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EXHIBIT 10.13
Execution Copy
LOAN AGREEMENT
BETWEEN
MICHIGAN STRATEGIC FUND
AND
ATMOSPHERE ANNEALING, INC.
$2,510,000
MICHIGAN STRATEGIC FUND
VARIABLE RATE DEMAND LIMITED OBLIGATION
REVENUE BONDS, SERIES 1997
(ATMOSPHERE ANNEALING, INC. PROJECT)
DATED AS OF DECEMBER 1, 1997
The interest of the Michigan Strategic Fund, the Issuer, subject to
certain specified exclusions in this Loan Agreement has been assigned to
First of America Bank, N.A., as Trustee under a Trust Indenture dated as of
December 1, 1997.
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TABLE OF CONTENTS
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 2
Section 1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . Page 2
Section 1.2. Rules of Interpretation. . . . . . . . . . . . . . . . . . Page 4
Section 1.3. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . Page 4
Section 1.4. Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . Page 4
ARTICLE II REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . Page 5
Section 2.1. Representations of the Issuer. . . . . . . . . . . . . . . Page 5
Section 2.2. Representations of the Obligor. . . . . . . . . . . . . . . Page 5
ARTICLE III CONSTRUCTION AND EQUIPPING OF THE PROJECT;
ISSUANCE OF THE BONDS . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 11
Section 3.1. Construction and Equipping of the Project. . . . . . . . Page 11
Section 3.2. Agreement to Issue Bonds; Application of Bond Proceeds. . Page 12
Section 3.3. Approvals and Permits. . . . . . . . . . . . . . . . . . Page 12
Section 3.4. Title. . . . . . . . . . . . . . . . . . . . . . . . . . Page 12
Section 3.5. Investment of Moneys in the Construction Fund and the
Bond Fund. . . . . . . . . . . . . . . . . . . . . . . . Page 12
Section 3.6. Additional Bonds. . . . . . . . . . . . . . . . . . . . . Page 13
Section 3.7. Issuer Makes No Warranties Regarding the Project. . . . . Page 13
ARTICLE IV REPAYMENT PROVISIONS . . . . . . . . . . . . . . . . . . . . . . Page 13
Section 4.1. The Loan. . . . . . . . . . . . . . . . . . . . . . . . . Page 13
Section 4.2. Repayment of the Loan and Payment of Other Amounts Payable. Page 13
Section 4.3. No Defense or Setoff--Unconditional Obligation. . . . . . Page 15
Section 4.4. Assignment and Pledge of Issuer's Rights. . . . . . . . . Page 15
Section 4.5. Obligor's Performance Under Indenture. . . . . . . . . . Page 16
Section 4.6. Mandatory Purchase of the Bonds by the Obligor. . . . . . Page 16
ARTICLE V SPECIAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . Page 16
Section 5.1. Issuer's, Trustee's, and Bank's Right of Access to the
Project. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 16
Section 5.2. Obligor to Maintain Existence; Conditions Under Which
Exceptions Permitted. . . . . . . . . . . . . . . . . . Page 16
Section 5.3. Indemnification Covenants. . . . . . . . . . . . . . . . Page 16
Section 5.4. Insurance. . . . . . . . . . . . . . . . . . . . . . . . Page 19
Section 5.5. Eminent Domain. . . . . . . . . . . . . . . . . . . . . . Page 19
Section 5.6. Application of Net Proceeds of Insurance and Eminent
Domain. . . . . . . . . . . . . . . . . . . . . . . . . . Page 19
Section 5.7. Maintenance and Repair. . . . . . . . . . . . . . . . . . Page 19
Section 5.8. Qualification in State. . . . . . . . . . . . . . . . . . Page 20
Section 5.9. Letter of Credit. . . . . . . . . . . . . . . . . . . . . Page 20
Section 5.10. Issuer's Limited Liability. . . . . . . . . . . . . . . Page 20
Section 5.11. Compliance with Laws. . . . . . . . . . . . . . . . . . Page 20
ARTICLE VI EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . Page 21
Section 6.1. Events of Default. . . . . . . . . . . . . . . . . . . . Page 21
Section 6.2. Remedies on Default. . . . . . . . . . . . . . . . . . . Page 22
Section 6.3. Agreement to Pay Attorneys' Fees and Expenses. . . . . . Page 23
Section 6.4. No Remedy Exclusive. . . . . . . . . . . . . . . . . . . Page 23
Section 6.5. No Additional Waiver Implied by One Waiver. . . . . . . . Page 23
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ARTICLE VII PREPAYMENT OF LOAN PAYMENTS . . . . . . . . . . . . . . . . . . Page 24
Section 7.1. Obligation to Prepay the Loan Payments Upon Determination
of Taxability. . .. . . . . . . . . . . . . . . . . . . . Page 24
Section 7.2. General Option to Prepay the Loan Payments. . . . . . . . Page 24
Section 7.3. Extraordinary Optional Prepayment. . . . . . . . . . . . Page 24
Section 7.4. Prepayment from Construction Fund. . . . . . . . . . . . Page 25
Section 7.5. Obligation to Prepay Loan Payments on Failure to Renew
or Replace Letter of Credit. . . . . . . . . . . . . . . Page 25
Section 7.6. Notice of Prepayment. . . . . . . . . . . . . . . . . . . Page 25
ARTICLE VIII RECORDING AND FINANCING STATEMENTS . . . . . . . . . . . . . . Page 25
Section 8.1. Recording and Financing Statements. . . . . . . . . . . . Page 25
ARTICLE IX MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . Page 26
Section 9.1. Notices. . . . . . . . . . . . . . . . . . . . . . . . . Page 26
Section 9.2. Assignments. . . . . . . . . . . . . . . . . . . . . . . Page 27
Section 9.3. Severability. . . . . . . . . . . . . . . . . . . . . . . Page 27
Section 9.4. Execution of Counterparts. . . . . . . . . . . . . . . . Page 27
Section 9.5. Amounts Remaining in Any Fund or With Trustee. . . . . . Page 27
Section 9.6. Amendments, Changes, and Modifications. . . . . . . . . . Page 28
Section 9.7. Governing Law. . . . . . . . . . . . . . . . . . . . . . Page 28
Section 9.8. Authorized Obligor Representative. . . . . . . . . . . . Page 28
Section 9.9. Term of Loan Agreement. . . . . . . . . . . . . . . . . . Page 28
Section 9.10. Binding Effect. . . . . . . . . . . . . . . . . . . . . Page 29
Section 9.11. References to Bank and Letter of Credit. . . . . . . . . Page 29
Section 9.12. Issuer Not Liable. . . . . . . . . . . . . . . . . . . . Page 29
Section 9.13. Continuing Disclosure. . . . . . . . . . . . . . . . . . Page 29
Section 9.14. Redemption of Bonds . . . . . . . . . . . . . . . . . . Page 29
EXHIBIT A Description of Project . . . . . . . . . . . . . . . . . . . . . Page A-1
EXHIBIT B Project Site . . . . . . . . . . . . . . . . . . . . . . . . . . Page B-1
EXHIBIT C Requisition Certificate . . . . . . . . . . . . . . . . . . . . . Page C-1
EXHIBIT D Completion Certificate . . . . . . . . . . . . . . . . . . . . . Page D-1
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LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Loan Agreement") dated as of December 1, 1997,
by and between the MICHIGAN STRATEGIC FUND, a public body corporate and
politic of the State of Michigan established and created pursuant to Act 270
of the Public Acts of Michigan of 1984, as amended (the "Issuer"), and
ATMOSPHERE ANNEALING, INC. (the "Obligor");
RECITALS:
A. The Issuer is authorized and empowered by the Act to make loans to
pay the costs of a project, all as described in the Act, for purposes of
assisting business enterprises in obtaining additional sources of financing
and to aid the State of Michigan (the "State") in achieving the goal of
long-term economic growth and full employment and otherwise achieving the
objectives of the Act; and
B. The Issuer is authorized by the Act to issue revenue bonds to
finance all or part of the cost of a project, which bonds are to be payable
solely as provided in this Loan Agreement and in a Trust Indenture between
the Issuer and First of America Bank, N.A., as trustee (in such
capacity, the "Trustee"), dated as of December 1, 1997 (the "Indenture");
and
C. The Obligor desires to acquire and install equipment in
manufacturing facilities of the Obligor located in the City of Lansing,
Xxxxxx County, Michigan (as further described in Exhibit A, the
"Project"). The Obligor will own the Project and will use the buildings and
real property together with the new machinery and equipment for
manufacturing operations providing heat treating services, phosphate and
zinc coating and shearing/sawing operations of bar steel to the forging
and cast iron (primarily automotive) industries. The Issuer will issue and
sell its Bonds (as defined below) and loan the money to the Obligor
for the financing of the Project and other expenses incidental thereto
pursuant to and in compliance with the Act, provided, however, that the
Project Costs and the cost of all acts and requirements incident thereto
shall be paid solely from the proceeds of the sale of the Bonds or from moneys
provided by the Obligor; and
D. The Issuer has authorized the issuance of, and agrees with the
Obligor to issue, its Variable Rate Demand Limited Obligation Revenue
Bonds, Series 1997 (Atmosphere Annealing, Inc. Project) in the principal
amount of $2,510,000 (the "Bonds"); and
E. The proceeds from the sale of the Bonds will be used for the
purpose of defraying the costs of the Project; and
F. Under the terms of this Loan Agreement, the Obligor will make
Loan Payments, and will be responsible for paying all costs of issuance of
the Bonds and the Issuer's obligation with respect to the Bonds is subject to
the limitations that principal of and interest on the Bonds and any other
costs or pecuniary liability relating to the Bonds, the Loan or any
proceeding, document, or certification incidental to the foregoing, shall
never constitute nor give rise to a charge against the credit or taxing
powers of the State or any agency thereof or general funds or assets of
the Issuer (including funds pertaining to other loans or activities of
the Issuer), but shall be a limited obligation of the Issuer payable only as
provided in this Loan Agreement and the Indenture.
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NOW, THEREFORE, in consideration of the respective
representations and agreements herein contained, the parties hereto agree as
follows (provided, that in the performance of the agreements of the Issuer
herein contained, any obligation it may thereby incur shall not constitute an
indebtedness, debt or liability or loan of credit of the Issuer, the State or
any other political subdivision thereof, or a charge against their general
credit or taxing powers within the meaning of any constitutional or
statutory limitation, but shall be payable solely out of the proceeds
derived from this Loan Agreement or the Project, the sale of the Bonds, the
income from the temporary investment thereof and moneys derived from drawings
under the Letter of Credit, all as herein provided):
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. All words and phrases defined in Article XV
of the Indenture shall have the same meanings in this Loan Agreement. In
addition, the following words and phrases shall have the following meanings
unless the context in which they are used shall indicate another or different
meaning:
"Act" means the Michigan Strategic Fund Act, being Act 270 of the
Public Acts of Michigan of 1984, as amended.
"Authorized Obligor Representative" means the person at the time
designated to act on behalf of the Obligor by written certificate furnished
to the Issuer and the Trustee. That certificate may designate an alternate
or alternates. In the event that all persons so designated become
unavailable or unable to act and the Obligor fails to designate a
replacement within ten days after such unavailability or inability to
act, the Trustee may appoint an interim Authorized Obligor
Representative until such time as the Obligor designates that person.
"Bond Purchase Agreement" means, collectively, the Bond Purchase
Agreement by and between the Issuer and Underwriter and approved by the
Obligor and the Letter of Representation from the Obligor to the Issuer and the
Underwriter.
"Bond Resolution" means the resolution authorizing the issuance of the
Bonds adopted by the Issuer on December 10, 1997.
"Cost" or "Project Cost" means the cost of constructing,
acquiring and installing the Project. Cost or Project Cost
includes any engineering, architectural, legal, accounting, financial, and
other expenses incident to the construction, acquiring and installing of the
Project.
"Eminent Domain" means the taking of title to, or the temporary use
of, the Project or any part thereof pursuant to eminent domain or
condemnation proceedings, or any settlement or compromise of such proceedings
or any voluntary conveyance of the Project or any part thereof during the
pendency of, or as a result of or because of a threat of, such proceedings.
LOAN AGREEMENT
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"Event of Default" means any occurrence or event specified as such
in and defined as such by Section 6.1 hereof.
"Indemnified Persons" has the meaning set forth in Section 5.3(a)
hereof and "Indemnified Parties" has the meaning set forth in Section 5.3(d)
hereof.
"Investment Obligations" means any of the following: (i) obligations
of the United States, its agencies, or United States government sponsored
enterprises; (ii) obligations, the principal and interest of which are
guaranteed by the United States or its agencies; (iii) obligations of a
state, a territory, or a possession of the United States, or any political
subdivision of any of the foregoing or the District of Columbia as
described in Section 103(a) of the Code, as amended (these obligations
must be rated in the highest three major grades as determined by at least
one national rating service or be secured, as to payments of principal and
interest, by a letter of credit provided by a financial institution or
insurance provided by a bond insurance company which itself or its debt
is rated in the highest three major grades as determined by at least one
national rating service); (iv) banker's acceptances, commercial accounts,
certificates of deposit, or depository receipts issued by a bank, trust
company, savings and loan association, savings bank, a credit union or other
financial institution whose deposits are, as appropriate, insured by the
Federal Deposit Insurance Corporation or the National Credit Union
Administration or any successor entities; (v) commercial paper rated at the
time of purchase within the two highest classifications established by at
least one national rating service, and which matures within 270 days after
the date of issue; (vi) repurchase agreements against obligations itemized
in (i) and (ii) above, and executed by a bank or trust company or by
members of the association of primary dealers or other recognized dealers in
United States government securities, the market value of which must be
maintained at levels at least equal to the amounts advanced and which
obligations must be held in the custody of the Trustee or the Trustee's
agent; (vii) any fund or other pooling arrangement which exclusively
purchases and holds the investments itemized in paragraphs (i) through (vi)
above; (viii) an investment agreement or guaranteed investment contract
with a provider whose unsecured long-term debt is rated within the
two highest rating classifications established by at least one national
rating service or an investment agreement or guaranteed investment contract
which is guaranteed by an entity meeting the provider requirements described
in this paragraph (viii); and (ix) Eurodollar time deposits in a bank or
branch in the United States owned by a bank domiciled outside the United
States (this type of investment must be in a bank with total assets of at
least US $45,000,000,000 and with a long-term debt rating of at least "A3"
(or its equivalent) by at least one national rating service).
"Issuance Costs" mean a one-time issuance fee of the Issuer equal to
$6,275 and items of expense payable or reimbursable directly or indirectly
by the Issuer and related to the authorization, sale and issuance of the
Bonds, which items of expense shall include, but not be limited to Issuer
application fees, printing costs, costs of reproducing documents, filing and
recording fees, initial fees and charges of the Trustee, the Tender Agent
and any paying agents, bond discounts, legal fees and charges, professional
consultants' fees, costs of credit ratings, fees and charges for execution,
transportation and safekeeping of the Bonds, and other costs, charges and fees
in connection with the foregoing.
"Loan" means the loan made pursuant to Section 4.1 of this Loan Agreement.
LOAN AGREEMENT
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"Loan Payments" means the amounts required to be paid by the Obligor
pursuant to Section 4.2(a) hereof.
"Municipality" means the City of Lansing, Xxxxxx County, Michigan.
"Person" or "persons" means natural persons, partnerships, limited
liability companies, firms, associations, corporations and public bodies.
"Project" means the Project described on Exhibit A to this Loan
Agreement located on the real property described in Exhibit B to this Loan
Agreement.
"Underwriter" means First of America Securities, Inc.
SECTION 1.2. RULES OF INTERPRETATION. For all purposes of this Loan
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(a) The words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Loan Agreement as a whole
and not to any particular article, section or other subdivision.
(b) The terms defined in this Article I have the meanings
assigned to them in this Article I and include the plural as well as the
singular, and the gender used shall include the other gender.
(c) All accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles.
(d) Any terms not defined herein, but defined in the Act shall
have the same meaning herein, unless the context otherwise requires.
SECTION 1.3. HEADINGS. The headings of the various articles and sections
herein are for convenience only and shall not define or limit the provisions
hereof.
SECTION 1.4. EXHIBITS. The following Exhibits are attached to and by
reference made a part of this Loan Agreement:
Exhibit A: Description of Project.
Exhibit B: Project Site.
Exhibit C: Form of Requisition Certificate.
Exhibit D: Form of Completion Certificate.
LOAN AGREEMENT
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ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS OF THE ISSUER. The Issuer makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) The Issuer is a public body corporate and politic
established and acting pursuant to the Act with full authority under the
Act to issue the Bonds and execute and enter into this Loan Agreement and
the Indenture.
(b) All of the proceedings approving this Loan Agreement
and the Indenture were conducted by the Issuer at meetings which
complied with the Open Meetings Act, Act 267 of the Public Acts of
Michigan of 1976, as amended.
(c) No member of the Issuer is directly or indirectly a party to
or in any manner whatsoever interested in this Loan Agreement, the
Bond Purchase Agreement, the Bonds or the proceedings related thereunder.
(d) Neither the execution and delivery of this Loan
Agreement, the consummation of the transactions contemplated hereby, nor
the fulfillment of or compliance with the terms and conditions of this
Loan Agreement conflicts with or results in a breach of the terms,
conditions or provisions of any restriction, agreement or instrument
to which the Issuer is a party, or by which it or any of its property
is bound, or constitutes a default under any of the foregoing.
SECTION 2.2. REPRESENTATIONS OF THE OBLIGOR. The Obligor makes the
following representations as the basis for the undertakings on its part herein
contained:
(a) The Obligor is a corporation duly organized under the laws
of the State, and is qualified to conduct its business in the State, has
the requisite power and authority to conduct its business, to own its
properties and to execute and deliver, and to perform all of its
obligations under this Loan Agreement, the Bond Purchase Agreement,
the Remarketing Agreement and the Reimbursement Agreement and by
proper action this Loan Agreement, the Bond Purchase Agreement, the
Remarketing Agreement and the Reimbursement Agreement have been duly
authorized, executed and delivered by, and, assuming due
authorization by the other parties thereto, are valid and binding
obligations of, the Obligor.
(b) Neither the authorization, execution or delivery of this
Loan Agreement, the Bond Purchase Agreement, the Remarketing
Agreement and the Reimbursement Agreement, the consummation of the
transactions contemplated by this Loan Agreement, the Bond Purchase
Agreement, the Indenture, the Remarketing Agreement and the
Reimbursement Agreement nor the fulfillment of or compliance with the
terms and conditions of this Loan Agreement, the Bond Purchase
Agreement, the Remarketing Agreement and the Reimbursement Agreement
will require any consent or approval of the directors or shareholders
of the Obligor which has not been obtained, result in a
LOAN AGREEMENT
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breach of or constitute a default under any of the terms, conditions
or provisions of any agreement or instrument to which the Obligor is
now a party or by which it is bound, or constitute a default under any
of the foregoing, or result in the creation or imposition of any lien,
charge or encumbrance of any nature whatsoever upon any of the property
or assets of the Obligor prohibited under the terms of any instrument or
agreement, or violate any provision of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award presently
in effect having applicability to the Obligor, or of the articles
of incorporation or bylaws of the Obligor.
(c) The Obligor is not in default (i) under any order, writ,
judgment, injunction, decree, determination or award or any indenture,
agreement, lease or instrument or (ii) under any law, rule or
regulation wherein such default could materially adversely affect the
Obligor or the ability of the Obligor to perform its obligations under
this Loan Agreement.
(d) The Project conforms with all applicable zoning, planning,
building, environmental and other regulations of the governmental
authorities having jurisdiction of the Project and all licenses and
approvals the Obligor requires to operate its facilities have been
obtained from appropriate state and federal agencies and departments
or, if not obtained on the date of this Loan Agreement, are
expected to be obtained in the normal course of business at or prior to
the time such authorizations, consents or approvals are required to be
obtained.
(e) The Project constitutes a "project" within the meaning of
the Act which the Obligor intends to operate as a project throughout
the term of this Loan Agreement as provided herein.
(f) To the best of the knowledge of the Obligor, no
authorizations, consents or approvals of governmental bodies or
agencies are required in connection with the execution and delivery
by the Obligor of this Loan Agreement, the Bond Purchase
Agreement, the Remarketing Agreement or the Reimbursement Agreement
or in connection with the carrying out by the Obligor of its obligations
under this Loan Agreement, the Bond Purchase Agreement, the Remarketing
Agreement or the Reimbursement Agreement which have not been
obtained or, if not obtained on the date of this Loan Agreement, are
expected to be obtained in the normal course of business at or prior to
the time such authorizations, consents or approvals are required to be
obtained.
(g) There are no actions or proceedings pending or threatened
before any court or administrative agency which will, in the reasonable
judgment of the Obligor, materially adversely affect the ability of
the Obligor to meet its obligations under this Loan Agreement, the
Bond Purchase Agreement, the Remarketing Agreement or the Reimbursement
Agreement.
(h) No member, director or officer of the Issuer has any interest
of any kind in the Obligor which would result, as a result of the
issuance of the Bonds, in a
LOAN AGREEMENT
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substantial financial benefit to such persons other than as a member
of the general public of the State.
(i) No portion of the proceeds of the Bonds will be used to
provide any airplane, health club facilities, skybox or other private
luxury box, facility primarily used for gambling, or store the
principal business of which is the sale of alcoholic beverages for
consumption off premises.
(j) The Obligor has heretofore supplied the Issuer estimates
of the Project Costs, the completion date and periods of usefulness of
the Project. Such estimates were made in good faith and are fair,
reasonable and realistic.
(k) Its requisitions from the Construction Fund will be such that
all of the property which is to be provided by the net proceeds of the
Bonds will be owned by the Obligor.
(l) No more than 2% of the proceeds of the Bonds will be used to
finance Issuance Costs of the Bonds.
(m) The average maturity of the Bonds does not exceed 120% of the
average reasonably expected economic life of the facilities being
financed by the Bonds, as determined pursuant to Section 147(b) of the
Code.
(n) The payment of principal of or interest on the Bonds
is not guaranteed in whole or in part by the United States or
any agency or instrumentality thereof. The Bonds are not issued as
part of an issue a significant portion of the proceeds of which are to
be used in making loans the payment of principal or interest with
respect to which are to be guaranteed in whole or in part by the United
States or any agency or instrumentality thereof, or invested directly or
indirectly in federally insured deposits or accounts. The payment of
principal of or interest on the Bonds is not otherwise indirectly
guaranteed in whole or in part by the United States or any agency or
instrumentality thereof within the meaning of Section 149(b) of the Code.
(o) The Obligor will comply with the provisions of Section 148
of the Code.
(p) The Obligor will not make any payments, or agreements to pay,
to any party other than the United States an amount that is required to
be paid to the United States under the rebate requirements under Section
148(f) of the Code by entering into any transaction that reduces the
amount required to be paid to the United State because such
transaction results in a smaller profit or a larger loss than would
have resulted if the transaction had been at arm's length and had
the yield on the Bonds not been relevant to either party. The Obligor
will not acquire with the proceeds of the Bonds any certificate of
deposit, investment contract, or any other type of investment at other
than its "fair market value" as defined by the Code.
(q) No event has occurred and no condition is existing with
respect to the Obligor that would constitute an Event of Default under
this Loan Agreement or that,
LOAN AGREEMENT
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11
with the lapse of time or the giving of notice or both, would become
an Event of Default under this Loan Agreement, the Bond Purchase
Agreement or the Reimbursement Agreement.
(r) No changes will be made in the Project and no actions will be
taken by the Obligor that shall in any way impair the exclusion from
gross income of interest on the Bonds for federal tax purposes.
(s) The information furnished by the Obligor and used by the
Issuer in preparing its Non-Arbitrage Certificate pursuant to the
Code and the information statement pursuant to Section 149(e) of the
Code (Form 8038), is accurate and complete as of the date of the issuance
of the Bonds.
(t) After the expiration of any applicable temporary period under
Section 148(d)(3) of the Code, at no time during any bond year will
the aggregate amount of gross proceeds of the Bonds invested in nonpurpose
investments with a yield materially higher than the yield on the Bonds
exceed 150% of the debt service on the Bonds for such bond year and
the aggregate amount of gross proceeds of the Bonds invested in
nonpurpose investments with a yield materially higher than the yield
on the Bonds, if any, will be promptly and appropriately reduced as
the amount of principal of the Bonds Outstanding is reduced, provided,
however, that the foregoing shall not require the sale or disposition
of any nonpurpose investment if such sale or disposition would result
in a loss which exceeds the amount which would be paid to the United
States (but for such sale or disposition) at the time of such
sale or disposition if a payment were due at such time.
(u) The Obligor covenants to comply with the Tax Compliance
Certificate. To the extent that the covenants in the Tax Compliance
Certificate differ from those contained in this Loan Agreement, the
covenants contained in the Tax Compliance Certificate shall control.
(v) All of the proceeds of the Bonds will be expended on the
Project and Issuance Costs or used for the redemption of Bonds pursuant to
the Indenture.
(w) The Obligor shall complete the Project as required by the
Act as promptly as practicable, and shall cause to be paid all costs of
the Project in excess of the moneys available therefor in the Construction
Fund.
(x) The Obligor expects to complete the Project within three years
after the date of issuance of the Bonds.
(y) The issue of Bonds is the only issue of obligations issued
with respect to the Project pursuant to the provisions of Section
144(a)(9) of the Code.
(z) The Project is reasonably expected to create approximately
23 new jobs in the Municipality.
LOAN AGREEMENT
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(aa) All reimbursements to Obligor for Project Costs from proceeds
of the Bonds shall be made in compliance with Treasury Regulations
Section 1.150-2 (the "Reimbursement Regulations").
(bb) At no time will any funds constituting gross proceeds of the
Bonds be used in a manner as would constitute failure of compliance with
Section 148 of the Code.
(cc) In the event that there are any "rebatable arbitrage earnings"
on the investment of the "gross proceeds" of the Bonds, if any, for
purposes of Section 148 of the Code, the Obligor will take such action to
compute, at such intervals as may be required to pay timely, such
"rebatable arbitrage earnings" to the United States in satisfaction of
the requirements of Section 148 of the Code.
(dd) The Obligor will not sell or cause to be sold any other
obligations issued by or on behalf of any state, territory or
possession of the United States, or political subdivision of the
preceding, or the District of Columbia on behalf of or for the benefit
of the Obligor or any related person to the Obligor which are private
activity bonds (within the meaning of Section 103(b) of the Code) within
15 days of the date of sale of the Bonds pursuant to a common plan
of financing with the Bonds and which will be paid from the same source
of funds as the Bonds without (a) delivering a certificate to Bond
Counsel and the Attorney General of the State to the effect that
such obligations, when aggregated with the Bonds, will not cause the
Bonds or the aggregate issue to fail to meet the requirements of the
Code, thereby impairing the tax-exempt status of the interest on the
Bonds, (b) representing that the Obligor will take all actions within
its control to insure that the tax-exempt status of the interest on such
obligations, and the obligations as a whole, is maintained, and (c)
obtaining an opinion of nationally recognized bond counsel, in a form
acceptable to Bond Counsel and the Attorney General of the State, that
the interest on such obligations is excluded from gross income for
federal income tax purposes, unless the foregoing requirements are
waived by Bond Counsel and by the Attorney General of the State. The
Obligor represents that there are no such obligations as described above
other than the Bonds.
(ee) The Obligor covenants, for the benefit of itself, the Issuer
and the owners from time to time of the Bonds, that it will not cause
or permit any proceeds of the Bonds to be invested in a manner contrary
to the provisions of Section 148 of the Code and that it will assume
compliance with such provisions on behalf of the Issuer (including,
without limitation, performing required calculations, the keeping of
proper records and the timely payment to the Department of the
Treasury of the United States, in the name of the Issuer, of all amounts
required to be so paid by Section 148 of the Code) and the Obligor shall
follow the procedures set forth in its Tax Compliance Certificate.
(ff) None of the proceeds of the Bonds will be used to provide a
facility the primary purpose of which is retail food and beverage
services, automobile sales or service, or the provision of recreation or
entertainment. No portion of the proceeds of the Bonds will be used to
provide any private or commercial golf course, country club, massage
parlor, tennis club, skating facility (including roller skating,
skateboard and ice
LOAN AGREEMENT
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13
skating), racquet sports facility (including any handball or
racquetball court), hot tub facility, suntan facility or racetrack.
(gg) All or a major portion of the proceeds of the Bonds will
be used directly or indirectly in the trade or business of the Obligor.
(hh) No portion of the proceeds of the Bonds will be used
for the acquisition of any property (or any interest therein) the
first use of which was not pursuant to such acquisition. No portion of
the proceeds of the Bonds will be used for the acquisition of land.
(ii) The inducement resolution adopted by the Issuer on May 21,
1997, and the actions undertaken by the Issuer as contemplated hereby
have induced the Obligor to develop the Project.
(jj) The Project was not "placed in service" within the
meaning of Regulation Section 1.150-2(d)(2)(ii) more than 18 months
prior to the date of issuance of the Bonds.
(kk) Not less than 95% of the net proceeds of the Bonds
(including investment proceeds) will be expended for the construction,
or improvement of land and the acquisition of machinery and equipment or
property of a character subject to the allowance for depreciation
within the meaning of Section 144(a)(1) of the Code paid or
incurred in compliance with the Reimbursement Regulations and not less
than 100% of the proceeds of the Bond were or will be used to pay costs
as permitted by the Act.
(ll) As of the date hereof, other than the Bonds, there are no
other issues of bonds as defined in Section 144(a)(2) of the Code, the
proceeds of which have been or will be used with respect to facilities
located within the Municipality, the principal user of which is the
Obligor or a "related person" as defined in Section 144(a)(3) of the Code.
(mm) Neither the Obligor nor any test period beneficiary have or will
have an aggregate allocable share (determined in accordance with the
provisions of Section 144(a)(10) of the Code) of outstanding tax
exempt industrial development bonds, including the Bonds, issued to
finance facilities owned or used by the Obligor or such related person
exceeding $40,000,000.
(nn) The Obligor shall not sell a portion of the Project or lease or
allow the sublease of a portion of the Project to any principal user
who, together with related persons to such principal user, would
cause the $40,000,000 limitation of Section 144(a)(10) of the Code to be
exceeded.
(oo) No nonexempt person or a related person (within the
meaning of Section 147(a) of the Code), who was a substantial user
(within the meaning of Section 147(a) of the Code) of the Project or
any part thereof will receive directly or indirectly proceeds of the
Bonds in an amount equal to 5% or more of the face amount of the Bonds
in payment for its interest in the Project or any part thereof.
LOAN AGREEMENT
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(pp) An amount equal to at least 15% of the Bond-financed portion
of the cost of acquiring a used building (and the equipment
therefor), if any, included in the Project shall be expended as
"rehabilitation expenditures" with respect to any such acquired building
(and the equipment therefor) for purposes of and within the meaning of
Section 147(d) of the Code.
(qq) None of the proceeds of the Bonds will be used directly or
indirectly to provide residential real property for family units.
(rr) None of the net proceeds of the Bonds, or any prior issue of
bonds described in Section 144(a)(11) of the Code, has been or will
be used to provide depreciable farm property.
(ss) The Obligor will not permit capital expenditures in the
Municipality by the Obligor and any principal user or related person,
as such terms are defined in the Code, cumulatively, to exceed
$10,000,000 during the period of six years beginning three years
prior to the issuance of the Bonds and extending three years
thereafter.
(tt) The Project constitutes a manufacturing facility within the
meaning of Section 144(a)(12)(C) of the Code.
(uu) None of the proceeds of the Bonds shall be applied to any
costs of the construction, acquisition or installation of the Project
which were paid or incurred (within the meaning of Section 103 of the
Code) more than 60 days prior to the inducement resolution adopted by
the Issuer with respect to the Project on May 21, 1997. No person that
is a substantial user of the Project or a related person (as those
terms are defined in the Code) after the acquisition date was also
a substantial user of the Project before March 22, 1997 (60 days prior
to the date of the inducement resolution).
(vv) The Project will not cause the transfer of employment of more
than 20 full-time persons from one municipality of the State to the
Municipality.
ARTICLE III
CONSTRUCTION AND EQUIPPING OF THE PROJECT;
ISSUANCE OF THE BONDS
SECTION 3.1. CONSTRUCTION AND EQUIPPING OF THE PROJECT.
(a) The Project will be implemented within the Municipality.
(b) The Obligor will implement the Project and the Issuer shall
have no responsibility or liability whatsoever with respect to the
Project and the construction, acquisition and installation thereof. It is
agreed and understood that the Obligor has entered into and executed and
will enter into and execute all agreements and contracts necessary to
assure and accomplish the actual construction, acquisition and
installation
LOAN AGREEMENT
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15
of the Project (and that the Issuer shall not execute any such
agreements or contracts) and that the Obligor will carry out, pay,
supervise, and enforce all such agreements and contracts, and will
provide for such insurance on and in connection with the
construction, acquisition and installation of the Project as it deems
necessary or advisable or as is required by law, and this Loan
Agreement. The Obligor shall pay, from proceeds from the sale and
delivery of the Bonds made available to it pursuant to this Loan
Agreement, and from any available income or earnings derived therefrom,
and from other funds of the Obligor to the extent necessary, the
entire Cost of the Project. The Obligor shall pay all taxes before they
become delinquent, including specifically all sales taxes and ad valorem
taxes, in connection with the Project and the construction,
acquisition and installation thereof. The Issuer shall loan to the
Obligor proceeds from the sale of the Bonds to be used by the Obligor to
finance the Cost of the Project, in accordance with procedures
established in the Indenture, including provisions for reimbursing the
Obligor for paying all or any part of such Cost under the aforesaid
agreements and contracts for the acquisition of the Project prior to
the issuance of the Bonds, including the Requisition Certificate and
Completion Certificate, the forms of which are attached hereto as
Exhibits C and D. It is specifically provided, however, that none of the
proceeds from the sale of the Bonds will be used to reimburse the
Obligor for, or to pay (and the Obligor hereby covenants and agrees
not to request reimbursement of or payment for) any part of the Cost
of the Project if such use or payment would result in a violation of
any of the Obligor's covenants contained in this Loan Agreement or in the
Tax Compliance Certificate.
SECTION 3.2. AGREEMENT TO ISSUE BONDS; APPLICATION OF BOND PROCEEDS. In
order to provide funds to finance the Project, as provided in Section 4.1
hereof, and at the request of the Obligor, the Issuer agrees that, pursuant
to the Indenture, it will issue, sell and cause to be delivered to the
purchaser or purchasers thereof, the Bonds bearing interest, maturing and
subject to prior redemption as set forth in the Indenture. The Issuer will
make available the proceeds of the Bonds to the Obligor by depositing the
proceeds of the Bonds in the Construction Fund pursuant to Section 4.03 of the
Indenture. Disbursements of money on deposit in the Construction Fund shall be
made in accordance with the conditions set forth in the Indenture.
SECTION 3.3. APPROVALS AND PERMITS. The Obligor has obtained all
permits necessary with respect to the construction, acquisition and
installation of the Project or, if not obtained on the date of this Loan
Agreement, are expected to be obtained in the normal course of business at or
prior to the time those permits are required.
SECTION 3.4. TITLE. Except as provided in this Loan Agreement, the Issuer
shall have no other right, title, or interest in and to the Project. Except
for making the proceeds of the Bonds available to the Obligor from the
source and in the manner provided in this Loan Agreement, the Issuer shall
not be responsible or liable in any manner for any claims, losses, damages,
penalties, costs, taxes, or fines with respect to the acquisition,
installation, construction, operation, maintenance or ownership of the
Project.
SECTION 3.5. INVESTMENT OF MONEYS IN THE CONSTRUCTION FUND AND THE BOND
FUND. Any moneys held in the Construction Fund and the Bond Fund shall be
invested or reinvested by the Trustee, at the written direction of the
Authorized Obligor Representative as provided in
LOAN AGREEMENT
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Article VI of the Indenture, to the extent permitted by law, in
Investment Obligations. Any such Investment Obligations may be purchased at
the offering or market price thereof at the time of such purchase. The
Trustee may make any and all such investments through its own investment
department.
The investments so purchased shall be held by the Trustee and shall be
deemed at all times a part of the Construction Fund or the Bond Fund, as the
case may be, and the interest accruing thereon and any profit realized
therefrom shall be credited to such Fund and any net losses resulting from
such investment shall be charged to such Fund and paid by the Obligor.
SECTION 3.6. ADDITIONAL BONDS. The Issuer covenants that it shall not
issue additional bonds on behalf of the Obligor without the prior written
consent of the Bank, and an opinion of Bond Counsel and the Attorney
General of the State to the effect that the issuance of such additional
bonds will not adversely affect the exclusion from gross income for federal
income tax purposes of interest on the Bonds Outstanding. The Obligor
understands that the Issuer is under no obligation to issue additional bonds.
SECTION 3.7. ISSUER MAKES NO WARRANTIES REGARDING THE PROJECT. The
Issuer has not made an inspection of the Project, and makes no warranty
or representation, express or implied or otherwise, with respect to the
Project or the location, use, description, design, merchantability, fitness
for use for any particular purpose, condition or durability thereof, or as to
the quality of the material or workmanship therein, it being agreed that the
Obligor is to bear all risks incident to the Project. The Issuer is to
have no responsibility or liability for any defect or deficiency in the
Project, whether patent or latent. The Issuer makes no warranty or
representation that the moneys contained in the Construction Fund will be
sufficient to pay all of the Project Costs attributable to the Project.
ARTICLE IV
REPAYMENT PROVISIONS
SECTION 4.1. THE LOAN. The Issuer covenants and agrees, upon the
terms and conditions of this Loan Agreement, to loan the proceeds received
from the sale of the Bonds to the Obligor in order to finance all or a
part of the Cost of the Project. Pursuant to this covenant and agreement,
the Issuer will issue the Bonds upon the terms and conditions contained in
the Indenture and this Loan Agreement, and will loan the proceeds of the
Bonds to the Obligor to be applied as provided in Article III hereof. These
proceeds shall be disbursed by the Trustee to or on behalf of the Obligor as
provided in Section 4.03 of the Indenture.
SECTION 4.2. REPAYMENT OF THE LOAN AND PAYMENT OF OTHER AMOUNTS PAYABLE.
(a) The Obligor covenants and agrees to make or cause to be made
Loan Payments to the Trustee, as assignee of the Issuer, equal to the
principal of, premium, if any, and interest on the Bonds for deposit by
the Trustee in the Bond Fund, which shall at all times be sufficient to
enable the Trustee to pay when due (whether at maturity or upon
redemption prior to maturity or acceleration) the principal of,
premium, if any,
LOAN AGREEMENT
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and interest on the Bonds. All Loan Payments shall be made or shall be
on deposit in immediately available funds not later than 12:00 p.m.,
Detroit, Michigan, time on the Business Day on which such payment on
the Bonds is to be made. The Excess Amount (as defined below) held by
the Trustee in the Bond Fund on an Interest Payment Date shall be
credited against the payment due on such date; and provided further,
that, subject to the provisions of the immediately following
sentence, if at any time the amount of Available Moneys held by the
Trustee in the Bond Fund should be sufficient (and remain sufficient)
to pay on the dates required the principal of, interest and premium,
if any, on the Bonds then remaining unpaid, the Obligor shall not be
obligated to make or cause to be made any further payments under the
provisions of this Section 4.2(a). Notwithstanding the provisions
of the preceding sentence, if on any date the Excess Amount held by the
Trustee in the Bond Fund is insufficient to make the then required
payments of principal (whether at maturity or upon redemption prior to
maturity or acceleration), interest and premium, if any, on the Bonds
on such date, the Obligor shall forthwith pay or cause to be paid such
deficiency. The term "Excess Amount" as of any Interest Payment Date
shall mean the amount of Available Moneys in the Bond Fund on such date
in excess of the amount required for the payment of the principal
of the Bonds which previously have matured at maturity or on a date
fixed for redemption and premium, if any, on such Bonds in all cases
where Bonds have not been presented for payment and paid, or for
the payment of interest which has previously come due in all cases
where interest checks have not been presented for payment and paid.
If the Obligor shall fail to pay or cause to be paid any Loan
Payments under this Section 4.2(a), the Loan Payment so in default shall
continue as an obligation of the Obligor until the amount so in default
shall have been fully paid.
(b) To the extent they are not paid out of the Construction
Fund, the Obligor shall pay to the Issuer the Issuer's fee at
closing and all other Issuance Costs and the following within ten days
of demand therefor, including but not limited to, (i) other
out-of-pocket costs and expenses of the Issuer incidental to the
performance of its obligations under this Loan Agreement, the Indenture
and the Bond Purchase Agreement, to the extent not paid as Project
Costs, and (ii) the out-of-pocket expenses of the Issuer related
to the Project, or incurred by the Issuer in enforcing the provisions
of this Loan Agreement and the Indenture.
(c) The Obligor also agrees to pay to the Trustee and the Tender
Agent (l) the initial acceptance fee of the Trustee and the Tender
Agent and the costs and expenses, including reasonable attorneys'
fees, incurred by the Trustee and the Tender Agent in entering into
and executing the Indenture and the Tender Agreement, and (2) during
the term of this Loan Agreement (i) an amount equal to the annual fee
of the Trustee and the Tender Agent for the services of the Trustee
and the Tender Agent rendered and its expenses incurred, under the
Indenture and the Tender Agreement, including reasonable attorneys'
fees, as and when the same become due, and (ii) the fees, charges and
expenses of the Trustee, the Tender Agent, and the Bond Registrar, as
and when the same become due.
LOAN AGREEMENT
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(d) The Trustee is authorized and directed to draw moneys
under the Letter of Credit in accordance with the provisions of the
Indenture to pay the principal of, premium, if any (to the extent
covered by the Letter of Credit), and interest on the Bonds if and
when due, and any moneys derived from a drawing under the Letter of
Credit shall constitute a credit against the obligation of the
Obligor to make payments under subsection (a) of this Section 4.2.
(e) If the date when any of the payments required to be made by
this Section 4.2 is not a Business Day, then such payments may be made
on the next Business Day with the same force and effect as if made on
the normal due date, and no interest shall accrue for the period after
such date through such next Business Day.
(f) The Obligor agrees to pay the Remarketing Agent all fees and
expenses (including reasonable attorneys' fees) due under the Remarketing
Agreement.
SECTION 4.3. NO DEFENSE OR SETOFF--UNCONDITIONAL OBLIGATION. The
obligations of the Obligor to make the payments required in Section 4.2
hereof and to perform and observe the other agreements on its part
contained herein shall be absolute and unconditional, irrespective of any
defense or any rights of setoff, recoupment or counterclaim it might
otherwise have against the Issuer, the Trustee or the Bank. During the
term of this Loan Agreement, the Obligor shall pay the payments to be made
in Section 4.2 hereof and all other payments required hereunder free of any
deductions and without abatement, diminution or setoff other than those
herein expressly provided. Until such time as the principal of, premium,
if any, and interest on the Bonds shall have been fully paid, or
provision for the payment thereof shall have been made in accordance with
the Indenture, the Obligor: (i) will not suspend or discontinue any payments
provided for in Section 4.2 hereof; (ii) will perform and observe all of
its agreements contained in this Loan Agreement; and (iii) will not terminate
this Loan Agreement for any cause, including, without limiting the
generality of the foregoing, its failure to complete the construction,
acquisition and installation of the Project, the occurrence of any
acts or circumstances that may constitute failure of consideration,
destruction of or damage to the Project, commercial frustration of purpose, any
change in the tax laws of the United States of America or the State or any
political subdivision thereof, or any failure of the Issuer, the Trustee or
the Bank to perform and observe any agreement, whether express or implied, or
any duty, liability or obligation arising out of or connected with this Loan
Agreement, except to the extent permitted by this Loan Agreement.
SECTION 4.4. ASSIGNMENT AND PLEDGE OF ISSUER'S RIGHTS. As security
for the payment of the Bonds (including redemption payments), the Issuer
will assign and pledge to the Trustee all right, title, and interest of the
Issuer in and to this Loan Agreement, including the right to receive
payments hereunder (except the right to receive payments, if any, under
Sections 4.2(b), 5.3, 6.3, and 9.12 hereof and the rights to make
determinations and receive notices as herein provided), and hereby directs
the Obligor to make said payments directly to the Trustee. The Obligor
herewith assents to such assignment and pledge and will make or cause to be
made payments directly to the Trustee without defense or setoff by reason
of any dispute between the Obligor and the Issuer, the Trustee or the Bank.
LOAN AGREEMENT
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SECTION 4.5. OBLIGOR'S PERFORMANCE UNDER INDENTURE. The Obligor agrees,
for the benefit of all Registered Owners, to do and perform all acts and
things required in the Indenture to be done or performed by it.
SECTION 4.6. MANDATORY PURCHASE OF THE BONDS BY THE OBLIGOR.
(a) The Obligor agrees to purchase on the dates on which Bonds are
to be purchased pursuant to the Demand Purchase Option, all of the Bonds
or portions thereof properly delivered to the Tender Agent for purchase
in accordance with the provisions of Section 1.04 of the Indenture, at a
price equal to 100% of the principal amount thereof, plus accrued
interest; provided, however, that if and to the extent all or a
portion of those Bonds are remarketed by the Remarketing Agent, the
Obligor shall be deemed to have satisfied its obligation to purchase the
Bonds so tendered for purchase.
(b) The Obligor shall satisfy the obligation set forth in
paragraph (a) of this Section 4.6 by providing to the Trustee a Letter
of Credit providing for the payment of the purchase price of Bonds.
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SECTION 5.1. ISSUER'S, TRUSTEE'S, AND BANK'S RIGHT OF ACCESS TO THE
PROJECT. The Obligor agrees that during the term of this Loan Agreement
the Issuer, the Trustee, the Bank, and their duly authorized agents shall
have the right during regular business hours, with reasonable notice, to
enter upon and examine and inspect the Project, provided that neither the
Issuer, the Trustee, nor the Bank will materially disturb the business
operations of the Obligor and each shall hold in confidence all confidential
information, trade secrets, patents, and patentable information.
SECTION 5.2. OBLIGOR TO MAINTAIN EXISTENCE; CONDITIONS UNDER WHICH
EXCEPTIONS PERMITTED. Except as provided below, the Obligor agrees that during
the term of this Loan Agreement it will maintain its existence and will
not dispose of all or substantially all of its assets. The Obligor may
consolidate with or merge into another entity or permit one or more entities
to consolidate with or merge into it, provided that any surviving, resulting
or transferee entity shall be qualified to do business in the State and shall
assume in writing or by operation of law all of the obligations of the
Obligor, under this Loan Agreement, the Reimbursement Agreement and the
Remarketing Agreement.
SECTION 5.3. INDEMNIFICATION COVENANTS.
(a) The Issuer and its members, officers, agents, and employees
(the "Indemnified Persons") shall not be liable to the Obligor for any
reason. The Obligor shall indemnify and hold the Issuer and the
Indemnified Persons harmless from any loss, expense (including
reasonable counsel fees), or liability of any nature due to any and all
LOAN AGREEMENT
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suits, actions, legal or administrative proceedings, or claims arising
or resulting from, or in any way connected with:
(1) the acquisition, operation, use or maintenance of the
Project,
(2) any act, failure to act, or misrepresentation by any
person, firm, corporation, or governmental agency, including
the Issuer, in connection with the issuance, sale, delivery or
remarketing of the Bonds,
(3) any act, failure to act, or misrepresentation by the
Issuer in connection with this Loan Agreement, the Indenture,
the Bond Purchase Agreement, or any other document involving the
Issuer in this matter, or
(4) the selection and appointment of firms providing
services related to the Bond transaction.
If any suit, action, or proceeding is brought against the Issuer
or any Indemnified Person, that action or proceeding shall be defended
by counsel to the Issuer or the Obligor, as the Issuer shall determine.
If the defense is by counsel to the Issuer, which is the Attorney
General of the State or may, in some instances, be private, retained
counsel, the Obligor shall indemnify the Issuer and Indemnified
Persons for the reasonable cost of that defense including
reasonable counsel fees. If the Issuer determines that the Obligor
shall defend the Issuer or Indemnified Person, the Obligor shall
immediately assume the defense at its own cost. The Obligor shall not
be liable for any settlement of any proceeding made without its consent
(which consent shall not be unreasonably withheld).
(b) The Obligor shall not be obligated to indemnify the Issuer
or any Indemnified Person under subsection (a), if a court with
competent jurisdiction finds that the liability in question was caused
by the willful misconduct or sole gross negligence of the Issuer or the
involved Indemnified Person, unless the court determines that, despite
the adjudication of liability but in view of all circumstances of the
case, the Issuer or the Indemnified Person(s) is (are) fairly and
reasonably entitled to indemnity for the expenses which the court
considers proper.
(c) The Obligor shall also indemnify the Issuer for all
costs and expenses, including reasonable counsel fees, incurred in:
(1) enforcing any obligation of the Obligor under this
Loan Agreement or any related agreement,
(2) taking any action requested by the Obligor,
(3) taking any action required by this Loan
Agreement, the Indenture, the Bond Purchase Agreement or any related
agreement, or
LOAN AGREEMENT
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21
(4) taking any action considered necessary by the Issuer and
which is authorized by this Loan Agreement, the Indenture, the
Bond Purchase Agreement, or any related agreement.
(d) The Obligor also agrees to pay and to indemnify and hold
harmless the Trustee, any person who "controls" the Trustee within the
meaning of Section 15 of the Securities Act of 1933, as amended, and a
any member, officer, agent, director, official and employee of the Trustee
(collectively called the "Indemnified Parties") from and against, any
and all claims, damages, demands, expenses, liabilities and losses of
every kind, character and nature asserted by or on behalf of any person
in connection with (i) the issuance, offering, sale, or delivery of the
Bonds, the Indenture and this Loan Agreement and the obligations
imposed on the Trustee hereby and thereby; or the design,
installation, operation, use, occupancy, maintenance, or ownership of
the Project; (ii) any written statements or representations made or
given by the Obligor or any of its directors, members, partners or
employees to the Indemnified Parties, with respect to the Obligor, the
Project, or the Bonds, including, but not limited to, statements or
representations of facts, financial information, or its general
affairs; (iii) damage to property or any injury to or death of any person
that may be occasioned by any cause whatsoever pertaining to the Project;
and (iv) any loss or damage incurred by the Trustee as a result of
violation by the Obligor of the provisions of Section 2.2 hereof, or
arising out of, resulting from, or in any way connected with, the
condition, use, possession, conduct, management, planning, design,
acquisition, installation, renovation or sale of the Project or any
part thereof to the extent not caused or occasioned by the gross
negligence or willful misconduct of such Indemnified Party. The
Obligor also covenants and agrees, at its expense, to pay, and to
indemnify and save the Indemnified Parties harmless of, from and against,
all costs, reasonable attorney fees, expenses and liabilities incurred in
any action or proceeding brought by reason of any such claim or demand.
In the event that any action or proceeding is brought against the
Indemnified Parties by reason of any such claim or demand, the
Indemnified Parties shall immediately notify the Obligor, which shall
resist and defend any action or proceeding on behalf of the
Indemnified Parties, including the employment of counsel, the payment of
all expenses and the right to negotiate and consent to settlement. Any
one or more of the Indemnified Parties shall have the right to employ
separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Parties unless the employment of such
counsel has been specifically authorized by the Obligor. If such
separate counsel is employed, the Obligor may join in any such suit for
the protection of its own interests. The Obligor shall not be liable for
any settlement of any such action effected without its consent (which
consent shall not be unreasonably withheld), but if settled with the
consent of the Obligor or if there be a final, unappealable judgment for
the plaintiff in any such action, the Obligor agrees to indemnify and
hold harmless the Indemnified Parties.
(e) The indemnification provisions herein contained shall
not be exclusive or in limitation of, but shall be in addition to,
the rights to indemnification of the Indemnified Persons or the
Indemnified Parties under any other agreement or law by which the Obligor
is bound or to which it is subject.
LOAN AGREEMENT
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(f) The obligations of the Obligor under this section shall
survive any assignment or termination of this Loan Agreement.
SECTION 5.4. INSURANCE. The Obligor represents and covenants that it will
keep, or cause to be kept, in force adequate insurance of a nature that
entities would maintain for like facilities and in accordance with the
requirements of the Reimbursement Agreement or any agreement securing the
Reimbursement Agreement. It is understood and agreed that the Issuer and
the Trustee shall have no duties or responsibilities whatsoever with
respect to the insurance of the Project, or the performance of the Project
for its designated purposes. The net proceeds received from any casualty or
property insurance shall be applied as provided in Section 5.6 hereof.
Except as required by the Reimbursement Agreement or any agreement
securing the Reimbursement Agreement, the Obligor shall have the sole right
and responsibility to adjust any losses with its insurers and to conduct
negotiations in connection therewith.
SECTION 5.5. EMINENT DOMAIN. In the event that title to, or the
temporary use of, the Project or any part thereof shall be taken by Eminent
Domain, the Obligor shall be obligated to continue to pay the Loan Payments
specified in Section 4.2(a) hereof, and the Issuer shall cause any net
proceeds received by it or the Trustee as a result of such eminent domain to
be applied as provided in Section 5.6 hereof.
SECTION 5.6. APPLICATION OF NET PROCEEDS OF INSURANCE AND EMINENT
DOMAIN. Subject to the provisions of the Mortgage and the Security
Agreement (both as defined in the Reimbursement Agreement), the net
proceeds of property insurance carried with respect to the Project pursuant
to the provisions hereof, the net proceeds resulting from Eminent Domain
and any other amounts receivable by the Obligor, the Trustee or the Issuer
pursuant to the provisions of Section 5.4 and/or Section 5.5 hereof shall
with the consent of the Bank (so long as the Letter of Credit is in effect
and has not been wrongfully dishonored) be applied together with such other
amounts as necessary provided by the Obligor for the repair, replacement,
renewal or improvement (the "Restoration") of the Project (such funds to
remain with the Bank and to be drawn down by the Obligor for Restoration of
the Project) and any proceeds not so used shall be used to redeem the
Bonds in accordance with the provisions of the Bonds and Section 7.3
hereof. Prior to their expenditure, such amounts shall be invested so as
not to have an adverse effect on the exclusion of the interest on the Bonds
from the gross income of the registered owners for federal income tax purposes.
The Obligor agrees that if the net proceeds from insurance or
resulting from Eminent Domain relating to the Project is applied to the
Restoration of the Project, it will restore the Project, or cause the
same to be done, to a condition substantially equivalent to its
condition prior to the occurrence of the event to which the net proceeds
were attributable. The Obligor shall be entitled to the net proceeds of any
insurance or resulting from Eminent Domain relating to property of the
Obligor not constituting part of the Project as provided herein.
SECTION 5.7. MAINTENANCE AND REPAIR. The Obligor agrees that it will
maintain the Project in good repair, working order and operating condition,
making from time to time all needed and proper repairs thereto.
LOAN AGREEMENT
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SECTION 5.8. QUALIFICATION IN STATE. Subject to the provisions of
Section 5.2 hereof, the Obligor agrees that throughout the term of this Loan
Agreement, it will be qualified to do business in the State.
SECTION 5.9. LETTER OF CREDIT.
(a) On or prior to the issuance, sale and delivery of the
Bonds, the Obligor hereby covenants and agrees to obtain and deliver
to the Trustee the Letter of Credit to be issued by the Bank in favor
of the Trustee for the benefit of the owners from time to time of the
Bonds in the form of Exhibit A to the Reimbursement Agreement. The Letter
of Credit shall be dated the date of issuance and delivery of the
Bonds; shall expire on December 15, 2002, and shall comply with the
additional requirements stated in Section 5.01 of the Indenture.
(b) At any time while the Letter of Credit or a Substitute
Letter of Credit is in effect, subject to the provisions of the
Reimbursement Agreement, the Obligor from time to time may, at its
option, deliver to the Trustee a Substitute Letter of Credit in
substitution for the existing Letter of Credit. The Substitute Letter
of Credit shall be an irrevocable direct-pay letter of credit in
substantially the same form, tenor and amount as the existing Letter of
Credit and shall comply with and be delivered in compliance with
the provisions of Section 5.02 of the Indenture.
SECTION 5.10. ISSUER'S LIMITED LIABILITY. It is recognized that the
Issuer's only source of funds with which to carry out its commitments with
respect to this Loan Agreement will be from the proceeds from the sale of
the Bonds; and it is expressly agreed that the Issuer shall have no
liability, obligation, or responsibility with respect to this Loan
Agreement except to the extent of funds available from such Bond proceeds.
If, for any reason, the proceeds from the sale of the Bonds are not
sufficient to pay the Cost of the Project, the Obligor shall pay the balance
of the funds necessary to pay the Cost of the Project from its own funds,
and it shall not be entitled to reimbursement therefor.
SECTION 5.11. COMPLIANCE WITH LAWS. The Obligor shall, throughout the
term of this Loan Agreement and at no expense to the Issuer or Trustee,
promptly comply with all laws, ordinances, orders, rules, regulations
and requirements of duly constituted public authorities which are
applicable to the Project or to the repair and alteration thereof, or to the
use or manner of use of the Project, provided, however, that such laws,
ordinances, orders, rules, regulations and requirements shall not
unlawfully discriminate against the Obligor. Notwithstanding the
foregoing, the Obligor shall have the right to contest the legality of any such
law, ordinance, order, rule, regulation or requirement as applied to the
Project provided that, in the opinion of legal counsel acceptable to the Bank,
such contest shall not in any way materially and adversely affect or impair
the obligations of the Obligor under this Loan Agreement or the Indenture.
LOAN AGREEMENT
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ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. EVENTS OF DEFAULT. The occurrence and continuation of any
one of the following shall constitute an Event of Default hereunder:
(a) failure by the Obligor to pay or cause to be paid any
amounts required to be paid as Loan Payments under this Loan Agreement on
the dates and in the manner specified herein; or
(b) failure by the Obligor to observe and perform any covenant,
condition or agreement on its part to be observed or performed in this
Loan Agreement, other than as referred to in subsection (a) above, for
a period of 30 days after written notice, specifying such failure
and requesting that it be remedied, is given to the Obligor by the
Issuer, the Trustee or the Bank, unless (i) the Trustee and the Bank
shall agree in writing to an extension of such time prior to its
expiration or (ii) if the failure is such that it can be corrected but not
within such 30-day period, corrective action is instituted by the Obligor
within such period and diligently pursued until such failure is
corrected; or
(c) the dissolution or liquidation of the Obligor or the filing
by the Obligor of a voluntary petition in bankruptcy, or failure
by the Obligor promptly to lift any execution, garnishment or
attachment of such consequence as will impair its ability to carry on
its obligations hereunder, or an order for relief under Title 11 of the
United States Bankruptcy Code, as amended from time to time, is entered
against the Obligor, or a petition or answer proposing the entry of an
order for relief against the Obligor under Title 11 of the United
States Bankruptcy Code, as amended from time to time, or its
reorganization, arrangement or debt readjustment under any present or
future federal bankruptcy act or any similar federal or state law shall
be filed in any court and such petition or answer shall not be
discharged within 90 days after the filing thereof, or the Obligor shall
fail generally to pay its debts as they become due, or a custodian
(including without limitation a receiver, trustee, assignee for the
benefit of creditors or liquidator of the Obligor) shall be appointed
for or take possession of all or a substantial part of its property and
shall not be discharged within 90 days after such appointment or taking
possession, or the Obligor shall consent to or acquiesce in such
appointment or taking possession, or assignment by the Obligor for the
benefit of its creditors, or the entry by the Obligor into an agreement
of composition with its creditors, or the adoption of a resolution by
the directors of the Obligor or the taking of any other action to
file a petition or answer proposing the entry of an order for relief
against the Obligor under Title 11 of the United States Bankruptcy
Code, as amended from time to time, or its reorganization, arrangement
or debt readjustment under any present or future federal bankruptcy
act or any similar federal or state laws; provided, that the term
"dissolution or liquidation of the Obligor," as used in this
subsection (c), shall not be construed to include the cessation of the
corporate existence of the Obligor resulting either from a merger or
consolidation of the Obligor into or with another entity or a
dissolution or liquidation of the Obligor following a transfer of all
or substantially all of its assets as
LOAN AGREEMENT
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25
an entirety, under the conditions permitting such actions contained
in Section 5.2 hereof; or
(d) any material warranty, representation or other statement made
by or on behalf of the Obligor contained herein, or in any document
or certificate furnished by the Obligor in compliance with or in reference
hereto, is false or misleading in any material respect when made; or
(e) The occurrence of an Event of Default under the Indenture.
SECTION 6.2. REMEDIES ON DEFAULT. Whenever any Event of Default shall
have occurred and be continuing hereunder, the Trustee may take any one or
more of the following remedial steps:
(a) The Issuer or the Trustee may exercise any right, power or
remedy permitted to it by law, and shall have in particular, without
limiting the generality of the foregoing, the right to declare the
unpaid Loan Payments to be immediately due and payable, if
concurrently with or prior to such declaration the unpaid principal
of and all unpaid accrued interest on the Bonds have been declared to
be due and payable under the Indenture, and upon such declaration the
unpaid Loan Payments shall thereupon become forthwith due and payable in
an amount sufficient to pay the principal of and interest on the Bonds
under Section 8.02 of the Indenture, without presentment, demand or
protest, all of which are hereby expressly waived. The Obligor shall
forthwith pay to the Trustee the entire principal of and interest accrued
on the Bonds.
Any declaration of acceleration on the Bonds may be waived,
rescinded and annulled pursuant to and in accordance with Section 8.11 of
the Indenture.
(b) The Issuer or the Trustee may take whatever action at law
or in equity as may appear necessary or desirable to collect the
payments and other amounts then due and thereafter to become due or to
enforce the performance and observance of any obligation, agreement or
covenant of the Obligor under this Loan Agreement, provided, however, all
such action shall be with the consent of the Bank (which consent shall
be required only so long as the Letter of Credit is in effect and has not
been wrongfully dishonored).
(c) The Issuer or the Trustee shall, subject to the limitations set
forth in Section 5.1 of this Loan Agreement, have reasonable access to
the Project and the right to inspect, examine and make copies of the
books and records and any and all accounts, data and income tax and other
tax returns of the Obligor relating to the Project or an Event of Default
during regular business hours of the Obligor if reasonably necessary
in the opinion of the Trustee or the Issuer.
In case the Issuer or the Trustee shall have proceeded to enforce its
rights under this Loan Agreement and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined
adversely to the Issuer or the Trustee as the case may be, then and in every
such case the Obligor, the Issuer and the Trustee shall be restored
respectively to
LOAN AGREEMENT
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26
their several positions and rights hereunder, and all rights, remedies and
powers of the Obligor, the Issuer and the Trustee shall continue as though no
such proceeding had been taken, except to the extent of any adverse
determination.
In case there shall be pending proceedings for the bankruptcy or
for the reorganization of the Obligor under the federal bankruptcy laws
or any other applicable law, or in case a receiver or trustee shall have
been appointed for the property of the Obligor, or in the case of any other
similar judicial proceedings relative to the Obligor, or to the creditors or
property of the Obligor, the Trustee shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount owing and unpaid pursuant to this Loan Agreement
and, in case of any judicial proceedings, to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee allowed in such judicial proceedings relative to
the Obligor, its creditors or its property, and to collect and receive any
moneys or other property payable or deliverable on any such claims, and to
distribute the same after the deduction of its charges and expenses; and
any receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized to make such payments to the Trustee, and to pay to the Trustee
any amount due it for compensation and expenses, including reasonable
attorney fees incurred by it up to the date of such distribution.
SECTION 6.3. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In the
event the Issuer or the Trustee should employ attorneys or incur other
expenses for the collection of the payments due under this Loan Agreement
or the enforcement of the performance or observance of any obligation or
agreement on the part of the Obligor herein contained, the Obligor agrees
that it will on demand therefor pay to the Issuer or the Trustee the
reasonable fees of such attorneys and such other expenses so incurred by the
Issuer or the Trustee.
SECTION 6.4. NO REMEDY EXCLUSIVE. No remedy herein conferred upon or
reserved to the Issuer or the Trustee is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Loan Agreement and the Indenture now or hereafter existing at law or in
equity or by statute. No delay or omission to exercise any right or power
accruing upon any Event of Default hereunder shall impair any such right
or power or shall be construed to be a waiver thereof, but any such right and
power may be exercised from time to time and as often as may be deemed
expedient. In order to entitle the Issuer to exercise any remedy reserved to
it in this Article VI, it shall not be necessary to give any notice, other
than such notice as may be herein expressly required. Such rights and
remedies as are given the Issuer hereunder shall also extend to the
Trustee, and the Trustee and the Owners from time to time of the Bonds shall
be deemed third party beneficiaries of all covenants and agreements herein
contained.
SECTION 6.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the
event any agreement contained in this Loan Agreement should be breached by
the Obligor and thereafter waived by the Issuer or the Trustee, such waiver
shall be limited to the particular breach so waived and shall not be
deemed to waive any other breach hereunder.
LOAN AGREEMENT
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ARTICLE VII
PREPAYMENT OF LOAN PAYMENTS
SECTION 7.1. OBLIGATION TO PREPAY THE LOAN PAYMENTS UPON
DETERMINATION OF TAXABILITY. Upon the occurrence of a Determination of
Taxability the Obligor shall have, and hereby accepts, the obligation to
prepay the Loan Payments as a whole, and not in part, in furtherance of its
obligation under Section 4.2(a) hereof, on any date not less than 30 days
or more than 60 days after the mailing by first class mail of written notice
of redemption because of the occurrence of a Determination of Taxability to
the registered owners of the Bonds pursuant to the terms of the Bonds. The
amount to be prepaid pursuant to this Section 7.1 shall be 100% of the
then outstanding principal amount of the Bonds (103% during the Fixed Rate
Period) plus accrued interest to the date fixed for redemption. The Trustee
shall, in accordance with Section 4.04 of the Indenture, draw upon the
Letter of Credit to prepay the principal of and accrued interest on the
Bonds in accordance with the terms of the Letter of Credit.
SECTION 7.2. GENERAL OPTION TO PREPAY THE LOAN PAYMENTS. With the
written consent of the Bank (so long as the Letter of Credit is in effect
and has not been wrongfully dishonored), the Obligor shall have, and is hereby
granted, the option to prepay the Loan Payments payable under Section 4.2(a)
hereof, in whole or in part, by paying to the Trustee an amount sufficient in
Available Funds to redeem all or a portion of the Bonds then Outstanding,
in the manner, at the redemption prices (including premium, if any), from
the sources and on the dates specified in Sections 1.03(a) and (b) of the
Indenture and in the Bonds for optional redemption. The Trustee shall, in
accordance with Section 4.04 of the Indenture, draw upon the Letter of
Credit to prepay the principal of and any applicable redemption premium (if
covered by the Letter of Credit) and accrued interest on the Bonds payable
under this Section 7.2 in accordance with the terms of the Letter of Credit.
The Obligor may not revoke its election to prepay all or part of the Loan
Payments without the prior written consent of the Bank.
SECTION 7.3. EXTRAORDINARY OPTIONAL PREPAYMENT. During the Fixed Rate
Period and with the written consent of the Bank (so long as the Letter of
Credit is in effect and has not been wrongfully dishonored), the Obligor
shall have, and is hereby granted, the option to prepay the unpaid balance
of the Loan Payments payable under Section 4.2(a) hereof, together with
interest thereon, as may be required to redeem, pursuant to the terms of the
Bonds, all Bond principal then outstanding if, in the reasonable opinion of
the Obligor:
(i) All or substantially all of the Project shall have been
damaged, destroyed, condemned or taken by eminent domain and the Obligor
elects not to reconstruct it; or
(ii) the construction or operation of the Project is enjoined or
prevented or is otherwise prohibited by, or conflicts with, any order,
decree, rule or regulation of any court, or federal, state or
local regulatory body, administrative agency or other governmental
body.
For purpose of this Section 7.3, the "reasonable opinion of the Obligor"
shall be expressed to the Trustee by delivery of a certificate of the
Authorized Obligor Representative stating that it is the opinion of the
Obligor that the circumstances, situations or conditions
LOAN AGREEMENT
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28
described in clause (i) or (ii) have occurred to the extent required for the
Obligor to exercise the option provided.
SECTION 7.4. PREPAYMENT FROM CONSTRUCTION FUND. The Obligor acknowledges
that the Bonds are subject to mandatory redemption prior to maturity
in part in authorized denominations from funds remaining on deposit in the
Construction Fund (except certain funds identified in the Completion
Certificate) upon the earlier of the completion of the Project in accordance
with the Loan Agreement or December 1, 2000, at a redemption price of 100%
of the principal amount to be redeemed plus accrued interest to the date
fixed for redemption. In the furtherance of its obligations under Section
4.2(a) hereof, the Obligor shall cause the prepayment of Loan Payments from
funds remaining on deposit in the Construction Fund to facilitate the mandatory
redemption of Bonds.
SECTION 7.5. OBLIGATION TO PREPAY LOAN PAYMENTS ON FAILURE TO RENEW OR
REPLACE LETTER OF CREDIT. The Obligor acknowledges that the Bonds are subject
to mandatory redemption prior to maturity if the Obligor does not renew the
Letter of Credit or obtain a Substitute Letter of Credit at least 60
days prior to the date of expiration or termination of the Letter of
Credit, all as provided in Section 1.03(e) of the Indenture, at a
redemption price of 100% of the principal amount of the Bonds to be
redeemed, if the Bonds bear interest at the Weekly Rate, or at a redemption
price of up to 103% of the principal amount of the Bonds to be redeemed as
provided in Section 1.03(e) of the Indenture, if the Bonds bear interest at
the Fixed Rate.
SECTION 7.6. NOTICE OF PREPAYMENT. In furtherance of an obligation
imposed upon the Obligor or to exercise an option granted to the Obligor by
Sections 7.2, 7.3 and 7.4 hereof, the Obligor shall give not less than 40
days written notice to the Issuer, the Trustee and the Bank which notice
shall specify therein the date upon which prepayment will be made, which
date shall be not less than 40 days from the date the notice is mailed,
and shall specify that all of the outstanding Loan Payments or a
specified portion thereof is to be so prepaid. The Issuer has directed the
Trustee to take forthwith all steps (other than the payment of the
money required to redeem the Bonds) necessary under the applicable
provisions of the Indenture to effect the redemption of the Bonds (or a
portion thereof) as provided in this Article VII.
ARTICLE VIII
RECORDING AND FINANCING STATEMENTS
SECTION 8.1. RECORDING AND FINANCING STATEMENTS. The Obligor will,
at its expense, take all necessary action, if any, to maintain and preserve
the lien and security interest of the Indenture and this Loan Agreement
so long as any Bond remains Outstanding.
The Obligor will, forthwith after the execution and delivery of the
Indenture and thereafter from time to time, cause the Indenture to be filed,
registered and recorded in that manner and in those places, if any, as may
be required by law in order to publish notice of and fully to perfect and
protect the lien and security interest of the Indenture and this Loan
Agreement. The Obligor will pay or cause to be paid all filing,
registration and recording fees incident to such filing, registration and
recording, and all expenses incident to the preparation,
LOAN AGREEMENT
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29
execution and acknowledgment of such instruments of further assurance,
and all federal or state fees and other similar fees, duties, imposts,
assessments and charges arising out of or in connection with the execution
and delivery of the Indenture, said financing statements and such
instruments of further assurance. Copies of those filings, as filed, shall
be provided to the Trustee.
ARTICLE IX
MISCELLANEOUS
SECTION 9.1. NOTICES. All notices, certificates or other communications
shall be sufficiently given and shall be deemed given on the first to occur
of (i) two Business Days after such notices are deposited in the United States
mail and sent by first class mail, postage prepaid, (ii) when the same are
delivered, in each case, to the parties at the addresses set forth below or at
such other address as a party may designate by notice to the other parties,
or (iii) when the same are sent by facsimile or telecopy (the receipt of
which is orally or electronically confirmed) promptly confirmed in writing by
first class mail, postage prepaid:
If to the Issuer:
Michigan Strategic Fund
P. 0. Xxx 00000
Xxxxxxx, Xxxxxxxx 00000
Attention: President
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
If to the Obligor:
Atmosphere Annealing, Inc., a Michigan corporation
000 X. Xx. Xxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, President
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
with a copy to:
MAXCO, Inc.
0000 Xxxxxxxxxx Xxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx, Vice President
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
LOAN AGREEMENT
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30
If to the Trustee:
First of America Bank, N.A.
0000 Xxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Department
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
If to the Bank:
First of America Bank, N.A.
P. O. Xxx 00000
Xxxxxxx, Xxxxxxxx 00000
Attention: Commercial Loan Department
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
with a copy to:
First of America Bank, N.A.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
[Mail Code K-BO1-2C]
Attention: Corporate and Municipal Finance Division
Telephone No. (000) 000-0000
Facsimile No. (000) 000-0000
A duplicate copy of each notice, certificate or other communication given
hereunder by either the Issuer or the Obligor to the other shall also be
given to the Trustee and the Bank.
SECTION 9.2. ASSIGNMENTS. The Issuer shall assign and pledge to the
Trustee its right, title and interest in and to this Loan Agreement as
provided by Section 4.4 hereof, and the Obligor may with the consent of the
Bank (so long as the Letter of Credit is in effect and has not been
wrongfully dishonored) assign to any surviving, resulting or transferee
corporation or entity its rights and obligations under this Loan Agreement as
provided by Section 5.2 hereof.
SECTION 9.3. SEVERABILITY. If any provision of this Loan Agreement
shall be held or deemed to be or shall, in fact, be illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative or unenforceable to
any extent whatsoever.
SECTION 9.4. EXECUTION OF COUNTERPARTS. This Loan Agreement
may be simultaneously executed in several counterparts, each of which shall
be an original and all of which shall constitute but one and the same
instrument.
SECTION 9.5. AMOUNTS REMAINING IN ANY FUND OR WITH TRUSTEE. It is agreed
by the parties hereto that after payment in full of (i) the principal of,
premium, if any, and interest on
LOAN AGREEMENT
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31
the Bonds, (ii) the fees, charges, indemnities and expenses of the
Issuer, the Trustee and the Tender Agent in accordance herewith and with
the Indenture (the payment of which fees, charges, indemnities and expenses
shall be evidenced by a written certification of the Obligor that it has
fully paid all such fees, charges, indemnities and expenses), and (iii) all
other amounts required to be paid under this Loan Agreement and the
Indenture, any amounts remaining in any fund or account maintained under this
Loan Agreement or the Indenture, (other than amounts in the Rebate Fund
under Section 4.06 of the Indenture) and not applied to the principal of,
premium, if any, and interest on the Bonds shall belong to and be paid to
the Obligor by the Trustee, provided, that, prior to making any payments,
Trustee shall request a written statement from the Bank as to whether or
not the Bank has been reimbursed by the Obligor for any and all drawings
under the Letter of Credit pursuant to the Reimbursement Agreement or
whether any other obligations are then due and owing to the Bank under
the Reimbursement Agreement, and such amounts remaining in the Bond Fund
shall, upon written notice from the Bank that the Obligor has not reimbursed
the Bank under the Reimbursement Agreement for any such drawing under the
Letter of Credit or for any other obligation then due and owing to the Bank
under the Reimbursement Agreement (which notice shall state the
unreimbursed amount), belong to and be paid to the Bank by the Trustee to
the extent that the Obligor has not so reimbursed the Bank.
SECTION 9.6. AMENDMENTS, CHANGES, AND MODIFICATIONS. Except as
otherwise provided in this Loan Agreement or the Indenture, subsequent to the
initial issuance of the Bonds and prior to their payment in full, this Loan
Agreement may not be effectively amended, changed, modified, altered, or
terminated without the written consent of the Trustee and the Bank (so long
as the Letter of Credit is in effect and has not been wrongfully dishonored).
SECTION 9.7. GOVERNING LAW. This Loan Agreement shall be governed
exclusively by and construed in accordance with the applicable law of the
State.
SECTION 9.8. AUTHORIZED OBLIGOR REPRESENTATIVE. Whenever under the
provisions of this Loan Agreement the approval of the Obligor is required
or the Obligor is required to take some action at the request of the Issuer,
the Trustee or the Bank, such approval or such request shall be given for
the Obligor by the Authorized Obligor Representative, and the Issuer,
the Trustee, and the Bank shall be authorized to act on any such
approval or request and neither party hereto shall have any complaint
against the other or against the Trustee or the Bank as a result of any such
action taken.
SECTION 9.9. TERM OF LOAN AGREEMENT. This Loan Agreement shall be in full
force and effect from the date hereof, and shall continue in effect until
the payment in full of all principal of, premium, if any, and interest
on the Bonds, or provision for the payment thereof shall have been made
pursuant to Article XIII of the Indenture, all fees, charges, indemnities
and expenses of the Issuer and the Trustee have been fully paid or provision
made for such payment (the payment of which fees, charges, indemnities and
expenses shall be evidenced by a written certification of the Obligor that
it has fully paid all such fees, charges, indemnities and expenses) and all
other amounts due hereunder have been duly paid or provision made for such
payment and all obligations of the Obligor to the Bank under the Reimbursement
Agreement have been paid. All representations, certifications and covenants by
the Obligor as to the indemnification of various parties as described in
Section 5.3 hereof, the payment of fees and expenses of the
LOAN AGREEMENT
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32
Issuer and the Trustee as described in Section 6.3 hereof, and all matters
affecting the tax-exempt status of the Bonds shall survive the termination of
this Loan Agreement.
SECTION 9.10. BINDING EFFECT. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Obligor and their
respective successors and assigns; subject, however, to the limitations
contained in Sections 4.4 and 5.2 hereof.
SECTION 9.11. REFERENCES TO BANK AND LETTER OF CREDIT. At any time
while the Letter of Credit has been wrongfully dishonored, all references to
the Bank and the Letter of Credit shall be ineffective.
SECTION 9.12. ISSUER NOT LIABLE. Notwithstanding any other provision of
this Loan Agreement (a) the Issuer shall not be liable to the Obligor, the
Trustee, the owners of Bonds or any other person for any failure of the
Issuer to take action under this Loan Agreement unless the Issuer (i) is
requested in writing by an appropriate person to take such action, (ii)
is assured to its satisfaction of payment of, indemnification against or
reimbursement for any expenses in such action and (iii) is afforded a
reasonable period under the circumstances to take such action, and (b)
neither the Issuer nor any member of the Issuer or any other official
or employee of the Issuer or the State shall be liable to the Obligor or any
other person for any action taken by its officers, servants, agents,
members, counsel or employees, or for any failure to take action under this
Loan Agreement except that the Issuer agrees to take, or refrain from, any
action required by an injunction and to comply with any final judgment for
specific performance. In acting under this Loan Agreement, or in refraining
from acting under this Loan Agreement, the Issuer may conclusively rely on
the advice of its counsel. Nothing in this Loan Agreement is a covenant,
stipulation, obligation or agreement of any present or future employee,
member, counsel or agent of the Issuer or the State in his individual
capacity, and neither the members of the Issuer nor any official
executing this Loan Agreement or the Bonds shall be subject to any
personal liability or accountability by reason of such execution by the Issuer
or any officer or employer of the Issuer.
SECTION 9.13. CONTINUING DISCLOSURE. The Obligor hereby covenants and
agrees that it will comply with and carry out all of the provisions of
any Continuing Disclosure Agreement that may be required in connection
with the underwriting or remarketing of the Bonds, including remarketing in
connection with a conversion of the Bonds to the Fixed Rate as provided in
the Indenture. Notwithstanding any other provision of this Loan Agreement,
failure of the Obligor to comply with the Continuing Disclosure
Agreement shall not be considered an Event of Default; however, the
Trustee may (and, at the request of the Underwriter or the Owners of at least
25% in aggregate principal amount of the Outstanding Bonds and upon
indemnification of the Trustee for such actions as provided in the
Indenture, shall), or any Bondholder or Beneficial Owner may, take such
actions as may be necessary and appropriate, including seeking specific
performance by court order, to cause the Obligor to comply with its obligations
under this Section 9.13.
SECTION 9.14. REDEMPTION OF BONDS. Pursuant to the Reimbursement
Agreement between the Obligor and the Bank the Obligor has agreed to
cause Bonds to be optionally redeemed pursuant to a schedule set forth in
the Reimbursement Agreement resulting in a weighted average life of 5.20
years for the Bonds. The Obligor covenants not to agree with the Bank to
amend
LOAN AGREEMENT
Page 29
33
this schedule so as to defer the payment of principal beyond the dates set
forth therein without first obtaining a written opinion of Bond Counsel and
the Attorney General that such amendment will not adversely affect the
exclusion of interest on the Bonds from gross interest for purposes of
federal income taxation. Nothing in this Section 9.14 shall be construed to
restrict the right of the Obligor, with the consent of the Bank, to cause
the redemption of the Bonds more rapidly than set forth in such schedule.
IN WITNESS WHEREOF, the Issuer and the Obligor have caused this Loan
Agreement to be executed in their respective names by their duly authorized
agents, all as of the date first above written.
MICHIGAN STRATEGIC FUND
By
_____________________________________________
Xxxxxx X. Xxxxxxxxx
Its: Authorized Officer
ATMOSPHERE ANNEALING, INC.
By: _____________________________________________
Its: Treasurer
LOAN AGREEMENT
Page 30
34
EXHIBIT A
DESCRIPTION OF PROJECT
This Exhibit A to Loan Agreement dated as of December 1, 1997,
between the Michigan Strategic Fund and Atmosphere Annealing, Inc., a Michigan
corporation.
The Project consists of the acquisition and installation of
equipment in manufacturing facilities of the Obligor located in the City
of Lansing, Xxxxxx County, Michigan. The Obligor will own the Project and
use the buildings and real property together with the new machinery and
equipment for manufacturing operations providing heat treating services,
phosphate and zinc coating and shearing/sawing operations of bar steel to
the forging and cast iron (primarily automotive) industries. The Issuer
will issue and sell its Bonds and loan the money to the Obligor for the
financing of the Project and other expenses incidental thereto pursuant to
and in compliance with the Act, provided, however, that the Project Costs
and the cost of all acts and requirements incident thereto shall be paid
solely from the proceeds of the sale of the Bonds or from moneys provided
by the Obligor.
LOAN AGREEMENT
Page A-1
35
EXHIBIT B
PROJECT SITE
This Exhibit B to Loan Agreement dated as of December 1, 1997,
between the Michigan Strategic Fund and Atmosphere Annealing, Inc., a Michigan
corporation.
The Project is located on real property situated in the City of Lansing,
County of Xxxxxx, State of Michigan, described as follows:
000 X. XXXXX XXXX PROPERTY
Land in the City of Lansing, Xxxxxx County, Michigan, described as:
Parcel No. 1:
Xxx 0, Xxxxxxxx Subdivision, according to the recorded plat thereof, as
recorded in Liber 6 of Plats, page 44, Xxxxxx County Records.
Parcel No. 2:
Xxx 0, Xxxxxxxx Subdivision, according to the recorded plat thereof, as
recorded in Liber 6 of Plats, page 44, Xxxxxx County Records.
Parcel No. 3:
Commencing 89.5 feet South of the Southwest corner of Lot 23, Rockford
Subdivision, thence South 38 feet, thence East 121.5 feet, thence North
38 feet, thence West 121.5 feet to the place of beginning, being a part
of the Northwest 1/4 of Section 28, Town 4 North, Range 2 West.
Parcel No. 4:
Xxx 00, Xxxxxxxx Subdivision, according to the recorded plat thereof, as
recorded in Liber 6 of Plats, page 44, Xxxxxx County Records.
Parcel No. 5:
Commencing 203.5 feet South of the Southwest corner of Lot 23, Rockford
Subdivision, thence South 38 feet, thence East 121.5 feet, thence North
38 feet, thence West 121.5 feet to the place of beginning, being a part
of the Northwest 1/4 of Section 28, Town 4 North, Range 2 West.
Parcel No. 6:
Commencing 127.5 feet South of the Southwest corner of Lot 23, Rockford
Subdivision, thence South 38 feet, thence East 121.5 feet, thence North
38 feet, thence West 121.5 feet to the place of beginning, being a part
of the Northwest 1/4 of Section 28, Town 4 North, Range 2 West.
Parcel No. 7:
Commencing 241.5 feet South of the Southwest corner of Lot 23, Rockford
Subdivision, thence South 39.5 feet, thence East 121.5 feet, thence North
39.5
LOAN AGREEMENT
Page B-1
36
feet, thence West 121.5 feet to the place of beginning, being a
part of the Northwest 1/4 of Section 28, Town 4 North, Range 2 West.
Parcel No. 8:
Lots 17 through 20, inclusive, Rockford Subdivision, according to the
recorded plat thereof, as recorded in Liber 6 of Plats, page 44, Xxxxxx
County Records, ALSO, Commencing at the Northeast corner of Lot
20, Rockford Subdivision, thence Southwesterly 212.5 feet to the South
line of Lot 19, thence West 667.2 feet, thence South 120 feet, thence West
121.5 feet to the East line of Osband Avenue, thence South 50 feet,
thence East 121.5 feet, thence South 231 feet, thence West 121.5 feet,
thence South 191 feet to the Northerly corner of Xxx 000, Xxxxxx
Xxxx Addition, thence East 50 feet, thence Southeasterly 181.1 feet to the
Southeasterly corner of Xxx 000, Xxxxxx Xxxx Addition, thence
Southeasterly 100 feet on Easterly line of Xxx x00, Xxxxxx Xxxx
Addition, extended to the Northerly line of New York Central Railroad,
thence Northeasterly along railroad right of way 1600 feet to the South
line of W. Mt. Hope Road, thence West 500 feet to the place of
beginning, being a part of the Northwest 1/4 of Section 00, Xxxx 0 Xxxxx,
Xxxxx 0 Xxxx.
0000 XXXXXXX PROPERTY
The property is legally described by:
Parts of Lots 12, 15, 16 and 21 through 26 including commencing on the
South line of Xxxxxxx Street 24.95 feet South of Northeast corner of Lot
21, thence South 132 feet West 34.3 feet, South 56.5 feet, West 40 feet,
South 141.5 feet, West 92 feet, South 132 feet, East 123.75 feet, South
165 feet, West 187.75 feet, North 114.96 feet, West 35 feet, North 50
feet, West 70.3 feet, Northerly 461.91 feet to South line of said street,
East 335.56 feet to beginning, Assessors Plat No. 11, City of Lansing,
Xxxxxx County, Michigan.
LOAN AGREEMENT
Page B-2
37
EXHIBIT C
REQUISITION CERTIFICATE
TO: First of America Bank, N.A., as Trustee
FROM: Atmosphere Annealing, Inc., a Michigan corporation (the "Obligor")
SUBJECT: Loan Agreement dated as of December 1, 1997, between the
Michigan Strategic Fund (the "Issuer") and the Obligor (the "Loan
Agreement")
This represents Requisition Certificate No. ____ in the total amount of
$______ ____ for payment of those Costs of the Project detailed in the schedule
attached.
The undersigned certifies that:
1. All of the expenditures for which moneys are requested hereby
represent proper Project Costs, have not been included in a
previous Requisition Certificate and have been properly recorded on
the Obligor's books.
2. The moneys requested hereby are not greater than those necessary
to meet obligations due and payable or to reimburse the Obligor for
funds actually advanced for Costs of the Project. The moneys
requested do not include retention or other moneys not yet due
or earned under construction contracts.
3. At least 95% of the sum of the payments herein requested
from the Construction Fund and all other payments from the
proceeds of the Bonds heretofore made from the Construction Fund
have been used to finance the acquisition and installation of
equipment which property other than land is of a character subject
to the allowance for depreciation under Section 167 of the Code,
and no more than 5% of the sum of the payments herein requested
from the Construction Fund and all other payments from the
proceeds of the Bonds heretofore made from the Construction Fund
has been or will be used, directly or indirectly, as working
capital or Issuance Costs (subject to the 2% limitation set forth
in Section 147(g) of the Code).
LOAN AGREEMENT
Page C-1
38
4. Pursuant to Section 4.03(c) of the Indenture, the undersigned
certifies on behalf of the Obligor that:
a) the expenditures for which payment is to be made or for
which reimbursement is requested are listed in summary form in
the attached schedule;
b) that the amounts requested are to be or have been paid by the
Obligor for property or to contractors, subcontractors,
materialmen, engineers, architects, or other persons who
will perform or have performed necessary or appropriate
services or will supply or have supplied necessary or
appropriate materials for the acquisition, construction,
renovation, equipping, and installation of the Project, as the
case may be, and that, to the best of my knowledge, the fair
value of such property, services, or materials is not exceeded
by the amounts requested to be paid;
c) that no part of the several amounts requested to be paid
to the Obligor, as stated in such schedule, has been or is the
basis for the payment of any money in any previous or then
pending request;
d) that the payment of the amounts requested will not result in a
breach of any of the covenants of the Obligor contained
in the Loan Agreement; and
e) that the expenditure of such amounts to be paid, when added
to all previous disbursements from the Construction Fund, will
result in at least 95% of the total of such
disbursements, other than disbursements for issuance
expenses, being used to provide property of a character
subject to the allowance for depreciation under the Internal
Revenue Code of 1986, as amended (the "Code"), (which
expenditures are amounts paid or incurred which are, for
federal income tax purposes, chargeable to the Project's
capital account or would be so chargeable either with a
proper election by the Obligor [for example, under section
266 of the Code] or but for a proper election by the Obligor
to deduct such amounts).
5. The Obligor is not in default under the Loan Agreement
or the Reimbursement Agreement and nothing has occurred to the
knowledge of the Obligor that would prevent the performance of its
obligations under the Loan Agreement or the Reimbursement Agreement.
LOAN AGREEMENT
Page C-2
39
6. Delivered herewith are all of the documents in form and content
required by Section 4.03 of the Indenture.
7. The terms used in this Requisition Certificate shall have the same
meaning as in the Loan Agreement.
Executed this ______ day of _____________________, 19__.
ATMOSPHERE ANNEALING, INC.
BY:_______________________________________
Authorized Obligor Representative
Approved:
FIRST OF AMERICA BANK, N.A.,
as Letter of Credit Bank
Dated:________________
By: _______________________________
Its: ______________________________
LOAN AGREEMENT
Page C-3
40
SCHEDULE TO REQUISITION CERTIFICATE NO.
--------
Payee and Location Amount
------------------ ------
Reimbursement to Obligor Amount
------------------------ ------
LOAN AGREEMENT
Page C-4
41
EXHIBIT D
COMPLETION CERTIFICATE
TO: Michigan Strategic Fund (the "Issuer")
First of America Bank, N.A., as Letter of Credit Bank
First of America Bank, N.A., as Trustee
FROM: Atmosphere Annealing, Inc., a Michigan corporation (the "Obligor")
SUBJECT: Loan Agreement dated as of December 1, 1997, between the Issuer
and the Obligor (the "Loan Agreement")
The undersigned hereby certify:
1. The Project has been substantially completed in such manner as to
conform with all applicable zoning, planning and building
regulations of the governmental authorities having jurisdiction of
the Project, as of _______ __________, 19__ (the "Completion Date").
2. The Costs of the Project have been paid in full except for those
not yet due and payable, which are described below and for
which moneys for payment thereof are being held in the
Construction Fund and will, in all events, be paid prior to December
1, 2000:
Cost of the Project not yet due and payable:
Description Amount
$_______
Total $_______
3. The moneys in the Construction Fund in excess of the totals set forth
in 2 above represent surplus bond proceeds and the Trustee is
hereby authorized and directed to transfer all such surplus bond
proceeds to the Bond Fund for use as provided in Section 1.03(f) of
the Indenture.
4. No Event of Default has occurred under the Loan Agreement
or the Reimbursement Agreement nor has any event occurred which
LOAN AGREEMENT
Page D-1
42
with the giving of notice or lapse of time or both shall become
such an Event of Default. Nothing has occurred to the knowledge of
the Obligor that would prevent the performance of its
obligations under the Loan Agreement or the Reimbursement
Agreement.
5. The terms used in this Completion Certificate shall have the same
meaning as in the Loan Agreement.
This certificate is given without prejudice to any rights against third
parties which exist at the date hereof or which may subsequently come into
being.
Executed this ________ day of ______________, 19___.
ATMOSPHERE ANNEALING, INC.
By:____________________________________
Its: Authorized Obligor Representative
LOAN AGREEMENT
Page D-2
