LOAN AGREEMENT
THIS LOAN AGREEMENT is made and entered into as of August 1, 1998
between THE STANLY COUNTY INDUSTRIAL FACILITIES AND POLLUTION CONTROL FINANCING
AUTHORITY, a political subdivision and body corporate and politic of the State
of North Carolina (the "Issuer"), and XXXXXXX INDUSTRIES, INC., an Indiana
corporation (the "Borrower"), under the circumstances summarized in the
following recitals (the capitalized terms not defined above or in the recitals
hereto shall have the meanings set forth in Article I hereof unless the context
or use clearly indicates another meaning or intent).
WITNESSETH:
WHEREAS, the Industrial and Pollution Control Facilities Financing Act,
Chapter 159C of the General Statutes of North Carolina, as amended (the "Act"),
authorizes and empowers the Issuer to issue revenue bonds and loan the proceeds
therefrom for the purpose of paying all or any part of the cost of land,
equipment or any one or more buildings or other structures, and any
rehabilitation, improvement, renovation or enlargement of, any addition to, any
building or other structure for use as or in connection with any industrial or
manufacturing facilities for industrial or manufacturing products for the
purpose of alleviating unemployment or raising below average manufacturing wages
by financing industrial and manufacturing facilities which provide job
opportunities or pay better than those prevalent in the area where there is a
direct or indirect favorable impact on employment commensurate with the size and
cost of the facilities; and
WHEREAS, the Project is of the character and will accomplish the
purposes of the Act, will create additional employment opportunities within
Stanly County, North Carolina (the "County") and will increase business
opportunities within and the area surrounding the County and will be to the
benefit of the health, safety, morals, right to gainful employment and general
welfare of the citizens of the County and the State of North Carolina; and
WHEREAS, Xxxxxxx Industries, Inc., an Indiana corporation (the
"Borrower"), has requested that the Issuer issue and sell a series of industrial
development revenue bonds for the purpose of financing the acquisition,
construction and equipping of a facility to be used in the manufacture,
packaging and distribution of building materials to be located in the County
(such facility, including the site on which it is located, being hereinafter
referred to as the "Project"); and
WHEREAS, after careful study and investigation of the nature of the
proposed issuance for the Project, the Issuer has determined that, in issuing
its industrial development revenue bonds, it will be acting in furtherance of
the public purposes intended to be served by the Act; and
WHEREAS, the Issuer has authorized the issuance and sale of $5,000,000
in aggregate principal amount of its Industrial Development Revenue Bonds
(Xxxxxxx Industries, Inc. Project), Series 1998 (the "Bonds"), the proceeds of
which will be used to finance the costs of the Project; and
WHEREAS, the Issuer proposes to loan the proceeds of the Bonds to the
Borrower, and the Borrower desires to borrow the proceeds of the Bonds upon the
terms and conditions set forth herein; and
WHEREAS, in order to secure said Bonds, the Issuer has entered into a
Trust Indenture, which pledges and assigns its rights in the Security to the
Trustee for the benefit of the Holders of the Bonds; and
WHEREAS, contemporaneously with the issuance of the Bonds, NBD Bank,
N.A. (the "Bank") will issue its irrevocable direct-pay Letter of Credit (the
"Letter of Credit"), in favor of the Trustee, for the account of the Borrower,
obligating the Bank to pay to the Trustee, in accordance with the terms thereof
upon presentation of drafts and certificates as required therein, certain
amounts specified therein for payment of the principal and Purchase Price of and
interest on the Bonds; and
WHEREAS, the Borrower and the Issuer each have full right and lawful
authority to enter into this Agreement, and to perform and observe the
provisions hereof on their respective parts to be performed and observed;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto covenant, agree and bind
themselves as follows, provided that any obligation of the Issuer created by or
arising out of this Agreement shall be a special obligation of the Issuer and
shall never constitute a debt or a pledge of the faith and credit or the taxing
power of the Issuer, the State or any political subdivision or taxing district
thereof, but shall be payable solely out of the Security, anything herein
contained to the contrary by implication or otherwise notwithstanding:
ARTICLE I
DEFINITIONS
All terms used herein which are defined in the Indenture identified
below shall have the meanings therein set forth, which definitions are by this
reference incorporated herein and made a part of this Agreement. In addition to
the terms elsewhere defined in this Agreement, the words "this Agreement" as
used herein shall mean this Agreement and the following terms used in this
Agreement (including the preamble) shall have the following meanings unless the
context indicates a different meaning or intent and such definitions shall be
equally applicable to both the singular and plural forms of any of the terms
herein defined:
"Authorized Borrower Representative" means the Borrower or such person
at the time and from time to time authorized by a valid power of attorney (in
form and substance acceptable to the Bank) to act on behalf of the Borrower
furnished to the Issuer, the Bank and the Trustee.
"Bond" or "Bonds" means the Issuer's Variable Rate Demand Industrial
Development Revenue Bonds (Xxxxxxx Industries, Inc. Project), Series 1998,
issued pursuant to the Indenture.
"Completion Date" means the date of completion of the Project in
accordance with the plans, as set forth in a completion certificate delivered
pursuant to Section 5.4 hereof.
"Costs of the Project" means (a) obligations of the Issuer or the
Borrower incurred, or reimbursement to the Borrower, for labor and to
contractors, builders and materialmen in connection with the acquisition,
construction, installation and equipping of the Project; (b) the cost of
contract bonds and of insurance of all kinds that may be required or necessary
during the course of construction of the Project which is not paid by the
contractor or contractors or otherwise provided for; (c) all costs of
engineering services, including test borings, surveys, estimates, plans and
specifications and preliminary investigations, and supervising construction, as
well as for the performance of all other duties required by or consequent upon
the proper construction of the Project; (d) Issuance Costs; (e) all other costs
which the Borrower shall be required to pay, under the terms of any contract or
contracts, for the acquisition, construction, installation and equipping of the
Project; (f) interest on the Bonds and property taxes during the construction
component of the Project that may be capitalized under the Code and generally
accepted accounting principles; (g) all other costs relating to the Project to
the extent that (i) such costs are eligible for payment under the Act, including
all such costs described in attached Exhibit B, and (ii) payment of such costs
will not cause the interest on the Bonds to be included in gross income for
federal income tax purposes; and (h) other costs of a nature comparable to those
described in clauses (a) through (g) above which the Borrower shall be required
to pay as a result of the damage, destruction, condemnation or taking of the
Project or any portion thereof.
"Indenture" means the Trust Indenture dated as of August 1, 1998
between the Issuer and Norwest Bank Minnesota, N.A., as trustee, as the same may
be amended or supplemented from time to time as permitted thereby.
"Issuance Costs" means items of expense payable or reimbursable
directly or indirectly by the Issuer or the Borrower and related to the
authorization, sale and issuance of the Bonds and authorization and execution of
this Agreement, which items of expense shall include, but not be limited to,
application fees and expenses, publication costs, printing costs, costs of
reproducing documents, filing and recording fees, Bond Counsel and Counsel fees,
costs of credit ratings, initial fees of the Trustee, Placement Agent fees,
charges for execution, transportation and safekeeping of the Bonds and related
documents, and other costs, charges and fees in connection with the foregoing.
"Loan" means the Loan made pursuant to Section 3.1 of this Agreement.
"Loan Repayments" means all amounts required to be paid by the Borrower
to the Issuer (and the Trustee as the assignee of the Issuer) pursuant to the
Promissory Note and Section 3.2 of this Agreement.
"Principal User" means a principal user of the Project as such term is
used in Section 144(a) of the Code.
"Project" means the acquisition, construction and equipping of a
manufacturing facility, all as more fully described in attached Exhibit D.
"Promissory Note" means the promissory note given by the Borrower
pursuant to this Agreement, in the form of attached Exhibit C, as the same may
be amended, modified or supplemented in accordance with the terms hereof.
"Requisition Certificate" means a certificate in the form of attached
Exhibit E delivered pursuant to Section 5.1 hereof.
"Tax Compliance Certificate" means the Tax Compliance Certificate dated
as of the Issue Date executed by the Borrower in connection with the issuance of
the Bonds.
"Unassigned Rights" means the right of the Issuer to make all
determinations and approvals and receive all notices accorded to it under this
Agreement and to enforce in its name and for its own benefit the provisions of
Sections 3.5, 8.6 and 10.4 of this Agreement with respect to Issuer fees and
expenses, and indemnity payments as the interests of the Issuer and related
persons shall appear.
ARTICLE II
REPRESENTATIONS
SECTION 2.1. Representations by the Borrower. As an inducement to the
Issuer to issue the Bonds and to make the Loan to the Borrower, the Borrower
makes the following representations, warranties and covenants:
(a) The Borrower has the authority and legal capacity to execute,
deliver and perform this Agreement, the Promissory Note, the Remarketing
Agreement, the Placement Agreement, the Reimbursement Agreement and the Tax
Compliance Certificate and to enter into and carry out the transactions
contemplated by those documents; that execution, delivery and performance do
not, and will not, violate any provision of law applicable to the Borrower and
do not, and will not, conflict with or result in a default under any agreement
or instrument to which the Borrower is a party or by which the Borrower is
bound.
(b) There are no actions, suits, proceedings, inquiries or
investigations pending, or to the knowledge of the Borrower threatened, against
or affecting the Borrower in any court or before any governmental authority or
arbitration board or tribunal which, if determined adversely to the Borrower,
would materially and adversely affect the transactions contemplated by this
Agreement, the Promissory Note, the Reimbursement Agreement, the Placement
Agreement, the Remarketing Agreement, the Tax Compliance Certificate or the
Indenture or which, in any way, would adversely affect the enforceability or
validity of the Bonds, the Indenture, the Reimbursement Agreement, the
Promissory Note, the Placement Agreement, the Remarketing Agreement or this
Agreement or the ability of the Borrower to perform its obligations under this
Agreement.
(c) The execution, delivery and performance of this Agreement, the
Promissory Note, the Reimbursement Agreement, the Placement Agreement, the
Remarketing Agreement and the Tax Compliance Certificate and the compliance by
the Borrower with all of the provisions hereof and thereof are not in
contravention of law or any unwaived provision of any mortgage, deed, instrument
or undertaking to which the Borrower is a party or by which it or its property
is bound.
(d) This Agreement, the Promissory Note, the Reimbursement Agreement,
the Placement Agreement, the Remarketing Agreement and the Tax Compliance
Certificate are valid, binding and enforceable in accordance with their terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights generally
and general principles of equity.
(e) The Borrower is not in default in any material respect under any
order, writ, judgment, injunction, decree, determination or award or any
indenture, agreement, lease or instrument. The Borrower is not in default under
any law, rule or regulation wherein such default could materially adversely
affect the Borrower or the ability of the Borrower to perform its obligations
under this Agreement.
(f) The Project conforms in all material respects with all applicable
zoning, planning, building, environmental and other regulations of the
governmental authorities having jurisdiction of the Project and all licenses and
approvals the Borrower requires to operate its facilities have been obtained by
appropriate state and federal agencies and departments or, if not obtained on
the date of this Agreement, are expected to be obtained in the normal course of
business at or prior to the time such authorizations, consents or approvals are
required to be obtained.
(g) The Borrower shall own and operate the Project, or cause it to be
operated, as an "industrial project for industry" within the meaning of the Act
until the Bonds are no longer outstanding.
(h) To the best of the knowledge of the Borrower, no authorizations,
consents or approvals of governmental bodies or agencies are required in
connection with the execution and delivery by the Borrower of this Agreement,
the Promissory Note, the Reimbursement Agreement, the Placement Agreement, the
Remarketing Agreement or the Tax Compliance Certificate or in connection with
the carrying out by the Borrower of its obligations under this Agreement, the
Promissory Note, the Reimbursement Agreement, the Placement Agreement, the
Remarketing Agreement or the Tax Compliance Certificate which have not been
obtained or, if not obtained on the date of this Agreement, are expected to be
obtained in the normal course of business at or prior to the time such
authorizations, consents or approvals are required to be obtained.
(i) None of the proceeds of the Bonds shall be applied to any costs of
the acquisition, construction, installation or equipping of the Project which
were paid or incurred (within the meaning of Section 103 of the Code) prior to
the date 60 days before the date on which the inducement resolution was adopted
by the Issuer with respect to the Project. The Issuer adopted a resolution
declaring official intent to finance the costs of the Project pursuant to Treas.
Reg. 1.150-2 not more than 60 days after the date on which the acquisition,
construction, installation and equipping of the Project commenced.
(j) The Borrower will comply with the provisions of Section 148 of the
Code. The Borrower covenants, for the benefit of itself, the Issuer and the
owners from time to time of the Bonds, that it will not cause or permit any
proceeds of the Bonds to be invested in a manner contrary to the provisions of
Section 148 of the Code and that it will assume compliance with such provisions
on behalf of the Issuer (including, without limitation, performing required
calculations, the keeping of proper records and the timely payment to the
Department of the Treasury of the United States, in the name of the Issuer, all
of amounts required to be so paid by Section 148 of the Code) and the Borrower
shall follow the rebate instructions set forth in the Tax Compliance
Certificate.
(k) No event has occurred and no condition exists with respect to the
Borrower that would constitute an "Event of Default" under this Agreement or
that, with the lapse of time or the giving of notice or both, would become an
"Event of Default" under this Agreement.
(l) In connection with any lease or grant by the Borrower of the use of
the Project, the Borrower shall require that any such lessee or user of any
portion of the Project not use that portion of the Project in any manner which
would violate the covenants set forth in the Tax Compliance Certificate.
(m) The Borrower shall on or prior to July 15 of each year deliver or
cause the Trustee to deliver to the Issuer and the Local Government Commission a
certificate stating the principal amount of the Bonds outstanding as of June 30
of such year and upon request of the Local Government Commission, a list of
owners of the Bonds as of June 30.
SECTION 2.2. Representations of the Issuer. The Issuer makes the
following representations and warranties:
(a) The Issuer is a political subdivision and body corporate and
politic and is authorized by the Act and the Bond Resolution authorizing the
issuance of the Bonds to enter into the transactions contemplated by this
Agreement and to carry out its obligations hereunder, and by proper action of
its governing body has been duly authorized to execute and deliver this
Agreement, the Indenture, the Placement Agreement and the Bonds and this
Agreement, the Indenture, the Placement Agreement and the Bonds have been duly
executed and delivered by the Issuer and are valid and binding obligations of
the Issuer enforceable in accordance with their terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, moratorium, reorganization,
or other laws affecting the enforcement of creditors' rights generally and
general principles of equity.
(b) All of the proceedings approving this Agreement, the Bond
Resolution and the Indenture were conducted by the Issuer at meetings which
fully complied with the Act.
(c) The Bonds are to be issued under and secured by the Indenture,
pursuant to which certain of the Issuer's interests in this Agreement, and the
revenues and receipts to be derived by the Issuer pursuant to this Agreement,
will be pledged and assigned to the Trustee as security for payment of the
principal or purchase price of, premium, if any, and interest on the Bonds. The
Issuer covenants that it has not and will not pledge or assign its interest in
this Agreement, or the revenues and receipts derived pursuant to this Agreement,
excepting Unassigned Rights, other than to the Trustee under the Indenture to
secure the Bonds.
(d) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions of this Agreement conflicts with or
results in a breach of the terms, conditions or provisions of any material
restriction, agreement or instrument to which the Issuer is a party, or by which
it or any of its property is bound, or constitutes a default under any of the
foregoing.
(e) No officer, employee or member of the Issuer is directly or
indirectly a party to or in any manner whatsoever interested in this Agreement,
the Placement Agreement, the Bonds or the proceedings related thereunder.
ARTICLE III
LOAN AND REPAYMENT
SECTION 3.1. Amount and Evidence of Loan. Concurrently with the
issuance and delivery of the Bonds, the Issuer shall make and the Borrower shall
receive the Loan in the principal sum of $5,000,000 the proceeds of which shall
be used to make the required deposit to the Construction Fund for payment of the
Costs of the Project to be disbursed in accordance with Section 5.1 hereof. The
Loan shall be evidenced by the Promissory Note.
SECTION 3.2. Loan Repayments. On or before each date on which a payment
of principal, premium, if any, or interest is due on the Bonds, whether by
acceleration, mandatory redemption or otherwise, and until the principal of,
premium, if any, and interest on the Bonds has been fully paid or provided for
as set forth in Article V of the Indenture, the Borrower shall pay, or cause to
be paid, to the Trustee, in immediately available funds for deposit in the Bond
Fund, the Loan Repayments, including the amounts payable as principal, premium,
if any, and interest due on the Bonds on such date, less any Eligible Funds held
by the Trustee in the Bond Fund that are required to be applied to the payment
of such principal, premium, if any, and interest on such date.
Notwithstanding any provision in this Section 3.2 to the contrary,
payments made from draws under the Letter of Credit shall be made on such dates
on behalf of the Borrower by the Trustee with funds drawn by the Trustee under
the Letter of Credit pursuant to clause (i) of Section 309(a) of the Indenture,
and no additional payments shall be due or paid by the Borrower hereunder with
respect to the payment of principal of, premium, if any, or interest on such
Bonds to the extent that funds are so drawn on the Letter of Credit and applied
by the Trustee for such payment on such dates.
SECTION 3.3. Mandatory and Optional Prepayments of the Promissory Note.
The Borrower may prepay the Promissory Note in whole or in part in increments of
principal of $100,000 during the Variable Rate Period or $5,000 during the Fixed
Rate Period. The Borrower may direct the redemption of the corresponding amount
of Bonds then outstanding on such dates and pursuant to the provisions and
limitations, and upon payment of any required premium, set forth in Section
217(a) of the Indenture.
The Borrower shall prepay the Promissory Note at such times in order to
enable the Trustee to redeem all or a portion of the Bonds as required in
Sections 217(b), (c) and (d) of the Indenture.
If the Borrower repays or prepays Loan Repayments and other amounts
owing to the Trustee under this Agreement and the Indenture and to the Bank
under the Reimbursement Agreement in such a manner so as to permit the Security
to be released from the lien of the Indenture in accordance with Article V of
the Indenture, then the Loan shall be deemed fully repaid and this Agreement and
the Promissory Note shall be canceled on the date on which the Security is so
released. To confirm such cancellation, the Borrower may require the Trustee to
cancel the Promissory Note and execute any further reasonable evidence of
cancellation on the date the Security is so released.
In the event of any optional prepayment of the Promissory Note, on or
before the date set for redemption of the Bonds to be redeemed in connection
therewith, the Borrower shall deposit, or cause to be deposited from a draw on
the Letter of Credit, in the Bond Fund with the Trustee immediately available
Eligible Funds which, when added to Eligible Funds on hand with the Trustee, are
sufficient to pay the principal of, premium, if any, and interest on the Bonds
and to pay all fees, costs, and expenses of the Issuer and the Trustee specified
in Sections 3.5, 3.6, 8.6 and 10.4 accruing through the date set for redemption
of the Bonds (provided that no moneys derived from a draw on the Letter of
Credit shall be used to pay such fees, costs and expenses of the Issuer or the
Trustee).
SECTION 3.4. Additional Payment Obligations of the Borrower. The
Borrower agrees to pay, or cause to be paid, to the Trustee, for deposit in the
Bond Purchase Fund, on or before each purchase date, an amount sufficient,
together with any moneys then held by the Trustee in the Bond Purchase Fund and
available for such purpose under Section 404 of the Indenture, to enable the
Trustee to pay the Purchase Price of all Bonds to be purchased on such date
pursuant to Section 205 or Section 206 of the Indenture at the price specified
therein; provided, however, that if the Letter of Credit is outstanding and
drawings may be made thereunder (but only if such drawing is permitted by the
terms of the Letter of Credit) for such purpose, payments with respect to the
Purchase Price of the Bonds on such date which are required to be made by the
Borrower under this Section 3.4 shall be made on behalf of the Borrower by the
Trustee with funds drawn by the Trustee under the Letter of Credit pursuant to
clause (ii) of Section 309(a) of the Indenture. No additional payments shall be
due or paid by the Borrower hereunder with respect to the Purchase Price of such
Bonds to the extent that funds are so drawn under the Letter of Credit and
applied by the Trustee to payment of the Purchase Price of Bonds purchased on
such date. Anything herein to the contrary notwithstanding, if on any purchase
date the amount theretofore paid by or on behalf of the Borrower hereunder
together with the amount theretofore drawn under the Letter of Credit is, for
any reason, insufficient to pay the Purchase Price of the Bonds being tendered
on such date as provided in the Indenture, the Borrower hereby agrees to
immediately pay an amount equal to such deficiency to the Trustee at its
corporate trust office in lawful money of the United States of America. Such
payment shall be made at such times as are necessary so that sufficient funds
will be available at such times as are necessary to pay the Purchase Price of
the Bonds tendered under the Indenture at the times and in the manner
contemplated by the Indenture.
SECTION 3.5. Payment of Issuer Fees. The Borrower shall pay, within 10
days of demand therefor, the reasonable fees and expenses of the Issuer related
to the Project, or incurred by the Issuer in performing or enforcing the
provisions of this Agreement or the Indenture.
SECTION 3.6. Administrative Expenses. The Borrower shall pay, or cause
to be paid, an amount equal to (a) the reasonable fees and charges of the
Trustee for services rendered as Trustee under the Indenture and its reasonable
expenses incurred as Trustee under the Indenture, as and when the same become
due, including the reasonable fees of its Counsel and (b) the reasonable fees
and charges of the Remarketing Agent for acting as Remarketing Agent under the
Indenture, as and when the same become due, including the reasonable fees of its
Counsel.
SECTION 3.7. Letter of Credit; Alternate Letter of Credit.
(a) The Borrower shall cause the Original Letter of Credit to be
delivered to the Trustee on or before the Issue Date. The Original Letter of
Credit shall terminate no earlier than the earliest of (i) the payment in full
by the Bank of funds authorized to be drawn thereunder, (ii) the surrender of
the Letter of Credit by the Trustee to the Bank for cancellation as a result of
(A) the payment in full of the Bonds pursuant to the provisions of the
Indenture, or (B) the acceptance by the Trustee of an Alternate Letter of
Credit, as certified by the Trustee to the Bank, (iii) August 15, 2003, (iv) the
Business Day following the Conversion Date, or (v) the fifteenth calendar day
following delivery to the Trustee of a direction by the Bank under Section 602
of the Indenture to declare the Bonds due and payable which has not been
rescinded.
(b) (i) The Borrower shall have the right at any time and from time to
time (but is not obligated) during the Variable Rate Period to arrange
for the renewal, reissuance or extension of any Letter of Credit. Any
renewal, reissuance or extension shall be for a period of at least one
year and shall expire on an August 15. Any extension or renewal of the
Letter of Credit during the Variable Rate Period shall not be required
to be accompanied by the documentation required for an Alternate Letter
of Credit as described in Section 3.7(b)(ii) below.
(ii) At any time during the Variable Rate Period upon at least
45 days prior written notice to the Trustee, the Borrower may, at its
option, so long as it has not delivered a Conversion Notice pursuant to
Section 204(a) of the Indenture, provide for delivery of an Alternate
Letter of Credit which shall be effective on the date such Alternate
Letter of Credit is accepted by the Trustee in accordance herewith. Any
Alternate Letter of Credit shall be issued by a commercial bank,
federal savings bank or savings and loan association organized under
the laws of the United States or any state of the United States or the
District of Columbia or a branch or agency of a foreign commercial bank
located in the United States that is subject to regulation by state or
federal banking regulatory authorities. The Alternate Letter of Credit
shall have the same terms as, and shall be in substantially the form
of, the Original Letter of Credit, except that the Alternate Letter of
Credit shall be for a period of at least one year and shall expire on
an August 15. On or before the date of delivery of any Alternate Letter
of Credit to the Trustee, as a condition of acceptance of any Alternate
Letter of Credit by the Trustee, the Borrower shall furnish to the
Trustee: (A) an opinion of Bond Counsel stating to the effect that the
delivery of such Alternate Letter of Credit is authorized under and
complies with this Section 3.7 and that the delivery of the Alternate
Letter of Credit will not in itself result in the loss of the exclusion
of the interest on the Bonds from gross income for federal income tax
purposes; (B) an opinion of Counsel stating to the effect that (1) the
Alternate Letter of Credit is a binding and enforceable obligation of
the issuer thereof (except as enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors' rights generally and (b) the availability of
equitable remedies, including specific performance and injunctive
relief), (2) payments thereunder will not constitute a voidable
preference under the United States Bankruptcy Code in the event of a
filing of a petition in bankruptcy by or against the Borrower or the
Issuer, and (3) the issuer thereof is a commercial bank, federal
savings bank or savings and loan association organized under the laws
of the United States or any state of the United States or the District
of Columbia or is a branch or agency of a foreign commercial bank
located under the laws of the United States or any state of the United
States or the District of Columbia and subject to regulation by state
or federal banking regulatory authorities; (C) evidence that the
long-term unsecured debt of the issuer of the Alternate Credit Facility
is rated not lower than Aa3 by Xxxxx'x Investors Service or AA- by
Standard & Poor's Ratings Services and, in any event, not lower than
the credit rating of the long-term unsecured debt of the issuer of the
Letter of Credit being replaced; and (D) if, at the time of issuance of
the Alternate Credit Facility, the Bonds are rated by any Rating
Agency, written evidence that the delivery of the Alternate Credit
Facility will not result in a lowering or withdrawal of such rating. In
the case of an Alternate Letter of Credit issued by a branch or agency
of a foreign commercial bank there shall also be delivered an opinion
of Counsel satisfactory to the Trustee and licensed to practice law in
the jurisdiction in which the head office of such bank is located, to
the effect that the Alternate Letter of Credit is the legal, valid and
binding obligation of such bank enforceable in accordance with its
terms.
(iii) Upon receipt of such documentation, the Trustee shall
accept such Alternate Letter of Credit, surrender the previous Letter
of Credit, and shall give notice thereof, all as set forth in Section
309 of the Indenture.
(c) (i) On the Business Day immediately preceding the Conversion Date,
the Borrower shall cause to be delivered to the Trustee: (A) an
amendment to the Letter of Credit or an Alternate Letter of Credit,
which Letter of Credit as amended or Alternate Letter of Credit, as the
case may be, (1) shall have the same terms as, and shall be in
substantially the form of, the Original Letter of Credit, except that
it shall provide for the payment of the outstanding principal, any
redemption premium and up to 210 days' interest (based on a 360 day
year) payable with respect to the Bonds after the Conversion Date and
except that it need not have any provisions relating to a Liquidity
Drawing, (2) shall be effective on the Conversion Date, (3) shall be
for a period of at least five years after the Conversion Date or the
remaining term of the Bonds, whichever is less, and (4) shall expire on
an August 15; (B) an opinion of Bond Counsel stating to the effect that
the delivery of the amendment to the Letter of Credit then in effect or
Alternate Letter of Credit, as the case may be, is authorized under and
complies with this Section 3.7(c) and that the delivery of the
amendment to the Letter of Credit or Alternate Letter of Credit will
not result in the loss of the exclusion of the interest on the Bonds
from gross income for federal income tax purposes; (C) an opinion of
Counsel stating to the effect that (1) the Letter of Credit as amended
or the Alternate Letter of Credit, as the case may be, is a binding and
enforceable obligation of the issuer thereof (except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
and other laws affecting creditors' rights generally and the
availability of equitable remedies, including specific performance and
injunctive relief), (2) payments thereunder will not constitute a
voidable preference under the United States Bankruptcy Code in the
event of a filing of a petition in bankruptcy by or against the
Borrower or the Issuer, and (3) the issuer thereof is a commercial
bank, federal savings bank or savings and loan association organized
under the laws of the United States or any state of the United States
or the District of Columbia or is a branch or agency of a foreign
commercial bank located and doing business in the United States and
subject to regulation by state or federal banking regulatory
authorities; and (D) evidence that the senior debt obligations or
comparable credit facilities of the issuer of the Letter of Credit as
amended or Alternate Letter of Credit, as the case may be, are rated by
a Rating Agency not less than "A." In the case of a Letter of Credit or
an Alternate Letter of Credit, as the case may be, issued by a branch
or agency of a foreign commercial bank there shall also be delivered an
opinion of counsel satisfactory to the Trustee and licensed to practice
law in the jurisdiction in which the head office of such bank is
located, to the effect that the Letter of Credit as amended or
Alternate Letter of Credit, as the case may be, is the legal, valid and
binding obligation of such bank enforceable in accordance with its
terms.
(ii) The Borrower shall have the right (but is not obligated)
after the Conversion Date to arrange for the renewal, reissuance or
extension of the Letter of Credit then in effect. Any renewal,
reissuance or extension shall be for a period of at least five years or
the remaining term of the Bonds, whichever is less, and shall expire on
an August 15. Any extension or renewal of the Letter of Credit during
the Fixed Rate Period shall not be required to be accompanied by the
documentation required for an Alternate Letter of Credit as described
in Section 3.7(c)(iii).
(iii) At any time after the Conversion Date upon at least 45
days prior written notice to the Trustee, the Borrower may, at its
option, provide for delivery of an Alternate Letter of Credit which
shall be effective on the date such Alternate Letter of Credit is
accepted by the Trustee in accordance herewith. Any Alternate Letter of
Credit shall be issued by a commercial bank, federal savings bank or
savings and loan association organized under the laws of the United
States or any state of the United States or the District of Columbia or
a branch or agency of a foreign commercial bank located in the United
States that is subject to regulation by state or federal banking
regulatory authorities. The Alternate Letter of Credit shall have the
same terms as and shall be in substantially the form of, the amended
Letter of Credit or Alternate Letter of Credit, as the case may be,
delivered pursuant to Section 3.7(c)(i) except that such Alternate
Letter of Credit shall be for a period of at least five years or the
remaining term of the Bonds, whichever is less, and shall expire on an
August 15. On or before the date of delivery of any Alternate Letter of
Credit to the Trustee, as a condition of acceptance of any Alternate
Letter of Credit by the Trustee, the Borrower shall furnish to the
Trustee: (A) an opinion of Bond Counsel stating to the effect that the
delivery of the Alternate Letter of Credit is authorized under and
complies with this Section 3.7(c) and that the delivery of the
Alternate Letter of Credit will not result in the loss of the exclusion
of the interest on the Bonds from gross income for federal income tax
purposes; (B) an opinion of Counsel stating to the effect that (1) the
Alternate Letter of Credit is a binding and enforceable obligation of
the issuer thereof (except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other laws
affecting creditors' rights generally and the availability of equitable
remedies, including specific performance and injunctive relief), (2)
payments thereunder will not constitute a voidable preference under the
United States Bankruptcy Code in the event of a filing of a petition in
bankruptcy by or against the Borrower or the Issuer, and (3) the issuer
thereof is a commercial bank, federal savings bank or savings and loan
association organized under the laws of the United States or any state
of the United States or the District of Columbia or is a branch or
agency of a foreign commercial bank located and doing business in the
United States that is subject to regulation by state or federal banking
regulatory authorities; and (C) evidence that the senior debt
obligations or comparable credit facilities of the issuer of the
Alternate Letter of Credit is rated by a Rating Agency at least equal
to the greater of (1) the rating of the senior debt obligations or
comparable credit facilities of the issuer of the then existing Letter
of Credit or (2) "A." In the case of an Alternate Letter of Credit
issued by a branch or agency of a foreign commercial bank there shall
also be delivered an opinion of counsel satisfactory to the Trustee and
licensed to practice law in the jurisdiction in which the head office
of such bank is located, to the effect that the Alternate Letter of
Credit is the legal, valid and binding obligation of such bank
enforceable in accordance with its terms.
(d) Notwithstanding any provision to the contrary herein, for so long
as any Bonds are Outstanding under the Indenture, a Letter of Credit or
Alternate Letter of Credit meeting the requirements set forth herein and in the
Indenture shall be in effect at all times.
SECTION 3.8. Credit for Bonds Surrendered. The Borrower shall have the
right to surrender Bonds, other than Bonds pledged to the Bank pursuant to the
Reimbursement Agreement, acquired by it to the Trustee. Bonds so surrendered
shall be forthwith canceled and the principal amount thereof shall be applied as
credits with respect to the Loan Repayments due and payable on the respective
maturity dates on such Bonds. The Trustee shall provide the Bank with a
certificate for the reduction of the amounts available to be drawn under the
Letter of Credit as a result of such payments in accordance with the terms of
the Letter of Credit.
ARTICLE IV
NO SECURITY INTEREST IN PROJECT
The Issuer shall have no rights to or any interest in the Project,
which shall be the sole and exclusive property of the Borrower. However, the
Borrower agrees that, subject to reasonable security and safety regulations, the
Issuer and the Trustee shall have the right at all reasonable times to enter
upon the site of the Project in order to determine that it conforms with the
requirements of this Agreement.
ARTICLE V
CONSTRUCTION OF THE PROJECT
SECTION 5.1. Disbursements from the Construction Fund.
(a) General Conditions. Disbursements of moneys in the Construction
Fund shall be made for Costs of the Project, provided that at the time of each
such disbursement the Borrower shall have complied with any and all conditions
set forth in the Reimbursement Agreement regarding the Bank's approval of
disbursement requests (unless such conditions are waived in the sole discretion
of the Bank). The Bank shall review the Borrower's request for disbursement and
evidence of compliance with the conditions of this Section 5.1 within ten days
after the receipt thereof. Disbursements shall be made by the Trustee to the
parties as designated in each Requisition Certificate.
(b) Costs of the Project. The proceeds of the Loan shall be used solely
to pay Costs of the Project. All Costs of the Project shall be reflected in the
budget provided to the Bank by the Borrower, which shall designate the portion
of Costs of the Project which shall be funded through the Loan and the portion
which shall be contributed by the Borrower. The maximum amount which the Bank
shall be obligated to authorize the Trustee to disburse for any Costs of the
Project shall be the amount shown in the budget, as modified from time to time
as herein provided.
From time to time, the Borrower or the Bank may determine that
modifications are necessary in the budget because of actual or anticipated
changes in the Costs of the Project. If, after due consultation and
consideration of the views of the Borrower and supporting documentation, the
Borrower and the Bank do not agree to what modifications need to be made in the
budget, the determination of the Bank shall control.
(c) Draw Request Documents. Each of the payments to be made for Costs
of the Project shall be made only upon delivery to the Trustee of a Requisition
Certificate signed by an Authorized Borrower Representative and approved in
writing by the Bank.
SECTION 5.2. Obligation of the Borrower to Complete the Project and to
Pay Costs in Event Construction Fund Insufficient. If requested, the Borrower
shall make available to the Issuer, the Bank and the Trustee such information
concerning the Project as any of them may reasonably request. The Borrower, with
the prior written consent of the Bank, may revise the plans and specifications
for the Project, provided, however, that the expenditure of moneys for the
Project as modified is permitted by the Act and will not impair the exclusion of
interest on the Bonds from gross income for federal income tax purposes.
In the event the money in the Construction Fund available for payment
of the Costs of the Project shall not be sufficient to make such payment in
full, the Borrower agrees to pay directly, or to deposit moneys in the
Construction Fund for the payment of, such costs of completing the Project as
may be in excess of the moneys available therefor in the Construction Fund. The
Issuer does not make any warranty or representation, either express or implied,
that the moneys which will be deposited into the Construction Fund, and which
under the provisions of this Agreement will be available for payment of the
Costs of the Project, will be sufficient to pay all of the costs which will be
incurred in connection therewith. The Borrower agrees that if, after exhaustion
of the moneys in the Construction Fund, the Borrower should pay, or deposit
moneys in the Construction Fund for payment of, any portion of the Costs of the
Project pursuant to the provisions of this Section 5.2, it shall not be entitled
to any reimbursement therefor from the Issuer, the Trustee, the Bank, or from
the owners of any of the Bonds, nor shall they be entitled to any diminution of
the amounts payable hereunder.
SECTION 5.3. Investment of Construction Fund, Bond Fund, Bond Purchase
Fund and Rebate Fund Moneys. Any moneys held in the Construction Fund, Bond
Fund, Bond Purchase Fund (excluding proceeds of a draw on the Letter of Credit,
which shall remain uninvested) or the Rebate Fund shall, pending disbursement
and upon written request of the Borrower or facsimile request of the Borrower
later confirmed in writing, be invested only in Permitted Investments in
accordance with the provisions of Section 407 of the Indenture, all at such
maturities, rates of interest and other specifications as the Borrower may
indicate in its request to the Trustee. The investments shall mature not later
than the respective dates estimated by the Borrower when the moneys in such
Funds shall be needed for the purposes provided in this Agreement and the
Indenture, but should the cash balance in a Fund be insufficient for such
purpose, the Trustee is authorized to sell the necessary portion of such
investments to meet that purpose. Recognizing that such investments shall be
made at the written direction of the Borrower, the Issuer agrees to cooperate
with the Borrower and the Borrower covenants that it will restrict the use of
the proceeds of the Bonds (and any other funds or moneys which may be deemed to
be proceeds of the Bonds pursuant to Section 148(a) of the Code), in such manner
and to such extent, if any, as may be necessary, after taking into account
reasonable expectations at the time the Bonds are issued, so that the Bonds will
not constitute "arbitrage bonds" under Section 148(a) of the Code.
SECTION 5.4. Certificate as to Completion. Upon the completion of the
acquisition, construction, installation and equipping of the Project and prior
to the final requisition of funds from the Construction Fund, the Borrower shall
submit to the Trustee and the Bank a completion certificate signed by the
Borrower substantially in the form of attached Exhibit A.
All Bond proceeds remaining in the Construction Fund after the earlier
of the Completion Date or August 12, 2001 shall be treated as Surplus Bond
Proceeds and transferred to the Bond Fund to be applied by the Trustee in the
manner provided in Section 11.1 hereof. Notwithstanding the foregoing, Bond
proceeds may be retained in the Construction Fund longer than three (3) years
after the Issue Date provided the Borrower delivers an opinion of Bond Counsel
to the Issuer and the Trustee to the effect that the retention of such Bond
proceeds in the Construction Fund will not adversely affect the exclusion of
interest on the Bonds from gross income of the Bondholders for federal income
tax purposes.
SECTION 5.5. No Warranty by Issuer. THE BORROWER RECOGNIZES THAT THE
ISSUER HAS NOT MADE AN INSPECTION OF THE PROJECT OR OF ANY FIXTURE OR OTHER ITEM
CONSTITUTING A PORTION THEREOF, AND THE ISSUER MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED OR OTHERWISE, WITH RESPECT TO THE SAME OR THE
LOCATION, USE, DESCRIPTION, DESIGN, MERCHANTABILITY, FITNESS FOR USE FOR ANY
PARTICULAR PURPOSE, CONDITION OR DURABILITY THEREOF, OR AS TO THE ISSUER'S OR
THE BORROWER'S TITLE THERETO OR OWNERSHIP THEREOF OR OTHERWISE, IT BEING AGREED
THAT ALL RISKS INCIDENT THERETO ARE TO BE BORNE BY THE BORROWER. In the event of
any defect or deficiency of any nature in the Project or any fixture or other
item constituting a portion thereof, whether patent or latent, the Issuer shall
have no responsibility or liability with respect thereto. The provisions of this
Section 5.5 have been negotiated and are intended to be a complete exclusion and
negation of any warranties or representations by the Issuer, express or implied,
with respect to the Project or any fixture or other item constituting a portion
thereof, whether arising pursuant to the Uniform Commercial Code of the State or
another law now or hereafter in effect or otherwise.
ARTICLE VI
USE OF PROJECT,
MAINTENANCE, TAXES AND INSURANCE
SECTION 6.1. Use, Maintenance and Modifications of Project by Borrower.
The Borrower shall use or lease for use the Project during the term of this
Agreement principally for manufacturing purposes. The Borrower does not know of
any reason why the Project will not be so used and occupied by it in the absence
of supervening circumstances not now anticipated by it or beyond its control.
Notwithstanding the foregoing, the Borrower shall have the right to use the
Project during the term of this Agreement for any lawful purpose under the Act
that will not affect the validity of the Bonds or impair the exclusion of
interest on the Bonds from gross income for federal income tax purposes. The
failure of the Borrower to use or lease for use the Project for its intended
purposes shall not in any way xxxxx or reduce the obligation of the Borrower to
repay the Loan under the provisions of this Agreement, and shall not be deemed a
default under this Agreement in any respect as long as such alternative use is
caused by supervening circumstances not now anticipated and does not impair the
exclusion of interest on the Bonds from gross income for federal income tax
purposes or contravene the Act.
The Borrower agrees that it will keep the Project in good repair and
good operating condition, ordinary wear and tear excepted, at its own cost.
The Borrower may make additions, modifications and improvements to the
Project from time to time as the Borrower, in its discretion, may deem to be
desirable, the cost of which shall be paid by the Borrower, provided, however,
that such additions, modifications and improvements do not materially and
adversely alter the scope, character, value or operation of the Project without
the prior written consent of the Bank, do not impair the exclusion of interest
on the Bonds from gross income for federal income tax purposes and do not
contravene the provisions of the Act. The Trustee, the Issuer or the Bank may
request opinions of professional engineers, architects and Counsel, satisfactory
to the Issuer, the Trustee and the Bank, as to the satisfaction of the
requirements set forth in this paragraph.
SECTION 6.2. Taxes, Other Governmental Charges and Utility Charges. The
Borrower shall pay before any interest, collection fees or penalties shall
accrue, every lawful cost, expense and obligation of every kind and nature,
foreseen or unforeseen, for the payment of which the Borrower is or shall become
liable by reason of its estate or interest in the Project or any portion
thereof, by reason of any right or interest of the Borrower in or under this
Agreement, or by reason of or in any manner connected with or arising out of the
possession, operation, maintenance, alteration, repair, rebuilding or use of the
Project or any portion thereof, including, without limitation, all taxes,
assessments, whether general or special, and governmental charges of any kind
whatsoever that may at any time be lawfully assessed or levied against or with
respect to any machinery, equipment or other property installed or brought by
the Borrower with the proceeds of the Bonds (including, without limiting the
generality of the foregoing, any taxes levied upon or with respect to the
receipts, income or profits of the Issuer from the Project and all utility and
other charges incurred in the operation, maintenance, use, occupancy and upkeep
of the Project); provided, that with respect to special assessments or other
governmental charges that may lawfully be paid in installments over a period of
years, the Borrower shall be obligated to pay only such installments as they
become due.
The Borrower may, at its expense and in its own name, in good faith
contest any such taxes, assessments and other charges as provided in the
Reimbursement Agreement.
The Borrower shall furnish to the Issuer promptly, upon request, proof
of the payment of any such tax, assessment or other governmental or similar
charge, or any other charge which is payable by the Borrower as set forth above.
SECTION 6.3. Insurance. The Borrower shall from the date hereof
continuously insure the Project or cause the Project to be insured against such
risks as are customarily insured against by businesses of like size and
character. In addition to the foregoing, the Borrower shall maintain insurance
policies as required by the Bank pursuant to the Reimbursement Agreement or any
mortgage or security agreement securing the obligations of the Borrower under
the Reimbursement Agreement.
ARTICLE VII
DAMAGE, DESTRUCTION AND CONDEMNATION
In the event (a) the Project is destroyed or sustains damage or (b)
title to or temporary use of all or substantially all of the Project is taken in
condemnation or by the exercise of the power of eminent domain by any
governmental body or by any Person acting under governmental authority, the
Borrower shall promptly give written notice thereof to the Issuer, the Bank and
the Trustee. The net proceeds of the casualty and property insurance carried
with respect to the Project or the net proceeds resulting from condemnation or
eminent domain proceedings shall be paid to the Bank and subject to the
provisions of the Reimbursement Agreement. As soon as practicable, the Bank
shall notify the Trustee whether such insurance or condemnation proceeds will be
permitted to be used to restore the Project as hereinafter provided or used to
prepay the Loan and cause the Bonds to be paid or redeemed to the extent of the
available insurance or condemnation proceeds. If the Bank allows such proceeds,
or any part thereof, to be used to restore the Project, the Trustee shall
deposit the net insurance or condemnation proceeds it receives from the Bank in
the Construction Fund, which shall be reactivated, or if the Bank elects to
cause the Loan to be prepaid to the extent of such net proceeds, such insurance
or condemnation proceeds shall be deposited in the Bond Fund and be used to
reimburse the Bank for a draw under the Letter of Credit in connection with the
redemption of Bonds as provided in Section 217(b) of the Indenture. Prior to
their expenditure, such insurance or condemnation proceeds shall be invested so
as not to have an adverse effect on the exclusion of the interest on the Bonds
from gross income for federal income tax purposes.
If the Project is to be restored, the Borrower shall diligently proceed
to do so with reasonable dispatch. The Trustee will, upon delivery to the
Trustee and the Bank of a certificate or certificates which set forth the
Borrower's estimate of the cost of total restoration and which are satisfactory
to the Bank, signed by the Borrower and approved in writing by the Bank, in the
same form as required by Section 5.1 hereof, and provided no Event of Default
specified in Section 10.1 hereof has occurred and is continuing, apply so much
as may be necessary of the moneys in the Construction Fund to the payment or
reimbursement of the costs of such repair, rebuilding or restoration. The
Borrower agrees to complete the work thereof and pay the cost thereof in excess
of the amount of moneys in the Construction Fund if necessary. The Borrower
shall not, by reason of the payment of any such excess costs, be entitled to any
reimbursement from the Issuer or the Trustee or any diminution in or
postponement of any obligation hereunder. Any balance of such moneys remaining
in the Construction Fund after providing for or making payment of all costs of
such repair, rebuilding or restoration, or which have not been so used within a
reasonable period of time under the circumstances, as determined by the Bank,
shall be treated as Surplus Bond Proceeds and applied pursuant to Section 11.1
hereof.
ARTICLE VIII
SPECIAL COVENANTS
SECTION 8.1. Assignment and Pledge of Issuer's Rights; Obligations of
Borrower Unconditional. As security for the payment of the Bonds, the Issuer
will assign and pledge to the Trustee all right, title and interest of the
Issuer in and to this Agreement and the Promissory Note, including the right to
receive payments hereunder and thereunder (except the Unassigned Rights), and
hereby directs the Borrower to make such payments directly to the Trustee. The
Borrower consents to such assignment and pledge and agrees that it will make
payments directly to the Trustee without defense or set-off by reason of any
dispute between the Borrower and the Issuer or the Trustee, and hereby further
agrees that its obligation to make payments hereunder and to perform its other
agreements contained herein are absolute and unconditional. Until the principal
of, premium, if any, and interest on the Bonds shall have been fully paid or
provision for the payment of the Bonds made in accordance with the Indenture,
the Borrower (a) will not suspend or discontinue any Loan Repayments, (b) will
perform all its other agreements in this Agreement and (c) will not terminate
this Agreement for any cause including any acts or circumstances that may
constitute failure of consideration, destruction of or damage to the Project,
commercial frustration of purpose, any change in the laws of the United States
or of the State or any political subdivision of either or any failure of the
Issuer to perform any of its agreements, whether express or implied, or any
duty, liability or obligation arising from or connected with this Agreement.
If the Borrower fails to make or cause to be made any of the payments
required to be made under this Agreement, the unpaid amount shall continue to be
an obligation of the Borrower until such amount is fully paid. The Borrower
agrees to pay the same with interest thereon from the date when due until paid
at the greater of the rate borne by the Bonds or the per annum rate of interest
equal to the rate of interest announced from time to time by the bank serving as
Trustee as its "prime rate" plus 3%.
SECTION 8.2. Right of Access to the Project. Subject to the reasonable
security and safety requirements of the Borrower, the Borrower agrees that the
Issuer, the Bank and the Trustee, and their respective duly authorized agents,
shall have the right at all reasonable times upon reasonable notice to enter
upon the Project to examine and inspect the same, and shall have the right at
all reasonable times to inspect all books and records of the Borrower relating
to the Project and make copies thereof.
SECTION 8.3. Maintenance of Existence. The Borrower agrees that
throughout the term of this Agreement it shall maintain its existence as a
corporation and shall not dispose of all or substantially all of its assets. In
the event the Borrower shall consolidate with or merge into another entity or
permit one or more entities to consolidate with or merge into it, (a) the
Borrower shall promptly deliver notice thereof to the Local Government
Commission and (b) any surviving, resulting or transferee entity shall be
qualified to do business in the State and shall assume in writing or by
operation of law all of the obligations of the Borrower under this Loan
Agreement and the Remarketing Agreement.
SECTION 8.4. Qualification in State. Subject to the provisions of
Section 8.3 hereof, the Borrower agrees that throughout the term of this Loan
Agreement, it will be qualified to do business in the State.
SECTION 8.5. Covenant as to Non-Impairment of Tax-Exempt Status. The
Borrower covenants that, notwithstanding any provision of this Agreement or the
rights of the Borrower hereunder, it will not take, or permit to be taken on its
behalf, any action that would impair the exclusion of interest on the Bonds from
gross income for federal income tax purposes and that it will take such
reasonable action for itself and on behalf of the Issuer as may be necessary to
continue such exclusion, including, without limitation, the preparation and
filing of any statements required to be filed by it in order to maintain such
exclusion.
The Borrower will not cause or permit any proceeds of the Bonds to be
invested in a manner contrary to the provisions of Section 148 of the Code and
will assure compliance with such requirements on behalf of the Issuer. The
Borrower shall calculate and timely pay to the United States of America, for the
account of the Issuer, all amounts required to be so paid in accordance with
Section 148 of the Code and shall maintain, on behalf of the Issuer, all records
required to be maintained pursuant to Section 148(f) of the Code.
In addition to the foregoing covenants and the covenants contained in
Section 2.1 hereof, the Borrower further covenants that (i) it will requisition,
apply and spend the moneys in the Construction Fund in a manner so that as of
any date at least 95% of the total amount theretofore requisitioned from the
Construction Fund (other than amounts requisitioned for Issuance Costs) will be
applied to finance costs for the acquisition, construction, rehabilitation or
improvement of land and other property which is of a character subject to an
allowance for depreciation under Section 167 of the Code; (ii) it will not
permit moneys in the Bond Fund, Bond Purchase Fund or Construction Fund to be
invested in such a manner as to cause the Bonds to be "arbitrage bonds" under
Section 148(a) of the Code; (iii) it will promptly notify the Trustee if, at any
time, the Borrower proposes to take any action, or any action is to be taken by
or on behalf of any Principal User of the Project or any Related Person, the
effect of which could be to cause interest on the Bonds to become includable in
the gross income of owners thereof for federal income tax purposes by reason of
the $10,000,000 capital expenditure limitation imposed by Section 144(a)(4) of
the Code being exceeded or the $40,000,000 limitation imposed by Section
144(a)(10) of the Code being exceeded; (iv) it will not requisition from the
Construction Fund for more than two percent (2.0%) of the proceeds of the Bonds
to pay Issuance Costs; and (v) no portion of the net proceeds of the Bonds will
be used for the acquisition of any property (or an interest therein) unless the
first use of such property is pursuant to such acquisition.
The Borrower acknowledges that a failure to abide by the foregoing
covenants and the covenants contained in Section 2.1 hereof and in the Tax
Compliance Certificate may result in a Determination of Taxability. In the event
of a Determination of Taxability for any reason, the sole and exclusive remedy
of the holders of the Bonds and the Trustee on their behalf shall be the early
redemption of the Bonds as provided in Section 217(b) of the Indenture.
SECTION 8.6. Indemnity, Expenses.
(a) The Issuer and the Local Government Commission and each of their
respective members, officers, agents and employees (hereinafter the "Indemnified
Persons") shall not be liable to the Borrower for any reason. The Borrower shall
indemnify and hold the Issuer and the Local Government Commission and the
Indemnified Persons harmless from any loss, expense (including reasonable
counsel fees), or liability of any nature due to any and all suits, actions,
legal or administrative proceedings, or claims arising or resulting from, or in
any way connected with: (i) the financing, installation, operation, use or
maintenance of the Project, (ii) any act, failure to act or material or
intentional misrepresentation by any Person in connection with the issuance,
sale, delivery or remarketing of the Bonds, (iii) any act, failure to act or
misrepresentation by the Issuer in connection with this Agreement or any other
document involving the Issuer in this matter, or (iv) the selection and
appointment of firms providing services related to the Bond transaction. If any
suit, action or proceeding is brought against the Issuer or any Indemnified
Person, that suit, action or proceeding shall be defended by Counsel to the
Issuer or the Borrower, as the Issuer shall determine (which determination shall
be based upon whether there may be defenses available to the Indemnified Persons
which are different from or in addition to those available to the Borrower). If
the defense is by Counsel to the Issuer, the Borrower shall indemnify the Issuer
and Indemnified Persons for the reasonable cost of that defense including
reasonable Counsel fees. If the Issuer determines that the Borrower shall defend
the Issuer or any Indemnified Person, the Borrower shall immediately assume the
defense at its own cost. The Borrower shall not be liable for any settlement of
any proceeding made without its consent (which consent shall not be unreasonably
withheld).
(b) Notwithstanding the provisions of subsection (a) of this Section
8.6, the Borrower shall not be obligated to indemnify the Issuer or the Local
Government Commission or any Indemnified Person under subsection (a), if a court
with competent jurisdiction finds that the liability in question was caused by
the willful misconduct or sole gross negligence of the Issuer or the Local
Government Commission or the involved Indemnified Person(s), unless the Court
determines that, despite the adjudication of liability but in view of all
circumstances of the case, the Issuer or the Indemnified Person(s) is (are)
fairly and reasonably entitled to indemnity for the expenses which the Court
considers proper.
(c) The Borrower shall also indemnify the Issuer for all reasonable
costs and expenses, including reasonable Counsel fees, incurred in: (i)
enforcing any obligation of the Borrower under this Agreement or any related
agreement, (ii) taking any action requested by the Borrower, (iii) taking any
action required by this Agreement or any related agreement or (iv) taking any
action considered necessary by the Issuer and which is authorized by this
Agreement or any related agreement.
(d) The Borrower also agrees to pay and to indemnify and hold harmless
the Trustee, any person who "controls" the Trustee within the meaning of Section
15 of the Securities Act of 1933, as amended, and any member, officer, agent,
director, official and employee of the Trustee (collectively called the
"Indemnified Parties") from and against any and all claims, damages, demands,
expenses, liabilities and losses of every kind, character and nature asserted by
or on behalf of any person in connection with (i) the issuance, offering, sale,
delivery, or remarketing of the Bonds, the Indenture and this Agreement and the
obligations imposed on the Trustee hereby and thereby; or the design,
installation, operation, use, occupancy, maintenance, or ownership of the
Project; (ii) any written statements or representations made or given by the
Borrower to the Indemnified Parties, with respect to the Borrower, the Project,
or the Bonds, including, but not limited to, statements or representations of
facts or financial information; (iii) damage to property or any injury to or
death of any person that may be occasioned by any cause whatsoever pertaining to
the Project; and (iv) any loss or damage incurred by the Trustee as a result of
violation by the Borrower of the provisions of Section 2.1 hereof, or arising
out of, resulting from, or in any way connected with, the condition, use,
possession, conduct, management, planning, design, acquisition, installation,
renovation or sale of the Project or any part thereof, to the extent not caused
or occasioned by the gross negligence or willful misconduct of such Indemnified
Party. The Borrower also covenants and agrees, at its expense, to pay, and to
indemnify the Indemnified Parties from and against, all costs, reasonable
attorney fees, expenses and liabilities incurred in any action or proceeding
brought by reason of any such claim or demand. In the event that any action or
proceeding is brought against the Indemnified Parties by reason of any such
claim or demand, that action or proceeding shall be defended by counsel to the
Indemnified Parties or the Borrower, as the Indemnified Parties shall determine
(which determination shall be based upon whether there may be defenses available
to the Indemnified Parties which are different from or in addition to those
available to the Borrower). If the defense is by counsel to the Indemnified
Parties, the Borrower shall indemnify the Indemnified Parties for the reasonable
cost of the defense including reasonable counsel fees. If the Indemnified
Parties determine that the Borrower shall defend the Indemnified Parties, the
Borrower shall immediately assume the defense at its own cost. If such separate
counsel is employed, the Borrower may join in any such suit for the protection
of its own interests. The Borrower shall not be liable for any settlement of any
such action effected without its consent; but if settled with the consent of the
Borrower or if there be a final, unappealable judgment for the plaintiff in any
such action, the Borrower agrees to indemnify and hold harmless the Indemnified
Parties.
(e) The indemnification provisions herein contained shall not be
exclusive or in limitation of, but shall be in addition to, the rights to
indemnification of the Indemnified Persons or the Indemnified Parties under any
other agreement or law by which the Borrower is bound or subject to.
(f) The obligations of the Borrower under this Section 8.6 shall
survive any assignment or termination of this Agreement.
SECTION 8.7. Compliance with Laws. The Borrower shall, throughout the
term of this Agreement and at no expense to the Issuer, promptly comply or cause
compliance with all laws, ordinances, orders, rules, regulations and
requirements of duly constituted public authorities which may be applicable to
the Project or to the repair and alteration thereof, or to the use or manner of
use of the Project.
SECTION 8.8. No Recourse. THE OBLIGATIONS OF THE ISSUER UNDER THIS
AGREEMENT ARE SPECIAL, LIMITED OBLIGATIONS OF THE ISSUER, PAYABLE SOLELY OUT OF
THE SECURITY AND AS OTHERWISE PROVIDED UNDER THIS AGREEMENT AND THE INDENTURE.
THE OBLIGATIONS OF THE ISSUER HEREUNDER SHALL NOT BE DEEMED TO CONSTITUTE A DEBT
OF THE ISSUER, THE STATE, OR ANY POLITICAL SUBDIVISION THEREOF OR A PLEDGE OF
THE FAITH AND CREDIT OF THE STATE OR ANY POLITICAL SUBDIVISION OR ANY SUCH
AGENCY, BUT SHALL BE PAYABLE SOLELY FROM THE REVENUES AND OTHERS FUNDS AS
DESCRIBED IN THE INDENTURE. Neither the Issuer, the Local Government Commission
nor any member, director, officer, employee or agent of the Issuer, the Local
Government Commission nor any person executing the Bonds shall be liable
personally for the Bonds or be subject to any personal liability or
accountability by reason of the issuance of the Bonds. No recourse shall be had
for the payment of the principal of, redemption premium, if any, and interest on
any of the Bonds or for any claim based thereon or upon any obligation, covenant
or agreement contained in the Bonds, the Indenture, this Agreement or the
Placement Agreement (or any other agreement entered into by the Issuer with
respect thereto) against any past, present or future member, officer, agent or
employee of the Issuer, the Local Government Commission or any incorporator,
member, officer, employee, director or trustee or any successor thereof, under
any rule of law or equity, statute or constitution or by the enforcement of any
assessment or penalty or otherwise, and all such liability of any such
incorporator, member, officer, employee, director, agent or trustee as such is
hereby expressly waived and released as a condition of and consideration for the
execution of the Indenture, the Placement Agreement and this Agreement (and any
other agreement entered into by the Issuer with respect thereto) and the
issuance of the Bonds.
SECTION 8.9. Indenture Provisions. The Indenture provisions concerning
the Bonds and the other matters therein are an integral part of the terms and
conditions of the loan made by the Issuer to the Borrower pursuant to this
Agreement and the execution of this Agreement shall constitute conclusive
evidence of approval of the Indenture by the Borrower to the extent it relates
to the Borrower. Additionally, the Borrower agrees that, whenever the Indenture
by its terms imposes a duty or obligation upon the Borrower, such duty or
obligation shall be binding upon the Borrower to the same extent as if the
Borrower were an express party to the Indenture, and the Borrower hereby agrees
to carry out and perform all of its obligations under the Indenture as fully as
if the Borrower were a party to the Indenture.
SECTION 8.10. Recording and Maintenance of Liens.
(a) The Borrower will, at its own expense, take all necessary action to
maintain and preserve any liens and security interest of this Agreement or the
Indenture so long as any principal of, premium, if any, or interest on the Bonds
remains unpaid.
(b) The Borrower will promptly, but not later than six months prior to
the date any financing statement or continuation statements must be filed to
perfect or maintain the security interest granted to the Trustee pursuant to the
Indenture, prepare the required financing or continuation statements and forward
completed originals to the Trustee accompanied by the name and address of the
appropriate state and county offices where such financing statements or
continuation statements are to be duly filed and recorded as required by the
provisions of the Uniform Commercial Code or other similar law as enacted by the
State.
(c) The Issuer shall have no responsibility for the preparation, filing
or recording of any instrument, document or financing statement or for the
maintenance of any security interest intended to be perfected hereby. The Issuer
will execute such instruments as may be necessary in connection with such filing
or recording.
ARTICLE IX
ASSIGNMENT, LEASING, EQUIPMENT
SECTION 9.1. Transfer, Assignment and Leasing. Subject to the terms and
conditions of the Reimbursement Agreement, the Borrower may lease any portion of
the Project provided that the Borrower delivers to the Bank, the Issuer and the
Trustee in connection with any such leasing an opinion of Bond Counsel that
subsequent to the execution of the lease, interest on the Bonds will remain
wholly excludable from gross income of the Bondholders for federal income tax
purposes. No leasing shall relieve the Borrower from primary liability for any
of its obligations hereunder, and in the event of any such leasing the Borrower
shall continue to remain primarily liable for the payment of Loan Repayments and
for performance and observance of the other agreements herein on its part to be
performed and observed.
Subject to the prior written consent of the Bank, the Trustee and the
Issuer, this Agreement may be assigned, in whole or in part, and the Project may
be sold, transferred or conveyed as a whole or in part, by the Borrower,
subject, however, to the following conditions:
(a) No assignment, sale, transfer or conveyance shall relieve the
Borrower from primary liability for any of its obligations hereunder, and if any
such assignment occurs, the Borrower shall continue to remain primarily liable
to make the payments required to be made by the Borrower hereunder and for
performance and observance of the other agreements on its part herein provided
to be performed and observed by it;
(b) The assignee or purchaser shall assume the obligations of the
Borrower hereunder to the extent of the interest assigned, sold, transferred or
conveyed;
(c) The Borrower shall, within thirty (30) days after the delivery
thereof, furnish or cause to be furnished to the Issuer and the Trustee a true
and complete copy of each such assignment or sale agreement, as the case may be,
together with (i) any instrument of assumption, and (ii) an opinion of Bond
Counsel that such assignment or sale agreement will not adversely affect the
exclusion of interest on the Bonds from gross income of the Bondholders for
federal income tax purposes; and
(d) The assignee, transferee or purchaser shall continue to use the
Project for purposes permitted under the Act for the term of this Agreement.
SECTION 9.2. Substitution and Removal of Machinery and Equipment.
Except as provided in this Section, machinery and equipment financed with the
proceeds of the Bonds shall remain at the site of the Project. The Borrower may
remove any machinery or equipment comprising a part of the Project upon
substituting therefor property of like nature having a fair market value of not
less than the removed property, provided that such substitution shall not impair
the exclusion of interest on the Bonds from gross income for federal income tax
purposes. Any such substituted machinery and equipment shall be identified in
writing by the Borrower to the Bank and shall become a part of the Project and
be included under the terms of this Agreement. The Borrower may, with the
consent of the Bank or as otherwise provided in the Reimbursement Agreement,
sell any machinery and equipment comprising a portion of the Project without
substitution therefor so long as, in the opinion of Bond Counsel, such removal
will not impair the exclusion of interest on the Bonds from gross income for
federal income tax purposes. Unless otherwise consented to by the Bank, the
Borrower shall pay into the Bond Fund the proceeds from such sales without
substitution when such proceeds exceed 5% of the original principal amount of
the Bonds, and such proceeds shall be treated as Surplus Bond Proceeds and
applied as provided in Section 11.1 hereof.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.1. Events of Default. The following shall be events of
default under this Agreement and the terms "Event of Default" or "Default" shall
mean, whenever they are used in this Agreement, any one or more of the following
events:
(a) Failure by the Borrower to pay the Loan Repayments in the amounts
and at the times provided in this Agreement or the Promissory Note; provided,
however, that no Event of Default described in this subparagraph (a) shall be
deemed to have occurred solely by reason of such failure to make such payments
if and to the extent that payments have nonetheless been made by the Bank to the
Trustee pursuant to the Letter of Credit for deposit in the Bond Fund at such
times and in such manner so as to prevent an event of default described under
Section 601(a) or (b) of the Indenture;
(b) Failure by the Borrower to make payments in the amounts and at the
times provided in Section 3.4 of this Agreement; provided, however that no Event
of Default described in this paragraph (b) shall be deemed to have occurred
solely by reason of such failure to make such payments if and to the extent that
payments have nonetheless been made by the Bank to the Trustee pursuant to the
Letter of Credit for deposit in the Bond Purchase Fund at such times and in such
manner so as to prevent an event of default described under Section 601(c) of
the Indenture;
(c) Failure by the Borrower to observe and perform any other covenant,
condition or agreement on its part to be observed or performed herein or in the
Promissory Note for a period of thirty (30) days after written notice,
specifying such failure and requesting that it be remedied, shall have been
given to the Borrower by the Issuer, the Bank or the Trustee; provided, however,
that if the failure is such that it can be corrected but not within such 30-day
period, and corrective action is instituted by the Borrower within such period
and diligently pursued until such failure is corrected, then such period shall
be increased to such extent as shall be determined by the Trustee with the
consent of the Bank to be necessary to enable the Borrower to observe or perform
such covenant, condition, undertaking or agreement through the exercise of due
diligence;
(d) Any representation or warranty made by the Borrower in any document
delivered by the Borrower to the Trustee or the Bank or the Issuer in connection
with the sale and delivery of the Bonds proves to be untrue when made in any
material respect;
(e) Occurrence of an Event of Default under the Indenture; or
(f) The Borrower (i) shall generally not pay its debts as they become
due, (ii) shall admit in writing its inability to pay its debts generally, (iii)
shall make a general assignment for the benefit of creditors, (iv) shall
institute any proceeding or voluntary case (A) seeking to adjudicate it a
bankrupt or insolvent or (B) seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief or
protection of debtors or (C) seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property, (v) shall take any action to
authorize any of the actions described above in this subsection (f), or (vi)
shall have instituted against it any proceeding (A) seeking to adjudicate it a
bankrupt or insolvent or (B) seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief or composition of it or its debts
under any law relating to bankruptcy, insolvency or reorganization or relief or
protection of debtors or (C) seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other similar official for it
or for any substantial part of its property, and, if such proceeding is being
contested by the Borrower in good faith, such proceeding shall remain
undismissed or unstayed for a period of 60 days.
SECTION 10.2. Remedies on Default. Whenever an Event of Default
referred to in Section 10.1 hereof shall have occurred and be continuing, and if
acceleration of the principal amount of the Bonds has been declared pursuant to
Section 602 of the Indenture:
(a) The Trustee, by written notice to the Issuer, the Borrower and the
Local Government Commission, shall declare all Loan Repayments to be immediately
due and payable, whereupon the same shall become immediately due and payable and
the Trustee shall thereupon draw upon the Letter of Credit in accordance with
its terms and the terms of the Indenture;
(b) Subject to the reasonable security and safety requirements of the
Borrower, the Issuer, the Local Government Commission or the Trustee may have
access to and inspect, examine, and make copies of the books and records and any
and all accounts, data and income tax and other tax returns of the Borrower,
only insofar as they relate to the Project or the Event of Default and the
remedying thereof; and
(c) To the extent of any insufficiency after drawing under the Letter
of Credit, the Trustee may pursue all remedies now or hereafter existing at law
or in equity to collect all amounts then due and thereafter to become due under
this Agreement or the Promissory Note or to enforce the performance of any other
obligation or agreement of the Borrower under such documents.
Any amounts collected pursuant to action taken under this Section shall
be applied in accordance with Section 607 of the Indenture.
Notwithstanding any other provision of this Agreement or the Indenture,
the Issuer shall be entitled to cause the Borrower to perform the Borrower's
obligations under Sections 3.5, 8.6 and 10.4 hereof for the benefit of the
Issuer.
SECTION 10.3. No Remedy Exclusive. No remedy conferred upon or reserved
to the Issuer or the Trustee by this Agreement is intended to be exclusive of
any other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or the Indenture, or now or hereafter existing at law or in equity. No
delay or omission to exercise any right or power accruing upon any Default shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may
be deemed expedient. In order to entitle the Issuer or the Trustee to exercise
any remedy reserved to it in this Article, it shall not be necessary to give any
notice, other than such notice as may be herein expressly required.
Notwithstanding any other provision of this Agreement (except Section
13.2 hereof) or the Indenture, the Issuer or the Trustee shall not be entitled
to exercise any remedy reserved to it in this Article X without the prior
written consent of the Bank; however, the Issuer may, after notice to but
without the prior written consent of the Bank, institute an action against the
Borrower to recover any fees or expenses to which the Issuer is entitled under
this Agreement.
SECTION 10.4. Agreement to Pay Attorneys' Fees and Expenses. In the
event that the Issuer, the Bank or the Trustee employs attorneys or incurs other
expenses for the enforcement or performance or observance of any obligation or
agreement on the part of the Borrower contained in the Promissory Note, the
Placement Agreement or in this Agreement, the Borrower agrees that it will on
demand therefor promptly reimburse the reasonable fees of such attorneys and
such other expenses so incurred.
SECTION 10.5. No Additional Waiver Implied by One Waiver. In the event
any term, condition or covenant contained in this Agreement is breached by
either party and thereafter waived by the other party, such waiver shall be
limited to the particular breach so waived and shall not be deemed to waive any
other breach hereunder. Because of the assignment of the Issuer's rights and
interest in this Agreement to the Trustee under the Indenture, the Issuer shall
have no power to waive or release the Borrower from any Event of Default or the
performance or observance of any obligation or condition of the Borrower under
this Agreement without the prior written consent of the Trustee and the Bank,
but the Issuer shall so waive or release the Borrower if requested by the
Trustee and the Bank, provided the Issuer receives an opinion of its Counsel
that such action will not impose any pecuniary obligation or liability or
adverse consequence upon the Issuer and the Issuer has been provided such
indemnification from the Borrower, the Trustee or the Bank, as the Issuer
reasonably deems necessary.
SECTION 10.6. Default by Issuer - Limited Liability. Notwithstanding
any provision or obligation to the contrary hereinbefore set forth, no provision
of this Agreement shall be construed so as to give rise to a pecuniary liability
of the Issuer or to give rise to a charge upon the general credit of the Issuer,
the liability of the Issuer hereunder shall be limited to its interest in this
Agreement, the Promissory Note, and all other related documents and collateral
and the lien of any judgment shall be restricted thereto. In the performance of
the agreements of the Issuer herein contained, any obligation it may incur for
the payment of money shall not be a debt of the Issuer, nor shall the Issuer be
liable on any obligation so incurred. The Issuer does not assume general
liability for the repayment of the Bonds or for the costs, fees, penalties,
taxes, interest, omissions, charges, insurance or any other payments recited
herein, and shall be obligated to pay the same only out of the amounts payable
by the Borrower hereunder. The Issuer shall not be required to do any act
whatsoever or exercise any diligence whatsoever to mitigate the damages to the
Borrower if a default shall occur hereunder.
ARTICLE XI
PAYMENT OF SURPLUS BOND PROCEEDS
FROM THE BOND FUND
SECTION 11.1. Surplus Bond Proceeds. All Surplus Bond Proceeds
transferred to the Bond Fund pursuant to the provisions of Section 5.4 and
Section 9.2 hereof shall be applied by the Trustee at the direction of the
Borrower after the date on which such moneys first become Eligible Funds in the
Bond Fund (i) to the purchase of Bonds on the open market for cancellation, (ii)
to the payment of the scheduled principal maturities of the Bonds (but not
interest) or (iii) to the redemption of Bonds on the first date on which the
Bonds may be called for optional redemption as set forth in Section 217(a) of
the Indenture. In addition, at the direction of the Borrower and with the
written consent of the Bank, Surplus Bond Proceeds held in the Current Account
of the Bond Fund shall be paid by the Trustee to the Bank to the extent of any
moneys owing under the Reimbursement Agreement as a result of a drawing on the
Letter of Credit to pay principal (but not interest) on the Bonds. To the extent
that the amount of Surplus Bond Proceeds exceeds 5% of the original aggregate
principal amount of the Bonds, such excess shall be invested at a yield which
will not exceed the yield on the Bonds or, in the opinion of Bond Counsel, will
not impair the exclusion of interest on the Bonds from gross income for federal
income tax purposes.
ARTICLE XII
THE BONDS
SECTION 12.1. Issuance of the Bonds. The obligations of the Issuer and
the Borrower hereunder are expressly conditioned upon the execution of the
Placement Agreement, satisfaction or waiver of its terms and conditions, and
payment for the Bonds pursuant thereto.
SECTION 12.2. Compliance with Indenture. The Issuer agrees to comply
with the covenants, requirements and provisions of the Indenture and perform all
of its obligations thereunder.
SECTION 12.3. Consent to Issuer's Pledge. The Borrower hereby
acknowledges and consents to the assignment and pledge by the Issuer to the
Trustee, for the benefit of the Bondholders, and the Bank, of (i) the Promissory
Note; (ii) the moneys deposited to the various funds and accounts hereunder and
under the Indenture (including investments); and (iii) all of the Issuer's
rights and powers under this Agreement, including the right to receive Loan
Repayments (but excluding the Unassigned Rights) and the right and power to
enforce, either jointly with the Issuer or separately, the performance of the
obligations of the Borrower under this Agreement. The Borrower further
acknowledges and consents to the right of the Trustee and the Bank, as the case
may be, to enforce all rights of the Issuer and Bondholders assigned under the
Indenture.
SECTION 12.4. Rights of Trustee Hereunder. The parties hereto recognize
and agree that the terms of this Agreement and the enforcement thereof are
essential to the Security of the Trustee (for the benefit of the Bondholders)
and the Bank and are entered into for the benefit of the Trustee (on behalf of
the Bondholders) and the Bank. The Trustee (and any assignee of or subrogee to
the Trustee) and the Bank shall accordingly have contractual rights and duties
in this Agreement and be entitled to require the enforcement of the terms
hereof.
Except for the rights of the Borrower set forth in Section 13.1 hereof,
the Borrower and the Issuer each acknowledge that neither the Borrower nor the
Issuer has any interest in the Bond Fund or the Bond Purchase Fund and any
moneys deposited therein and that the Bond Fund and the Bond Purchase Fund and
any moneys deposited therein shall be in the custody of and held by the Trustee
in trust for the benefit of the Bondholders and the Bank as provided in the
Indenture.
SECTION 12.5. Amendments to Indenture and this Agreement. The Issuer
shall not amend nor consent to any amendment to the Indenture or this Agreement
except as specified in Article VIII of the Indenture, which Article VIII is
incorporated herein by this reference as if it were fully set forth herein. The
Borrower hereby agrees to be bound by the provisions of Article VIII of the
Indenture.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. Amounts Remaining in Funds. Any amounts remaining in the
Construction Fund or the Bond Fund upon expiration or sooner cancellation or
termination of this Agreement, after the Loan and the Bonds shall be deemed to
have been paid and discharged under the provisions of the Indenture and the
fees, charges and expenses of the Trustee and all other amounts required to be
paid under the Indenture, the Reimbursement Agreement and this Agreement have
been paid, shall be paid to the Borrower as an overpayment of the Loan.
SECTION 13.2. Rights of the Bank. All rights of the Bank under this
Agreement to consent to certain extensions, remedies, waivers, actions and
amendments hereunder shall cease, terminate and become null and void (i) for so
long as the Bank wrongfully dishonors any draft presented in strict conformity
with the Letter of Credit and until it has honored the dishonored draft or a
subsequent draft, if any, thereunder or (ii) if the Letter of Credit is no
longer in effect and any and all of the Borrower's obligations to the Bank
pursuant to the Reimbursement Agreement have been paid; provided that nothing
contained or implied herein shall affect the rights of the Bank as set forth in
the Reimbursement Agreement.
SECTION 13.3. Notices. Except as otherwise provided herein, it shall be
sufficient service or giving of any notice, request, complaint, demand or other
paper required by this Agreement to be given to or filed with the Issuer, the
Trustee, the Local Government Commission, the Bank, the Remarketing Agent, or
the Borrower if the same is duly mailed by overnight courier, postage pre-paid,
or sent by telegram, telecopy or telex or other similar communication, or when
given by telephone, confirmed in writing by overnight courier, postage pre-paid,
or sent by telegram, telecopy, telex or other similar communication, on the same
day addressed as specified in Section 904 of the Indenture.
The Borrower, the Issuer, the Local Government Commission, the Bank,
and the Trustee may designate, by notice given hereunder, any further or
different addresses to which subsequent notices, certificates, requests or other
communications shall be sent, but no notice directed to any one such entity
shall thereby be required to be sent to more than two addresses.
SECTION 13.4. Bondholders' Action. Whenever any consent, approvals,
waivers or other actions are required of the Bondholders hereunder, under the
Indenture, the Promissory Note or any other instrument or document delivered
with respect to the Bonds, such consent shall only be given in compliance with
Section 806 of the Indenture.
SECTION 13.5. Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the Issuer, the Borrower and their respective
successors and assigns, subject to the limitation that any obligation of the
Issuer created by or arising out of this Agreement shall not be a general debt
of the Issuer but shall be payable solely out of the Security, the proceeds of
the sale of the Bonds or the net proceeds of any insurance or condemnation
awards as provided herein, anything herein contained to the contrary by
implication or otherwise notwithstanding.
SECTION 13.6. Severability. If any clause, provision or section of this
Agreement be held illegal or invalid by any court, the invalidity of such
clause, provision or section shall not affect any of the remaining clauses,
provisions or sections hereof and this Agreement shall be construed and enforced
as if such illegal or invalid clause, provision or section had not been
contained herein. If any agreement or obligation contained in this Agreement is
held to be in violation of law, then such agreement or obligation shall be
deemed to be the agreement or obligation of the Issuer or the Borrower, as the
case may be, to the full extent permitted by law.
SECTION 13.7. Captions. The captions or headings in this Agreement are
for convenience only and in no way define, limit or describe the scope or intent
of any provision or sections of this Agreement.
SECTION 13.8. Interpretation. This Agreement shall be governed by and
interpreted in accordance with the laws of the State.
SECTION 13.9. Execution in Counterparts. This Agreement may be executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
SECTION 13.10. No Third Party Beneficiary. It is specifically agreed
between the parties executing this Agreement that it is not intended by any of
the provisions of any part of this Agreement to establish in favor of the public
or any member thereof, other than as expressly provided herein or as
contemplated in the Indenture, the rights of a third-party beneficiary
hereunder, or to authorize anyone not a party to this Agreement to maintain a
suit for personal injuries or property damage pursuant to the terms or
provisions of this Agreement. The duties, obligations and responsibilities of
the parties to this Agreement with respect to third parties shall remain as
imposed by law.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the day and year first above written.
SIGNATURE PAGE OF ISSUER
TO
LOAN AGREEMENT
THE STANLY COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
By:
Chairman
(SEAL)
ATTEST:
--------------------------------------
Secretary
SIGNATURE PAGE OF BORROWER
TO
LOAN AGREEMENT
XXXXXXX INDUSTRIES, INC., an Indiana
corporation
By:
President
EXHIBIT A
COMPLETION CERTIFICATE
TO: Norwest Bank Minnesota, N.A., as Trustee
Norwest Center
Sixth and Marquette
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust Department
NBD Bank, N.A., as Letter of Credit Bank
Xxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Corporate Banking Division
FROM: Xxxxxxx Industries, Inc.
SUBJECT: $5,000,000
The Stanly County Industrial Facilities and Pollution Control
Financing Authority Variable Rate Demand Industrial
Development Revenue Bonds (Xxxxxxx Industries, Inc. Project),
Series 1998 (the "Bonds")
The undersigned does hereby certify:
1. The acquisition, construction, installation and equipping of the
Project have been substantially completed in such manner as to conform with all
applicable zoning, planning and building regulations of the governmental
authorities having jurisdiction of the Project, as of _____________, ____ (the
"Completion Date").
2. The Costs of the Project have been paid in full except for those not
yet due and payable, which are described below and for which moneys for payment
thereof are being held in the Construction Fund:
Cost of the Project not yet due and payable:
Description Amount
$----------
Total $__________
3. The moneys in the Construction Fund in excess of the totals set
forth in 2 above represent Surplus Bond Proceeds and the Trustee is hereby
authorized and directed to transfer all such Surplus Bond Proceeds to the Bond
Fund pursuant to Section 5.4 of the Loan Agreement.
4. No event of default has occurred under the Promissory Note, the Loan
Agreement or the Reimbursement Agreement nor has any event occurred which with
the giving of notice or lapse of time or both shall become such an event of
default. Nothing has occurred to the knowledge of the Borrower that would
prevent the performance of its obligations under the Promissory Note, the Loan
Agreement or the Reimbursement Agreement.
This certificate is given without prejudice to any rights against third
parties which exist at the date hereof or which may subsequently come into
being.
Capitalized terms used but not defined herein shall have the meanings
given in the Loan Agreement and Trust Indenture relating to the Bonds.
Executed this _________ day of _____________________, _______.
XXXXXXX INDUSTRIES, INC.
By:
Authorized Representative
EXHIBIT B
COSTS OF THE PROJECT
The following are the estimated costs of the Project:
Building $ 3,750,000.00
Land $ 373,000.00
Machinery and Equipment $ 754,500.00
Capitalized Interest $ 0.00
Issuance Costs* $ 100,000.00
Letter of Credit Fees $ 22,500.00
-------------
TOTAL $ 5,000,000.00
=============
----------------
* Issuance costs in excess of $100,000.00 will be paid from the Borrower's own
funds.
EXHIBIT C
PROMISSORY NOTE
Amount: $5,000,000.00 Maturity: August 1, 2010
FOR VALUE RECEIVED, Xxxxxxx Industries, Inc. (the "Borrower"), promises
to pay to the order of The Stanly County Industrial Facilities and Pollution
Control Financing Authority (the "Issuer"), the principal sum of FIVE MILLION
AND 00/100 DOLLARS ($5,000,000.00) together with (a) interest thereon in an
amount sufficient to enable the Issuer to make payment of all interest becoming
due and payable on the Issuer's Variable Rate Demand Industrial Development
Revenue Bonds (Xxxxxxx Industries, Inc. Project), Series 1998 (the "Bonds") in
the principal amount of Five Million Dollars ($5,000,000), issued pursuant to a
Trust Indenture dated as of August 1, 1998 (the "Indenture") between the Issuer
and Norwest Bank Minnesota, N.A., a national banking association, as trustee
(the "Trustee"), which Indenture and Bonds are incorporated herein by reference
and made a part hereof, and (b) such redemption premiums and other amounts as
are required to be paid by the Borrower to the Issuer as Loan Repayments as
provided in the Loan Agreement, dated as of August 1, 1998 between the Borrower
and the Issuer (the "Loan Agreement"), which is incorporated herein by reference
and made a part hereof.
The foregoing amounts shall be paid by means of Loan Repayments which
shall be due and payable (less any credits to which the Borrower may be entitled
under the Loan Agreement), in immediately available funds, as follows:
1. On or before each date on which a payment of interest is due on the
Bonds, the Borrower shall pay interest in an amount equal to the aggregate
unpaid interest due or to become due on the Bonds on such payment date, less any
Eligible Funds (as defined in the Indenture) then held by the Trustee in the
Bond Fund (as defined in the Indenture) which are then being held for
application to the payment of interest on the Bonds in accordance with the
Indenture;
2. On or before each date on which a payment of principal, Purchase
Price (as defined in the Indenture) and premium, if any, is due on the Bonds,
whether by maturity, acceleration or otherwise, the Borrower shall pay principal
and premium, if any, in an amount equal to principal, Purchase Price and
premium, if any, then due or to become due on the Bonds on such payment date,
less any Eligible Funds then held by the Trustee in the Bond Fund, other than
those Eligible Funds applied to payment of interest on the Bonds as set forth
above, which are then being held for the payment of principal and premium, if
any, on the Bonds under the Indenture.
Notwithstanding the foregoing, the Borrower shall pay principal of,
premium, if any, and interest on the Bonds to the Trustee so as to permit the
redemption of all or a portion of Bonds then outstanding in accordance with
Section 217 of the Indenture.
The Borrower shall have the option to make advance payments of Loan
Repayments, from time to time, which advance payments shall be deposited with
the Trustee in the Bond Fund and shall be applied as provided in the Loan
Agreement and the Indenture.
All payments shall be made in coin or currency of the United States of
America in immediately available funds at the principal office of the Trustee,
or at the office of any successor trustee.
If the Borrower fails to pay any installment of principal, premium, if
any, and interest when due under this Promissory Note and the Trustee fails to
receive sufficient moneys pursuant to one or more draws under the Letter of
Credit (as defined in the Indenture) to pay any such installment, or upon the
occurrence of any one or more of the events of default specified in the Loan
Agreement, the Trustee then, or at any time thereafter, may under certain
conditions specified in Section 602 of the Indenture give notice to the Borrower
declaring all unpaid amounts then outstanding hereunder or under the Loan
Agreement (including all fees), to be due and payable, and thereupon, without
further notice or demand, all such amounts shall become and be immediately due
and payable. Failure to exercise this option shall not constitute a waiver of
the right to exercise the same at any time in the event of any continuing or
subsequent default.
All payments hereon shall be applied first to accrued interest, then to
premium, if any, and then to principal.
The undersigned waives (except as provided herein) demand, protest,
presentment for payment and notice of nonpayment and agrees to pay all costs of
collection when incurred, including reasonable attorneys' fees, and to perform
and comply with each of the covenants, conditions, provisions and agreements of
the undersigned contained in every instrument evidencing or securing the
indebtedness evidenced hereby. No extension of the time for the payment of this
Promissory Note made by agreement with any person now or hereafter liable for
the payment of this Promissory Note shall operate to release, discharge, modify,
change or affect the original liability under this Promissory Note, either in
whole or in part, of the undersigned if not a party to such agreement.
Page 2 of a Note containing Three Pages, dated August 13, 1998 from
Xxxxxxx Industries, Inc. to The Stanly County Industrial Facilities and
Pollution Control Financing Authority.
-----------------------------
Initialed for Identification
This Promissory Note is issued under and is subject to the terms and
conditions of the Loan Agreement.
This Promissory Note and all instruments securing the same are to be
construed according to the laws of the State of North Carolina.
XXXXXXX INDUSTRIES, INC., an Indiana
corporation
By:
President
Page 3 of a Note containing Three Pages, dated August 13, 1998 from
Xxxxxxx Industries, Inc. to The Stanly County Industrial Facilities and
Pollution Control Financing Authority.
-----------------------------
Initialed for Identification
ENDORSEMENT
Pay, without recourse, to the order of Norwest Bank Minnesota, N.A., as
trustee, under the Trust Indenture, dated as of August 1, 1998, from the
undersigned.
THE STANLY COUNTY INDUSTRIAL FACILITIES
AND POLLUTION CONTROL FINANCING AUTHORITY
By:
Chairman
(SEAL)
ATTEST:
------------------------------------
Secretary
The above assignment is hereby accepted.
NORWEST BANK MINNESOTA, N.A.,
a national banking association, as Trustee
By:
Printed:
Its:
EXHIBIT D
PROJECT DESCRIPTION
The Project will consist of the financing by Xxxxxxx Industries, Inc.,
an Indiana corporation, of certain industrial development facilities consisting
of the acquisition, construction and equipping of an approximately 166,000
square foot manufacturing facility, together with machinery and equipment
therein, to be located on Highway 52 in New London, Stanly County, North
Carolina, for the manufacture, packaging and distribution of building materials.
EXHIBIT E
REQUISITION CERTIFICATE
TO: Norwest Bank Minnesota, N.A.,
as Trustee
FROM: Xxxxxxx Industries, Inc.
(the "Borrower")
SUBJECT: $5,000,000
The Stanly County Industrial Facilities and Pollution Control
Financing Authority Variable Rate Demand Industrial
Development Revenue Bonds (Xxxxxxx Industries, Inc. Project),
Series 1998 (the "Bonds")
This represents Requisition Certificate No. ________ in the total
amount of $__________ for payment of those Costs of the Project detailed in the
schedule attached.
The undersigned does certify that:
1. All of the expenditures for which moneys are requested hereby
represent proper Costs of the Project, have not been included in a previous
Requisition Certificate and have been properly recorded on the Borrower's books.
2. The moneys requested hereby are not greater than those necessary to
meet obligations due and payable or to reimburse the Borrower for funds actually
advanced for Costs of the Project. The moneys requested do not include retention
or other moneys not yet due or earned under construction contracts.
3. After payment of moneys hereby requested, there will remain
available to the Borrower (from the Construction Fund) sufficient funds to
complete the Project substantially in accordance with the plans and
specifications therefore.
4. All of the payment herein requested from the Construction Fund and
all other payments from the proceeds of the Bonds (including investment earnings
thereon) heretofore made from the Construction Fund have been used or are being
used by the Borrower to finance Costs of the Project, first incurred subsequent
to __________, _____ (unless such amounts are for Issuance Costs or an amount
not in excess of the lesser of $100,000 or 5% of the proceeds of the Bonds, or
for preliminary expenditures up to an amount not in excess of 20% of the
aggregate issue price of the Bonds). Not more than 2% of the proceeds of the
Bonds ($___________) have been or will be used to pay, directly or indirectly,
Issuance Costs for the Bonds.
5. The Borrower is not in default under the Promissory Note, the Loan
Agreement or the Reimbursement Agreement and nothing has occurred to the
knowledge of the Borrower that would prevent the performance of its obligations
under the Loan Agreement, the Promissory Note or the Reimbursement Agreement.
6. Delivered herewith are all of the documents in form and content
required by Section 5.1 of the Loan Agreement.
Capitalized terms used but not defined herein shall have the meanings
given in the Loan Agreement and Trust Indenture relating to the Bonds.
Executed this _______ day of ____________________, _______.
XXXXXXX INDUSTRIES, INC.
By:
Authorized Representative
Approved:
NBD BANK, N.A., as Letter of Credit Bank
By:
Its:
TABLE OF CONTENTS
(This Table of Contents is not a part of the
Loan Agreement but is for convenience of reference only)
Page
ARTICLE I - DEFINITIONS 2
ARTICLE II - REPRESENTATIONS 4
SECTION 2.1. Representations by the Borrower 4
SECTION 2.2. Representations of the Issuer 6
ARTICLE III - LOAN AND REPAYMENT 6
SECTION 3.1. Amount and Evidence of Loan 6
SECTION 3.2. Loan Repayments 6
SECTION 3.3. Mandatory and Optional Prepayments of the Promissory Note
SECTION 3.4. Additional Payment Obligations of the Borrower 7
SECTION 3.5. Payment of Issuer Fees 8
SECTION 3.6. Administrative Expenses 8
SECTION 3.7. Letter of Credit; Alternate Letter of Credit 8
SECTION 3.8. Credit for Bonds Surrendered 11
ARTICLE IV - NO SECURITY INTEREST IN PROJECT 11
ARTICLE V - CONSTRUCTION OF THE PROJECT 11
SECTION 5.1. Disbursements from the Construction Fund 11
SECTION 5.2. Obligation of the Borrower to Complete the Project and to
Pay Costs in Event Construction Fund Insufficient 12
SECTION 5.3. Investment of Construction Fund, Bond Fund, Bond Purchase
Fund and Rebate Fund Moneys 12
SECTION 5.4. Certificate as to Completion 13
SECTION 5.5. No Warranty by Issuer 13
ARTICLE VI - USE OF PROJECT, MAINTENANCE, TAXES AND INSURANCE 13
SECTION 6.1. Use, Maintenance and Modifications of Project by
Borrower 13
SECTION 6.2. Taxes, Other Governmental Charges and Utility Charges 14
SECTION 6.3. Insurance 14
ARTICLE VII - DAMAGE, DESTRUCTION AND CONDEMNATION 15
ARTICLE VIII - SPECIAL COVENANTS 15
SECTION 8.1. Assignment and Pledge of Issuer's Rights;
Obligations of Borrower Unconditional 15
SECTION 8.2. Right of Access to the Project 16
SECTION 8.3. Maintenance of Existence.. 16
SECTION 8.4. Qualification in State. 16
SECTION 8.5. Covenant as to Non-Impairment of Tax-Exempt Status 16
SECTION 8.6. Indemnity, Expenses 17
SECTION 8.7. Compliance with Laws 19
SECTION 8.8. No Recourse 19
SECTION 8.9. Indenture Provisions 19
SECTION 8.10. Recording and Maintenance of Liens 19
ARTICLE IX - ASSIGNMENT, LEASING, EQUIPMENT 20
SECTION 9.1. Transfer, Assignment and Leasing 20
SECTION 9.2. Substitution and Removal of Machinery and Equipment 21
ARTICLE X - EVENTS OF DEFAULT AND REMEDIES 21
SECTION 10.1. Events of Default 21
SECTION 10.2. Remedies on Default 22
SECTION 10.3. No Remedy Exclusive 23
SECTION 10.4. Agreement to Pay Attorneys'Fees and Expenses 23
SECTION 10.5. No Additional Waiver Implied by One Waiver 23
SECTION 10.6. Default by Issuer - Limited Liability 23
ARTICLE XI - PAYMENT OF SURPLUS BOND PROCEEDS FROM THE BOND FUND 24
SECTION 11.1. Surplus Bond Proceeds 24
ARTICLE XII - THE BONDS 24
SECTION 12.1. Issuance of the Bonds 24
SECTION 12.2. Compliance with Indenture 24
SECTION 12.3. Consent to Issuer's Pledge 24
SECTION 12.4. Rights of Trustee Hereunder 24
SECTION 12.5. Amendments to Indenture and this Agreement 25
ARTICLE XIII - MISCELLANEOUS 25
SECTION 13.1. Amounts Remaining in Funds 25
SECTION 13.2. Rights of the Bank 25
SECTION 13.3. Notices 25
SECTION 13.4. Bondholders'Action 25
SECTION 13.5. Binding Effect 26
SECTION 13.6. Severability 26
SECTION 13.7. Captions 26
SECTION 13.8. Interpretation 26
SECTION 13.9. Execution in Counterparts 26
SIGNATURE PAGE OF ISSUER 27
SIGNATURE PAGE OF BORROWER 28
EXHIBIT A - COMPLETION CERTIFICATE
EXHIBIT B - COSTS OF THE PROJECT
EXHIBIT C - PROMISSORY NOTE ENDORSEMENT
EXHIBIT D - PROJECT DESCRIPTION
EXHIBIT E - REQUISITION CERTIFICATE
Execution Copy
LOAN AGREEMENT
BETWEEN
THE STANLY COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY,
AS ISSUER
AND
XXXXXXX INDUSTRIES, INC.,
AS BORROWER
------------------------------------------------------------------
$5,000,000
THE STANLY COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY
VARIABLE RATE DEMAND INDUSTRIAL
DEVELOPMENT REVENUE BONDS
(XXXXXXX INDUSTRIES, INC. PROJECT)
SERIES 1998
------------------------------------------------------------------
Dated as of August 1, 1998
