REIMBURSEMENT AGREEMENT
between
K-V PHARMACEUTICAL COMPANY
and
LASALLE NATIONAL BANK
dated as of October 16, 1997
$4,595,000.00
Industrial Development Authority of
the County of St. Louis, Missouri
Private Activity Refunding and Revenue Bonds Series 1989(F)
(K-V Pharmaceutical Company Project)
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINED TERMS..................................................2
ARTICLE II REIMBURSEMENT OBLIGATION; OTHER PAYMENTS;
LETTER OF CREDIT COMMISSION; SECURITY..........................8
Section 2.1. Reimbursement..................................................8
Section 2.2. Fees; Interest on Overdue Amounts..............................9
Section 2.3. Computation of Interest and Fees;
Place and Manner of Payment....................................9
Section 2.4. Payments in Respect of Regulatory Changes......................10
Section 2.5. Security; Release of Pledged Bonds.............................11
Section 2.6. Loan in Respect of Certain Draws
under the Letter of Credit.....................................12
Section 2.7. Substitute Letter of Credit....................................12
Section 2.8. Optional Redemption............................................12
Section 2.9. Required Deposits for Mandatory
Redemption Under Section 302(g)................................13
ARTICLE III ISSUANCE OF LETTER OF CREDIT;
CONDITIONS TO ISSUANCE.........................................13
Section 3.1. Issuance of Letter of Credit...................................13
Section 3.2. Conditions Precedent to Issuance of Letter of Credit...........13
ARTICLE IV REPRESENTATIONS AND WARRANTIES; COVENANTS;
INDEMNIFICATION; CONTINUING OBLIGATION.........................16
Section 4.1. Representations and Warranties of the Borrower.................16
Section 4.2. Affirmative Covenants..........................................20
Section 4.3. Negative Covenants.............................................26
Section 4.4. Indemnification................................................28
Section 4.5. Continuing Obligation; Obligation Absolute.....................29
Section 4.6. Liability of the Bank..........................................30
ARTICLE V DEFAULTS AND REMEDIES..........................................32
Section 5.1. Events of Default; Remedies....................................32
Section 5.2. No Waiver; Remedies Cumulative.................................34
Section 5.3. Right of Set-Off...............................................34
ARTICLE VI MISCELLANEOUS..................................................34
Section 6.1. Costs, Expenses and Taxes......................................34
Section 6.2. Term of Letter of Credit and Agreement;
Termination by Borrower........................................35
Section 6.3. Transfer of Letter of Credit...................................35
Section 6.4. Severability...................................................35
Section 6.5. Governing Law..................................................35
Section 6.6. Headings.......................................................36
Section 6.7. Notices........................................................37
Section 6.8. Participation..................................................38
Section 6.9. Counterparts...................................................38
Section 6.10. Notices and Payments..........................................38
Section 6.11. Modification..................................................38
EXHIBITS
Schedule 1.0 Collateral
Exhibit A to Schedule 1.0 Legal Description
Exhibit A Form of Letter of Credit
Exhibit B Form of Legal Opinion of Counsel to Borrower
REIMBURSEMENT AGREEMENT
This REIMBURSEMENT AGREEMENT ("Agreement"), dated as of October 16,
1997 is made by and between K-V PHARMACEUTICAL COMPANY, a Delaware corporation
(the "Borrower"), and LASALLE NATIONAL BANK, a national banking association (the
"Bank").
PREAMBLE
WHEREAS, the Industrial Development Authority of the County of St.
Louis, Missouri (the "Issuer") has issued its Private Activity Refunding and
Revenue Bonds, Series 1989(F) (K-V Pharmaceutical Company Project), in the
aggregate principal amount of $4,595,000.00 (the "Bonds") to provide funds to
refund $3,200,000 of Industrial Development Revenue Bonds Series of 1981
previously issued by Issuer and to finance the acquisition of certain
manufacturing equipment (the "Project") pursuant to the terms of an Indenture of
Trust between the Issuer and Mercantile Bank National Association, formerly know
as Xxxx Xxxxx Bank, as trustee ("Trustee"), dated as of November 1, 1989, as the
same may be amended, modified or supplemented from time to time;
WHEREAS, the Issuer loaned the proceeds of the Bonds to the Borrower
under the terms and conditions set forth in that certain Loan Agreement between
Issuer and Borrower dated as of November 1, 1989, as the same may be amended,
modified or supplemented from time to time (the "Loan Agreement");
WHEREAS, the Bonds are required to be secured by a direct pay Letter of
Credit pursuant to Section 3.6 of the Loan Agreement for the account of the
Borrower naming Trustee as the beneficiary thereof;
WHEREAS, the Borrower has notified the Trustee that it intends to
replace the existing Letter of Credit with an alternate Letter of Credit issued
by the Bank;
WHEREAS, the Bank has agreed to provide a direct pay Letter of Credit
(the "Letter of Credit") in the stated amount of Two Million Five Hundred
Eighty-Six Thousand Three Hundred Thirty and 00/100 Dollars ($2,586,330.00) for
the account of the Borrower naming Trustee as the beneficiary thereof in the
form attached hereto as Exhibit A;
WHEREAS, to evidence its obligation to reimburse the Bank for any and
all draws under the Letter of Credit and fees payable thereunder, the Borrower
enters into this Reimbursement Agreement with the Bank;
WHEREAS, to secure its obligations under this Reimbursement Agreement,
the Borrower will execute concurrently herewith a Missouri Future Advance Deed
of Trust and Security Agreement and an Assignment of Rents and Leases
encumbering the real property described therein;
WHEREAS, the Borrower, the Bank and the Trustee, as custodian (the
"Custodian"), desire to enter into the Pledge Agreement (as defined herein)
pursuant to which, among other things, the Bonds purchased from amounts drawn
under the Letter of Credit due to a failure to remarket will be held by the
Custodian for the benefit of the Bank in pledge as collateral security for the
obligations of the Borrower hereunder and under the Letter of Credit; and
NOW, THEREFORE, in consideration of the premises and the mutual
promises set forth herein, the receipt and sufficiency of which are hereby
acknowledged, in order to induce the Bank to issue the Letter of Credit and
intending to be legally bound hereby, the Borrower and the Bank hereby agree as
follows:
ARTICLE I
DEFINED TERMS
The following terms shall, unless the context indicates otherwise, have
the meanings provided below (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"Affiliate" means any Person (a) that directly or indirectly, through
one or more intermediaries, controls or is controlled by, or is under common
control with the Borrower or one or more Affiliates of the Borrower, (b) that
directly or beneficially owns or holds 10% or more of any equity interest in the
Borrower or one or more Affiliates of the Borrower or (c) 10% or more of whose
voting stock (or in the case of a Person which is not a corporation, 10% or more
of any equity interest) is owned directly or beneficially or held by the
Borrower or one or more Affiliates of the Borrower. For purposes of this
definition and this Agreement the term "control" shall mean, directly or
indirectly, the power to direct or cause the direction of the management or
policies of a Person, whether through ownership interest or otherwise.
"Agreement" means this Reimbursement Agreement.
"Assignment of Rents" means the Assignment of Rents and Leases dated of
even date herewith made by Borrower and Bank pursuant to Sections 2.5(a) and 3.2
(g) hereof.
"Available Amount" means the "Maximum Available Credit" as defined in
the Letter of Credit.
"Bank" means LaSalle National Bank, a national banking association, the
issuer of the Letter of Credit, its successors and assigns.
"Bonds" means the Bonds defined in the Preamble to this Agreement.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions in either the city of New York, New York or Chicago,
Illinois are required or authorized by law to be closed or a day on which the
New York Stock Exchange is closed.
"Capital Expenditures" means the cost of acquiring any fixed assets, or
any improvements, replacements, substitutions, accessions or additions thereto
or therefor which have a useful life of more than one year, including without
limitation, the cost of direct or indirect acquisitions of such assets by way of
purchase, capital lease or otherwise.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means the property of the Borrower set forth in Schedule
1.0 hereto.
"Date of Issuance" means the date of issuance of the Letter of Credit
as provided in Section 3.1 hereof.
"Debt" means all of a Person's liabilities, obligations and
indebtedness to any Person of any and every kind and nature, whether primary,
secondary, direct, indirect, absolute, contingent, fixed, or otherwise,
heretofore, now or hereafter owing, due or payable, however evidenced, created,
incurred, acquired or owing and however arising, whether under written or oral
agreement, by operation of law or otherwise. Without in any way limiting the
generality of the foregoing, Debt specifically includes (i) indebtedness for
borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) obligations to pay the deferred purchase price of
property or services, (iv) obligations as lessee under leases which shall have
been or should be, in accordance with GAAP, recorded as capital leases, (v)
obligations under direct or indirect guaranties in respect of, and obligations
(contingent or otherwise) to purchase or otherwise acquire, or otherwise to
assure a creditor against loss in respect of, indebtedness or obligations of
others of the kinds referred to in clauses (i) through (iv) above, and (vi)
liabilities in respect of unfunded vested benefits under Plans and Multiemployer
Plans covered by Title IV of ERISA.
"Default Rate" shall mean the Prime Rate plus two percent (2%).
"Documents" means this Agreement, the Letter of Credit, the Bonds, the
Indenture, the Loan Agreement, the Remarketing Agreement, the Pledge Agreement,
the Mortgage, the Assignment of Rents, the Environmental Agreement, and any
instrument or agreement related thereto, and "Document" means any of the
foregoing.
"EBITDA" means with respect to any fiscal period of Borrower,
Borrower's aggregate (a) net income for such period, plus (b) the aggregate
amounts deducted in determining such net income in respect of (i) Interest
Expense, (ii) income taxes, (iii) depreciation and (iv) amortization minus (c)
extraordinary gains, each determined on a consolidated basis and in accordance
with GAAP consistently applied.
"Environmental Agreement" means the Environmental Indemnity Agreement
dated of even date herewith between Borrower and Bank delivered pursuant to
Sections 2.5(a) and 3.2(g) hereof.
"Environmental Claim" means any accusation, allegation, notice of
violation, claim, demand, abatement order or other order or direction
(conditional or otherwise) by any governmental authority or any Person for any
damage, including, without limitation, personal injury (including sickness,
disease or death), tangible or intangible property damage, contribution,
indemnity, indirect or consequential damages, damage to the environment,
nuisance, pollution, contamination or other adverse effects on the environment
or for fines, penalties or restrictions resulting from or based upon (i) the
existence of a Release (whether sudden or non-sudden or accidental or
non-accidental) of, or exposure to, any Hazardous Materials in, into or onto the
environment at, in, by, from, onto or related to any Facility, (ii) the use,
handling, transportation, storage, treatment or disposal of Hazardous Materials
in connection with the operation of any Facility, or (iii) the violation, or
alleged violation, of any Environmental Laws or any Governmental Authorizations
relating to environmental matters in connection with the Facilities.
"Environmental Laws" means all statutes, ordinances, orders, rules,
regulations, plans, policies, or decrees and the like relating to (i)
environmental matters, including, without limitation, those relating to fines,
injunctions, penalties, damages, contribution, cost recovery compensation,
losses or injuries resulting from the Release or threatened Release of Hazardous
Materials, (ii) the generation, use, storage, transportation, or disposal of
Hazardous Materials or (iii) occupational safety and health, industrial hygiene,
land use or the protection of human, plant or animal health or welfare, in any
manner applicable to the Borrower or an Affiliate or any of their respective
properties, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. ss. 9601 et seq.), the
Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.), the
Resource Conservation and Recovery Act (42 U.S.C. ss. 6901 et seq.), the Federal
Water Pollution Control Act (33 U.S.C. ss. 1251 et seq.), the Clean Air Act (42
U.S.C. ss. 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. ss. 2601
et seq.), the Occupational Safety and Health Act (29 U.S.C. ss. 651 et seq.) and
the Emergency Planning and Community Right-To-Know Act (42 U.S.C. ss. 11001 et
seq.), each as amended or supplemented, and any analogous present or future
local, state and federal statutes and regulations promulgated pursuant thereto,
each as in effect as of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time and, unless the context otherwise
requires, the regulations promulgated thereunder and any successor statute.
"ERISA Affiliate" means each trade or business (whether or not
incorporated) which together with the Borrower would be deemed to be a "single
employer" within the meaning of Section 4001(b) of ERISA or, where applicable,
would be treated as a "single employer" under Section 412(c)(11) of the Code.
"ERISA Termination Event" means (i) a "Reportable Event" described in
Section 4043 of ERISA (other than a "Reportable Event" not subject to the
provision for 30-day notice to the PBGC under ERISA or with respect to which the
30-day notice requirement has been waived by the PBGC), or (ii) the withdrawal
of the Borrower or any ERISA Affiliate from a Plan during a plan year in which
it was a "substantial employer," both of such terms as defined in Section
4001(a) of ERISA, including a cessation of operations that is treated as a
withdrawal by a "substantial employer" under Section 4062(e) of ERISA, or (iii)
the filing of a notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, or (iv) the institution
of proceedings to terminate a Plan by the PBGC or (v) any other event or
condition which in the reasonable judgment of the Borrower is likely to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, any Plan or (vi) the partial or complete
withdrawal of the Borrower or any ERISA Affiliate from a Multiemployer Plan.
"ETHEX" means Ethex Corporation, a Missouri corporation and
wholly-owned subsidiary of Borrower.
"Event of Default" means an Event of Default as defined in Section 5.1
of this Agreement.
"Facility" or "Facilities" means any and all real property (including,
without limitation, all buildings, fixtures or other improvements located
thereon) now, hereafter or heretofore, owned, leased, operated or used by the
Borrower or any Affiliate or any of their respective successors and assigns
including, without limitation, the real property legally described on Exhibit A
to Schedule 1.0 hereto and the Project.
"GAAP" means generally accepted accounting principles as pronounced by
the Financial Accounting Standards Board and/or the American Institute of
Certified Public Accountants, consistently applied and maintained throughout the
periods indicated.
"Governmental Authorization" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"Governmental Obligations" means noncallable direct general obligations
of, or obligations the payment of the principal of and interest on which are
unconditionally guaranteed by, the United States of America.
"Hazardous Materials" means any chemical, material or substance,
exposure to which is prohibited, limited or regulated by any governmental
authority or the Environmental Laws or which may or could pose a hazard to the
health and safety of the owners, occupants or any persons in the vicinity of the
Facilities, including, without limitation, to the extent so prohibited, limited
or regulated (i) any chemical, material or substance defined as or included in
the definition of "hazardous substances," "hazardous wastes," "hazardous
materials," "extremely hazardous waste," "restricted hazardous waste,"
"infectious waste," "toxic substances" or any other formulations intended to
define, list or classify substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws or publications promulgated pursuant thereto, (ii)
any oil, petroleum or petroleum derived substance, (iii) any drilling fluids,
produced waters and other wastes associated with the exploration, development or
production of crude oil, natural gas or geothermal resources, (iv) any flammable
substances or explosives, (v) any radioactive materials, (vi) asbestos in any
form (which is or could become friable), (vii) urea formaldehyde foam
insulation, (viii) electrical equipment which contains any oil or dielectric
fluid containing levels of polychlorinated biphenyls in excess of fifty parts
per million, or (ix) pesticides.
"Indenture" means the Trust Indenture (pursuant to which the Bonds have
been issued) constituting a trust agreement between the Issuer and Trustee dated
as of November 1, 1989, as amended by that certain Amendment of Indenture of
Trust and Loan Agreement dated as of November 1, 1994 among the Issuer, the
Borrower, the Trustee and the Remarketing Agent.
"Issuer" means the Industrial Development Authority of the County of
St. Louis, Missouri, a public corporation organized and existing under the laws
of the State of Missouri, its successors and assigns.
"K-V Loan Agreement" means that certain Loan Agreement dated as of June
18, 1997 by and among Borrower, ETHEX and PDI and Bank, as the same may be
amended, restated, supplemented or modified from time to time.
"Letter of Credit" means the irrevocable, transferable direct pay
letter of credit issued by the Bank for the account of the Borrower pursuant to
this Agreement in the form of Exhibit A hereto with appropriate insertions, as
amended.
"Leverage Ratio" means, as of any date, the ratio of (i) Liabilities to
(ii) Tangible Net Worth.
"Lien" means, with respect to any asset, any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (including any agreement to
give any of the foregoing, any conditional sale or other title retention
agreement, any lease in the nature thereof, and the filing of or agreement to
give any financing statement under the Uniform Commercial Code of any
jurisdiction).
"Loan Agreement" means the Loan Agreement dated as of November 1, 1989,
between the Issuer and the Borrower, as amended by that certain Amendment of
Indenture of Trust and Loan Agreement dated as of November 1, 1994 among the
Issuer, the Borrower, the Trustee and the Remarketing Agent.
"Long-Term Debt" means all Debt which, at the time of incurrence, has a
final maturity or term greater than one year or which is renewable at the option
of the debtor for a term greater than one year from the date of original
issuance.
"Mortgage" means the Missouri Future Advance Deed of Trust and Security
Agreement dated of even date herewith made by Borrower to Xxxxxxxx X. Weike,
Hillsboro Title Company, Xxxxxxx 00 xxx 0xx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
as trustee, for the benefit of the Bank and delivered by the Borrower to the
Bank pursuant to Sections 2.5(a) and 3.2 (g) hereof.
"Multiemployer Plan" means a plan defined as such in Section 4001(a)(3)
of ERISA to which contributions have been made by the Borrower or any ERISA
Affiliate.
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"PDI" means Particle Dynamics, Inc., a New York corporation and
wholly-owned subsidiary of Borrower.
"Person" means and includes an individual, a partnership, a joint
venture, a corporation (whether or not for profit), a trust, an unincorporated
organization, a government or any department or agency thereof or any other
entity or organization.
"Plan" means, at any time, any single-employer plan, as defined in
Section 4001(a) and subject to Title IV of ERISA, which is maintained, or at any
time during the five calendar years preceding the time in question was
maintained, for employees of the Borrower or an ERISA Affiliate.
"Pledge Agreement" means the Pledge Agreement dated as of even date
herewith between the Bank and the Borrower delivered by the Borrower to the Bank
pursuant to Section 2.5(a) hereof.
"Prime Rate" means the rate of interest (expressed as a percentage per
annum) most recently announced by the Bank from time to time as its U.S. dollar
prime rate, which is not necessarily the Bank's lowest or most favorable rate of
interest at any one time. The rate of interest shall change automatically and
immediately as and when the Prime Rate shall change, without notice to the
Borrower, and any notice to which it may be entitled is hereby waived, and any
such change in the Bank's Prime Rate shall not affect any of the terms and
conditions of this Agreement, all of which shall remain in full force and
effect.
"Project" means the land and the buildings, improvements, fixtures,
furnishings, machinery and equipment and related support facilities described in
Schedule 2 of the Loan Agreement, and any additions, modifications,
improvements, replacements, repairs, reconstruction, restoration or
substitutions made pursuant to Sections 5.1 or 5.6 of the Loan Agreement.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dumping, leaching,
or migration of Hazardous Materials into the indoor or outdoor environment
(including, without limitation, the abandonment or disposal of any barrels,
containers or other closed receptacles containing any Hazardous Materials), or
into or out of any Facility.
"Remarketing Agent" means X.X. Xxxxxxx & Sons or any Remarketing Agent
appointed and at the time acting as such in accordance with the Indenture.
"Remarketing Agreement" means the Remarketing Agreement, dated November
1, 1989, between X.X. Xxxxxxx and Sons and the Borrower and, with respect to any
other Remarketing Agent, the agreement pursuant to which such Remarketing Agent
agrees to act in the capacity of Remarketing Agent.
"Stated Amount" means the maximum available amount of the Letter of
Credit when issued of Two Million Five Hundred Eighty-Six Thousand Three Hundred
Thirty Dollars (US $2,586,330.00), as the same may be reduced and reinstated as
provided in the Letter of Credit.
"Tangible Net Worth" means as of any date, Net Worth minus intangible
assets (as defined in accordance with GAAP).
"Termination Date" means the earliest date on which the Trustee's right
to draw under the Letter of Credit terminates or expires which is referred to in
the Letter of Credit as the "Stated Termination Date".
"Trustee" means the Trustee appointed and at such time acting under the
Indenture.
The definition of any Document shall be deemed to include any and all
further modifications, alterations, amendments and supplements thereto. The
terms "hereof," "hereby," "hereto," "hereunder" and similar terms mean of, by,
to, under and similarly to, respectively, this Agreement, and the term
"heretofore" means before, and the term "hereafter" means after the effective
date hereof. All accounting terms not specifically defined herein shall be
construed in accordance with GAAP applied in the preparation of the financial
statements referred to in Section 4.2(d). All capitalized terms herein not
defined herein shall bear the same meanings of such terms in the Indenture.
ARTICLE II
REIMBURSEMENT OBLIGATION; OTHER PAYMENTS;
LETTER OF CREDIT COMMISSION; SECURITY
Section II.1. Reimbursement
(a) The Borrower hereby agrees to pay to the Bank, not later than 2:00
p.m., Chicago, Illinois, time, on each date that any amount is drawn under the
Letter of Credit a sum equal to the amount so drawn plus any fees outstanding.
(b) Notwithstanding any provision to the contrary contained herein, as
provided in the Letter of Credit, all payments made by the Bank under the Letter
of Credit will be made with the Bank's own funds and not with any funds of the
Borrower or the Issuer.
Section II.2. Fees; Interest on Overdue Amounts
(a) The Borrower agrees to pay to the Bank a non-refundable letter of
credit fee in an amount equal to 1% per annum payable quarterly in advance of
the Available Amount of the Letter of Credit as in effect from time to time.
Such fee shall be payable to the Bank without any requirement of notice from the
Bank in quarterly installments as follows: (i) on the Date of Issuance for the
period ending September 30, 1997, and (ii) thereafter, quarterly in advance on
the first Business Day of each January, April, July and October and on the
Termination Date (to the extent an portion of the fee remains outstanding), in
each instance prorated for any partial quarter.
(b) The Borrower agrees to pay the Bank the greater of $250 or 1/4 of
1% of the amount of each drawing under the Letter of Credit, plus all customary
incidental expenses, on the date of each such drawing. In addition, the Borrower
agrees to pay the Bank $1,500 upon the transfer of the Letter of Credit to a
successor Trustee under the Indenture.
(c) The failure by the Borrower to pay when due any amounts under this
Agreement, in addition to constituting an Event of Default hereunder, shall
create an obligation of the Borrower to pay to the Bank, and the Borrower agrees
to pay to the Bank, interest on any and all such amounts due and not paid under
this Agreement from the date such payment becomes due until paid in full at a
rate of interest equal to the Prime Rate plus two percent (2%). All such
interest shall be payable upon demand.
Section 11.3. Computation of Interest and Fees; Place and Manner of
Payment. Letter of Credit fees and all interest payable hereunder shall be
computed on the basis of a year of 360 days and actual days elapsed. All
payments by the Borrower to the Bank hereunder shall be made in lawful currency
of the United States and in immediately available funds on the date such payment
is due at the Bank's principal office at 000 Xxxx Xxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000 or as otherwise specified in writing by the Bank.
Amounts received by the Bank from the Borrower after 2:00 p.m., Chicago time,
shall be deemed to have been received on the next succeeding Business Day.
Payments shall be made to the following account by wire transfer for direct
debit by the Bank:
LaSalle National Bank (ABA No.000000000)
Chicago, Illinois
For the account of K-V Pharmaceutical Company
Account Number: 5590011846
Section II.4. Payments in Respect of Regulatory Changes
(a) If any law, treaty regulation, guideline or directive (including,
without limitation, regulations and guidelines with respect to capital adequacy
and Regulation D promulgated by the Board of Governors of the Federal Reserve
System as now and from time to time hereafter in effect), any change in any law,
treaty regulation, guideline or directive or any interpretation thereof by any
court or administrative or governmental authority charged or claiming to be
charged with the administration thereof, or any change in GAAP applicable to the
Bank shall (i) impose, modify, make or deem applicable any reserve, special
deposit, insurance assessment or similar requirement against any assets held by,
deposits with or for the account of, or loans, letters of credit or commitments
by the Bank, (ii) change the basis of taxation of payments due the Bank under
this Agreement or the Bonds (other than a change in taxation of the overall net
income of the Bank), (iii) cause or deem letters of credit to be assets held by
the Bank and/or as deposits on its books, (iv) subject the Bank to any tax
(other than taxes based upon gross revenues or income), charge, fee, deduction
or withholding of any kind whatsoever, or (v) impose on the Bank any other
condition regarding this Agreement, the Letter of Credit or any other Document,
and the result of any such event, or any similar measure shall be to increase
the cost to the Bank of issuing or maintaining the Letter of Credit or making
any advances hereunder or reduce the amount of any fee or compensation
receivable by the Bank in respect of the Letter of Credit, this Agreement or any
other Document, upon written notice by the Bank to the Borrower, the Borrower
agrees to pay to the Bank, from time to time as specified by the Bank, such
additional amounts as shall be sufficient to compensate the Bank for such
increased costs or reductions.
(b) If the Bank shall have determined that the adoption of any law,
rule or regulation regarding capital adequacy (including but not limited to any
United States law, rule or regulation), or any change in any applicable law,
rule or regulation, as the case may be, or any change in the enforcement or
interpretation or administration thereof by any court or any administrative or
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive regarding capital adequacy (whether or not having the force
of law) of any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on the Bank's capital as a
consequence of its obligations hereunder or under the Letter of Credit to a
level below that which the Bank could have achieved but for such adoption,
change or compliance (taking into consideration the Bank's policies with respect
to capital adequacy) then, on notice and demand by the Bank given promptly after
such determination is made by the Bank, the Borrower agrees to pay to the Bank
from time to time such additional amount or amounts as will compensate the Bank
for such reduction.
(c) The protections of Sections 2.4(a) and (b) shall be available to
the Bank regardless of any possible contention of invalidity or inapplicability
of the law, regulation or condition which has been imposed; provided, however,
if it shall later be determined by the Bank that any amount so paid by the
Borrower pursuant to this Section 2.4 is in excess of the amount payable under
the provisions hereof, the Bank shall promptly refund such excess amount to the
Borrower. Notwithstanding the foregoing provisions of this Section 2.4 to the
contrary, in the event that the Bank has (i) determined that an increase or
reduction has occurred and (ii) provided notice to the Borrower of additional
amounts payable to the Bank, in each case in accordance with Section 2.4(a) or
(b), the Borrower shall have sixty (60) days after the receipt of such notice to
replace the Letter of Credit and pay in full all outstanding obligations
hereunder without liability to the Bank for such additional amount from the date
of such notice or for the termination fee set forth in Section 2.7 hereof.
Section II.5. Security; Release of Pledged Bonds
(a) As security for the payment of all obligations of the Borrower
under this Agreement, (i) the Borrower has entered into the Pledge Agreement
under which it has pledged to the Bank, and granted to the Bank a security
interest in its right, title and interest in and to Bonds delivered to the Bank
or to the Trustee for the account of the Borrower in connection with certain
drawings under the Letter of Credit (as defined in the Pledge Agreement, the
"Pledged Bonds"), (ii) the Borrower hereby grants to the Bank a security
interest and pledges, assigns, transfers and sets over to the Bank all of its
right, title and interest in and to the Collateral, (iii) the Borrower shall
enter into the Mortgage pursuant to which the Bank shall hold a first and prior
mortgage lien on the real property legally described on Exhibit A to Schedule
1.0 hereof, (iv) the Borrower shall enter into the Assignment of Rents with the
Bank and (v) the Borrower shall enter into the Environmental Agreement in favor
of the Bank. The Borrower shall not transfer Pledged Bonds to any other person
unless the Letter of Credit has been fully reinstated with respect to the
drawing used to purchase such Bonds.
(b) The Bank agrees to release from the Lien of the Pledge Agreement
any Pledged Bonds to the extent that the Bank receives reimbursement in cash
(whether under this Agreement or the Indenture) of an amount equal to the amount
of any Tender Drawing (as defined in the Letter of Credit) related to the
purchase of such Pledged Bonds in a manner that will permit the reinstatement of
the Letter of Credit in respect of such Pledged Bonds in accordance with the
terms thereof.
(c) The Borrower shall make appropriate entries upon its financial
statements and its books and records disclosing the Bank's security interest in
the Collateral, the Mortgage and the Assignment of Rents. The Borrower shall
execute and deliver to the Bank, at any time and from time to time hereafter at
the request of the Bank, all agreements, instruments, documents and other
written material that the Bank may reasonably request, in form and substance
satisfactory to the Bank, to perfect and maintain perfected the Bank's security
interest in the Collateral and the Mortgage and to consummate the transactions
contemplated in or by this Agreement or the other Documents. The Borrower
warrants and represents to and covenants with the Bank that: (a) the Bank's
security interest in the Collateral and the Mortgage is now and at all times
hereafter shall be perfected and have a first priority; and (b) there are no,
and shall not be, Liens on the Collateral, the Project or any other property of
the Borrower or its Affiliates other than (i) the Liens of the Bank, (ii) leases
of Personalty or Fixtures (as defined in the Mortgage) used on the Project which
according to generally accepted accounting principles consistently applied are
capital leases ("Capital Leases"), (iii) purchase money security interests in
Personalty and Fixtures (as defined in the Mortgage) used on the Project and
(iv) leases, which are not Capital Leases, of Personalty and Fixtures (as
defined in the Mortgage) used on the Project, provided that the liability for
the Personalty and Fixtures (as defined in the Mortgage) so leased and so
subject to security interests does not exceed One Million Five Hundred Thousand
and 00/100 Dollars ($1,500,000.00). The foregoing shall not limit the right of
tenants under Real Estate Leases (as defined in the Mortgage) to install
removable fixtures subject to security interests on the Project which can be
removed without damage to the Project and which pursuant to the Real Estate
Leases (as defined in the Mortgage) and the written consent of Bank obtained
prior to installation shall remain the property of such tenants and shall not be
considered part of the Project.
Section II.6. Loan in Respect of Certain Draws under the Letter of
Credit. Unless an Event of Default has occurred and is continuing,
notwithstanding Section 2.1 hereof, if an amount is drawn under the Letter of
Credit as a result of (i) the occurrence of an Event of Taxability, as defined
in the Indenture, pursuant to Section 302(c), (ii) an optional tender of Bonds
pursuant to Section 302(a) of the Indenture, (iii) a redemption in the event of
condemnation, deficiency of title, fire or other casualty pursuant to Section
302(b) of the Indenture, or (iv) redemption upon Certain Defaults (as defined in
the Indenture) pursuant to Section 302(d), the Borrower shall pay immediately to
the Bank, a sum equal to the amount so drawn and any fees outstanding hereunder
plus interest at a rate per annum equal to the Prime Rate plus two percent (2%)
until such payment is made in full. The proceeds of any remarketing of Pledged
Bonds shall be immediately applied to the repayment of any amounts outstanding
hereunder first to the payment of fees, then to the payment of interest and then
to the payment of principal.
Section II.7. Substitute Letter of Credit. Notwithstanding any
provisions of the Indenture to the contrary, the Borrower agrees not to replace
the Letter of Credit prior to the earlier of (i) if the Bonds are then rated by
Xxxxx'x Investors Service, the date on which Xxxxx'x Investors Service shall
have lowered either the long-term rating on the Bonds backed by the Bank's
Letter of Credit below "A" or the short-term rating on the Bonds backed by the
Bank's Letter of Credit below "P-1" or (ii) if the Bonds are then rated by
Standard & Poor's Corporation, the date on which Standard & Poor's Corporation
shall have lowered either the long-term rating on the Bonds backed by the Bank's
Letter of Credit below "A" or the short-term rating on the Bonds backed by the
Bank's Letter of Credit below "A-1." As a condition to any such replacement of
the Letter of Credit, the Borrower shall (A) provide the Bank with ninety (90)
days' prior written notice of the same and (B) pay in full all outstanding
obligations hereunder.
Section II.8. Optional Redemption. The Borrower agrees in the case of
any redemption of Bonds under Section 302 of the Indenture, to deposit an amount
equal to the amount to be drawn by the Trustee under the resulting Redemption
Drawing (as defined in the Letter of Credit) with the Bank, which amount shall
be deposited not later than thirty-one (31) days prior to the redemption date.
The Borrower hereby grants to the Bank a security interest in and pledges,
assigns, transfers and sets over to Bank all of its right, title and interest in
and to such deposit. Such Deposit shall be held as collateral security for any
and all indebtedness, obligations and liabilities of the Borrower to the Bank
hereunder, whether now existing or hereafter arising and whether due or
contingent, and shall at the written direction of the Borrower, to the extent
permitted by law, be invested in Governmental Obligations or such other
investments acceptable to the Bank, provided such Governmental Obligations or
other investments mature at such time as is necessary to provide sufficient
funds to satisfy such indebtedness, obligations and liabilities of the Borrower
to the Bank hereunder. Upon the payment by the Bank of the amount demanded in
said Redemption Drawing, the Bank shall immediately reimburse itself from said
collateral and remit any excess to the Borrower.
Section 2.9. Required Deposits for Mandatory Redemption Under Section
302(g). On or before each November 1, continuing through November 1, 2003, the
Borrower will direct the Trustee to make an optional redemption of the Bonds
pursuant to Section 301(g) of the Indenture. The amount of the Bonds to be
redeemed upon each such mandatory optional redemption shall be in accordance
with the following schedule:
November 1 Principal Amount
---------- ----------------
1997 $325,000
1998 $325,000
1999 $325,000
2000 $325,000
2001 $325,000
2002 $325,000
2003 $325,000*
* The remaining $205,000 principal amount
shall be due on November 1, 2004.
ARTICLE III
ISSUANCE OF LETTER OF CREDIT;
CONDITIONS TO ISSUANCE
Section III.1. Issuance of Letter of Credit. Upon satisfaction of the
conditions set forth in Section 3.2, the Bank agrees to issue the Letter of
Credit to the Trustee on the Date of Issuance in an amount not to exceed the
Stated Amount expiring on November 5, 1998, unless terminated prior thereto in
accordance with its terms or unless extended by the Bank pursuant to Section 6.2
hereof.
Section III.2. Conditions Precedent to Issuance of Letter of Credit.
(i) The Bank shall have received on or before the Date of Issuance, in form and
substance satisfactory to the Bank and its legal counsel, the following:
(a) copies of the Certificate or Articles of Incorporation certified by
the State of incorporation and copies of the By-laws of the Borrower certified
by the Secretary of State of the applicable jurisdiction and the secretary or
assistant secretary of the Borrower;
(b) certified copies of the resolutions of the Board of Directors of
the Borrower evidencing corporate authorization for the execution and delivery
of this Agreement and the other Documents to which the Borrower is a party;
(c) incumbency certificates as to the authority and signature of the
person(s) signing this Agreement and the other Documents to which the Borrower
is a party on behalf of the Borrower;
(d) true and correct copies of all governmental approvals, if any,
necessary for the Borrower to enter into this Agreement and the transactions
contemplated hereby, together with certified copies of all approvals,
authorizations, or consents of or notices or registrations with, any
governmental body or agency required for the Borrower to enter into this
Agreement and the transactions and consequences contemplated hereby and thereby,
as the case may be;
(e) the legal opinion of counsel to the Borrower, which shall be
substantially in the form of Exhibit B to this Agreement;
(f) accurate and complete executed copies of the Indenture, the Loan
Agreement, the Remarketing Agreement, a specimen Bond and all other documents
and agreements furnished in connection with the closing of the sale of the
Bonds;
(g) accurate and complete executed copies of this Agreement, the
Mortgage, the Environmental Agreement, the Assignment of Rents and Form UCC-1
Financing Statements;
(h) an ALTA Loan Policy-1992 title policy issued by Chicago Title
Insurance Company naming the Borrower as the fee owner of the property subject
to the Mortgage and insuring the Bank in the amount of Two Million Six Hundred
Thousand and 00/100 Dollars ($2,600,000.00) as the holder of a valid and
existing first and prior mortgage lien as to the Mortgage, with extended
coverage, and subject only to those exceptions and exclusions as are acceptable
to the Bank and with the following title endorsements: (i) Zoning 3.1; (ii)
Comprehensive l; (iii) letter of credit; (iv) location no. 1; (v) survey; (vi)
access; (vii) contiguity, if applicable; (viii) usury, if available; (ix)
creditor's rights, if available; and (iv) such other special endorsements as the
Bank may require;
(i) an environmental assessment report in form and substance
satisfactory to the Bank from an experienced environmental consulting firm
satisfactory to the Bank. The report shall be certified by a supervising
professional registered engineer or certified professional geologist. The report
shall, among other things, (i) contain a detailed history of the prior ownership
and uses of the Project site and surrounding properties within a one-half mile
radius of the Project site, including copies or summaries of hazardous and solid
waste reporting documents on file at the applicable regulatory agencies for
present and past storage and disposal at each site investigated, (ii) contain
reports of investigations of federal, state and local environmental agencies,
CERCLIS lists, National Priorities' Lists, the registrations of underground
storage tanks, landfills and wetlands designations, all with respect to the
Project site and surrounding properties within a one-half mile radius of the
Project site, and (iii) indicate in the professional judgment of such
consultant, that the Project site and surrounding properties are free of
Environmental Claims and are in compliance with all applicable Environmental
Laws. The report shall contain recommendations of what further study, if any,
may be necessary to define the extent of any contamination or noncompliance
found or suspected to exist at the Project site, the Project, or surrounding
properties;
(j) a complete and current spotted plat of survey of the Project site
certified to the Bank and Chicago Title Insurance Company and prepared in
accordance with the Minimum Standard Detail Requirements of the American Land
Title Association by an independent surveyor satisfactory to the Bank, showing
thereon: (i) the location of the perimeter of the Project site by courses and
distances; (ii) the location of all improvements, rights of way, encroachments,
and visible or recorded utilities and sewers (delineating, if possible, their
course to the point of connection with the public system); and (iii) the
location of the lines of the streets abutting the Project site and the width
thereof; and whether the Project site is located in a designated flood hazard
area;
(k) a certificate of an executive officer of the Borrower certifying on
behalf of the Borrower that (i) no Event of Default shall have occurred and be
continuing under this Agreement or would result from the issuance of the Letter
of Credit, and no event has occurred and is continuing which would constitute
any such Event of Default but for the requirement that notice be given or time
elapse or both, (ii) the representations and warranties of the Borrower
contained in this Agreement shall be true and correct as of the Date of
Issuance, and (iii) all conditions precedent to the issuance, sale and delivery
of the Bonds and the effectiveness of this Agreement shall have occurred;
(l) a Good Standing Certificate for the Borrower issued by the
Secretaries of State of both Delaware and Missouri as of a date not more than
three days prior to the Date of Issuance;
(m) a legal opinion of Bryan, Cave, XxXxxxxxxx & XxXxxxxxx, as Bond
counsel, relating to the validity and tax exempt status of the Bonds dated as of
the Date of Issuance;
(n) such other approvals, opinions or documents as the Bank may
reasonably request;
(o) UCC, Tax Lien, Bankruptcy and Judgment searches of the Borrower,
which shall be satisfactory to the Bank;
(p) payment in to the Bank in respect of the letter of credit fee
required pursuant to Section 2.2(a)(i); and
(q) Lender's Loss Payable Endorsement in favor of Bank for each
insurance policy of Borrower naming Bank as loss payee and additional insured.
(ii) The statements set forth in Section 3.2(k) above shall be true and
correct on the Date of Issuance and upon the date of each draw under the Letter
of Credit.
(iii) On and before the Date of Issuance, the Indenture shall continue
to be in full force and effect and no default or event of default thereunder
shall have occurred thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES;
COVENANTS; INDEMNIFICATION; CONTINUING OBLIGATION
Section IV.1. Representations and Warranties of the Borrower. The
Borrower hereby represents and warrants as of (i) the date hereof, (ii) the Date
of the Issuance, and (iii) with respect to subsections (a) through (e) and
subsections (h) through (w) below, the date of each drawing under the Letter of
Credit, as follows:
(a) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and is duly qualified
to do business and is in good standing under the laws of each state in which the
ownership of its properties and the nature and extent of the activities
transacted by it makes such qualification necessary. The Borrower has all
requisite corporate power and authority to conduct its activities as presently
conducted, to own its properties and to perform its obligations under this
Agreement.
(b) The execution, delivery and performance by the Borrower of this
Agreement and the other Documents to which it is a party are within the
Borrower's corporate powers, have been duly authorized by all necessary
corporate action and do not contravene (i) the Borrower's Certificate of
Incorporation or By-laws or (ii) in any material respect any law or any
contractual restriction binding on or affecting the Borrower or its properties,
and do not result in or require the creation of any Lien (except as may be
created under the Documents) upon or with respect to any of its properties.
(c) No authorization or 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 the Borrower of this Agreement or
any other Document to which the Borrower is a party.
(d) This Agreement is, and the Documents to which the Borrower is a
party when delivered hereunder will be, legal, valid and binding obligations of
the Borrower, enforceable against the Borrower in accordance with their
respective terms.
(e) The Bonds have been duly authorized, authenticated and issued and
delivered, and are the legal, valid and binding obligations of the Issuer, and
are not in default. Interest on the Bonds is exempt from federal income
taxation, and the Borrower has taken no action which would adversely affect the
exemption for such interest from such taxation. The issuance and sale of the
Bonds was and any remarketing of the Bonds after their issuance was or will be
in full compliance with all applicable securities laws.
(f) The balance sheet (including the notes thereto) of the Borrower and
its Affiliates on a consolidated basis as at March 31, 1997, and the related
statements of revenues and expenses and changes in net assets employed for the
benefit of members for the fiscal year then ended, audited by BDO Xxxxxxx, LLP,
are complete and correct and fairly present the combined financial condition of
the Borrower and its Affiliates as at such date and the results of the
operations of the Borrower and its Affiliates for the fiscal year ended on such
date, in accordance with GAAP, and the balance sheet of the Borrower as at June
30, 1997 and the related statements of revenues and expenses and changes in net
assets employed for the benefit of members for the period ended June 30, 1997,
internally prepared, are complete and correct and fairly present the financial
condition of the Borrower as at such date and the results of the operations of
the Borrower for the period ended on such date, and since March 31, 1997, there
has been no material adverse change in the Borrower's financial condition,
business, properties or operations. Neither the Borrower nor any Affiliate has
on the date hereof, nor will have on the Date of Issuance, any material
contingent obligations, long-term leases or unusual forward or long-term
commitments, which are not reflected in the foregoing statements (and the
related notes thereto) except the obligations entered into in connection with
the issuance of the Bonds.
(g) There is no pending or, to the best knowledge of the Borrower,
threatened action, suit, inquiry, investigation, or proceeding affecting,
directly or indirectly, the Borrower or any Affiliate before any court,
governmental agency or arbitrator, which, in any case, may (i) materially and
adversely affect the financial condition or operation of the Borrower or any
Affiliate, (ii) which seeks to restrain or would otherwise have a material
adverse effect on the transactions contemplated herein, or (iii) which would
affect the validity or enforceability of the Agreement or any Documents.
(h) No proceeds of any drawing under the Letter of Credit will be used
to acquire any security in any transaction which is subject to Section 13 or 14
of the Securities Exchange Act of 1934, as amended.
(i) The Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying margin stock (within the meaning of
Regulation U issued by the Board of Governors of the Federal Reserve System),
and no proceeds of any drawing under the Letter of Credit will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying any margin stock.
(j) No ERISA Termination Event has occurred nor is expected to occur
with respect to any Plan.
(k) Schedule B (Actuarial Information) to the 1996 annual report (Form
5500 Series) with respect to each Plan, copies of which have been filed with the
Internal Revenue Service and furnished to the Bank, has been signed by the
enrolled actuary for such Plan as complete and accurate and as fairly presenting
the funding status of such Plan, and since the date of such Schedule B there has
been no material adverse change in such funding status.
(l) Neither the Borrower nor any ERISA Affiliate has incurred, or
expects to incur, any material withdrawal liability under Section 4201 of ERISA
to any Multiemployer Plan.
(m) The Borrower and each Affiliate have filed all tax returns
(Federal, state and local) required to be filed and paid all taxes shown thereon
to be due, including interest and penalties, other than such taxes that the
Borrower or an Affiliate is contesting in good faith by appropriate legal
proceedings.
(n) There are no Liens upon or with respect to any of the properties of
the Borrower or any right to receive revenues of the Borrower, other than (i)
Liens arising under this Agreement, the Letter of Credit, the Pledge Agreement,
the Indenture or the Loan Agreement and (ii) other Liens permitted pursuant to
Section 4.3(a) hereof.
(o) Neither the Borrower nor any Affiliate is a party to any indenture,
loan or credit agreement or any lease or other agreement or instrument
(including corporate charters) which is likely to have a material adverse effect
on the ability of the Borrower to perform its respective obligations under any
of the Documents to which it is party or is to be a party or which would
restrict or otherwise limit the incurring of the indebtedness represented by
this Agreement and the other Documents.
(p) (i) The operations of the Borrower and each Affiliate (including,
without limitation, all operations and conditions at or in the Project)
comply with all Environmental Laws;
(ii) the Borrower and each Affiliate has obtained or has
timely applied for all Governmental Authorizations under Environmental
Laws necessary to its operations, if any, and all such permits as have
been obtained are in good standing, and the Borrower and each Affiliate
is in compliance with all terms and conditions of such Governmental
Authorizations;
(iii) the Borrower and each Affiliate has not received (A) any
notice or claim to the effect that it is or may be liable to any person
as a result of the Release or threatened Release of any Hazardous
Materials or (B) any letter or request for information under Section
104 of the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. ss. 9604) or comparable state laws, and to the
Borrower's and each Affiliate's knowledge, none of the operations of
the Borrower and each Affiliate is the subject of any federal or state
investigation evaluating whether any remedial action is needed to
respond to a Release or threatened Release of any Hazardous Materials
at any Facility or at any other location;
(iv) to the best knowledge of the Borrower and each Affiliate
after diligent investigation, the operations of the Borrower and each
Affiliate are not subject to any judicial or administrative proceeding
alleging the violation of or liability under any Environmental Laws;
(v) to the best knowledge of the Borrower and each Affiliate
after diligent investigation, the Borrower and each Affiliate is not
and the Project is not, subject to any outstanding written order or
agreement with any governmental authority or private party relating to
(a) any Environmental Laws or (b) any Environmental Claims;
(vi) to the best knowledge of the Borrower and each Affiliate
after diligent investigation, the Borrower and each Affiliate does not
have any contingent liability in connection with any Release of any
Hazardous Materials;
(vii) neither the Borrower and each Affiliate nor any of its
predecessors has filed any notice under any Environmental Law
indicating past or present treatment or Release of Hazardous Materials
at any Facility, and the Borrower's and each Affiliate's operations do
not involve the generation, transportation, treatment, storage or
disposal of hazardous waste, as defined under 40 C.F.R. Parts 260-270
or any state equivalent;
(viii) no Hazardous Material exists on, under or about the
Project in a manner that is known to give rise to an Environmental
Claim and the Borrower and each Affiliate has not filed any notice or
report of a Release of any Hazardous Materials that could give rise to
an Environmental Claim;
(ix) neither the Borrower and each Affiliate nor any of its
predecessors has disposed of any Hazardous Materials in a manner that
is known to give rise to an Environmental Claim;
(x) no underground storage tanks or surface impoundments are
on or at the Project; and
(xi) no lien in favor of any Person for (a) any liability
under any Environmental Laws or (b) damages arising from or costs
incurred by such Person in response to a Release has been filed or has
been attached to the Project.
(q) (i) the Borrower and each Affiliate has not received any notice
from any insurance company of any defects or inadequacies in the
Project which would adversely affect the insurability of the Project or
which would materially increase the cost of insuring the Project beyond
that which is customarily charged for similar property in the vicinity
of the Project and for a similar purpose; and
(ii) (a) no condemnation of any portion of the Project, (b) no
condemnation or relocation of any roadways abutting the Project, and
(c) no denial of access to the Project from any point of access to the
Project, has commenced of which the Borrower and each Affiliate has
knowledge after diligent investigation or to which the Borrower and
each Affiliate is a party; and that to the best of the Borrower's and
each Affiliate's knowledge, none of the foregoing is contemplated by
any governmental authority which could have an adverse effect on the
use, occupancy or enjoyment of the Project.
(r) Neither the Borrower nor any Affiliate is an "investment company"
or a company "controlled by an investment company," within the meaning of the
Investment Company Act of 1940, as amended.
(s) The Borrower and each Affiliate is in compliance in all material
respects with all laws, orders, regulations and ordinances of all federal,
foreign, state and local governmental authorities binding upon or affecting the
business, operation or assets of the Borrower and each Affiliate.
(t) The Borrower makes each of the representations and warranties
contained in the other Documents to which the Borrower is a party operative and
applicable for the benefit of the Bank as if the same were set forth at length
herein.
(u) The representations and warranties of the Borrower in the other
Documents to which it is a party are true and correct.
(v) The Borrower and each Affiliate possess adequate licenses, patents,
patent applications, copyrights, service marks, trademarks and trade names to
conduct their operations and business in all material respects as heretofore
conducted and as intended to be hereafter conducted and all such items are, and
will continue to be, owned by the Borrower and/or an Affiliate free and clear of
conflicting claims or uses of any other Person.
(w) The Affiliates of the Borrower are PDI and ETHEX.
Section IV.2. Affirmative Covenants. So long as the Termination Date
has not yet occurred or any amounts are due or owing to the Bank hereunder or
under the Documents, the Borrower hereby covenants that it will, unless the Bank
shall otherwise consent in writing:
(a) Existence, Etc. Subject to Section 4.3(b), do or cause to be done
all things necessary to preserve and keep in full force and effect the
Borrower's and each Affiliate's corporate existence in good standing.
(b) Compliance with Laws. Etc. Comply, and cause each Affiliate to
comply, in all material respects with all applicable laws, rules, regulations
and orders, noncompliance with which may materially adversely affect (i) the
financial condition or operations of the Borrower or any Affiliate or (ii) the
ability of the Borrower to perform its obligations under this Agreement or any
of the Documents.
(c) Payment of Taxes and Other Claims. Subject to the terms of the
Mortgage when delivered to the Bank, pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (i) all material taxes,
assessments and governmental charges levied or imposed upon the Borrower and
each Affiliate or upon the income, surplus or property of the Borrower and each
Affiliate, and (ii) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a lien upon the property of the Borrower and each
Affiliate; provided, however, that the Borrower shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and in accordance with the terms of the Mortgage.
(d) Reporting Requirements. Maintain a system of accounting in
accordance with GAAP consistently applied and shall furnish to Bank:
(i) as soon as possible and in any event within ten (10) days
after the occurrence of an Event of Default or any event which, with
the giving of notice, lapse of time, or both, would constitute an Event
of Default, the statement of an Authorized Officer setting forth
details of such Event of Default or event and the action which
Borrowers have taken or propose to take to cure the same;
(ii) as soon as available, copies of the periodic Form 10-Q
quarterly report or comparable successor report filed by Borrower with
the Securities and Exchange Commission or any successor agency;
provided, that if such report is not made available within forty-five
(45) days after the end of each of the first three quarterly accounting
periods in each fiscal year of Borrower beginning with the quarter
ending June 30, 1997, Borrower shall immediately deliver to Bank an
internally-prepared balance sheet of Borrower and its Affiliates on a
consolidated basis as at the end of such quarter and the related
statements of operations and statements of cash flows of Borrower and
its Affiliates on a consolidated basis for such quarter and for the
portion of the fiscal year ended at the end of such quarter, setting
forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of the previous
fiscal year, all in reasonable detail and certified (subject to normal
year-end adjustments) as to fairness of presentation, in accordance
with GAAP (other than footnotes thereto), by an Authorized Officer or
Controller (if such Controller is a corporate officer) of Borrower;
(iii) as soon as available, copies of the Form 10-K Annual
Report or comparable successor report filed by Borrower with the
Securities and Exchange Commission or any successor agency; provided,
that if such report is not made available within ninety (90) days after
the close of each fiscal year of Borrower, Borrower shall immediately
deliver to Bank a balance sheet and the related consolidated statements
of operations and stockholders' equity and statements of cash flows of
Borrower and its Affiliates on a consolidated basis as of the end of
such fiscal year, fairly and accurately presenting the financial
condition of Borrower and its Affiliates on a consolidated basis as at
such date and the results of operations of Borrower and its Affiliates
for such fiscal year and setting forth in each case in comparative form
the corresponding figures for the corresponding period of the preceding
fiscal year, all in reasonable detail, prepared in accordance with GAAP
consistently applied, and audited by BDO Xxxxxxx, LLP or such other
independent certified public accountants acceptable to Bank (the
"Accountants");
(iv) Together with each delivery of the Annual Reports or
financial statements required by subsection (v) above, Borrower shall
deliver to Bank a certificate executed by the President or Chief
Financial Officer of Borrower stating whether any Event of Default, or
event which, with the passage of time or giving of notice or both,
would constitute such an Event of Default, currently exists and is
continuing and what activities, if any, Borrowers are taking or
proposing to take with respect thereto;
(v) concurrently with the delivery of the reports and/or
financial statements referred to in Sub-paragraphs (ii) and (iii), a
compliance certificate duly completed and executed by both the Chairman
of the Board or President and the Chief Financial Officer of Borrower
(a) stating that Borrower has observed and performed all of its
covenants and other agreements and satisfied every condition, contained
in this Agreement, the K-V Agreement and the Documents to be observed,
performed or satisfied by it and that such officer has no knowledge of
any Event of Default except as specified in such certificate, (b)
stating that, to the best of such officer's knowledge, all such
financial statements are complete and correct in all respects and have
been prepared in accordance with GAAP consistently applied throughout
the periods reflected therein, and (c) showing calculations of
compliance with the financial covenants set forth in Paragraph 4.2(i)
below;
(vi) promptly upon receipt and, in any event, within fifteen
(15) days after receipt thereof, copies of all auditors' letters to
management and management's response thereto pertaining to the balance
sheet and related financial statements of Borrower and its Affiliates;
(vii) (A) as soon as possible and in any event (i) within
thirty (30) days after Borrower or any ERISA Affiliate knows or has
reason to know that any ERISA Termination Event described in clause (i)
of the definition of ERISA Termination Event with respect to any Plan
has occurred and (ii) within ten (10) days after Borrower or any ERISA
Affiliate knows or has reason to know that any other ERISA Termination
Event with respect to any Plan has occurred, a statement of the Chief
Financial Officer (or designee) of Borrower describing such ERISA
Termination Event and the action, if any, which Borrower, or any such
ERISA Affiliate proposes to take with respect thereto;
(B) promptly and in any event within fifteen (15)
Business Days after receipt thereof by Borrower or any ERISA Affiliate
from the PBGC, copies of each notice received of the PBGC's intention
to terminate any Plan or to have a trustee appointed to administer any
Plan; and
(C) promptly and in any event within fifteen (15)
Business Days after receipt thereof by Borrower or any ERISA Affiliate
from a Multiemployer Plan sponsor, a copy of each notice received
concerning the imposition or amount of withdrawal liability which has
been assessed pursuant to Section 4202 of ERISA;
(viii) within fifteen (15) Business Days after notice to any
Borrower of the commencement thereof, notice, in writing, of any
action, suit, arbitration or other proceeding instituted, commenced or
threatened against or affecting any Borrower with an amount in
controversy in excess of Seven Hundred Fifty Thousand and 00/100
Dollars ($750,000.00);
(ix) at Bank's request, Borrower's federal, state and local
tax returns as soon as said returns are completed in the form said
returns will be filed with the Internal Revenue Service and any state
or local department of revenue or taxing authority;
(x) promptly upon their becoming available, copies of (A) all
registration statements and regular periodic reports which Borrower
shall have filed with the Securities and Exchange Commission (or any
governmental agency substituted therefor) or any national securities
exchange and (B) all financial statements, reports and proxy statements
so mailed; and
(xi) such other information respecting the condition or
operations, financial or otherwise, of Borrower or any Affiliate as
Bank may from time to time reasonably request.
(e) Maintenance of Insurance. Subject to the terms of the Mortgage when
delivered to the Bank, insure and keep insured, with insurance companies meeting
the standards set forth in the Mortgage, all of its property of an insurable
nature against liability, fire and other casualties in such manner and to the
extent required pursuant to the Mortgage. If the Borrower, at any time or times
hereafter, shall fail to obtain or maintain, or cause to be obtained or
maintained, any of the policies of insurance required to be maintained pursuant
to the Mortgage or to pay or cause to be paid any premium in whole or in part
relating thereto, then the Bank, without waiving or releasing any obligation or
Event of Default by the Borrower hereunder, may at any time or times thereafter
(but shall be under no obligation to do so) obtain and maintain such policies of
insurance and pay such premiums and take any other action with respect thereto
which the Bank deems advisable.
(f) Compliance With Securities Laws. Cause any remarketing of the Bonds
after the Date of Issuance to be in full compliance with all applicable
securities laws.
(g) Visitation Rights. At any time or times during the Borrower's usual
business hours and, prior to an Event of Default, with at least one (1) Business
Day's prior notice, permit the Bank or any agents or representatives thereof, to
examine and make copies of and abstracts from the records and books of account
of, and visit the properties of, the Borrower and any Affiliate, all as the Bank
shall reasonably request, and to discuss the affairs, finances and accounts of
the Borrower, and any Affiliate with the Borrower's or officers or directors.
(h) Environmental Disclosure and Inspection.
(i) Exercise due diligence in order to comply with all
Environmental Laws.
(ii) Permit the Bank, from time to time and in its sole and
absolute discretion, to retain, at the Borrower's expense, an
independent professional consultant to review any report relating to
Hazardous Materials prepared by or for the Borrower and at reasonable
times and subject to reasonable conditions to conduct its own
investigation of the Project. The Borrower hereby grants to the Bank,
its agents, employees, consultants, and contractors the right to enter
into or onto, with one (1) Business Day's prior notice prior to an
Event of Default or at any time without notice on or after an Event of
Default, the Project to perform such tests on such property as are
reasonably necessary to conduct such a review and/or investigation.
(iii) Promptly advise the Bank in writing and in reasonable
detail of (i) any Release of any Hazardous Materials required to be
reported to any federal, state or local governmental or regulatory
agency under any applicable Environmental Laws, (ii) any and all
written communications with respect to Environmental Claims or any
Release of Hazardous Material required to be reported to any federal,
state or local governmental or regulatory agency, (iii) any remedial
action taken by the Borrower or any other person in response to (1) any
Hazardous Material on, under or about any Facility, the existence of
which could result in an Environmental Claim, or (2) any Environmental
Claim that could have a material adverse effect on the Borrower, (iv)
the Borrower's discovery of any occurrence or condition on any real
property adjoining or in the vicinity of any Facility that could cause
such Facility or any part thereof to be subject to any restrictions on
the ownership, occupancy, transferability or use there of under any
Environmental Laws, and (v) any request for information from any
governmental agency indicating that such agency has initiated an
investigation as to whether the Borrower may be potentially responsible
for a Release of Hazardous Materials.
(iv) Promptly notify the Bank of (i) any acquisition of stock,
assets, or property by the Borrower that reasonably could be expected
to expose the Borrower to, or result in, Environmental Claims that
could have a material adverse effect or that could be expected to have
a material adverse effect on any Governmental Authorization then held
by the Borrower, and (ii) any proposed action outside of the normal
course of business to be taken by the Borrower to commence industrial
or other operations that could subject the Borrower to additional laws,
rules or regulation, including, without limitation, laws, rules and
regulations requiring additional environmental permits or licenses.
(v) At its own expense, provide copies of such documents or
information as the Bank may reasonably request in relation to any
matters disclosed pursuant to this Section 4.2(h).
(vi) Promptly take any and all necessary remedial action in
connection with the presence, storage, use, disposal, transportation or
Release of any Hazardous Materials on, under or about the Project in
order to comply with all applicable Environmental Laws and Governmental
Authorizations. In the event the Borrower undertakes any remedial
action with respect to any Hazardous Material on, under or about the
Project, the Borrower shall conduct and complete such remedial action
in compliance with all applicable Environmental Laws and in accordance
with the policies, orders and directives of all federal, state and
local governmental authorities.
(i) Financial Covenants. Borrower warrants and represents to and
covenants with Bank that it shall maintain the following financial covenants on
a consolidated basis:
(i) Maintain, at all times, a Tangible Net Worth of not less
than the amounts set forth below, during the following periods:
Fiscal Year Ended Amount
----------------- ------
1997 $23,000,000
1998 $23,500,000
1999 $32,000,000
2000 and thereafter $40,000,000
(ii) Maintain EBITDA, at all times, of not less than the
amounts set forth below, calculated each month for the preceding
twelve-month period on a trailing twelve month basis:
Fiscal Year Ended Amount
----------------- ------
1997 $10,000,000
1998 $13,000,000
1999 $25,000,000
2000 and thereafter $40,000,000
(iii) Maintain a Leverage Ratio, at all times, of not greater
than 1.10 to 1.0.
(iv) Not permit Capital Expenditures to exceed the following
amounts for the periods set forth below:
Fiscal Year Ended Amount
----------------- ------
1997 $6,500,000
1998 $7,000,000
1999 $14,000,000
2000 and thereafter $17,000,000
provided, however, that the amount of Capital Expenditures may exceed
the limits set forth above on a cumulative basis so long as the aggregate amount
of Capital Expenditures are (a) made with funds other than Loan (as that term is
defined in the K-V Loan Agreement) proceeds or other Funded Debt (as that term
is defined in the K-V Loan Agreement) and (b) at all times do not exceed
$7,900,000 plus 75% of Borrower's net income, in accordance with GAAP, for the
period from the Closing Date (as that term is defined in the K-V Loan Agreement)
and thereafter.
(j) Recording of Mortgage. The Borrower will, at its expense, cause the
Mortgage and Assignment of Rents to be properly recorded as a mortgage upon its
interest in the Project and certain related real property and will, at its
expense, do all things necessary by way of any additional filings to continue
and maintain the first lien and priority of the Mortgage.
(k) Creation of New Affiliate. Prior to the formation of any Affiliate
other than those disclosed in Section 4.1(w), the Borrower shall provide notice
to the Bank thereof, which notice shall specify (i) the name, state or
jurisdiction of incorporation and address of such Affiliate, (ii) the operating
purpose of such Affiliate and (iii) the assets to be owned by such Affiliate.
Section IV.3. Negative Covenants. So long as the Termination Date has
not occurred or any amount is due or owing to the Bank hereunder, unless the
Bank shall otherwise consent in writing, the Borrower shall not:
(a) Liens, Etc. Create or suffer to exist any Lien, other charge or
encumbrance, or any other type of preferential arrangement upon or with respect
to any of its properties, whether now owned or hereafter acquired, or assign any
right to receive income, in each case to secure or provide for the payment of
any Debt of any Person, except:
(i) Liens existing prior to the date of this Agreement,
provided such Liens have been disclosed to the Bank prior to the date
hereof and are not being paid or satisfied by any loans to Borrower or
its Affiliates from the Bank, and Liens arising under this Agreement,
the Letter of Credit, the Pledge Agreement, the Mortgage, the
Assignment of Rents, the Indenture or the Loan Agreement;
(ii) Liens for current taxes, assessments or other
governmental charges which are not delinquent or remain payable without
any penalty, or the validity of which are contested in good faith by
appropriate proceedings upon stay of execution of the enforcement
thereof and appropriate reserves are set aside therefor and pursuant to
and in compliance with the provisions of the Mortgage;
(iii) deposits or pledges to secure:
(A) statutory obligations;
(B) surety or appeal bonds;
(C) bonds for release of attachment, stay of
execution or injunction; or
(D) performance of bids, tenders, contracts (other
than for the repayment of Debt) or leases, or for purposes of like
general nature in the ordinary course of its business;
(iv) other Liens incidental to the conduct of its operations
or the ownership or use of its property (including, without limitation,
carriers', warehousemen's, vendors' liens, and other similar liens)
which do not in the aggregate materially detract from the value of the
property or assets of the Borrower or materially impair its use in the
operation of the business of the Borrower, and which encumber only the
personal property of the Borrower;
(v) any Lien placed upon any personal property of the Borrower
to secure or provide the payment of all or part of the purchase price
of such property; provided that any such Lien shall not encumber any
other property of the Borrower other than the property so acquired and
further provided that the Debt incurred after the date hereof and
secured thereby shall not exceed $750,000.00 in the aggregate;
(vi) Liens permitted under Section 2.5(c) above; and
(vii) any Lien renewing, extending or refunding any Lien
existing on the date hereof or permitted by clauses (i) through (vi)
above, provided that the principal amount secured is not increased, and
the Lien is not extended to other property.
(b) Maintain Existence, Etc. (i) dissolve or liquidate the Borrower or
any Affiliate or amend or modify the Borrower's Certificate of Incorporation in
any manner inconsistent with the performance of the Borrower's obligations
hereunder; or (ii) convey, transfer, lease or otherwise dispose of the Project
or any Collateral (except for Collateral transferred or disposed of in the usual
and ordinary course of business to any person); or (iii) engage in any
transaction out of the ordinary course of business.
(c) Amendments to Documents. Enter into or consent to any amendments or
modifications of, or grant or accept the benefit of any waivers of any
provisions of, any Document.
(d) Merger, Etc. (i) merge or consolidate with any Person or permit the
merger or consolidation of any Affiliate with any Person; or (ii) purchase,
lease or otherwise acquire all or substantially all of the assets or properties
of, or acquire any capital stock, equity interests, debt or other securities of
any Person. Notwithstanding anything to the contrary in this Section 4.3,
Borrower may enter into and complete any acquisition so long as the
consideration to be paid in the acquisition is solely stock of Borrower or
consists of a combination of stock of Borrower plus net cash of not greater than
Five Million and 00/100 Dollars ($5,000,000.00).
(e) Indebtedness. Incur, create, assume, become or be liable in any
manner with respect to or permit to exist, any Debt, obligations or other
indebtedness, except (i) the obligations under the Documents; and (ii) trade
obligations and normal accruals in the ordinary course of business not yet due
and payable, including indebtedness incurred to purchase machinery and equipment
not exceeding at any time $750,000.00 in the aggregate, or with respect to which
the Borrower is contesting in good faith the amount or validity thereof by
appropriate proceedings, and then only to the extent that the Borrower has set
aside on its books adequate reserves therefor, if appropriate under GAAP.
(f) Investments or Loans. Make or permit to exist investments or loans
in or to any other Person, except for Permitted Investments (as defined in the
Indenture). Notwithstanding the foregoing, the restrictions set forth in Section
4.3(b) and this Section 4.3(f) shall not be deemed to limit the ability of the
Borrower to make grants, loans or investments in accordance with law and the
Certificate of Incorporation and By-laws of the Borrower as currently in
existence.
(g) Guaranties. Enter into any guaranty agreement, endorsement or any
other agreement which in any way directly, indirectly or contingently causes the
Borrower to become liable for the obligations or liabilities of any other
Person, except endorsements of negotiable instruments for collection in the
ordinary course of business.
(h) Arbitrage. The Borrower shall not make any use nor permit any use
to be made of the proceeds of any of the Bonds or any other funds which will
cause any of the Bonds to be "arbitrage bonds" subject to federal income
taxation by reason of Section 148(a) of the Code and any applicable regulations
promulgated thereunder.
Section IV.4. Indemnification. The Borrower hereby indemnifies, defends
and holds harmless the Bank from and against any and all claims, damages,
losses, liabilities reasonable costs and expenses whatsoever (including
attorneys' fees) which the Bank may incur (or which may be claimed against the
Bank by any person or entity whatsoever) by reason of or in connection with (a)
the execution and delivery or transfer of, or payment or failure to pay under,
the Letter of Credit, (b) the issuance, sale and remarketing of the Bonds,
including, without limitation, any of the foregoing resulting from any actual or
alleged misstatement or omission in any offering document with respect to the
Bonds, (c) the purchase of any of the Bonds pursuant to the Remarketing
Agreement, (d) any action, suit, proceeding, claim or loss suffered or incurred
by the Bank, or resulting in any Lien against the property of the Borrower,
under or on account of any Environmental Claims, Environmental Laws or Release
of any Hazardous Materials relating to any Facility or any action or failure to
act with respect thereto by the Borrower or any Affiliate, or (e) the operation
or maintenance of the Project; provided, that the Borrower shall not be required
to indemnify the Bank for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (i) the willful
misconduct or gross negligence of the Bank in determining whether a document
presented under the Letter of Credit complied with the terms of the Letter of
Credit or (ii) the Bank's wrongful failure to pay under the Letter of Credit
after the presentation to it by the Trustee (or a successor Trustee under the
Indenture to whom the Letter of Credit has been transferred in accordance with
its terms) of a document strictly complying with the terms and conditions of the
Letter of Credit (it being understood that in making any payment under the
Letter of Credit, the Bank's exclusive reliance on the documents presented to
the Bank in accordance with the terms of the Letter of Credit as to any and all
matters set forth therein, whether or not any statement or any document
presented pursuant to the Letter of Credit shall prove to be forged, fraudulent,
invalid or insufficient in any respect or any statement therein proves to be
untrue or inaccurate in any respect whatsoever, shall not be deemed to be
willful misconduct or gross negligence of the Bank). If any proceeding shall be
brought or threatened against the Bank by reason of or in connection with the
events described in clause (a), (b), (c), (d) or (e) above (and except as
otherwise provided in clause (i) or (ii) above), the Bank shall notify the
Borrower in writing, and the Borrower shall assume the defense thereof,
including the employment of counsel reasonably acceptable to the Bank and the
payment of all costs of litigation. Notwithstanding the preceding sentences, the
Bank shall have the right to employ its own counsel and to determine its own
defense of such action in any such case, but the fees and expenses of such
counsel shall be at the expense of the Bank unless (i) the employment of such
counsel shall have been authorized in writing by the Borrower or (ii) the
Borrower, after the aforementioned notice of the action, shall not have employed
counsel reasonably acceptable to the Bank to have charge of such defense, in
either of which events the reasonable fees and expenses of such counsel shall be
borne by the Borrower. The Borrower shall not be liable for any settlement of
any such action effected without its consent. If the Borrower elects to settle
such claim at the sole cost and expense of the Borrower and the Bank refuses to
permit such settlement, the obligation of the Borrower to pay fees and expenses
relating to such claim pursuant to this Section 4.4 shall become null and void.
Nothing in this Section 4.4 is intended to limit the obligations of the Borrower
contained in Article II and Article VI hereof.
Section IV.5. Continuing Obligation; Obligation Absolute. This
Agreement is a continuing obligation and shall (a) be binding upon the Borrower
and its successors and permitted assigns, and (b) inure to the benefit of and be
enforceable by the Bank and its successors, transferees and assigns; provided,
that the Borrower may not assign all or any part of this Agreement without the
prior written consent of the Bank. The obligations of the Borrower under this
Agreement shall be absolute, unconditional and irrevocable and shall be
satisfied strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including, without limitation, the following
circumstances:
(i) any lack of validity or enforceability of the Letter of
Credit, the Bonds, the Indenture, the Loan Agreement or any other
Document;
(ii) any amendment or waiver of or any consent to departure
from all or any of the Documents (except an amendment to this Agreement
in accordance with Section 6.11);
(iii) the existence of any claim, setoff, defense or other
rights which the Borrower or any other Person may have at any time
against the Trustee or any successor trustee, any beneficiary or any
transferee of the Letter of Credit (or any persons or entities for whom
the Trustee, any such beneficiary or any such transferee may be
acting), the Bank (other than the defense of payment to the Bank in
accordance with the terms of this Agreement) or any other Person or
entity whether in connection with this Agreement, the other Documents
or any unrelated transaction;
(iv) any demand, statement or any other document presented
under the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect whatsoever;
(v) payment by the Bank, under the Letter of Credit against
presentation of a demand, draft or certificate which does not comply
with the terms of the Letter of Credit; and
(vi) any other circumstance or happening or omission
whatsoever, whether or not similar to any of the foregoing.
Section IV.6. Liability of the Bank
(a) Without waiving, for purposes of this Section, any legal right
against parties other than the Bank, the Borrower assumes all risks of the acts
or omissions of the Trustee and any transferee of the Letter of Credit with
respect to its use of the Letter of Credit. Neither the Bank nor any of its
officers, directors, employees or agents shall be liable or responsible for: (i)
the use which may be made of the Letter of Credit or by or for any acts or
omissions of the Trustee or any transferee in connection therewith; (ii) the
validity, sufficiency or genuineness of drafts, certificates or documents, or of
any endorsement(s) thereon, even if such drafts, certificates or documents
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged; (iii) payment by the Bank against presentation of drafts
or certificates which do not comply with the terms of the Letter of Credit; or
(iv) any other circumstances whatsoever in making or failing to make payment
under the Letter of Credit, except only that the Borrower shall have a claim
against the Bank, and the Bank shall be liable to the Borrower to the extent,
but only to the extent, of any direct, as opposed to consequential, damages
suffered by the Borrower which the Borrower proves were caused by (i) the Bank's
willful misconduct or gross negligence in determining whether drafts,
certificates or documents presented under the Letter of Credit complied with the
terms of the Letter of Credit or (ii) the Bank's wrongful and willful failure to
pay under the Letter of Credit after the presentation to it by the Trustee (or a
successor Trustee under the Indenture to whom the Letter of Credit has been
transferred in accordance with its terms) of drafts, certificates or documents
strictly complying with the terms and conditions of the Letter of Credit (it
being understood that in making such payment the Bank's exclusive reliance on
the documents presented to the Bank in accordance with the terms of the Letter
of Credit as to any and all matters set forth therein, whether or not any
statement or any document presented pursuant to the Letter of Credit proves to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein proves to be untrue or inaccurate in any respect whatsoever, shall not
be deemed willful misconduct or gross negligence of the Bank). The Bank is
hereby expressly authorized and directed to honor any demand for payment which
is made under the Letter of Credit without regard to, and without any duty on
its part to inquire into the existence of, any disputes or controversies between
the Issuer, the Borrower, the Trustee or any other person or the respective
rights, duties or liabilities of any of them, or whether any facts or
occurrences represented in any of the documents presented under the Letter of
Credit are true and correct.
(b The Bank may, under the Letter of Credit, receive, accept and pay
any drafts or certificates or other documents and instruments (otherwise in
order) signed by or issued to the receiver, trustee in bankruptcy or custodian
of anyone named in the Letter of Credit as the person by whom drafts,
certificates and other documents and instruments are to be made or issued. The
Bank may accept drafts or certificates or documents that appear on their face to
be in order, without responsibility for further investigation.
(c The Bank shall not have any liability to the Borrower for the
solvency, standing and responsibility of any Person whomsoever and the Bank
shall not have any liability to the Borrower, and the Borrower assumes all
responsibility, for (i) the form, sufficiency, correctness, validity,
genuineness, falsification and legal effect of any drafts, certificates and
other documents, instruments and other papers relating thereto, (ii) the general
and particular conditions stipulated therein, (iii) the good faith and acts of
any Person (other than the Bank), (iv) the existence, form, sufficiency and
breach of contracts of any nature whatsoever, including the Documents, (v) any
delay in giving or failure to give any notice, demand or protest, (vi) the
failure of any Person (other than the Bank) to comply with the terms of the
Letter of Credit, (vii) errors, omissions, delays in or non-delivery of any
message, however sent, and (viii) any other error, neglect or omission, except
only that the Borrower shall have a claim against the Bank, and the Bank shall
be liable to the Borrower to the extent, but only to the extent, of any direct,
as opposed to consequential, damages suffered by the Borrower which the Borrower
proves were caused by (i) the Bank's willful misconduct or gross negligence in
determining whether drafts, certificates or documents presented under the Letter
of Credit complied with the terms of the Letter of Credit or (ii) the Bank's
wrongful failure to pay under the Letter of Credit after the presentation to it
by the Trustee (or a successor Trustee under the Indenture to whom the Letter of
Credit has been transferred in accordance with its terms) of drafts,
certificates or documents strictly complying with the terms and conditions of
the Letter of Credit (it being understood that in making such payment the Bank's
exclusive reliance on the documents presented to the Bank in accordance with the
terms of the Letter of Credit as to any and all matters set forth therein,
whether or not any statement or any document presented pursuant to the Letter of
Credit proves to be forged, fraudulent, invalid or insufficient in any respect
or any statement therein proves to be untrue or inaccurate in any respect
whatsoever, shall not be deemed wilful misconduct or gross negligence of the
Bank).
(d The Bank shall not have any liability to the Borrower for, and the
Borrower hereby waives any right to object to payment made under the Letter of
Credit against, a draft, certificate or document under the Letter of Credit
varying in punctuation, capitalization, spelling or similar matters of form. The
determination whether a draft, certificate or document has been made prior to
the expiration of the Letter of Credit and whether a draft, certificate or
document is in proper and sufficient form for compliance with the Letter of
Credit shall be made by the Bank in its sole discretion, which determination,
absent manifest error, shall be conclusive and binding upon the Borrower except
as otherwise provided in this Agreement.
ARTICLE V
DEFAULTS AND REMEDIES
Section V.1. Events of Default; Remedies. Unless waived by the Bank in
the manner provided in Section 5.2 hereof, each of the following shall
constitute an "Event of Default" hereunder:
(a the Borrower shall fail to pay on the date due any fee or other
amount required to be paid or reimbursed under this Agreement; or
(b any representation or warranty made or deemed made by the Borrower
herein or in any certificate, financial or other statement furnished by the
Borrower pursuant to this Agreement shall prove to have been untrue, incorrect
or incomplete in any material respect when made or deemed made; or
(c the breach by the Borrower of any term or provision of Section 4.2
or Section 4.3 or any other term or provision of this Agreement which is not
remedied within 30 days thereafter; or
(d any default or Event of Default shall occur and be continuing
(after the expiration of all applicable grace periods) under the other Documents
or any other agreement now or hereafter entered into evidencing any obligation
owed to the Bank by the Borrower or any Affiliate; or
(e the Borrower or any Affiliate shall fail to pay any principal of,
premium or interest on, or other amount owing in respect of any of its Debt in
excess of Seven Hundred Fifty Thousand and 00/100 Dollars ($750,000.00) when due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) and such failure shall continue after the applicable grace period, if
any, specified in the agreement or instrument relating to such Debt; or
(f (i) the Borrower or any Affiliate shall (A) apply for or consent to
the appointment of a receiver, trustee or liquidator, (B) admit in writing its
inability to pay its debts generally as they become due, (C) make a general
assignment for the benefit of creditors, (D) be adjudicated bankrupt or
insolvent, or (E) commence a voluntary case under applicable bankruptcy laws or
file a voluntary petition or answer seeking reorganization, an arrangement with
creditors or an order for relief or seeking to take advantage of an insolvency
law or file an answer admitting the material allegations of a petition filed
against it in any bankruptcy, reorganization or insolvency proceeding; or
corporate action shall be taken by it for the purpose of effecting any of the
foregoing; or (ii) if, without the application, approval or consent of the
Borrower or any Affiliate, a proceeding shall be instituted in any court of
competent jurisdiction, under any law relating to bankruptcy, insolvency,
reorganization, dissolution, winding up, liquidation, a composition or
arrangement with creditors, a readjustment of debts, the appointment of a
trustee, receiver, liquidator or custodian or the like of the Borrower or any
Affiliate, as the case may be, or of all or any substantial part of any of the
Borrower's or such Affiliate's assets, or other like relief in respect thereof
under any bankruptcy or insolvency law, and, if such proceeding is being
contested in good faith, the same shall (i) result in the entry of an order for
relief or any such adjudication or appointment or (ii) continue undismissed,
pending and unstayed, for any period of forty-five (45) consecutive days; or
(g) a material portion of Borrower's or any Affiliate's assets is
attached, seized, subjected to a writ or distress warrant or is levied upon; or
(h) any approval of any governmental body, public board or public body
related to this Agreement or the other Documents shall be modified, rescinded,
revoked or set aside or otherwise cease to remain in full force and effect or
shall otherwise not authorize the entirety of the drawings and other amounts
outstanding hereunder; or
(i) any provision of this Agreement or the other Documents, shall at
any time for any reason cease to be valid and binding on the Borrower or any
other Affiliate, as the case may be, or shall be declared to be null and void,
or the validity or enforceability thereof shall be denied or contested by the
Borrower or any other Affiliate, as the case may be, or a proceeding shall be
commenced by any governmental agency or authority having jurisdiction over the
Borrower or any Affiliate seeking to establish the invalidity or
unenforceability thereof and the Borrower or any Affiliate, as the case may be,
shall fail diligently or successfully to defend such proceeding; or
(j) any default or Event of Default shall occur and be continuing
(after the expiration of all applicable grace periods) under the K-V Loan
Agreement.
Upon the occurrence of an Event of Default hereunder, by notice to the
Borrower (except in the case of an Event of Default described in clause (f)
above, notice of which shall not be required) the Bank may, in its sole
discretion, but shall not be obligated to take one or more of the following
actions: (i) declare all amounts due and payable hereunder by the Borrower to be
forthwith due and payable, and the same shall thereupon become immediately due
and payable without demand, presentment, protest or further notice of any kind
all of which are hereby expressly waived, (ii) require the Borrower to provide
cash collateral in an amount equal to the amount of the Letter of Credit, in
which case the Borrower shall immediately provide such cash collateral, (iii)
exercise its rights and remedies hereunder and under the Pledge Agreement and/or
the Mortgage and/or the Assignment of Rents and all rights and remedies of a
secured party on default under the Uniform Commercial Code in effect in the
State of Missouri at that time or (iv) notify the Trustee of the occurrence and
continuance of an Event of Default hereunder by sending to the Trustee (to the
address specified in or pursuant to the Indenture) a notice to redeem the Bonds
as referenced in Section 302(d) of the Indenture.
Section V.2. No Waiver; Remedies Cumulative. No failure by the Bank to
exercise, and no delay in exercising, any right against any party hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other further exercise thereof or the exercise
of any other right. No waiver hereunder shall be valid unless in writing signed
by the parties hereto. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law or equity.
Section V.3. Right of Set-Off. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby authorized at any time
and from time to time, to the fullest extent permitted by law, to set off and
apply any and all deposits (general or special, time or demand, provisional or
final), at any time held and other indebtedness at any time owing by the Bank to
or for the credit or the account of the Borrower or any other Affiliate against
any and all of the obligations of the Borrower now or hereafter existing under
this Agreement, irrespective of whether or not the Bank shall have made any
demand hereunder and although such obligations may be contingent or unmatured.
ARTICLE VI
MISCELLANEOUS
Section VI.1. Costs, Expenses and Taxes. The Borrower hereby agrees to
pay on demand all reasonable costs and expenses incurred by the Bank in
connection with the preparation, execution and delivery of this Agreement and
any other documents which may be delivered in connection with this Agreement and
all reasonable costs and expenses, if any, in connection with the enforcement of
this Agreement and such other documents which may be delivered in connection
with this Agreement, including, without limitation, the reasonable fees and
expenses of counsel for the Bank with respect thereto and with respect to
advising the Bank as to its rights and responsibilities under this Agreement. In
addition, the Borrower hereby agrees to pay any and all stamp and other taxes
and fees payable or determined to be payable in connection with the execution,
delivery, filing and recording of this Agreement, the Documents and such other
documents and agrees to save the Bank harmless from and against any and all
liabilities with respect to or resulting from any delay in paying or omission to
pay such taxes and fees, provided that the conduct of the Bank in so delaying or
omitting to pay does not constitutes willful misconduct or gross negligence.
Section VI.2. Term of Letter of Credit and Agreement; Termination by
Borrower
(a The Stated Termination Date shall be November 5, 1998 unless the
Borrower and the Bank shall mutually agree to extend the Stated Termination Date
as provided in paragraph (b) of this Section 6.2. This Agreement shall remain in
full force and effect so long as the Letter of Credit is in effect and until all
amounts owed by the Borrower to the Bank hereunder are paid in full.
Notwithstanding the foregoing, the provisions of Sections 4.4 and 6.1 shall
survive the termination of this Agreement.
(b This Letter of Credit shall be automatically renewed for additional
terms of one year beginning November 6, 1998 and terminating on the following
November 5, unless the Bank, in its sole discretion, elects not to renew this
Letter of Credit following expiration of the then existing term. In such event,
Bank shall provide the Borrower and the Trustee with written notice of its
election not to renew the Letter of Credit at least sixty (60) days prior to the
then Stated Termination Date.
(c In evaluating whether or not to extend the Stated Termination Date
of the Letter of Credit in accordance with the foregoing provisions of this
Section 6.2, the Bank agrees to evaluate the possibility of such extension
pursuant to the then current underwriting standards in effect at the Bank at
such time. Notwithstanding the foregoing, the Bank shall have no obligation to
extend the Stated Termination Date of the Letter of Credit beyond one year.
Section VI.3. Transfer of Letter of Credit. The Letter of Credit may be
transferred to a successor trustee acceptable to the Bank in accordance with the
terms of the Indenture.
Section VI.4. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or nonauthorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
Section VI.5. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the internal law and not the choice of law rules
of the State of Illinois.
BORROWER HEREBY AGREES THAT ALL ACTIONS OR PROCEEDINGS INITIATED BY BORROWER AND
ARISING DIRECTLY OR INDIRECTLY OUT OF THIS AGREEMENT OR THE OTHER DOCUMENTS
SHALL BE LITIGATED IN THE CIRCUIT COURT OF XXXX COUNTY, ILLINOIS OR THE UNITED
STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS OR, IF BANK
INITIATES SUCH ACTION, IN ADDITION TO THE FOREGOING COURTS ANY COURT IN WHICH
BANK SHALL INITIATE SUCH ACTION, TO THE EXTENT SUCH COURT HAS JURISDICTION.
BORROWER HEREBY EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION
IN ANY ACTION OR PROCEEDING COMMENCED BY BANK IN ANY OF SUCH COURTS AND HEREBY
WAIVES PERSONAL SERVICE OF THE SUMMONS AND COMPLAINT, OR OTHER PROCESS OR PAPERS
ISSUED THEREIN, AND AGREES THAT SERVICE OF SUCH SUMMONS AND COMPLAINT OR OTHER
PROCESS OR PAPERS MAY BE MADE BY ACTUAL DELIVERY OR REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO BORROWER AT THE ADDRESS TO WHICH
NOTICES ARE TO BE SENT HEREIN. BORROWER HEREBY IRREVOCABLY APPOINTS AND
DESIGNATES XXXXXX X. XXXX OF GALLOP, XXXXXXX AND XXXXXX, X.X., WHOSE ADDRESS IS
00 XXXXXX XXXXX, XXXXX 0X, XXXXXXXXXX, XXXXXXXX, OR ANY OTHER PERSON HAVING AND
MAINTAINING A PLACE OF BUSINESS IN ILLINOIS, WHOM BORROWER MAY HEREAFTER FROM
TIME TO TIME DESIGNATE (HAVING GIVEN FIVE (5) DAYS WRITTEN NOTICE THEREOF TO
BANK) AS BORROWER'S TRUE AND LAWFUL ATTORNEY AND DULY AUTHORIZED AGENT FOR
ACCEPTANCE OF SERVICE OF PROCESS. BORROWER AGREES THAT NOTWITHSTANDING ANYTHING
CONTAINED HEREIN TO THE CONTRARY, SUCH SERVICE OF PROCESS UPON SUCH PERSON SHALL
CONSTITUTE PERSONAL SERVICE OF PROCESS UPON BORROWER. BORROWER WAIVES ANY CLAIM
THAT XXXX COUNTY, ILLINOIS OR THE NORTHERN DISTRICT OF ILLINOIS IS AN
INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE. SHOULD BORROWER,
AFTER BEING SO SERVED, FAIL TO APPEAR OR ANSWER TO ANY SUMMONS, COMPLAINT,
PROCESS OR PAPERS SO SERVED WITHIN THE NUMBER OF DAYS PRESCRIBED BY LAW AFTER
THE MAILING THEREOF, BORROWER SHALL BE DEEMED IN DEFAULT AND AN ORDER AND/OR
JUDGMENT MAY BE ENTERED BY BANK AGAINST BORROWER AS DEMANDED OR PRAYED FOR IN
SUCH SUMMONS, COMPLAINT, PROCESS OR PAPERS, PROVIDED, HOWEVER, BANK MAY NOT SEEK
A DEFAULT JUDGMENT FOR AT LEAST THIRTY (30) DAYS AFTER THE DATE OF PROOF OF
SERVICE. THE EXCLUSIVE CHOICE OF FORUM FOR BORROWER SET FORTH HEREIN SHALL NOT
BE DEEMED TO PRECLUDE THE ENFORCEMENT, BY BANK, OF ANY JUDGMENT OBTAINED IN ANY
OTHER FORUM OR THE TAKING, BY BANK, OF ANY ACTION TO ENFORCE THE SAME IN ANY
OTHER APPROPRIATE JURISDICTION, AND BORROWER HEREBY WAIVES THE RIGHT TO
COLLATERALLY ATTACK ANY SUCH JUDGMENT OR ACTION.
BANK AND BORROWER ACKNOWLEDGE AND AGREE THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT OR ANY OF THE OTHER DOCUMENTS OR WITH RESPECT TO THE
TRANSACTION CONTEMPLATED THEREBY WOULD BE BASED UPON DIFFICULT AND COMPLEX
ISSUES AND, THEREFORE, THE PARTIES AGREE THAT ANY LAWSUIT ARISING OUT OF ANY
SUCH CONTROVERSY SHALL BE TRIED IN A COURT OF COMPETENT JURISDICTION BY A JUDGE
SITTING WITHOUT A JURY.
Section VI.6. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section VI.7. Notices. All notices and other communications provided
for hereunder shall be in writing, shall be personally delivered or sent by
United States registered or certified mail, return receipt requested, postage
prepaid, and shall be addressed to the appropriate party as set forth below or
to such other address as shall be designated by a party in a written notice to
the other party pursuant hereto. All such notices and other communications shall
be effective upon their delivery to the applicable address.
(a If to the Bank:
LaSalle National Bank
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Commercial Loans
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Vedder, Price, Xxxxxxx & Kammholz
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(b If to the Borrower:
K-V Pharmaceutical Company
0000 Xxxxx Xxxxxx Xxxx
Xx. Xxxxx, Xxxxxxxx
Attention: Xxxxxx X. Xxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Gallop, Xxxxxxx & Xxxxxx, X.X.
000 Xxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Except as otherwise specifically required herein, notice of the exercise of any
right, power or option granted to the Bank by this Agreement is not required to
be given. Rejection or refusal to accept or inability to deliver because of
changed address when no notice of changed address was given, shall be deemed to
be receipt.
Section VI.8. Participation. The Borrower understands that the Bank may
enter into a participation agreement with certain other banks providing for
participation in the payments made by the Bank under the Letter of Credit;
provided, however, the Bank shall retain such portion of the Stated Amount of
the Letter of Credit which is larger than such portion of any such participating
bank, and provided further, that any such participation shall not affect the
Bank's obligations under the Letter of Credit. The Borrower hereby consents to
such participation. The Borrower further agrees that to the extent that any such
other bank so participates, the Borrower shall have in respect of such other
participating bank all the concomitant duties and obligations set forth in this
Agreement as if such duties and obligations ran directly to such other
participating bank had signed this Agreement, save that all payments by the
Borrower in respect of such duties and obligations shall be made to the Bank.
Such participation shall not expand the obligations of the Borrower beyond those
which the Borrower expressly assumes in the Loan Agreement and this Agreement.
Section VI.9. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be regarded as the original and all of which
shall constitute one and the same Agreement.
Section VI.10. Notices and Payments. The Bank will give prompt written
notice to the Trustee of its receipt of reimbursement for Tender Drawings (as
defined in the Letter of Credit).
Section VI.11. Modification. This Agreement may not be modified,
altered or amended except by an agreement in writing signed by the Bank and the
Borrower.
IN WITNESS WHEREOF, the Borrower and the Bank have executed this
Agreement as of the date first above written.
K-V PHARMACEUTICAL COMPANY
By:
Its:
ATTEST:
By:
Its:
LASALLE NATIONAL BANK
By:
Its:
SCHEDULE 1.0
Collateral
All right, title and interest of the Borrower, in and to all of the
following purchased with the proceeds from the sale of the Bonds and located at
0000 Xxxxxxx Xxxx, Xx. Xxxxx, Xxxxxxxx 00000.
(i Improvements and Fixtures. All buildings, structures, replacements,
furnishings, fixtures, fittings and other improvements and property of every
kind and character now or hereafter located or erected on the Real Estate
(hereinafter defined) and owned or purported to be owned by the Borrower,
together with all building or construction materials, equipment, appliances,
machinery, plant equipment, fittings, apparati, fixtures and other articles of
any kind or nature whatsoever now or hereafter found on, affixed to or attached
to the Real Estate and owned or purported to be owned by the Borrower, including
(without limitation) all motors, boilers, engines and devices for the operation
of pumps, and all heating, electrical, lighting, power, plumbing, air
conditioning, refrigeration and ventilation equipment (all of the foregoing is
herein referred to collectively as the "Improvements");
(ii Personal Property. All furniture, furnishings, equipment
(including, without limitation, telephone and other communications equipment,
window cleaning, building cleaning, monitoring, garbage, air conditioning, pest
control and other equipment) and all other tangible property of any kind or
character located on the Real Estate including, without limitation, all rights
of the Borrower as lessee under any lease for furniture, furnishings, fixtures
and other items of personal property at any time during the term of such lease
(all of the foregoing is herein referred to collectively as the "Goods");
(iii Intangibles. All option rights, purchase contracts, books and
records and general intangibles of the Borrower relating to the Real Estate or
the Improvements and all accounts, contract rights, instruments, chattel paper
and other rights of the Borrower for payment of money to it for property sold or
lent by it, for services rendered by it, for money lent by it, or for advances
or deposits made by it, and any other intangible property of the Borrower to the
extent that any of the foregoing is related to the Real Estate or the
Improvements (all of the foregoing is herein referred to collectively as the
"Intangibles");
(iv Rents. All rents, issues, profits, royalties, avails, income and
other benefits derived or owned by the Borrower directly or indirectly from the
Real Estate or the Improvements (all of the foregoing is herein collectively
called the "Rents");
(v Leases. All rights of the Borrower under all leases, licenses,
occupancy agreements, concessions or other arrangements, whether written or
oral, whether now existing or entered into at any time hereafter, whereby any
person agrees to pay money to the Borrower or any consideration for the use,
possession or occupancy of, or any estate in, the Real Estate or the
Improvements or any part thereof, and all rents, income, profits, benefits,
avails, advantages and claims against guarantors under any thereof (all of the
foregoing is herein referred to collectively as the "Leases"), which Leases
shall be deemed to include, without limitation, any lease entered into between
the Borrower and the Guarantor in respect of the Real Estate and Improvements;
(vi Contracts for Services. All rights of the Borrower, if any, under
any contracts executed by the Borrower with any provider of goods or services
for or in connection with services performed or to be performed in connection
with the Real Estate or the Improvements (all of the foregoing being herein
referred to collectively as the "Contracts");
(vii Other Property. All other property or rights of the Borrower of
any kind or character related to the Real Estate or the Improvements, and all
proceeds (including insurance and condemnation proceeds) and products of any of
the foregoing. (All of the Real Estate and the Improvements, and any other
property which is real estate under applicable law, is sometimes referred to
collectively herein as the "Premises");
(viii Secured Assignment of Deposit Accounts. All accounts established
with the Bank and identified on the books of the Bank as an account of the
Borrower (the "Account"), any and all deposits at any time or from time to time
credited to or deposited in the Account, and all property which may, prior to a
permitted withdrawal, be acquired directly or indirectly using the proceeds (or
any part thereof) of any of the foregoing, any and all interest and other income
distributions on or with respect to any of the foregoing and any and all
substitutions for and proceeds of any of the foregoing; provided, however, that
Collateral shall not include any funds or proceeds thereof donated to the
Borrower, the use of which is restricted to a specific purpose by the donor
thereof.
The term "Real Estate" shall mean and include the following:
All of the land described on Exhibit A to Schedule 1.0
attached hereto (the "Land"), together with all and singular the
tenements, rights, easements, hereditaments, rights of way, privileges,
liberties, appendages and appurtenances to the Land (including, without
limitation, all rights relating to storm and sanitary sewer, water,
gas, electric, railway and telephone services); all development rights,
air rights, water, water rights, water stock, gas, oil, minerals, coal
and other substances of any kind or character underlying or relating to
the Land; all estate, claim, demand, right, title or interest of the
Borrower in and to any street, road, highway, or alley (vacated or
otherwise) adjoining the Land or any part thereof; all strips and gores
belonging, adjacent or pertaining to the Land; and any after-acquired
title to any of the foregoing.
Exhibit A to Schedule 1.0
Legal Description of Real Estate
Lot 2 of WESTPORT INDUSTRIAL SUBDIVISION FIRST ADDITION, according to
the plat thereof recorded in Book 106, page 12 in the St. Louis County
Recorder's Office.
Exhibit A
Letter of Credit
SEE ATTACHED
Exhibit B
Form of Legal Opinion of Counsel to Borrower
SEE ATTACHED
