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EXHIBIT 10.40
AGREEMENT RE: LETTER OF CREDIT
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AND ASSIGNMENT OF COLLATERAL
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This Agreement Re: Letter of Credit and Assignment of Collateral
("Agreement") is executed as of March 1, 1985, by and between XXXXX FARGO BANK,
N.A. ("Bank") and BANK ONE TRUST COMPANY, N.A. ("Trustee").
1. Recitals.
1.1 The Bonds. The Development Authority of DeKalb County
("Issuer"), pursuant to that certain Trust Indenture executed as of even date
herewith between Trustee and Issuer (the "Trust Indenture"), agreed to issue its
certain Development Authority of DeKalb County Variable Rate Demand Industrial
Development Revenue Bonds (Radiation Sterilizers, Incorporated Project), Series
1985 (the "Bonds"). The proceeds of the Bonds are to be lent to Radiation
Sterilizers, Incorporated, a California corporation ("Company"). Trustee is the
trustee for the Bonds.
1.2 The Reimbursement Agreement. Pursuant to the terms of that
certain Letter of Credit Agreement executed between Company and Bank as of even
date herewith (the "Reimbursement Agreement"), Bank has agreed to issue a letter
of credit in the face amount of $5,408,220.00 (the "Letter of Credit").
Capitalized terms used and not otherwise defined herein shall have the same
meanings as are set forth in the Reimbursement Agreement. Trustee is empowered
to draw upon the Letter of Credit for the benefit of the purchasers of the Bonds
as provided in the Letter of Credit. The obligations of the Company to Bank
under the Reimbursement Agreement and notes and other documents executed in
connection therewith have been guaranteed by Xxxxxxx Xxxx & Associates, a
California limited partnership ("Guarantor") pursuant to that certain Payment
Guaranty, executed by Guarantor in favor of Bank as of even date herewith (the
"Guaranty").
1.3 Security Documents. The obligations of Company to Trustee in
connection with the Bonds and in connection with other documents and agreements
pertaining to the Bonds, and the obligations of Guarantor to Bank under the
Guaranty are secured by the following documents (collectively, the "Security
Documents"):
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a. Five Deeds of Trust with Assignments of Rents executed as of
even date herewith by Guarantor as trustor naming Trustee and Bank, as
their interests appear, as beneficiary and American Securities Company
as trustee (the "Deeds of Trust"), covering five parcels of improved
real property (collectively, the "Properties") in the Cities of San
Leandro and Hayward, County of Alameda, California; and
b. That certain Security Agreement executed as of even date
herewith by Company as debtor naming Trustee and Bank, as their
interests appear, as secured party (the "Security Agreement").
1.4 Agreement. Bank and Trustee wish to enter into this Agreement so as
to clarify their respective rights in the event of a draw by Trustee upon the
Letter of Credit.
2. Disbursement Procedure.
Trustee hereby agrees that it will not make any disbursement to Company
or to any other person or entity of all or any portion of the proceeds of the
Bonds or any other funds held from time to time by Trustee under the Trust
Indenture without the approval of Bank (subject to certain pre-approvals of
disbursements by Bank).
3. Bank Rights on Default.
Trustee hereby acknowledges and agrees that Bank shall have the
following rights in the event of the occurrence of an Event of Default under the
Reimbursement Agreement:
(a) The right to implement any or all of its rights under the
Reimbursement Agreement and the other Loan Documents other than
foreclosure on the Security Documents, including without limitation
commencement of actions against Company to recover sums owing under the
Loan Documents and/or to obtain injunctive relief and making demand
upon Guarantor for the performance of its obligations under the
Guaranty, without giving notice to Trustee of Bank's intention to cause
a default to be declared under the Trust Indenture; in such event,
there shall be no declaration by Trustee of a default under the Trust
Indenture notwithstanding any such action by Bank unless there are
grounds for such default other than by reason of the occurrence of an
Event of Default under the Reimbursement Agreement; or
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(b) The right, with or without implementation of any or
all of its rights under the Reimbursement Agreement and the other
Loan Documents, to give notice to Trustee of Bank's intention to
cause a default to be declared under the Trust Indenture; in such
event, Trustee shall immediately declare such a default and make
an A Drawing under the Letter of Credit.
4. Assignment of Rights.
Trustee hereby agrees that, immediately upon receipt by Trustee
of any payment under the Letter of Credit which has the effect of retiring in
full the obligation of Bank thereunder, Trustee will do the following:
4.1 Subject to Section 1105 of the Trust Indenture, use all funds
in its possession pursuant to the Trust Indenture and all funds paid under the
Letter of Credit as may be necessary to promptly redeem and retire all
outstanding Bonds at their face amount plus any accrued interest.
4.2 At the option of Bank, either reconvey, release and cancel,
or assign to Bank, all of its right, title and interest under the Deeds of Trust
and the Security Agreement and execute, acknowledge and deliver to Bank such
instruments and documents as may be reasonably necessary in connection with such
reconveyance, release, cancellation or assignment.
4.3 Subject to Section 1105 of the Trust Indenture, deliver to
Bank, in good funds and to such account as Bank shall designate, the entire
balance of undisbursed proceeds of the Bonds and any other funds then held by
Trustee under the Trust Indenture, together with any interest and other sums
accrued on all such sums, as of the date of payment by Bank on the Letter of
Credit, subject to prior payment of any unpaid fees and expenses (not to include
any fees or expenses of outside legal counsel) of Trustee described in Section
1202 of the Trust Indenture.
4.4 Assign to Bank all of its right, title and interest under or
in connection with the Trust Indenture, including without limitation all sums in
which Trustee has an interest pursuant to the provisions of the Indenture and
all causes of action and other rights which have accrued or may accrue
thereafter; provided, however, that Bank shall not be subject to any of the
trust obligations of Trustee with regard to such sums, causes of action and
other rights.
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5. Termination of Shared Interest Requirement.
Trustee hereby agrees that, immediately upon receipt by Trustee
of written assurances (from bond counsel or otherwise) satisfactory to Trustee
that Trustee is not required, for purposes of maintenance of the rating of the
Bonds or otherwise, to hold a shared interest in the Security Documents, Trustee
will, at the option of Bank, either reconvey, release and cancel, or assign to
Bank, all of its right, title and interest under the Security Documents, and
will execute, acknowledge and deliver to Bank such instruments and documents as
may be reasonably necessary in connection with such reconveyance, release,
cancellation or assignment.
6. Notices.
6.1 Trustee shall, as soon as reasonably practicable, give Bank
notice of the occurrence of any default or event which, with the giving of
notice or the passage of time, or both, would constitute a default under the
Trust Indenture or any other instrument, document or agreement pertaining to the
Bonds, regardless of whether Trustee has elected or may elect to exercise its
rights, under the Indenture or otherwise, as a result of such default or other
event. Trustee shall also immediately give Bank notice of any action which
Trustee takes or decides to take as a result of any such default or other event.
6.2 Trustee shall immediately give Bank notice of (a) its
resignation or removal or any other actual or planned change in the identity of
Trustee, whether pursuant to the Trust Indenture or otherwise, and (b) any
actual or planned amendment of the Trust Indenture or any supplement thereto, or
any request by any person or entity for the same.
6.3 Trustee shall deliver to Bank copies of any reports to be
delivered by Trustee pursuant to the Trust Indenture, as it may be amended from
time to time, such delivery to be concurrent with Trustee's delivery of such
reports pursuant to the Trust Indenture.
6.4 All notices, requests, demands, directions or other
communications which may be given pursuant to this Agreement must be in writing
and must be mailed or personally delivered to the appropriate party at its
address as follows:
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If to Trustee: Bank One Trust Company, N.A.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000-0000
Attention: Corporate Trust Administration
If to Bank: Xxxxx Fargo Bank, N.A.
Real Estate Industries Group
0000 Xxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxxxx
Vice President
Addresses for purposes of notice may be changed from time to time by written
notice pursuant to this Section 6.4. If any notice, request, demand, direction
or other communication is given by mail it will be effective upon the earlier of
(a) 96 hours after deposit in the U.S. Mail, certified or registered mail,
return receipt requested postage prepaid or (b) actual receipt, as indicated by
the return receipt; if given by personal delivery, when delivered.
7. Attorneys' Fees.
In the event that either Bank or Trustee brings an action to
interpret or enforce their rights under this Agreement, the prevailing party in
such action shall be entitled to recover its costs and attorneys' fees as
awarded by the court in such action.
8. Amendments; Governing Law.
This Agreement may be amended only by a written agreement signed
by both Bank and Trustee. This Agreement shall be governed by and interpreted in
accordance with the laws of the State of California.
IN WITNESS WHEREOF, Bank and Trustee have caused this Agreement
to be duly executed as of the date first written above.
"Bank":
XXXXX FARGO BANK,
By /s/ Signature Unreadable
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Its Vice President
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"Trustee":
BANK ONE TRUST COMPANY, N.A.
By /s/ [SIG]
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Its Trust Administrator
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