EXHIBIT 10.8
EXECUTION COPY
TAXABLE RATE LOAN AGREEMENT
Between
GE CAPITAL PUBLIC FINANCE, INC.,
as Lender,
and
ABSORPTION CORP.,
as Borrower
Dated as of March 1, 2003
_______________________________
THIS INSTRUMENT CONSTITUTES A SECURITY AGREEMENT
UNDER THE WASHINGTON UNIFORM COMMERCIAL CODE.
_________________________________
TAXABLE RATE LOAN AGREEMENT
Lender: GE Capital Public Finance, Inc.
Suite 470
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Borrower: Absorption Corp.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
THIS TAXABLE RATE LOAN AGREEMENT is dated as of March 1, 2003 (this
"Agreement") between GE Capital Public Finance, Inc., a Delaware corporation, as
lender (with its successors and assigns, "Lender"), and Absorption Corp., a
Nevada corporation, as borrower ("Borrower").
WHEREAS, Borrower desires to obtain a loan from Lender to finance all
or a portion of the acquisition, improvement and construction of the Property
(defined below).
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, and in consideration of the premises contained in this
Agreement, Lender and Borrower agree as follows:
ARTICLE I
DEFINITIONS AND EXHIBITS
Section 1.01. DEFINITIONS. The following terms used herein will have
the meanings indicated below unless the context clearly requires otherwise:
"Acquisition Costs" means the contract price paid or to be paid to the
Vendors or reimbursed to Borrower for any portion of the Property upon
Borrower's acceptance thereof, including administrative, engineering, legal,
financial and other costs incurred by Lender, Borrower, Escrow Agent and Vendors
in connection with the acquisition, construction and improvement and financing
by Lender of such Property, which Acquisition Costs are set forth in Exhibit C
hereto.
"Agreement" means this Agreement, including all exhibits hereto, as any
of the same may be supplemented or amended from time to time in accordance with
the terms hereof.
"Bank" means any bank acceptable to Lender in its sole discretion, the
issuer of the Letter of Credit.
"Borrower" means Absorption Corp., a Nevada corporation.
"Business Day" means a day other than a Saturday or Sunday on which
banks are generally open for business in New York, New York and Minneapolis,
Minnesota.
"Corporate Guarantor" means International Absorbents Inc., a company
duly organized and validly existing under the laws of the Province of British
Columbia, Canada.
"Corporate Guaranty Agreement" means the Corporate Guaranty and
Negative Pledge Agreement dated as of March 1, 2003 executed by Corporate
Guarantor in favor of Lender.
"Default" means an event that, with giving of notice or passage of time
or both, would constitute an Event of Default as provided in Article XI hereof.
"Environmental Laws" means any federal, state and local laws relating
to emissions, discharges, releases of Hazardous Waste or Materials into ambient
air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Waste or Materials.
"Escrow Agent" means Xxxxxxxx & Xxxxxx Trust Company N.A., as escrow
agent under the Escrow Agreement, and its successors and assigns permitted under
the Escrow Agreement.
"Escrow Agreement" means the Escrow Agreement dated as of March 1, 2003
among Lender, Issuer, Borrower and Escrow Agent.
"Escrow Fund" means the fund established and held by Escrow Agent
pursuant to the Escrow Agreement.
"Final Appraisal" means the appraisal required by Section 2.08 hereof
conducted by a MAI-certified appraiser chosen and engaged by Lender.
"Final Appraisal Amount" means the appraised amount described in the
Final Appraisal.
"GE Capital Entity" means GE Capital Public Finance, Inc., General
Electric Capital Corporation or any of its or their affiliates.
"Hazardous Substances Agreement" means the Environmental Indemnity
Agreement Regarding Hazardous Substances dated as of March 1, 2003 executed by
Borrower and Corporate Guarantor for the benefit of Lender.
"Hazardous Waste or Materials" means any substance or material defined
in or designated as hazardous or toxic wastes, hazardous or toxic material, a
hazardous, toxic or radioactive substance, or other similar term, by any
Environmental Law now or hereafter in effect.
"Improvements" has the meaning set forth in the definition of
"Property."
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"Interest" means the portion of any payment from Borrower to Lender
designated as and comprising interest as shown in Exhibit A hereto.
"Issuer" means the Washington Economic Development Finance Authority,
acting as issuer under the Tax-Exempt Loan Agreement.
"Lender" means (i) GE Capital Public Finance, Inc., acting as lender
under this Agreement, (ii) any surviving, resulting or transferee corporation of
GE Capital Public Finance, Inc. and (iii) except where the context requires
otherwise, any assignee(s) of Lender.
"Letter of Credit" means an irrevocable standby letter of credit in the
form attached hereto as Exhibit J that may be issued by Bank in an amount which
shall equal the Undersecured Amount plus 120 days accrued interest on the
Undersecured Amount.
"Loan" means the loan from Lender to Borrower pursuant to this
Agreement.
"Loans" means collectively the Loan and the Tax-Exempt Loan.
"Loan Payments" means the loan payments payable by Borrower pursuant to
the provisions of this Agreement as specifically set forth in Exhibit A hereto.
As provided in Article II hereof, Loan Payments shall be payable by Borrower to
Lender in the amounts and at the times as set forth in Exhibit A hereto.
"Loan Proceeds" means the total amount of money to be paid pursuant to
Section 2.02 hereof by Lender to Escrow Agent for deposit and application in
accordance with the Escrow Agreement.
"LTV Amount" means the least of (i) $2,910,000.00, (ii) 90% of the cost
of the Premises and Improvements, and (iii) the product of (A) 75% and (B) the
Final Appraisal Amount.
"Mortgage" means the Commercial Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture Filing dated as of the date hereof
executed by Borrower in favor of Lender, relating to the Property.
"Permitted Exceptions" means the permitted exceptions listed on Exhibit
E hereto.
"Premises" has the meaning set forth in the definition of "Property."
"Prepayment Amount" means the amount which Borrower may or must from
time to time pay or cause to be paid to Lender in order to prepay the Loan, as
provided in Section 2.07 hereof, such amounts being set forth in Exhibit A
hereto, together with accrued interest and all other amounts due hereunder.
"Principal" means the portion of any Loan Payment designated as
principal in Exhibit A hereto.
"Property" means, collectively, all of Borrower's estate, right, title
and interest, now owned or hereafter acquired, including any reversion or
remainder interest, in the real property
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located in an unincorporated area of Whatcom County, Washington described on
Exhibit D hereto, including all heretofore or hereafter vacated alleys and
streets abutting the property, and all easements, rights, appurtenances,
tenements, hereditaments, rents, royalties, mineral, oil and gas rights and
profits, water, water rights and water stock appurtenant to the property
(collectively "Premises"); together with all of Borrower's estate, right, title
and interest, now owned or hereafter acquired, in:
(a) all buildings, structures, improvements, parking areas,
landscaping, equipment, software intangibles, fixtures and articles of
property now or hereafter erected on, attached to, or used or adapted
for use in the operation of the Premises, including (without
limitation) all heating, air conditioning, manufacturing and
incinerating apparatus and equipment; all boilers, engines, motors,
dynamos, generating equipment, piping and plumbing fixtures, water
heaters, ranges, cooking apparatus and mechanical kitchen equipment,
refrigerators, freezers, cooling, ventilating, sprinkling and vacuum
cleaning systems, fire extinguishing apparatus, gas and electric
fixtures, carpeting, floor coverings, underpadding, elevators,
escalators, partitions, mantels, built-in mirrors, window shades,
blinds, draperies, screens, storm sash, awnings, signs, furnishings of
public spaces, halls and lobbies, and shrubbery and plants, and
including also all interest of any owner of the Premises in any of such
items hereafter at any time acquired under conditional sale contract,
chattel mortgage or other title retaining or security instrument, all
of which property mentioned in this clause (a) shall be deemed part of
the realty covered by this Agreement and not severable wholly or in
part without material injury to the freehold of the Premises (all of
the foregoing together with replacements and additions thereto are
referred to herein as "Improvements");
(b) all compensation, awards, damages, rights of action and
proceeds, including interest thereon and/or the proceeds of any
policies of insurance therefor, arising out of or relating to a (i)
taking or damaging of the Premises or Improvements thereon by reason of
any public or private improvement, condemnation proceeding (including
change of grade), sale or transfer in lieu of condemnation, or fire,
earthquake or other casualty, or (ii) any injury to or decrease in the
value of the Premises or the Improvements for any reason whatsoever;
(c) return premiums or other payments upon any insurance any time
provided for the benefit of or naming Lender, and refunds or rebates of
taxes or assessments on the Premises;
(d) all the right, title and interest of Borrower in, to and
under all written and oral leases and rental agreements (including
extensions, renewals and subleases; all of the foregoing shall be
referred to collectively herein as the "Leases") now or hereafter
affecting the Premises including, without limitation, all rents,
issues, profits and other revenues and income therefrom and from the
renting, leasing or bailment of Improvements and equipment, all
guaranties of tenants' performance under the Leases, all
letter-of-credit rights and all other supporting obligations associated
with the Leases, and all rights and claims of any kind that Borrower
may have against any tenant under the Leases or in connection with the
termination or rejection of the Leases in a bankruptcy or insolvency
proceeding; and the leasehold estate, if applicable;
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(e) plans, specifications, contracts, documents and agreements
relating to the design or construction of the Improvements; Borrower's
rights under any payment, performance or other bond in connection with
the design or construction of the Improvements; all landscaping and
construction materials, supplies and equipment used or to be used or
consumed in connection with construction of the Improvements, whether
stored on the Premises or at some other location; and contracts,
agreements and purchase orders with contractors, subcontractors,
suppliers and materialmen incidental to the design or construction of
the Improvements;
(f) all contracts, documents, accounts, deposit accounts, rights,
claims or causes of action pertaining to or affecting the Premises or
the Improvements, including, without limitation, all options or
contracts to acquire other property for use in connection with
operation or development of the Premises or Improvements, promissory
notes, management contracts, service or supply contracts, deposits,
bank accounts, general intangibles (including without limitation
trademarks, trade names, symbols and payment intangibles), permits,
licenses, franchises and certificates, and all commitments or
agreements, now or hereafter in existence, intended by the obligor
thereof to provide Borrower with proceeds to satisfy the loan evidenced
hereby or improve the Premises or Improvements, and the right to
receive all proceeds due under such commitments or agreements,
including refundable deposits and fees;
(g) all books, records, surveys, reports and other documents
related to the Premises, the Improvements, the Leases or other items of
collateral described herein; and
(h) all additions, accessions, replacements, substitutions,
proceeds and products of the real and personal property, tangible and
intangible, described herein.
"Purchase Agreements" means Borrower's purchase agreements with Vendors
of the Property.
"State" means the State of Washington.
"Substitute Bank" means the issuer of a Substitute Letter of Credit,
which issuer must be acceptable to Lender in its sole discretion.
"Substitute Letter of Credit" means an irrevocable standby letter of
credit in form, substance and amount acceptable to Lender in its sole discretion
and issued by a Substitute Bank.
"Tax-Exempt Loan Agreement" means the Tax-Exempt Loan Agreement dated
as of March 1, 2003 among Lender, Issuer and Borrower.
"Tax-Exempt Loan" means the loan from Lender to Borrower pursuant to
the Tax-Exempt Loan Agreement.
"Tax Exempt Prepayment Amount" means the amount which Borrower may or
must from time to time pay or cause to be paid to Lender in order to prepay the
Tax-Exempt Loan, as provided in Section 2.07 of the Tax-Exempt Loan Agreement,
such amounts being set forth in Exhibit A thereto, together with accrued
interest and all other amounts due thereunder.
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"UCC" means the Uniform Commercial Code as adopted and in effect in the
State.
"Undersecured Amount" means the excess of (i) the Loan Proceeds over
(ii) the LTV Amount.
"Vendor" means the contractor, manufacturer, vendor or seller of any
portion of the Property, as well as the agents or dealers of a manufacturer,
from whom Borrower has purchased or is purchasing any portion of the Property.
Section 1.02. EXHIBITS. The following exhibits are attached hereto and
made a part hereof:
Exhibit A: Schedule of Loan Payments setting forth the Loan Payments
and Prepayment Amounts.
Exhibit B-1: Form of opinion of counsel to Borrower.
Exhibit B-2: Form of opinion of counsel to Corporate Guarantor.
Exhibit C: Schedule of Acquisition Costs.
Exhibit D: Legal Description of Real Property.
Exhibit E: List of Permitted Exceptions.
Exhibit F: List of Trade Names.
Exhibit G: Phase I Requirements.
Exhibit H: Permanent Loan Insurance Requirements.
Exhibit I: Form of Certificate of Chief Financial Officer.
Exhibit J: Form of Letter of Credit.
Section 1.03. RULES OF CONSTRUCTION. (a) Except as otherwise indicated
herein, the singular form of any word used herein, including the terms defined
in Section 1.01 hereof, shall include the plural, and vice versa. The use herein
of a word of any gender shall include correlative words of all genders.
(b) Unless otherwise specified, references to Articles, Sections and
other subdivisions of this Agreement are to the designated Articles, Sections
and other subdivision of this Agreement as originally executed. The words
"hereof," "herein," "hereunder" and words of similar import refer to this
Agreement as a whole.
(c) The headings or titles of the several articles and sections shall
be solely for convenience of reference and shall not affect the meaning,
construction or effect of the provisions hereof.
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ARTICLE II
FINANCING OF PROPERTY AND TERMS OF LOAN
Section 2.01. ACQUISITION OF PROPERTY. Borrower shall acquire, improve
or construct the Property pursuant to one or more Purchase Agreements from one
or more Vendors. Borrower shall remain liable to the Vendor or Vendors in
respect of its duties and obligations in accordance with each Purchase Agreement
and shall bear the risk of loss with respect to any loss or claim relating to
any of the Property covered by any Purchase Agreement, and Lender shall not
assume any such liability or risk of loss. Borrower covenants and agrees to pay
or cause to be paid such amounts as may be necessary to complete the
improvement, construction and acquisition of the Property and to ensure that the
Property are operational to the extent that the Loan Proceeds are insufficient
to cause such improvement, construction and acquisition. Borrower shall
substantially complete the improvement, construction and acquisition of the
Property no later than September 30, 2004.
Section 2.02. LOAN. Lender hereby agrees, subject to the terms and
conditions of this Agreement, to make a loan to Borrower in the amount of
$555,000.00; and Borrower hereby agrees to borrow such amount from Lender. Upon
fulfillment of the conditions set forth in Article III hereof, Lender shall
deposit the Loan Proceeds in the Escrow Fund to be held, invested and disbursed
as provided in the Escrow Agreement. Borrower's obligation to repay the Loan,
shall commence, and interest shall begin to accrue, on the date that Loan
Proceeds are disbursed to Borrower or deposited in the Escrow Fund.
Section 2.03. INTEREST. The principal amount of the Loan hereunder
outstanding from time to time shall bear interest (computed on the basis of
actual days elapsed in a 360-day year) at the rate of five and seventy-eight
hundredths percent (5.78%) from the date that Loan Proceeds are deposited in the
Escrow Fund until October 1, 2003 and at the rate of five and fifty-three
hundredths percent (5.53%) thereafter and throughout the remaining term of the
Loan. Interest accruing on the principal balance of the Loan outstanding from
time to time shall be payable as provided in Exhibit A and upon earlier demand
in accordance with the terms hereof or prepayment in accordance with the terms
of Section 2.07 hereof.
Section 2.04. PAYMENTS. Borrower shall pay the principal of, premium,
if any in accordance with Section 2.07 hereof, and interest as provided in
Section 2.03 hereof. Borrower shall pay to Lender Loan Payments in the amounts
and on the dates set forth in Exhibit A hereto and all other amounts due
hereunder. All amounts required to be paid by Borrower hereunder shall be paid
in lawful money of the United States of America in immediately available funds.
Section 2.05 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made hereunder shall be stated to be due on a day which is not a Business Day,
such payment may be made on the next succeeding Business Day, and such extension
of time shall in such case be included in the computation of interest or the
fees hereunder, as the case may be.
Section 2.06. LOAN PAYMENTS TO BE UNCONDITIONAL. The obligations of
Borrower to make the Loan Payments required under this Article II and to make
other payments hereunder and to perform and observe the covenants and agreements
contained herein shall be absolute and
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unconditional in all events, without abatement, diminution, deduction, setoff or
defense for any reason, including (without limitation) any failure of the
Property to be delivered or installed, any defects, malfunctions, breakdowns or
infirmities in the Property or any accident, condemnation, destruction or
unforeseen circumstances. Notwithstanding any dispute between Borrower and any
of Lender, any Vendor or any other person, Borrower shall make all Loan Payments
when due and shall not withhold any Loan Payments pending final resolution of
such dispute, nor shall Borrower assert any right of setoff or counterclaim
against its obligation to make such payments required under this Agreement.
Section 2.07. PREPAYMENTS. (a) Borrower may, in its discretion, prepay
the Loans in whole at any time by paying both the applicable Prepayment Amount
and the applicable Tax-Exempt Prepayment Amount.
(b) Borrower shall prepay the Loans in whole or in part at any time
pursuant to Sections 9.01 and 9.02 of this Agreement and of the Tax-Exempt Loan
Agreement by paying both the applicable Prepayment Amount and the applicable
Tax-Exempt Prepayment Amount.
(c) Borrower shall prepay the Loans in full immediately upon demand of
Lender after the occurrence of an Event of Default by paying both the applicable
Prepayment Amount and the applicable Tax-Exempt Prepayment Amount. A portion of
such prepayment may be made with funds remaining in the Escrow Fund pursuant to
the Escrow Agreement.
(d) Reserved.
(e) The amounts due hereunder shall be repaid in part with funds
remaining in the Escrow Fund upon termination of the Escrow Agreement as
provided in Section 2.03 of the Escrow Agreement and, if less than 80% of the
amount deposited in the Escrow Fund has been disbursed pursuant to the Escrow
Agreement, together with a prepayment premium calculated at the percentage used
to determine the Prepayment Amount at the date of such prepayment.
(f) Borrower shall prepay the Loans in part pursuant to Section 2.08
hereof.
Upon any prepayment in part of the Loans, the prepayment shall be
applied to (i) the Loan Payments and any other amounts due hereunder and (ii)
the loan payments due under the Tax-Exempt Loan Agreement and any other amounts
due thereunder, in each case, as determined by Lender.
Section 2.08. FINAL APPRAISAL. Upon completion of the acquisition,
construction and installation of the Property and before any disbursement of the
Escrow Holdback Amount (as defined in Section 2.04 of the Escrow Agreement) from
the Escrow Fund, but in no event later than September 30, 2004, Borrower shall
provide to Lender the Final Appraisal. Borrower shall reimburse Lender for the
cost of the Final Appraisal. Upon receipt of the Final Appraisal, if an
Undersecured Amount exists, Borrower shall either (i) deliver or cause to be
delivered to Lender the Letter of Credit or (ii) prepay in part the Loan in the
amount of the Undersecured Amount.
Section 2.09. SECURITY. The obligations of Borrower to make the Loan
Payments required by this Article II and to make other payments hereunder and to
perform or observe the covenants and agreements contained herein shall be
secured, among other things, by a security
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interest in the Property, and pursuant to the Mortgage covering the Property as
described therein, and by certain other documents executed and delivered in
connection herewith. Nothing herein shall limit the liability of Borrower under
the Hazardous Substances Agreement.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. CONDITIONS OF CLOSING. Lender's agreement to make the
Loan to Borrower and to deposit the Loan Proceeds in the Escrow Fund shall be
subject to the condition precedent that Lender shall have received all of the
following, each in form and substance satisfactory to Lender:
(a) This Agreement, properly executed on behalf of Borrower, and
each of the Exhibits hereto properly completed.
(b) The Escrow Agreement, properly executed on behalf of Issuer,
Borrower and Escrow Agent.
(c) The Mortgage, properly executed on behalf of Borrower.
(d) The Hazardous Substances Agreement, properly executed on
behalf of Borrower and Corporate Guarantor.
(e) The Corporate Guaranty Agreement, properly executed on behalf
of Corporate Guarantor.
(f) The Tax-Exempt Loan Agreement, properly executed on behalf of
Borrower and Issuer.
(g) A certificate of the Secretary or an Assistant Secretary of
Borrower, certifying as to (i) the resolutions of the board of
directors and, if required, the shareholders of Borrower, authorizing
the execution, delivery and performance of this Agreement, the
Tax-Exempt Loan Agreement, the Mortgage, the Hazardous Substances
Agreement, the Escrow Agreement and any related documents, (ii) the
bylaws of Borrower, and (iii) the signatures of the officers or agents
of Borrower authorized to execute and deliver this Agreement, the
Tax-Exempt Loan Agreement, the Mortgage, the Hazardous Substances
Agreement, the Escrow Agreement and other instruments, agreements and
certificates on behalf of Borrower.
(h) Currently certified copies of the Articles of Incorporation
of Borrower.
(i) A Certificate of Good Standing issued as to Borrower by the
Secretary of State of the State of Nevada not more than 10 days prior
to the date hereof.
(j) Certificate of qualification to do business in the State
issued as to Borrower not more than 10 days prior to the date of the
funding of the loan.
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(k) A certificate of the Secretary or an Assistant Secretary of
Corporate Guarantor, certifying as to (i) the resolutions of the board
of directors and, if required, the shareholders of Corporate Guarantor,
authorizing the execution, delivery and performance of the Corporate
Guaranty Agreement, the Hazardous Substances Agreement and any related
documents, (ii) the bylaws of Corporate Guarantor, and (iii) the
signatures of the officers or agents of Corporate Guarantor authorized
to execute and deliver the Corporate Guaranty Agreement, the Hazardous
Substances Agreement and other instruments, agreements and certificates
on behalf of Corporate Guarantor.
(l) Currently certified copies of the Articles of Incorporation
of Corporate Guarantor.
(m) A Certificate of Good Standing issued as to Corporate
Guarantor by the Registrar of Companies of the Province of British
Columbia, Canada not more than 10 days prior to the date hereof.
(n) As applicable, financing statements authorized by Borrower,
as debtor, and naming Lender, as secured party, and/or the original
certificate of title or manufacturer's certificate of origin and title
application if any of the Property is subject to certificate of title
laws.
(o) Current searches of appropriate filing offices showing that
(i) no state or federal tax liens have been filed and remain in effect
against Borrower, (ii) no financing statements have been filed and
remain in effect against Borrower relating to the Property except those
financing statements filed by Lender and (iii) Lender has duly filed
all financing statements necessary to perfect the security interest
created pursuant to this Agreement and the Mortgage.
(p) An environmental engineering report for the Premises prepared
by an engineer engaged by Lender after consultation with Borrower and
at Borrower's expense, and in a manner satisfactory to Lender, based
upon an investigation relating to and making appropriate inquiries
concerning the Premises and in compliance with the Environmental Phase
I Requirements set forth in Exhibit G hereto.
(q) An opinion of counsel to Borrower, addressed to Lender, in
the form attached hereto as Exhibit B-1.
(r) An opinion of counsel to Corporate Guarantor, addressed to
Lender, in the form attached hereto as Exhibit B-2.
(s) Payment of Lender's fees, commissions and expenses required
by Section 12.01 hereof.
(t) Any other documents or items required by Lender.
(u) With respect to any item of Property, certificates of the
insurance required hereunder, containing a lender's loss payable clause
or endorsement in favor of Lender and the permanent loan insurance
requirements set forth in Exhibit H hereto.
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Section 3.02. CONDITIONS OF DISBURSEMENT. In addition to the
requirements set forth in Section 3.01 hereof, Lender's agreement to authorize
any disbursement from the Escrow Fund shall be subject to the additional
condition precedent that Borrower shall have satisfied all of the conditions
precedent set forth in Article 3 of the Escrow Agreement applicable to such
disbursement.
ARTICLE IV
RESERVED.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER
Borrower represents, warrants and covenants for the benefit of Lender,
as follows:
(a) Borrower is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada, has power
to enter into this Agreement and by proper corporate action has duly
authorized the execution and delivery of this Agreement, the Tax-Exempt
Loan Agreement, the Mortgage, the Hazardous Substances Agreement and
the Escrow Agreement. Borrower is in good standing and is duly licensed
or qualified to transact business in the State and in all jurisdictions
where the character of the property owned or leased or the nature of
the business transacted by it makes such licensing or qualification
necessary. Borrower's exact legal name is as set forth on the execution
page hereof.
(b) Borrower has been fully authorized to execute and deliver
this Agreement, the Tax-Exempt Loan Agreement, the Mortgage, the
Hazardous Substances Agreement, the Subordination Agreement and the
Escrow Agreement under the terms and provisions of the resolution of
its board of directors, or by other appropriate official approval, and
further represents, covenants and warrants that all requirements have
been met, and procedures have occurred in order to ensure the
enforceability of this Agreement, the Tax-Exempt Loan Agreement, the
Mortgage, the Hazardous Substances Agreement and the Escrow Agreement,
and this Agreement, the Tax-Exempt Loan Agreement, the Mortgage, the
Hazardous Substances Agreement and the Escrow Agreement have been duly
authorized, executed and delivered.
(c) The officer of Borrower executing this Agreement, the
Tax-Exempt Loan Agreement, the Mortgage, the Hazardous Substances
Agreement, the Escrow Agreement and any related documents has been duly
authorized to execute and deliver this Agreement, the Tax-Exempt Loan
Agreement, the Mortgage, the Hazardous Substances Agreement, the Escrow
Agreement and such related documents under the terms and provisions of
a resolution of Borrower's board of directors.
(d) This Agreement, the Tax-Exempt Loan Agreement, the Mortgage,
the Hazardous Substances Agreement and the Escrow Agreement constitute
valid and legally binding obligations of Borrower, enforceable against
Borrower in accordance with their
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respective terms, except to the extent limited by bankruptcy,
reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights.
(e) The execution and delivery of this Agreement, the Tax-Exempt
Loan Agreement, the Mortgage, the Hazardous Substances Agreement and
the Escrow Agreement, the consummation of the transactions contemplated
hereby and thereby and the fulfillment of the terms and conditions
hereof and thereof do not and will not violate any law, rule,
regulation or order, conflict with or result in a breach of any of the
terms or conditions of the articles of incorporation or bylaws of
Borrower or of any corporate restriction or of any agreement or
instrument to which Borrower is now a party and do not and will not
constitute a default under any of the foregoing or result in the
creation or imposition of any liens, charges or encumbrances of any
nature upon any of the property or assets of Borrower contrary to the
terms of any instrument or agreement.
(f) The authorization, execution, delivery and performance of
this Agreement by Borrower do not require submission to, approval of,
or other action by any governmental authority or agency, which action
with respect to this Agreement has not been taken and which is final
and nonappealable.
(g) There is no action, suit, proceeding, claim, inquiry or
investigation, at law or in equity, before or by any court, regulatory
agency, public board or body pending or, to the best of Borrower's
knowledge, threatened against or affecting Borrower, challenging
Borrower's authority to enter into this Agreement, the Tax-Exempt Loan
Agreement, the Mortgage, the Hazardous Substances Agreement or the
Escrow Agreement or any other action wherein an unfavorable ruling or
finding would adversely affect the enforceability of this Agreement,
the Tax-Exempt Loan Agreement, the Mortgage, the Hazardous Substances
Agreement or the Escrow Agreement or any other transaction of Borrower
which is similar hereto, or would materially and adversely affect the
financial condition, business or properties of Borrower.
(h) The Premises and the property at which any portion of the
Property is located is properly zoned for its current and anticipated
use and the use of the Property will not violate any applicable zoning,
land use, environmental or similar law or restriction. Borrower has all
licenses and permits to use the Property.
(i) Borrower has furnished to Lender a Phase I Environmental Site
Assessment dated January 22, 2003, prepared by URS (the "Report").
Except as disclosed to Lender in the Report, Borrower has received no
notification of any kind suggesting that the Property or any adjacent
property is or may be contaminated with any Hazardous Waste or
Materials or is or may be required to be cleaned up in accordance with
any applicable law or regulation; and Borrower further represents and
warrants that, except as previously disclosed to Lender in writing, to
the best of its knowledge as of the date hereof after due and diligent
inquiry, there are no Hazardous Waste or Materials located in, on or
under the Property or any adjacent property, or incorporated in any
Improvements, nor has the Property or any adjacent property ever been
used as a landfill or a waste disposal site, or a manufacturing,
handling, storage, distribution or disposal facility for Hazardous
Waste or Materials. Borrower has obtained all permits, licenses
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and other authorizations which are required under any Environmental
Laws at Borrower's facilities or in connection with the operation of
its facilities. Except as previously disclosed to Lender in writing,
Borrower and all activities of Borrower at its facilities comply with
all Environmental Laws and with all terms and conditions of any
required permits, licenses and authorizations applicable to Borrower
with respect thereto. Except as previously disclosed to Lender in
writing, Borrower is also in compliance with all limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in Environmental Laws
or contained in any plan, order, decree, judgment or notice of which
Borrower is aware. Except as previously disclosed to Lender in writing,
Borrower is not aware of, nor has Borrower received notice of, any
events, conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent continued
compliance with, or which may give rise to any liability under, any
Environmental Laws.
(j) Borrower has heretofore furnished to Lender the audited
financial statements of Corporate Guarantor for its fiscal years ended
January 31, 2002, January 31, 2001, January 31, 2000 and January 31,
1999 and the unaudited financial statements of Borrower for the six
months ended July 31, 2002 and July 31, 2001, and those statements
fairly present the financial condition of Corporate Guarantor on the
dates thereof and the results of its operations and cash flows for the
periods then ended and were prepared in accordance with generally
accepted accounting principles. Since the date of the most recent
financial statements, there has been no material adverse change in the
business, properties or condition (financial or otherwise) of Corporate
Guarantor.
(k) Borrower has paid or caused to be paid to the proper
authorities when due all federal, state and local taxes required to be
withheld by it. Borrower has filed all federal, state and local tax
returns which are required to be filed, and Borrower has paid or caused
to be paid to the respective taxing authorities all taxes as shown on
said returns or on any assessment received by it to the extent such
taxes have become due.
(l) Borrower has or will have good and absolute title to all
Property and all proceeds thereof, free and clear of all mortgages,
security interests, liens and encumbrances except for the security
interest created pursuant to this Agreement and the Mortgage and the
Permitted Exceptions.
(m) All financial and other information provided to Lender by or
on behalf of Borrower in connection with Borrower's request for the
Loan contemplated hereby is true and correct in all material respects
and Borrower has not omitted to provide Lender with any information
which would be material to Lender's decision to enter into this
Agreement and, as to projections, valuations or pro forma financial
statements, present a good faith opinion as to such projections,
valuations and pro forma condition and results.
(n) Borrower has authorized Lender to file financing statements,
and such financing statements when filed will be sufficient to perfect
the security interest created pursuant to this Agreement. When such
financing statements are filed in the offices noted therein, Lender
will have a valid and perfected security interest in the Property,
subject to no other security interest, assignment, lien or encumbrance.
None of the
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Property constitutes a replacement of, substitution for or accessory to
any property of Borrower subject to a lien of any kind. Borrower owns
the Premises subject to no liens or encumbrances of any kind except the
Permitted Exceptions.
(o) No person other than Borrower is in occupancy or possession
of any portion of the real property where any portion of the Property
is located.
ARTICLE VI
TITLE TO PROPERTY; SECURITY INTEREST
Section 6.01. TITLE TO PROPERTY. Legal title to the Property and any
and all repairs, replacements, substitutions and modifications to such Property
shall be in Borrower. Borrower will at all times protect and defend, at its own
cost and expense, its title from and against all claims, liens and legal
processes of creditors of Borrower, and keep all Property free and clear of all
such claims, liens and processes.
Section 6.02. SECURITY INTEREST IN PROPERTY. This Agreement is intended
to constitute a security agreement within the meaning of the UCC. As security
for (a) Borrower's payment to Lender of Loan Payments and all other amounts
payable to Lender hereunder, (b) Borrower's payment to Lender of Loan Payments
(as defined in the Tax-Exempt Loan Agreement) and all other amounts due under
the Tax-Exempt Loan Agreement, and (c) any other obligations of Borrower to
Lender or any GE Capital Entity (whether direct or indirect and whether now
existing or hereafter acquired), Borrower hereby grants to Lender a security
interest constituting a first lien on (i) the Property, (ii) all general
intangibles and other property relating thereto, (iii) all accessories,
attachments, parts, equipment and repairs now or hereafter attached or affixed
or used in connection with any of the foregoing property, (iv) all warehouse
receipts, bills of lading and other documents of title now or hereafter covering
any of the foregoing property, (v) all securities, funds, moneys, deposits and
other property at any time held in or subject to the Escrow Fund, (vi) all
accessions thereto, (vii) all substitutions for any of the foregoing property,
and (viii) products and proceeds of any of the foregoing property. To the extent
that the same entity (or an affiliate thereof) is Lender under this Agreement
and any other document or agreement with Borrower, the security interest in the
Property shall secure all of Borrower's obligations under all such agreements,
but shall not secure Borrower's obligations under such agreements under which a
different entity is Lender. Borrower ratifies its previous authorization for
Lender to pre-file UCC financing statements and any amendments thereto
describing the Property and all other collateral described above and containing
any other information required by the applicable UCC. Borrower authorizes
Lender, and hereby grants Lender a power of attorney (which is coupled with an
interest), to file financing statements and amendments thereto describing the
Property and containing any other information required by the applicable UCC and
all proper terminations of the filings of other secured parties with respect to
the Property, in such form and substance as Lender, in its sole discretion, may
determine. Borrower agrees to execute such additional documents, including
demands for terminations, assignments, affidavits, notices and similar
instruments, in form satisfactory to Lender, and take such other actions that
Lender deems necessary or appropriate to establish and maintain the security
interest created by this Section, and Borrower hereby designates and appoints
Lender as its agent, and grants to Lender a power of attorney (which is coupled
with an interest), to execute on behalf of Borrower,
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such additional documents and to take such other actions. Borrower hereby waives
any right that Borrower may have to file with the applicable filing officer any
financing statement, amendment, termination or other record pertaining to the
Property and/or Lender's interest therein.
Section 6.03. CHANGE IN NAME OR CORPORATE STRUCTURE OF BORROWER; CHANGE
IN LOCATION OF BORROWER'S CHIEF EXECUTIVE OFFICE. Borrower's chief executive
office is located at the address set forth above, and all of Borrower's records
relating to its business and the Property are kept at such location. Borrower
hereby agrees to provide written notice to Lender of any change or proposed
change in its name, corporate structure, chief executive office or change or
proposed change in the location of the Property. Such notice shall be provided
thirty days in advance of the date that such change or proposed change is
planned to take effect. Borrower does business, and has done business, only
under its own name and the trade names, if any, set forth on Exhibit F hereto.
Section 6.04. LIENS AND ENCUMBRANCES TO TITLE. Borrower shall not,
directly or indirectly, create, incur, assume or suffer to exist any mortgage,
pledge, lien, charge, encumbrance or claim on or with respect to the Property
(together, "Liens") other than the respective rights of Lender as herein
provided and the Permitted Exceptions. Borrower shall promptly, at its own
expense, take such action as may be necessary duly to discharge or remove any
such Lien. Borrower shall reimburse Lender for any expenses incurred by Lender
to discharge or remove any Lien.
Section 6.05. ASSIGNMENT OF INSURANCE. As additional security for the
payment and performance of Borrower's obligations hereunder, Borrower hereby
assigns to Lender any and all moneys (including, without limitation, proceeds of
insurance and refunds of unearned premiums) due or to become due under, and all
other rights of Borrower with respect to, any and all policies of insurance now
or at any time hereafter covering the Property or any evidence thereof or any
business records or valuable papers pertaining thereto, and Borrower hereby
directs the issuer of any such policy to pay all such moneys directly to Lender.
Borrower hereby assigns to Lender any and all moneys due or to become due with
respect to any condemnation proceeding affecting the Property. At any time,
whether before or after the occurrence of any Event of Default, Lender may (but
need not), in Lender's name or in Borrower's name, execute and deliver proof of
claim, receive all such moneys, endorse checks and other instruments
representing payment of such moneys, and adjust, litigate, compromise or release
any claim against the issuer of any such policy or party in any condemnation
proceeding.
Section 6.06. AGREEMENT AS FINANCING STATEMENT. To the extent permitted
by applicable law, a carbon, photographic or other reproduction of this
Agreement or of any financing statements signed by Borrower is sufficient as a
financing statement in any state to perfect the security interests granted in
this Agreement.
Section 6.07. LETTER OF CREDIT. Upon receipt of the Final Appraisal and
if (i) an Undersecured Amount exists and (ii) Borrower elects not to prepay the
Loan in the amount of the Undersecured Amount pursuant to Section 2.08 hereof,
Borrower hereby agrees to deliver or cause to be delivered to Lender the Letter
of Credit as additional security for the prompt payment and performance of all
of Borrower's obligations under this Agreement. Borrower hereby further agrees
to deliver to Lender not later than 60 days prior to any scheduled expiration
date
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of the Letter of Credit or any Substitute Letter of Credit, as applicable (a)
evidence satisfactory to Lender that such Letter of Credit or Substitute Letter
of Credit has been renewed on terms acceptable to Lender or (b) a Substitute
Letter of Credit. If at any time (x) the rating of Bank by LACE is below "B" or
(y) the rating of a Substitute Bank is below the rating required by Lender at
the time the related Substitute Letter of Credit is accepted by Lender, Borrower
shall within 30 days provide to Lender a Substitute Letter of Credit. A failure
by Borrower to fully and timely perform any obligation under this Section 6.07
or the failure of Bank or any Substitute Bank to fully and timely honor any
draft under the Letter of Credit or any Substitute Letter of Credit as the case
may be shall constitute an immediate Event of Default hereunder.
ARTICLE VII
AFFIRMATIVE COVENANTS OF BORROWER
So long as the Loan shall remain unpaid, Borrower will comply with the
following requirements:
Section 7.01. REPORTING REQUIREMENTS. Borrower will deliver, or cause
to be delivered, to Lender each of the following, which shall be in form and
detail acceptable to Lender:
(a) as soon as available, and in any event within 120 days after
the end of each fiscal year of Corporate Guarantor, consolidated
audited financial statements of Corporate Guarantor with the
unqualified opinion of independent certified public accountants
selected by Corporate Guarantor and acceptable to Lender, which annual
consolidated financial statements shall include the balance sheet of
Corporate Guarantor as at the end of such fiscal year and the related
statements of income, retained earnings and cash flows of Corporate
Guarantor for the fiscal year then ended, all in reasonable detail and
prepared in accordance with generally accepted accounting principles
applied on a consistent basis, together with (i) a report signed by
such accountants stating that in making the investigations necessary
for said opinion they obtained no knowledge, except as specifically
stated, of any Default or Event of Default hereunder and all relevant
facts in reasonable detail to evidence, and the computations as to,
whether or not Borrower is in compliance with the requirements set
forth in Sections 7.11 through 7.13 hereof; and (ii) a certificate of
the chief financial officer of Corporate Guarantor or Borrower in the
form of Exhibit I hereto stating that such financial statements have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis and whether or not such
officer has knowledge of the occurrence of any Default or Event of
Default hereunder and, if so, stating in reasonable detail the facts
with respect thereto;
(b) as soon as available and in any event within 90 days after
the end of each fiscal quarter of Corporate Guarantor, a consolidated
unaudited/internal balance sheet and statements of income and retained
earnings of Corporate Guarantor as at the end of and for such quarter
and for the year to date period then ended, in reasonable detail and
stating in comparative form the figures for the corresponding date and
periods in the previous year, all prepared in accordance with generally
accepted accounting principles applied on a consistent basis and
certified by the chief financial officer of Corporate Guarantor or
Borrower, subject to year-end audit adjustments; and accompanied by a
16
certificate of that officer in the form of Exhibit I hereto stating (i)
that such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis,
(ii) whether or not such officer has knowledge of the occurrence of any
Default or Event of Default hereunder not theretofore reported and
remedied and, if so, stating in reasonable detail the facts with
respect thereto, and (iii) all relevant facts in reasonable detail to
evidence, and the computations as to, whether or not Borrower is in
compliance with the requirements set forth in Sections 7.11 through
7.13 hereof;
(c) immediately after the commencement thereof, notice in writing
of all litigation and of all proceedings before any governmental or
regulatory agency affecting Borrower or Corporate Guarantor of the type
described in Article V hereof or which seek a monetary recovery against
Borrower or Corporate Guarantor in excess of $500,000;
(d) as promptly as practicable (but in any event not later than
five Business Days) after an officer of Borrower obtains knowledge of
the occurrence of any event that constitutes a Default or an Event of
Default hereunder, notice of such occurrence, together with a detailed
statement by a responsible officer of Borrower of the steps being taken
by Borrower to cure the effect of such Default or Event of Default;
(e) promptly upon knowledge thereof, notice of any loss or
destruction of or damage to any Property or of any material adverse
change in any Property;
(f) promptly upon their distribution, copies of all financial
statements, reports and proxy statements that Borrower shall have sent
to its stockholders;
(g) promptly after the amending thereof, copies of any and all
amendments to its certificate of incorporation, articles of
incorporation or bylaws;
(h) promptly upon knowledge thereof, notice of any violation by
Borrower of any law, rule or regulation;
(i) promptly upon knowledge thereof, notice of any material
adverse change in the financial or operating condition of Borrower or
Corporate Guarantor;
(j) upon request of Lender, as soon as available, and in any
event within 180 days after the end of each fiscal year forecasts and
projections of Borrower's and Corporate Guarantor's financial results
for the current fiscal year, together with a balance sheet, an income
statement and supporting facts and assumptions used to formulate such
forecasts and projections; and
(k) promptly upon knowledge thereof, notice of any downgrade in
the rating of Bank or any Substitute Bank by LACE Financial
Corporation.
Section 7.02. BOOKS AND RECORDS; INSPECTION AND EXAMINATION. Borrower
will keep accurate books of record and account for itself pertaining to the
Property and pertaining to Borrower's business and financial condition and such
other matters as Lender may from time to time request in which true and complete
entries will be made in accordance with generally
17
accepted accounting principles consistently applied and, upon request of Lender,
will permit any officer, employee, attorney or accountant for Lender to audit,
review, make extracts from, or copy any and all corporate and financial books,
records and properties of Borrower at all times during ordinary business hours,
and to discuss the affairs of Borrower with any of its directors, officers,
employees or agents. Borrower will permit Lender, or its employees, accountants,
attorneys or agents, to examine and copy any or all of its records and to
examine and inspect the Property at any time during Borrower's business hours.
Section 7.03. COMPLIANCE WITH LAWS. Borrower will (a) comply with the
requirements of applicable laws and regulations, the noncompliance with which
would materially and adversely affect its business or its financial condition
and (b) use and keep the Property, and will require that others use and keep the
Property, only for lawful purposes, without violation of any federal, state or
local law, statute or ordinance. Borrower shall secure all permits and licenses,
if any, necessary for the installation and operation of the Property. Borrower
shall comply in all respects (including, without limitation, with respect to the
use, maintenance and operation of each item of the Property) with all laws of
the jurisdictions in which its operations involving any component of Property
may extend and of any legislative, executive, administrative or judicial body
exercising any power or jurisdiction over the items of the Property or its
interest or rights under this Agreement.
Section 7.04. ENVIRONMENTAL COMPLIANCE. Borrower shall promptly comply
with all statutes, regulations and ordinances, and with all orders, decrees or
judgments of governmental authorities or courts having jurisdiction, relating to
the use, collection, treatment, disposal, storage, control, removal or cleanup
of Hazardous Waste or Materials in, on or under the Property or any adjacent
property, or incorporated in any Improvements, at Borrower's expense. In the
event that Lender at any time believes that the Property is not free of all
Hazardous Waste or Materials or that Borrower has violated any applicable
Environmental Laws with respect to the Property, then immediately, upon request
by Lender, Borrower shall obtain and furnish to Lender, at Borrower's sole cost
and expense, an environmental audit and inspection of the Property from an
expert satisfactory to Lender. In the event that Borrower fails to immediately
obtain such audit or inspection, Lender or its agents may perform or obtain such
audit or inspection at Borrower's sole cost and expense. Lender may, but is not
obligated to, enter upon the Property and take such actions and incur such costs
and expenses to effect such compliance as it deems advisable to protect its
interest in the Property; and whether or not Borrower has actual knowledge of
the existence of Hazardous Waste or Materials on the Property or any adjacent
property as of the date hereof, Borrower shall reimburse Lender as provided
herein for the full amount of all costs and expenses incurred by Lender prior to
Lender acquiring title to the Property through foreclosure or acceptance of a
deed in lieu of foreclosure, in connection with such compliance activities.
Neither this provision nor any provision herein or in the Mortgage or related
documents shall operate to put Lender in the position of an owner of the
Property prior to any acquisition of the Property by Lender. The rights granted
to Lender herein and in the Mortgage or related documents are granted solely for
the protection of Lender's lien and security interest covering the Property and
do not grant to Lender the right to control Borrower's actions, decisions or
policies regarding Hazardous Waste or Materials.
Section 7.05. PAYMENT OF TAXES AND OTHER CLAIMS. Borrower will pay or
discharge, when due, (a) all taxes, assessments and governmental charges levied
or imposed upon it or upon
18
its income or profits, upon any properties belonging to it (including, without
limitation, the Property) or upon or against the creation, perfection or
continuance of the security interest created pursuant to this Agreement, prior
to the date on which penalties attach thereto, (b) all federal, state and local
taxes required to be withheld by it, and (c) all lawful claims for labor,
materials and supplies which, if unpaid, might by law become a lien or charge
upon any properties of Borrower; provided, that Borrower shall not be required
to pay any such tax, assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate proceedings. Borrower
will pay, as the same respectively come due, all taxes and governmental charges
of any kind whatsoever that may at any time be lawfully assessed or levied
against or with respect to the Property, as well as all gas, water, steam,
electricity, heat, power, telephone, utility and other charges incurred in the
operation, maintenance, use, occupancy and upkeep of the Property.
Section 7.06. PRESERVATION AND MAINTENANCE OF PROPERTY. Borrower (a)
shall, at its own expense, maintain, preserve and keep the Property in good
repair, working order and condition, and shall from time to time make all
repairs and replacements necessary to keep the Property in such condition, and
in compliance with state and federal laws, ordinary wear and tear excepted, (b)
shall maintain the Property in a condition suitable for certification by the
manufacturer thereof (if certification is available) and in conformance with all
manufacturer's recommended maintenance requirements, (c) shall not commit waste
or permit impairment or deterioration of the Property, (d) shall not abandon the
Property, (e) shall restore or repair promptly and in a good and workmanlike
manner all or any part of the Property to the equivalent of its original
condition, or such other condition as Lender may approve in writing, in the
event of any damage, injury or loss thereto, whether or not insurance proceeds
are available to cover in whole or in part the costs of such restoration or
repair, (f) shall keep all improvements, fixtures, equipment, machinery and
appliances on the Property, in good repair and shall replace fixtures,
equipment, machinery and appliances on the Property when necessary to keep such
items in good repair, (g) shall comply with all laws, ordinances, regulations
and requirements of any governmental body applicable to the Property and (h)
shall give notice in writing to Lender of and, unless otherwise directed in
writing by Lender, appear in and defend any action or proceeding purporting to
affect the Property, the security of this Agreement or the rights or powers of
Lender hereunder. Neither Borrower nor any tenant or other person shall remove,
demolish or alter any improvement now existing or hereafter erected on the
Property or any fixture, equipment, machinery or appliance in or on the Property
except when incident to the replacement of fixtures, equipment, machinery and
appliances with items of like kind. In the event that any parts or accessories
forming part of any item or items of Property become worn out, lost, destroyed,
damaged beyond repair or otherwise rendered unfit for use, Borrower, at its own
expense and expeditiously, will replace or cause the replacement of such parts
or accessories by replacement parts or accessories free and clear of all liens
and encumbrances and with a value and utility at least equal to that of the
parts or accessories being replaced (assuming that such replaced parts and
accessories were otherwise in good working order and repair). All such
replacement parts and accessories shall be deemed to be incorporated immediately
into and to constitute an integral portion of the Property and, as such, shall
be subject to the terms of this Agreement. Lender shall have no responsibility
in any of these matters, or for the making of improvements or additions to the
Property. Borrower will defend the Property against all claims or demands of all
persons (other than Lender) claiming the Property or any interest therein.
19
Borrower represents, warrants and covenants that the Property is and
shall be in compliance with the Americans with Disabilities Act of 1990 and all
of the regulations promulgated thereunder, as the same may be amended from time
to time.
Section 7.07. INSURANCE. (a) Borrower shall obtain and maintain the
following types of insurance upon and relating to the Property:
(i) "All Risk" property and fire insurance (with extended
coverage endorsement including malicious mischief and vandalism) in an
amount not less than the full replacement value of the Property (with a
deductible not to exceed $5,000 and with co-insurance limited to a
maximum of 10% of the amount of the policy), naming Lender under a
lender's loss payee endorsement (form 438BFU or equivalent) and
including agreed amount, inflation guard, replacement cost and waiver
of subrogation endorsements;
(ii) Comprehensive general liability insurance in an amount not
less than $2,000,000.00 insuring against personal injury, death and
property damage and naming Lender as additional insured;
(iii) Business interruption insurance covering loss of rental or
other income for up to twelve (12) months; and
(iv) Such other types of insurance or endorsements to existing
insurance as may be required from time to time by Lender.
(b) Upon each reasonable request of Lender, Borrower shall increase the
coverages under any of the insurance policies required to be maintained
hereunder or otherwise modify such policies in accordance with Lender's request.
All of the insurance policies required hereunder shall be issued by corporate
insurers licensed to do business in the state in which the Property is located
and rated A:X or better by A.M. Best Company, and shall be in form acceptable to
Lender. If and to the extent that the Property is located within an area that
has been or is hereafter designated or identified as an area having special
flood hazards by the Department of Housing and Urban Development or such other
official as shall from time to time be authorized by federal or state law to
make such designation pursuant to any national or state program of flood
insurance, Borrower shall carry flood insurance with respect to the Property in
amounts not less than the maximum limit of coverage then available with respect
to the Property or the amount of the Loans, whichever is less. Certificates of
all insurance required to be maintained hereunder shall be delivered to Lender,
along with evidence of payment in full of all premiums required thereunder,
contemporaneously with Borrower's execution of this Agreement. All such
certificates shall be in form acceptable to Lender and shall require the
insurance company to give to Lender at least 30 days' prior written notice
before canceling the policy for any reason or materially amending it.
Certificates evidencing all renewal and substitute policies of insurance shall
be delivered to Lender, along with evidence of the payment in full of all
premiums required thereunder, at least 15 days before termination of the
policies being renewed or substituted. If any loss shall occur at any time when
Borrower shall be in default hereunder, Lender shall be entitled to the benefit
of all insurance policies held or maintained by Borrower, to the same extent as
if same had been made payable to Lender, and
20
upon foreclosure hereunder, Lender shall become the owner thereof. Lender shall
have the right, but not the obligation, to make premium payments, at Borrower's
expense, to prevent any cancellation, endorsement, alteration or reissuance of
any policy of insurance maintained by Borrower, and such payments shall be
accepted by the insurer to prevent same.
(c) As between Lender and Borrower, Borrower assumes all risks and
liabilities from any cause whatsoever, whether or not covered by insurance, for
loss or damage to any portion of the Property and for injury to or death of any
person or damage to any property, whether such injury or death be with respect
to agents or employees of Borrower or of third parties, and whether such
property damage be to Borrower's property or the property of others. Whether or
not covered by insurance, Borrower hereby assumes responsibility for and agrees
to reimburse Lender for and will indemnify, defend and hold Lender harmless from
and against all liabilities, obligations, losses, damages, penalties, claims,
actions, costs and expenses (including reasonable attorneys' fees) of whatsoever
kind and nature, imposed on, incurred by or asserted against Lender that in any
way relate to or arise out of this Agreement, the transactions contemplated
hereby and the Property, including but not limited to, (i) the selection,
manufacture, construction, purchase, acceptance or rejection of the Property or
the ownership of the Property, (ii) the delivery, lease, possession,
maintenance, use, condition, return or operation of the Property, (iii) the
condition of the Property sold or otherwise disposed of after possession by
Borrower, (iv) any patent or copyright infringement, (v) the conduct of
Borrower, its officers, employees and agents, (vi) a breach of Borrower of any
of its covenants or obligations hereunder and (vii) any claim, loss, cost or
expense involving alleged damage to the environment relating to the Property,
including, but not limited to investigation, removal, cleanup and remedial
costs. All amounts payable by Borrower pursuant to the immediately preceding
sentence shall be paid immediately upon demand of Lender. This provision shall
survive the termination of this Agreement.
Section 7.08. PRESERVATION OF CORPORATE EXISTENCE. Borrower will
preserve and maintain its corporate existence and all of its rights, privileges
and franchises necessary or desirable in the normal conduct of its business; and
shall conduct its business in an orderly, efficient and regular manner.
Section 7.09. PERFORMANCE BY LENDER. If Borrower at any time fails to
perform or observe any of the covenants or agreements contained in this
Agreement, in the Mortgage or any other related document, and if such failure
shall continue for a period of 10 calendar days after Lender gives Borrower
written notice thereof (or in the case of the agreements contained in Sections
7.06 and 7.07 hereof, immediately upon the occurrence of such failure, without
notice or lapse of time), Lender may, but need not, perform or observe such
covenant on behalf and in the name, place and stead of Borrower (or, at Lender's
option, in Lender's name) and may, but need not, take any and all other actions
which Lender may reasonably deem necessary to cure or correct such failure
(including, without limitation, the payment of taxes, the satisfaction of
security interests, liens or encumbrances, the performance of obligations owed
to account debtors or other obligors, the procurement and maintenance of
insurance, the execution of assignments, security agreements and financing
statements, and the endorsement of instruments); and Borrower shall thereupon
pay to Lender on demand the amount of all moneys expended and all costs and
expenses (including reasonable attorneys' fees and legal expenses) incurred by
Lender in connection with or as a result of the performance or observance of
such agreements or the
21
taking of such action by Lender, together with interest thereon from the date
expended or incurred at the lesser of 18% per annum or the highest rate
permitted by law. To facilitate the performance or observance by Lender of such
covenants of Borrower, Borrower hereby irrevocably appoints Lender, or the
delegate of Lender, acting alone, as the attorney in fact of Borrower with the
right (but not the duty) from time to time to create, prepare, complete,
execute, deliver, endorse or file in the name and on behalf of Borrower any and
all instruments, documents, assignments, security agreements, financing
statements, applications for insurance and other agreements and writings
required to be obtained, executed, delivered or endorsed by Borrower under this
Agreement.
Section 7.10. LIMITATIONS OF LIABILITY. In no event, whether as a
result of breach of contract, warranty, tort (including negligence or strict
liability), indemnity or otherwise, shall Lender, its assignees, if any, be
liable for any special, consequential, incidental, punitive or penal damages,
including, but not limited to, loss of profit or revenue, loss of use of the
Premises or any associated equipment, service materials or software, damage to
associated equipment, service materials or software, cost of capital, cost of
substitute property, service materials or software, facilities, services or
replacement power or downtime costs.
Section 7.11. RATIO OF DEBT TO TANGIBLE NET WORTH. Borrower shall
maintain at all times its ratio of Debt (as defined below) to Tangible Net Worth
(as defined below) at not more than 1.50 to 1.00. "Debt" shall mean (i) all
items of indebtedness or liability which in accordance with generally accepted
accounting principles or federal tax law would be included in determining total
liabilities as shown on the liabilities side of a balance sheet, (ii)
indebtedness secured by any mortgage, pledge, lien or security interest existing
on property owned by Borrower, whether or not the indebtedness secured thereby
shall have been assumed, and (iii) guaranties and endorsements (other than for
purposes of collection in the ordinary course of business) by Borrower and other
contingent obligations of Borrower in respect of, or to purchase or otherwise
acquire, indebtedness of others. "Tangible Net Worth" means the excess of:
(a) the tangible assets of Borrower, which, in accordance with
generally accepted accounting principles, are tangible assets, after
deducting adequate reserves in each case where, in accordance with
generally accepted accounting principles, a reserve is proper over
(b) all Debt of Borrower;
provided, however, that (i) inventory shall be taken into account on the basis
of the cost (determined on a first-in, first-out basis) or current market value,
whichever is lower, (ii) in no event shall there be included as such tangible
assets patents, trademarks, trade names, copyrights, licenses, good will,
advances or loans to, or receivables from, directors, officers, employees or
affiliates, prepaid or intangible assets, amounts relating to covenants not to
compete, pensions assets, deferred charges or treasury stock or any securities
or Debt of Borrower or any other securities unless the same are readily
marketable in the United States of America or entitled to be used as a credit
against federal income tax liabilities, (iii) securities included as such
tangible assets shall be taken into account at their current market price or
cost, whichever is lower, and (iv) any write-up in the book value of any assets
shall not be taken into account.
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Section 7.12. DEBT SERVICE COVERAGE RATIO OF BORROWER. Borrower will
maintain for each fiscal year its Debt Service Coverage Ratio (as defined below)
at not less than 1.75 to 1.00 "Debt Service Coverage Ratio" means the ratio of
(i) Borrower's Cash Flow Available for Debt Service (as defined below) to (ii)
Borrower's Debt Service (as defined below). "Cash Flow Available for Debt
Service" of Borrower means, with respect to the applicable period of
determination, Borrower's income, plus interest expense, depreciation,
amortization and other non-cash charges. "Debt Service" of Borrower means, with
respect to the applicable period of determination, the aggregate of (i) interest
expense of Borrower (ii) all installments of principal on Debt of Borrower that
are due on demand or during the period of determination, (iii) all installments
of rent under capitalized lease obligations (to the extent not already accounted
for in computation of net income or Debt) of Borrower that are due on demand or
during the period of determination and (iv) distributions and dividends to
stockholders and advances to affiliates of Borrower during the period of
determination.
Section 7.13. TANGIBLE NET WORTH. Borrower shall maintain its Tangible
Net Worth at all times at not less than $7,000,000.
ARTICLE VIII
NEGATIVE COVENANTS OF BORROWER
So long as the Loan shall remain unpaid, Borrower agrees that:
Section 8.01. LIEN. Borrower will not create, incur or suffer to exist
any mortgage, deed of trust, pledge, lien, security interest, assignment or
transfer upon or of any of the Property except for the security interest created
pursuant to this Agreement and the liens created pursuant to the Mortgage.
Section 8.02. SALE OF ASSETS. Neither Borrower nor Corporate Guarantor
will sell, lease, assign, transfer or otherwise dispose of all or a substantial
part of its assets or of any of the Property or any interest therein (whether in
one transaction or in a series of transactions).
Section 8.03. CONSOLIDATION AND MERGER. Neither Borrower nor Corporate
Guarantor will consolidate with or merge into any person, or permit any other
person to merge into it or acquire (in a transaction analogous in purpose or
effect to a consolidation or merger) all or substantially all of the assets of
any other person.
Section 8.04. ACCOUNTING. Neither Borrower nor Corporate Guarantor will
adopt, permit or consent to any material change in accounting principles other
than as required by generally accepted accounting principles. Neither Borrower
nor Corporate Guarantor will adopt, permit or consent to any change in its
fiscal year.
Section 8.05. TRANSFERS. Neither Borrower nor Corporate Guarantor will
in any manner transfer any property without prior or present receipt of full and
adequate consideration.
Section 8.06. PLACE OF BUSINESS. Borrower will not permit any of the
Property or any records pertaining to the Property to be located in any state or
area in which, in the event of such
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location, a financing statement covering such Property would be required to be,
but has not in fact been, filed in order to perfect the security interest
created pursuant to this Agreement.
Section 8.07. MODIFICATIONS AND SUBSTITUTIONS. (a) Borrower will not
make any material alterations, modifications or additions to the Property which
cannot be removed without materially damaging the functional capabilities or
economic value of the Property. Upon return of the Property to Lender and at the
request of Lender, Borrower, at its sole cost and expense, will remove all
alterations, modifications and additions and repair the Property as necessary to
return the Property to the condition in which it was furnished, ordinary wear
and tear and permitted modifications excepted.
(b) Notwithstanding the provisions of subparagraph (a) of this Section,
Borrower may, with the prior written consent of Lender, substitute for parts,
elements, portions or all of the Property, other parts, elements, portions,
equipment or facilities; provided, however, that any substitutions made pursuant
to Borrower's obligations to make repairs referenced under any provision of this
Agreement shall not require such prior written consent. Borrower shall provide
such documents or assurances as Lender may reasonably request to maintain or
confirm the security interest assigned to Lender in the Property as so modified
or substituted.
Section 8.08. USE OF PROPERTY. Unless required by applicable law or
unless Lender has otherwise agreed in writing, Borrower shall not allow changes
in the use for which all or any part of the Property was intended at the time
this Agreement was executed. Borrower shall not, without Lender's prior written
consent, (a) initiate or acquiesce in a change in the zoning classification
(including any variance under any existing zoning ordinance applicable to the
Property), (b) permit the use of the Property to become a non-conforming use
under applicable zoning ordinances, (c) file any subdivision or parcel map
affecting the Property, or (d) amend, modify or consent to any easement or
covenants, conditions and restrictions pertaining to the Property.
ARTICLE IX
DAMAGE AND DESTRUCTION; CONDEMNATION
Section 9.01. DAMAGE AND DESTRUCTION. Borrower shall provide a complete
written report to Lender immediately upon any loss, theft, damage or destruction
of any Property and of any accident involving any Property. If all or any part
of the Property is lost, stolen, destroyed or damaged beyond repair ("Damaged
Property"), Borrower shall as soon as practicable after such event either: (a)
replace the same at Borrower's sole cost and expense with property having
substantially similar specifications and of equal or greater value to the
Damaged Property immediately prior to the time of the loss occurrence, such
replacement equipment to be subject to Lender's approval, whereupon such
replacement property shall be substituted in this Agreement and the other
related documents by appropriate endorsement or amendment; or (b) pay the
applicable Prepayment Amount and applicable Tax-Exempt Prepayment Amount of the
Damaged Property. Borrower shall notify Lender of which course of action it will
take within 15 calendar days after the loss occurrence. If, within 45 calendar
days of the loss occurrence, (a) Borrower fails to notify Lender; (b) Borrower
and Lender fail to execute an amendment to this Agreement to delete the Damaged
Property and add the replacement property or
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(c) Borrower fails to pay the applicable Prepayment Amount and the applicable
Tax-Exempt Prepayment Amount, then Lender may, at its sole discretion, declare
the applicable Prepayment Amount and the applicable Tax-Exempt Prepayment Amount
to be immediately due and payable, and Borrower is required to pay the same. The
Net Proceeds of insurance with respect to the Damaged Property shall be made
available by Lender to be applied to discharge Borrower's obligation under this
Section as provided in Section 5 of the Mortgage. The payment of the Prepayment
Amount and the Tax-Exempt Prepayment Amount and the termination of Lender's
interest in the Damaged Property is subject to the terms of Section 2.07 hereof.
For purposes of this Section, the term "Net Proceeds" shall mean the amount
remaining from the gross proceeds of any insurance claim after deducting all
expenses (including reasonable attorneys' fees) incurred in the collection of
such claim.
Section 9.02. CONDEMNATION. If the Property, or any part thereof, shall
be condemned for any reason, including without limitation fire or earthquake
damage, or otherwise taken for public or quasi-public use under the power of
eminent domain, or be transferred in lieu thereof, all damages or other amounts
awarded for the taking of, or injury to, the Property shall be paid to Lender
who shall have the right, in its sole and absolute discretion, to apply the
amounts so received against (a) the costs and expenses of Lender, including
attorneys' fees incurred in connection with collection of such amounts, and (b)
the balance against the outstanding principal balance of the Loans; provided,
however, that if (i) no Event of Default shall have occurred and be continuing
hereunder, (ii) Borrower provides evidence satisfactory to Lender of its ability
to pay all amounts becoming due hereunder during the pendency of any restoration
or repairs to or replacement of the Property, (iii) Lender determines, in its
sole discretion, that the proceeds of such award are sufficient to restore,
repair, replace and rebuild the Property as nearly as possible to its value,
condition and character immediately prior to such taking (or, if the proceeds of
such award are insufficient for such purpose, if Borrower provides additional
sums to Lender's satisfaction so that the aggregate of such sums and the
proceeds of such award will be sufficient for such purpose), and (iv) Borrower
provides evidence satisfactory to Lender that none of the tenants of the
Property will terminate their lease agreements as a result of either the
condemnation or taking or the repairs to or replacement of the Property, the
proceeds of such award, together with additional sums provided by Borrower,
shall be placed in a separate account for the benefit of Lender and Borrower to
be used to restore, repair, replace and rebuild the Property as nearly as
possible to its value, condition and character immediately prior to such taking.
All work to be performed in connection therewith shall be pursuant to a written
contract therefor, which contract shall be subject to the prior approval of
Lender. To the extent that any funds remain after the Property has been so
restored and repaired, the same shall be applied against the outstanding
principal balance of the Loans in such order as Lender may elect. To enforce its
rights hereunder, Lender shall be entitled to participate in and control any
condemnation proceedings and to be represented therein by counsel of its own
choice, and Borrower will deliver, or cause to be delivered to Lender such
instruments as may be requested by it from time to time to permit such
participation. In the event Lender, as a result of any such judgment, decree or
award, believes that the payment or performance of the Loans is impaired, Lender
may declare the entire unpaid principal balance of the Loans immediately due and
payable.
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ARTICLE X
ASSIGNMENT, SUBLEASING AND SELLING
Section 10.01. ASSIGNMENT BY LENDER. This Agreement, and the
obligations of Borrower to make payments hereunder, may be assigned and
reassigned in whole or in part to one or more assignees or subassignees by
Lender at any time subsequent to its execution, without the necessity of
obtaining the consent of Borrower; provided, however, that no such assignment or
reassignment shall be effective unless and until (a) Borrower shall have
received notice of the assignment or reassignment disclosing the name and
address of the assignee or subassignee, and (b) in the event that such
assignment or reassignment is made to a bank or trust company as trustee for
holders of certificates representing interests in this Agreement, such bank or
trust company agrees to maintain, or cause to be maintained, a book-entry system
by which a record of the names and addresses of such holders as of any
particular time is kept and agrees, upon request of Borrower, to furnish such
information to Borrower. Upon receipt of notice of assignment, Borrower will
reflect in a book-entry the assignee designated in such notice of assignment,
and shall agree to make all payments to the assignee designated in the notice of
assignment, notwithstanding any claim, defense, setoff or counterclaim
whatsoever (whether arising from a breach of this Agreement or otherwise) that
Borrower may from time to time have against Lender or the assignee. Borrower
agrees to execute all documents, including notices of assignment and chattel
mortgages, which may be reasonably requested by Lender or its assignee to
protect their interest in the Property and in this Agreement.
Section 10.02. NO SALE OR ASSIGNMENT BY BORROWER. This Agreement and
the interest of Borrower in the Property may not be sold, assumed, assigned or
encumbered by Borrower, except for the Permitted Exceptions.
ARTICLE XI
EVENTS OF DEFAULT AND REMEDIES
Section 11.01. EVENTS OF DEFAULT. The following constitute "Events of
Default" under this Agreement:
(a) failure by Borrower to pay to Lender when due any Loan
Payment or to pay any other payment required to be paid hereunder and
the continuation of such failure for a period of 10 days;
(b) failure by Borrower to maintain insurance on the Property in
accordance with Section 7.07 hereof;
(c) failure by Borrower to comply with the provisions of Sections
7.11, 7.12, 7.13, 8.01, 8.02 or 8.03 hereof;
(d) failure by Borrower or Corporate Guarantor, as the case may
be, to observe and perform any other covenant, condition or agreement
contained herein, in the Mortgage, in the Hazardous Substances
Agreement, in the Escrow Agreement, in the
26
Corporate Guaranty Agreement or in any other document or agreement
executed in connection herewith on its part to be observed or performed
for a period of 30 days after written notice is given to Borrower or
Corporate Guarantor, as the case may be, specifying such failure and
directing that it be remedied; provided, however, that, if the failure
stated in such notice cannot be corrected within such 30-day period,
Lender will not unreasonably withhold its consent to an extension of
such time if corrective action is instituted by Borrower or Corporate
Guarantor, as the case may be, within the applicable period and
diligently pursued until the default is corrected;
(e) Borrower or Corporate Guarantor shall be or become insolvent,
or admit in writing its inability to pay its debts as they mature, or
make an assignment for the benefit of creditors; or Borrower or
Corporate Guarantor shall apply for or consent to the appointment of
any receiver, trustee or similar officer for it or for all or any
substantial part of its property; or such receiver, trustee or similar
officer shall be appointed without the application or consent of
Borrower or Corporate Guarantor, as the case may be; or Borrower or
Corporate Guarantor shall institute (by petition, application, answer,
consent or otherwise) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding relating to it under the laws of any jurisdiction; or any
such proceeding shall be instituted (by petition, application or
otherwise) against Borrower or Corporate Guarantor; or any judgment,
writ, warrant of attachment or execution or similar process shall be
issued or levied against a substantial part of the property of Borrower
or Corporate Guarantor;
(f) determination by Lender that any representation or warranty
made by Borrower or Corporate Guarantor herein, in the Corporate
Guaranty Agreement or in any other document executed in connection
herewith was untrue in any material respect when made;
(g) an amendment or termination relating to a filed financing
statement describing any of the Property is improperly filed;
(h) the occurrence of a default or an event of default under any
instrument, agreement or other document evidencing, relating to or
securing any indebtedness or other monetary obligation of Borrower or
Corporate Guarantor;
(i) Corporate Guarantor shall repudiate, purport to revoke or
fail to perform its obligations under the Corporate Guaranty Agreement;
(j) ownership of the stock of Borrower changes during the period
that the Loan is outstanding (Borrower hereby acknowledges that Lender
has made its decision to enter into the transactions contemplated
hereby based upon the management expertise of the current stockholders
and their ownership of the stock of Borrower);
(k) the occurrence of a default or an event of default under the
Mortgage or any other agreement between or among Lender or any GE
Capital Entity and Borrower, including (without limitation) any
occurrence of a default or an event of default under the Tax-Exempt
Loan Agreement;
27
(l) failure by Borrower to fully and timely perform any of its
obligations under Section 6.07 of this Agreement or the failure of Bank
or any Substitute Bank to fully and timely honor any draft under the
Letter of Credit or any Substitute Letter of Credit as the case may be;
or
(m) failure to satisfy all of the conditions contained in Section
3.02 hereof by September 30, 2004.
Section 11.02. REMEDIES ON DEFAULT. Whenever any Event of Default shall
have occurred, Lender shall have the right, at its sole option without any
further demand or notice, to take any one or any combination of the following
remedial steps which are accorded to Lender by applicable law:
(a) by notice to Borrower, declare the entire unpaid principal
amount of the Loan then outstanding, all interest accrued and unpaid
thereon and all amounts payable under this Agreement to be forthwith
due and payable, whereupon the Loan, all such accrued interest and all
such amounts shall become and be forthwith due and payable, without
presentment, notice of dishonor, protest or further notice of any kind,
all of which are hereby expressly waived by Borrower;
(b) take possession of the Property wherever situated, without
any court order or other process of law and without liability for
entering the premises, and lease, sublease or make other disposition of
the Property for use over a term in a commercially reasonable manner,
all for the account of Lender, provided that Borrower shall remain
directly liable for the deficiency, if any, between the rent or other
amounts paid by a lessee or sublessee of the Property pursuant to such
lease or sublease during the same period of time, after deducting all
costs and expenses, including reasonable attorneys' fees and expenses,
incurred with respect to the recovery, repair and storage of the
Property during such period of time;
(c) take possession of the Property wherever situated, without
any court order or other process of law and without liability for
entering the Premises, and sell the Property in a commercially
reasonable manner. All proceeds from such sale shall be applied in the
following manner:
FIRST, to pay all proper and reasonable costs and expenses
associated with the recovery, repair, storage and sale of the
Property, including reasonable attorneys' fees and expenses;
SECOND, to pay (i) Lender the amount of all unpaid Loan
Payments or other obligations (whether direct or indirect owed by
Borrower to Lender), if any, which are then due and owing,
together with interest and late charges thereon, (ii) Lender the
then applicable Prepayment Amount (taking into account the
payment of past-due Loan Payments as aforesaid), plus a pro rata
allocation of interest, at the rate utilized to calculate the
Loan Payments, from the next preceding due date of a Loan Payment
until the date of payment by the buyer, and (iii) any other
amounts due hereunder, including indemnity payments, taxes,
28
charges, reimbursement of any advances and other amounts payable
to Lender hereunder; and
THIRD, to pay the remainder of the sale proceeds, purchase
moneys or other amounts paid by a buyer of the Property to
Borrower;
(d) proceed by appropriate court action to enforce specific
performance by Borrower of the applicable covenants of this Agreement
or to recover for the breach thereof, including the payment of all
amounts due from Borrower. Borrower shall pay or repay to Lender all
costs of such action or court action, including, without limitation,
reasonable attorneys' fees;
(e) exercise all rights and remedies under the Mortgage;
(f) take whatever action at law or in equity that may appear
necessary or desirable to enforce its rights with respect to the
Property. Borrower shall pay or repay to Lender all costs of such
action or court action, including, without limitation, reasonable
attorneys' fees;
(g) with or without notice to Borrower, submit one or more drafts
under the Letter of Credit or any Substitute Letter of Credit for any
amounts due hereunder; and
(h) exercise any and all rights and remedies under the Tax-Exempt
Loan Agreement.
Notwithstanding any other remedy exercised hereunder, Borrower shall
remain obligated to pay to Lender any unpaid portion of the Prepayment Amount
and the Tax-Exempt Prepayment Amount.
Section 11.03. NO REMEDY EXCLUSIVE. No remedy herein conferred upon or
reserved to Lender is intended to be exclusive and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity. No delay or omission
to exercise any right or power accruing upon any Event of Default shall impair
any such right or power or shall be construed to be a waiver thereof, but any
such right or power may be exercised from time to time and as often as may be
deemed expedient. In order to entitle Lender to exercise any remedy reserved to
it in this Article, it shall not be necessary to give any notice other than such
notice as may be required by this Article. All remedies herein conferred upon or
reserved to Lender shall survive the termination of this Agreement.
Section 11.04. LATE CHARGE. Any Loan Payment not paid by Borrower on
the due date thereof shall, to the extent permissible by law, bear a late charge
equal to the lesser of five cents ($.05) per dollar of the delinquent amount or
the lawful maximum, and Borrower shall be obligated to pay the same immediately
upon receipt of Lender's written invoice therefor.
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ARTICLE XII
MISCELLANEOUS
Section 12.01. COSTS AND EXPENSES OF LENDER. Borrower shall pay to
Lender, in addition to the Loan Payments payable by Borrower hereunder, such
amounts in each year as shall be required by Lender in payment of any reasonable
costs and expenses incurred by Lender in connection with the execution,
performance or enforcement of this Agreement, including but not limited to
payment of all reasonable fees, costs and expenses and all administrative costs
of Lender in connection with the Property, expenses (including, without
limitation, attorneys' fees and disbursements), fees of auditors or attorneys,
insurance premiums not otherwise paid hereunder and all other direct and
necessary administrative costs of Lender or charges required to be paid by it in
order to comply with the terms of, or to enforce its rights under, this
Agreement. Such costs and expenses shall be billed to Borrower by Lender from
time to time, together with a statement certifying that the amount so billed has
been paid by Lender for one or more of the items above described, or that such
amount is then payable by Lender for such items. Amounts so billed shall be due
and payable by Borrower within thirty (30) days after receipt of the xxxx by
Borrower.
Section 12.02. DISCLAIMER OF WARRANTIES. LENDER MAKES NO WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE, DESIGN, CONDITION,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR FITNESS FOR USE OF THE
PROPERTY, OR ANY OTHER WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, WITH
RESPECT THERETO. In no event shall Lender be liable for any loss or damage in
connection with or arising out of this Agreement, the Property or the existence,
furnishing, functioning or Borrower's use of any item or products or services
provided for in this Agreement.
Section 12.03. NOTICES. All notices, certificates, requests, demands
and other communications provided for hereunder or under the Escrow Agreement
shall be in writing and shall be (a) personally delivered, (b) sent by first
class United States mail, (c) sent by overnight courier of national reputation,
or (d) transmitted by telecopy, in each case addressed to the party to whom
notice is being given at its address as set forth above and, if telecopied,
transmitted to that party at its telecopier number set forth above or, as to
each party, at such other address or telecopier number as may hereafter be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section. All such notices, requests, demands and
other communications shall be deemed to have been given on (a) the date received
if personally delivered, (b) when deposited in the mail if delivered by mail,
(c) the date sent if sent by overnight courier, or (d) the date of transmission
if delivered by telecopy. If notice to Borrower of any intended disposition of
the Property or any other intended action is required by law in a particular
instance, such notice shall be deemed commercially reasonable if given (in the
manner specified in this Section) at least ten (10) calendar days prior to the
date of intended disposition or other action.
Section 12.04. FURTHER ASSURANCE AND CORRECTIVE INSTRUMENTS. Borrower
hereby agrees that it will, from time to time, execute, acknowledge and deliver,
or cause to be executed, acknowledged and delivered, such further acts,
instruments, conveyances, transfers and
30
assurances, as Lender reasonably deems necessary or advisable for the
implementation, correction, confirmation or perfection of this Agreement, the
Mortgage, the Hazardous Substances Agreement, the Escrow Agreement and any
rights of Lender hereunder or thereunder.
Section 12.05. BINDING EFFECT; TIME OF THE ESSENCE. This Agreement
shall inure to the benefit of and shall be binding upon Lender and Borrower and
their respective successors and assigns. Time is of the essence.
Section 12.06. SEVERABILITY. In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 12.07. AMENDMENTS. To the extent permitted by law, the terms of
this Agreement shall not be waived, altered, modified, supplemented or amended
in any manner whatsoever except by written instrument signed by the parties
hereto, and then such waiver, consent, modification or change shall be effective
only in the specific instance and for the specific purpose given.
Section 12.08. EXECUTION IN COUNTERPARTS. This Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute one and the same instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart, provided that
only the original marked "Original: 1 of 6" on the execution page thereof shall
constitute chattel paper under the UCC.
Section 12.09. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State.
Section 12.10. WASHINGTON STATE NOTICE. Lender hereby notifies Borrower
as follows: ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY/EXTEND CREDIT, OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
Section 12.11. CAPTIONS. The captions or headings in this Agreement are
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or sections of this Agreement.
Section 12.12. ENTIRE AGREEMENT. This Agreement, the Mortgage, the
Hazardous Substances Agreement, the Escrow Agreement and the exhibits hereto and
thereto constitute the entire agreement among Lender, Borrower and Escrow Agent.
There are no understandings, agreements, representations or warranties, express
or implied, not specified herein or in such documents regarding this Agreement
or the Property financed hereby.
Section 12.13. COMMERCIAL PURPOSES; USURY. Borrower represents and
warrants that the Property which is the subject of this Agreement is not and
will not be used principally for agricultural purposes and that the obligations
and indebtedness evidenced by this Agreement were incurred primarily for
commercial, investment or business purposes and not for personal, family or
household purposes within the meaning of RCW 19.52.080. It is the intention of
the parties hereto to comply with any applicable usury laws; accordingly, it is
agreed that,
31
notwithstanding any provisions to the contrary in this Agreement, in no event
shall this Agreement require the payment or permit the collection of interest or
any amount in the nature of interest or fees in excess of the maximum permitted
by applicable law.
Section 12.14. BOUND TRANSCRIPTS. Within 45 days of the day of closing,
Borrower shall cause to be prepared and furnished, at Borrower's expense, to
Lender and its counsel, bound transcripts in CD Rom format containing this
Agreement, the Escrow Agreement and all other documents related thereto.
Section 12.15. WAIVER OF JURY TRIAL. LENDER AND BORROWER HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY OF THE
RELATED DOCUMENTS, ANY DEALINGS AMONG LENDER OR BORROWER RELATING TO THE SUBJECT
MATTER OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY RELATED
TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED AMONG LENDER AND
BORROWER. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS). THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT,
ANY RELATED DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY RELATED TRANSACTIONS. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
[REMAINDER OF PAGE INTENTIONALLY BLANK; EXECUTION PAGE FOLLOWS.]
32
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
their respective corporate names by their duly authorized officers, all as of
the date first written above.
Lender: GE CAPITAL PUBLIC FINANCE, INC.
By: ___________________________________________
Title: Vice President
Borrower: ABSORPTION CORP.
By: ___________________________________________
Title: ________________________________________
ORIGINAL: ___ OF 6
[EXECUTION PAGE OF TAXABLE RATE LOAN AGREEMENT]
EXHIBIT A TO TAXABLE RATE LOAN AGREEMENT
SCHEDULE OF LOAN PAYMENTS
Closing Date: March 19, 2003
Coupon Rate: 5.78% until October 1, 2003, 5.53% thereafter
PAYMENT PAYMENT LOAN PRINCIPAL INTEREST PRINCIPAL PREPAYMENT
DATE NUMBER PAYMENT COMPONENT COMPONENT BALANCE* AMOUNT*
--------- ------- ---------- ---------- --------- ---------- ----------
3/19/2003 -- -- -- 555,000.00 582,750.00
5/1/2003 1 12,064.63 8,322.08 3,742.55 546,677.92 574,011.82
6/1/2003 2 12,064.63 9,431.46 2,633.17 537,246.46 564,108.78
7/1/2003 3 12,064.63 9,476.89 2,587.74 527,769.57 554,158.05
8/1/2003 4 12,064.63 9,522.54 2,542.09 518,247.03 544,159.38
9/1/2003 5 12,064.63 9,568.41 2,496.22 508,678.62 534,112.55
10/1/2003 6 12,064.63 9,614.49 2,450.14 499,064.13 524,017.34
11/1/2003 7 12,064.63 9,764.78 2,299.85 489,299.35 513,764.32
12/1/2003 8 12,064.63 9,809.78 2,254.85 479,489.57 503,464.05
1/1/2004 9 12,064.63 9,854.98 2,209.65 469,634.59 493,116.32
2/1/2004 10 12,064.63 9,900.40 2,164.23 459,734.19 482,720.90
3/1/2004 11 12,064.63 9,946.02 2,118.61 449,788.17 472,277.58
4/1/2004 12 12,064.63 9,991.86 2,072.77 439,796.31 461,786.13
5/1/2004 13 12,064.63 10,037.90 2,026.73 429,758.41 446,948.75
6/1/2004 14 12,064.63 10,084.16 1,980.47 419,674.25 436,461.22
7/1/2004 15 12,064.63 10,130.63 1,934.00 409,543.62 425,925.36
8/1/2004 16 12,064.63 10,177.32 1,887.31 399,366.30 415,340.95
9/1/2004 17 12,064.63 10,224.22 1,840.41 389,142.08 404,707.76
10/1/2004 18 12,064.63 10,271.33 1,793.30 378,870.75 394,025.58
11/1/2004 19 12,064.63 10,318.67 1,745.96 368,552.08 383,294.16
12/1/2004 20 12,064.63 10,366.22 1,698.41 358,185.86 372,513.29
1/1/2005 21 12,064.63 10,413.99 1,650.64 347,771.87 361,682.74
2/1/2005 22 12,064.63 10,461.98 1,602.65 337,309.89 350,802.29
3/1/2005 23 12,064.63 10,510.19 1,554.44 326,799.70 339,871.69
4/1/2005 24 12,064.63 10,558.63 1,506.00 316,241.07 328,890.71
5/1/2005 25 12,064.63 10,607.29 1,457.34 305,633.78 314,802.79
6/1/2005 26 12,064.63 10,656.17 1,408.46 294,977.61 303,826.94
7/1/2005 27 12,064.63 10,705.27 1,359.36 284,272.34 292,800.51
8/1/2005 28 12,064.63 10,754.61 1,310.02 273,517.73 281,723.26
9/1/2005 29 12,064.63 10,804.17 1,260.46 262,713.56 270,594.97
10/1/2005 30 12,064.63 10,853.96 1,210.67 251,859.60 259,415.39
11/1/2005 31 12,064.63 10,903.98 1,160.65 240,955.62 248,184.29
12/1/2005 32 12,064.63 10,954.23 1,110.40 230,001.39 236,901.43
1/1/2006 33 12,064.63 11,004.71 1,059.92 218,996.68 225,566.58
2/1/2006 34 12,064.63 11,055.42 1,009.21 207,941.26 214,179.50
3/1/2006 35 12,064.63 11,106.37 958.26 196,834.89 202,739.94
4/1/2006 36 12,064.63 11,157.55 907.08 185,677.34 191,247.66
5/1/2006 37 12,064.63 11,208.97 855.66 174,468.37 177,957.74
PAYMENT PAYMENT LOAN PRINCIPAL INTEREST PRINCIPAL PREPAYMENT
DATE NUMBER PAYMENT COMPONENT COMPONENT BALANCE* AMOUNT*
--------- ------- ---------- ---------- --------- ---------- ----------
6/1/2006 38 12,064.63 11,260.62 804.01 163,207.75 166,471.91
7/1/2006 39 12,064.63 11,312.51 752.12 151,895.24 154,933.14
8/1/2006 40 12,064.63 11,364.65 699.98 140,530.59 143,341.20
9/1/2006 41 12,064.63 11,417.02 647.61 129,113.57 131,695.84
10/1/2006 42 12,064.63 11,469.63 595.00 117,643.94 119,996.82
11/1/2006 43 12,064.63 11,522.49 542.14 106,121.45 108,243.88
12/1/2006 44 12,064.63 11,575.59 489.04 94,545.86 96,436.78
1/1/2007 45 12,064.63 11,628.93 435.70 82,916.93 84,575.27
2/1/2007 46 12,064.63 11,682.52 382.11 71,234.41 72,659.10
3/1/2007 47 12,064.63 11,736.36 328.27 59,498.05 60,688.01
4/1/2007 48 12,064.63 11,790.44 274.19 47,707.61 48,661.76
5/1/2007 49 12,064.63 11,844.78 219.85 35,862.83 36,580.09
6/1/2007 50 12,064.63 11,899.36 165.27 23,963.47 24,442.74
7/1/2007 51 12,064.63 11,954.20 110.43 12,009.27 12,249.46
8/1/2007 52 12,064.63 12,009.27 55.36 0.00 0.00
---------- ---------- ---------
627,360.76 555,000.00 72,360.76
--------------------
*After payment of Loan Payment due opposite Prepayment Amount.
A-2
EXHIBIT B-1 TO TAXABLE RATE LOAN AGREEMENT
FORM OF OPINION OF COUNSEL TO BORROWER
[Closing Date]
Absorption Corp.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
GE Capital Public Finance, Inc.
Suite 470
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Re: $555,000.00 Loan from GE Capital Public Finance, Inc. to Absorption Corp.
Ladies and Gentlemen:
We have acted as counsel to Absorption Corp., a Nevada corporation
("Borrower"), with respect to the above-referenced transaction and with respect
to the Taxable Rate Loan Agreement dated as of March 1, 2003 (the "Loan
Agreement") between GE Capital Public Finance, Inc. ("Lender"), and Borrower,
the Escrow Agreement of even date therewith (the "Escrow Agreement") among
Lender, Washington Economic Development Finance Authority, Borrower and Xxxxxxxx
& Xxxxxx Trust Company N.A., as escrow agent, the Commercial Deed of Trust,
Security Agreement, Assignment of Leases and Rents and Fixture Filing of even
date therewith (the "Mortgage"), the Environmental Indemnity Agreement Regarding
Hazardous Substances (the "Hazardous Substances Agreement"; the Loan Agreement,
the Escrow Agreement, the Mortgage and the Hazardous Substances Agreement may be
referred to herein collectively as the "Agreements") of even date therewith
executed by Borrower and International Absorbents Inc. and various related
matters and, in this capacity, have reviewed a duplicate original or certified
copy of each of the Agreements. Based upon the examination of these and such
other documents as we deem relevant, it is our opinion that:
1. Borrower has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Nevada with
full power and authority to own its properties and conduct its
business. Borrower is qualified to do business in the State of
Washington.
2. Borrower has full power and authority to execute and deliver
the Agreements and to carry out the terms thereof. The Agreements have
been duly and validly authorized, executed and delivered, are in full
force and effect and are the legal, valid and binding contracts of
Borrower enforceable in accordance with their respective terms
(including against claims of usury), except to the extent limited by
state and federal laws affecting remedies and by bankruptcy,
reorganization, or other laws of general application relating to or
affecting the enforcement of creditors' rights.
3. No consent, authorization, approval or other action by, and no
notice to, or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by
Borrower of the Agreements, except for such action which has been duly
obtained or taken and is in full force and effect.
4. The consummation of the transactions contemplated by the
Agreements and the carrying out of the terms thereof will not result in
violation of any provisions of the articles of incorporation or bylaws
of Borrower or result in the violation of any provision of, or in a
default under, any indenture, mortgage, deed of trust, indebtedness,
agreement, judgment, decree, order, statute, rule or regulation to
which Borrower is a party or by which it or its property is bound.
5. There are no legal or governmental actions, suits,
proceedings, inquiries or investigations pending, threatened or
contemplated, or any basis therefor, to which Borrower is or may become
a party or of which any property of Borrower is or may become subject,
other than ordinary routine litigation incident to the kind of business
conducted by Borrower which, if determined adversely to Borrower, would
not, individually or in the aggregate, have a material adverse effect
on the financial position or results of operations of Borrower.
6. There are no legal or governmental proceedings pending,
threatened or contemplated, or any basis therefor, wherein an
unfavorable decision, ruling or finding would adversely affect the
validity of or security for the Agreements or the transactions
contemplated thereby.
7. Borrower has taken all steps legally required as a condition
precedent to the execution and delivery of the Loan Agreement and to
permit the commencement of the acquisition, construction, improvement
and operation of the Property (defined in the Loan Agreement). Borrower
has made all submissions to governmental authorities and has obtained,
and there are currently in full force and effect, all consents,
approvals, authorizations, accreditations, licenses, permits and orders
of any governmental or regulatory authority that are required to be
obtained by Borrower to enable the Property to be acquired, constructed
and improved in accordance with the plans and specifications therefor.
8. The provisions of the Loan Agreement and the Mortgage are
effective to create a security interest in favor of Lender in all of
Borrower's right, title and interest in and to the Property and all
proceeds thereof. Such security interest has been properly perfected
and is subject to no liens or encumbrances.
9. The Mortgage is in proper form for execution and recording the
real property records of Whatcom County, Washington and when so
recorded will be effective to create in favor of Lender a valid and
enforceable lien and mortgage on the real property described therein.
The Mortgage contains the remedies which are customarily granted to
commercial lenders in loan transactions secured by real property
located in the State of Washington.
This opinion may be relied upon the addressees hereto and any of their
successors and assigns.
Very truly yours,
X-0-0
XXXXXXX X-0 TO TAXABLE RATE LOAN AGREEMENT
FORM OF OPINION OF COUNSEL TO CORPORATE GUARANTOR
[Closing Date]
Absorption Corp.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
GE Capital Public Finance, Inc.
Suite 470
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Re: $555,000.00 Loan from GE Capital Public Finance, Inc. to Absorption Corp.
Ladies and Gentlemen:
We have acted as counsel to International Absorbents Inc., a company
duly incorporated under the laws of the Province of British Columbia, Canada
("Guarantor"), with respect to the above-referenced transaction and with respect
to the Taxable Rate Loan Agreement dated as of March 1, 2003 (the "Loan
Agreement") between GE Capital Public Finance, Inc. ("Lender"), and Absorption
Corp. ("Borrower"), the Escrow Agreement of even date therewith (the "Escrow
Agreement") among Lender, Washington Economic Development Finance Authority,
Borrower and Xxxxxxxx & Xxxxxx Trust Company N.A., as escrow agent, the
Commercial Deed of Trust, Security Agreement, Assignment of Leases and Rents and
Fixture Filing of even date therewith (the "Mortgage"), the Environmental
Indemnity Agreement Regarding Hazardous Substances (the "Hazardous Substances
Agreement"; the Loan Agreement, the Escrow Agreement, the Mortgage and the
Hazardous Substances Agreement may be referred to herein collectively as the
"Agreements") of even date therewith executed by Borrower and Guarantor and
various related matters and the Corporate Guaranty and Negative Pledge Agreement
(the "Guaranty") dated as of March 1, 2003 executed by Guarantor and, in this
capacity, have reviewed a duplicate original or certified copy of each of the
Agreements and the Guaranty. Based upon the examination of these and such other
documents as we deem relevant, it is our opinion that:
1. Guarantor has been duly organized and is validly existing as a
company in good standing under the laws of the Province of British Columbia,
Canada with full power and authority to own its own properties and conduct its
business.
2. Guarantor has full power and authority to execute and deliver the
Guaranty and each of the Agreements to which Guarantor is a party and to carry
out the terms thereof. The Guaranty and each of the Agreements to which
Guarantor is a party have been duly and validly authorized, executed and
delivered, are in full force and effect and are the legal, valid and binding
contracts of Guarantor enforceable in accordance with their respective terms,
except to the extent limited by state and federal laws affecting remedies and by
bankruptcy, reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights.
3. The consummation of the transactions contemplated by the Guaranty
and each of the Agreements to which Guarantor is a party and the carrying out of
the terms thereof will not result in the violation of any provisions of any
articles of incorporation or bylaws of Guarantor or result in the violation of
any provision of, or in a default under, any indenture, mortgage, deed of trust,
indebtedness, agreement, judgment, decree, order, statute, rule or regulation to
which Guarantor is a party or by which Guarantor's property is bound.
4. There are no legal or governmental actions, suits, proceedings,
inquiries or investigations pending, threatened or contemplated, or any basis
therefor, to which Guarantor is or may become a party or of which any property
of Guarantor is or may become subject, other than ordinary routine litigation
incident to the kind of business conducted by Guarantor which, if determined
adversely to Guarantor, would not, individually or in the aggregate, have a
material adverse effect on the financial position or results of operations of
Guarantor.
5. There are no legal or governmental proceedings pending, threatened
or contemplated, or any basis therefor, wherein an unfavorable decision, ruling
or finding would adversely affect the validity of the Guaranty or any of the
Agreements to which Guarantor is a party or the transactions contemplated
thereby.
6. The choice of law of the State of Washington as the law governing
the Guaranty would be upheld and recognized as a valid choice of law by the
courts of the Province of British Columbia, Canada.
7. A judgment rendered by any federal or state court in the State of
Washington having jurisdiction over Guarantor may be enforced in the courts of
the Province of British Columbia, Canada. The foregoing opinion assumes the
rendering of such judgment complied with ____________________________.
This opinion may be relied upon the addressees hereto and any of their
successors and assigns.
Very truly yours,
B-2-2
EXHIBIT C TO TAXABLE RATE LOAN AGREEMENT
SCHEDULE OF
ACQUISITION COST OF PROPERTY
Proceeds of the Loan may be allocated to expenditures made for all or a
portion of the following Acquisition Costs:
Acquisition, construction and improvement of a building located on the
Property providing approximately 106,000 square feet of space for manufacturing.
EXHIBIT D TO TAXABLE RATE LOAN AGREEMENT
LEGAL DESCRIPTION OF REAL PROPERTY
Real property in the County of Whatcom, State of Washington, described as
follows:
Parcel A
Lots 5 and 6, Grandview Light Industrial Park, General and Specific Binding Site
Plan as per the map thereof, recorded January 10, 1992, under Whatcom County
Auditor's file No. 920110138, records of Whatcom County, Washington, being a
portion of Section 6, Township 39 North, Range 2 East of X.X.
Parcel A-1
An easement for ingress, egress and utilities as delineated on the face of
Grandview Light Industrial Park Binding Site Plan.
Parcel B
Xxx 0, Xxxxxxxxx Xxxxx Xxxxxxxxxx Xxxx General Binding Site Plan Modification
and Specific Binding Site Plan No. 4, as per the map thereof, recorded August 8,
1996, under Whatcom County Auditor's file No. 960808016, records of Whatcom
County, Washington, being a portion of Section 6, Township 39 North, Range 2
East of X.X.
Parcel B-1
An easement for ingress, egress and utilities as delineated on the face of
Grandview Light Industrial Park General Binding Site Plan Modification and
Specific Binding Site Plan No. 4.
APN: 390206 122168 0000
APN: 390206 092195 0000
APN: 390206 063216 0000
EXHIBIT E TO TAXABLE RATE LOAN AGREEMENT
LIST OF PERMITTED EXCEPTIONS
1. General Taxes for the year 2003, none now due and payable. The first half
becomes delinquent after April 30th. The second half becomes delinquent
after October 31st.
Tax Account No.: 390206 122168 0000
2. General Taxes for the year 2003, none now due and payable. The first half
becomes delinquent after April 30th. The second half becomes delinquent
after October 31st.
Tax Account No.: 390206 092195 0000
3. General Taxes for the year 2003, none now due and payable. The first half
becomes delinquent after April 30th. The second half becomes delinquent
after October 31st.
Tax Account No.: 390206 063216 0000
4. Any tax, fee, assessments or charges as may be levied by Lot Owner's
Association and/or for Road Maintenance, none now due and payable.
5. Covenant to Bind Properties and the Terms and Conditions contained
therein:
Recorded: January 17, 2003
Recording Information: 2030103673
6. Easement, including terms and provisions contained therein:
Recording Information: 1573884
In Favor of: Cascade Natural Gas Corporation
For: Pipeline(s)
7. Easement, including terms and provisions contained therein:
Recording Information: 1591808
In Favor of: Continental Telephone of the Northwest
For: Telephone, telegraph and communication structures
8. Covenants, conditions, restrictions and/or easements; but deleting any
covenant, condition or restriction indicating a preference, limitation or
discrimination based on
race, color, religion, sex, handicap, family status, or national origin to
the extent such covenants, conditions or restrictions violate Title 00,
Xxxxxxx 0000(x), xx xxx Xxxxxx Xxxxxx Codes:
Recording Information: 920110139
Modification and/or amendment by instrument:
Recording Information: 920731205 & 960808017
9. Real Property Owners Agreement and the terms and conditions thereof:
Between: Coast Pacific Trading, Inc.
And: Xxxxxx Xxxxxx and Xxxxxxxx X. Xxxxxx, husband and
wife & Xxxxxx, Inc.
Recording Information: 931208159
E-2
EXHIBIT F TO TAXABLE RATE LOAN AGREEMENT
LIST OF TRADE NAMES
None.
EXHIBIT G TO TAXABLE RATE LOAN AGREEMENT
ENVIRONMENTAL PHASE I REPORT REQUIREMENTS
The report is to be addressed to GE CAPITAL PUBLIC FINANCE, INC.
("GECPF") and BORROWER, and must be signed by the preparing engineer. The
introductory paragraphs of the report should include (a) the name of the
property or transaction; (b) a brief description of the property; (c) the date
of initial contact with GECPF; (d) a statement acknowledging GECPF as Lender;
(e) a description of the assignment (Phase I or Phase II Reporting format); (f)
Why the assessment is being conducted; and (g) how the information will be used.
The following sections must be addressed and included in all reports:
1. Property Description -- The property description should include site
specific physical and demographic conditions and include a site diagram
and area location map. In addition, a description of the hydrogeology
as well as a statement as to the inferred direction of groundwater flow
must be included. The type of soil, density, absorptive qualities,
etc., distance to water table, and any other pertinent information
useful in analyzing the movement of materials in and through the soil
at the subject property must be addressed. Also to be included is the
presence and quality of potable water and how said source may be
impacted by on-site contamination.
2. Historical Study -- A review of the historical uses of the property is
to be included in the report. Review of real estate records such as
title documentation (see below), appraisal reports, certificates of
occupancy, building permits, etc., available deeds and other ownership
records, tax maps/records, aerial photographs, topographical or
township planning maps, Xxxxxxx maps, and interviews may be utilized.
With regard to title documentation, the report must include a chain of
title search (through a title company) listing past owners of the
property. The search should go back a minimum of 50 years.
An affirmative statement must be given, as to whether or not there are
any expected environmental concerns as a result of any prior ownership
or use. If the property was previously used for agricultural purposes,
the engineer must include statements as to what types of pesticides
would have been used as well as their probable and existing impact to
the subject property.
3. On-Site Inspection -- The inspector is to make a physical inspection of
the site to evaluate for visual signs of hazardous materials. The
report should include the results of this inspection and must
incorporate the following areas of concern:
(a) Asbestos:
(i) Suspect/potential asbestos containing materials (PACM)
which are readily accessible, such as ceiling tiles, mastic
in flooring, boiler pipe wrapping, etc., are to be tested
to determine the presence of asbestos. Other potential
sources of asbestos containing materials which are not
readily accessible,
such as wallboards, roof flashings, etc., need not be
tested, but should be identified, and the quantity (i.e.,
sq. ft.) of suspected PACMs estimated. In both cases, the
cost to remove it should be included in the report.
(ii) The report must state whether the asbestos is in a friable
or non-friable state and include an estimate of the cost to
remove the asbestos containing materials.
(iii) Asbestos containing materials, if they are not to be
removed, are to be addressed in an Operations and
Maintenance Agreement/Plan, a copy of which is to be
included with the report.
(b) PCB's:
The report should identify any PCB containing transformers. If a
"no PCB content" sticker is not present on the transformer, the
inspector is to verify ownership and responsibility for its
maintenance. GE Capital Public Finance, Inc. may require the
Borrower have the transformer tested (by the responsible party)
for PCB presence or leakage. Any PCB containing transformers or
fixtures, for which a utility is not responsible, will have to be
removed. Estimated costs for doing that removal are to be
included in the report.
(c) Above and Underground Storage Tanks:
The inspection must include identification of any aboveground and
underground storage tanks at the subject property. Any such tanks
must be checked for the following: (i) condition, with the latest
testing data included if it exists; (ii) whether or not
registration with a Federal, State, or local agency is required;
(iii) recommendations should be included for any testing or
remediation indicated by the inspection and the latest testing
data included with the report, and (iv) in the case of
aboveground storage tanks, the report should indicate whether or
not the ASTs need to be placed within secondary containment, i.e.
bermed concrete containment.
(d) Radon:
Either a test should be made for radon gas or a radon survey map
of the area should be consulted to determine the radon rating of
the subject property. If radon is not an issue in the area of the
subject property, an affirmative statement to that effect must be
made.
(e) Wetlands:
Wetland issues must be addressed. If wetlands are not an issue,
an affirmative statement to that effect should be included in the
report.
G-2
(f) Hazardous Materials:
General housekeeping practices are to be outlined if hazardous
materials are stored on site. This section should include an
outline of materials utilized/stored on site, their purpose,
methods of disposal, potential for discharge into municipal storm
drains or on-site drainage facilities (including septic systems),
and regulatory reporting requirements.
If a septic system is located on site, the report must address
the following: (i) the age of the system, (ii) its location
parameters, maintenance records and condition, (iii) its
potential as a source of hazardous materials, and (iv) the need
for testing of organic or inorganic substances must be addressed.
4. Activity Review -- The inspector is to contact all federal (CERCLIS),
state (EPA), and local regulatory agencies to determine whether the
site or the surrounding properties within a one mile radius (regardless
of the ASTM guidelines) are currently or have been involved in any
cleanup activities. Any reference to such cleanup activity is to
include the following: (a) location and distance of the site from the
subject property including notation as to whether the site is up or
down gradient to the subject property; (b) based on that information,
an affirmative statement must be given as to whether or not each such
site represents a potential environmental hazard to the subject
property; (c) database records to be searched should include NPL,
CERCLIS, RCRIS-Violators, HMIRS, PADS, ERNS, FINDS, TRIS, TSCA, UST/
AST, LUST, and any other applicable state or federal databases; and (d)
the Activity Review must be less than 6 month old.
5. The report must be less than 6 months old.
6. The report must be updated if it was completed prior to any
construction or substantial remodel. The update should include the use
of construction materials as well as an update of all RCRA, CERCLIS &
EPA lists.
7. Any other noted site specific environmental issues must be identified
and recommendations for their removal/remediation should be offered.
G-3
EXHIBIT H TO TAXABLE RATE LOAN AGREEMENT
PERMANENT LOAN INSURANCE REQUIREMENTS
NAME OF INSURED:
INSURED MAILING ADDRESS:
PROPERTY ADDRESS(s):
MORTGAGEE/LOSS PAYEE:
GE Capital Public Finance, Inc., a Delaware Corporation, its successors
and assigns, _______________________________.
INSURANCE REQUIREMENTS:
HAZARD INSURANCE:
Evidenced on Form Xxxxx 27 - Evidence of Property Insurance, naming GE
Capital Public Finance, Inc., its successors and/or assigns, as Loss
Payee and Mortgagee as respects the subject property.
Perils: Fire and Extended coverage, vandalism and malicious mischief,
Boiler and Machinery, and if applicable, Flood and Earthquake
Insurance.
Values: 100% Replacement cost value of property/Limit of $5,000
deductible
Endorsements Required: Inflation Guard, and Agreed Amount and
Replacement Cost endorsements; List of locations and schedule of values, if
blanket policy; 438BFU (Loss Payee Endorsement (see copy attached) with
enlargement of same for easier reading), in favor of GE Capital Public Finance,
Inc. amended to 30 days notice of change, cancellation or non-renewal; 30 days
notice of cancellation; waiver of subrogation endorsement is required unless
property is owner occupied; co-insurance should not be a condition of any
insurance provided.
Loss of Rents/Business Interruption for 12 months (or in an amount
equivalent to at least 12 mos. rent) is required.
Boiler and Machinery coverage is required. If the insurance carrier for
the Boiler & Machinery coverage is different from that of the Property
Coverage, a Joint Loss Agreement endorsement must be reflected on the
evidences of insurance for both Property coverage and Boiler &
Machinery coverage.
If the 438BFU Lender's Loss Payable Endorsement is not available,
please submit another Loss Payable endorsement for review by GE Capital
Public Finance, Inc.
LIABILITY:
Evidenced on Form Xxxxx 25 - Certificate of Liability Insurance
Coverage to be on occurrence basis only.
Evidence of insurance, showing comprehensive general liability on an
occurrence basis, in an amount not less than $2,000,000 (per
occurrence) to include: (i) bodily injury and property damage liability
(primary and excess umbrella acceptable to satisfy limits); and (ii) GE
Capital Public Finance, Inc. is to be named additional insured as
respects this property only and the additional insured endorsement
should be attached to the certificate.
SPECIAL INSTRUCTIONS
GE Capital Public Finance, Inc. is to be provided with an Evidence of Property
Insurance and a Certificate of Liability Insurance from an insurance company
having a Best's Rating of A/X or better for both hazard and liability coverage
and must be executed by the insurance company or its authorized agent. The
evidence and certificate must itemize all the above endorsements and the
evidence must include a copy of the completed and signed 438BFU endorsement (a
copy of which is attached). WITHIN 90 DAYS OF ISSUANCE OF THE EVIDENCE OF
INSURANCE, THE INSURANCE COMPANY IS TO PROVIDE A CERTIFIED COPY OF THE INSURANCE
POLICY INCLUDING ALL ENDORSEMENTS AND AMENDMENTS.
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EXHIBIT I TO TAXABLE RATE LOAN AGREEMENT
FORM OF CERTIFICATE OF CHIEF FINANCIAL OFFICER
I, the undersigned, hereby certify that I am the duly qualified and
acting chief financial officer of Absorption Corp. ("Borrower") and, with
respect to Section [7.01(a)/7.01(b)] of the Taxable Rate Loan Agreement dated as
of March 1, 2003 (the "Agreement") between Borrower and GE Capital Public
Finance, Inc. ("Lender"), that:
1. The attached financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis.
2. I have no knowledge of any Default or Event of Default under the
Agreement.
3. Section 7.11 of the Agreement requires Borrower to maintain its
ratio of Debt to Tangible Net Worth at not more than 1.50 to 1.00. The
calculation of such ratio is set forth below:
4. Section 7.12 of the Agreement requires Borrower to maintain its Debt
Service Coverage Ratio at not less than 1.75 to 1.00. The calculation of such
ratio is set forth below:
5. Section 7.13 of the Agreement requires Borrower to maintain its
Tangible Net Worth at not less than $7,000,000. Borrower's Tangible Net Worth is
$___________.
Dated: _________ __, 20__.
Borrower: ABSORPTION CORP.
By: ______________________________________
Title: Chief Financial Officer
Date: ______________________________________
EXHIBIT J TO TAXABLE RATE LOAN AGREEMENT
FORM OF LETTER OF CREDIT
(Letterhead of Bank)
GE Capital Public Finance, Inc.
Suite 470
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Re: Irrevocable Letter of Credit No. __________ for
U.S.$_________, Dated _______ __, 20__.
Ladies and Gentlemen:
We hereby issue our irrevocable Letter of Credit No. _______ in the
amount of $_________ in favor of GE Capital Public Finance, Inc., a Delaware
corporation ("Beneficiary"), for the account of Absorption Corp. ("Customer").
We undertake to honor from time to time Beneficiary's sight draft or
drafts on us not exceeding in the aggregate U.S.$_________ when accompanied by a
signed statement on behalf of Beneficiary stating either (i) that the amount of
the accompanying draft is due and owing by Customer to Beneficiary or (ii) that
a petition has been filed by or against Customer under Title 11 of the United
States Code or any successor law or similar law.
We agree that we shall have no duty or right to inquire as to the basis
upon which Beneficiary has determined to present to us any draft under this
Letter of Credit, and presentation of such draft shall automatically result in
payment to Beneficiary.
This Letter of Credit is valid until _______ __, 20__, and drafts drawn
hereunder, when accompanied by the statement referred to above, will be honored
if presented to us at our office at ________________________________ on or
before that date by 11:59 P.M.
All drafts must be marked "Drawn under irrevocable Letter of Credit No.
_____, dated _______ __, 20__." All drawings shall be made in person or by
telecopy (or other facsimile telecommunication) without further need of
documentation, it being understood that Beneficiary's signed drafts and the
statement referred to above submitted via such telecopy (or other facsimile
telecommunication) are to be the sole operative instruments of drawing. Such
documents shall be presented to _____________________________________________,
telecopy number ___________.
This Letter of Credit is subject to the Uniform Customs and Practice
for Documentary Credits (1993 Revision) (the "UCP") and, to the extent not
inconsistent therewith, the Uniform Commercial Code of the State of Washington.
If the expiration date stated above occurs on a
date that we are closed for reasons referred to in Article 17 of the UCP, then
such expiration date shall be extended to the tenth Business Day (defined below)
on which we are open following written notice to Beneficiary from us that we
have reopened. "Business Day" shall mean a day on which we are is not required
or authorized by law to be closed and on which the New York Stock Exchange is
open.
This Letter of Credit is transferable in its entirety to any transferee
that has succeeded to Beneficiary's rights under the Taxable Rate Loan Agreement
dated as of March 1, 2003 between Beneficiary and Customer. Transfer of this
Letter of Credit to such transferee shall be effected by the presentation to us
of this Letter of Credit accompanied by a signed notice of transfer. Upon such
presentation we shall endorse the transfer on this Letter of Credit and such
transfer shall become effective upon delivery of this Letter of Credit by us to
such transferee.
We agree that drawings under this Letter of Credit will be paid from
our own funds and not directly or indirectly from funds or collateral on deposit
with us or pledged for our account and that we will seek reimbursement for
payments made pursuant to this Letter of Credit only after such payments have
been made.
All of the terms and conditions of this Letter of Credit are contained
herein and shall not be altered except by reduction in the amount due to
corresponding payments in like amount in compliance with the aforementioned
terms. There are no other conditions to this Letter of Credit.
We hereby waive any defense based upon any allegation of fraud.
Very truly yours,
____________________________________________
By _________________________________________
Title ______________________________________
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