Notwithstanding anything to
the contrary in this Section 7, the Pledgee shall not sell or otherwise
dispose of Bank Bonds pursuant to this Section 7 for a purchase price which
is less than the par value of such Bank Bonds without obtaining the prior
consent of the Pledgor.
8. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGOR. The Pledgor
represents and warrants that (a)(i) on the date of delivery to the Pledgee,
or to the Trustee for the account of the Pledgee, of any Bank Bonds or (ii)
in the event 100% of the Bonds are held by a depository in a book-entry only
system, on the date of transfer by the Trustee or the depository to the
account of the Pledgee or to the account of the Pledgor, expressly subject to
the rights of the Pledgee hereunder, of any Bank Bonds, none of the Issuer,
the Remarketing Agent or the Trustee will have any right, title or interest
in or to the Bank Bonds which would adversely affect the Pledgee; (b) on the
date of delivery to the Pledgee or to the Trustee for the account of the
Pledgee of any Bank Bonds or, in the event of 100% of the Bonds are held by a
depository in a book-entry only system, on the date of transfer by the
Trustee or the depository to the account of the Pledgee or the Pledgor,
expressly subject to the rights of the Pledgee hereunder, of any Bank Bonds,
it will have full power, authority and legal right to pledge all of its
right, title and interest in and to the Bank Bonds pursuant to this Pledge
Agreement; (c) this Pledge Agreement has been duly authorized, executed and
delivered by the Pledgor and constitutes a legal, valid and binding
obligation of the Pledgor, enforceable in accordance with its terms except as
such enforceability may be limited by insolvency, reorganization, moratorium
or other similar laws relating to or limiting creditor's rights; (d) no
consent of any other party (including, without limitation, creditors of the
Pledgor) and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration
with, any governmental authority, domestic or foreign, is required to be
obtained by the Pledgor in connection with the execution, delivery or
performance of this Pledge Agreement; (e) the execution, delivery and
performance of this Pledge Agreement will not violate any provision of any
applicable law or regulation or of any order, judgment, writ, award or decree
of any court, arbitrator or governmental authority, domestic or foreign, or
of any material mortgage, indenture, lease, contract, or other agreement,
instrument or undertaking to which the Pledgor is a party or which purports
to be binding upon the Pledgor or upon its assets and will not result in the
creation or imposition of any lien, charge or encumbrance on or security
interest in any of the assets of the Pledgor except as contemplated by this
Pledge Agreement; and (f) the pledge, assignment and delivery of such Bank
Bonds pursuant to this Pledge Agreement will create a valid first lien on and
a security interest in, all right, title or interest of the Pledgor in or to
such Bank Bonds, and the proceeds thereof, subject to no prior pledge, lien,
mortgage, hypothecation, security interest, charge, option or encumbrance or
to any agreement purporting to grant to any third party a security interest
in the property or assets of the
4
Pledgor which would include the Bank Bonds. The Pledgor covenants and agrees
that it will defend the Pledgee's right, title and security interest in and
to the Bank Bonds and the proceeds thereof against the claims and demands of
all persons whomsoever; and covenants and agrees that it will have like title
to and right to pledge any other property at any time hereafter pledged to
the Pledgee as Collateral hereunder and will likewise defend the Bank's right
thereto and security interest therein.
9. NO DISPOSITION, ETC. Without the prior written consent of the
Pledgee, the Pledgor agrees that it will not sell, assign, transfer, exchange
or otherwise dispose of, or grant any option with respect to, the Collateral,
nor will it create, incur or permit to exist any pledge, lien, mortgage,
hypothecation, security interest, charge, option or any other encumbrance
with respect to any of the Collateral, or any interest therein, or any
proceeds thereof, except for the lien and security interest provided for by
this Pledge Agreement.
10. SALE OF COLLATERAL. (a) The Pledgor recognizes that the the Pledgee
may be unable to effect a public sale of any or all of the Bank Bonds by
reason of certain prohibitions contained in the Securities Act of 1933, as
amended (the "Securities Act"), and applicable state securities laws, but may
be compelled to resort to one or more private sales thereof to a restricted
group of purchasers who will be obliged to agree, among other things, to
acquire such securities for their own account for investment and not with a
view to the distribution or resale thereof. The Pledgor acknowledges and
agrees that any such private sale may result in prices and other terms less
favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall
be deemed to have been made in a commercially reasonable manner. The Pledgee
shall be under no obligation to delay a sale of any of the Bank Bonds for the
period of time necessary to permit the issuer of such securities to
register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if the issuer would agree to do so.
(b) The Pledgor further agrees to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of any portion
or all of the Bank Bonds valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injuctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic
or foreign, having jurisdiction over any such sale or sales, all at the
Pledgor's expense. The Pledgor further agrees that a breach of any of the
covenants contained in this paragraph 10 will cause irreparable injury to the
Pledgee, that the Pledgee has no adequate remedy at law in respect of such
breach and, as a consequence, agrees that each and every covenant contained
in this paragraph shall be specifically enforceable against the Pledgor, and
the Pledgor hereby waives and agrees not to assert any defenses against an
action for specific performance of such covenants except for a defense that
no Event of Default has occurred under the Reimbursement Agreement. The
Pledgor further acknowledges the impossibility of ascertaining the amount of
damages which would be suffered by the Pledgee by reason of a breach of any of
such covenants and, consequently, agrees that, if the Pledgee shall xxx for
damages for breach, the Pledgor shall pay, as liquidated damages and not as a
penalty, an amount
5
equal to the par value plus accrued premium, if any, and accrued interest on
the Bank Bonds and all amounts payable pursuant to the Reimbursement
Agreement on the date the Pledgee shall demand compliance with this paragraph.
11. TRUSTEE AS AGENT. The parties hereto acknowledge that the Pledgee may
designate the Trustee, or any successor trustee under the Indenture, its agent
for the purpose of holding the Bank Bonds on behalf of the Pledgee and with
such authority for taking actions with respect to the Bank Bonds as may be
directed by, and on behalf of, the Pledgee.
12. FURTHER ASSURANCES. The Pledgor agrees that at any time and from time
to time upon the written request of the Pledgee, the Pledgor will execute and
deliver such further documents and do such further acts and things as the
Pledgee may reasonably request in order to effect the purposes of this Pledge
Agreement.
13. AMENDMENTS: ETC. No amendment, modification, termination or waiver
of any provision of this Pledge Agreement, and no consent to any departure by
Pledgor therefrom, shall in any event be effective unless the same shall be
in writing and signed by the Pledgee and, in the case of any such amendment
or modification, by Pledgor. Any such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given.
14. NOTICES. All notices and other communications provided for in
hereunder shall be made and delivered as set forth in Section 7.2 of the
Reimbursement Agreement.
15. FAILURE OR INDULGENCE NOT WAIVER: REMEDIES CUMULATIVE. No failure or
delay on the part of the Pledgee in the exercise of any power, right or
privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude
any other or further exercise thereof or of any other power, right or
privilege. All rights and remedies existing under this Pledge Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.
16. SEVERABILITY. In case any provision in or obligation under this
Pledge Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
17. HEADINGS. Section and subsection headings in this Pledge Agreement
are included herein for convenience of reference only and shall not
constitute a part of this Pledge Agreement for any other purpose or be given
any substantive effect.
18. GOVERNING LAW: TERMS. THIS PLEDGE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
6
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF CALIFORNIA. WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION
OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN
THE STATE OF CALIFORNIA. Unless otherwise defined herein or in the
Reimbursement Agreement, terms used in Article 8 and 9 of the Uniform
Commercial Code in the State of California are used herein as therein defined.
19. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS PLEDGE
AGREEMENT MAY BE BROUGHT IN ANY FEDERAL OR STATE COURT OF COMPETENT
JURISDICTION IN THE STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF
THIS PLEDGE AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF
THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND
IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGEMENT RENDERED THEREBY IN
CONNECTION WITH THIS PLEDGE AGREEMENT. The Pledgor hereby agrees that service
of all process in any such proceeding in any such court may be made by
registered or certified mail, return receipt requested, to the Pledgor at its
address provided in Section 7.2 of the Reimbursement Agreement, such service
being hereby acknowledged by the Pledgor to be sufficient for personal
jurisdiction in any action against the Pledgor in any such court and to be
otherwise effective and binding service in every respect. Nothing herein
shall affect the right to serve process in any other manner permitted by law
or shall limit the right of the Pledgee to bring proceedings against the
Pledgor in the courts of any other jurisdiction.
20. WAIVER OF JURY TRIAL. THE PLEDGOR AND THE PLEDGEE HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS PLEDGE AGREEMENT. The scope of this waiver
is intended to be all-encompassing of any and all disputes that may be filed
in any court and that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. The Pledgor and the
Pledgee each acknowledge that this waiver is a material inducement for the
Pledgor and the Pledgee to enter into a business relationship, that the
Pledgor and the Pledgee have already relied on this waiver in entering into
this Pledge Agreement and that each will continue to rely on this waiver in
their related future dealings. The Pledgor and the Pledgee further warrant
and represent that each has reviewed this waiver with its legal counsel, and
that each knowingly and voluntarily waive its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT
IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING.
7
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS
SECTION 20 AND EXECUTED BY EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS PLEDGE AGREEMENT. In the event of litigation, this Pledge Agreement may
be filed as a written consent to a trial by the court.
21. COUNTERPARTS. This Pledge Agreement may be executed in one or
more counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed an original, but
all such counterparts together shall constitute but one and the same
instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.
[remainder of page intentionally left blank]
8
IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to
be duly executed and delivered on the day and year first above written.
PLEDGOR: XXXXXX-XXXXXX, INC.
as Pledgor
By:
---------------------------
Title:
PLEDGEE: THE FIRST NATIONAL BANK OF
CHICAGO, as Pledgee
By:
---------------------------
Title:
S-1
Exhibit C
CUSTODY AGREEMENT
This CUSTODY AGREEMENT is made as of this 1st day of November, 1996, by
and among Bankers Trust Company of California, N.A. (the "Custodian") and The
First National Bank of Chicago ("FNBC").
RECITALS
Pursuant to the terms and conditions set forth in the Reimbursement
Agreement dated as of November 1, 1996 (the "Reimbursement Agreement")
between FNBC and Xxxxxx-Xxxxxx, Inc. (the "Company"), FNBC has agreed to
issue its irrevocable Letter of Credit (as defined in the Reimbursement
Agreement) for the account of the Company in connection with the La Mirada
Industrial Development Authority's Taxable Variable Rate Demand Industrial
Development Revenue Bonds (Xxxxxx-Xxxxxx, Inc. Project) Series 1996 (the
"Bonds"). All other terms used herein which are defined in the Reimbursement
Agreement and not defined herein shall have the same meanings assigned them in
the Reimbursement Agreement unless the context otherwise requires.
As security for payment of the obligations of the Company owed to the
FNBC under the Reimbursement Agreement, including those in respect of
Purchase Drawings, the Corporation has agreed to pledge to FNBC and grant to
FNBC a security interest in, its right, title and interest in and to Bonds
delivered to or held for the account of FNBC in connection with such drawings
(the "Bank Bonds") pursuant to the Pledge Agreement dated as of November 1,
1996 among the Company and the FNBC (the "Pledge Agreement").
FNBC wishes to appoint the Custodian as its agent to take possession
and hold the Bank Bonds on behalf of and for the benefit of FNBC, on the
terms and under the conditions set forth in this Custody Agreement and the
Custodian is willing to do so.
Therefore, in consideration of mutual covenants recited herein, it is
hereby agreed as follows:
1. FNBC hereby appoints the Custodian as its agent and bailee for the
purpose of receiving Bank Bonds from Bankers Trust Company of California,
N.A., as Trustee and holding such Bank Bonds for and on behalf of FNBC. The
Custodian hereby agrees to hold the Bank Bonds for such purpose, as the
FNBC's agent and bailee.
2. Except at the written direction of FNBC, the Custodian shall not
pledge, hypothecate, transfer or release possession of any Bank Bonds held by
the Custodian on behalf of FNBC to any person or in any manner not in
accordance
1
with this Custody Agreement and shall not enter into any other agreement
regarding possession of the Bank Bonds without the prior written consent of
FNBC.
3. This Custody Agreement cannot be amended or modified except in a
writing signed by FNBC and the Custodian.
4. This Custody Agreement shall inure to the benefit of and shall be
binding upon the Custodian and FNBC and their respective successors and
assigns.
5. Upon written notice to FNBC and release to FNBC or its designee of
any Bank Bonds then held by the Custodian pursuant to this Custody Agreement
the Custodian shall have the right to terminate its obligations under this
Custody Agreement.
6. In acting under this Custody Agreement, the Custodian shall not be
liable to the Banks except for negligence or willful misconduct in the
performance of its obligations hereunder.
7. In acting under this Custody Agreement, the Custodian shall have no
duties or obligations other than as specifically set forth herein.
(Remainder of page intentionally left blank)
2
IN WITNESS WHEREOF, the parties have hereto set their hands by their
authorized representatives, all as of the date first above written.
BANKERS TRUST COMPANY OF
CALIFORNIA, N.A., as Custodian
By:
---------------------------
THE FIRST NATIONAL BANK OF
CHICAGO
By:
---------------------------
S-1
Exhibit D
[LETTERHEAD]
November 20, 1996
The First National Bank of Chicago,
as issuer under the Reimbursement
Agreement referred to below
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Re: Reimbursement Agreement between Xxxxxx-Xxxxxx, Inc. and
The First National Bank and Trust Company of Chicago
-------------------------------------------------------
Ladies and Gentlemen:
We have acted as special counsel to Xxxxxx-Xxxxxx, Inc., a Delaware
corporation (the "Company"), in connection with the Reimbursement Agreement
dated as of November 1, 1996 (the "Reimbursement Agreement"), between the
Company and The First National Bank of Chicago (the "Bank"). This opinion is
delivered to you under Section 3.1(d) of the Reimbursement Agreement.
Capitalized terms used in this opinion and not otherwise defined have the
meanings assigned to such terms in the Reimbursement Agreement; PROVIDED,
HOWEVER, that the term "Trust Estate" has the meaning assigned to such term
in the Deed of Trust (as defined below).
With your permission, all assumptions and statements of reliance in
this opinion have been made without any independent investigation or
verification on our part except to the extent otherwise expressly stated, and
we express no opinion with respect to the subject matter or accuracy of such
assumptions or items upon which we have relied; PROVIDED, HOWEVER, that
although we have made no independent investigation or inquiry, we have no
reason to believe that any of such assumption is untrue or that such reliance
is unfounded.
In connection with the opinions expressed below, we have (i)
investigated such questions of law, (ii) examined originals or certified,
conformed or reproduction copies of such corporate agreements, instruments,
documents and records of the Company, such certificates of public officials
and such other documents as we have deemed necessary or appropriate for the
purposes of this opinion and (iii) obtained such information from officers
and representatives of the Company as we have deemed necessary or appropriate
for the purposes of this opinion. We
November 20, 1996
Page 2
advise you that this opinion is based upon a consideration of legal principles
that would be applicable in judicial proceedings. We have examined, among
other documents, the following:
(A) an executed copy of the Reimbursement Agreement;
(B) an executed copy of the Pledge Agreement dated as of November 1,
1996, made by the Company in favor of the Bank;
(C) an executed copy of the Deed of Trust, Assignment of Rents and
Fixture Filing dated as of November 1, 1996 (the "Deed of Trust"), made
by the Company in favor of the Bank;
(D) an executed copy of the Security Agreement dated as of November
1, 1996, made by the Company in favor of the Bank;
(E) an executed copy of the Environmental Indemnity dated as of
November 1, 1996, made by the Company in favor of the Bank;
(F) the Officer's Certificate of the Company delivered to us in
connection with this opinion, a copy of which is attached as Annex A (the
"Officer's Certificate"); and
(G) unfiled copies of the financing statements naming the Company as
debtor and the Bank as secured party (collectively, the "Financing
Statements"), which Financing Statements we understand will be filed in
the filing offices of the Secretary of State for the States of
California, Delaware and Illinois.
The documents referred to in items (B) through (D) above are referred to in
this opinion collectively as the "Collateral Documents" and the documents
referred to in items (A) through (E) above are referred to individually as a
"Reviewed Document" and collectively as the "Reviewed Documents".
In all such examinations, we have assumed the legal capacity of all
natural persons executing documents, the genuineness of all signatures, the
authenticity of original and certified documents and the conformity to
original or certified copies of all copies submitted to us as conformed or
reproduction copies. As to various questions of fact relevant to the opinions
expressed in this opinion, we have relied upon, and assume the
November 20, 1996
Page 3
accuracy of, representations and warranties contained in the Reviewed
Documents and certificates and written statements and other information of or
from representatives of the Company and others and assume compliance on the
part of all parties to the Reviewed Documents with their covenants and
agreements contained in the Reviewed Documents. With respect to the opinions
expressed in clause (iii) (A) of paragraph 2 below, our opinions are limited
to our review of only those laws and regulations that, in our experience,
could reasonably be expected to be applicable to transactions of the type
contemplated by the Reviewed Documents.
To the extent it may be relevant to the opinions expressed in this
opinion, we have assumed that the parties to the Reviewed Documents other
than the Company have the power to enter into and perform such documents and
to consummate the transactions contemplated by the Reviewed Documents and
that such documents have been duly authorized, executed and delivered by, and
constitute legal, valid and binding obligations of, such parties.
Based upon the foregoing, and subject to the limitations,
qualifications and assumptions set forth in this opinion, we are of the
opinion that:
1. The Company has executed and delivered each Reviewed Document
to which it is a party and the Financing Statements. Each Reviewed Document
constitutes an enforceable obligation of the Company.
2. The execution and delivery by the Company of each of the
Reviewed Documents to which it is a party, the performance by the Company of
its obligations under such Reviewed Documents and the granting by the Company
of the security interests to be granted by it under the Collateral Documents
(i) have been authorized by all necessary corporate action by the Company
(including the execution and delivery of the Financing Statements), (ii) do
not contravene any provision of the certificate of incorporation or by-laws
of the Company and (iii) do not violate (A) any present law or present
regulation of any governmental agency or authority applicable to the Company
or its property, (B) any material agreement binding upon the Company or its
property (this opinion being limited to those agreements that have been
identified to us as material in the Officer's Certificate and being further
limited in that we express no opinion with respect to any violation arising
under or based upon any covenant of a financial or numerical nature or
requiring computation) or (C) any judicial or arbitral decree or order of a
November 20, 1996
Page 4
material nature binding upon the Company or its property (this opinion being
limited to those decrees and orders that have been identified to us in the
Officer's Certificate).
3. The execution and delivery by the Company of each of the
Reviewed Documents to which it is a party, the performance by the Company of
its obligations under such Reviewed Documents and the granting by the Company
of the security interests to be granted by it under the Collateral Documents
do not require under present law any filing or registration by the Company
with, or approval or consent of, any governmental agency or authority of the
State of California or of the United States of America that has not been made
or obtained except (i) those required in the ordinary course of business in
connection with the performance by the Company of its obligations under
certain covenants contained in the Reviewed Documents to which it is a party,
(ii) to perfect the security interests granted under the Collateral Documents
and (iii) under securities and other laws that may be applicable to the
disposition of any collateral subject to such laws.
4. The Deed of Trust, when accepted for recordation by the Los
Angeles County Recorder's Office, creates a valid transfer of the Trust
Estate described in the Deed of Trust that constitutes real property or
fixtures under California law in favor of the trustee named in the Deed of
Trust for the benefit of the Bank to secure the obligations described in the
Deed of Trust.
The opinions set forth above are subject to the following
qualifications:
(A) Our opinions above as to enforceability are subject to:
(i) applicable bankruptcy, insolvency, reorganization, voidable
preference, fraudulent transfer, moratorium or similar laws, and related
judicial doctrines, affecting creditors' rights and remedies generally,
as in effect from time to time;
(ii) general principles of equity (including, without limitation,
standards of materiality, good faith, fair dealing and reasonableness,
equitable defenses and limits on the availability of equitable remedies,
including, without limitation, the remedies of specific performance and
nonjudicial foreclosure), whether such principles are considered in a
proceeding at law or in equity; and
November 20, 1996
Page 5
(iii) the qualification that certain provisions of the Reviewed
Documents may be invalid, not binding or unenforceable in whole or in
part under the laws (including judicial decisions) of the State of
California or the United States of America, but the inclusion of such
provisions does not affect the validity, binding effect or
enforceability as against the Company of the Reviewed Documents as a
whole, and the Reviewed Documents contain provisions adequate to permit
enforcement of the obligations created thereby, subject to the other
qualifications contained in this letter.
(B) We express no opinion as to the enforceability of any
provision in the Reviewed Documents:
(i) permitting the Bank or any other person or entity to sell or
otherwise dispose of, or purchase, any collateral subject thereto, or
enforce any other right or remedy thereunder (including without
limitation any self-help or taking-possession remedy), except in
compliance with the Uniform Commercial Code of the State of California
("UCC") and other applicable federal, state, local and foreign laws;
(ii) establishing standards for the performance of the obligations
of good faith, diligence, reasonableness and care prescribed by the UCC
or of any of the obligations referred to in Section 9501(3) of the UCC;
(iii) establishing standards for compliance with the requirements
of Section 9501(4) of the UCC;
(iv) relating to indemnification, contribution or exculpation in
connection with violations of securities laws or statutory duties or
public policy;
(v) purporting to, either directly or indirectly, indemnify
against the consequences of willful, reckless or unlawful acts or gross
negligence of the indemnified party;
(vi) relating to exculpation of any party in connection with its
own negligence that a court would determine in the circumstances under
applicable law to be unfair or insufficiently explicit;
(vii) providing that the Bank or any other person or entity may
exercise set-off rights other than in accordance with and pursuant to
applicable law;
November 20, 1996
Page 6
(viii) relating to forum selection to the extent the forum is a
federal court;
(ix) relating to choice of governing law;
(x) relating to forum selection to the extent that any relevant
action or proceeding does not arise out of or relate to such Reviewed
Document or to the extent that the enforceability of any such provision
is to be determined by any court other than a court of the State of
California or to the extent such choice of law may be limited or
affected by receivership, conservatorship or other similar laws and
regulations applicable to federally insured depository institutions;
(xi) waiving any rights to trial by jury;
(xii) requiring or relating to payment of interest (or discount or
equivalent amounts) or any premium or "make whole" payment at a rate or
in an amount, after the maturity or after or upon acceleration of the
respective liabilities evidenced or secured thereby, or upon prepayment,
that a court would determine in the circumstances under applicable law
to be commercially unreasonable or a penalty or a forfeiture;
(xiii) creating a trust or other fiduciary relationship;
(xiv) specifying that provisions of such Reviewed Documents may be
waived only in writing, to the extent that an oral agreement or an
implied agreement by trade practice or course of conduct has been
created that modifies any provision of such Reviewed Documents;
(xv) giving any person or entity the power to accelerate
obligations without any notice to the obligor;
(xvi) limiting the ability of the Company or any other person or
entity to transfer voluntarily or involuntarily (by way of sale,
creation of a security interest, attachment, levy, garnishment or other
judicial process) its right, title or interest in or to any collateral
subject thereto or other property, except to the extent such provisions
are made enforceable pursuant to the Xxxx-St. Xxxxxxx Depository
Institutions Act of 1982 (12 U.S.C. Section 1701j-3);
November 20, 1996
Page 7
(xvii) waiving any statute of limitations;
(xviii) relating to the enforceability of any provision or
accumulation of provisions that may be deemed to be unconscionable;
(xix) relating to any tax laws;
(xx) establishing evidentiary standards; or
(xxi) restricting the Company's access to legal or equitable
remedies.
(C) Our opinions as to enforceability are subject to the effect of
generally applicable rules of law that:
(i) provide that forum selection clauses in contracts are not
necessarily binding on the court(s) in the forum selected;
(ii) limit the availability of a remedy under certain circumstances
when another remedy has been elected;
(iii) may, where less than all of a contract may be invalid, not
binding or unenforceable, limit the validity, binding effect and
enforceability of the balance of the contract to circumstances in which
the invalid, not binding or unenforceable portion is not an essential
part of the agreed exchange;
(iv) govern and afford judicial discretion regarding the
determination of damages and entitlement to attorneys' fees and other
costs; and
(v) may permit a party that has materially failed to render or
offer performance required by the contract to cure that failure unless
(a) permitting a cure would unreasonably hinder the aggrieved party from
making substitute arrangements for performance or (b) it was important
in the circumstances to the aggrieved party that performance occur by
the date stated in the contract.
(D) We express no opinion as to the validity, binding effect or
enforceability of any purported waiver, release, variation, disclaimer,
consent or other agreement to similar effect (all of the foregoing,
collectively, a "Waiver") by the Company under any of the Reviewed Documents
to the extent limited by Sections 1102(3) or 9501(3) of the UCC or other
provisions of
November 20, 1996
Page 8
applicable law (including judicial decisions), or to the extent that such a
Waiver applies to a right, claim, duty, defense or ground for discharge
otherwise existing or occurring as a matter of law (including judicial
decisions), except to the extent that such a Waiver is effective under and is
not prohibited by or void, invalid or unenforceable under the UCC or other
provisions of applicable law (including judicial decisions).
(E) We express no opinion as to the perfection of the security
interests granted under the Reviewed Documents.
(F) Our security interest opinions are subject to the effect of
Sections 9307, 9308, 9309, 9314 and 9315 of the UCC on such opinions and do
not apply to any collateral constituting "consumer goods" or "farm products."
(G) We have assumed, with your permission, that the Bank is either
(i) a foreign (other nation) bank or a foreign (other state) bank which meets
the requirements of Section 1716 of the California Financial Code or (ii) a
bank created and operating under and pursuant to the laws of the State of
California or of the United States of America within the meaning of Section 1
of Article XV of the Constitution of the State of California.
(H) We express no opinion as to (i) the sufficiency or accuracy of
the descriptions of the property described in the Collateral Documents, (ii)
the state of title to any real or personal property which may be the subject
of the Collateral Documents (rather, we assume title for the purpose of the
opinion expressed in paragraph 4 above) or (iii) the priority or the
perfection of any lien or security interest created, or purported to be
created, by the Collateral Documents.
(I) We have not been requested to express and with your permission
we do not express an opinion as to the application of, and our opinions above
are subject to the effect, if any, of, any applicable fraudulent conveyance,
fraudulent transfer, fraudulent obligation or preferential transfer law and
any law governing the liquidation or dissolution of, or the distribution of
assets of, any person or entity.
(J) We express no opinion with respect to whether or not the
property subject to the Deed of Trust (a) is zoned for any particular use,
(b) complies with applicable law pertaining to environmental and land use
regulation (including, without limitation, the California Environmental
Quality Act, as amended) or (c) complies with laws pertaining to land
division (including,
November 20, 1996
Page 9
without limitation, the California Subdivision Map Act), and we qualify our
opinions above to the extent of non-compliance with any of the same.
(K) We express no opinion with respect to the validity, binding
effect or enforceability of any environmental indemnity except to the extent
such indemnity, and the enforcement of such indemnity, conforms with Sections
726.5 and 736 of the Civil Code of California, subject to the qualifications
set forth in this opinion.
(L) We assume the Deed of Trust is not granted for purposes of
construction of improvements on the real property described in the Deed of
Trust.
(M) We assume the Bank in the enforcement of any of their security
interests will conform with the applicable requirements of California law
including, without limitation, the obligations to exercise good faith, fair
dealing and commercial reasonableness.
(N) The opinions expressed above are subject to the assumption
that (i) the Company is a corporation duly incorporated, validly existing
and in good standing under the laws of its state of incorporation and (ii) the
Company has the corporate power and authority to execute, deliver and perform
its obligations under the Reviewed Documents.
(O) The opinions expressed in this opinion are limited to the
federal laws of the United States of America and the laws of the State of
California.
(P) We note (and you should be aware) that any obligation secured
in whole or in part by California real property is subject to application of
various statutes protecting the interests of mortgagors and restricting the
procedures and means of enforcement employed by mortgagees which enforce such
obligations. In particular:
(i) The exercise of the power of sale in a deed of trust is a
matter of contract and, as such, may be enforced by the parties in accordance
with its terms, subject to applicable law. If there is a dispute over the
existence of a default or the amount due and payable which results in the
issuance of a temporary restraining order or preliminary injunction, or if
the default involves a breach of a non-monetary obligation, you may have no
practical alternative other than to pursue a judicial action for foreclosure.
November 20, 1996
Page 10
(ii) Section 726 of the California Code of Civil Procedure
("Section 726") and Subdivision 9501(4) of the California Uniform Commercial
Code contain provisions relating to the enforcement of obligations secured by
real or real and personal property, including provisions that relate to and
specify the procedures for the sale of encumbered property, the application
of proceeds, the calculation, availability and procedures pertaining to the
rendition in certain cases of a deficiency judgment and other related
matters. We advise you that in an action or proceeding to recover on a debt
or other obligation secured by real or real and personal property, the debtor
may require the creditor to exhaust all of its security before a personal
judgment may be obtained against the debtor for a deficiency. We also advise
you that failure to comply with those provisions (including any attempt to
exercise any statutory, equitable or contractual right of set-off with
respect to any funds or other property of the Company that may be deposited
with the Bank from time to time with respect to the obligations secured by
the Deed of Trust) may result in the loss of the collateral encumbered by a
deed of trust or mortgage on real property. SEE, e.g. XXXXXX v. COMMUNITY
BANK, 10 Cal. 3d 729, 111 Cal. Rptr. 897 (1974); BANK OF AMERICA v. DAILY,
152 Cal. App. 3d 767, 199 Cal. Rptr. 557 (1984) IN RE XXXXXXX, 37 B.R. 659 (
Bankr. App. 1984), aff'd, 758 F.2d 454 (9th Cir. 1985); SECURITY PACIFIC
NATIONAL BANK x. XXXXX, 51 Cal. 3d 991, 275 Cal. Rptr 201 (1990); O'XXXX x.
GENERAL SECURITY CORP., 4 Cal. App. 4th 587, 5 Cal. Rptr. 2d 712 (1992); SHIN
v. SUPERIOR COURT, 26 Cal. App. 4th 542, 31 Cal. Rptr. 2d 587, modified,
reh'g denied 26 Cal. App. 4th 1788a (1994). We further advise you that
although no California court, to our knowledge, has so far expressly held
that violation of Section 726 would result in extinguishment of the secured
obligation, several decisions have raised the possibility that following a
violation of Section 726 the secured obligation itself may not be
enforceable. SEE , E.G., WOZAB (last paragraph of majority opinion) and the
result in DAILY.
(iii) Section 580d of the California Code of Civil Procedure
provides that no deficiency judgment shall be rendered under California law
upon an obligation secured by a deed of trust or mortgage on real property
after sale of the real property under the power of sale contained in such
deed of trust or mortgage.
(iv) The provisions of Sections 726, 580a and 580d of the
California Code of Civil Procedure and Section 2924 of
November 20, 1996
Page 11
the California Civil Code have been held by courts in California to be imbued
with various public purposes. Devices that have the substantive effect of
circumventing such public purposes may be held to be invalid as against
public policy notwithstanding attempted express or implied waivers obtained
from a borrower contemporaneously with the making of or renewing a loan.
(v) Section 2924c of the California Civil Code provides that
whenever the maturity of an obligation secured by a deed of trust or mortgage
on real property is accelerated by reason of a default in the payment of
interest or in the payment of any installment of principal or other sums
secured thereby, or by reason of failure of the trustor or mortgagor to pay
taxes, assessments, or insurance premiums, the trustor or mortgagor and
certain other entitled persons have the right, to be exercised at any time
within the reinstatement period described in such Section, to cure such
default by paying the entire amount then due (including certain reasonable
costs and expenses incurred in enforcing such obligations but excluding any
principal amount that would not then be due had no default occurred) and
thereby cure the default and reinstate such deed of trust or mortgage and the
obligations secured thereby to the same effect as if no such acceleration had
occurred. If the power of sale in the deed of trust or mortgage is not to be
exercised, such reinstatement right may be exercised at any time prior to
entry of the decree of foreclosure.
(vi) Our opinions are subject to the effect of provisions of
California law that grant certain redemption rights during certain times to
persons having an interest in property subject to a lien and which prevent the
parties to the contract from restraining the right of redemption from a lien,
including, without limitation, California Civil Code Sections 2889 and 2903
through 2905 and California Code of Civil Procedure Sections 729.010 through
729.090.
(vii) You should be aware that a California court may not strictly
enforce certain covenants contained in the Deed of Trust if a determination
is made that the security therefor has not been impaired, that the Bank has
violated the implied covenant of good faith and fair dealing or that
enforcement or acceleration would otherwise be unreasonable under the then
existing circumstances. In addition, our opinion that the Reviewed Documents
are enforceable does not mean that any particular legal or equitable remedy
(such as
November 20, 1996
Page 12
specific enforcement, etc.) would necessarily be available or precluded,
even if specifically stated in such agreement to be available, or precluded,
as the case may be. We do believe, however, that notwithstanding the
limitations expressed in the preceding sentence (but subject to the other
assumptions, qualifications and limitations set forth in this opinion),
(a) the laws and judicial decisions referred to in this paragraph do not
render the Reviewed Documents invalid, not binding or unenforceable as a
whole and (b) enforcement or acceleration of the liens and the security
interests evidenced by the Reviewed Documents would be available if an
event of default occurs as a result of a material breach of any obligation
secured by the Reviewed Documents, which breach results in a material
impairment of the Bank's security interests, provided such enforcement or
acceleration is accomplished in accordance with California law.
(viii) We express no opinion as to the effect of any of the
foregoing on any existing obligation in favor of the Bank which may be
held to be also secured by the real property encumbered by virtue of the
Reviewed Documents.
(Q) The opinions expressed above are limited to the matters expressly
set forth in this opinion, and no opinion is implied or may be inferred
beyond the matters expressly stated in this opinion. The opinions expressed
above are rendered as of the date of this letter and do not take into account
any event, action, interpretation, change of law or similar item that occurs
after the date of this letter; and we disclaim any undertaking to advise you
of any changes which may be brought to our attention subsequent to the date
of this letter.
(R) We express no opinion as to the enforceability of any provision in
the Reviewed Documents relating to the appointment of a receiver, to the
extent the appointment of a receiver is governed by applicable statutory
requirements, and to the extent such provision may not be in compliance with
said statutory requirements.
You understand that the scope of our representation does not include
providing legal services with regard to the statutory and regulatory
requirements and restrictions (including, without limitation, the policies,
procedures, guidelines or practices of any federal or state regulator with
respect thereto) applicable to or actually applied to financial institutions
or, in their capacities as such, financial institution-affiliated parties. We
express no opinion regarding
November 20, 1996
Page 13
the compliance by the addressees of this opinion or the transactions
contemplated by the Reviewed Documents with any such financial institutions
regulatory matters.
The opinions expressed in this opinion are solely for the benefit of the
Bank and Caisse Nationale De Credit Agricole and may not be relied on in any
manner or for any purpose by any other person or entity. The Bank is
authorized to provide this opinion to a Participant; provided that such
Participant is not entitled to rely on this opinion, even as of the date of
this opinion, without our prior written consent.
Very truly yours,
/s/ Xxxxx, Day, Xxxxxx & Xxxxx
-------------------------------
XXXXX, DAY, XXXXXX & XXXXX
ANNEX A
XXXXXX-XXXXXX, INC.
OFFICER'S CERTIFICATE
Reference is made to the opinion letter of Xxxxx, Day, Xxxxxx & Xxxxx
(the "Opinion") delivered in connection with the Reimbursement Agreement
dated as of November 1, 1996 (the "Reimbursement Agreement"), between the
Company and The First National Bank of Chicago. Capitalized terms used in
this opinion and not otherwise defined have the meanings assigned such terms
in the Opinion.
The undersigned officer of the Company certifies, in connection with the
Company's execution, delivery and performance of the Placement Agreement,
that attached as SCHEDULE I to this certificate is a list of (i) material
agreements binding upon the Company or its property and (ii) any judicial or
arbitral decree or order of a material nature binding upon the Company or its
property. A true and complete copy of each of the above material agreements,
decrees and orders has previously been furnished to Xxxxx, Day, Xxxxxx &
Xxxxx. No default or event of default or violation of any such agreements,
decrees or orders exists or, immediately after giving effect to entry into the
Reviewed Documents or consummation of any of the transactions contemplated by
the Reviewed Documents, will exist. The agreements, decrees and orders listed
on the attached SCHEDULE I and the agreements listed on Exhibit A to the
opinion letter of Xxxxxx Xxxxxxx Xxxxxx & Brand issued in connection with the
Reimbursement Agreement constitute all material agreements binding upon the
Company or its property.
IN WITNESS WHEREOF, I have hereunto set my hand this 20th day of
November, 1996.
XXXXXX-XXXXXX, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Xxxxxx X. Xxxxxxxx
Assistant Secretary
EXHIBIT E
TO COME FROM XXXXX DAY
SCHEDULE I
1. Rights Agreement dated as of December 8, 1986, between Chemical Bank, as
successor Rights Agent, and the Company, as amended by First Amendment
thereto dated as of October 5, 1989, Second Amendment thereto dated as
of December 4, 1995, and Third Amendment thereto dated as of January 31,
1996.
2. Indenture dated as of November 1, 1993, between the Company and Norwest
Bank Minnesota, N.A., as trustee, [XXXXXXXXXX] the Company's
$130,000,000 8-7/8% Senior Subordinated [XXXXXXXXXX] due 2003, as
supplemented.
3. Stock Purchase Agreement dated September 8, [XXXXXXXXXX] Company, Tone
Brothers, Inc. and Xxxxx Xxxxx Food Inc.
4. Agreement Not to Compete dated as of October [XXXXXXXXXX] between the
Company and Xxxxx Xxxxx Food Inc.
5. Supply Agreement dated October 27, 1994, between the Company and Tone
Brothers, Inc.
6. Supply Agreement dated October 27, 1994, between the Company and Xxxxx
Xxxxx Food Inc.
7. Standstill Agreement among the Company and Xxxxxxx Xxxxx Capital
Partners, Inc., Xxxxxxx Xxxxx Capital Appreciation Partnership No.
B-XVIII, L.P.,Xxxxxxx Xxxxx Kecalp, L.P. 1994, ML Offshore Partnership
No. B-XVIII, ML IBK Positions, Inc., MLCP Associates L.P. No. II, MLCP
Associates L.P. No. IV, Xxxxxxx Xxxxx Kecalp L.P. 1991,, Xxxxxxx Xxxxx
Capital Appreciation Partnership No. XIII, L.P., ML Offshore Partnership
No. XIII, ML Employees LBO Partnership No. I, L.P., Xxxxxxx Xxxxx
Kecalp, L.P. 1987 and Merchant Banking L.P. No. II (collectively, the
"ML Entities").
8. Registration Rights Agreement dated as of May 17, 1996, among the
Company, the ML Entities (other xxxx Xxxxxxx Xxxxx Capital Partners,
Inc.), The Equitable Life Assurance Society of the United States,
Equitable Deal Flow Fund, L.P., Equitable Variable Life Insurance
Company and Xxxxx X. Xxxxxxxx.
9. The Agreement and Plan of Merger dated February 2, 1996, among the
Company, US Foodservice Inc., f/k/a USF Acquisition Corporation
("USF"), and US Foodservice Inc. (predecessor corporation of USF).
10. Tax Agreement among the Company and certain stockholders.
11. Credit Agreement dated as of May 17, 1996, among the Company, Bank of
America National Trust and Savings Association, as administrative agent
(in such capacity, the "Administrative Agent"), The Chase Manhattan
Bank, N.A., as
documentation agent, BA Securities, Inc., as co-arranger, Chase
Securities, Inc., as co-arranger, and the other financial institutions
party thereto, as lenders.
12. Company Security Agreement dated as of May 17, 1996, made by the Company
in favor of the Administrative Agent.
13. Company Note and Stock Pledge Agreement dated as of May 17, 1996, made
by the Company in favor of the Administrative Agent.
14. Receivables Sale Agreement dated as of May 16, 1996, among the Company,
Xxxx Xxxxxx & Co. ("Xxxxxx"), Xxxxxx-Xxxxxx Funding Corporation ("RSFC")
and the Company, as servicer.
15. Pooling Agreement dated as of May 16, 1996, among RSFC, the Company, as
servicer, and Chemical Bank, as trustee (the "Trustee"), as supplemented
by Series 1996-1 Supplement to Pooling Agreement dated as of May 16,
1996.
16. Servicing Agreement dated as of May 16, 1996, among RSFC, the Company,
as servicer, certain wholly-owned subsidiaries of the Company parties
thereto, as subservicers, and the Trustee.
17. Security Agreement dated as of May 16, 1996, among the Company, Xxxxxx
and RSFC.
18. Receivables Sale Agreement dated as of November 15, 1996, among the
Company, Xxxxxx, Xxxxxxx Brothers, Inc., White Swan, Inc., X.X. Xxxxxxxx
& Company, Inc., Roanoke Restaurant Service, Inc., King's Foodservice,
Inc., US Foodservice of Florida, Inc., US Foodservice of Atlanta, RS
Funding Inc. and US Foodservice Inc., as servicer.
19. Common Stock Purchase Warrant dated May 17, 1996, issued by the
Company to Dresder Bank AG, New York Branch//Grand Cayman Branch.
20. Common Stock Purchase Warrant dated May 17, 1996, issued by the Company to
The Nippon Credit Bank, Ltd.
21. Common Stock Purchase Warrant dated as of May 17, 1996, issued by the
Company to Teachers Insurance and Annuity Association of America.
SCHEDULE I
CERTAIN EXISTING LIENS
Liens granted under the Receivables Sale Agreement dated as of November 15,
1996, among the Company, Xxxxxx, Xxxxxxx Brothers, Inc., White Swan, Inc.,
X.X. Xxxxxxxx & Company, Inc., Roanoke Restaurant Service, Inc., King's
Foodservice, Inc., US Foodservice of Florida, Inc., US Foodservice of
Atlanta, RS Funding Inc. and US Foodservice Inc., as servicer.
Those exceptions to title listed on Schedule B of Chicago Title Insurance
Company's Commitment No. 006135273-x55 dated October 24, 1996 as items AG, G,
I, J, K, L, M, N, O, P, Q, R and S.
SCHEDULE II
CERTAIN INDEBTEDNESS
Receivables Sale Agreement dated as of November 15, 1996, among the Company,
Xxxxxx, Xxxxxxx Brothers, Inc., White Swan, Inc., X.X. Xxxxxxxx & Company,
Inc., Roanoke Restaurant Service, Inc., King's Foodservice, Inc., US
Foodservice of Florida, Inc., US Foodservice of Atlanta, RS Funding Inc. and
US Foodservice Inc., as servicer.
Under a guaranty dated as of October 30, 1996, the Company guaranteed the
obligations of Xxxxxxx Brothers, Inc. under the Master Lease dated September
1994, between Xxxxxxx Brothers, Inc. and First Fleet Corporation.
SCHEDULE III
CERTAIN REGULATORY MATTERS
None.
SCHEDULE IV
(k) ENVIRONMENTAL MATTERS:
(a) oils, or Hazardous Materials:
(i) Ongoing soil and ground water remediation at the Premises
due to the previous use of the site by Ford Motor Company as a
distribution facility for Ford automobiles. By letter dated
May 3, 1994 at the Los Angeles County Public Works, Waste Management
Division, Ford Motor Company accepted financial responsibility for
such remediation. Pursuant to the Hazardous Materials Agreement
between the Catellus Development Corporation, Predelivery Service
Corporation (collectively, the "Seller") and the Company, dated
December 25, 1993, Seller has accepted the obligation to remove and
remediate all hazardous materials from the Premises and has agreed
to indemnify the Company for any and all liability relating to such
contamination.
(ii) Four underground storage tanks (containing diesel, new oil,
waste oil, and empty but used as neutralizing tank), five clarifiers,
seven aboveground storage tanks (containing ammonia (3), diesel (2)
and water) and many containers of Hazardous Materials are located on
the Premises, most of which are associated with the on-site
maintenance and fueling of a fleet of trucks, and others which are
routine, janitorial and maintenance supplies, refrigeration, battery
storage and charging. The operations of all appear to be in
compliance with Hazardous Materials Laws.
(iii) During the normal course of the Company's business it
distributes products such as detergents and other cleaning materials
used in restaurants, institutions, schools, colleges and the like
that are deemed to be Hazardous Materials and so labelled.
(b) asbestos: Suspect asbestos-containing materials have been observed
in the roofing and flooring at the Premises. All are in good condition.
(c) urea formaldehyde foam insulation: none.
(d) pcbs: Based upon the age of the Project, the utility owned
transformers, lighting ballasts, hydraulic elevator and three hydraulic
trash compactors are not likely to contain polychlorinated biphenyls.
SCHEDULE V
TO REIMBURSEMENT AGREEMENT OF XXXXXX-XXXXXX, INC.
ERISA
A. LIST OF QUALIFIED PLANS REQUIRED BY SECTION 4.1(j)(i):
1. QUALIFIED PLANS SPONSORED ONLY BY THE COMPANY AND/OR XXXX
XXXXXX & CO.:
Xxxxxx-Xxxxxx Value Plan (a savings plan and trust).
Xxxxxx-Xxxxxx, Inc. Pension Plan (a defined benefit pension plan
and trust).
Xxxx Xxxxxx & Co. Union Employee Pension Plan (a defined benefit
pension plan and trust).
Xxxxxx-Xxxxxx, Inc. U.S. Lace Paperworks Division Pension Plan (a
money purchase pension plan and trust, which has been terminated and
liquidated in 1996).
2. QUALIFIED PLANS SPONSORED ONLY BY USF AND/OR ITS SUBSIDIARIES:
US Foodservice Inc. 401(k) Retirement Savings Plan (a savings plan
and trust).
Retirement Plan for White Swan, Inc. (a defined benefit pension
plan and trust "frozen" since 1993, without further accrual of
increased benefits)
Liquidating Trust of Retirement Plan for Employees of Xxxxxxx
Brothers, Inc. (The related Plan was terminated more than five
years ago and all benefits were paid to participants. The few
remaining assets are not liquid, their proceeds will likely be
needed to pay expenses, and any net proceeds will revert to the
sponsoring employer.)
B. LIST OF MULTIEMPLOYER PLANS REQUIRED BY SECTION 4.1(j)(i):
1. MULTIEMPLOYER PLANS TO WHICH THE COMPANY AND/OR XXXX XXXXXX & CO.
CONTRIBUTE:
Central States Southeast and Southwest Areas Pension Fund
New York State Teamsters Conference Pension Fund
Southern States Conference of Teamsters Pension Fund
Western States Conference of Teamsters Pension Trust Fund
O.P.E.I.U. Local 153 Pension Fund (Englewood, NJ)
I.B.T. Local 202 Pension Fund (Englewood, NJ)
I.B.T. Local 282 Pension Fund (Englewood, NJ)
I.B.T. Local 852 Pension Fund (Englewood, NJ)
I.B.T. Local 000 Xxxxxxx Xxxxx (Xxxxxxxx Xxxxxxx, XX)
I.B.T. Local 738 Pension Fund (Glendale Heights, IL)
I.B.T. Local 745 Pension Fund (Dallas, TX)
I.B.T. Local 000 Xxxxxxx Xxxx (Xxxxxxx, XX)
Teamsters Pension Trust of Philadelphia
Warehouse Employees Union Local 169 and Employers Joint Pension Fund
(Philadelphia, PA)
Western Pennsylvania Teamsters and Employers Pension Fund
(Pittsburgh, PA)
Retail, Wholesale and Department Store International Union and
Industry Pension Fund (Indianapolis, Indiana)
Industrial Employers and Distributors Association and Warehouse
Union Locals 6 and 17 I.L.W.U. Pension Trust (Sacramento, CA)
Central States Southeast and Southwest Areas Health and Welfare Fund
Northern California General Teamsters Security Trust Fund, Plan A
Teamsters and Food Employers Security Trust Fund
I.B.T. Local 202 Union Welfare Plan (Englewood, NJ)
I.B.T. Local 738 Welfare Fund (Glendale Heights, IL)
I.B.T. Local 738 Special Clinic Trust Fund (Glendale Heights, IL)
Teamsters Health and Welfare Plan (Local 705) (Glendale Heights, IL)
Teamsters Health and Welfare Plan 5 (Local 781) (Glendale Heights, IL)
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Teamsters Health and Welfare Fund of Philadelphia, PA and Vicinity
(Philadelphia, PA)
Western Pennsylvania Teamsters and Motor Carriers Welfare Fund
(Pittsburgh, PA)
Michigan Conference of Teamsters Welfare Fund (Detroit, MI)
Minnesota Local 544 Health and Welfare Fund (Minneapolis, MN)
I.B.T. Local No. 638 Joint Administered Fund (Olfisco Division at
Minneapolis, MN)
Southwestern Teamsters Security Fund Plan 4 (Phoenix, AZ)
Oregon Teamsters Employers Trust Plan F-W (Portland, OR)
Teamsters Local 533 Health and Welfare Trust Fund (Reno, NV)
ILWU Warehousemen's Welfare Fund (Sacramento, CA)
Western Teamsters Welfare Trust (Salinas, CA)
Teamsters and Employers Trust (San Francisco, CA)
San Francisco Local 00 Xxxxxxx Xxxxxxx and Helpers Security Fund
(San Francisco, CA)
Local 856 Health and Welfare Trust Fund (San Francisco, CA)
Washington Teamsters Welfare Trust (Seattle, WA)
North Coast Trust Fund Plan #9 (Sonoma Co., CA)
Inland Empire Teamsters Trust (Spokane, WA)
Southwest Areas Health and Welfare Fund (St. Louis, MO)
2. MULTIEMPLOYER PLANS TO WHICH USF AND/OR ITS SUBSIDIARIES CONTRIBUTE:
Central States Southeast and Southwest Areas Health and Welfare Fund
C. LIST OF "PENSION PLANS" AS DEFINED IN ERISA SECTION 3(2) THAT ARE NEITHER
QUALIFIED PLANS NOR MULTIEMPLOYER PLANS AS REQUIRED BY SECTION 4.1(j)(i):
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1. "PENSION PLANS" AS DEFINED IN ERISA SECTION 3(2), THAT ARE NEITHER
QUALIFIED PLANS NOR MULTIEMPLOYER PLANS AND ARE SPONSORED ONLY BY THE
COMPANY AND/OR XXXX XXXXXX & CO.:
Xxxxxx-Xxxxxx, Inc., makes specified contributions to union employees'
individual retirement accounts pursuant to contract at Sacramento,
California (no plan document has been located, other than the collective
bargaining agreement)
Xxxxxx-Xxxxxx, Inc. Deferred Compensation Plan (an unfunded executive
savings plan, which is funded in part by a grantor trust held by a bank
trustee, hereinafter referred to as the "grantor trust").
Xxxxxx-Xxxxxx, Inc. Supplemental Executive Retirement Plan (an unfunded
executive pension plan, which is included in the grantor trust and
provides for individual agreements with certain executives).
Xxxxxx-Xxxxxx, Inc. Supplemental Excess Retirement Plan (an unfunded
executive pension plan, which is also funded in part by the grantor
trust).
Xxxx Xxxxxx & Co. Supplemental Executive Retirement Plan (an unfunded
executive pension plan, which is not funded by the grantor trust).
Other Supplemental Executive Retirement Agreements for certain officers
of the Company and Xxxx Xxxxxx & Co. (unfunded executive pension
arrangements, some of which are included in the grantor trust).
2. "PENSION PLANS," AS DEFINED IN ERISA SECTION 3(2), THAT ARE NEITHER
QUALIFIED PLANS NOR MULTIEMPLOYER PLANS AND ARE SPONSORED ONLY BY USF
AND/OR ITS SUBSIDIARIES:
The following arrangements may contain provisions constituting such plans:
US Foodservice Executive Management Bonus Plan
Severance Agreement for Xxxxx Xxxxxxx
Employment Agreements for the following employees:
Xxxxxx Xxxxx
Xxxxxx Xxxxxx
Xxxxxx Xxxxxx
Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxxxxx
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Miscellaneous Employee Bonus Plans applicable to employees of USF
Subsidiaries
D. LIST OF "WELFARE PLANS" AS DEFINED IN ERISA SECTION 3(1) AS REQUIRED BY
SECTION 4.1(j)(i):
1. "WELFARE PLANS." AS DEFINED ERISA SECTION 3(1), THAT ARE SPONSORED ONLY
BY THE COMPANY AND/OR XXXX XXXXXX & CO.:
Xxxxxx-Xxxxxx Health and Dental Benefits Plan and Trust (including its
own trust and a pre-tax salary reduction premium contribution
arrangement under Internal Revenue Code 125).
Xxxx Xxxxxx & Co. Retiree Health and Dental Benefits Plan (included in
the trust last identified above).
Xxxxxx-Xxxxxx Employee Vacation Plan and Trust (including its own
trust).
X. X. Xxxxxx & Co. Group Life Insurance Plan
X. X. Xxxxxx & Co. Long Term Disability Insurance Program
X. X. Xxxxxx & Co. Accidental Death & Dismemberment Plan
X. X. Xxxxxx & Co. Group Travel Accident Plan
Xxxx Xxxxxx & Co. Group Life and Long Term Disability Plan
Xxxx Xxxxxx & Co. Accidental Death & Dismemberment Plan
Xxxx Xxxxxx & Co. Travel Accident Plan
Xxxxxx-Xxxxxx Short Term Disability Plan
Discretionary Severance Pay Policy
2. "WELFARE PLANS" AS DEFINED IN ERISA SECTION 3(1), THAT ARE SPONSORED
ONLY BY USF AND/OR ITS SUBSIDIARIES:
Employee Benefit Plan (including major medical benefits, dental
benefits, short term disability benefits and a prescription program).
Business Travel Accident Plan
Long Term Disability Insurance Plan
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Group Basic and Supplemental Life and AD&D and Dependent Life Insurance
Plan
Flex Spending Plan (including medical and dependent care spending
account options).
White Swan, Inc. Employee Injury Benefit Plan
Certain divisions and Subsidiaries of USF have provided limited
employee assistance benefits and severance benefits, which may be
treated as welfare plans under ERISA (the "Ancillary Benefits")
3. "WELFARE PLANS" AS DEFINED ERISA SECTION 3(1), THAT ARE SPONSORED BY
BOTH THE COMPANY AND USF:
Individual Life and Disability Insurance Policy Program for Executive
Management Committee members.
E. EXCEPTIONS TO REPRESENTATIONS IN SECTION 4.1(j)(ii):
1. Each of the following Plans (as defined for this Agreement) are being
administered pursuant to an unsigned plan document or amendment, which
is described below after the name of the respective Plan or Trust:
(a) Rykoff & Xxxxxx Pension Plans Master Trust - A restated draft
Trust Agreement, as last submitted to the Internal Revenue
Service on April 3, 1995. A prior Trust Agreement, First
Amendment and Schedule A thereto were signed.
(b) The Retirement Plan for White Swan, Inc. - A proposed restated
plan document submitted to the Internal Revenue Service for a
determination letter on June 30, 1995.
(c) The Company and/or Xxxx Xxxxxx & Co. are currently obligated to
contribute to the Multiemployer Plans identified as such in the
list of Plans set forth above. However, the provision for pension
contributions to the I.B.T. Local 282 Pension Fund was
inadvertently left out of the last collective bargaining
agreement; and a letter of agreement confirming contributions to
that fund is being obtained.
(d) Xxxx Xxxxxx & Co. Supplemental Executive Retirement Plan -
A draft Plan document was last revised on September 6, 1990.
(e) Xxxxxx-Xxxxxx Employee Vacation Plan and Trust - Employees have
received notice of a vacation plan change that has not been
formally reflected in the
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Plan document
(f) Xxxxxx-Xxxxxx "Cafeteria" Plan under Code Section 125 - The
premium conversion arrangement document has not been located. The
Forms 5500 filed for the Xxxxxx-Xxxxxx Health and Dental Benefits
Plan and Trust did not include Schedule F describing the premium
conversion arrangement.
(g) Because USF is not sure whether the Ancillary Benefits described
above have been provided as part of an welfare plan under ERISA,
such Ancillary Benefits may not be set forth in plan documents or
summary plan descriptions, nor have any annual reports been filed
with respect to such Ancillary Benefits.
2. The summary plan description ("SPD") of each of the following Plans (as
defined for this Agreement) does not reflect the plan document that is
currently used for plan administration:
(a) Xxxxxx-Xxxxxx, Inc. Pension Plan (A restated SPD was prepared in
draft form as of July 11, 1995; and has been revised in draft
form as of October 18, 1996).
(b) Xxxx Xxxxxx & Co. Union Employee Pension Plan (A restated SPD was
prepared in draft form as of July 11, 1995, and has been revised
in draft form as of April 11, 1996).
(c) Xxxxxx-Xxxxxx Value Plan (A restated SPD was prepared in draft
form as of July 11, 1995, and has been revised in draft form as
of April 19, 1996).
(d) Xxxx Xxxxxx & Co. Retiree Health and Dental Benefits Plan (A
current SPD exists, but may not have been distributed to
employees or filed with DOL).
F. EXCEPTIONS TO REPRESENTATIONS IN SECTION 4.1(j)(iv):
The Xxxx Xxxxxx & Co. Union Employee Pension Plan has an "Unfunded Pension
Liability" amounting to $4,147 as of May 1, 1995.
The Retirement Plan for White Swan, Inc. had an "Unfunded Pension Liability"
amounting to $2,266,937 as of December 31, 1995; and its actuary estimates
that such amount has decreased to approximately $1,650,000 as of July 1,
1996.
G. EXCEPTIONS TO REPRESENTATIONS IN SECTION 4.1(j)(v):
Xxxx Xxxxxx & Co., a Subsidiary of the Company, maintains the Xxxx Xxxxxx &
Co. Retiree Health and Dental Benefits Plan, which provides health and
dental benefits to a limited group
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of employees of that Subsidiary who meet certain eligibility
requirements for this Plan and retire under the Xxxxxx-Xxxxxx, Inc.
Pension Plan (formerly the Xxxx Xxxxxx & Co. Pension Plan).
The X. X. Xxxxxx & Co. Group Life Insurance Plan and the Xxxx Xxxxxx &
Co. Group Life and Long Term Disability Plan include limited
post-retirement life insurance benefits.
The Employment Agreement of Xxxx Xxx Xxxxxxxxxxxx provides for health
and other welfare benefits after his employment termination.
Approximately 52 employees of Xxxxxxx Brothers, Inc. who retired prior
to November 1, 1990, are entitled to participate in the US Foodservice
Employee Medical Plan.
H. EXCEPTIONS TO REPRESENTATIONS IN SECTIONS 4.1(j)(vii) AND (ix):
As a result of the merger with USF, most or all of the locations with
union employees covered by the Xxxx Xxxxxx & Co. Union Employee Pension
Plan will be shut down and the employees terminated. These actions are
expected to result in the full vesting of affected participants, a
partial termination of that plan and, if all participants are
terminated, the "freezing" of future benefit accruals or termination of
that plan. The plan's actuary estimates that a plan termination would
require a final cash contribution of between $300,000 and $400,000.
I. EXCEPTION TO REPRESENTATIONS IN SECTION 4.1(j)(viii):
As of January 1, 1990, the Xxxx Xxxxxx & Co. Savings Plan was merged
into the X. X. Xxxxxx & Co. Profit Sharing Plan, both of which had
previously been operated under the same Master Trust Agreement. The
merged Plan and Trust was then designated the Xxxxxx-Xxxxxx Value Plan.
By letter received by the Company on March 24, 1995, the Pension and
Welfare Administration of the U.S. Department of Labor (the "DOL") made
an inquiry with respect to the Xxxx Xxxxxx & Co. Savings Plan. The
Company responded to the inquiry by letters dated July 26, 1995, and
March 28, 1996, each of which transmitted certain documents to DOL.
Since the date of the Company's last response, the Company has not
received any additional inquiries from DOL with respect to this matter.
J. EXCEPTION TO REPRESENTATIONS IN SECTION 4.1(j)(x):
The Company owned all of the capital stock of Tone Brothers, Inc.
("Tone") during the period from April 11, 1989 through October 27, 1994;
and sold that stock on the latter date to Xxxxx Xxxxx Food Inc. for a
cash price of $96,000,000, subject to certain post-closing adjustments.
During that entire period and at the time of the sale, Tone maintained a
Qualified Plan that was a defined benefit pension plan subject
to Title IV of ERISA (the
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"Tone Plan"). Based on the Actuarial Valuation Report for the Tone
Plan, which was prepared by Principal Mutual Life Insurance Company as
of September 1, 1994 (the last valuation date before the sale), the
Company's actuarial consultant estimates that Tone's unfunded pension
liability (on a plan termination basis) with respect to the Tone Plan
was then approximately $400,000.
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APPENDIX I
to
Reimbursement Agreement
dated as of
November 1, 1996
between
THE FIRST NATIONAL BANK OF CHICAGO
and
XXXXXX-XXXXXX, INC.
A DELAWARE COMPANY
COVENANTS AND DISBURSEMENT PROCEDURES REGARDING INSURANCE
OR CONDEMNATION PROCEEDS
This APPENDIX I (Covenants and Disbursement Procedures regarding
Insurance of Condemnation Proceeds) is attached to and forms an integral part
of that certain Reimbursement Agreement dated as of November 1, 1996 between
XXXXXX-XXXXXX, INC., a Delaware Corporation and THE FIRST NATIONAL BANK OF
CHICAGO (the "Reimbursement Agreement"). All terms defined in such
Reimbursement Agreement shall have the same meanings when used in this
APPENDIX I.
Part A: DISBURSEMENTS
A.1 INSURANCE OR CONDEMNATION PROCEEDS.
(a) CONDITIONS. Disbursement of Cash Proceeds (as hereinafter
defined) for restoration of the Project shall be made pursuant to the
following procedures and conditions:
(i) In the event of a casualty or a condemnation which results in
damage to the Project in excess of $1,000,000, as determined by or on
behalf of the Company and reasonably approved by Bank:
(1) Within sixty (60) days following the date of such
casualty or condemnation (the "Election Period"), the Company shall
notify Bank in writing of the Company's election either (x) to
redeem the Bonds in whole pursuant to the provisions of the
Indenture and the Reimbursement Agreement, or (y) to restore the
Project to a condition substantially the same as the condition of
the Project immediately prior to such casualty or condemnation (the
"Prior Condition").
(2) Within thirty (30) days after the expiration of
the Election Period, the Company shall deliver to Bank collateral,
in the form of cash
I-1
and/or an irrevocable, clean "sight draft" standby letter of credit issued by
a financial institution and otherwise in form and substance reasonably
satisfactory to Bank (any such letter of credit, together with any amendments
thereto or substitutions thereof approved by Bank, shall be a "Collateral
Letter of Credit" hereunder) in an aggregate sum equal to the difference (if
a positive number) between (x) the lesser of: (I) the Initial Stated Amount
or (II) the total costs of restoring the Project to the Prior Condition, as
determined by or on behalf of the Company and reasonably approved by Bank;
PROVIDED, HOWEVER, that in the event the Company has elected to redeem the
Bonds in whole in accordance with SUBPARAGRAPH A.1(a)(i)(1) above, the
Initial Stated Amount shall be used regardless of whether or not such Amount
is higher or lower than the total costs of restoring the Project to the Prior
Condition; AND (y) the amount of insurance or condemnation proceeds actually
delivered to Bank as a result of such casualty or condemnation, or, if
acceptable to Bank in its sole discretion, the amount of insurance or
condemnation proceeds reasonably anticipated by the Company to be delivered
to Bank as a result of such casualty or condemnation.
(3) If the Company has elected to restore the Project to the Prior
Condition in accordance with SUBPARAGRAPH A.1(a)(i)(1) above, then, within
thirty (30) days after the expiration of the Election Period, the Company
shall deliver to Bank (x) an estimated budget of all costs of restoring the
Project to the Prior Condition (which budget, together with any modifications
thereto thereafter reasonably approved by Bank in accordance with PARAGRAPH
B.2 hereof, shall be the "Restoration Budget" hereunder) and (y) a
construction time line (which construction time line, together with any
modifications thereto thereafter reasonably approved by Bank, shall be the
"Construction Schedule" hereunder) setting forth, among other things, the
dates upon which each of the following will occur: the plans and
specifications for the restoration of the Project will be completed, a
construction contract, in form and substance reasonably acceptable to Bank,
will be executed, all necessary governmental approvals will be obtained and
phases of construction will be commenced and completed. The initial
Reconstruction Budget and Construction Schedule shall be subject to Bank's
approval, which approval shall not be unreasonably withheld or delayed.
(4) If the Company has elected to restore the Project to the Prior
Condition in accordance with SUBPARAGRAPH A.1(a)(i)(1) above, all costs of
restoring the Project to the Prior Condition in excess of the sum of cash
delivered to Bank in accordance with SUBPARAGRAPH A.1(a)(i)(2) above
(collectively, the "Cash Proceeds") shall be paid by the Company with its own
funds first before any Cash Proceeds are disbursed for payment or
reimbursement of any such costs.
I-2
(5) Any failure by the Company to satisfy in a timely manner the
conditions to disbursement set forth in this SUBPARAGRAPH A.1(a)(i) shall,
after the expiration of any applicable notice and/or cure period set forth in
the Reimbursement Agreement, constitute an Event of Default under the
Reimbursement Agreement. Upon the occurrence of an Event of Default under the
Reimbursement Agreement, Bank may, at its option, draw upon any Collateral
Letter of Credit and deposit such proceeds into the Disbursement Account (as
hereinafter defined). In such case, the term "Cash Proceeds" as used herein
shall include the proceeds that are drawn from any Collateral Letter of
Credit and are deposited into the Disbursement Account.
(ii) In the event of a casualty or a condemnation which results in
damage to the Project of $1,000,000 or less, as determined by or on behalf of
the Company and reasonably approved by Bank:
(1) Bank will promptly release to the Company the insurance or
condemnation proceeds delivered to Bank as a result of such casualty or
condemnation so long as, within (60) days following the date of such
casualty or condemnation, the Company delivers to Bank a certificate,
signed by a responsible officer of the Company, which states either (x)
that the Company will restore the Project to the Prior Condition, or (y)
that the portion of the Project damaged by such casualty or
condemnation will have no significant adverse impact upon the use and
operation of the Project; in which case the Bank shall have the right, at
the Bank's sole discretion but at the Company's sole cost and expense,
to cause an appraisal of the Project to be prepared and, if the Bank
determines, in its sole discretion, that the value of the Project has
been materially and adversely impacted as a result of such casualty or
condemnation (such appraisal to be based upon the value of the Project
immediately prior to such casualty or condemnation versus the value of
the Project immediately after such casualty or condemnation (such
difference to be referred to as the "Reduced Value")), the Company shall
either (I) deliver to Bank additional collateral, in form and substance
and pursuant to documentation reasonably acceptable to Bank, to secure
the performance by the Company of the Obligations in an amount equal to
the Reduced Value or (II) partially redeem the Bonds in an amount equal
to the Reduced Value. In the event that the Company elects to partially
redeem the Bonds, the Stated Amount (as defined in the Letter of Credit)
of the Letter of Credit shall be reduced by the amount set forth in the
reduction certificate delivered in connection with such partial
redemption and the condition set forth in CLAUSE (II) of this
SUBPARAGRAPH A.1(a)(ii)(1)(y) shall not be satisfied until the Company
has reimbursed Bank for the amount of the draw on the Letter of Credit
in connection with such partial redemption in accordance with the
provisions of the Reimbursement Agreement.
I-3
(2) If the Company has elected to restore the Project to the Prior
Condition in accordance with SUBPARAGRAPH A.1(a)(ii)(1)(x) above, then
the Company shall promptly commence and thereafter diligently continue
to pursue such restoration to completion.
(3) Any failure by the Company to satisfy in a timely manner the
conditions to disbursement set forth in this SUBPARAGRAPH A.1(a)(ii)
shall, after the expiration of any applicable notice and/or cure period
set forth in the Reimbursement Agreement, constitute an Event of Default
under the Reimbursement Agreement.
(b) Any Cash Proceeds delivered by or on behalf of the Company to Bank
shall be deposited in an account with Bank or another financial institution
acceptable to Bank (the "Disbursement Account") for disbursement as hereafter
provided. Any funds on deposit in the Disbursement Account may, with the
prior written consent of the Bank be invested, from time to time, in
investments approved by Bank in writing. Any and all earnings on such
investments shall, so long as no Event of Default exists under the
Reimbursement Agreement, be disbursed to the Company at the Company's request
not more frequently than once per calendar month.
A.2 BANK'S CONSENT TO DISBURSEMENTS. The Company shall complete,
execute, and forward to Bank its funding requisition for each requested
disbursement of Cash Proceeds, together with a complete set of Payment
Request Documents (as hereinafter defined) with respect thereto, as described
in PARAGRAPH A.5 of this APPENDIX I. Bank's approval of a funding requisition
shall not be construed as representation by Bank that it has reviewed,
considered, approved or joined in any of the representations of the Company
contained therein. Bank shall not be required to give its consent to more
than two disbursements during each calendar month.
A.3 DISBURSEMENT METHOD. Each disbursement of Cash Proceeds for the
payment of restoration costs shall be made by the Bank or, following the
occurrence of an Event of Default, in such manner as Bank may direct. Upon
satisfaction by the Company of the conditions to disbursement set forth in
PARAGRAPH A.5, Bank shall promptly authorize disbursement of such funds for
the payment of the restoration costs described in the approved Payment
Request Documents for such disbursement, or to reimburse the Company
therefor; PROVIDED, HOWEVER, upon the occurrence of an Event of Default Bank,
at its sole option, may make disbursements directly to any contractors,
subcontractors, laborers, materialmen, or other persons providing services or
materials to the Project (collectively, "Claimants") by issuing and
delivering to the Company cashier's checks payable to such Claimants, in
accordance with a "Request for Cashier's Checks" which shall be submitted by
the Company and approved by Bank as part of the Payment Request Documents
for such disbursement. The Company agrees to cause all payments or
reimbursements from the Disbursement Account to be made by checks drawn upon
such account.
I-4
A.4 BALANCING. (a) As a material condition to Bank's consent to any
disbursement of Cash Proceeds, the Company hereby agrees to provide
sufficient funds for the payment of restoration costs so that, in Bank's
reasonable judgment, the aggregate sum of (i) the undisbursed portion of
the Cash Proceeds available to the Company for the payment or
reimbursement of restoration costs, PLUS (ii) the undrawn portion of any
Collateral Letter of Credit available for the payment or reimbursement of
restoration costs, PLUS (iii) any undisbursed amounts deposited pursuant
to SUBPARAGRAPH A.4(b), is at least equal to the amount that will need to
be expended in order to complete the restoration work in accordance with
the plans therefor approved by Bank. Categories listed as "contingencies"
on the Reconstruction Budget shall be deemed to be actual restoration
costs for the purposes of balancing.
(b) The determination as to whether sufficient funds are or will be
available to complete the restoration work may be made by Bank at any
time, including in connection with any request for Bank's consent to a
disbursement. Within ten (10) days following notice from Bank that
insufficient funds exist, the Company shall deliver to Bank for deposit in
the Disbursement Account cash or other security reasonably acceptable to
Bank (including another Collateral Letter of Credit) in such amount as
Bank deems necessary to complete the restoration work in accordance with
the plans approved by Bank. Any such amounts delivered to Bank for deposit
in the Disbursement Account shall be the next funds authorized for
disbursement by Bank hereunder, subject to the terms and conditions of
this Agreement.
A.5 CONDITIONS TO DISBURSEMENTS. Bank's consent to any disbursement
of Cash Proceeds shall be subject to satisfaction of each of the following
conditions precedent:
(a) REPRESENTATIONS AND WARRANTS CORRECT: NO DEFAULT. As of the
date of such disbursement, the representations and warranties of the
Company contained in the Reimbursement Agreement and Related Documents
shall be correct as though made on and as of that date, no Event of
Default shall have occurred and no Default shall exist on such date.
(b) BALANCING. As of the date of such disbursement, in Bank's
reasonable judgment, the Company shall be in compliance with the
provisions of PARAGRAPH A.4 of this APPENDIX I, and the making of the
disbursement in question would not cause the Company to be out of
compliance therewith immediately following such disbursement.
(c) PAYMENT REQUEST DOCUMENTS. The Company shall have submitted to
Bank, and Bank shall have approved, the following documents (collectively,
the "PAYMENT REQUEST DOCUMENTS") with request to such disbursement, each
of which shall be in form and substance satisfactory to Bank and duly
executed by the appropriate parties:
I-5
(i) a certificate, signed by a responsible officer of the
Company, confirming the satisfaction of each of the conditions set
forth in SUBPARAGRAPH A.5(a) of this APPENDIX I;
(ii) a "PAYMENT REQUEST," in duplicate, in such form as Bank
shall from time to time require, together with a report, certified as
true and correct by a responsible officer of the Company, setting
forth such details concerning the progress of the reconstruction work
as Bank may require, including without limitation: (A) a detailed
breakdown of all restoration costs covered by the Reconstruction
Budget, including an itemization of (1) all costs accrued as of the
date of such Payment Request, (2) all costs accrued and unpaid as of
such date, (3) all costs projected to be necessary to complete the
restoration work, and (4) the application of all past disbursements;
(B) a current Construction Schedule (any revisions shown thereon from
the previous Construction Schedule shall be subject to Bank's
reasonable approval); and (C) all changes from the previous report
which are known or reasonably anticipated by the Company;
(iii) evidence of proper application of all past disbursements,
including without limitation the following: an unconditional partial
waiver of lien from each contractor and subcontractor, in form and
substance satisfactory to Bank, covering the full amount of all past
disbursements for direct construction costs through the date of the
most recent disbursement; and an unconditional final waiver of lien,
in form and substance satisfactory to Bank, from each contractor and
each subcontractor who, as of the most recent disbursement, had
completed the work covered by its contract or subcontract, covering
the full amount due each such contractor or subcontractor;
(iv) if Bank, upon the occurrence of an Event of Default, is
requiring that Disbursements to Claimants be made by the cashier's
check, a completed "Request for Cashier's Checks," in form and
substance acceptable to Bank;
(v) specific assignments to Bank of all agreements, permits
and licenses issued in connection with or required for the
restoration work for which such specific assignments shall not have
previously been delivered to Bank, together with signed consents to
such assignments where deemed appropriate by Bank;
(vi) if any part of the disbursement is for site preparation
and grading, a certificate from a soils engineer acceptable to Bank
that such work and all grading and site preparation then in process
or completed are in compliance with the recommendations specified in
such soils engineer's soils test report;
(vii) such title insurance endorsements to the Title Policy as
Bank may require, including, without limitation, endorsements
reflecting the date and the amount of the requested disbursement and
insuring the continued priority of the
I-6
liens of the Deed of Trust over mechanics' and other liens, subject
to no exceptions to title other than those which have been approved
by Bank; and
(ix) such other documents and information as Bank may
reasonably require, including, without limitation, invoices, purchase
orders and lien releases from all Claimants covering the amount of
each disbursement thereto.
(d) INSPECTION BY BANK. With respect to disbursements for direct
reconstruction costs, the work of reconstruction shall be progressing or
shall have been completed to Bank's satisfaction, based on the inspection
and findings of Bank's inspector.
(e) TECH. Each disbursement for direct construction costs of the
reconstruction work shall be subject to a holdback (the "TECH") of ten
percent (10%) of the amount of all direct construction costs incurred
through the date of such disbursement; PROVIDED, HOWEVER, that no Tech
shall be required for (i) contracts or subcontracts of less than $10,000,
or (ii) for materials and supplies purchased directly from vendors and
suppliers. The amount of such Tech shall be disbursed by Bank to the
Disbursement Account upon Bank's determination that each of the following
additional conditions has been satisfied:
(i) The renovation work shall have been completed in
accordance with the plans approved by Bank and all legal
requirements, and the Company shall have furnished to Bank, at the
Company's expense, a standard AIA form of Certificate of Project
Completion, signed by the contractor and Company's architect,
certifying that the renovation work has been completed in a good and
workmanlike manner and in accordance with such plans;
(ii) A valid notice of completion shall have been recorded and
the applicable lien periods shall have expired, or, in lieu thereof,
Bank shall have received and approved final lien waivers and
releases, in form and substance satisfactory to Bank, from all
contractors, subcontractors, laborers and materialmen employed or
furnishing materials in connection with the reconstruction work;
(iii) All claims of lien and stop notices that may have been
recorded or notice thereof served on Bank, the Issuer or the Trustee
shall have either been paid in full and released or the Company shall
have posted a surety bond sufficient to discharge the same;
(iv) The Company shall have delivered or caused to be delivered
to Bank a complete set of "as built" working drawings for the
restoration work;
(v) Bank shall have received satisfactory evidence that no
Uniform Commercial Code financing statements or fixture filings are
recorded or filed in the Office of the California Secretary of State
(or in the Office of the Secretary of
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State of the state in which the Company's principal business office
is located, if other than California), or in the Official Records
of Los Angeles County, against the Company's interest in the
Premises of the Project, or which purport to cover any collateral
described in the Bank Security Documents, except those which may
have been filed in favor of Bank in connection herewith and with
the Related Documents and except those previously approved by Bank
in writing;
(vi) Bank shall have received appropriate approvals from (A)
all governmental authorities regarding completion of the
reconstruction work, which approvals shall be evidenced by an
irrevocable certificate for the permanent occupancy thereof to the
extent such approval is a condition to the lawful use and occupancy
of the Project; (B) the local board of fire underwriters or its
equivalent; and (C) all other governmental authorities having
jurisdiction over the contemplated uses, operation and occupancy of
the Project; and
(vii) The Company shall have submitted to Bank copies of all
agreements, permits and licenses issued in connection with or
required for the restoration work, and all insurance policies or
certificates required under the Reimbursement Agreement, to the
extent not previously delivered to Bank.
(f) STORED MATERIALS. Bank shall have the right, in its
sole discretion, to withhold its consent to any disbursement for materials
(other than lumber or drywall in reasonable quantities as determined by Bank)
purchased or to be purchased but not yet installed or incorporated into the
Project ("STORED MATERIALS"). Without limiting the generality of the
foregoing, Bank, as a condition to its consent to any requested disbursement
relating to Stored Materials (including, but not limited to, such lumber and
drywall), may require that the Company supply Bank with the following:
(i) Evidence satisfactory to Bank that the Stored
Materials requested are included within the coverage of the
insurance policies required by SECTION 5.1 (c) of the Reimbursement
Agreement;
(ii) A certificate satisfactory to Bank from the seller or
fabricator of the Stored Materials that upon payment, ownership of
the Stored Materials will vest in the Company free of liens and
claims of third parties; and
(iii) Evidence satisfactory to Bank that the Stored
Materials are stored on the Premises and adequately protected from
theft and damage, or, if not so stored, (A) evidence that the
Stored Materials are stored in a bonded warehouse or storage yard
approved by Bank, which warehouse or yard has been notified that
the Trustee and Bank have a security interest in said Stored
Materials, and (B) the original warehouse receipt.
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PART B: RECONSTRUCTION OF THE IMPROVEMENTS
B.1 RECONSTRUCTION PERIOD.
The Company shall commence construction of the renovation work and
shall cause such construction to continue with diligence and continuity in
compliance with the plans and the Construction Schedule approved by Bank in
order that the renovation work shall be completed on or before the completion
date approved by Bank based upon the approved Construction Schedule (the
"Required Completion Date"); PROVIDED HOWEVER, that the Required Completion
Date may be extended for a period equal to proven delays caused by fire,
earthquake or other acts of God, acts of public enemies, riot, insurrection,
governmental regulation of the sale of materials and supplies or the
transportation thereof, strikes directly affecting the work of construction
or shortages of material or labor resulting directly from governmental
control or diversion (collectively, "Force Majeure Events"). If the Required
Completion Date is extended by ninety (90) days or more as a result of the
occurrence of one or more Force Majeure Events, the Company shall deliver to
Bank a revised Reconstruction Budget every ninety (90) days that the
Required Completion Date is extended and Bank shall have the right to approve
such Reconstruction Budget in accordance with SUBPARAGRAPH B.2(b) hereof.
B.2 APPROVAL OF CHANGES IN PROJECT AGREEMENTS AND RECONSTRUCTION
BUDGET.
(a) The Company shall strictly enforce all contracts and
agreements entered into in connection with the renovation work and shall not
agree to any material change order or any changes in the Reconstruction
Budget, except pursuant to a written change order and in accordance with this
PARAGRAPH B.2. Each change order shall be submitted to Bank for its prior
written approval if such change order (i) would result in a material change
in plans and specifications previously approved by Bank, the Construction
Schedule or the general contract; (ii) would increase or decrease the
Reconstruction Budget by more than the amount specified by Bank in connection
with its approval of the Reconstruction Budget in the case of an individual
change order, or (iii) would cause the aggregate of all change orders
(whether proposed or executed) to exceed the amount specified by Bank in
connection with its approval of the Reconstruction Budget.
(b) If any change order would increase the Reconstruction Budget,
Bank may, in its sole discretion, condition its approval upon the Company
depositing with Bank, pursuant to PARAGRAPH A.4 of this APPENDIX I. such
amount as Bank may reasonably require in order to provide sufficient funds
for the payment of the restoration costs.
(c) The Company acknowledges that the process of obtaining the
information and confirmations needed to put Bank in a position to approve
change orders may cause delays, and the Company consents to such delays and
agrees to
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cooperate diligently with Bank in the gathering of the information required.
In addition, the Company acknowledges and agrees that Bank is under no duty
to review, advise or inform the Company of, and Bank's approval or
disapproval shall not constitute a warranty or representation about, the
quality or suitability of the plans or any modification, amendment or
supplement thereto. All contracts relating to the renovation work shall, to
the extent reasonably possible, contain provisions implementing the
provisions of this PARAGRAPH B.2.
B.3 PURCHASE OF MATERIALS UNDER CONDITIONAL SALES CONTRACT.
Except as expressly authorized by Bank in writing, no materials, equipment,
fixtures for the renovation work, or articles of personal property placed in
the Project, shall be purchased, installed or affixed under any security
agreement or other arrangements however denominated whereby the right is
reserved or accrues to anyone to remove or to repossess any such item or to
consider them personal property after their incorporation in the work of
construction or whereby any person other than Bank reserves, acquires or
creates a lien upon or security interest in such items, except as expressly
authorized by Bank in writing; PROVIDED, HOWEVER, that the Company may utilize
leased construction equipment in connection with the reconstruction of the
Project.
B.4 INSPECTION
(a) During the construction period, Bank and its agents and
representatives shall have the right: (i) of free entry and access to the
Project and to all sites away from the Project where materials that are to be
incorporated into the Project are stored; (ii) at the Company's expense, to
inspect all work done, labor performed and materials furnished for use in the
Project; (iii) if Company does not provide satisfactory information, to
contact directly or otherwise communicate with any contractor, subcontractor
and other Claimant to verify any matters disclosed in any Payment Request
Documents submitted to Bank; and (iv) to examine, copy and make extracts of,
all books, records, accounting data, subcontracts and other documents
pertaining to the Company or the Project and all contractors and
subcontractors supplying goods or services in connection with the
construction of the Project. The Company shall cooperate with and shall use
commercially reasonable efforts to cause all contractors and all
subcontractors to cooperate with Bank and its agents and representatives.
Said books, records, accounting data, subcontracts and documents shall be
made available to Bank promptly upon written demand therefor. The Company
shall require or cause its contractors to require that all contracts relating
to the Project contain an acknowledgement of the foregoing inspection rights,
except where such rights have been waived by Bank in writing.
(b) The Company acknowledges that Bank is under no duty to
supervise or to inspect the work of construction, the labor performed
therefor, the materials used therein or any books and records. The Company
agrees that any inspections by Bank are for the sole purpose of preserving
Bank's rights hereunder that the Company is
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not entitled to rely upon the same with respect to materials, workmanship,
compliance with the approved plans or otherwise. The Company intends and
agrees to conduct its own investigations and inspections of the construction,
the labor performed and materials supplied to determine that the quality of
the Project and all other requirements of the construction are being
performed in a manner satisfactory to the Company. The Company agrees to
immediately notify Bank, in writing, should the same be in any manner
unsatisfactory. A failure to inspect the construction of the Project, any part
thereof or any books and records relating thereto, shall not constitute a
waiver of any of Bank's rights hereunder. Inspection not followed by notice
of default shall not constitute a waiver of any default then existing; nor
shall it constitute an acknowledgment that there has been or will be
compliance with the plans and specifications approved by Bank or that the
construction is free from defective materials or workmanship.
B.5 PROTECTION AGAINST CLAIMS
(a) The Company shall promptly discharge or cause to be discharged any
mechanics' or materialmen's liens or claims of lien filed or otherwise
asserted against the Premises, the Project or any funds due any contractor
and any proceedings for the enforcement thereof and shall promptly discharge
or cause to be discharged any stop notices received by Bank, the Issuer, or
the Trustee; PROVIDED, HOWEVER, that so long as no proceedings shall have
been commenced for the enforcement of such claims or liens, the Company shall
have the right to contest in good faith and with reasonable diligence the
validity of any such liens or claims upon furnishing to the Title Company
such security or indemnity as the latter may require to induce it to issue
the Title Policy, or an interim endorsement thereto, insuring against all
such claims or liens and, provided further, that Bank will not be required to
consent to any further disbursements until all such mechanics' or
materialmen's liens or claims of lien have been so insured against by the
Title Company to Bank's satisfaction. In the case of stop notices, the
Company shall have the right to contest, in good faith and with reasonable
diligence, the validity of any stop notice, provided that the Company shall
immediately file with Bank and the Trustee a bond in the form and amount
required by law in order to release such stop notice. Bank shall have no
obligation to consent to any further disbursements until all stop notices
have been fully released, bonded or discharged.
(b) If (i) the Company fails promptly to discharge or contest liens,
claims of lien or stop notices and provided the security or indemnity in the
manner provided in CLAUSE (a) above, or (ii) after having complied with the
provisions of CLAUSE (a) above there is an adverse conclusion to any such
contest and the Company does not cause any final judgment or decree to be
immediately satisfied and the lien or stop notice to be discharged, then Bank
may, but shall not be required to, procure the release and discharge of any
such lien or stop notice and any judgment or decree thereon, and in
furtherance thereof may, in its sole discretion, effect any settlement or
compromise or furnish any security or indemnity as may be required by the
Title Company. All amounts expended by Bank in connection with the provisions
of this SUBPARAGRAPH B.5(b), together with interest thereon at the Bank Rate
from the date of such expenditure until
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Bank has been repaid and, until paid, said sums shall be secured by the Bank
Security Documents. In settling, compromising or arranging for the discharge
of any liens or stop notices under this SUBPARAGRAPH B.5(b), Bank shall not
be required to establish or confirm the validity or amount of the lien to
stop notice.
(c) The Company will designate Bank as the "Construction Lender" on
any application for building permits for reconstruction work affecting the
Project in accordance with California Civil Code Section 3097(i).
B.6 CONFORMITY WITH APPROVED PLANS. The Company agrees to perform all
renovation work in conformity in all material respects with the plans
approved by Bank and, if applicable, the recommendations contained in the
soils report made in connection with such renovation work. If any portion of
the renovation work is not in conformity with the approved plans and such
recommendations in any material respect, or if any materials or workmanship
on the renovation work shall appear to Bank to be defective, or in the event
of any encroachment to which Bank shall not have previously consented, Bank,
in addition to its other rights and remedies, shall have the right (a) to
direct that the Company stop the work (or such portion thereof as Bank deems
necessary) and repair, reconstruct or correct such matter in accordance with
the approved plans and such recommendations, and (b) to withhold its consent
to all further disbursements until the work is in satisfactory compliance
with the approved plans and such recommendations, and any such defect or
encroachment is eliminated. After the issuance of any such direction by Bank,
no further renovation work shall be done on the Project without the prior
written consent of Bank until the work is in satisfactory compliance with the
approved plans and such recommendations. Upon notice from Bank to the
Company, or the Company's discovery irrespective of such notice, that the
work is not in conformity with the approved plans and such recommendations,
the Company shall commence correcting the deviation, as promptly as is
practicable and in any event within five days after the notice, and shall
prosecute such work diligently to completion, which in no event shall be
later than thirty (30) days after such notice or discovery unless the Company
shall provide written notice to Bank that the correction shall take longer
and Bank shall reasonably consent thereto. If corrective action satisfactory
to Bank is not commenced and thereafter diligently pursued in accordance with
the provisions of the immediately preceding sentence, Bank shall have the
right (but not the obligation or the duty) to undertake such action at the
Company's expense and such expense shall be deemed to be included in the
Approved Budget. Furthermore, if Bank determines that the corrective work is
not proceeding satisfactorily, Bank shall have the right (but not the
obligation or the duty), upon not less than five (5) days' notice to the
Company, to take over such corrective work itself and prosecute it to
completion at the Company's expense and such expense shall be deemed to be
included in the Approved Budget.
B.7 ENCROACHMENTS. Except for off-site improvements designated in the
approved plans, the Company agrees that the reconstructed improvements shall
be constructed entirely within the lot lines of the Premises and will not
encroach upon any
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easements, right of way, any other real estate, building lines or set-back
requirements. The Company will furnish, from time to time upon demand,
satisfactory evidence of compliance with the requirements of this PARAGRAPH
B.7.
B.8 WARRANTIES. Upon request of Bank, the Company shall furnish or
otherwise make available to Bank copies of all warranties and guaranties
received from any laborer or supplier furnishing labor, materials, equipment,
fixtures or furnishings in connection with the renovation work.
B.9 AUTHORITY TO FILE NOTICES. The Company irrevocably appoints,
designates, and authorizes Bank as its agent (said agency being coupled with
an interest) to file for record any notice of completion, cessation of labor,
or any other notice that Bank deems necessary or desirable to protect its
rights and interests hereunder or under any of the other Related Documents.
B.10 THIRD-PARTY CONSULTANTS. Bank may hire such third party
consultants as it deems necessary, the reasonable costs of which prior to the
occurrence of an Event of Default and the costs of which after an Event of
Default, in either case, shall be paid by the Company in accordance with the
Reimbursement Agreement, to provide the following services: (a) to review the
reconstruction plans; (b) to review the final construction cost breakdown
and the construction schedule; (c) to conduct compliance inspections with
respect to the progress of construction of the renovated improvements and to
review each element of any request for disbursement submitted by the Company;
and (d) to perform such other services as may from time to time, be required
by Bank in connection with the administration of the transactions
contemplated hereby.
B.11 DISCLAIMER BY BANK. Bank shall not be liable to any contractor,
subcontractor, supplier, laborer, architect, engineer, or any other person
for services performed or materials supplied in connection with the Project,
or for any debts or claims accruing in favor of any such person against the
Company or others or against the Premises or the Project. The Company is not
and shall not be an agent of Bank for any purpose. Bank is not a joint
venture partner with the Company in any manner whatsoever. Prior to default
by the Company under this Agreement and the exercise by Bank of the remedies
granted herein, Bank shall not be deemed to be in privity of contract with any
contractor, subcontractor, or provider of services to the Project, nor shall
any payment of funds directly to any such person be deemed to create any
third party beneficiary status or recognition of same by Bank. Approvals
granted by Bank for any matter covered by this Agreement shall be narrowly
construed to cover only the parties and facts identified in any written
approval, and shall be solely for the benefit of the Company.
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