EXHIBIT 10.6
LOAN AGREEMENT
Among
GE CAPITAL PUBLIC FINANCE, INC.,
as Lender,
and
MICHIGAN STRATEGIC FUND,
as Issuer,
and
SECOM GENERAL CORPORATION,
as Borrower
Dated as of September 1, 1996
---------
This instrument constitutes a security agreement
under the Michigan Uniform Commercial Code
---------
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND EXHIBITS
Section 1.01. Definitions ........................................ 2
Section 1.02. Exhibits ........................................... 5
Section 1.03. Rules of Construction............................... 6
ARTICLE II
FINANCING OF EQUIPMENT AND TERMS OF LOAN
Section 2.01. Acquisition of Equipment............................ 6
Section 2.02. Loan................................................ 6
Section 2.03. Interest............................................ 6
Section 2.04. Payments............................................ 7
Section 2.05. Payment on Non-Business Days........................ 7
Section 2.06. Loan Payments To Be Unconditional................... 7
Section 2.07. Prepayments......................................... 7
Section 2.08. Execution, Authentication and Delivery of the Bond.. 8
Section 2.09. Mutilated, Lost, Stolen or Destroyed Bond .......... 8
ARTICLE III
CONDITIONS PRECEDENT............................................... 8
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ISSUER................ 11
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF BORROWER.............. 13
ARTICLE VI
TITLE TO EQUIPMENT, SECURITY INTEREST
Section 6.01. Title to the Equipment.............................. 21
Section 6.02. Security Interest in Equipment...................... 21
Section 6.03. Change in Name or Corporate Structure of Borrower,
Change in Location of Borrower's Principal Place
of Business......................................... 21
Section 6.04. Liens and Encumbrances to Title..................... 22
Section 6.05. Personal Property................................... 22
Section 6.06. Assignment of Insurance............................. 22
Section 6.07. Occupancy........................................... 22
Section 6.08. Agreement as Financing Statement.................... 23
ARTICLE VII
AFFIRMATIVE COVENANTS OF BORROWER
Section 7.01. Reporting Requirements.............................. 23
Section 7.02. Books and Records; Inspection and Examination....... 24
Section 7.03. Compliance With Laws; Environmental Indemnity....... 25
Section 7.04. Payment of Taxes and Other Claims................... 25
Section 7.05. Maintenance of Equipment............................ 25
Section 7.06. Insurance; Indemnification.......................... 26
Section 7.07. Preservation of Corporate Existence................. 28
Section 7.08. Performance by Lender............................... 28
Section 7.09. Covenant as to Nonimpairment of Tax-Exempt Status... 28
Section 7.10. Financial Covenants................................. 29
ARTICLE VIII
NEGATIVE COVENANTS OF BORROWER
Section 8.01. Lein................................................ 30
Section 8.02. Sale of Assets...................................... 30
Section 8.03. Consolidation and Merger............................ 31
Section 8.04. Accounting.......................................... 31
Section 8.05. Transfers........................................... 31
Section 8.06. Other Defaults...................................... 31
Section 8.07. Place of Business................................... 31
Section 8.08. Modification and Substitutions...................... 31
Section 8.09. Use of the Equipment................................ 32
ARTICLE IX
DAMAGE AND DESTRUCTION;............................................ 32
ARTICLE X
ASSIGNMENT, SUBLEASING AND SELLING
Section 10.01. Assignment by Lender................................ 32
Section 10.02. No Sale or Assignment by Borrower................... 33
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ARTICLE XI
EVENTS OF DEFAULT AND REMEDIES
Section 11.01. Events of Default................................... 33
Section 11.02. Remedies on Default................................. 34
Section 11.03. Return of Equipment................................. 36
Section 11.04. No Remedy Exclusive................................. 36
Section 11.05. Late Charge......................................... 36
ARTICLE XII
MISCELLANEOUS
Section 12.01. Costs and Expenses of Lender and Issuer............. 37
Section 12.02. Disclaimer of Warranties............................ 37
Section 12.03. Notices............................................. 37
Section 12.04. Further Assurance and Corrective Instruments........ 38
Section 12.05. Binding Effect; Time of the Essence................. 38
Section 12.06. Severability........................................ 38
Section 12.07. Amendments.......................................... 38
Section 12.08. Execution in Counterparts........................... 38
Section 12.09. Applicable Law...................................... 38
Section 12.10. Captions............................................ 38
Section 12.11. Entire Agreement.................................... 38
Section 12.12. Usury............................................... 39
Section 12.13. Waiver of Jury Trial................................ 39
Section 12.14. Governmental Functions.............................. 39
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LOAN AGREEMENT
Lender: GE Capital Public Finance, Inc.
Suite 470
0000 Xxxxxxxxxx Xxxx Xxxx.
Xxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Issuer: Michigan Strategic Fund
Attn: President
000 Xxxx Xxxxxx, 0xx xxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Borrower: Secom General Corporation
46035 Xxxxx Xxxxx Xxxxxx
Xxxx, Xx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
THIS LOAN AGREEMENT dated as of September 1, 1996 (this "Agreement")
among GE Capital Public Finance, Inc., a Delaware corporation, as lender (with
its successors and assigns, "Lender"), Michigan Strategic Fund, a public body
corporate and politic duly organized and validly existing under the laws of
the state of Michigan (the "State"), as issuer ("Issuer"), and Secom General
Corporation, a Delaware corporation, as borrower ("Borrower").
WHEREAS, Issuer is authorized and empowered under the laws of the State,
including 1984 PA270, as amended (the "Act"), to assist any person, firm or
corporation in the financing of certain projects and facilities, through the
issuance of its limited obligation revenue bonds; and
WHEREAS, in furtherance of the purposes of the Act, Issuer proposes to
finance all or a portion of the acquisition and installation of the Equipment
(as hereinafter defined) by Borrower pursuant to this Agreement by obtaining a
loan from Lender, issuing the Bond (as defined herein) and lending the
proceeds thereof to Borrower; and
WHEREAS, Borrower proposes the acquisition and installation of the
Equipment and as an inducement therefor has requested Issuer to assist in the
financing of the Equipment and certain other expenses incidental thereto, as
provided in the Act; and
WHEREAS, Borrower shall make Loan Payments (as hereinafter defined)
directly to Lender as assignee of Issuer; and
WHEREAS, the Bond and the interest obligation thereon shall never
constitute any obligation of the State or a general obligation of Issuer
within the meaning of any constitutional or statutory limitation and shall
never constitute nor give rise to a charge against the general credit or
taxing powers or the State, but shall be a limited obligation of Issuer
payable solely from the Loan Payments payable hereunder by Borrower to Lender
as assignee of Issuer;
NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledge and in consideration of the premises contained in this
Agreement, Lender, Issuer and Borrower agree as follows:
ARTICLE I
DEFINITIONS AND EXHIBITS
Section 1.01 Definitions. The following terms used herein will have the
meanings indicated unless the context clearly requires otherwise:
"Acquisition Costs" means the contract price paid or to be paid to the
Vendors for any portion of the Equipment upon Borrower's acceptance thereof as
set forth on Exhibit A hereto.
"Agreement" means this Agreement, including all exhibits hereto, as any
of the same may be supplemented or amended from time to time in accordance
with the terms hereof.
"Bond" means Issuer's $4,000,000.00 Limited Obligation Revenue Bond
(Secom General Corporation Project), Series 1996B, in the form attached
hereto as Exhibit E.
"Bond Counsel" means an attorney or firm of attorneys nationally
recognized in the field of municipal finance and acceptable to Lender and
Issuer.
"Borrower" means Secom General Corporation, a Delaware corporation.
"Business Day" means a day other than a Saturday or Sunday on which
banks are generally open for business in New York, New York.
"Capital Expenditures" means expenditures:
(a) properly chargeable to the capital account of any person
without regard to any rule of the Code which permits such expenditures
to be treated as current expenses;
(b) financed from sources other than the Loan Proceeds; and
(c) which resulted in property used in connection with facilities
located in the City of Novi, Oakland County, Michigan, or located in any
adjacent political subdivision and integrated with or contiguous to such
facilities, the "principal user" of which is Borrower or any Related
Person or any other Principal User of the Equipment or Related Person to
such Principal User, except capital expenditures exempted under Section
144(a)(4)(C) of the Code.
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"Certificate of Acceptance" means a Certificate of Acceptance, in
substantially the form set forth as Exhibit B hereto, whereby Borrower
acknowledges receipt in good condition of particular items of Equipment
identified therein and confirms the date of delivery thereof and certain other
matters.
"Code" means the Internal Revenue Code of 1986, as amended,
and United States Treasury regulations promulgated thereunder.
"Default" means an event that, with giving of notice or passage of time
or both, would constitute an Event of Default as provided in Article XI hereof.
"Determination of Taxability" means any determination, decision or
decree by the Commissioner of Internal Revenue, or any District Director of
Internal Revenue or any court of competent jurisdiction, or an opinion of Bond
Counsel that an Event of Taxability shall have occurred. A Determination of
Taxability also shall be deemed to have occurred on the first to occur of the
following:
(a) the date when Borrower files any statement, supplemental
statement, or other tax schedule, return or document, which discloses
that an Event of Taxability shall have occurred; or
(b) the effective date of any federal legislation enacted after
the date of this Agreement or promulgation of any income tax regulation
or ruling by the Internal Revenue Service that causes an Event of
Taxability after the date of this Agreement.
"Equipment" means the personal property identified in Exhibit A hereto
to be used in connection with Borrower's operations (including, to the extent
permitted pursuant to the Code without jeopardizing the tax-exempt status of
the Interest, certain items originally financed through internal advances of
Borrower in anticipation of obtaining permanent financing through Issuer),
together with all replacement parts, additions, repairs, accessions and
accessories incorporated therein and/or affixed to such personal property.
"Escrow Agent" means National City Bank of Minneapolis, as escrow agent
under the Escrow Agreement and its successors and assigns permitted under the
Escrow Agreement.
"Escrow Agreement" means the Escrow Agreement dated as of September 1,
1996 among Lender, Issuer, Borrower and Escrow Agent.
"Escrow Fund" means the fund established and held by Escrow Agent
pursuant to the Escrow Agreement.
"Event of Taxability" means if as the result of any act, failure to act
or use of the proceeds of the Loan, a change in use of the Equipment or any
misrepresentation or inaccuracy in any of the representations, warranties or
covenants contained in this Agreement or the Tax Compliance Certificate by
Issuer or Borrower or the enactment of any federal legislation after the date
of this
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Agreement or the promulgation of any income tax regulation or ruling by the
Internal Revenue Service after the date of this Agreement, the interest on the
Bond is or becomes includable in the recipient's gross income.
"Guarantors" means Uniflow Corporation, Form Flow, Inc., L&H Die, Inc.,
and Micanol, Inc.
"Guaranty Agreements" means the four Guaranty Agreements dated as of
September 1, 1996 executed on behalf of Guarantors.
"Indemnity Agreement" means the Indemnity Agreement dated as of
September 1, 1996 executed on behalf of Borrower for the benefit of Lender.
"Interest" means the portion of any payment from Issuer to Lender under
the Bond designated as and comprising interest as shown in Exhibit A hereto.
"Insurance Costs" means items of expense payable or reimbursable
directly or indirectly by Issuer or Borrower and related to the authorization,
sale and issuance of the Bond 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, charges for execution, transportation and
safekeeping of the Bond and related documents, and other costs, charges and
fees in connection with the foregoing.
"Issuer" means the Michigan Strategic Fund, acting as issuer under this
Agreement.
"Lender" means (i) GE Capital Public Finance, Inc., acting as lender
under this Agreement and holder of the Bond, (ii) any surviving, resulting or
transferee corporation of GE Capital Public Finance, Inc (who is also holder
of the Bond) and (iii) except where the context requires otherwise, any
assignee(s) of Lender (who shall also be holder of the Bond).
"Loans" means the loan from Issuer to Borrower pursuant to this
Agreement.
"Loan Payments" means the loan payments payable by Borrower pursuant to
the provisions of this Agreement as specifically set forth in Exhibit A
hereto. As provided in Article II hereof, Loan Payments shall be payable by
Borrower directly to Lender, as assignee of Issuer, in the amounts and at the
times as set forth in Exhibit A hereto.
"Loans Proceeds" means the total amount of money to be deposited
pursuant to Section 2.02 hereof with Escrow Agent for deposit and application
in accordance with the Escrow Agreement. The Loan Proceeds consist of the
proceeds of the Bond.
"Prepayment Amount" means the amount which Borrower may from time to
time, in its discretion, pay or cause to be paid to Lender as assignee of
Issuer in order to prepay the Loan and the Bond, as provided in Section 2.07
hereof, such amounts being set forth in Exhibit A hereto.
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"Principal" means the portion of any Loan Payment designated as
principal in Exhibit A hereto.
"Principal User" means a principal user of the Equipment as such term is
used in Section 144(a) of the Code.
"Prior Loan Agreement" means the Loan Agreement dated as of June 1, 1996
among Lender, Issuer and Borrower.
"Purchase Agreement" means Borrower's purchase agreements with Vendors
of the equipment.
"Related Person" with reference to any Substantial User, means a
"related person" within the meaning of Section 147(a) of the Code, and, with
reference to any "Principal User, means a "related person" within the meaning
of Section 144(a)(3) of the Code.
"Reserved Rights" means those certain rights of Issuer under this
Agreement to indemnification, liability insurance proceeds and reimbursement
for certain costs and expenses pursuant Sections 7.06, 7.03 and 12.01(b)
hereof, to receive notice pursuant to Section 12.03 hereof and to inspect
Borrower's books and records pursuant to Section 7.02 hereof.
"State" means the State of Michigan.
"Substantial User" means, with respect to any "facilities" (as the term
"facilities' is used in section 147(a) of the Code), a "substantial user" of
such "facilities" within the meaning of Section 147(a)of the Code.
"Tax Compliance Certificate" means, collectively, the Non-Arbitrage
Certificate and the Tax Compliance Certificate, each dated as of the date
hereof, executed by Borrower in connection with the Issuance of the Bond.
"UCC" means the Uniform Commercial Code as adopted and in effect in the
State.
"Vendor" means the manufacturer or vendor of an item of Equipment, as
well as the agents or dealers of the manufacturer, from whom Borrower has
purchased or is purchasing items of Equipment.
Section 1.02. Exhibits. The following exhibits are attached hereto and
made a part hereof:
Exhibit A: Form of Schedule of Equipment and Loan Payments describing
the Equipment and setting forth the Loan Payments and Prepayment Amounts.
Issuer hereby authorizes Lender to insert in Exhibit A the serial or other
identifying numbers relating to the Equipment when available.
Exhibit B: Form of Certificate of Acceptance.
Exhibit C: Form of opinion of counsel to Borrower and Guarantors.
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Exhibit D: Form of opinion of Bond Counsel.
Exhibit E: Form of Bond.
Section 1.03. Rules of Construction. (a) The singular form of any word
used herein, including the terms defined in Section 1.01 hereof, shall include
the plural, and vice versa. The use herein of a word of any gender shall
include correlative words of all genders.
(b) Unless otherwise specified, references to Articles, Sections and
other subdivisions of this Agreement are to the designated Articles, Sections
and other subdivision of this Agreement as originally executed. The words
"hereof," "herein," "hereunder" and words of similar import refer to this
Agreement as a whole.
(c) The headings or titles of the several articles and sections shall
be solely for convenience of reference and shall not affect the meaning,
construction or effect of the provisions hereof.
ARTICLE II
FINANCING OF EQUIPMENT AND TERMS OF LOANS
Section 2.01. Acquisition of Equipment. Borrower either has ordered or
shall order the Equipment pursuant to one or more Purchase Agreements from one
or more Vendors. Borrower shall remain liable to the Vendor or Vendors in
respect of its duties and obligations in accordance with each Purchase
Agreement and shall bear the risk of loss with respect to any loss or claim
relating to any item of Equipment covered by any Purchase Agreement, and
neither Lender nor Issuer shall assume any such liability or risk of loss.
Section 2.02. Loan. Lender hereby agrees, subject to the terms and
conditions of this Agreement, to make a loan to Issuer pursuant to the terms
hereof and through the purchase of the Bond in the amount of $4,000,000.00;
Issuer hereby agrees, subject to the terms and conditions of this Agreement
and the Bond, to sell the Bond to Lender and to lend the Loan Proceeds to
Borrower; and Borrower hereby agrees to borrow such amount from Issuer. Upon
fulfillment of the conditions set forth in Article III hereof, Lender shall
deposit the Loan Proceeds (consisting of the proceeds of the Bond) in the
Escrow Fund to be held, invested and disbursed as provided in the Escrow
Agreement. Issuer's obligation to make payments on the Bond, and Borrower's
obligation to repay the Loan, shall commence, and interest shall begin to
accrue, on the date on which Loan Proceeds are deposited in the Escrow Fund
(which shall be the date on which the Bond is issued).
Section 2.03. Interest. The principal amount of the Bond and the Loan
hereunder outstanding from time to time shall bear interest (computed on the
basis of actual days elapsed in a 360-day year) at the rate of five and
ninety-nine hundredths percent (5.99%). Interest accruing on the principal
balance of such loans outstanding from time to time shall be payable as
provided in Exhibit A and the Bond and upon earlier demand in accordance with
the terms hereof or prepayment in accordance with the terms of the Bond and
Section 2.07 hereof.
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Section 2.04. Payments. Issuer shall pay the principal of, premium, if
any in accordance with Section 2.07 hereof and interest on the Bond, but only
out of the amounts paid by Borrower pursuant to this Agreement. Borrower shall
pay to Lender, as assignee of Issuer and holder of the Bond, Loan Payments, in
the amounts and on the dates set forth in Exhibit A hereto. As security for
its obligation to pay the principal of, premium, if any in accordance with
Section 2.07 hereof, and interest on the Bond, Issuer assigns to Lender all of
Issuer's right to receive Loan Payments from Borrower hereunder, all of
Issuer's rights hereunder (except Reserved Rights) and all of Issuer's right,
title and interest in and to the Equipment, and Issuer irrevocably constitutes
and appoints Lender and any present or future officer or agent of Lender as
its lawful attorney, with full power of substitution and resubstitution, and
in the name of Issuer or otherwise, to collect the Loan Payments and any other
payments due hereunder and under the Bond and to xxx in any court for such
Loan Payments or other payments, to exercise all rights hereunder with respect
to the Equipment and to withdraw or settle any claims, suits or proceedings
pertaining to or arising out of this Agreement upon any terms. Such Loan
Payments and other payments shall be made by Borrower directly to Lender, as
Issuer's assignee, and shall be credited against Issuer's payment obligations
hereunder and under the Bond. No provision, covenant or agreement contained in
this Agreement or any obligation herein imposed on Issuer, or the breach
thereof, shall constitute or give rise to or impose upon Issuer or the State a
pecuniary liability, a charge upon its general credit or taxing powers or a
pledge of its general revenues but shall be a limited obligation as described
herein. Issuer has no taxing power. All amounts required to be paid by
Borrower hereunder shall be paid in lawful money of the United States of
America in immediately available funds. No recourse shall be had by Lender or
Borrower for any claim based on this Agreement or the Bond against any member,
director, officer, employee or agent of Issuer alleging personal liability on
the part of such person.
Section 2.05 Payment on Non-Business Days. Whenever any payment to be
made hereunder shall be stated to be due on a day which is not a Business Day,
such payment may be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of
interest or the fees hereunder, as the case may be.
Section 2.06. Loan Payments To Be Unconditional. The obligations of
Borrower to make payment of the Loan Payments required under this Article II
and to make other payments hereunder and to perform and observe the covenants
and agreements contained herein shall be absolute and unconditional in all
events, without abatement, diminution, deduction, setoff or defense for any
reason, including (without limitation) any failure of the Equipment to be
delivered or installed, any defects, malfunctions, breakdowns or infirmities
in the Equipment or any accident, condemnation, destruction or unforeseen
circumstances. Notwithstanding any dispute between Borrower and any of Issuer,
Lender, any Vendor or any other person, Borrower shall make all Loan Payments
when due and shall not withhold any Loan Payments pending final resolution of
such dispute, nor shall Borrower assert any right of set-off or counterclaim
against its obligation to make such payments required under this Agreement.
Section 2.07. Prepayments. (a) Borrower may, in its discretion, prepay
the Loan and the Bond in whole at any time after the third anniversary of the
date hereof by paying the applicable Prepayment Amount.
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(b) Borrower shall prepay the Loan and the Bond in whole or in part at
any time pursuant to Article IX hereof by paying the applicable Prepayment
Amount.
(c) Borrower shall prepay the Loan and the Bond in full immediately upon
demand of Lender after the occurrence of an Event of Default by paying the
applicable Prepayment Amount.
(d) Borrower shall prepay the Loan and the Bond in full immediately upon
demand of Lender after the occurrence of a Determination of Taxability;
provided, however, that Lender, in its sole discretion may waive the
requirement that the Loan and the Bond be prepaid pursuant to this Section
2.07(d).
(e) The Loan and the Bond shall be repaid in part with funds remaining in
the Escrow Fund upon termination of the Escrow Agreement as provided in
Sections 2.03 or 2.04 of the Escrow Agreement. Such prepayment shall be without
prepayment premium or penalty as long as such funds are not in an amount
greater than $150,000.00. In the event that such funds are in an amount equal
to or greater than $150,000 00, any such prepayment shall be subject to a 2%
prepayment premium and shall not occur unless Borrower provides an opinion of
counsel that such prepayment will not result in a Default or Event of Default
and an opinion of Bond Counsel that such prepayment will not result in a
Determination of Taxability.
Upon any prepayment in part of the Loan and the Bond, the prepayment
shall be applied to the Principal portion of prepayments in inverse order of
maturity.
Section 2.08. Execution, Authentication and Delivery of the Bond.
The Bond shall be executed on behalf of Issuer by the manual signature of a
member or an authorized officer of Issuer and shall have impressed or printed
thereon the official seal of Issuer.
Section 2.09 Mutilated, Lost, Stolen or Destroyed Bond. Subject to
Act 354, Michigan Public Acts, 1972, as amended, and any other applicable law,
in the event the Bond is mutilated, lost, stolen or destroyed, Issuer may
authorize the execution and delivery of a new bond of like tenor as that
mutilated, lost, stolen or destroyed; provided, however, that in the case of
any mutilated Bond, such mutilated Bond shall first be surrendered to Issuer
and in the case of any lost, stolen or destroyed Bond, there shall first be
furnished to Issuer evidence of the ownership thereof and of such loss, theft
or destruction satisfactory to Issuer together, in each case, with a bond of
indemnity satisfactory to Issuer. Issuer may charge the holder or owner of
such Bond with any amounts provided by the aforesaid Act 354 and any other
applicable law.
ARTICLE III
CONDITIONS PRECEDENT
Lender's agreement to purchase the Bond, to make the loan to Issuer
hereunder and to deposit the Loan Proceeds with Escrow Agent shall be subject
to the condition precedent that Lender shall have received all of the
following, each in form and substance satisfactory to Lender:
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(a) This Agreement, properly executed on behalf of Issuer and
Borrower, and each of the Exhibits hereto properly completed.
(b) The Bond, in the form attached hereto as Exhibit E, properly
executed on behalf of Issuer.
(c) The Tax Compliance Certificate, properly executed on behalf of
Borrower, in form and substance acceptable to Lender.
(d) The Escrow Agreement, properly executed on behalf of Issuer,
Borrower and Escrow Agent.
(e) The Indemnity Agreement, properly executed on behalf of
Borrower, in form and substance acceptable to Lender.
(f) A certificate of the Secretary or an Assistant Secretary of
Borrower, certifying as to (i) the resolutions of the board of directors
and, if required, the shareholders of Borrower, authorizing the
execution, delivery and performance of this Agreement, the Escrow
Agreement and the Tax Compliance Certificate and any related documents,
(ii) the bylaws of Borrower, and (iii) the signatures of the officers or
agents of Borrower authorized to execute and deliver this Agreement, the
Escrow Agreement and the Tax Compliance Certificate and other
instruments, agreements and certificates on behalf of Borrower.
(g) Currently certified copies of the Articles of Incorporation of
Borrower.
(h) A Certificate of Good Standing issued as to Borrower by the
Secretary of State of the state of Borrower's incorporation and by the
Michigan Department of Consumer and Industry Services not more than 10
days prior to the date hereof.
(i) Certificates of the insurance required hereunder, containing a
lender's loss payable clause or endorsement in favor of Lender.
(j) A completed and executed Form 8038 or evidence of filing
thereof with the Secretary of Treasury.
(k) A resolution or evidence of other official action taken by or
on behalf of Issuer to authorize the transactions contemplated hereby.
(i) Evidence that the financing of the Equipment has been approved
by the "applicable elected representative" of Issuer after a public
hearing held upon reasonable notice.
(m) A true and correct copy of any and all leases pursuant to which
Borrower is leasing the property where the Equipment will be located,
together with a landlord's disclaimer and consent with respect to each
such lease.
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(n) A true and correct copy of any and all mortgages, deeds of
trust or similar agreements (whether or not Borrower is a party to any
such agreement) relating to the property where the Equipment will be
located, together with a mortgagee's waiver with respect to each such
mortgage, deed of trust or similar agreement.
(o) As applicable, financing statements, including fixture filings
if necessary, executed by Borrower, as debtor, and naming Issuer, as
secured party, and Lender, as assignee, and/or the original certificate
of title or manufacturer's certificate of origin and title application
if any of the Equipment is subject to certificate of title laws.
(p) Financing statements, including fixture filings if necessary,
executed by Issuer, as debtor, and naming Lender, as secured party.
(q) Current searches of appropriate filing offices showing that (i)
no state or federal tax liens have been filed and remain in effect
against Borrower, (ii) no financing statements have been filed and
remain in effect against Borrower relating to the Equipment except those
financing statements filed by Lender, (iii) Lender has duly filed all
financing statements necessary to perfect the security interest created
pursuant to this Agreement and (iv) Lender has duly filed all financing
statements necessary to perfect the transfer of Issuer's interest in
this Agreement and the Loan Payments.
(r) A Guaranty Agreement in form and substance acceptable to Lender
executed on behalf of each Guarantor.
(s) An opinion of counsel to Borrower, addressed to Lender and
Issuer, in the form attached hereto as Exhibit C.
(t) An opinion of Bond Counsel, addressed to Lender and Issuer, in
the form attached hereto as Exhibit D.
(u) Payment of Lender's fees, commissions and expenses required by
Section 12.01 hereof.
(v) Payment of Issuer's fees incurred in connection with this
Agreement and the transactions contemplated hereby.
(w) Any other documents or items required by Lender.
(x) A mortgagee's waiver with respect to the Equipment in form and
substance acceptable to Lender executed on behalf of MetLife Capital
Financial Corporation and security interest subordination agreement(s)
or release(s) in form and substance acceptable to Lender with respect to
the Equipment executed by such persons as Lender may request in form and
substance acceptable to Lender.
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Lender's agreement to consider approval of any disbursement from the
Escrow Fund shall be subject to the further conditions precedent that on the
date thereof:
(y) Lender shall have received each of the items required for a
disbursement pursuant to the Escrow Agreement;
(z) Lender shall have received in form and substance satisfactory
to Lender Vendor invoice(s) and/or xxxx(s) of sale relating to the
Equipment and, if such invoices have been paid by Borrower, evidence of
payment thereof and, if applicable, evidence of official intent to
reimburse such payment as required by the Code;
(a) the representations and warranties contained in Articles IV and
V hereof are correct on and as of the date of such disbursement as
though made on and as of such date, except to the extent that such
representations and warranties relate solely to an earlier due; and
(b) no event has occurred and is continuing, or would result from
such disbursement, which constitutes a Default, an Event of Default or a
Determination of Taxability.
(c) Lender shall have received evidence satisfactory to Lender that
Lender has a first priority perfected security interest in the
Equipment, including (without limitation) current searches of
appropriate filing offices showing that (i) no state or federal tax
liens or judgment liens have been filed and remain in effect against
Borrower and (ii) no financing statements have been filed and remain in
effect against Borrower relating to the Equipment except those financing
statements filed by or on behalf of Lender.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF ISSUER
Issuer represents, warrants and covenants for the benefit of Lender and
Borrower, as follows:
(a) Issuer is a public body corporate and politic duly created and
validly existing under the Constitution and laws of the State.
(b) Issuer is authorized under the Act to issue the Bond and to
enter into this Agreement, the Escrow Agreement and the transactions
contemplated hereby and to perform all of its obligations hereunder.
(c) Issuer has duly authorized the issuance of the Bond and the
execution and delivery of this Agreement and the Escrow Agreement under
the terms and provisions of the resolution of its governing body, and
further represents, covenants and warrants that all requirements have
been met and procedures have occurred in order to ensure the
enforceability of this Agreement and the Escrow Agreement against
Issuer, and Issuer has complied with such public bidding requirements
(if any) as may be applicable to this Agreement. Issuer has
11
taken all necessary action and has complied with all provisions of
the Act required to make this Agreement and the Escrow Agreement the
valid and binding obligations of Issuer.
(d) The officer of Issuer executing this Agreement and any related
documents has been duly authorized to execute and deliver this Agreement
and the Escrow Agreement and such related documents under the terms and
provisions of a resolution of Issuer's governing body, or by other
appropriate official action.
(e) This Agreement and the Escrow Agreement are legal, valid and
binding Obligations of Issuer, enforceable in accordance with their
respective terms, except to the extent limited by bankruptcy,
reorganization or other laws of general application relating to
effecting the enforcement of creditors' rights.
(f) All of the proceedings approving this Agreement, the Escrow
Agreement and the Bond were conducted by Issuer at meetings which
complied with Act 267, Michigan Public Acts, 1976, as amended.
(g) No member of the Board of Directors of Issuer is directly or
indirectly a party to or in any manner whatsoever interested in this
Agreement, the Escrow Agreement, the Bond or the proceedings related
thereto.
(h) Issuer has assigned to Lender all of Issuer's rights in the
Equipment and this Agreement (except Reserved Rights) including the
assignment of all rights in the security interest granted to Issuer by
Borrower.
(i) Issuer will not pledge, mortgage or assign this Agreement to
any person, firm or corporation, except as provided under the terms
hereof.
(j) None of the execution and delivery of this Agreement or the
Escrow Agreement, the consummation of the transactions contemplated
hereby or the fulfillment of or compliance with the terms and conditions
of this Agreement or the Escrow Agreement violates any law, rule,
regulation or order, conflicts with or results in a breach of any of the
terms, conditions or provisions of any restriction or any agreement or
instrument to which Issuer is now a party or by which it is bound or
constitutes a default under any of the foregoing or results in the
creation or imposition of any prohibited lien, charge or encumbrance of
any nature whatsoever upon any of the property or assets of Issuer under
the terms of any instrument or agreement.
(k) There is no action, suit, proceeding, claim, inquiry or
investigation, at law or in equity, before or by any court, regulatory
agency, public board or body which has been served upon Issuer or, to
the best of Issuer's knowledge, is threatened against or affecting
Issuer, challenging Issuer's authority to enter into this Agreement or
the Escrow Agreement or any other action wherein an unfavorable ruling
or finding would adversely affect the enforceability of this Agreement
or the Escrow Agreement or any other transaction of Issuer which is
similar hereto, or the exclusion of the interest on the Bond from gross
income for federal tax purposes
12
under the Code, or would materially and adversely affect any of the
transactions contemplated by this Agreement.
(l) Issuer will submit or cause to be submitted to the Secretary of
the Treasury a Form 8038 at the time and in the form required by the
Code.
(m) The financing of the Equipment has been approved by the
"applicable elected representative" (as defined in Section 147(f) of the
Code) of Issuer after a public hearing held upon reasonable notice.
(n) Issuer will take no action that would cause the Interest to
become includable in gross income for federal income tax purposes under
the Code.
(o) Issuer covenants that it will promptly pay or cause to be paid
to Lender the Loan Payments payable by Borrower hereunder and under the
Bond to the extent actually received from Borrower at the place, on the
dates and in the manner set forth herein and in the Bond.
(p) Issuer recognizes that investment of the Loan Proceeds will be
at the written direction of Borrower, but agrees that it will commit no
act that would cause the Bond to be an "arbitrage bond" within the
meaning of Section 148(a) of the Code.
ARTICLE V
REPRESENTATIONS, WARRANTIES
AND COVENANTS OF BORROWER
Borrower represents, warrants and covenants for the benefit of Lender and
Issuer, as follows:
(a) Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware, has power to
enter into this Agreement and the Escrow Agreement and by proper
corporate action has duly authorized the execution and delivery of this
Agreement, the Escrow Agreement and the Tax Compliance Certificate.
Borrower is in good standing and is duly licensed or qualified to
transact business in the State and in all jurisdictions where the
character of the property owned or leased or the nature of the business
transacted by it makes such licensing or qualification necessary.
(b) Borrower has been fully authorized to execute and deliver this
Agreement, the Escrow Agreement and the Tax Compliance Certificate under
the terms and provisions of the resolution of its board of directors, or
by other appropriate official approval, and further represents,
covenants and warrants that all requirements have been met, and
procedures have occurred in order to ensure the enforceability of this
Agreement, the Escrow Agreement and the Tax Compliance Certificate and
this Agreement, the Escrow Agreement and the Tax Compliance Certificate
have been duly authorized, executed and delivered.
13
(c) The officer of Borrower executing this Agreement, the Escrow
Agreement and the Tax Compliance Certificate and any related documents
has been duly authorized to execute and deliver this Agreement, the
Escrow Agreement and the Tax Compliance Certificate and such related
documents under the terms and provisions of a resolution of Borrower's
board of directors.
(d) This Agreement, the Escrow Agreement and the Tax Compliance
Certificate constitute valid and legally binding obligations of
Borrower, enforceable against Borrower in accordance with their
respective terms, except to the extent limited by bankruptcy,
reorganization or other laws of general application relating to
effecting the enforcement of creditors' rights.
(e) The execution and delivery of this Agreement, the Escrow
Agreement and the Tax Compliance Certificate, the consummation of the
transactions contemplated hereby and the fulfillment of the terms and
conditions hereof do not and will not violate any law, rule, regulation
or order, conflict with or result in a breach of any of the terms or
conditions of the articles of incorporation or bylaws of Borrower or of
any corporate restriction or of any agreement or instrument to which
Borrower is now a party and do not and will not constitute a default
under any of the foregoing or result in the creation or imposition of
any liens, charges or encumbrances of any nature upon any of the
property or assets of Borrower contrary to the teens of any instrument
or agreement to which Borrower is a party or by which it is bound.
(f) The authorization, execution, delivery and performance of this
Agreement by Borrower do not require submission to, approval of, or
other action by any governmental authority or agency, which action with
respect to this Agreement has not been taken and which is final and
nonappealable.
(g) There is no action, suit, proceeding, claim, inquiry or
investigation, at law or in equity, before or by any court, regulatory
agency, public board or body pending or, to the best of Borrower's
knowledge, threatened against or affecting Borrower, challenging
Borrower's authority to enter into this Agreement, the Escrow Agreement
or the Tax Compliance Certificate or any other action wherein an
unfavorable ruling or finding would adversely affect the enforceability
of this Agreement, the Escrow Agreement or the Tax Compliance
Certificate or any other transaction of Borrower which is similar
hereto, or the exclusion of the Interest from gross income for federal
tax purposes under the Code, or would materially and adversely affect
any of the transactions contemplated by this Agreement.
(h) The property at which the Equipment is located is properly
zoned for its current and anticipated use and the use of the Equipment
will not violate any applicable zoning, land use, environmental or
similar law or restriction. Borrower has all licenses and permits to use
the Equipment. Borrower has obtained all permits, licenses and other
authorizations which are required under federal, state and local laws
relating to emissions, discharges, releases of pollutants, contaminants,
hazardous or toxic materials, or wastes into ambient air, surface water,
ground water or land, or otherwise relating to the manufacture,
processing, distribution,
14
use, treatment, storage, disposal, transport or handling of
pollutants, contaminants or hazardous or toxic materials or wastes
("Environmental Laws") at Borrower's facilities or in connection
with the operation of its facilities. Except as previously disclosed
to Lender in writing, Borrower and all activities of Borrower at its
facilities comply with all Environmental Laws and with all terms and
conditions of any required permits, licenses and authorizations
applicable to Borrower with respect thereto. Except as previously
disclosed to Lender in writing, Borrower is also in compliance with
all limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in
Environmental Laws or contained in any plan, order, decree, judgment
or notice of which Borrower is aware. Except as previously disclosed
to Lender in writing, Borrower is not aware of, nor has Borrower
received notice of, any events, conditions, circumstances,
activities, practices, incidents, actions or plans which may
interfere with or prevent continued compliance with, or which may
give rise to any liability under, any Environmental Laws.
(i) The Equipment is of the type authorized and permitted to be
financed by the Act.
(j) Borrower owns or will own the Equipment and intends to operate
the Equipment, or cause the Equipment to be operated, as a "project,"
within the meaning of the Act, until the date on which all of the Loan
Payments have been fully paid or the applicable Prepayment Amount has
been fully paid.
(k) Borrower will not take any action that would cause the Interest
to become includable in gross income of the recipient for federal income
tax purposes under the Code, and Borrower will take and will cause its
officers, employees and agents to take all affirmative actions legally
within its power necessary to ensure that the Interest does not become
includable in gross income of the recipient for federal income tax
purposes under the Code (including, without limitation, the calculation
and payment of any rebate required to preserve such exclusion).
(l) Borrower has heretofore furnished to Lender the audited
financial statement of Borrower for its fiscal year ended September 30,
1995 and the unaudited financial statement of Borrower for the months
ended March 31, 1996, and those statements fairly present the financial
condition of Borrower on the dates thereof and the results of its
operations and cash flows for the periods then ended and were prepared
in accordance with generally accepted accounting principles. Since the
date of the most recent financial statements, there has been no material
adverse change in the business, properties or condition (financial or
otherwise) of Borrower.
(m) Borrower has paid or caused to be paid to the proper
authorities when due all federal, state and local taxes required to be
withheld by it. Borrower has filed all federal, state and local tax
returns which are required to be filed, and Borrower has paid or caused
to be paid to the respective taxing authorities all taxes as shown on
said returns or on any assessment received by it to the extent such
taxes have become due.
15
(n) Borrower has or will have good and absolute title to all
Equipment and all proceeds thereof, free and clear of all mortgages,
security interests, liens and encumbrances except for the security
interest created pursuant to this Agreement.
(o) All financial and other information provided to Lender by or on
behalf of Borrower and each Guarantor in connection with Borrower's
request for the Loan contemplated hereby is true and correct in all
material respects and, as to projections, valuations or pro forma
financial statements, present a good faith opinion as to such
projections, valuations and pro forma condition and results.
(p) Borrower has provided to Lender signed financing statements
sufficient when filed to perfect the security interest created pursuant
to this Agreement. When such financing Statements are filed in the
offices noted therein, Lender, as assignee of Issuer, will have a valid
and perfected security interest in the Equipment, subject to no other
security interest, Assignment, Lien or encumbrance. Borrower intends the
Equipment to be and remain personal property rather than a fixture on
real estate. Borrower owns the real property where the Equipment will be
located subject to no liens or encumbrances of any kind except a
mortgage interest held by MetLife Capital Financial Corporation.
(q) Upon delivery and installation of the Equipment, Borrower will
provide to lender a completed and executed copy of the Certificate of
Acceptance attached hereto as Exhibit B.
(r) All representations and warranties of Borrower set forth in the
Tax Compliance Certificate are true and correct as of the date hereof.
Borrower will comply fully at all times with the Tax Compliance
Certificate, and Borrower will not take any action, or omit to take any
action which, if taken or omitted, respectively, would violate the Tax
Compliance Certificate.
(s) Expenses for work done by officers or employees of Borrower in
connection with the Equipment will be included as an Acquisition Cost,
if at all, only to the extent (i) such persons were specifically
employed for such particular purpose, (ii) the expenses do not exceed
the actual cost thereof and (iii) such expenses are treated or capable
of being treated (whether or not so treated) on the books of Borrower as
a capital expenditure in conformity with generally accepted accounting
principles applied on a consistent basis.
(t) Any costs incurred with respect to that part of the Equipment
paid from the Loan proceeds shall be treated or capable of being treated
on the books of Borrower as capital expenditures in conformity with
generally accepted accounting principles applied on a consistent basis.
(u) No part of the Loan Proceeds will be used to finance inventory
or rolling stock or will be used for working capital or to finance any
other cost (other than Issuance Costs not exceeding $80,000) not
constituting an Acquisition Cost.
16
(v) No person other than Borrower and Uniflow Corporation
(Borrower's wholly-owned subsidiary) is in occupancy or possession of
any portion of the real property where the Equipment is located.
(w) The Equipment is property of the character subject to the
allowance for depreciation under Section 167 of the Code.
(x) The completion of the acquisition of the Equipment will not
have the effect of transferring more than 20 full-time employees from
one municipality of the State to another and is expected to create
approximately 25 jobs in the City of Novi and thereby promote the
development of present business enterprises in Michigan.
(y) None of the Loan Proceeds shall be applied to any costs of the
acquisition or installation of the Equipment which were paid (within the
meaning of Section 103 of the Code) prior to the date 60 days before the
date (March 27, 1996) on which the inducement resolution was adopted by
Issuer with respect to the Equipment. Issuer adopted a resolution
declaring official intent to finance the costs of the Equipment pursuant
to Treas. Reg. 1.150-2 not more than 60 days after the date on which the
acquisition and installation of the Equipment commenced.
(z) No member, director or officer of Issuer has any interest of
any kind in Borrower which would result, as a result of the Loan and the
issuance of the Bond, in a substantial financial benefit to such persons
other than as a member of the general public of the State.
(aa) Other than Issuer's $3,000,000 Limited Obligation Revenue Bond
(Secom General Corporation Project), Series 1996A, there are no
outstanding bonds as described in Section 144(a)(2) of the Code that
have been issued by any state, political subdivision, district, public
body, agency, authority, commission or instrumentality, the proceeds of
which have been or will be used with respect to facilities located
within the City of Novi, Oakland County, Michigan, the Principal User of
which is Borrower or a Related Person as defined in Section 144(a)(3) of
the Code or a Principal User of the Equipment or any Related Person to
any such Principal User.
(bb) All property which is to be financed by the net Loan Proceeds
is to be owned by Borrower.
(cc) All reimbursements to Borrower for Acquisition Costs from Loan
Proceeds shall be made in compliance with Treasury Regulation 1.150-2
(the "Reimbursement Regulations").
(dd) The amount of Issuance Costs financed from the proceeds of the
sale of the Bond shall not exceed 2% of the Loan Proceeds.
17
(ee) Borrower has heretofore supplied Lender and Issuer estimates of
the costs of the Equipment, the completion date and periods of
usefulness of the Equipment. Borrower hereby warrants that such
estimates were made in good faith and are fair, reasonable and
realistic.
(ff) Borrower shall complete the acquisition of the Equipment as
required by the Act as promptly as practicable, and shall cause to be
paid all costs of the Equipment in excess of the moneys available
therefor in the Escrow Fund in compliance with the terms of the Escrow
Agreement.
(gg) Borrower expects to complete acquisition and installation of
the Equipment by June 1, 1997.
(hh) There are no other bonds described in Section 144(a) of the
Code which have been issued, or are contemplated to be issued, pursuant
to Section 144(a) of the Code (or its predecessor provision), for the
benefit of Borrower, any Principal User, or any Related Person to
Borrower and which (i) were or are to be sold at substantially the same
time as the Bond; (ii) were or are to be sold pursuant to a common plan
of marketing as the marketing plan for the Bond; (iii) were or are to be
sold at substantially the same rate of interest as the interest rate on
the Bond; and (iv) are payable directly or indirectly by Borrower or
from the source from which the Bond is payable.
(ii) Not less than 95% of the net Loan Proceeds (including
investment proceeds) will be expended for the acquisition, construction,
reconstruction or improvement of land or property of a character subject
to the allowance for depreciation within the meaning of Section
144(a)(1) of the Code paid in compliance with the Reimbursement
Regulations and not less than 100% of the Loan Proceeds will be used to
pay costs as permitted by the Act.
(jj) The information furnished by Borrower and used by Issuer in
preparing the Form 8038, Information Return for Tax-Exempt Private
Activity Bond Issues, to be filed by or on behalf of Issuer with the
Internal Revenue Service in Philadelphia, Pennsylvania pursuant to
Section 149(e) of the Code, was true and complete as of the date of
completion of said Form 8038.
(kk) The average maturity of the Bond does not exceed 120% of the
average reasonably expected economic life of the Equipment, as
determined pursuant to Section 147(b) of the Code.
(ll) No more than 25% of the net Loan Proceeds will be used to
provide a facility the primary purpose of which is retail food and
beverage services, automobile sales or service, or the provision of
recreation or entertainment. No portion of the Loan Proceeds will be
used to provide any private or commercial golf course, country club,
massage parlor, tennis club, skating facility (including roller skating,
skateboard and ice skating), racquet sports facility (including any
handball or racquetball court), hot tub facility, suntan facility,
racetrack, airplane,
18
skybox or other private luxury box, health club facility, facility
primarily used for gambling, store the principal business of which
is the sale of alcoholic beverages for off premises consumption or
residential real property for family units.
(mm) Less than 25% of the net Loan Proceeds will be used to acquire
land. No portion of the Loan Proceeds will be used to acquire land (or
an interest therein) to be used for farming purposes.
(nn) No portion of the net Loan Proceeds 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.
(oo) The sum of the authorized face amount of the Bond allocable to
each test-period beneficiary (as defined in Section 144(a)(10)(D) of the
Code) plus the respective aggregate face amount of all tax-exempt
facility related bonds presently outstanding which are allocable to each
such test-period beneficiary does not exceed $40,000,000. During a three
(3) year period commencing on the later of the date of the issuance of
the Bond or the date the Equipment is placed in service, Borrower shall
not sell a portion of the Equipment or lease or allow the sublease of a
portion of the Equipment to any Principal User who, together with
Related Persons to such Principal User, would cause the $40,000,000
limitation of Section 144(a)(10) of the Code to be exceeded.
(pp) The Equipment does not consist of a portion of a single
building, enclosed shopping mall or strip of offices, stores or
warehouses using substantial common facilities with any other portion or
portions of such property (of which the Equipment is a part) and where
any such other portions are or will be financed with qualified bonds the
interest on which is excluded from gross income for federal income tax
purposes under Section 103(a) of the Code.
(qq) The payment of principal or interest with respect to the Bond
is not guaranteed In whole or in part by the United States or any agency
or instrumentality thereof. The Bond is not issued as part of an issue a
significant portion of the proceeds of which are to be used in making
loans the payment of principal or interest with respect to which are to
be guaranteed in whole or in part by the United States or any agency or
instrumentality thereof, or invested directly or indirectly in federally
insured deposits or accounts. The payment of principal or interest on
the Bond is not otherwise indirectly guaranteed in whole or in part by
the United States or any agency or instrumentality thereof within the
meaning of Section 149(b) of the Code.
(rr) Borrower will comply with the provisions of Section 148 of the
Code. Borrower covenants, for the benefit of itself, Issuer and Lender,
that it will not cause or permit any Loan Proceeds 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 Issuer
(including, without limitation, performing required calculations, the
keeping of proper records and the
19
timely payment to the Department of the Treasury of the United
States, in the name of Issuer, all of amounts required to be so paid
by Section 148 of the Code).
(ss) No event has occurred and no condition exists with respect to
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.
(tt) At least 95% of the net Loan Proceeds will be used to finance a
"manufacturing facility' within the meaning of Section 144(a)(12)(C) of
the Code, and no more than 25% of the net Loan Proceeds will be used to
finance facilities that are "directly related and ancillary" thereto
within the meaning of Section 144(a)(12)(C) of the Code. For this
purpose, the term "manufacturing facility" means any facility which is
used in the manufacturing or production of tangible personal property
(including the processing resulting in a change in the condition of such
property). Manufacturing facilities do not include an office unless such
office is located on the premises of the manufacturing facility and not
more than a de minimus (5%) portion of the functions to be performed at
such office is not directly related to the day-to-day operations at such
facility. Manufacturing facilities do not include storage facilities for
raw materials, work in process, finished goods or other materials unless
such storage facilities are located on the premises of the manufacturing
facility and are directly related to a manufacturing activity conducted
at such facility as opposed to a warehousing, distributing, wholesaling,
retailing or other non-manufacturing activity.
(uu) No Loan Proceeds will be allocated to the reimbursement of an
expenditure for costs of the Equipment unless such reimbursement
allocation is made not later than 18 months after the later of:
(i) the date the original expenditure is paid; or
(ii) the date the Equipment is placed in service or abandoned, but
in no event more than 3 years after the original expenditure
is paid.
(vv) No person that was a Substantial User of the Equipment at any
time during the five (5) year period before the date on which the Bond
was issued or any Related Person to that user (x) will receive (directly
or indirectly) 5% or more of the Loan Proceeds for such person's
interest in the Equipment, and (y) will be a Substantial User of the
Equipment at any time during the five (5) year period after the date on
which the Bond was issued.
(ww) Borrower will not permit the sum of (i) the face amount of the
Bond, plus (ii) Capital Expenditures made during the period of six (6)
years beginning three (3) years prior to the issuance of the Bond and
extending three (3) years thereafter, plus (iii) the outstanding
principal amount of any prior industrial development bond issues issued
to finance facilities of Borrower or any Related Person in the City of
Novi, Michigan, to exceed $10,000,000.
(xx) Notwithstanding any other provisions of this Agreement or any
other agreement or any rights of Borrower under this Agreement or any
other agreement, Borrower
20
shall not take or permit to be taken by its agents or assigns any
action which, or fail to take any reasonable action the omission of
which would (i) impair the exclusion of interest on the Bond from
the gross income of the recipient under the Code or (ii) affect the
validity of the Bond under the Act.
ARTICLE VI
TITLE TO EQUIPMENT; SECURITY INTEREST
Section 6.01. Title to the Equipment. Legal title to the Equipment and
any and all repairs, replacements, substitutions and modifications to such
Equipment shall be in Borrower. Borrower will at all times protect and defend,
at its own cost and expense, its title from and against all claims, liens and
legal processes of creditors of Borrower, and keep all Equipment free and
clear of all such claims, liens and processes.
Section 6.02. Security Interest in Equipment. This Agreement is
intended to constitute a security agreement within the meaning of the UCC. As
security for Borrower's payment to Lender, as assignee of Issuer, of Loan
Payments and all other amounts payable to Lender hereunder, under the
Indemnity Agreement and under the Prior Loan Agreement and as security for any
other obligations (whether direct or indirect) of Borrower to Lender, Borrower
hereby grants to Issuer, and Issuer hereby assigns to Lender, a security
interest constituting a first lien on the Equipment, all repairs,
replacements, substitutions and modifications thereto or thereof and all
proceeds of the foregoing. Issuer and Borrower agree to execute such
additional documents, including financing statements (including fixture
filings if necessary), assignments, affidavits, notices and similar
instruments, in form satisfactory to Lender, and to take such other actions
that Lender deems necessary or appropriate to establish and maintain the
security interest created by this Sections and Borrower hereby designates and
appoints Lender as its agent, and grants to Lender a power of attorney (which
is coupled with an interest), to execute on behalf of Borrower, such
additional documents and to take such other actions. If requested by Lender,
Borrower shall obtain a landlord and/or mortgagee's consent and waiver with
respect to the property where the Equipment is located. If requested by Lender,
Borrower shall conspicuously xxxx the Equipment with appropriate lettering,
labels or tags, and maintain such markings, so as clearly to disclose Lender's
security interest in the Equipment.
Section 6.03. Change in Name or Corporate Structure of Borrower;
Change in Location on of Borrower's Principal Place of Business. Borrower's
chief executive office is located at the address set forth above, and all of
Borrower's records relating to its business and the Equipment are kept at such
location. Borrower hereby agrees to provide written notice to Lender and
Issuer of any change or proposed change in its name, corporate structure,
place of business or chief executive office or change or proposed change in
the location of the Equipment; provided, however, that no change or proposed
change in the location of the Equipment shall be (i) made without the prior
written consent of Lender and Issuer, together with a written opinion of Bond
Counsel to the effect that such relocation will not result in a Determination
of Taxability, or (ii) to a location outside the State. Such notice shall be
provided 30 days in advance of the date that such change or proposed change is
planned to take
21
effect. Borrower does business, and has done business, only under its own name
and the trade names, if any, set forth on the execution page hereof.
Section 6.04. Liens and Encumbrances to Title. Borrower shall not,
directly or indirectly, create, incur, assume or suffer to exist any mortgage,
pledge, lien, charge, encumbrance or claim on or With respect to the Equipment
(together, "Liens") other than the respective rights of Lender and Issuer as
herein provided. Borrower shall promptly, at its own expense, take such action
as may be necessary duly to discharge or remove any such Lien. Borrower shall
reimburse Lender for any expenses incurred by Lender to discharge or remove
any Lien.
Section 6.05. Personal Property. The parties hereby intend that the
Equipment be, and during the period this Agreement is in force remain,
personal property and, when subjected to use by Borrower hereunder, not be or
become fixtures; provided, however, that if contrary to the parties' intent
the Equipment is or may be deemed to be a fixture, Borrower shall cause
filings to be made with the applicable government officials or filing offices
to create and preserve for Lender as assignee of Issuer a perfected first
priority security interest in the Equipment.
Section 6.06 Assignment of Insurance. As additional security for the
payment and performance of Borrowers obligations hereunder, Borrower hereby
assigns to Lender, as assignee of Issuer, any and all moneys (including,
without limitation, proceeds of insurance and refunds of unearned premiums)
due or to become due under, and all other rights of Borrower with respect to,
any and all policies of insurance now or at any time hereafter covering the
Equipment or any evidence thereof or any business records or valuable papers
pertaining thereto, and Borrower hereby directs the issuer of any such policy
to pay all such moneys directly to Lender. Borrower hereby assigns to Lender,
as assignee of Issuer, any and all moneys due or to become due with respect to
any condemnation proceeding affecting the Equipment. At any time, whether
before or after the occurrence of any Event of Default, Lender may (but need
not), in Lender's name or in Borrower's name, execute and deliver proof of
claim, receive all such moneys, endorse checks and other instruments
representing payment of such moneys, and adjust, litigate, compromise or
release any claim against the issuer of any such policy or party in any
condemnation proceeding.
Section 6.07. Occupancy. (a) Borrower hereby irrevocably grants to
Lender the right to occupy the property where the Equipment is located (the
"Premises") at any time after the occurrence and during the continuance of an
Event of Default.
(b) Lender may occupy the Premises only to hold, sell, store, liquidate,
realize upon or otherwise dispose of the Equipment and for other purposes that
Lender may in good xxxxx xxxx to be related or incidental purposes.
(c) The right of Lender to occupy the Premises shall cease and terminate
upon the earlier of (1) payment in full and discharge of all obligations of
Borrower and Issuer hereunder, and (2) final sale or disposition of all of the
Equipment and delivery of all such Equipment to purchasers.
22
(d) Lender shall not be obligated to pay or account for any rent or
other compensation for the occupancy of the Premises. Borrower will pay, or
reimburse Lender for, all taxes, fees, duties, levies, charges and expenses at
any time incurred by or imposed upon Lender by reason of the execution,
delivery, existence, recordation, performance or enforcement of this Section.
Section 6.08. Agreement as Financing Statement. To the extent permitted
by applicable law, a carbon, photographic or other reproduction of this
Agreement or of any financing statements signed by Borrower is sufficient as a
financing statement in any state to perfect the security interests granted in
this Agreement.
ARTICLE VII
AFFIRMATIVE COVENANTS OF BORROWER
So long as the Loan and the Bond shall remain unpaid, Borrower will
comply with the following requirements, unless Lender shall otherwise consent
in writing:
Section 7.01. Reporting Requirements. Borrower will deliver, or cause
to be delivered, to Lender each of the following, which shall be in form and
detail acceptable to Lender:
(a) as soon as available, and in any event within 120 days after
the end of each fiscal year of Borrower, audited financial statements of
Borrower with the unqualified opinion of independent certified public
accountants selected by Borrower and acceptable to Lender, which annual
financial statements shall include the balance sheet of Borrower as at
the end of such fiscal year and the related statements of income,
retained earnings and cash flows of Borrower for the fiscal year then
ended, ally in reasonable detail and prepared in accordance with
generally accepted accounting principles applied on a basis consistent
with the accounting practices applied in the financial statements
referred to in Article V hereof, together with (i) a report signed by
such accountants stating that in making the investigations necessary for
said opinion they obtained no knowledge, except as specifically stated,
of any Default or Event of Default hereunder and all relevant facts in
reasonable detail to evidence, and the computations as to, whether or
not Borrower is in compliance with the requirements set forth in Section
7.10 hereof; and (ii) a certificate of the chief financial officer of
Borrower stating that such financial statements have been prepared in
accordance with generally accepted accounting principles applied on a
basis consistent with the accounting practices reflected in the annual
financial statements referred to in Article V hereof and whether or not
such of officer has knowledge of the occurrence of any Default or Event
of Default hereunder and, if so, stating in reasonable detail the facts
with respect thereto;
(b) as soon as available and in any event within 90 days after the
end of each fiscal quarter of Borrower, an unaudited internal balance
sheet and statements of income and retained earnings of Borrower as at
the end of and for such month and for the year to date period then
ended, in reasonable detail and stating in comparative form the figures
for the corresponding date and periods in the previous year, all
prepared in accordance with generally
23
accepted accounting principles applied on a basis consistent with
the accounting practices reflected in the financial statements
referred to in Article V hereof and certified by the chief financial
officer of Borrower, subject to year-end audit adjustments; and
accompanied by a certificate of that officer stating (i) that such
financial statements have been prepared in accordance with generally
accepted accounting principles applied on a basis consistent with
the accounting practices reflected in the financial statements
referred to in Article V hereof, (ii) whether or not such officer
has knowledge of the occurrence of any Default or Event of Default
hereunder not theretofore reported and remedied and, if so, stating
in reasonable detail the facts with respect thereto, and (iii) all
relevant facts in reasonable detail to evidence, and the
computations as to, whether or not Borrower is in compliance with
the requirements set forth in Section 7.10 hereof;
(c) immediately after the commencement thereof, notice in writing
of all litigation and of all proceedings before any governmental or
regulatory agency affecting Borrower of the type described in Article V
hereof or which seek a monetary recovery against Borrower in excess of
$250,000.00;
(d) as promptly as practicable (but in any event not later than
five Business Days) after an officer of Borrower obtains knowledge of
the occurrence of any event that constitutes a Default or an Event of
Default hereunder, notice of such occurrence, together with a detailed
statement by a responsible officer of Borrower of the steps being taken
by Borrower to cure the effect of such Default or Event of Default;
(e) promptly upon knowledge thereof, notice of any loss or
destruction of or damage to any Equipment or of any material adverse
change in any Equipment;
(f) promptly upon their distribution, copies of all financial
statements, reports and proxy statements that Borrower shall have sent
to its stockholders;
(g) promptly after the amending thereof, copies of any and all
amendments to its certificate of incorporation, articles of
incorporation or bylaws;
(h) promptly upon knowledge thereof, notice of the violation by
Borrower of any law, rule or regulation;
(i) promptly upon knowledge thereof, notice of any material adverse
change in the financial or operating condition of Borrower.
Section 7.02. Books and Records; Inspection and Examination. Borrower
will keep accurate books of record and account for itself pertaining to the
Equipment and pertaining to Borrower's business and financial condition and
such other matters as Lender may from time to time request in which true and
complete entries will be made in accordance with generally accepted accounting
principles consistently applied and, upon request of Lender or Issuer, will
permit any officer, employee, attorney or accountant for Lender or Issuer to
audit, review, make extracts from, or copy any and all corporate and financial
books, records and properties of Borrower at all times during
24
ordinary business hours, and to discuss the affairs of Borrower with any of
its directors, officers, employees or agents. Borrower will permit Lender,
Issuer or any of their employees, accountants, attorneys or agents, to examine
and copy any or all of its records and to examine and inspect the Equipment at
any time during Borrower's business hours.
Section 7.03. Compliance With Laws; Environmental Indemnity. Borrower
will (a) comply with the requirements of applicable laws and regulations, the
noncompliance with which would materially and adversely affect its business or
its financial condition, (b) comply with all applicable Environmental Laws and
obtain any permits, licenses or similar approvals required by any such
Environmental Laws and (c) use and keep the Equipment, and will require that
others use and keep the Equipment only for lawful purposes, without violation
of any federal, state or local law, statute or ordinance. Borrower shall secure
all permits and licenses, if any, necessary for the installation and operation
of the Equipment. Borrower shall comply in all respects (including, without
limitation, with respect to the use, maintenance and operation of each item of
the Equipment) with all laws of the jurisdictions in which its operations
involving any component of Equipment may extend and of any legislative,
executive, administrative or judicial body exercising any power or
jurisdiction over the items at the Equipment or its interest or rights under
this Agreement. Borrower will indemnify, defend and hold Lender or Issuer
harmless from and against any claims, loss or damage to which Lender or Issuer
may be subjected as a result of any past, present or future existence, use,
handling, storage, transportation or disposal of any hazardous waste or
substance or toxic substance by Borrower or on property owned, leased or
controlled by Borrower. This indemnification shall survive the termination of
this Agreement and payment of the indebtedness hereunder and under the Bond.
Section 7.04. Payment of Taxes and Other Claims. Borrower will pay or
discharge, when due, (a) all taxes, assessments and governmental charges
levied or imposed upon it or upon its income or profits, upon any properties
belonging to it (including, without limitation, the Equipment) or upon or
against the creation, perfection or continuance of the security interest
created pursuant to this Agreement, prior to the date on which penalties
attach thereto, (b) all federal, state and local taxes required to be withheld
by it, and (c) all lawful claims for labor, materials and supplies which, if
unpaid, might by law become a lien or charge upon any properties of Borrower;
provided, that Borrower shall not be required to pay any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings. Borrower will pay, as the same
respectively come due, all taxes and governmental charges of any kind
whosoever that may at any time be lawfully assessed or levied against or with
respect to the Equipment, as well as all gas, water, steam, electricity, heat,
power, telephone, utility and other charges incurred in the operation,
maintenance, use, occupancy and upkeep of the Equipment.
Section 7.05. Maintenance of Equipment. (a) Borrower shall, at its own
expense, maintain, preserve and keep the Equipment in good repair, working
order and condition, and shall from time to time make all repairs and
replacements necessary to keep the Equipment in such condition, and in
compliance with state and federal laws, ordinary wear and tear excepted.
Borrower shall maintain the Equipment in a condition suitable for
certification by the manufacturer thereof (if certification is available) and
in conformance with all manufacturers recommended maintenance requirements. In
the event that any parts or accessories forming part of any item or items of
Equipment become worn out,
25
lost, destroyed, damaged beyond repair or otherwise rendered unfit for use,
Borrower, at its own expense and expeditiously, will replace or cause the
replacement of such parts or accessories by replacement parts or accessories
free and clear of all liens and encumbrances and with a value and utility at
least equal to that of the parts or accessories being replaced (assuring that
such replaced parts and accessories were otherwise in good working order and
repair). All such replacement parts and accessories shall be deemed to be
incorporated immediately into and to constitute an integral portion of the
Equipment and, as such, shall be subject to the terms of this Agreement.
Neither Lender nor Issuer shall have any responsibility in any of these
matters, or for the making of improvements or additions to the Equipment.
(b) Borrower will defend the Equipment against all claims or demands of
all persons (other than Lender) claiming the Equipment or any interest
therein.
(c) Borrower will keep the Equipment free and clear of all security
interests, liens and encumbrances except the security interest created
pursuant to this Agreement.
Section 7.06. Insurance; Indemnification. (a) Borrower shall, at its own
expense, procure and maintain continuously in effect: (i) public liability
insurance for personal injuries, death or damage to or loss of property
arising out of or in any way relating to the Equipment sufficient to protect
Lender and Issuer from liability in all events, with a coverage limit of not
less than $1,000,000 per occurrence unless a different coverage minimum with
respect to particular Equipment is required by Lender, and (ii) insurance
against such hazards as Lender may require, including, but not limited to,
all-risk casualty and property insurance, in an amount equal to the greater of
the full replacement cost of the Equipment with new equipment having
substantially similar specifications or the applicable Prepayment Amount.
(b) If required by State law, Borrower shall carry workers' compensation
insurance covering all employees on, in, near or about the Equipment, and upon
request, shall furnish to Lender certificates evidencing such coverage.
(c) All insurance policies required by this Article shall be taken out
and maintained with insurance companies acceptable to Lender; and shall
contain a provision that the insurer shall not cancel or revise coverage
thereunder without giving written notice to the insured parties at least thirty
(30) days before the cancellation or revision becomes effective. No insurance
shall be subject to any co-insurance clause. Each insurance policy required by
this Article shall name Lender and Issuer, as applicable, as an additional
insured party and loss payee without regard to any breach of warranty or other
act or omission of Borrower and shall include a lender's loss payable
endorsement for the benefit of Lender. Prior to the delivery of Equipment,
Borrower shall deposit with Lender evidence satisfactory to Lender of such
insurance and, prior to the expiration thereof, shall provide Lender evidence
of all renewals or replacements thereof.
(d) As among Lender, Borrower and Issuer, Borrower assumes all risks and
liabilities from any cause whatsoever, whether or not covered by insurance,
for loss or damage to any Equipment and for injury to or death of any person
or damage to any property, whether such injury or death be with respect to
agents or employees of Borrower or of third parties, and whether such property
damage be
26
to Borrower's property or the property of others. Whether or not covered by
insurance, Borrower hereby assumes responsibility for and agrees to reimburse
Lender for and will indemnify, defend and hold Lender harmless from and
against all liabilities, obligations, losses, damages, penalties, claims,
actions, costs and expenses (including reasonable attorneys' fees) of
whatsoever kind and nature, imposed on, incurred by or asserted against Lender
that in any way relate to or arise out of this Agreement, the Bond, the
transactions contemplated hereby and the Equipment, including but not limited
to, (i) the selection, manufacture, purchase, acceptance or rejection of
Equipment or the ownership of the Equipment, (ii) the delivery, lease,
possession, maintenance, use, condition, return or operation of the Equipment,
(iii) the condition of the Equipment sold or otherwise disposed of after
possession by Borrower, (iv) any patent or copyright infringement, (v) the
conduct of Borrower, its officers, employees and agents, (vi) a breach of
Borrower of any of its covenants or obligations hereunder and (vii) any claim,
loss, cost or expense involving alleged damage to the environment relating to
the Equipment, including, but not limited to investigation, removal, cleanup
and remedial costs. All amounts payable by Borrower pursuant to the
immediately preceding sentence shall be paid immediately upon demand of
Lender. This provision shall survive the termination of this Agreement.
(e) Issuer and its members, officers, agents and employees (the
"Indemnified Persons") shall not be liable to Borrower for any reason.
Borrower shall indemnify and hold Issuer and the indemnified Persons harmless
from any loss, expenses (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
Equipment, (ii) any act, failure to act, or misrepresentation by any person,
firm, corporation or governmental agency, including Issuer, in connection with
the Loan, (iii) any act, failure to act, or misrepresentation by Issuer in
connection with this Agreement or any other document involving Issuer in this
matter, or (iv) the selection and appointment of firms providing services to
the transactions contemplated by this Agreement. If any suit, action or
proceeding is brought against Issuer or any Indemnified Person, that action or
proceeding shall be defended by counsel to Issuer or Borrower as Issuer shall
determine. If the defense is by counsel to Issuer, which is the Attorney
General of Michigan or may, in some instances by private, retained counsel,
Borrower shall indemnify Issuer and Indemnified Persons for the reasonable
cost of that defense, including reasonable counsel fees. If Issuer determines
that Borrower shall defend Issuer or Indemnified Persons, Borrower shall
immediately assume the defense at its own cost. Borrower shall not be liable
for any settlement of any proceeding made without its consent (which consent
shall not be unreasonably withheld).
Borrower shall also indemnify Issuer for all reasonable costs and
expenses, including reasonable counsel fees incurred in: (i) enforcing any
obligation of Borrower under this Agreement or any related agreement, (ii)
taking any action requested by Borrower, (iii) taking any action required by
this Agreement or any related agreement, or (iv) taking any action considered
necessary by Issuer and which is authorized by this Agreement or any related
agreement.
Borrower shall not be obligated to indemnify Issuer or any Indemnified
Person if a court with competent jurisdiction finds that the liability in
question was caused by the willful misconduct or sole gross negligence of
Issuer or the involved Indemnified Person, unless the court determines that,
despite the adjudication of liability but in view of all circumstances of the
case, Issuer or the Indemnified
27
Person(s) is (are) fairly and reasonably entitled to indemnity for the
expenses which the court considers proper.
The obligations of Borrower under this Section 7.06(e) shall survive any
assignment or termination of this Agreement.
Section 7.07. Preservation of Corporate Existence. Borrower will
preserve and maintain its corporate existence and all of its rights,
privileges and franchises necessary or desirable in the normal conduct of its
business; and shall conduct its business in an orderly, efficient and regular
manner.
Section 7.08. Performance by Lender. If Borrower at any time fails to
perform or observe any of the covenants or agreements contained in this
Agreement, and if such failure shall continue for a period of ten calendar
days after Lender gives Borrower written notice thereof (or in the case of the
agreements contained in Sections 7.05 and 7.06 hereof, immediately upon the
occurrence of such failure, without notice or lapse of time), Lender may, but
need not, perform or observe such covenant on behalf and in the name, place
and stead of Borrower (or, at Lender's option, in Lender's name) and may, but
need not, take any and all other actions which Lender may reasonably deem
necessary to cure or correct such failure (including, without limitation, the
payment of taxes, the satisfaction of security interests, liens or
encumbrances, the performance of obligations owed to account debtors or other
obligors, the procurement and maintenance of insurance, the execution of
assignments, security agreements and financing statements, and the endorsement
of instruments), and Borrower shall thereupon pay to Lender on demand the
amount of all moneys expended and all costs and expenses (including reasonable
attorney's fees and legal expenses) incurred by Lender in connection with or
as a result of the performance or observance of such agreements or the taking
of such action by Lender, together with interest thereon from the date
expended or incurred at the rate publicly announced by Citibank, N.A. at its
principal office in New York, New York as its prime rate (any change in such
prime rate of interest to be effective on the date on which such change is
announced by Citibank, N.A.) plus 5%, but not in excess of the maximum rate
permitted by law. To facilitate the performance or observance by Lender of
such covenants of Borrower, Borrower hereby irrevocably appoints Lender, or
the delegate of Lender, acting alone, as the attorney in fact of Borrower with
the right (but not the duty) from time to time to create, prepare, complete,
execute, deliver, endorse or file in the name and on behalf of Borrower any
and all instruments, documents, assignments, security agreements, financing
statements, applications for insurance and other agreements and writings
required to be obtained, executed, delivered or endorsed by Borrower under
this Agreement.
Section 7.09. Covenant as to Nonimpairment of Tax-exempt Status.
Borrower covenants that, notwithstanding any provision of this Agreement or
the rights of Borrower hereunder, it will not take, or permit to be taken on
its behalf, any action that would impair the exclusion of Interest from gross
income for federal income tax purposes and that it will take such reasonable
action for itself and on behalf of 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.
Borrower will not cause or permit any Loan Proceeds 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
28
of Issuer. Borrower shall calculate and timely pay to the United States of
America, for the account of Issuer, all amounts required to be so paid in
accordance with Section 148 of the Code and shall maintain on behalf of
Issuer, all records required to be maintained pursuant to Section 148(f) of
the Code. At least once every five years, commencing with the end of the fifth
Bond Year (as defined in the Income Tax Regulations promulgated under Section
148(f) of the Code, and not later than 60 days after payment in full of the
Loan and the Bond, Borrower will furnish to each of Issuer and Lender a
certificate showing compliance with the applicable provisions of said Section
148(f), which certificate shall be accompanied by an opinion of counsel or
certificate of accountants supporting the matters set forth in such
certificate.
In addition to the foregoing covenants, Borrower further covenants that
(i) it will requisition, apply and spend the moneys in the Escrow Fund in a
manner so that as of any date at least 95% of the total amount theretofore
requisitioned from the Escrow Fund will be applied to finance costs (paid on
or after January 28, 1996) 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 Escrow Fund to be invested in such a manner as to cause
the Bond to be an "arbitrage bond" under Section 148(a) of the Code, (iii) it
will promptly notify Lender if, at any time, 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 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 Escrow Fund more than $80,000
to pay Issuance Costs; and (v) no portion of the net Loan Proceeds 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.
Borrower acknowledges that a failure to abide by the foregoing covenants
may result in a Determination of Taxability.
Section 7.10. Financial Covenants. (a) Borrower and Guarantors will
maintain a ratio of Total Funded Debt (as defined below) to EBITDA (as defined
below) at no more than 4.75 to 1.0 (determined for the four most recently
ended fiscal quarters).
(b) Borrower and Guarantors will maintain Tangible Capital Funds (as
defined below) at the end of each fiscal quarter equal to at least
$10,000,000.
(c) Borrower and Guarantors will maintain a ratio (calculated on a
consolidated basis) of (i) total liabilities minus deferred tax liabilities at
the end of each fiscal quarter, as shown on the consolidated balance sheet of
Borrower and Guarantors and as determined and prepared in accordance with
generally accepted accounting principles consistently applied to (ii) Tangible
Capital Funds, at no more than 3.0 to 1.0.
29
(d) Borrower and Guarantors will maintain a ratio (calculated on a
consolidated basis) of current assets to current liabilities, as determined in
accordance with generally accepted accounting principles, of at least 1.25 to
1.0.
As used in this Section 7.10, the following terms have the following
meanings:
"Total Funded Debt" means total liabilities of Borrower and Guarantors
minus (i) cash on hand, (ii) accounts payable, (iii) deferred tax liabilities,
and (iv) other deferred liabilities, as shown on the consolidated balance
sheet of Borrower and Guarantors and as determined and prepared in accordance
with generally accepted accounting principles consistently applied.
"EBITDA" means consolidated earnings of Borrower and Guarantors net of
interest payments and accruals, federal income taxes, depreciation and
amortization, as shown on the consolidated balance sheet of Borrower and
Guarantors and as determined and prepared in accordance with generally
accepted accounting principles consistently applied.
"Tangible Capital Funds" means Tangible Net Worth plus deferred tax
liabilities.
"Tangible Net Worth" means (i) the amount of all assets excluding
deferred tax liabilities which, under generally accepted accounting principles
consistently applied, would appear on the consolidated balance sheet of
Borrower and Guarantors, but excluding intangible items such as deferred tax
assets, goodwill, treasury shares, reserves, patents, trademarks, research and
development expenses and the like, and excluding any write-up in the book
value of such assets resulting from a reevaluation thereof, less (ii) the
amount of all liabilities which, under generally accepted accounting
principles consistently applied, would appear on the consolidated balance
sheet of Borrower and Guarantors (including all lease obligations payable
within the succeeding 12-month period).
ARTICLE VIII
NEGATIVE COVENANTS OF BORROWER
So long as the Loan and the Bond shall remain unpaid, Borrower agrees
that:
Section 8.01. Lien. Borrower will not create, incur or suffer to exist
any mortgage, deed of trust, pledge, lien, security interest, assignment or
transfer upon or of any of the Equipment except for the security interest
created pursuant to this Agreement.
Section 8.02. Sale of Assets. Borrower will not sell, lease, assign,
transfer or otherwise dispose of all or a substantial part of its assets or of
any of the Equipment or any interest therein (whether in one transaction or in
a series of transactions) without the prior written consent of Lender (which
consent Lender may withhold in its sole discretion) and, with respect to the
Equipment, without providing an opinion of counsel that such action will not
result in a Default or Event of Default and an opinion of Bond Counsel that
such action will not result in a Determination of Taxability.
30
Section 8.03. Consolidation and Merger. Borrower will not consolidate
with or merge into any person or permit any other person to merge into it, or
acquire (in a transaction analogous in purpose or effect to a consolidation or
merger) all or substantially all the assets of any other person unless: (i)
Lender provides its prior written consent thereto (which consent Lender may
withhold in its sole discretion), (ii) written notice of such merger or
consolidation is provided to Issuer and (iii) the surviving entity is
qualified to do business in the State and agrees in writing to assume
Borrower's obligations hereunder, under the Escrow Agreement and under the Tax
Compliance Certificate.
Section 8.04. Accounting. Borrower will not adopt, permit or consent to
any material change in accounting principles other than as required by
generally accepted accounting principles without the prior written consent of
Lender (which consent Lender may withhold in its sole discretion). Borrower
will not adopt, permit or consent to any change in its fiscal year without the
prior written consent of Lender (which consent Lender may withhold in its sole
discretion).
Section 8.05. Transfers. Borrower will not in any manner transfer any
property without prior or present receipt of full and adequate consideration.
Section 8.06. Other Defaults. Borrower will not permit any breach,
default or event of default to occur under any note, loan agreement,
indenture, lease, mortgage, contract for deed, security agreement or other
contractual obligation binding upon Borrower or any judgment, decree, order or
determination applicable to Borrower.
Section 8.07. Place of Business. Borrower will not permit any of the
Equipment or any records pertaining to the Equipment to be located outside the
State or in any location where, in the event of such location, a financing
statement covering such Equipment would be required to be, but has not in fact
been, filed in order to perfect the security interest created pursuant to this
Agreement.
Section 8.08. Modifications and Substitutions. (a) Borrower will not
make any material alterations, modifications or additions to the Equipment
which cannot be removed without materially damaging the functional
capabilities or economic value of the Equipment. Upon transfer of the
Equipment to Lender and at the request of Lender, Borrower, at its sole cost
and expense, will remove all alterations, modifications and additions and
repair the Equipment as necessary to return the Equipment to the condition in
which it was furnished, ordinary wear and tear and permitted modifications
excepted.
(b) Notwithstanding the provisions of subparagraph (a) of this section,
Borrower may, with the prior written consent of Lender, substitute for parts,
elements, portions or all of the Equipment, other parts, elements, portions,
equipment or facilities of similar function and value; provided, however, that
any substitutions made pursuant to Borrower's obligations to make repairs
referenced under any provision of this Agreement shall not require such prior
written consent. Borrower shall provide such documents or assurances as Lender
may reasonably request to maintain or confirm the security interest assigned
to Lender in the Equipment as so modified or substituted.
31
Section 8.09. Use of the Equipment. Borrower will not install, use,
operate or maintain the Equipment improperly, carelessly, in violation of any
applicable law or in a manner contrary to that contemplated by this Agreement.
ARTICLE IX
DAMAGE AND DESTRUCTION;
USE OF NET PROCEEDS
Borrower shall provide a complete written report to Lender immediately
upon any loss, theft, damage or destruction of any Equipment and of any
accident involving any Equipment. If all or any part of the Equipment is lost,
stolen, destroyed or damaged beyond repair ("Damaged Equipment"), Borrower
shall as soon as practicable after such event either: (a) replace the same at
Borrower's sole cost and expense with equipment having substantially similar
specifications and of equal or greater value to the Damaged Equipment
immediately prior to the time of the loss occurrence, such replacement
equipment to be subject to Lender's approval, whereupon such replacement
equipment shall be substituted in this Agreement and the other related
documents by appropriate endorsement or amendment; or (b) pay the applicable
Prepayment Amount of the Damaged Equipment. Borrower shall notify Lender of
which course of action it will take within fifteen (15) calendar days after
the loss occurrence. If, within forty-five (45) calendar days of the loss
occurrence, (a) Borrower fails to notify Lender; (b) Borrower and Lender fail
to execute an amendment to this Agreement to delete the Damaged Equipment and
add the replacement equipment or (c) Borrower fails to pay the applicable
Prepayment Amount, then Lender may, at its sole discretion, declare the
applicable Prepayment Amount to be immediately due and payable, and Borrower
is required to pay the same. The Net Proceeds of insurance with respect to the
Damaged Equipment shall be made available by Lender to be applied to discharge
Borrower's obligation under this Article. The payment of the Prepayment Amount
and the termination of Lender's interest in the Damaged Equipment is subject
to the terms of Section 2.07 hereof. For purposes of this Article, the term
"Net Proceeds" shall mean the amount remaining from the gross proceeds of any
insurance claim or condemnation award after deducting all expenses (including
reasonable attorneys' fees) incurred in the collection of such claim or award.
ARTICLE X
ASSIGNMENT, SUBLEASING AND SELLING
Section 10.01. Assignment by Lender. This Agreement, the Bond and the
obligations of Borrower to make payments hereunder and under the Bond may be
assigned in whole but not in part to an assignee by Lender at any time,
without the necessity of obtaining the consent of Issuer or Borrower;
provided, however, that no such assignment or any reassignment shall be
effective unless and until Issuer and Borrower shall have received (i) notice
of the assignment disclosing the name and address of the assignee, which
notice Issuer shall maintain as evidence of the registration and ownership of
the Bond, (ii) a properly completed assignment of the Bond and (iii) an
investment letter
32
substantially in the form delivered at closing. Upon receipt of notice of
assignment, Borrower shall agree to make all payments to the assignee designed
in the notice of assignment, notwithstanding any claim, defense, setoff or
counterclaim whatsoever (whether arising from a breach of this Agreement or
otherwise) that Issuer and Borrower may from time to time have against Lender
or the assignee. Issuer and Borrower agree to execute all documents, including
notices of assignment and chattel mortgages or financing statements, which may
be reasonably requested by Lender or its assignee to protect their interest in
the Equipment and in this Agreement.
Section 10.02. No Sale or Assignment by Borrower. This Agreement and
the interest of Borrower in the Equipment may not be sold, assumed, assigned
or encumbered by Borrower without the prior written consent of Lender (which
consent Lender may withhold in its sole discretion) and without providing to
Issuer: (i) 30 days' notice of such sale, assumption, assignment or
encumbrance and (ii) evidence that Borrower's obligations hereunder, under the
Escrow Agreement and under the Tax Compliance Certificate have been properly
assumed.
ARTICLE XI
EVENTS OF DEFAULT AND REMEDIES
Section 11.01. Events of Default. The following constitute "Events of
Default" under this Agreement:
(a) failure by Borrower to pay to Lender, as assignee of Issuer,
when due any Loan Payment or to pay any other payment required to be paid
hereunder or under the Indemnity Agreement and the continuation of such
failure for a period of ten (10) days;
(b) failure by Borrower to maintain insurance on the Equipment in
accordance with Section 7.06 hereof;
(c) failure by Borrower or Issuer to observe and perform any other
covenant, condition or agreement contained herein, in the Escrow
Agreement, in the Tax Compliance Certificate, in the Indemnity Agreement
or in any other document or agreement executed in connection herewith on
its part to be observed or performed for a period of 30 days after
written notice is given to Borrower or Issuer, as the case may be,
specifying such failure and requesting that it be remedied; provided,
however, that, if the failure stated in such notice cannot be corrected
within such 30-day period, Lender will not unreasonably withhold its
consent to an extension of such time if corrective action is instituted
by Borrower or Issuer, as the case may be, within the applicable period
and diligently pursued until the default is corrected;
(d) initiation by Issuer of a proceeding under any federal or state
bankruptcy or insolvency law seeking relief under such laws concerning
the indebtedness of Issuer;
(e) Borrower or any Guarantor shall be or become insolvent, or
admit in writing its inability to pay its debts as they mature, or make
an assignment for the benefit of creditors; or
33
Borrower or any Guarantor shall apply for or consent to the appointment
of any receiver, trustee or similar officer for it or for all or any
substantial part of its property; or such receiver, trustee or similar
officer shall be appointed without the application or consent of Borrower
or any Guarantor, as the case may be; or Borrower or any Guarantor shall
institute (by petition, application, answer, consent or otherwise) any
bankruptcy, insolvency, reorganization, arrangement, readjustment of
debt, dissolution, liquidation or similar proceeding relating to it under
the laws of any jurisdiction; or any such proceeding shall be instituted
(by petition, application or otherwise) against Borrower or any
Guarantor; or any judgment, writ, warrant of attachment or execution or
similar process shall be issued or levied against a substantial part of
the property of Borrower or any Guarantor;
(f) determination by Lender that any representation or warranty
made by Borrower, Issuer or any Guarantor herein, in the Tax Compliance
Certificate or in any other document executed in connection herewith was
untrue in any material respect when made;
(g) an Event of Taxability shall occur;
(h) the occurrence of a default or an event of default under any
instrument, agreement or other document evidencing or relating to any
indebtedness or other monetary obligation of Borrower in an amount
greater than $250,000.00;
(i) any Guarantor shall repudiate, purport to revoke or fail to
perform such Guarantor's obligations under a Guaranty Agreement; or
(j) the percentage share of ownership of the stock of Borrower held
by Borrower's officers and directors and by Manubusiness Opportunities,
Inc. on the date on which the Bond is issued is reduced during the period
that the Loan and the Bond are outstanding without the prior written
consent of Lender (Borrower hereby acknowledges that Lender has made its
decision to enter into the transactions contemplated hereby based upon
the management expertise of the current stockholders and their ownership
of the stock of Borrower); or
(k) the occurrence of a default or an event of default under the
Prior Loan Agreement or any other obligation (whether direct or indirect)
of Borrower to Lender or any of its affiliates.
Section 11.02. Remedies on Default. Whenever any Event of Default shall
have occurred and be continuing, Lender, as assignee of Issuer, shall have the
right, at its sole option without any further demand or notice, to take any one
or any combination of the following remedial steps insofar as the same are
available to secured parties under Article 9 of the UCC in effect in the State
from time to time and which are otherwise accorded to Lender, as assignee of
Issuer, by applicable law:
(a) by notice to Issuer and Borrower, declare the entire unpaid
principal amount of the Loan and the Bond then outstanding, all interest
accrued and unpaid thereon and all amounts payable under this Agreement
to be forthwith due and payable, whereupon the Loan,
34
the Bond, all such accrued interest and all such amounts shall become and
be forthwith due and payable, without presentment, notice of dishonor,
protest or further notice of any kind, all of which are hereby expressly
waived by Borrower;
(b) take possession of the Equipment wherever situated, without any
court order or other process of law and without liability for entering
the premises, and lease, sublease or make other disposition of the
Equipment for use over a term in a commercially reasonable manner, all
for the account of Lender, provided that Borrower shall remain directly
liable for the deficiency, if any, between the rent or other amounts paid
by a lessee or sublessee of the Equipment pursuant to such lease or
sublease during the same period of time, after deducting all costs and
expenses, including reasonable attorneys' fees and expenses, incurred
with respect to the recovery, repair and storage of the Equipment during
such period of time;
(c) take possession of the Equipment wherever situated, without any
court order or other process of law and without liability for entering
the premises, and sell the Equipment in a commercially reasonable manner.
All proceeds from such sale shall be applied in the following manner:
FIRST, to pay all proper and reasonable costs and expenses
associated with the recovery, repair, storage and sale of the
Equipment, including reasonable attorneys' fees and expenses;
SECOND, to pay (i) Lender the amount of all unpaid Loan Payments
or other obligations owed to Lender under the Prior Loan Agreement
which are then due and owing, together with interest and late charges
thereon and (ii) Lender the then applicable Prepayment Amount (taking
into account the payment of past-due Loan Payments as aforesaid),
plus a pro rata allocation of interest, at the rate utilized to
calculate the Loan Payments, from the next preceding due date of a
Loan Payment until the date of payment by the buyer;
THIRD, to pay Issuer and/or Lender any other amounts due
hereunder, including indemnity payments, taxes, charges,
reimbursement of any advances and other amounts payable to Lender or
Issuer hereunder;
FOURTH, to pay the remainder of the sale proceeds, purchase
moneys or other amounts paid by a buyer of the Equipment to Borrower;
(c) proceed by appropriate court action to enforce specific
performance by Issuer or Borrower of the applicable covenants of this
Agreement or to recover for the breach thereof, including the payment of
all amounts due from Borrower. Borrower shall pay or repay to Lender or
Issuer all costs of such action or court action, including, without
limitation, reasonable attorneys' fees; and
(d) take whatever action at law or in equity may appear necessary or
desirable to enforce its rights with respect to the Equipment. Borrower
shall pay or repay to Lender or
35
Issuer all costs of such action or court action, including, without
limitation, reasonable attorneys' fees.
Notwithstanding any other remedy exercised hereunder, Borrower shall
remain obligated to pay to Lender any unpaid portion of the Prepayment Amount.
Section 11.03. Return of Equipment. Upon an Event of Default, Borrower
shall within ten (10) calendar days after notice from Lender, at its own cost
and expense: (a) perform any testing and repairs required to place the
Equipment in the condition required by Article VII; (b) if deinstallation,
disassembly or crating is required, cause the Equipment to be deinstalled,
disassembled and crated by an authorized manufacturer's representative or such
other service person as is satisfactory to Lender; and (c) deliver the
Equipment to a location specified by Lender, freight and insurance prepaid by
Borrower. If Borrower refuses to deliver the Equipment in the manner designed,
Lender may enter upon Borrower's premises where the Equipment is kept and take
possession of the Equipment and charge to Borrower the costs of such taking.
Borrower hereby expressly waives any damages occasioned by such taking.
Section 11.04. No Remedy Exclusive. No remedy herein conferred upon or
reserved to Lender or Issuer is intended to be exclusive and every such remedy
shall be cumulative and shall be in addition to every other remedy given under
this Agreement or now or hereafter existing at law or in equity. No delay or
omission to exercise any right or power accruing upon any Event of Default
shall impair any such right or power or shall be construed to be a waiver
thereof, but any such right or power may be exercised from time to time and as
often as may be deemed expedient. In order to entitle Lender or Issuer to
exercise any remedy reserved to it in this Article, it shall not be necessary
to give any notice other than such notice as may be required by this Article.
All remedies herein conferred upon or reserved to Lender or Issuer shall
survive the termination of this Agreement.
Section 11.05. Late Charge. Any Loan Payment not paid by Borrower on the
due date thereof shall, to the extent permissible by law, bear a late charge
equal to the lesser of five cents ($.05) per dollar of the delinquent amount
or the lawful maximum, and Borrower shall be obligated to pay the same
immediately upon receipt of Lender's written invoice therefor.
36
ARTICLE XII
MISCELLANEOUS
Section 12.01. Costs and Expenses of Lender and Issuer. (a) Borrower
shall pay to Lender, in addition to the Loan Payments payable by Borrower
hereunder, such amounts in each year as shall be required by Lender in payment
of any reasonable costs and expenses incurred by Lender in connection with the
execution, performance or enforcement of this Agreement, including but not
limited to payment of all reasonable fees, costs and expenses and all
administrative costs of Lender in connection with the Equipment, expenses
(including, without limitation, attorneys' fees and disbursements), fees of
auditors or attorneys, insurance premiums not otherwise paid hereunder and all
other direct and necessary administrative costs of Lender or charges required
to be paid by it in order to comply with the terms of, or to enforce its
rights under, this Agreement. Such costs and expenses shall be billed to
Borrower by Lender from time to time, together with a statement certifying
that the amount so billed has been paid by Lender for one or more of the items
above described, or that such amount is then payable by Lender for such items.
Amounts so billed shall be due and payable by Borrower within 30 days after
receipt of the xxxx by Borrower. Issuer shall have no liability for any fees
or expenses of Lender.
(b) Borrower hereby further expressly agrees to pay upon written
request, the fees and expenses of Issuer (including the fees and expenses of
its bond counsel) related to the transactions contemplated by this Agreement
which are not otherwise required to be paid by Borrower under the terms of
this Agreement. In particular, but without limiting the generality of the
foregoing, Borrower shall pay a one-time issuance fee of $10,000.00 to Issuer
prior to or contemporaneously with the making of the Loan. In addition,
Borrower shall pay, within ten (10) days of demand therefor: (i) all
out-of-pocket costs and expenses of Issuer incidental to the making of the
Loan and (ii) the reasonable out-of-pocket expenses of Issuer (including,
without limitation, reasonable attorneys' fees) related to the transactions
contemplated by this Agreement or incurred by Issuer in enforcing the
provisions of this Agreement.
Section 12.02. Disclaimer of Warranties. LENDER AND ISSUER MAKE NO
WARRANTY OR REPRESENTATION, EITHER EXPRESS OR IMPLIED, AS TO THE VALUE,
DESIGN, CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR
FITNESS FOR USE OF THE EQUIPMENT, OR ANY OTHER WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED, WITH RESPECT THERETO. In no event shall Lender or Issuer
be liable for any loss or damage in connection with or arising out of this
Agreement, the Equipment or the existence, furnishing, functioning or
Borrowers use of any item or products or services provided for in this
Agreement.
Section 12.03. Notices. All notices, certificates, requests, demands and
other communications provided for hereunder or under the Escrow Agreement
shall be in writing and shall be (a) personally delivered, (b) sent by
first-class United States mail, (c) sent by overnight courier of national
reputation, or (d) transmitted by telecopy, in each case addressed to the
party to whom notice is being given at its address as set forth above and, if
telecopied, transmitted to that party at its telecopier number set forth
37
above or, as to each party, at such other address or telecopier number as may
hereafter be designed by such party in a written notice to the other party
complying as to delivery with the terms of this Section. All such notices,
requests, demands and other communications shall be deemed to have been given
on (a) the date received if personally delivered, (b) when deposited in the
mail if delivered by mail, (c) the date sent if sent by overnight courier, or
(d) the date of transmission if delivered by telecopy. If notice to Borrower
of any intended disposition of the Equipment or any other intended action is
required by law in a particular instance, such notice shall be deemed
commercially reasonable if given (in the manner specified in this Section) at
least ten (10) calendar days prior to the date of intended disposition or
other action.
Section 12.04. Further Assurance and Corrective Instruments. Issuer and
Borrower hereby agree that they will, from time to time, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such further
acts, instruments, conveyances, transfers and assurances, as Lender reasonably
deems necessary or advisable for the implementation, correction, confirmation
or perfection of this Agreement or the Escrow Agreement and any rights of
Lender hereunder or thereunder.
Section 12.05. Binding Effect; Time of the Essence. This Agreement shall
inure to the benefit of and shall be binding upon Lender, Issuer, Borrower and
their respective successors and assigns. Time is of the essence.
Section 12.06. Severability. In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 12.07. Amendments. To the extent permitted by law, the terms of
this Agreement shall not be waived, altered, modified, supplemented or amended
in any manner whatsoever except by written instrument signed by the parties
hereto, and then such waiver, consent, modification or change shall be
effective only in the specific instance and for the specific purpose given.
Section 12.08. Execution in Counterparts. This Agreement may be executed
in several counterparts, each of which shall be an original and all of which
shall constitute one and the same instruments and any of the parties hereto
may execute this Agreement by signing any such counterpart. provided that only
the original marked "Original: 1 of 6" on the execution page thereof shall
constitute chattel paper under the Uniform Commercial Code.
Section 12.09. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State.
Section 12.10. Captions. The captions or headings in this Agreement are
for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Agreement.
Section 12.11. Entire Agreement. This Agreement, the Escrow Agreement
and the exhibits hereto and thereto constitute the entire agreement among
Lender, Issuer, Borrower and Escrow
38
Agent. There are no understandings, agreements, representations or warranties,
express or implied, not specified herein or in such documents regarding this
Agreement or the Equipment financed hereby.
Section 12.12. Usury. It is the intention of the parties hereto to
comply with any applicable usury laws; accordingly, it is agreed that,
notwithstanding any provisions to the contrary in this Agreement, in no event
shall this Agreement require the payment or permit the collection of interest
or any amount in the nature of interest or fees in excess of the maximum
permitted by applicable law.
Section 12.13. Waiver of Jury Trial. LENDER, ISSUER AND BORROWER HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF, DIRECTLY OR INDIRECTLY, THIS AGREEMENT, ANY OF
THE RELATED DOCUMENTS, ANY DEALINGS AMONG LENDER, ISSUER OR BORROWER RELATING
TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR
ANY RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED
AMONG LENDER, ISSUER AND BORROWER. THE SCOPE OF THIS WAIVER IS INTENDED TO BE
ALL ENCOMPASSING OF ANY-AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT
(INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED) EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, ANY RELATED DOCUMENTS, OR TO
ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY RELATED TRANSACTIONS. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
Section 12.l4. Governmental Functions. The State is not assigning any of
its governmental functions in this Agreement. The State shall not be precluded
from taking such actions as shall be necessary in order for it to perform its
governmental functions. Issuer shall, however, be bound by its undertakings
herein and in the Escrow Agreement
39
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
their respective corporate names by their duly authorized officers, all as of
the date first written above.
GE CAPITAL PUBLIC FINANCE, INC.
Lender:
By__________________________
Title V. P.
----------------------
MICHIGAN STRATEGIC FUND
Issuer:
By__________________________
Title_______________________
By__________________________
Title_______________________
Borrower:
SECOM GENERAL CORPORATION
By__________________________
Title_______________________
Trade Names of Borrower, if any
__________________
NONE
__________________
__________________
ORIGINAL: 4 OF 6
[EXECUTION PAGE OF LOAN AGREEMENT]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
their respective corporate names by their duly authorized officers, all as of
the date first written above.
GE CAPITAL PUBLIC FINANCE, INC.
Lender:
By__________________________
Title_______________________
MICHIGAN STRATEGIC FUND
Issuer:
By__________________________
Title Member
-----------------------
By__________________________
Title Authorized Officer
------------------
Borrower:
SECOM GENERAL CORPORATION
By /s/ Xxxxx X. Xxxxxxx
--------------------------
Title Secretary-Treasurer
-----------------------
Trade Names of Borrower, if any
__________________
NONE
__________________
__________________
ORIGINAL: 4 OF 6
[EXECUTION PAGE OF LOAN AGREEMENT]
