EXHIBIT 10.7
EXECUTION COPY
TAX-EXEMPT LOAN AGREEMENT
Among
GE CAPITAL PUBLIC FINANCE, INC.,
as Lender,
and
WASHINGTON ECONOMIC DEVELOPMENT FINANCE AUTHORITY,
as Issuer,
and
ABSORPTION CORP.,
as Borrower
Dated as of March 1, 2003
_______________________________
THIS INSTRUMENT CONSTITUTES A SECURITY AGREEMENT
UNDER THE WASHINGTON UNIFORM COMMERCIAL CODE.
_________________________________
TAX-EXEMPT LOAN AGREEMENT
Lender: GE Capital Public Finance, Inc.
Suite 470
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Issuer: Washington Economic Development Finance Authority
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Borrower: Absorption Corp.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
THIS TAX-EXEMPT LOAN AGREEMENT is dated as of March 1, 2003 (this
"Agreement") among GE Capital Public Finance, Inc., a Delaware corporation, as
lender (with its successors and assigns, "Lender"), Washington Economic
Development Finance Authority, a public body corporate and politic with
perpetual corporate succession, constituting an instrumentality of the State of
Washington (the "State"), as issuer ("Issuer"), and Absorption Corp., a Nevada
corporation, as borrower ("Borrower").
WHEREAS, Issuer is authorized and empowered under the laws of the
State, including Chapter 43.163 Revised Code of Washington ("RCW") (the "Act"),
to issue nonrecourse revenue bonds in the name of Issuer and to loan the
proceeds of such bonds to eligible borrowers to finance "project costs" for
"economic development activities" (as such terms are defined in RCW 43.163.010);
and
WHEREAS, in relation thereto, Issuer is authorized to enter into
"financing documents" (as defined in RCW 43.163.010(9)) necessary or convenient
for purposes of financing project costs; and
WHEREAS, in accordance with the Act, Issuer proposes to issue the Bond
(defined below), which shall be purchased by Lender and the proceeds of which
will be loaned to Borrower and used by Borrower to finance all or a portion of
the acquisition, improvement and construction of the Property (defined below) by
Borrower pursuant to this Agreement; and
WHEREAS, Borrower proposes to borrow the proceeds of the Bond upon the
terms and conditions set forth herein to finance the acquisition, improvement
and construction of the Property; and
WHEREAS, Borrower shall make Loan Payments (defined below) directly to
Lender as assignee of Issuer and holder of the Bond pursuant to the terms set
forth in this Agreement; and
WHEREAS, this Agreement and the Bond shall not be deemed to constitute
a debt or liability or moral obligation of Issuer or the State or any political
subdivision thereof, or a pledge of the faith and credit or taxing power of
Issuer or the State or any political subdivision thereof, but shall be a special
obligation payable solely from the Loan Payments payable hereunder by Borrower
to Lender as assignee of Issuer and holder of the Bond;
NOW, THEREFORE, for good and valuable consideration, receipt of which
is hereby acknowledged, 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 below unless the context clearly requires otherwise:
"Acquisition Costs" means the contract price paid or to be paid to the
Vendors or reimbursed to Borrower for any portion of the Property upon
Borrower's acceptance thereof, including administrative, engineering, legal,
financial and other costs incurred by Lender, Issuer, Borrower, Escrow Agent and
Vendors in connection with the acquisition, construction and improvement and
financing by Lender of such Property and costs of issuance that may be paid
pursuant to the Tax Regulatory Agreement, which Acquisition Costs are set forth
in Exhibit F hereto.
"Act" means Chapter 43.163 Revised Code of Washington, as amended from
time to time.
"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.
"Assignment" means the Assignment of even date herewith among Issuer,
Lender and Borrower.
"Bank" means any bank acceptable to Lender in its sole discretion, the
issuer of the Letter of Credit.
"Bond" means Issuer's $2,355,000.00 Tax-Exempt Economic Development
Revenue Bond, Series 2003B (Absorption Corp. Project), in the form attached
hereto as Exhibit E.
"Borrower" means Absorption Corp., a Nevada corporation.
"Business Day" means a day other than a Saturday or Sunday on which
banks are generally open for business in New York, New York and Minneapolis,
Minnesota.
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"Code" means the Internal Revenue Code of 1986, as amended, and United
States Treasury regulations promulgated thereunder.
"Corporate Guarantor" means International Absorbents Inc., a company
duly organized and validly existing under the laws of the Province of British
Columbia, Canada.
"Corporate Guaranty Agreement" means the Corporate Guaranty and
Negative Pledge Agreement dated as of March 1, 2003 executed by Corporate
Guarantor in favor of Lender.
"Default" means an event that, with giving of notice or passage of time
or both, would constitute an Event of Default as provided in Article XI hereof.
"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 obtained
by Lender of counsel qualified in such matters, 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; or
(c) if upon sale, lease or other deliberate action taken with
respect to the Property within the meaning of Treas. Reg. ss.
1.141-2(d), Lender fails to receive an unqualified opinion of bond
counsel to the effect that such deliberate action will not cause
interest payable by Borrower hereunder to become includable in the
gross income of the recipient.
"Environmental Laws" means any federal, state and local laws relating
to emissions, discharges, releases of Hazardous Waste or Materials into ambient
air, surface water, ground water or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Waste or Materials.
"Escrow Agent" means Xxxxxxxx & Xxxxxx Trust Company N.A., as escrow
agent under the Escrow Agreement, and its successors and assigns permitted under
the Escrow Agreement.
"Escrow Agreement" means the Escrow Agreement dated as of March 1, 2003
among Lender, Issuer, Borrower and Escrow Agent.
"Escrow Fund" means the fund established and held by Escrow Agent
pursuant to the Escrow Agreement.
"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 Property or any
misrepresentation or inaccuracy in
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any of the representations, warranties or covenants contained in this Agreement,
the Mortgage or the Tax Regulatory Agreement by Issuer or Borrower or the
enactment of any federal legislation after the date of this Agreement or the
promulgation of any income tax regulation or ruling by the Internal Revenue
Service after the date of this Agreement, the Interest is or becomes includable
in Lender's gross income.
"Final Appraisal" means the appraisal required by Section 2.08 hereof
conducted by a MAI-certified appraiser chosen and engaged by Lender.
"Final Appraisal Amount" means the appraised amount described in the
Final Appraisal.
"GE Capital Entity" means GE Capital Public Finance, Inc., General
Electric Capital Corporation or any of its or their affiliates.
"Gross-Up Rate" means, with respect to any Interest payment (including
payments made prior to the Event of Taxability), the rate necessary to calculate
a total payment in an amount sufficient such that the sum of the Interest
payment plus an additional payment would, after being reduced by the federal tax
(including interest and penalties) actually payable thereon, equal the amount of
the Interest payment.
"Hazardous Substances Agreement" means the Environmental Indemnity
Agreement Regarding Hazardous Substances dated as of March 1, 2003 executed by
Borrower and Corporate Guarantor for the benefit of Lender.
"Hazardous Waste or Materials" means any substance or material defined
in or designated as hazardous or toxic wastes, hazardous or toxic material, a
hazardous, toxic or radioactive substance, or other similar term, by any
Environmental Law now or hereafter in effect.
"Improvements" has the meaning set forth in the definition of
"Property."
"Indemnification and Compensation Agreement" means the Indemnification
and Compensation Agreement dated as of October 30, 2001 between Issuer and
Borrower.
"Interest" means the portion of any payment from Issuer to Lender
designated as and comprising interest as shown in Exhibit A hereto.
"Issuer" means the Washington Economic Development Finance Authority,
acting as issuer under this Agreement.
"Lender" means (i) GE Capital Public Finance, Inc., acting as lender
under this Agreement, (ii) any surviving, resulting or transferee corporation of
GE Capital Public Finance, Inc. and (iii) except where the context requires
otherwise, any assignee(s) of Lender.
"Letter of Credit" means an irrevocable standby letter of credit in the
form attached hereto as Exhibit M that may be issued by Bank in an amount which
shall equal the Undersecured Amount plus 120 days accrued interest on the
Undersecured Amount.
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"Loan" means the loan from Issuer to Borrower pursuant to this
Agreement.
"Loans" means collectively the Loan and the Taxable Loan.
"Loan Payments" means the loan payments payable by Borrower pursuant to
the provisions of this Agreement and the Bond 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 and holder of the
Bond, in the amounts and at the times as set forth in Exhibit A hereto.
"Loan Proceeds" means the total amount of money to be paid pursuant to
Section 2.02 hereof by Lender to Escrow Agent for deposit and application in
accordance with the Escrow Agreement.
"LTV Amount" means the least of (i) $2,910,000.00, (ii) 90% of the cost
of the Premises and Improvements, and (iii) the product of (A) 75% and (B) the
Final Appraisal Amount.
"Mortgage" means the Commercial Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture Filing dated as of the date hereof
executed by Borrower in favor of Lender, relating to the Property.
"Permitted Exceptions" means the permitted exceptions listed on Exhibit
H hereto.
"Premises" has the meaning set forth in the definition of "Property."
"Prepayment Amount" means the amount which Borrower may or must from
time to time pay or cause to be paid to Lender as assignee of Issuer and holder
of the Bond 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, together with
accrued interest and all other amounts due hereunder.
"Principal" means the portion of any Loan Payment designated as
principal in Exhibit A hereto.
"Property" means, collectively, all of Borrower's estate, right, title
and interest, now owned or hereafter acquired, including any reversion or
remainder interest, in the real property located in an unincorporated area of
Whatcom County, Washington described on Exhibit G hereto, including all
heretofore or hereafter vacated alleys and streets abutting the property, and
all easements, rights, appurtenances, tenements, hereditaments, rents,
royalties, mineral, oil and gas rights and profits, water, water rights and
water stock appurtenant to the property (collectively "Premises"); together with
all of Borrower's estate, right, title and interest, now owned or hereafter
acquired, in:
(a) all buildings, structures, improvements, parking areas,
landscaping, equipment, software intangibles, fixtures and articles of
property now or hereafter erected on, attached to, or used or adapted
for use in the operation of the Premises, including (without
limitation) all heating, air conditioning, manufacturing and
incinerating apparatus and equipment; all boilers, engines, motors,
dynamos, generating equipment, piping and plumbing fixtures, water
heaters, ranges, cooking apparatus and mechanical
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kitchen equipment, refrigerators, freezers, cooling, ventilating,
sprinkling and vacuum cleaning systems, fire extinguishing apparatus,
gas and electric fixtures, carpeting, floor coverings, underpadding,
elevators, escalators, partitions, mantels, built-in mirrors, window
shades, blinds, draperies, screens, storm sash, awnings, signs,
furnishings of public spaces, halls and lobbies, and shrubbery and
plants, and including also all interest of any owner of the Premises in
any of such items hereafter at any time acquired under conditional sale
contract, chattel mortgage or other title retaining or security
instrument, all of which property mentioned in this clause (a) shall be
deemed part of the realty covered by this Agreement and not severable
wholly or in part without material injury to the freehold of the
Premises (all of the foregoing together with replacements and additions
thereto are referred to herein as "Improvements");
(b) all compensation, awards, damages, rights of action and
proceeds, including interest thereon and/or the proceeds of any
policies of insurance therefor, arising out of or relating to a
(i) taking or damaging of the Premises or Improvements thereon by
reason of any public or private improvement, condemnation proceeding
(including change of grade), sale or transfer in lieu of condemnation,
or fire, earthquake or other casualty, or (ii) any injury to or
decrease in the value of the Premises or the Improvements for any
reason whatsoever;
(c) return premiums or other payments upon any insurance any time
provided for the benefit of or naming Lender, and refunds or rebates of
taxes or assessments on the Premises;
(d) all the right, title and interest of Borrower in, to and
under all written and oral leases and rental agreements (including
extensions, renewals and subleases; all of the foregoing shall be
referred to collectively herein as the "Leases") now or hereafter
affecting the Premises including, without limitation, all rents,
issues, profits and other revenues and income therefrom and from the
renting, leasing or bailment of Improvements and equipment, all
guaranties of tenants' performance under the Leases, all
letter-of-credit rights and all other supporting obligations associated
with the Leases, and all rights and claims of any kind that Borrower
may have against any tenant under the Leases or in connection with the
termination or rejection of the Leases in a bankruptcy or insolvency
proceeding; and the leasehold estate, if applicable;
(e) plans, specifications, contracts, documents and agreements
relating to the design or construction of the Improvements; Borrower's
rights under any payment, performance or other bond in connection with
the design or construction of the Improvements; all landscaping and
construction materials, supplies and equipment used or to be used or
consumed in connection with construction of the Improvements, whether
stored on the Premises or at some other location; and contracts,
agreements and purchase orders with contractors, subcontractors,
suppliers and materialmen incidental to the design or construction of
the Improvements;
(f) all contracts, documents, accounts, deposit accounts, rights,
claims or causes of action pertaining to or affecting the Premises or
the Improvements, including, without limitation, all options or
contracts to acquire other property for use in connection
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with operation or development of the Premises or Improvements,
promissory notes, management contracts, service or supply contracts,
deposits, bank accounts, general intangibles (including without
limitation trademarks, trade names, symbols and payment intangibles),
permits, licenses, franchises and certificates, and all commitments or
agreements, now or hereafter in existence, intended by the obligor
thereof to provide Borrower with proceeds to satisfy the loan evidenced
hereby or improve the Premises or Improvements, and the right to
receive all proceeds due under such commitments or agreements,
including refundable deposits and fees;
(g) all books, records, surveys, reports and other documents
related to the Premises, the Improvements, the Leases or other items of
collateral described herein; and
(h) all additions, accessions, replacements, substitutions,
proceeds and products of the real and personal property, tangible and
intangible, described herein.
"Purchase Agreements" means Borrower's purchase agreements with Vendors
of the Property.
"Reserved Rights" means (i) all reasonable fees and expenses of Issuer
incurred in connection with this Agreement, the Indemnification and Compensation
Agreement, the Bond, the Escrow Agreement or the Tax Regulatory Agreement,
including, without limitation, any and all fees and expenses incurred in
connection with the authorization, issuance, sale and delivery of the Bond and
the administration of the Bond; (ii) the right of Issuer to be held harmless in
general from any liabilities arising from the Escrow Agreement, construction and
operation of the Property (including environmental hazards); (iii) Issuer's
reliance on any statements made by other parties to the transaction; (iv) any
legal and investigatory expenses incurred in connection with the foregoing; (v)
any costs and expenses of Issuer incurred as a result of an Event of Default
involving a party other than Issuer; (vi) rights of Issuer under the
Indemnification and Compensation Agreement; and (vii) rights of Issuer to
receive notices under Section 12.03 hereof.
"State" means the State of Washington.
"Substitute Bank" means the issuer of a Substitute Letter of Credit,
which issuer must be acceptable to Lender in its sole discretion.
"Substitute Letter of Credit" means an irrevocable standby letter of
credit in form, substance and amount acceptable to Lender in its sole discretion
and issued by a Substitute Bank.
"Tax Regulatory Agreement" means the Tax Regulatory Agreement and
Arbitrage Certificate of even date herewith among Borrower, Issuer and Lender,
as such Tax Regulatory Agreement and Arbitrage Certificate may be amended from
time to time in accordance with its terms.
"Taxable Loan" means the loan from Lender to Borrower pursuant to the
Taxable Loan Agreement.
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"Taxable Loan Agreement" means the Taxable Rate Loan Agreement dated as
of March 1, 2003 between Lender and Borrower.
"Taxable Prepayment Amount" means the amount which Borrower may or must
from time to time pay or cause to be paid to Lender in order to prepay the
Taxable Loan, as provided in Section 2.07 of the Taxable Loan Agreement, such
amounts being set forth in Exhibit A thereto, together with accrued interest and
all other amounts due thereunder.
"UCC" means the Uniform Commercial Code as adopted and in effect in the
State.
"Undersecured Amount" means the excess of (i) the Loan Proceeds over
(ii) the LTV Amount.
"Vendor" means the contractor, manufacturer, vendor or seller of any
portion of the Property, as well as the agents or dealers of a manufacturer,
from whom Borrower has purchased or is purchasing any portion of the Property.
Section 1.02. EXHIBITS. The following exhibits are attached hereto and
made a part hereof:
Exhibit A: Schedule of Loan Payments setting forth the Loan Payments
and Prepayment Amounts.
Exhibit B-1: Form of opinion of counsel to Borrower.
Exhibit B-2: Form of opinion of counsel to Corporate Guarantor.
Exhibit C: Form of opinion of counsel to Issuer.
Exhibit D: Form of opinion of bond counsel.
Exhibit E: Form of Bond.
Exhibit F: Schedule of Acquisition Costs.
Exhibit G: Legal Description of Real Property.
Exhibit H: List of Permitted Exceptions.
Exhibit I: List of Trade Names.
Exhibit J: Permanent Loan Insurance Requirements.
Exhibit K: Phase I Requirements.
Exhibit L: Form of Certificate of Chief Financial Officer.
Exhibit M: Form of Letter of Credit.
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Section 1.03. RULES OF CONSTRUCTION. (a) Except as otherwise indicated
herein, the singular form of any word used herein, including the terms defined
in Section 1.01 hereof, shall include the plural, and vice versa. The use herein
of a word of any gender shall include correlative words of all genders.
(b) Unless otherwise specified, references to Articles, Sections and
other subdivisions of this Agreement are to the designated Articles, Sections
and other subdivision of this Agreement as originally executed. The words
"hereof," "herein," "hereunder" and words of similar import refer to this
Agreement as a whole.
(c) The headings or titles of the several articles and sections shall
be solely for convenience of reference and shall not affect the meaning,
construction or effect of the provisions hereof.
ARTICLE II
FINANCING OF PROPERTY AND TERMS OF LOAN
Section 2.01. ACQUISITION OF PROPERTY. Borrower shall acquire, improve
or construct the Property pursuant to one or more Purchase Agreements from one
or more Vendors. Borrower shall remain liable to the Vendor or Vendors in
respect of its duties and obligations in accordance with each Purchase Agreement
and shall bear the risk of loss with respect to any loss or claim relating to
any of the Property covered by any Purchase Agreement, and neither Lender nor
Issuer shall assume any such liability or risk of loss. Borrower covenants and
agrees to pay or cause to be paid such amounts as may be necessary to complete
the improvement, construction and acquisition of the Property and to ensure that
the Property are operational to the extent that the Loan Proceeds are
insufficient to cause such improvement, construction and acquisition. Borrower
shall substantially complete the improvement, construction and acquisition of
the Property no later than September 30, 2004.
Section 2.02. LOAN. Lender hereby agrees, subject to the terms and
conditions of this Agreement, to purchase the Bond in the amount of
$2,355,000.00; Issuer hereby agrees, subject to the terms and conditions of this
Agreement, to issue the Bond and to lend the proceeds thereof to Borrower; and
Borrower hereby agrees to borrow such proceeds from Issuer. Upon fulfillment of
the conditions set forth in Article III hereof, Lender shall deposit the Loan
Proceeds in the Escrow Fund to be held, invested and disbursed as provided in
the Escrow Agreement. 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 that Loan Proceeds are deposited in the Escrow
Fund.
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
sixty-three hundredths percent (5.63%) from the date that Loan Proceeds are
deposited in the Escrow Fund until October 1, 2003 and at the rate of five and
thirty-eight hundredths percent (5.38%) thereafter and throughout the remaining
term of the Loan. Interest accruing on the principal balance of the Bond and the
Loan outstanding from time to time shall be payable as provided in Exhibit A and
in the Bond and upon earlier demand in
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accordance with the terms hereof or prepayment in accordance with the terms of
the Bond and Section 2.07 hereof. Upon the occurrence of a Determination of
Taxability, Borrower shall, with respect to future interest payments, begin
making Loan Payments calculated at the Gross-Up Rate. In addition, Borrower
shall make immediately upon demand of Lender a payment to Lender sufficient to
supplement prior Loan Payments to the Gross-Up Rate.
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, Loan Payments, in the amounts and on the
dates set forth in Exhibit A hereto. Additionally, Borrower shall pay to Lender,
as assignee of Issuer and holder of the Bond, an amount equal to the product of
(i) 18% per annum and (ii) the delinquent amount of any Loan Payment not paid
when due. 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, and
pursuant to the Assignment, Issuer has assigned to Lender all of Issuer's right
to receive Loan Payments from Borrower hereunder, all of Issuer's rights
hereunder (except the Issuer's Reserved Rights) and all of Issuer's right, title
and interest in and to the Property, 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
Property, 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
holder of the Bond, 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 imposed on Issuer herein or under the Bond, or
the breach thereof, shall constitute or give rise to or impose upon Issuer a
pecuniary liability, a charge upon its general credit or taxing powers or a
pledge of its general revenues. In making the agreements, provisions and
covenants set forth in this Agreement, Issuer has not obligated itself except
with respect to the Property and the application of the Loan Payments to be paid
by Borrower hereunder. All amounts required to be paid by Borrower hereunder
shall be paid in lawful money of the United States of America in immediately
available funds. No recourse shall be had by Lender or Borrower for any claim
based on this Agreement, the Bond or the Tax Regulatory Agreement against any
director, officer, employee or agent of Issuer alleging personal liability on
the part of such person, unless such claim is based on the willful dishonesty of
or intentional violation of law by such person.
Section 2.05 PAYMENT ON NON-BUSINESS DAYS. Whenever any payment to be
made hereunder or under the Bond shall be stated to be due on a day which is not
a Business Day, such payment may be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
interest or the fees hereunder, as the case may be.
Section 2.06. LOAN PAYMENTS TO BE UNCONDITIONAL. The obligations of
Borrower to make the Loan Payments required under this Article II and to make
other payments hereunder and to perform and observe the covenants and agreements
contained herein shall be absolute and unconditional in all events, without
abatement, diminution, deduction, setoff or defense for any reason, including
(without limitation) any failure of the Property to be delivered or installed,
any
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defects, malfunctions, breakdowns or infirmities in the Property 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 setoff or counterclaim against its obligation to make such
payments required under this Agreement.
Section 2.07. PREPAYMENTS. (a) Borrower may, in its discretion, prepay
the Loans and the Bond in whole at any time by paying both the applicable
Prepayment Amount and the applicable Taxable Prepayment Amount.
(b) Borrower shall prepay the Loans and the Bond in whole or in part at
any time pursuant to Sections 9.01 and 9.02 of this Agreement and of the Taxable
Loan Agreement by paying both the applicable Prepayment Amount and the
applicable Taxable Prepayment Amount.
(c) Borrower shall prepay the Loans and the Bond in full immediately
upon demand of Lender after the occurrence of an Event of Default by paying both
the applicable Prepayment Amount and the applicable Taxable Prepayment Amount. A
portion of such prepayment may be made with funds remaining in the Escrow Fund
pursuant to the Escrow Agreement.
(d) Borrower shall prepay the Loan and the Bond in full immediately
upon demand of Lender after the occurrence of a Determination of Taxability by
paying the applicable Prepayment Amount plus an amount necessary to supplement
the prior Loan Payments to the Gross-Up Rate.
(e) The amounts due hereunder shall be repaid, and the amounts due
under the Bond shall be paid, in part with funds remaining in the Escrow Fund
upon termination of the Escrow Agreement as provided in Section 2.03 of the
Escrow Agreement and, if less than 80% of the amount deposited in the Escrow
Fund has been disbursed pursuant to the Escrow Agreement, together with a
prepayment premium calculated at the percentage used to determine the Prepayment
Amount at the date of such prepayment.
(f) Borrower shall prepay the Loans in part pursuant to Section 2.08
hereof.
Upon any prepayment in part of the Loans, the prepayment shall be
applied to (i) the Loan Payments and any other amounts due hereunder and (ii)
the loan payments due under the Taxable Loan Agreement and any other amounts due
thereunder, in each case, as determined by Lender.
Section 2.08. FINAL APPRAISAL. Upon completion of the acquisition,
construction and installation of the Property and before any disbursement of the
Escrow Holdback Amount (as defined in Section 2.04 of the Escrow Agreement) from
the Escrow Fund, but in no event later than September 30, 2004, Borrower shall
provide to Lender the Final Appraisal. Borrower shall reimburse Lender for the
cost of the Final Appraisal. Upon receipt of the Final Appraisal, if an
Undersecured Amount exists, Borrower shall either (i) deliver or cause to be
delivered to Lender the Letter of Credit or (ii) prepay in part the Loan in the
amount of the Undersecured Amount.
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Section 2.09. SECURITY. The obligations of Borrower to make the Loan
Payments required by this Article II and to make other payments hereunder and to
perform or observe the covenants and agreements contained herein shall be
secured, among other things, by a security interest in the Property, and
pursuant to the Mortgage covering the Property as described therein, and by
certain other documents executed and delivered in connection herewith. Nothing
herein shall limit the liability of Borrower under the Hazardous Substances
Agreement.
Section 2.10. DESCRIPTION OF THE BOND. The Bond shall be issued in a
single bond in registered form. The Bond shall mature, and principal of, premium
(if any) and interest on the Bond shall be payable as set forth in the Bond and
Exhibit A hereto. The Bond and all obligations of Issuer under or with respect
to the Bond and this Agreement are limited obligations of Issuer payable solely
out of the Loan Payments and other and other security specifically pledged
thereto. No recourse shall be had against any other properties, funds or assets
of Issuer for the payment of any amounts owing with respect to the Bond or this
Agreement. The Bond, this Agreement and the obligations of Issuer under or with
respect thereto do not constitute or create a charge against Issuer or create an
indebtedness of Issuer within the meaning of any constitutional or statutory
debt limitation. Holders of the Bond shall have no right to compel the payment
of any amounts owing under or with respect to the Bond or this Agreement out of
any funds or other assets of Issuer or the State. Issuer's agents, including the
person(s) executing this Agreement or the Bond, shall not be subject to any
personal liability for any reason relating to the issuance of the Bond or the
performance of any obligations under or with respect to this Agreement.
IN ACCORDANCE WITH RCW 43.163.140(1), THE BOND SHALL NOT BE DEEMED TO
CONSTITUTE A DEBT, LIABILITY OR GENERAL OBLIGATION OF THE ISSUER OR THE STATE OF
WASHINGTON OR ANY POLITICAL SUBDIVISION THEREOF, OR A PLEDGE OF THE FAITH AND
CREDIT OF THE ISSUER OR THE STATE OF WASHINGTON OR ANY SUCH POLITICAL
SUBDIVISION, BUT SHALL BE PAYABLE SOLELY FROM THE REVENUES AND PROCEEDS PROVIDED
THEREFOR. THE ISSUER SHALL NOT BE OBLIGATED TO PAY THE SAME NOR INTEREST OR
PREMIUM, IF ANY, THEREON EXCEPT FROM THE REVENUES AND PROCEEDS PLEDGED THEREFOR,
AND NEITHER THE FAITH AND CREDIT NOR ANY TAXING POWER OF THE STATE OF WASHINGTON
OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OF THE PRINCIPAL
OF OR THE INTEREST OR PREMIUM, IF ANY, ON THE BOND. THE ISSUER HAS NO TAXING
AUTHORITY.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.01. CONDITIONS OF CLOSING. Lender's agreement to purchase the
Bond and to deposit the Loan Proceeds in the Escrow Fund shall be subject to the
condition precedent that Lender shall have received all of the following, each
in form and substance satisfactory to Lender:
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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, properly executed on behalf of Issuer.
(c) The Assignment, properly executed on behalf of Issuer and
Borrower.
(d) The Tax Regulatory Agreement, properly executed on behalf of
Issuer and Borrower.
(e) The Escrow Agreement, properly executed on behalf of Issuer,
Borrower and Escrow Agent.
(f) The Mortgage, properly executed on behalf of Borrower.
(g) The Hazardous Substances Agreement, properly executed on
behalf of Borrower and Corporate Guarantor.
(h) The Corporate Guaranty Agreement, properly executed on behalf
of Corporate Guarantor.
(i) The Taxable Loan Agreement, properly executed on behalf of
Borrower.
(j) 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 Taxable
Loan Agreement, the Mortgage, the Hazardous Substances Agreement, the
Escrow Agreement, the Assignment and the Tax Regulatory Agreement and
any related documents, (ii) the bylaws of Borrower, and (iii) the
signatures of the officers or agents of Borrower authorized to execute
and deliver this Agreement, the Taxable Loan Agreement, the Mortgage,
the Hazardous Substances Agreement, the Escrow Agreement, the
Assignment and the Tax Regulatory Agreement and other instruments,
agreements and certificates on behalf of Borrower.
(k) Currently certified copies of the Articles of Incorporation
of Borrower.
(l) A Certificate of Good Standing issued as to Borrower by the
Secretary of State of the State of Nevada not more than 10 days prior
to the date hereof.
(m) Certificate of qualification to do business in the State
issued as to Borrower not more than 10 days prior to the date of the
funding of the loan.
(n) A certificate of the Secretary or an Assistant Secretary of
Corporate Guarantor, certifying as to (i) the resolutions of the board
of directors and, if required, the shareholders of Corporate Guarantor,
authorizing the execution, delivery and performance of the Corporate
Guaranty Agreement, the Hazardous Substances Agreement and any related
documents, (ii) the bylaws of Corporate Guarantor, and (iii) the
signatures of the officers or agents of Corporate Guarantor authorized
to execute and
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deliver the Corporate Guaranty Agreement, the Hazardous Substances
Agreement and other instruments, agreements and certificates on behalf
of Corporate Guarantor.
(o) Currently certified copies of the Articles of Incorporation
of Corporate Guarantor.
(p) A Certificate of Good Standing issued as to Corporate
Guarantor by the Registrar of Companies of the Province of British
Columbia, Canada not more than 10 days prior to the date hereof.
(q) A completed and executed Form 8038 or evidence of filing
thereof with the Secretary of Treasury.
(r) A resolution or evidence of other official action taken by or
on behalf of Issuer to authorize the transactions contemplated hereby.
(s) Evidence that the issuance of the Bond for the purpose of
financing of the Property has been approved by the "applicable elected
representative" of Issuer after a public hearing held upon reasonable
notice.
(t) As applicable, financing statements authorized by Borrower,
as debtor, and naming Lender, as secured party, and/or the original
certificate of title or manufacturer's certificate of origin and title
application if any of the Property is subject to certificate of title
laws.
(u) Financing statements authorized by Issuer, as debtor, and
naming Lender, as secured party.
(v) Current searches of appropriate filing offices showing that
(i) no state or federal tax liens have been filed and remain in effect
against Borrower, (ii) no financing statements have been filed and
remain in effect against Borrower relating to the Property except those
financing statements filed by Lender, (iii) Lender has duly filed all
financing statements necessary to perfect the security interest created
pursuant to this Agreement and the Mortgage, 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.
(w) An environmental engineering report for the Premises prepared
by an engineer engaged by Lender after consultation with Borrower and
at Borrower's expense, and in a manner satisfactory to Lender, based
upon an investigation relating to and making appropriate inquiries
concerning the Premises and in compliance with the Environmental Phase
I Requirements set forth in Exhibit K hereto.
(x) An opinion of counsel to Borrower, addressed to Lender and
Issuer, in the form attached hereto as Exhibit B-1.
(y) An opinion of counsel to Corporate Guarantor, addressed to
Lender and Issuer, in the form attached hereto as Exhibit B-2.
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(z) An opinion of counsel to Issuer, addressed to Lender and
Borrower, in the form attached hereto as Exhibit C.
(aa) An opinion of bond counsel, addressed to Issuer and Lender,
in the form attached hereto as Exhibit D.
(bb) Payment of Lender's fees, commissions and expenses required
by Section 12.01 hereof.
(cc) Payment of Issuer's fees, commissions and expenses incurred
in connection with this Agreement, the Indemnification and Compensation
Agreement and the transactions contemplated hereby and thereby.
(dd) Any other documents or items required by Lender.
(ee) With respect to any item of Property, certificates of the
insurance required hereunder, containing a lender's loss payable clause
or endorsement in favor of Lender and the permanent loan insurance
requirements set forth in Exhibit J hereto.
Section 3.02. CONDITIONS OF DISBURSEMENT. In addition to the
requirements set forth in Section 3.01 hereof, Lender's agreement to authorize
any disbursement from the Escrow Fund shall be subject to the additional
condition precedent that Borrower shall have satisfied all of the conditions
precedent set forth in Article 3 of the Escrow Agreement applicable to such
disbursement.
ARTICLE IV
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, with perpetual
corporate succession, constituting an instrumentality of the State.
(b) Issuer will exercise its best efforts to preserve and keep in
full force and effect its existence as a public body corporate and
politic.
(c) Issuer is authorized under the Constitution and laws of the
State to issue the Bond and to enter into this Agreement, the
Assignment, the Escrow Agreement, the Tax Regulatory Agreement and the
transactions contemplated hereby and to perform all of its obligations
hereunder.
(d) Issuer has duly authorized the issuance of the Bond and the
execution and delivery of this Agreement, the Assignment, the Escrow
Agreement and the Tax Regulatory Agreement under the terms and
provisions of the resolution of its governing body 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
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ensure the enforceability of the Bond, this Agreement, the Assignment,
the Escrow Agreement and the Tax Regulatory Agreement against Issuer.
Issuer has taken all necessary action and has complied with all
provisions of the Act, including but not limited to the making of the
findings required by the Act, required to make the Bond, this
Agreement, the Assignment, the Escrow Agreement and the Tax Regulatory
Agreement the valid and binding obligations of Issuer.
(e) The officer of Issuer executing the Bond, this Agreement, the
Assignment, the Escrow Agreement, the Tax Regulatory Agreement and any
related documents has been duly authorized to issue the Bond and to
execute and deliver this Agreement, the Assignment, the Escrow
Agreement and the Tax Regulatory Agreement and such related documents
under the terms and provisions of a resolution of Issuer's governing
body, or by other appropriate official action.
(f) The Bond, this Agreement, the Assignment, the Escrow
Agreement and the Tax Regulatory 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 or affecting the
enforcement of creditors' rights.
(g) Pursuant to the Assignment, Issuer has assigned to Lender all
of Issuer's rights in the Property, the Loan Payments and this
Agreement (except Issuer's Reserved Rights) including the assignment of
all rights in the security interest granted to Issuer by Borrower.
(h) Issuer will not pledge, mortgage or assign this Agreement or
its duties and obligations hereunder to any person, firm or
corporation, except as provided under the terms hereof and under the
terms of the Assignment.
(i) None of the issuance of the Bond or the execution and
delivery of this Agreement, the Assignment, the Escrow Agreement or the
Tax Regulatory Agreement, the consummation of the transactions
contemplated hereby or thereby or the fulfillment of or compliance with
the terms and conditions of the Bond, this Agreement, the Assignment,
the Escrow Agreement or the Tax Regulatory 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.
(j) 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 Issuer's
knowledge, threatened against or affecting Issuer, challenging Issuer's
authority to issue the Bond or to enter into this Agreement, the
Assignment, the Escrow Agreement or the Tax Regulatory Agreement or any
other action wherein an unfavorable ruling or finding would adversely
affect the enforceability of the Bond, this
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Agreement, the Assignment, the Escrow Agreement or the Tax Regulatory
Agreement or any other transaction of Issuer 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.
(k) Issuer will submit or cause to be submitted to the Secretary
of the Treasury a Form 8038 (or other information reporting statement)
with respect to the Bond at the time and in the form required by the
Code.
(l) The issuance of the Bond for the purpose of financing the
Property 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.
(m) Issuer will comply fully at all times with the Tax Regulatory
Agreement, and Issuer will not take any action, or omit to take any
action, which, if taken or omitted, respectively, would violate the Tax
Regulatory Agreement.
(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 (including, without limitation, intentional acts under Treas.
Reg. ss. 1.148-2(c) or consenting to a deliberate action within the
meaning of Treas. Reg. ss. 1.141-2(d)), and Issuer 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).
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 Nevada, has power
to enter into this Agreement and by proper corporate action has duly
authorized the execution and delivery of this Agreement, the Taxable
Loan Agreement, the Mortgage, the Hazardous Substances Agreement, the
Escrow Agreement, the Assignment, the Indemnification and Compensation
Agreement and the Tax Regulatory Agreement. Borrower is in good
standing and is duly licensed or qualified to transact business in the
State and in all jurisdictions where the character of the property
owned or leased or the nature of the business transacted by it makes
such licensing or qualification necessary. Borrower's exact legal name
is as set forth on the execution page hereof.
(b) Borrower has been fully authorized to execute and deliver
this Agreement, the Taxable Loan Agreement, the Mortgage, the Hazardous
Substances Agreement, the Escrow Agreement, the Assignment, the
Indemnification and Compensation Agreement
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and the Tax Regulatory Agreement under the terms and provisions of the
resolution of its board of directors, or by other appropriate official
approval, and further represents, covenants and warrants that all
requirements have been met, and procedures have occurred in order to
ensure the enforceability of this Agreement, the Taxable Loan
Agreement, the Mortgage, the Hazardous Substances Agreement, the Escrow
Agreement, the Assignment, the Indemnification and Compensation
Agreement and the Tax Regulatory Agreement and this Agreement, the
Taxable Loan Agreement, the Mortgage, the Hazardous Substances
Agreement, the Escrow Agreement, the Assignment, the Indemnification
and Compensation Agreement and the Tax Regulatory Agreement have been
duly authorized, executed and delivered.
(c) The officer of Borrower executing this Agreement, the Taxable
Loan Agreement, the Mortgage, the Hazardous Substances Agreement, the
Escrow Agreement, the Assignment, the Indemnification and Compensation
Agreement and the Tax Regulatory Agreement and any related documents
has been duly authorized to execute and deliver this Agreement, the
Taxable Loan Agreement, the Mortgage, the Hazardous Substances
Agreement, the Escrow Agreement, the Assignment, the Indemnification
and Compensation Agreement and the Tax Regulatory Agreement and such
related documents under the terms and provisions of a resolution of
Borrower's board of directors.
(d) This Agreement, the Taxable Loan Agreement, the Mortgage, the
Hazardous Substances Agreement, the Escrow Agreement, the Assignment,
the Indemnification and Compensation Agreement and the Tax Regulatory
Agreement 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 or affecting the enforcement of
creditors' rights.
(e) The execution and delivery of this Agreement, the Taxable
Loan Agreement, the Mortgage, the Hazardous Substances Agreement, the
Escrow Agreement, the Assignment, the Indemnification and Compensation
Agreement and the Tax Regulatory Agreement, the consummation of the
transactions contemplated hereby and thereby and the fulfillment of the
terms and conditions hereof and thereof do not and will not violate any
law, rule, regulation or order, conflict with or result in a breach of
any of the terms or conditions of the articles of incorporation or
bylaws of Borrower or of any corporate restriction or of any agreement
or instrument to which Borrower is now a party and do not and will not
constitute a default under any of the foregoing or result in the
creation or imposition of any liens, charges or encumbrances of any
nature upon any of the property or assets of Borrower contrary to the
terms of any instrument or agreement.
(f) The authorization, execution, delivery and performance of
this Agreement by Borrower do not require submission to, approval of,
or other action by any governmental authority or agency, which action
with respect to this Agreement has not been taken and which is final
and nonappealable.
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(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 Taxable Loan
Agreement, the Mortgage, the Hazardous Substances Agreement, the Escrow
Agreement, the Assignment, the Indemnification and Compensation
Agreement or the Tax Regulatory Agreement or any other action wherein
an unfavorable ruling or finding would adversely affect the
enforceability of this Agreement, the Taxable Loan Agreement, the
Mortgage, the Hazardous Substances Agreement, the Escrow Agreement, the
Assignment, the Indemnification and Compensation Agreement or the Tax
Regulatory Agreement 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 the financial condition, business or properties of Borrower.
(h) The Premises and the property at which any portion of the
Property is located is properly zoned for its current and anticipated
use and the use of the Property will not violate any applicable zoning,
land use, environmental or similar law or restriction. Borrower has all
licenses and permits to use the Property.
(i) Borrower has furnished to Lender a Phase I Environmental Site
Assessment dated January 22, 2003, prepared by URS (the "Report").
Except as disclosed to Lender in the Report, Borrower has received no
notification of any kind suggesting that the Property or any adjacent
property is or may be contaminated with any Hazardous Waste or
Materials or is or may be required to be cleaned up in accordance with
any applicable law or regulation; and Borrower further represents and
warrants that, except as previously disclosed to Lender in writing, to
the best of its knowledge as of the date hereof after due and diligent
inquiry, there are no Hazardous Waste or Materials located in, on or
under the Property or any adjacent property, or incorporated in any
Improvements, nor has the Property or any adjacent property ever been
used as a landfill or a waste disposal site, or a manufacturing,
handling, storage, distribution or disposal facility for Hazardous
Waste or Materials. Borrower has obtained all permits, licenses and
other authorizations which are required under any Environmental Laws at
Borrower's facilities or in connection with the operation of its
facilities. Except as previously disclosed to Lender in writing,
Borrower and all activities of Borrower at its facilities comply with
all Environmental Laws and with all terms and conditions of any
required permits, licenses and authorizations applicable to Borrower
with respect thereto. Except as previously disclosed to Lender in
writing, Borrower is also in compliance with all limitations,
restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in Environmental Laws
or contained in any plan, order, decree, judgment or notice of which
Borrower is aware. Except as previously disclosed to Lender in writing,
Borrower is not aware of, nor has Borrower received notice of, any
events, conditions, circumstances, activities, practices, incidents,
actions or plans which may interfere with or prevent continued
compliance with, or which may give rise to any liability under, any
Environmental Laws.
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(j) The Property is of the type authorized and permitted to be
financed with the proceeds of the Bond pursuant to the Act.
(k) Borrower owns or will own the Property and intends to operate
the Property, or cause the Property to be operated, as an "economic
development activity" 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.
(l) 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 (including, without
limitation, intentional acts under Treas. Reg. ss. 1.148-2(c) or
deliberate action within the meaning of Treas. Reg. ss. 1.141-2(d)),
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).
(m) Borrower has heretofore furnished to Lender the audited
financial statements of Corporate Guarantor for its fiscal years ended
January 31, 2002, January 31, 2001, January 31, 2000 and January 31,
1999 and the unaudited financial statements of Borrower for the six
months ended July 31, 2002 and July 31, 2001, and those statements
fairly present the financial condition of Corporate Guarantor on the
dates thereof and the results of its operations and cash flows for the
periods then ended and were prepared in accordance with generally
accepted accounting principles. Since the date of the most recent
financial statements, there has been no material adverse change in the
business, properties or condition (financial or otherwise) of Corporate
Guarantor.
(n) 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.
(o) Borrower has or will have good and absolute title to all
Property and all proceeds thereof, free and clear of all mortgages,
security interests, liens and encumbrances except for the security
interest created pursuant to this Agreement and the Mortgage and the
Permitted Exceptions.
(p) All financial and other information provided to Lender by or
on behalf of Borrower in connection with Borrower's request for the
Loan contemplated hereby is true and correct in all material respects
and Borrower has not omitted to provide Lender with any information
which would be material to Lender's decision to enter into this
Agreement and, as to projections, valuations or pro forma financial
statements, present a good faith opinion as to such projections,
valuations and pro forma condition and results.
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(q) Borrower has authorized Lender to file financing statements,
and such financing statements when filed will be sufficient to perfect
the security interest created pursuant to this Agreement. When such
financing statements are filed in the offices noted therein, Lender, as
assignee of Issuer and holder of the Bond, will have a valid and
perfected security interest in the Property, subject to no other
security interest, assignment, lien or encumbrance. None of the
Property constitutes a replacement of, substitution for or accessory to
any property of Borrower subject to a lien of any kind. Borrower owns
the Premises subject to no liens or encumbrances of any kind except the
Permitted Exceptions.
(r) Borrower will aid and assist Issuer in connection with
preparing and submitting to the Internal Revenue Service a Form 8038
(or other applicable information reporting statement) with respect to
the Bond at the time and in the form required by the Code.
(s) Borrower will comply fully at all times with the Tax
Regulatory Agreement, and Borrower will not take any action, or omit to
take any action, which, if taken or omitted, respectively, would
violate the Tax Regulatory Agreement, and the representations and
warranties in the Tax Regulatory Agreement are true and correct.
(t) Expenses for work done by officers or employees of Borrower
in connection with the Property 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.
(u) Any costs incurred with respect to that part of the Property
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.
(v) 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 not constituting an Acquisition Cost.
(w) No person other than Borrower is in occupancy or possession
of any portion of the real property where any portion of the Property
is located.
(x) The Property is property of the character subject to the
allowance for depreciation under Section 167 of the Code.
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ARTICLE VI
TITLE TO PROPERTY; SECURITY INTEREST
Section 6.01. TITLE TO PROPERTY. Legal title to the Property and any
and all repairs, replacements, substitutions and modifications to such Property
shall be in Borrower. Borrower will at all times protect and defend, at its own
cost and expense, its title from and against all claims, liens and legal
processes of creditors of Borrower, and keep all Property free and clear of all
such claims, liens and processes.
Section 6.02. SECURITY INTEREST IN PROPERTY. This Agreement is intended
to constitute a security agreement within the meaning of the UCC. As security
for (a) Borrower's payment to Lender, as assignee of Issuer, of Loan Payments
and all other amounts payable to Lender hereunder, (b) Borrower's payment to
Lender of Loan Payments (as defined in the Taxable Loan Agreement) and all other
amounts due under the Taxable Loan Agreement, and (c) any other obligations of
Borrower to Lender or any GE Capital Entity (whether direct or indirect and
whether now existing or hereafter acquired), Borrower hereby grants to Issuer,
and Issuer hereby assigns to Lender, a security interest constituting a first
lien on (i) the Property, (ii) all general intangibles and other property
relating thereto, (iii) all accessories, attachments, parts, equipment and
repairs now or hereafter attached or affixed or used in connection with any of
the foregoing property, (iv) all warehouse receipts, bills of lading and other
documents of title now or hereafter covering any of the foregoing property, (v)
all securities, funds, moneys, deposits and other property at any time held in
or subject to the Escrow Fund, (vi) all accessions thereto, (vii) all
substitutions for any of the foregoing property, and (viii) products and
proceeds of any of the foregoing property. To the extent that the same entity
(or an affiliate thereof) is Lender under this Agreement and any other document
or agreement with Borrower, the security interest in the Property shall secure
all of Borrower's obligations under all such agreements, but shall not secure
Borrower's obligations under such agreements under which a different entity is
Lender. Borrower ratifies its previous authorization for Lender to pre-file UCC
financing statements and any amendments thereto describing the Property and all
other collateral described above and containing any other information required
by the applicable UCC. Borrower authorizes Lender, and hereby grants Lender a
power of attorney (which is coupled with an interest), to file financing
statements and amendments thereto describing the Property and containing any
other information required by the applicable UCC and all proper terminations of
the filings of other secured parties with respect to the Property, in such form
and substance as Lender, in its sole discretion, may determine. Issuer and
Borrower agree to execute such additional documents, including demands for
terminations, assignments, affidavits, notices and similar instruments, in form
satisfactory to Lender, and take such other actions that Lender deems necessary
or appropriate to establish and maintain the security interest created by this
Section, and Issuer and Borrower hereby designate and appoint Lender as their
agent, and grant to Lender a power of attorney (which is coupled with an
interest), to execute on behalf of Issuer and Borrower, as the case may be, such
additional documents and to take such other actions. Borrower hereby waives any
right that Borrower may have to file with the applicable filing officer any
financing statement, amendment, termination or other record pertaining to the
Property and/or Lender's interest therein.
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Section 6.03. CHANGE IN NAME OR CORPORATE STRUCTURE OF BORROWER; CHANGE
IN LOCATION OF BORROWER'S CHIEF EXECUTIVE OFFICE. Borrower's chief executive
office is located at the address set forth above, and all of Borrower's records
relating to its business and the Property are kept at such location. Borrower
hereby agrees to provide written notice to Lender and Issuer of any change or
proposed change in its name, corporate structure, chief executive office or
change or proposed change in the location of the Property. Such notice shall be
provided thirty days in advance of the date that such change or proposed change
is planned to take effect. Borrower does business, and has done business, only
under its own name and the trade names, if any, set forth on Exhibit I hereto.
Section 6.04. LIENS AND ENCUMBRANCES TO TITLE. Borrower shall not,
directly or indirectly, create, incur, assume or suffer to exist any mortgage,
pledge, lien, charge, encumbrance or claim on or with respect to the Property
(together, "Liens") other than the respective rights of Lender and Issuer as
herein provided and the Permitted Exceptions. Borrower shall promptly, at its
own expense, take such action as may be necessary duly to discharge or remove
any such Lien. Borrower shall reimburse Lender for any expenses incurred by
Lender to discharge or remove any Lien.
Section 6.05. ASSIGNMENT OF INSURANCE. As additional security for the
payment and performance of Borrower's obligations hereunder, Borrower hereby
assigns to Lender, 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 Property or any
evidence thereof or any business records or valuable papers pertaining thereto,
and Borrower hereby directs the issuer of any such policy to pay all such moneys
directly to Lender. Borrower hereby assigns to Lender, as assignee of Issuer,
any and all moneys due or to become due with respect to any condemnation
proceeding affecting the Property. At any time, whether before or after the
occurrence of any Event of Default, Lender may (but need not), in Lender's name
or in Borrower's name, execute and deliver proof of claim, receive all such
moneys, endorse checks and other instruments representing payment of such
moneys, and adjust, litigate, compromise or release any claim against the issuer
of any such policy or party in any condemnation proceeding.
Section 6.06. AGREEMENT AS FINANCING STATEMENT. To the extent permitted
by applicable law, a carbon, photographic or other reproduction of this
Agreement or of any financing statements signed by Borrower is sufficient as a
financing statement in any state to perfect the security interests granted in
this Agreement.
Section 6.07. LETTER OF CREDIT. Upon receipt of the Final Appraisal and
if (i) an Undersecured Amount exists and (ii) Borrower elects not to prepay the
Loan in the amount of the Undersecured Amount pursuant to Section 2.08 hereof,
Borrower hereby agrees to deliver or cause to be delivered to Lender the Letter
of Credit as additional security for the prompt payment and performance of all
of Borrower's obligations under this Agreement. Borrower hereby further agrees
to deliver to Lender not later than 60 days prior to any scheduled expiration
date of the Letter of Credit or any Substitute Letter of Credit, as applicable
(a) evidence satisfactory to Lender that such Letter of Credit or Substitute
Letter of Credit has been renewed on terms acceptable to Lender or (b) a
Substitute Letter of Credit. If at any time (x) the rating of Bank by
23
LACE is below "B" or (y) the rating of a Substitute Bank is below the rating
required by Lender at the time the related Substitute Letter of Credit is
accepted by Lender, Borrower shall within 30 days provide to Lender a Substitute
Letter of Credit. A failure by Borrower to fully and timely perform any
obligation under this Section 6.07 or the failure of Bank or any Substitute Bank
to fully and timely honor any draft under the Letter of Credit or any Substitute
Letter of Credit as the case may be shall constitute an immediate Event of
Default hereunder.
ARTICLE VII
AFFIRMATIVE COVENANTS OF BORROWER
So long as the Loan shall remain unpaid, Borrower will comply with the
following requirements:
Section 7.01. REPORTING REQUIREMENTS. Borrower will deliver, or cause
to be delivered, to Lender each of the following, which shall be in form and
detail acceptable to Lender:
(a) as soon as available, and in any event within 120 days after
the end of each fiscal year of Corporate Guarantor, consolidated
audited financial statements of Corporate Guarantor with the
unqualified opinion of independent certified public accountants
selected by Corporate Guarantor and acceptable to Lender, which annual
consolidated financial statements shall include the balance sheet of
Corporate Guarantor as at the end of such fiscal year and the related
statements of income, retained earnings and cash flows of Corporate
Guarantor for the fiscal year then ended, all in reasonable detail and
prepared in accordance with generally accepted accounting principles
applied on a consistent basis, together with (i) a report signed by
such accountants stating that in making the investigations necessary
for said opinion they obtained no knowledge, except as specifically
stated, of any Default or Event of Default hereunder and all relevant
facts in reasonable detail to evidence, and the computations as to,
whether or not Borrower is in compliance with the requirements set
forth in Sections 7.11 through 7.13 hereof; and (ii) a certificate of
the chief financial officer of Corporate Guarantor or Borrower in the
form of Exhibit L hereto stating that such financial statements have
been prepared in accordance with generally accepted accounting
principles applied on a consistent basis and whether or not such
officer has knowledge of the occurrence of any Default or Event of
Default hereunder and, if so, stating in reasonable detail the facts
with respect thereto;
(b) as soon as available and in any event within 90 days after
the end of each fiscal quarter of Corporate Guarantor, a consolidated
unaudited/internal balance sheet and statements of income and retained
earnings of Corporate Guarantor as at the end of and for such quarter
and for the year to date period then ended, in reasonable detail and
stating in comparative form the figures for the corresponding date and
periods in the previous year, all prepared in accordance with generally
accepted accounting principles applied on a consistent basis and
certified by the chief financial officer of Borrower or Corporate
Guarantor, subject to year-end audit adjustments; and accompanied by a
certificate of that officer in the form of Exhibit L hereto stating (i)
that such financial statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis,
(ii) whether or not such officer has knowledge of
24
the occurrence of any Default or Event of Default hereunder not
theretofore reported and remedied and, if so, stating in reasonable
detail the facts with respect thereto, and (iii) all relevant facts in
reasonable detail to evidence, and the computations as to, whether or
not Borrower is in compliance with the requirements set forth in
Sections 7.11 through 7.13 hereof;
(c) immediately after the commencement thereof, notice in writing
of all litigation and of all proceedings before any governmental or
regulatory agency affecting Borrower or Corporate Guarantor of the type
described in Article V hereof or which seek a monetary recovery against
Borrower or Corporate Guarantor in excess of $500,000;
(d) as promptly as practicable (but in any event not later than
five Business Days) after an officer of Borrower obtains knowledge of
the occurrence of any event that constitutes a Default or an Event of
Default hereunder, notice of such occurrence, together with a detailed
statement by a responsible officer of Borrower of the steps being taken
by Borrower to cure the effect of such Default or Event of Default;
(e) promptly upon knowledge thereof, notice of any loss or
destruction of or damage to any Property or of any material adverse
change in any Property;
(f) promptly upon their distribution, copies of all financial
statements, reports and proxy statements that Borrower shall have sent
to its stockholders;
(g) promptly after the amending thereof, copies of any and all
amendments to its certificate of incorporation, articles of
incorporation or bylaws;
(h) promptly upon knowledge thereof, notice of any violation by
Borrower of any law, rule or regulation;
(i) promptly upon knowledge thereof, notice of any material
adverse change in the financial or operating condition of Borrower or
Corporate Guarantor;
(j) upon request of Lender, as soon as available, and in any
event within 180 days after the end of each fiscal year forecasts and
projections of Borrower's and Corporate Guarantor's financial results
for the current fiscal year, together with a balance sheet, an income
statement and supporting facts and assumptions used to formulate such
forecasts and projections;
(k) within 30 days of request by Lender, evidence satisfactory to
Lender that Borrower has complied with the capital expenditure
limitations of Code section 144(a)(4); and
(l) promptly upon knowledge thereof, notice of any downgrade in
the rating of Bank or any Substitute Bank by LACE Financial
Corporation.
Section 7.02. BOOKS AND RECORDS; INSPECTION AND EXAMINATION. Borrower
will keep accurate books of record and account for itself pertaining to the
Property and pertaining to Borrower's business and financial condition and such
other matters as Lender may from time to
25
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, will permit any officer, employee, attorney or accountant for Lender
to audit, review, make extracts from, or copy any and all corporate and
financial books, records and properties of Borrower at all times during ordinary
business hours, and to discuss the affairs of Borrower with any of its
directors, officers, employees or agents. Borrower will permit Lender, or its
employees, accountants, attorneys or agents, to examine and copy any or all of
its records and to examine and inspect the Property at any time during
Borrower's business hours.
Section 7.03. COMPLIANCE WITH LAWS. Borrower will (a) comply with the
requirements of applicable laws and regulations, the noncompliance with which
would materially and adversely affect its business or its financial condition
and (b) use and keep the Property, and will require that others use and keep the
Property, only for lawful purposes, without violation of any federal, state or
local law, statute or ordinance. Borrower shall secure all permits and licenses,
if any, necessary for the installation and operation of the Property. Borrower
shall comply in all respects (including, without limitation, with respect to the
use, maintenance and operation of each item of the Property) with all laws of
the jurisdictions in which its operations involving any component of Property
may extend and of any legislative, executive, administrative or judicial body
exercising any power or jurisdiction over the items of the Property or its
interest or rights under this Agreement.
Section 7.04. ENVIRONMENTAL COMPLIANCE. Borrower shall promptly comply
with all statutes, regulations and ordinances, and with all orders, decrees or
judgments of governmental authorities or courts having jurisdiction, relating to
the use, collection, treatment, disposal, storage, control, removal or cleanup
of Hazardous Waste or Materials in, on or under the Property or any adjacent
property, or incorporated in any Improvements, at Borrower's expense. In the
event that Lender at any time believes that the Property is not free of all
Hazardous Waste or Materials or that Borrower has violated any applicable
Environmental Laws with respect to the Property, then immediately, upon request
by Lender, Borrower shall obtain and furnish to Lender, at Borrower's sole cost
and expense, an environmental audit and inspection of the Property from an
expert satisfactory to Lender. In the event that Borrower fails to immediately
obtain such audit or inspection, Lender or its agents may perform or obtain such
audit or inspection at Borrower's sole cost and expense. Lender may, but is not
obligated to, enter upon the Property and take such actions and incur such costs
and expenses to effect such compliance as it deems advisable to protect its
interest in the Property; and whether or not Borrower has actual knowledge of
the existence of Hazardous Waste or Materials on the Property or any adjacent
property as of the date hereof, Borrower shall reimburse Lender as provided
herein for the full amount of all costs and expenses incurred by Lender prior to
Lender acquiring title to the Property through foreclosure or acceptance of a
deed in lieu of foreclosure, in connection with such compliance activities.
Neither this provision nor any provision herein or in the Mortgage or related
documents shall operate to put Lender in the position of an owner of the
Property prior to any acquisition of the Property by Lender. The rights granted
to Lender herein and in the Mortgage or related documents are granted solely for
the protection of Lender's lien and security interest covering the Property and
do not grant to Lender the right to control Borrower's actions, decisions or
policies regarding Hazardous Waste or Materials.
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Section 7.05. PAYMENT OF TAXES AND OTHER CLAIMS. Borrower will pay or
discharge, when due, (a) all taxes, assessments and governmental charges levied
or imposed upon it or upon its income or profits, upon any properties belonging
to it (including, without limitation, the Property) or upon or against the
creation, perfection or continuance of the security interest created pursuant to
this Agreement, prior to the date on which penalties attach thereto, (b) all
federal, state and local taxes required to be withheld by it, and (c) all lawful
claims for labor, materials and supplies which, if unpaid, might by law become a
lien or charge upon any properties of Borrower; provided, that Borrower shall
not be required to pay any such tax, assessment, charge or claim whose amount,
applicability or validity is being contested in good faith by appropriate
proceedings. Borrower will pay, as the same respectively come due, all taxes and
governmental charges of any kind whatsoever that may at any time be lawfully
assessed or levied against or with respect to the Property, as well as all gas,
water, steam, electricity, heat, power, telephone, utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the
Property.
Section 7.06. PRESERVATION AND MAINTENANCE OF PROPERTY. Borrower (a)
shall, at its own expense, maintain, preserve and keep the Property in good
repair, working order and condition, and shall from time to time make all
repairs and replacements necessary to keep the Property in such condition, and
in compliance with state and federal laws, ordinary wear and tear excepted, (b)
shall maintain the Property in a condition suitable for certification by the
manufacturer thereof (if certification is available) and in conformance with all
manufacturer's recommended maintenance requirements, (c) shall not commit waste
or permit impairment or deterioration of the Property, (d) shall not abandon the
Property, (e) shall restore or repair promptly and in a good and workmanlike
manner all or any part of the Property to the equivalent of its original
condition, or such other condition as Lender may approve in writing, in the
event of any damage, injury or loss thereto, whether or not insurance proceeds
are available to cover in whole or in part the costs of such restoration or
repair, (f) shall keep all improvements, fixtures, equipment, machinery and
appliances on the Property, in good repair and shall replace fixtures,
equipment, machinery and appliances on the Property when necessary to keep such
items in good repair, (g) shall comply with all laws, ordinances, regulations
and requirements of any governmental body applicable to the Property and (h)
shall give notice in writing to Lender of and, unless otherwise directed in
writing by Lender, appear in and defend any action or proceeding purporting to
affect the Property, the security of this Agreement or the rights or powers of
Lender hereunder. Neither Borrower nor any tenant or other person shall remove,
demolish or alter any improvement now existing or hereafter erected on the
Property or any fixture, equipment, machinery or appliance in or on the Property
except when incident to the replacement of fixtures, equipment, machinery and
appliances with items of like kind. In the event that any parts or accessories
forming part of any item or items of Property become worn out, lost, destroyed,
damaged beyond repair or otherwise rendered unfit for use, Borrower, at its own
expense and expeditiously, will replace or cause the replacement of such parts
or accessories by replacement parts or accessories free and clear of all liens
and encumbrances and with a value and utility at least equal to that of the
parts or accessories being replaced (assuming that such replaced parts and
accessories were otherwise in good working order and repair). All such
replacement parts and accessories shall be deemed to be incorporated immediately
into and to constitute an integral portion of the Property and, as such, shall
be subject to the terms of this Agreement. Neither Lender nor Issuer shall have
any responsibility in any of these matters, or for the making of improvements or
additions to the Property. Borrower will defend the Property
27
against all claims or demands of all persons (other than Lender) claiming the
Property or any interest therein.
Borrower represents, warrants and covenants that the Property is and
shall be in compliance with the Americans with Disabilities Act of 1990 and all
of the regulations promulgated thereunder, as the same may be amended from time
to time.
Section 7.07. INSURANCE. (a) Borrower shall obtain and maintain the
following types of insurance upon and relating to the Property:
(i) "All Risk" property and fire insurance (with extended
coverage endorsement including malicious mischief and vandalism) in an
amount not less than the full replacement value of the Property (with a
deductible not to exceed $5,000 and with co-insurance limited to a
maximum of 10% of the amount of the policy), naming Lender under a
lender's loss payee endorsement (form 438BFU or equivalent) and
including agreed amount, inflation guard, replacement cost and waiver
of subrogation endorsements;
(ii) Comprehensive general liability insurance in an amount not
less than $2,000,000.00 insuring against personal injury, death and
property damage and naming Lender as additional insured;
(iii) Business interruption insurance covering loss of rental or
other income for up to twelve (12) months; and
(iv) Such other types of insurance or endorsements to existing
insurance as may be required from time to time by Lender.
(b) Upon each reasonable request of Lender, Borrower shall increase the
coverages under any of the insurance policies required to be maintained
hereunder or otherwise modify such policies in accordance with Lender's request.
All of the insurance policies required hereunder shall be issued by corporate
insurers licensed to do business in the state in which the Property is located
and rated A:X or better by A.M. Best Company, and shall be in form acceptable to
Lender. If and to the extent that the Property is located within an area that
has been or is hereafter designated or identified as an area having special
flood hazards by the Department of Housing and Urban Development or such other
official as shall from time to time be authorized by federal or state law to
make such designation pursuant to any national or state program of flood
insurance, Borrower shall carry flood insurance with respect to the Property in
amounts not less than the maximum limit of coverage then available with respect
to the Property or the amount of the Loans, whichever is less. Certificates of
all insurance required to be maintained hereunder shall be delivered to Lender,
along with evidence of payment in full of all premiums required thereunder,
contemporaneously with Borrower's execution of this Agreement. All such
certificates shall be in form acceptable to Lender and shall require the
insurance company to give to Lender at least 30 days' prior written notice
before canceling the policy for any reason or materially amending it.
Certificates evidencing all renewal and substitute policies of insurance shall
be delivered to Lender, along with evidence of the payment in full of all
premiums required thereunder, at least 15 days before termination of the
policies
28
being renewed or substituted. If any loss shall occur at any time when Borrower
shall be in default hereunder, Lender shall be entitled to the benefit of all
insurance policies held or maintained by Borrower, to the same extent as if same
had been made payable to Lender, and upon foreclosure hereunder, Lender shall
become the owner thereof. Lender shall have the right, but not the obligation,
to make premium payments, at Borrower's expense, to prevent any cancellation,
endorsement, alteration or reissuance of any policy of insurance maintained by
Borrower, and such payments shall be accepted by the insurer to prevent same.
(c) As 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 portion of the Property and for injury to or death of
any person or damage to any property, whether such injury or death be with
respect to agents or employees of Borrower or of third parties, and whether such
property damage be to Borrower's property or the property of others. Whether or
not covered by insurance, Borrower hereby assumes responsibility for and agrees
to reimburse Lender and Issuer for and will indemnify, defend and hold Lender
and Issuer 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 or Issuer that in any way relate to or arise out of this
Agreement, the transactions contemplated hereby and the Property, including but
not limited to, (i) the selection, manufacture, construction, purchase,
acceptance or rejection of the Property or the ownership of the Property, (ii)
the delivery, lease, possession, maintenance, use, condition, return or
operation of the Property, (iii) the condition of the Property sold or otherwise
disposed of after possession by Borrower, (iv) any patent or copyright
infringement, (v) the conduct of Borrower, its officers, employees and agents,
(vi) a breach of Borrower of any of its covenants or obligations hereunder and
(vii) any claim, loss, cost or expense involving alleged damage to the
environment relating to the Property, including, but not limited to
investigation, removal, cleanup and remedial costs. All amounts payable by
Borrower pursuant to the immediately preceding sentence shall be paid
immediately upon demand of Issuer or Lender, as the case may be. This provision
shall survive the termination of this Agreement.
Section 7.08. PRESERVATION OF CORPORATE EXISTENCE. Borrower will
preserve and maintain its corporate existence and all of its rights, privileges
and franchises necessary or desirable in the normal conduct of its business; and
shall conduct its business in an orderly, efficient and regular manner.
Section 7.09. PERFORMANCE BY LENDER. If Borrower at any time fails to
perform or observe any of the covenants or agreements contained in this
Agreement, in the Mortgage or any other related document, and if such failure
shall continue for a period of 10 calendar days after Lender gives Borrower
written notice thereof (or in the case of the agreements contained in Sections
7.06 and 7.07 hereof, immediately upon the occurrence of such failure, without
notice or lapse of time), Lender may, but need not, perform or observe such
covenant on behalf and in the name, place and stead of Borrower (or, at Lender's
option, in Lender's name) and may, but need not, take any and all other actions
which Lender may reasonably deem necessary to cure or correct such failure
(including, without limitation, the payment of taxes, the satisfaction of
security interests, liens or encumbrances, the performance of obligations owed
to account debtors or other obligors, the procurement and maintenance of
insurance, the execution of assignments, security agreements and financing
statements, and the endorsement of instruments); and
29
Borrower shall thereupon pay to Lender on demand the amount of all moneys
expended and all costs and expenses (including reasonable attorneys' fees and
legal expenses) incurred by Lender in connection with or as a result of the
performance or observance of such agreements or the taking of such action by
Lender, together with interest thereon from the date expended or incurred at the
lesser of 18% per annum or the highest rate permitted by law. To facilitate the
performance or observance by Lender of such covenants of Borrower, Borrower
hereby irrevocably appoints Lender, or the delegate of Lender, acting alone, as
the attorney in fact of Borrower with the right (but not the duty) from time to
time to create, prepare, complete, execute, deliver, endorse or file in the name
and on behalf of Borrower any and all instruments, documents, assignments,
security agreements, financing statements, applications for insurance and other
agreements and writings required to be obtained, executed, delivered or endorsed
by Borrower under this Agreement.
Section 7.10. LIMITATIONS OF LIABILITY. In no event, whether as a
result of breach of contract, warranty, tort (including negligence or strict
liability), indemnity or otherwise, shall Lender, its assignees, if any, or
Issuer be liable for any special, consequential, incidental, punitive or penal
damages, including, but not limited to, loss of profit or revenue, loss of use
of the Premises or any associated equipment, service materials or software,
damage to associated equipment, service materials or software, cost of capital,
cost of substitute property, service materials or software, facilities, services
or replacement power or downtime costs.
Section 7.11. RATIO OF DEBT TO TANGIBLE NET WORTH. Borrower shall
maintain at all times its ratio of Debt (as defined below) to Tangible Net Worth
(as defined below) at not more than 1.50 to 1.00. "Debt" shall mean (i) all
items of indebtedness or liability which in accordance with generally accepted
accounting principles or federal tax law would be included in determining total
liabilities as shown on the liabilities side of a balance sheet, (ii)
indebtedness secured by any mortgage, pledge, lien or security interest existing
on property owned by Borrower, whether or not the indebtedness secured thereby
shall have been assumed, and (iii) guaranties and endorsements (other than for
purposes of collection in the ordinary course of business) by Borrower and other
contingent obligations of Borrower in respect of, or to purchase or otherwise
acquire, indebtedness of others. "Tangible Net Worth" means the excess of:
(a) the tangible assets of Borrower, which, in accordance with
generally accepted accounting principles, are tangible assets, after
deducting adequate reserves in each case where, in accordance with
generally accepted accounting principles, a reserve is proper over
(b) all Debt of Borrower;
provided, however, that (i) inventory shall be taken into account on the basis
of the cost (determined on a first-in, first-out basis) or current market value,
whichever is lower, (ii) in no event shall there be included as such tangible
assets patents, trademarks, trade names, copyrights, licenses, good will,
advances or loans to, or receivables from, directors, officers, employees or
affiliates, prepaid or intangible assets, amounts relating to covenants not to
compete, pensions assets, deferred charges or treasury stock or any securities
or Debt of Borrower or any other securities unless the same are readily
marketable in the United States of America or entitled to be used as a credit
against federal income tax liabilities, (iii) securities included as such
tangible
30
assets shall be taken into account at their current market price or cost,
whichever is lower, and (iv) any write-up in the book value of any assets shall
not be taken into account.
Section 7.12. DEBT SERVICE COVERAGE RATIO OF BORROWER. Borrower will
maintain for each fiscal year its Debt Service Coverage Ratio (as defined below)
at not less than 1.75 to 1.00 "Debt Service Coverage Ratio" means the ratio of
(i) Borrower's Cash Flow Available for Debt Service (as defined below) to (ii)
Borrower's Debt Service (as defined below). "Cash Flow Available for Debt
Service" of Borrower means, with respect to the applicable period of
determination, Borrower's income, plus interest expense, depreciation,
amortization and other non-cash charges. "Debt Service" of Borrower means, with
respect to the applicable period of determination, the aggregate of (i) interest
expense of Borrower (ii) all installments of principal on Debt of Borrower that
are due on demand or during the period of determination, (iii) all installments
of rent under capitalized lease obligations (to the extent not already accounted
for in computation of net income or Debt) of Borrower that are due on demand or
during the period of determination and (iv) distributions and dividends to
stockholders and advances to affiliates of Borrower during the period of
determination.
Section 7.13. TANGIBLE NET WORTH. Borrower shall maintain its Tangible
Net Worth at all times at not less than $7,000,000.
ARTICLE VIII
NEGATIVE COVENANTS OF BORROWER
So long as the Loan 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 Property except for the security interest created
pursuant to this Agreement and the liens created pursuant to the Mortgage.
Section 8.02. SALE OF ASSETS. Neither Borrower nor Corporate Guarantor
will sell, lease, assign, transfer or otherwise dispose of all or a substantial
part of its assets or of any of the Property or any interest therein (whether in
one transaction or in a series of transactions).
Section 8.03. CONSOLIDATION AND MERGER. Neither Borrower nor Corporate
Guarantor will consolidate with or merge into any person, or permit any other
person to merge into it or acquire (in a transaction analogous in purpose or
effect to a consolidation or merger) all or substantially all of the assets of
any other person.
Section 8.04. ACCOUNTING. Neither Borrower nor Corporate Guarantor will
adopt, permit or consent to any material change in accounting principles other
than as required by generally accepted accounting principles. Neither Borrower
nor Corporate Guarantor will adopt, permit or consent to any change in its
fiscal year.
Section 8.05. TRANSFERS. Neither Borrower nor Corporate Guarantor will
in any manner transfer any property without prior or present receipt of full and
adequate consideration.
31
Section 8.06. PLACE OF BUSINESS. Borrower will not permit any of the
Property or any records pertaining to the Property to be located in any state or
area in which, in the event of such location, a financing statement covering
such Property would be required to be, but has not in fact been, filed in order
to perfect the security interest created pursuant to this Agreement.
Section 8.07. MODIFICATIONS AND SUBSTITUTIONS. (a) Borrower will not
make any material alterations, modifications or additions to the Property which
cannot be removed without materially damaging the functional capabilities or
economic value of the Property. Upon return of the Property to Lender and at the
request of Lender, Borrower, at its sole cost and expense, will remove all
alterations, modifications and additions and repair the Property as necessary to
return the Property to the condition in which it was furnished, ordinary wear
and tear and permitted modifications excepted.
(b) Notwithstanding the provisions of subparagraph (a) of this Section,
Borrower may, with the prior written consent of Lender, substitute for parts,
elements, portions or all of the Property, other parts, elements, portions,
equipment or facilities; provided, however, that any substitutions made pursuant
to Borrower's obligations to make repairs referenced under any provision of this
Agreement shall not require such prior written consent. Borrower shall provide
such documents or assurances as Lender may reasonably request to maintain or
confirm the security interest assigned to Lender in the Property as so modified
or substituted.
Section 8.08. USE OF PROPERTY. Unless required by applicable law or
unless Lender has otherwise agreed in writing, Borrower shall not allow changes
in the use for which all or any part of the Property was intended at the time
this Agreement was executed. Borrower shall not, without Lender's prior written
consent, (a) initiate or acquiesce in a change in the zoning classification
(including any variance under any existing zoning ordinance applicable to the
Property), (b) permit the use of the Property to become a non-conforming use
under applicable zoning ordinances, (c) file any subdivision or parcel map
affecting the Property, or (d) amend, modify or consent to any easement or
covenants, conditions and restrictions pertaining to the Property.
ARTICLE IX
DAMAGE AND DESTRUCTION; CONDEMNATION
Section 9.01. DAMAGE AND DESTRUCTION. Borrower shall provide a complete
written report to Lender immediately upon any loss, theft, damage or destruction
of any Property and of any accident involving any Property. If all or any part
of the Property is lost, stolen, destroyed or damaged beyond repair ("Damaged
Property"), Borrower shall as soon as practicable after such event either: (a)
replace the same at Borrower's sole cost and expense with property having
substantially similar specifications and of equal or greater value to the
Damaged Property immediately prior to the time of the loss occurrence, such
replacement equipment to be subject to Lender's approval, whereupon such
replacement property shall be substituted in this Agreement and the other
related documents by appropriate endorsement or amendment; or (b) pay the
applicable Prepayment Amount and applicable Taxable Prepayment Amount of the
Damaged Property. Borrower shall notify Lender of which course of action it will
take within 15 calendar days after the loss occurrence. If, within 45 calendar
days of the loss occurrence, (a) Borrower
32
fails to notify Lender; (b) Borrower and Lender fail to execute an amendment to
this Agreement to delete the Damaged Property and add the replacement property
or (c) Borrower fails to pay the applicable Prepayment Amount and the applicable
Taxable Prepayment Amount, then Lender may, at its sole discretion, declare the
applicable Prepayment Amount and the applicable Taxable Prepayment Amount to be
immediately due and payable, and Borrower is required to pay the same. The Net
Proceeds of insurance with respect to the Damaged Property shall be made
available by Lender to be applied to discharge Borrower's obligation under this
Section as provided in Section 5 of the Mortgage. The payment of the Prepayment
Amount and the Taxable Prepayment Amount and the termination of Lender's
interest in the Damaged Property is subject to the terms of Section 2.07 hereof.
For purposes of this Section, the term "Net Proceeds" shall mean the amount
remaining from the gross proceeds of any insurance claim after deducting all
expenses (including reasonable attorneys' fees) incurred in the collection of
such claim.
Section 9.02. CONDEMNATION. If the Property, or any part thereof, shall
be condemned for any reason, including without limitation fire or earthquake
damage, or otherwise taken for public or quasi-public use under the power of
eminent domain, or be transferred in lieu thereof, all damages or other amounts
awarded for the taking of, or injury to, the Property shall be paid to Lender
who shall have the right, in its sole and absolute discretion, to apply the
amounts so received against (a) the costs and expenses of Lender, including
attorneys' fees incurred in connection with collection of such amounts, and (b)
the balance against the outstanding principal balance of the Loans; provided,
however, that if (i) no Event of Default shall have occurred and be continuing
hereunder, (ii) Borrower provides evidence satisfactory to Lender of its ability
to pay all amounts becoming due hereunder during the pendency of any restoration
or repairs to or replacement of the Property, (iii) Lender determines, in its
sole discretion, that the proceeds of such award are sufficient to restore,
repair, replace and rebuild the Property as nearly as possible to its value,
condition and character immediately prior to such taking (or, if the proceeds of
such award are insufficient for such purpose, if Borrower provides additional
sums to Lender's satisfaction so that the aggregate of such sums and the
proceeds of such award will be sufficient for such purpose), and (iv) Borrower
provides evidence satisfactory to Lender that none of the tenants of the
Property will terminate their lease agreements as a result of either the
condemnation or taking or the repairs to or replacement of the Property, the
proceeds of such award, together with additional sums provided by Borrower,
shall be placed in a separate account for the benefit of Lender and Borrower to
be used to restore, repair, replace and rebuild the Property as nearly as
possible to its value, condition and character immediately prior to such taking.
All work to be performed in connection therewith shall be pursuant to a written
contract therefor, which contract shall be subject to the prior approval of
Lender. To the extent that any funds remain after the Property has been so
restored and repaired, the same shall be applied against the outstanding
principal balance of the Loans in such order as Lender may elect. To enforce its
rights hereunder, Lender shall be entitled to participate in and control any
condemnation proceedings and to be represented therein by counsel of its own
choice, and Borrower will deliver, or cause to be delivered to Lender such
instruments as may be requested by it from time to time to permit such
participation. In the event Lender, as a result of any such judgment, decree or
award, believes that the payment or performance of the Loans or the Bond is
impaired, Lender may declare the entire unpaid principal balance of the Loans
immediately due and payable.
33
ARTICLE X
ASSIGNMENT, SUBLEASING AND SELLING
Section 10.01. ASSIGNMENT BY LENDER. This Agreement, and the
obligations of Borrower to make payments hereunder, may be assigned and
reassigned in whole or in part to one or more assignees or subassignees (who
shall be the purchaser of the Bond or an interest therein) by Lender at any time
subsequent to its execution, without the necessity of obtaining the consent of
Issuer or Borrower; provided, however, that no such assignment or reassignment
shall be effective unless and until (a) Issuer and Borrower shall have received
notice of the assignment or reassignment disclosing the name and address of the
assignee or subassignee, which notice Issuer shall maintain as evidence of the
ownership and registration of the Bond, and (b) in the event that such
assignment or reassignment is made to a bank or trust company as trustee for
holders of certificates representing interests in this Agreement and the Bond,
such bank or trust company agrees to maintain, or cause to be maintained, a
book-entry system by which a record of the names and addresses of such holders
as of any particular time is kept and agrees, upon request of Issuer or
Borrower, to furnish such information to Issuer or Borrower. Upon receipt of
notice of assignment, Borrower will reflect in a book-entry the assignee
designated in such notice of assignment, and shall agree to make all payments to
the assignee designated in the notice of assignment, notwithstanding any claim,
defense, setoff or counterclaim whatsoever (whether arising from a breach of
this Agreement or otherwise) that 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, which may be
reasonably requested by Lender or its assignee to protect their interest in the
Property and in this Agreement.
Section 10.02. NO SALE OR ASSIGNMENT BY BORROWER. This Agreement and
the interest of Borrower in the Property may not be sold, assumed, assigned or
encumbered by Borrower, except for the Permitted Exceptions.
ARTICLE XI
EVENTS OF DEFAULT AND REMEDIES
Section 11.01. EVENTS OF DEFAULT. The following constitute "Events of
Default" under this Agreement:
(a) failure by Borrower to pay to Lender, as assignee of Issuer,
when due any Loan Payment or to pay any other payment required to be
paid hereunder and the continuation of such failure for a period of 10
days;
(b) failure by Borrower to maintain insurance on the Property in
accordance with Section 7.07 hereof;
(c) failure by Borrower to comply with the provisions of Sections
7.11, 7.12, 7.13, 8.01, 8.02 or 8.03 hereof;
34
(d) failure by Borrower, Issuer or Corporate Guarantor, as the
case may be, to observe and perform any other covenant, condition or
agreement contained herein, in the Mortgage, in the Hazardous
Substances Agreement, in the Escrow Agreement, in the Tax Regulatory
Agreement, in the Corporate Guaranty Agreement or in any other document
or agreement executed in connection herewith on its part to be observed
or performed for a period of 30 days after written notice is given to
Borrower, Issuer or Corporate Guarantor, as the case may be, specifying
such failure and directing that it be remedied; provided, however,
that, if the failure stated in such notice cannot be corrected within
such 30-day period, Lender will not unreasonably withhold its consent
to an extension of such time if corrective action is instituted by
Borrower, Issuer or Corporate Guarantor, as the case may be, within the
applicable period and diligently pursued until the default is
corrected;
(e) 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;
(f) Borrower or Corporate Guarantor shall be or become insolvent,
or admit in writing its inability to pay its debts as they mature, or
make an assignment for the benefit of creditors; or Borrower or
Corporate Guarantor shall apply for or consent to the appointment of
any receiver, trustee or similar officer for it or for all or any
substantial part of its property; or such receiver, trustee or similar
officer shall be appointed without the application or consent of
Borrower or Corporate Guarantor, as the case may be; or Borrower or
Corporate Guarantor shall institute (by petition, application, answer,
consent or otherwise) any bankruptcy, insolvency, reorganization,
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding relating to it under the laws of any jurisdiction; or any
such proceeding shall be instituted (by petition, application or
otherwise) against Borrower or Corporate Guarantor; or any judgment,
writ, warrant of attachment or execution or similar process shall be
issued or levied against a substantial part of the property of Borrower
or Corporate Guarantor;
(g) determination by Lender that any representation or warranty
made by Borrower, Issuer or Corporate Guarantor herein, in the Tax
Regulatory Agreement, in the Corporate Guaranty Agreement or in any
other document executed in connection herewith was untrue in any
material respect when made;
(h) an Event of Taxability shall occur;
(i) an amendment or termination relating to a filed financing
statement describing any of the Property is improperly filed;
(j) the occurrence of a default or an event of default under any
instrument, agreement or other document evidencing, relating to or
securing any indebtedness or other monetary obligation of Borrower or
Corporate Guarantor;
(k) Corporate Guarantor shall repudiate, purport to revoke or
fail to perform its obligations under the Corporate Guaranty Agreement;
35
(l) ownership of the stock of Borrower changes during the period
that the Loan is outstanding (Borrower hereby acknowledges that Lender
has made its decision to enter into the transactions contemplated
hereby based upon the management expertise of the current stockholders
and their ownership of the stock of Borrower);
(m) the occurrence of a default or an event of default under the
Mortgage or any other agreement between or among Lender or any GE
Capital Entity and Borrower, including (without limitation) any
occurrence of a default or an event of default under the Taxable Loan
Agreement;
(n) failure by Borrower to fully and timely perform any of its
obligations under Section 6.07 of this Agreement or the failure of Bank
or any Substitute Bank to fully and timely honor any draft under the
Letter of Credit or any Substitute Letter of Credit as the case may be;
or
(o) failure to satisfy all of the conditions contained in Section
3.02 hereof by September 30, 2004.
Section 11.02. REMEDIES ON DEFAULT. Whenever any Event of Default shall
have occurred, Lender, 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 which are 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, all such
accrued interest and all such amounts shall become and be forthwith due
and payable, without presentment, notice of dishonor, protest or
further notice of any kind, all of which are hereby expressly waived by
Borrower;
(b) take possession of the Property wherever situated, without
any court order or other process of law and without liability for
entering the premises, and lease, sublease or make other disposition of
the Property for use over a term in a commercially reasonable manner,
all for the account of Lender, provided that Borrower shall remain
directly liable for the deficiency, if any, between the rent or other
amounts paid by a lessee or sublessee of the Property pursuant to such
lease or sublease during the same period of time, after deducting all
costs and expenses, including reasonable attorneys' fees and expenses,
incurred with respect to the recovery, repair and storage of the
Property during such period of time;
(c) take possession of the Property wherever situated, without
any court order or other process of law and without liability for
entering the Premises, and sell the Property in a commercially
reasonable manner. All proceeds from such sale shall be applied in the
following manner:
FIRST, to pay all proper and reasonable costs and expenses
associated with the recovery, repair, storage and sale of the
Property, including reasonable attorneys' fees and expenses;
36
SECOND, to pay (i) Lender the amount of all unpaid Loan
Payments or other obligations (whether direct or indirect owed by
Borrower to Lender), if any, which are then due and owing,
together with interest and late charges thereon, (ii) Lender the
then applicable Prepayment Amount (taking into account the
payment of past-due Loan Payments as aforesaid), plus a pro rata
allocation of interest, at the rate utilized to calculate the
Loan Payments, from the next preceding due date of a Loan Payment
until the date of payment by the buyer, and (iii) any other
amounts due hereunder, including indemnity payments, taxes,
charges, reimbursement of any advances and other amounts payable
to Lender or Issuer hereunder; and
THIRD, to pay the remainder of the sale proceeds, purchase
moneys or other amounts paid by a buyer of the Property to
Borrower;
(d) proceed by appropriate court action to enforce specific
performance by 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;
(e) exercise all rights and remedies under the Mortgage;
(f) take whatever action at law or in equity that may appear
necessary or desirable to enforce its rights with respect to the
Property. Borrower shall pay or repay to Lender or Issuer all costs of
such action or court action, including, without limitation, reasonable
attorneys' fees;
(g) with or without notice to Borrower, submit one or more drafts
under the Letter of Credit or any Substitute Letter of Credit for any
amounts due hereunder; and
(h) exercise any and all rights and remedies under the Taxable
Loan Agreement.
Notwithstanding any other remedy exercised hereunder, Borrower shall
remain obligated to pay to Lender any unpaid portion of the Prepayment Amount
and the Taxable Prepayment Amount.
Section 11.03. 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.
37
Section 11.04. LATE CHARGE. Any Loan Payment not paid by Borrower on
the due date thereof shall, to the extent permissible by law, bear a late charge
equal to the lesser of five cents ($.05) per dollar of the delinquent amount or
the lawful maximum, and Borrower shall be obligated to pay the same immediately
upon receipt of Lender's written invoice therefor.
ARTICLE XII
MISCELLANEOUS
Section 12.01. COSTS AND EXPENSES OF LENDER. Borrower shall pay to
Lender, in addition to the Loan Payments payable by Borrower hereunder, such
amounts in each year as shall be required by Lender in payment of any reasonable
costs and expenses incurred by Lender in connection with the execution,
performance or enforcement of this Agreement, including but not limited to
payment of all reasonable fees, costs and expenses and all administrative costs
of Lender in connection with the Property, expenses (including, without
limitation, attorneys' fees and disbursements), fees of auditors or attorneys,
insurance premiums not otherwise paid hereunder and all other direct and
necessary administrative costs of Lender or charges required to be paid by it in
order to comply with the terms of, or to enforce its rights under, this
Agreement. Such costs and expenses shall be billed to Borrower by Lender from
time to time, together with a statement certifying that the amount so billed has
been paid by Lender for one or more of the items above described, or that such
amount is then payable by Lender for such items. Amounts so billed shall be due
and payable by Borrower within thirty (30) days after receipt of the xxxx by
Borrower.
Section 12.02. DISCLAIMER OF WARRANTIES. LENDER 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 PROPERTY, 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
Property or the existence, furnishing, functioning or Borrower's use of any item
or products or services provided for in this Agreement.
Section 12.03. NOTICES. All notices, certificates, requests, demands
and other communications provided for hereunder or under the Escrow Agreement or
the Tax Regulatory Agreement shall be in writing and shall be (a) personally
delivered, (b) sent by first class United States mail, (c) sent by overnight
courier of national reputation, or (d) transmitted by telecopy, in each case
addressed to the party to whom notice is being given at its address as set forth
above and, if telecopied, transmitted to that party at its telecopier number set
forth above or, as to each party, at such other address or telecopier number as
may hereafter be designated by such party in a written notice to the other party
complying as to delivery with the terms of this Section. All such notices,
requests, demands and other communications shall be deemed to have been given on
(a) the date received if personally delivered, (b) when deposited in the mail if
delivered by mail, (c) the date sent if sent by overnight courier, or (d) the
date of transmission if delivered by telecopy. If notice to Borrower of any
intended disposition of the Property or any other intended action is required by
law in a particular instance, such notice shall be deemed commercially
38
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, the Mortgage, the Hazardous Substances Agreement,
the Escrow Agreement or the Tax Regulatory 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 instrument, and any of the parties
hereto may execute this Agreement by signing any such counterpart, provided that
only the original marked "Original: 1 of 6" on the execution page thereof shall
constitute chattel paper under the UCC. A purchase of this chattel paper from
Issuer would violate the rights of Lender.
Section 12.09. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State.
Section 12.10. WASHINGTON STATE NOTICE. Lender hereby notifies Borrower
as follows: ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY/EXTEND CREDIT, OR
TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
Section 12.11. CAPTIONS. The captions or headings in this Agreement are
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or sections of this Agreement.
Section 12.12. ENTIRE AGREEMENT. This Agreement, the Mortgage, the
Hazardous Substances Agreement, the Tax Regulatory Agreement, the Escrow
Agreement, the Assignment and the exhibits hereto and thereto constitute the
entire agreement among Lender, Issuer, Borrower and Escrow Agent. There are no
understandings, agreements, representations or
39
warranties, express or implied, not specified herein or in such documents
regarding this Agreement or the Property financed hereby.
Section 12.13. COMMERCIAL PURPOSES; USURY. Borrower represents and
warrants that the Property which is the subject of this Agreement is not and
will not be used principally for agricultural purposes and that the obligations
and indebtedness evidenced by this Agreement were incurred primarily for
commercial, investment or business purposes and not for personal, family or
household purposes within the meaning of RCW 19.52.080. It is the intention of
the parties hereto to comply with any applicable usury laws; accordingly, it is
agreed that, notwithstanding any provisions to the contrary in this Agreement,
in no event shall this Agreement require the payment or permit the collection of
interest or any amount in the nature of interest or fees in excess of the
maximum permitted by applicable law.
Section 12.14. BOUND TRANSCRIPTS. Within 45 days of the day of closing,
Borrower shall cause to be prepared and furnished, at Borrower's expense, to
Issuer, Lender and their counsel, bound transcripts in CD Rom format containing
this Agreement, the Escrow Agreement, the Tax Regulatory Agreement and all other
documents related thereto.
Section 12.15. 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.
[REMAINDER OF PAGE INTENTIONALLY BLANK; EXECUTION PAGE FOLLOWS.]
40
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
their respective corporate names by their duly authorized officers, all as of
the date first written above.
Lender: GE CAPITAL PUBLIC FINANCE, INC.
By: ___________________________________
Title: Vice President
Issuer: WASHINGTON ECONOMIC DEVELOPMENT
FINANCE AUTHORITY
By: ___________________________________
Title: ________________________________
Borrower: ABSORPTION CORP.
By: ___________________________________
Title: ________________________________
ORIGINAL: ___ OF 6
[EXECUTION PAGE OF TAX-EXEMPT LOAN AGREEMENT]
EXHIBIT A TO TAX-EXEMPT LOAN AGREEMENT
SCHEDULE OF LOAN PAYMENTS
Closing Date: March 19, 2003
Coupon Rate: 5.63% until October 1, 2003, 5.38% thereafter
PAYMENT PAYMENT LOAN PRINCIPAL INTEREST PRINCIPAL PREPAYMENT
DATE NUMBER PAYMENT COMPONENT COMPONENT BALANCE* AMOUNT*
--------- ------- ------------ ------------ ------------ ------------ ------------
3/19/2003 0 -- -- -- 2,355,000.00 2,472,750.00
5/1/2003 1 15,468.43 -- 15,468.43 2,355,000.00 2,472,750.00
6/1/2003 2 11,048.87 -- 11,048.87 2,355,000.00 2,472,750.00
7/1/2003 3 11,048.87 -- 11,048.87 2,355,000.00 2,472,750.00
8/1/2003 4 11,048.87 -- 11,048.87 2,355,000.00 2,472,750.00
9/1/2003 5 11,048.87 -- 11,048.87 2,355,000.00 2,472,750.00
10/1/2003 6 11,048.87 -- 11,048.87 2,355,000.00 2,472,750.00
11/1/2003 7 10,558.25 -- 10,558.25 2,355,000.00 2,472,750.00
12/1/2003 8 10,558.25 -- 10,558.25 2,355,000.00 2,472,750.00
1/1/2004 9 10,558.25 -- 10,558.25 2,355,000.00 2,472,750.00
2/1/2004 10 10,558.25 -- 10,558.25 2,355,000.00 2,472,750.00
3/1/2004 11 10,558.25 -- 10,558.25 2,355,000.00 2,472,750.00
4/1/2004 12 10,558.25 -- 10,558.25 2,355,000.00 2,472,750.00
5/1/2004 13 10,558.25 -- 10,558.25 2,355,000.00 2,449,200.00
6/1/2004 14 10,558.25 -- 10,558.25 2,355,000.00 2,449,200.00
7/1/2004 15 10,558.25 -- 10,558.25 2,355,000.00 2,449,200.00
8/1/2004 16 10,558.25 -- 10,558.25 2,355,000.00 2,449,200.00
9/1/2004 17 10,558.25 -- 10,558.25 2,355,000.00 2,449,200.00
10/1/2004 18 10,558.25 -- 10,558.25 2,355,000.00 2,449,200.00
11/1/2004 19 10,558.25 -- 10,558.25 2,355,000.00 2,449,200.00
12/1/2004 20 10,558.25 -- 10,558.25 2,355,000.00 2,449,200.00
1/1/2005 21 10,558.25 -- 10,558.25 2,355,000.00 2,449,200.00
2/1/2005 22 10,558.25 -- 10,558.25 2,355,000.00 2,449,200.00
3/1/2005 23 10,558.25 -- 10,558.25 2,355,000.00 2,449,200.00
4/1/2005 24 10,558.25 -- 10,558.25 2,355,000.00 2,449,200.00
5/1/2005 25 10,558.25 -- 10,558.25 2,355,000.00 2,425,650.00
6/1/2005 26 10,558.25 -- 10,558.25 2,355,000.00 2,425,650.00
7/1/2005 27 10,558.25 -- 10,558.25 2,355,000.00 2,425,650.00
8/1/2005 28 10,558.25 -- 10,558.25 2,355,000.00 2,425,650.00
9/1/2005 29 10,558.25 -- 10,558.25 2,355,000.00 2,425,650.00
10/1/2005 30 10,558.25 -- 10,558.25 2,355,000.00 2,425,650.00
11/1/2005 31 10,558.25 -- 10,558.25 2,355,000.00 2,425,650.00
12/1/2005 32 10,558.25 -- 10,558.25 2,355,000.00 2,425,650.00
1/1/2006 33 10,558.25 -- 10,558.25 2,355,000.00 2,425,650.00
2/1/2006 34 10,558.25 -- 10,558.25 2,355,000.00 2,425,650.00
3/1/2006 35 10,558.25 -- 10,558.25 2,355,000.00 2,425,650.00
4/1/2006 36 10,558.25 -- 10,558.25 2,355,000.00 2,425,650.00
5/1/2006 37 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
PAYMENT PAYMENT LOAN PRINCIPAL INTEREST PRINCIPAL PREPAYMENT
DATE NUMBER PAYMENT COMPONENT COMPONENT BALANCE* AMOUNT*
--------- ------- ------------ ------------ ------------ ------------ ------------
6/1/2006 38 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
7/1/2006 39 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
8/1/2006 40 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
9/1/2006 41 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
10/1/2006 42 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
11/1/2006 43 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
12/1/2006 44 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
1/1/2007 45 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
2/1/2007 46 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
3/1/2007 47 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
4/1/2007 48 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
5/1/2007 49 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
6/1/2007 50 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
7/1/2007 51 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
8/1/2007 52 10,558.25 -- 10,558.25 2,355,000.00 2,402,100.00
9/1/2007 53 22,922.30 12,364.05 10,558.25 2,342,635.95 2,389,488.67
10/1/2007 54 22,922.30 12,419.48 10,502.82 2,330,216.47 2,376,820.80
11/1/2007 55 22,922.30 12,475.16 10,447.14 2,317,741.31 2,364,096.14
12/1/2007 56 22,922.30 12,531.09 10,391.21 2,305,210.22 2,351,314.42
1/1/2008 57 22,922.30 12,587.27 10,335.03 2,292,622.95 2,338,475.41
2/1/2008 58 22,922.30 12,643.71 10,278.59 2,279,979.24 2,325,578.82
3/1/2008 59 22,922.30 12,700.39 10,221.91 2,267,278.85 2,312,624.43
4/1/2008 60 22,922.30 12,757.33 10,164.97 2,254,521.52 2,299,611.95
5/1/2008 61 22,922.30 12,814.53 10,107.77 2,241,706.99 2,286,541.13
6/1/2008 62 22,922.30 12,871.98 10,050.32 2,228,835.01 2,273,411.71
7/1/2008 63 22,922.30 12,929.69 9,992.61 2,215,905.32 2,260,223.43
8/1/2008 64 22,922.30 12,987.66 9,934.64 2,202,917.66 2,246,976.01
9/1/2008 65 22,922.30 13,045.89 9,876.41 2,189,871.77 2,233,669.21
10/1/2008 66 22,922.30 13,104.37 9,817.93 2,176,767.40 2,220,302.75
11/1/2008 67 22,922.30 13,163.13 9,759.17 2,163,604.27 2,206,876.36
12/1/2008 68 22,922.30 13,222.14 9,700.16 2,150,382.13 2,193,389.77
1/1/2009 69 22,922.30 13,281.42 9,640.88 2,137,100.71 2,179,842.72
2/1/2009 70 22,922.30 13,340.97 9,581.33 2,123,759.74 2,166,234.93
3/1/2009 71 22,922.30 13,400.78 9,521.52 2,110,358.96 2,152,566.14
4/1/2009 72 22,922.30 13,460.86 9,461.44 2,096,898.10 2,138,836.06
5/1/2009 73 22,922.30 13,521.21 9,401.09 2,083,376.89 2,125,044.43
6/1/2009 74 22,922.30 13,581.83 9,340.47 2,069,795.06 2,111,190.96
7/1/2009 75 22,922.30 13,642.72 9,279.58 2,056,152.34 2,097,275.39
8/1/2009 76 22,922.30 13,703.88 9,218.42 2,042,448.46 2,083,297.43
9/1/2009 77 22,922.30 13,765.32 9,156.98 2,028,683.14 2,069,256.80
10/1/2009 78 22,922.30 13,827.04 9,095.26 2,014,856.10 2,055,153.22
11/1/2009 79 22,922.30 13,889.03 9,033.27 2,000,967.07 2,040,986.41
12/1/2009 80 22,922.30 13,951.30 8,971.00 1,987,015.77 2,026,756.09
1/1/2010 81 22,922.30 14,013.85 8,908.45 1,973,001.92 2,012,461.96
2/1/2010 82 22,922.30 14,076.67 8,845.63 1,958,925.25 1,998,103.76
3/1/2010 83 22,922.30 14,139.78 8,782.52 1,944,785.47 1,983,681.18
A-2
PAYMENT PAYMENT LOAN PRINCIPAL INTEREST PRINCIPAL PREPAYMENT
DATE NUMBER PAYMENT COMPONENT COMPONENT BALANCE* AMOUNT*
--------- ------- ------------ ------------ ------------ ------------ ------------
4/1/2010 84 22,922.30 14,203.18 8,719.12 1,930,582.29 1,969,193.94
5/1/2010 85 22,922.30 14,266.86 8,655.44 1,916,315.43 1,954,641.74
6/1/2010 86 22,922.30 14,330.82 8,591.48 1,901,984.61 1,940,024.30
7/1/2010 87 22,922.30 14,395.07 8,527.23 1,887,589.54 1,925,341.33
8/1/2010 88 22,922.30 14,459.61 8,462.69 1,873,129.93 1,910,592.53
9/1/2010 89 22,922.30 14,524.43 8,397.87 1,858,605.50 1,895,777.61
10/1/2010 90 22,922.30 14,589.55 8,332.75 1,844,015.95 1,880,896.27
11/1/2010 91 22,922.30 14,654.96 8,267.34 1,829,360.99 1,865,948.21
12/1/2010 92 22,922.30 14,720.66 8,201.64 1,814,640.33 1,850,933.14
1/1/2011 93 22,922.30 14,786.66 8,135.64 1,799,853.67 1,835,850.74
2/1/2011 94 22,922.30 14,852.96 8,069.34 1,785,000.71 1,820,700.72
3/1/2011 95 22,922.30 14,919.55 8,002.75 1,770,081.16 1,805,482.78
4/1/2011 96 22,922.30 14,986.44 7,935.86 1,755,094.72 1,790,196.61
5/1/2011 97 22,922.30 15,053.63 7,868.67 1,740,041.09 1,757,441.50
6/1/2011 98 22,922.30 15,121.12 7,801.18 1,724,919.97 1,742,169.17
7/1/2011 99 22,922.30 15,188.91 7,733.39 1,709,731.06 1,726,828.37
8/1/2011 100 22,922.30 15,257.01 7,665.29 1,694,474.05 1,711,418.79
9/1/2011 101 22,922.30 15,325.41 7,596.89 1,679,148.64 1,695,940.13
10/1/2011 102 22,922.30 15,394.12 7,528.18 1,663,754.52 1,680,392.07
11/1/2011 103 22,922.30 15,463.13 7,459.17 1,648,291.39 1,664,774.30
12/1/2011 104 22,922.30 15,532.46 7,389.84 1,632,758.93 1,649,086.52
1/1/2012 105 22,922.30 15,602.10 7,320.20 1,617,156.83 1,633,328.40
2/1/2012 106 22,922.30 15,672.05 7,250.25 1,601,484.78 1,617,499.63
3/1/2012 107 22,922.30 15,742.31 7,179.99 1,585,742.47 1,601,599.89
4/1/2012 108 22,922.30 15,812.89 7,109.41 1,569,929.58 1,585,628.88
5/1/2012 109 22,922.30 15,883.78 7,038.52 1,554,045.80 1,569,586.26
6/1/2012 110 22,922.30 15,954.99 6,967.31 1,538,090.81 1,553,471.72
7/1/2012 111 22,922.30 16,026.53 6,895.77 1,522,064.28 1,537,284.92
8/1/2012 112 22,922.30 16,098.38 6,823.92 1,505,965.90 1,521,025.56
9/1/2012 113 22,922.30 16,170.55 6,751.75 1,489,795.35 1,504,693.30
10/1/2012 114 22,922.30 16,243.05 6,679.25 1,473,552.30 1,488,287.82
11/1/2012 115 22,922.30 16,315.87 6,606.43 1,457,236.43 1,471,808.79
12/1/2012 116 22,922.30 16,389.02 6,533.28 1,440,847.41 1,455,255.88
1/1/2013 117 22,922.30 16,462.50 6,459.80 1,424,384.91 1,438,628.76
2/1/2013 118 22,922.30 16,536.31 6,385.99 1,407,848.60 1,421,927.09
3/1/2013 119 22,922.30 16,610.44 6,311.86 1,391,238.16 1,405,150.54
4/1/2013 120 22,922.30 16,684.92 6,237.38 1,374,553.24 1,388,298.77
5/1/2013 121 22,922.30 16,759.72 6,162.58 1,357,793.52 1,371,371.46
6/1/2013 122 22,922.30 16,834.86 6,087.44 1,340,958.66 1,354,368.25
7/1/2013 123 22,922.30 16,910.33 6,011.97 1,324,048.33 1,337,288.81
8/1/2013 124 22,922.30 16,986.15 5,936.15 1,307,062.18 1,320,132.80
9/1/2013 125 22,922.30 17,062.30 5,860.00 1,289,999.88 1,302,899.88
10/1/2013 126 22,922.30 17,138.80 5,783.50 1,272,861.08 1,285,589.69
11/1/2013 127 22,922.30 17,215.64 5,706.66 1,255,645.44 1,268,201.89
12/1/2013 128 22,922.30 17,292.82 5,629.48 1,238,352.62 1,250,736.15
1/1/2014 129 22,922.30 17,370.35 5,551.95 1,220,982.27 1,233,192.09
A-3
PAYMENT PAYMENT LOAN PRINCIPAL INTEREST PRINCIPAL PREPAYMENT
DATE NUMBER PAYMENT COMPONENT COMPONENT BALANCE* AMOUNT*
--------- ------- ------------ ------------ ------------ ------------ ------------
2/1/2014 130 22,922.30 17,448.23 5,474.07 1,203,534.04 1,215,569.38
3/1/2014 131 22,922.30 17,526.46 5,395.84 1,186,007.58 1,197,867.66
4/1/2014 132 22,922.30 17,605.03 5,317.27 1,168,402.55 1,180,086.58
5/1/2014 133 22,922.30 17,683.96 5,238.34 1,150,718.59 1,162,225.78
6/1/2014 134 22,922.30 17,763.24 5,159.06 1,132,955.35 1,144,284.90
7/1/2014 135 22,922.30 17,842.88 5,079.42 1,115,112.47 1,126,263.59
8/1/2014 136 22,922.30 17,922.88 4,999.42 1,097,189.59 1,108,161.49
9/1/2014 137 22,922.30 18,003.23 4,919.07 1,079,186.36 1,089,978.22
10/1/2014 138 22,922.30 18,083.95 4,838.35 1,061,102.41 1,071,713.43
11/1/2014 139 22,922.30 18,165.02 4,757.28 1,042,937.39 1,053,366.76
12/1/2014 140 22,922.30 18,246.46 4,675.84 1,024,690.93 1,034,937.84
1/1/2015 141 22,922.30 18,328.27 4,594.03 1,006,362.66 1,016,426.29
2/1/2015 142 22,922.30 18,410.44 4,511.86 987,952.22 997,831.74
3/1/2015 143 22,922.30 18,492.98 4,429.32 969,459.24 979,153.83
4/1/2015 144 22,922.30 18,575.89 4,346.41 950,883.35 960,392.18
5/1/2015 145 22,922.30 18,659.17 4,263.13 932,224.18 932,224.18
6/1/2015 146 22,922.30 18,742.83 4,179.47 913,481.35 913,481.35
7/1/2015 147 22,922.30 18,826.86 4,095.44 894,654.49 894,654.49
8/1/2015 148 22,922.30 18,911.27 4,011.03 875,743.22 875,743.22
9/1/2015 149 22,922.30 18,996.05 3,926.25 856,747.17 856,747.17
10/1/2015 150 22,922.30 19,081.22 3,841.08 837,665.95 837,665.95
11/1/2015 151 22,922.30 19,166.76 3,755.54 818,499.19 818,499.19
12/1/2015 152 22,922.30 19,252.69 3,669.61 799,246.50 799,246.50
1/1/2016 153 22,922.30 19,339.01 3,583.29 779,907.49 779,907.49
2/1/2016 154 22,922.30 19,425.71 3,496.59 760,481.78 760,481.78
3/1/2016 155 22,922.30 19,512.81 3,409.49 740,968.97 740,968.97
4/1/2016 156 22,922.30 19,600.29 3,322.01 721,368.68 721,368.68
5/1/2016 157 22,922.30 19,688.16 3,234.14 701,680.52 701,680.52
6/1/2016 158 22,922.30 19,776.43 3,145.87 681,904.09 681,904.09
7/1/2016 159 22,922.30 19,865.10 3,057.20 662,038.99 662,038.99
8/1/2016 160 22,922.30 19,954.16 2,968.14 642,084.83 642,084.83
9/1/2016 161 22,922.30 20,043.62 2,878.68 622,041.21 622,041.21
10/1/2016 162 22,922.30 20,133.48 2,788.82 601,907.73 601,907.73
11/1/2016 163 22,922.30 20,223.75 2,698.55 581,683.98 581,683.98
12/1/2016 164 22,922.30 20,314.42 2,607.88 561,369.56 561,369.56
1/1/2017 165 22,922.30 20,405.49 2,516.81 540,964.07 540,964.07
2/1/2017 166 22,922.30 20,496.98 2,425.32 520,467.09 520,467.09
3/1/2017 167 22,922.30 20,588.87 2,333.43 499,878.22 499,878.22
4/1/2017 168 22,922.30 20,681.18 2,241.12 479,197.04 479,197.04
5/1/2017 169 22,922.30 20,773.90 2,148.40 458,423.14 458,423.14
6/1/2017 170 22,922.30 20,867.04 2,055.26 437,556.10 437,556.10
7/1/2017 171 22,922.30 20,960.59 1,961.71 416,595.51 416,595.51
8/1/2017 172 22,922.30 21,054.56 1,867.74 395,540.95 395,540.95
9/1/2017 173 22,922.30 21,148.96 1,773.34 374,391.99 374,391.99
10/1/2017 174 22,922.30 21,243.78 1,678.52 353,148.21 353,148.21
11/1/2017 175 22,922.30 21,339.02 1,583.28 331,809.19 331,809.19
A-4
PAYMENT PAYMENT LOAN PRINCIPAL INTEREST PRINCIPAL PREPAYMENT
DATE NUMBER PAYMENT COMPONENT COMPONENT BALANCE* AMOUNT*
--------- ------- ------------ ------------ ------------ ------------ ------------
12/1/2017 176 22,922.30 21,434.69 1,487.61 310,374.50 310,374.50
1/1/2018 177 22,922.30 21,530.79 1,391.51 288,843.71 288,843.71
2/1/2018 178 22,922.30 21,627.32 1,294.98 267,216.39 267,216.39
3/1/2018 179 22,922.30 21,724.28 1,198.02 245,492.11 245,492.11
4/1/2018 180 22,922.30 21,821.68 1,100.62 223,670.43 223,670.43
5/1/2018 181 22,922.30 21,919.51 1,002.79 201,750.92 201,750.92
6/1/2018 182 22,922.30 22,017.78 904.52 179,733.14 179,733.14
7/1/2018 183 22,922.30 22,116.50 805.80 157,616.64 157,616.64
8/1/2018 184 22,922.30 22,215.65 706.65 135,400.99 135,400.99
9/1/2018 185 22,922.30 22,315.25 607.05 113,085.74 113,085.74
10/1/2018 186 22,922.30 22,415.30 507.00 90,670.44 90,670.44
11/1/2018 187 22,922.30 22,515.79 406.51 68,154.65 68,154.65
12/1/2018 188 22,922.30 22,616.74 305.56 45,537.91 45,537.91
1/1/2019 189 22,922.30 22,718.14 204.16 22,819.77 22,819.77
2/1/2019 190 22,922.30 22,819.77 102.53 0.00 0.00
------------ ------------ ------------
3,719,669.68 2,355,000.00 1,364,669.68
--------------------
* After payment of Loan Payment due opposite Prepayment Amount.
A-5
EXHIBIT B-1 TO TAX-EXEMPT LOAN AGREEMENT
FORM OF OPINION OF COUNSEL TO BORROWER
[Closing Date]
Washington Economic Development Finance Authority
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Absorption Corp.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
GE Capital Public Finance, Inc.
Suite 470
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
$2,355,000.00
Washington Economic Development Finance Authority
Tax-Exempt Economic Development Revenue Bond,
Series 2003B (Absorption Corp. Project)
Ladies and Gentlemen:
We have acted as counsel to Absorption Corp., a Nevada corporation
("Borrower") with respect to the issuance and delivery of the Bond described
above (the "Bond") and with respect to the Tax-Exempt Loan Agreement dated as of
March 1, 2003 (the "Loan Agreement") among GE Capital Public Finance, Inc.
("Lender"), Washington Economic Development Finance Authority ("Issuer") and
Borrower, the Escrow Agreement of even date therewith (the "Escrow Agreement")
among Lender, Issuer, Borrower and Xxxxxxxx & Xxxxxx Trust Company N.A., as
escrow agent, the Commercial Deed of Trust, Security Agreement, Assignment of
Leases and Rents and Fixture Filing of even date therewith (the "Mortgage"), the
Environmental Indemnity Agreement Regarding Hazardous Substances (the "Hazardous
Substances Agreement") of even date therewith executed by Borrower and
International Absorbents Inc., the Assignment of even date therewith among
Lender, Issuer and Borrower (the "Assignment"), the Indemnification and
Compensation Agreement dated October 30, 2001, between Borrower and Issuer (the
"Indemnification and Compensation Agreement"), the Tax Regulatory Agreement and
Arbitrage Certificate dated as of March 1, 2003 among Lender, Issuer and
Borrower (the "Tax Regulatory Agreement"; the Loan Agreement, the Escrow
Agreement, the Mortgage, the Hazardous Substances Agreement, the Assignment, the
Indemnification and Compensation Agreement and the Tax Regulatory Agreement may
be referred to herein collectively as the "Agreements") and various related
matters and, in this capacity, have reviewed a duplicate original or certified
copy of each of the Agreements. Based upon the examination of these and such
other documents as we deem relevant, it is our opinion that:
1. Borrower has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of Nevada with
full power and authority to own its properties and conduct its
business. Borrower is qualified to do business in the State of
Washington.
2. Borrower has full power and authority to execute and deliver
the Agreements and to carry out the terms thereof. The Agreements have
been duly and validly authorized, executed and delivered, are in full
force and effect and are the legal, valid and binding contracts of
Borrower enforceable in accordance with their respective terms
(including against claims of usury), except to the extent limited by
state and federal laws affecting remedies and by bankruptcy,
reorganization, or other laws of general application relating to or
affecting the enforcement of creditors' rights.
3. No consent, authorization, approval or other action by, and no
notice to, or filing with, any governmental authority or regulatory
body is required for the due execution, delivery and performance by
Borrower of the Agreements, except for such action which has been duly
obtained or taken and is in full force and effect.
4. The consummation of the transactions contemplated by the
Agreements and the carrying out of the terms thereof will not result in
violation of any provisions of the articles of incorporation or bylaws
of Borrower or result in the violation of any provision of, or in a
default under, any indenture, mortgage, deed of trust, indebtedness,
agreement, judgment, decree, order, statute, rule or regulation to
which Borrower is a party or by which it or its property is bound.
5. There are no legal or governmental actions, suits,
proceedings, inquiries or investigations pending, threatened or
contemplated, or any basis therefor, to which Borrower is or may become
a party or of which any property of Borrower is or may become subject,
other than ordinary routine litigation incident to the kind of business
conducted by Borrower which, if determined adversely to Borrower, would
not, individually or in the aggregate, have a material adverse effect
on the financial position or results of operations of Borrower.
6. There are no legal or governmental proceedings pending,
threatened or contemplated, or any basis therefor, wherein an
unfavorable decision, ruling or finding would adversely affect the
validity of or security for the Bond, the Agreements or the
transactions contemplated thereby.
7. Borrower has taken all steps legally required as a condition
precedent to the execution and delivery of the Loan Agreement and to
permit the commencement of the acquisition, construction, improvement
and operation of the Property (defined in the Loan Agreement). Borrower
has made all submissions to governmental authorities and has obtained,
and there are currently in full force and effect, all consents,
approvals, authorizations, accreditations, licenses, permits and orders
of any governmental or regulatory authority that are required to be
obtained by Borrower to enable the Property to be acquired, constructed
and improved in accordance with the plans and specifications therefor.
B-1-2
8. The provisions of the Loan Agreement and the Mortgage are
effective to create a security interest in favor of Lender, as assignee
of Issuer, in all of Borrower's right, title and interest in and to the
Property and all proceeds thereof. Such security interest has been
properly perfected and is subject to no liens or encumbrances.
9. The Mortgage is in proper form for execution and recording the
real property records of Whatcom County, Washington and when so
recorded will be effective to create in favor of Lender a valid and
enforceable lien and mortgage on the real property described therein.
The Mortgage contains the remedies which are customarily granted to
commercial lenders in loan transactions secured by real property
located in the State of Washington.
This opinion may be relied upon the addressees hereto and any of their
successors and assigns.
Very truly yours,
X-0-0
XXXXXXX X-0 TO TAX-EXEMPT LOAN AGREEMENT
FORM OF OPINION OF COUNSEL TO CORPORATE GUARANTOR
[Closing Date]
Washington Economic Development Finance Authority
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Absorption Corp.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
GE Capital Public Finance, Inc.
Suite 470
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
$2,355,000.00
Washington Economic Development Finance Authority
Tax-Exempt Economic Development Revenue Bond,
Series 2003B (Absorption Corp. Project)
Ladies and Gentlemen:
We have acted as counsel to International Absorbents Inc., a company
duly incorporated under the laws of the Province of British Columbia, Canada
("Guarantor"), in connection with above-referenced bond (the "Bond") and with
respect to the Tax-Exempt Loan Agreement dated as of March 1, 2003 (the "Loan
Agreement") among GE Capital Public Finance, Inc. ("Lender"), Washington
Economic Development Finance Authority ("Issuer") and Absorption Corp.
("Borrower"), the Escrow Agreement of even date therewith (the "Escrow
Agreement") among Lender, Issuer, Borrower and Xxxxxxxx & Xxxxxx Trust Company
N.A., as escrow agent, the Commercial Deed of Trust, Security Agreement,
Assignment of Leases and Rents and Fixture Filing of even date therewith (the
"Mortgage"), the Environmental Indemnity Agreement Regarding Hazardous
Substances (the "Hazardous Substances Agreement") of even date therewith
executed by Borrower and Guarantor, the Assignment of even date therewith among
Lender, Issuer and Borrower (the "Assignment"), the Indemnification and
Compensation Agreement dated October 30, 2001, between Borrower and Issuer (the
"Indemnification and Compensation Agreement"), the Tax Regulatory Agreement and
Arbitrage Certificate dated as of March 1, 2003 among Lender, Issuer and
Borrower (the "Tax Regulatory Agreement"; the Loan Agreement, the Escrow
Agreement, the Mortgage, the Hazardous Substances Agreement, the Assignment, the
Indemnification and Compensation Agreement and the Tax Regulatory Agreement may
be referred to herein collectively as the "Agreements") and various related
matters and the Corporate Guaranty and Negative Pledge Agreement (the
"Guaranty") dated as of March 1, 2003 executed by Guarantor and, in this
capacity, have reviewed a duplicate original
or certified copy of each of the Agreements and the Guaranty. Based upon the
examination of these and such other documents as we deem relevant, it is our
opinion that:
1. Guarantor has been duly organized and is validly existing as a
company in good standing under the laws of the Province of British
Columbia, Canada with full power and authority to own its own
properties and conduct its business.
2. Guarantor has full power and authority to execute and deliver
the Guaranty and each of the Agreements to which Guarantor is a party
and to carry out the terms thereof. The Guaranty and each of the
Agreements to which Guarantor is a party have been duly and validly
authorized, executed and delivered, are in full force and effect and
are the legal, valid and binding contracts of Guarantor enforceable in
accordance with their respective terms, except to the extent limited by
state and federal laws affecting remedies and by bankruptcy,
reorganization or other laws of general application relating to or
affecting the enforcement of creditors' rights.
3. The consummation of the transactions contemplated by the
Guaranty and each of the Agreements to which Guarantor is a party and
the carrying out of the terms thereof will not result in the violation
of any provisions of any articles of incorporation or bylaws of
Guarantor or result in the violation of any provision of, or in a
default under, any indenture, mortgage, deed of trust, indebtedness,
agreement, judgment, decree, order, statute, rule or regulation to
which Guarantor is a party or by which Guarantor's property is bound.
4. There are no legal or governmental actions, suits,
proceedings, inquiries or investigations pending, threatened or
contemplated, or any basis therefor, to which Guarantor is or may
become a party or of which any property of Guarantor is or may become
subject, other than ordinary routine litigation incident to the kind of
business conducted by Guarantor which, if determined adversely to
Guarantor, would not, individually or in the aggregate, have a material
adverse effect on the financial position or results of operations of
Guarantor.
5. There are no legal or governmental proceedings pending,
threatened or contemplated, or any basis therefor, wherein an
unfavorable decision, ruling or finding would adversely affect the
validity of the Guaranty or any of the Agreements to which Guarantor is
a party or the transactions contemplated thereby.
6. The choice of law of the State of Washington as the law
governing the Guaranty would be upheld and recognized as a valid choice
of law by the courts of the Province of British Columbia, Canada.
7. A judgment rendered by any federal or state court in the State
of Washington having jurisdiction over Guarantor may be enforced in the
courts of the Province of British Columbia, Canada. The foregoing
opinion assumes the rendering of such judgment complied with
____________________________.
This opinion may be relied upon the addressees hereto and any of
their successors and assigns.
Very truly yours,
B-2-2
EXHIBIT C TO TAX-EXEMPT LOAN AGREEMENT
FORM OF OPINION OF COUNSEL TO ISSUER
[Closing Date]
Washington Economic Development Finance Authority
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Absorption Corp.
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
GE Capital Public Finance, Inc.
Suite 470
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
$2,355,000.00
Washington Economic Development Finance Authority
Tax-Exempt Economic Development Revenue Bond,
Series 2003B (Absorption Corp. Project)
Ladies and Gentlemen:
We have acted as counsel to Washington Economic Development Finance
Authority ("Issuer") in connection with the issuance and sale of the bond
described above (the "Bond") and with respect to the Tax-Exempt Loan Agreement
dated as of March 1, 2003 (the "Loan Agreement") among GE Capital Public
Finance, Inc. ("Lender"), Issuer and Absorption Corp. ("Borrower"), the Escrow
Agreement of even date therewith (the "Escrow Agreement") among Lender, Issuer,
Borrower and Xxxxxxxx & Xxxxxx Trust Company N.A., as escrow agent, the
Assignment of even date therewith among Lender, Issuer and Borrower (the
"Assignment"), the Indemnification and Compensation Agreement dated October 30,
2001, between Issuer and Borrower (the "Indemnification and Compensation
Agreement"), the Tax Regulatory Agreement and Arbitrage Certificate dated as of
March 1, 2003 (the "Tax Regulatory Agreement"; the Loan Agreement, the Escrow
Agreement, the Assignment, the Indemnification and Compensation Agreement and
the Tax Regulatory Agreement may be referred to herein collectively as the
"Agreements") and various related matters and, in this capacity, have reviewed a
duplicate original or certified copy of the Agreements. Based upon the
examination of these and such other documents as we deem relevant, it is our
opinion that:
1. Issuer is a political subdivision of the State of Washington
(the "State") under the Internal Revenue Code of 1986, as amended [or
other qualified tax-exempt issuer], duly organized, existing and
operating under the Constitution and laws of the State.
2. Issuer is authorized and has power under applicable law to
enter into the Agreements, to issue the Bond and to carry out its
obligations thereunder and the transactions contemplated thereby.
3. The issuance of the Bond has been duly and validly authorized,
all conditions precedent to the issuance of the Bond have been
fulfilled and the Bond has been issued in accordance with the laws of
the State. The Bond is the legal, valid and binding obligation of
Issuer, enforceable in accordance with its terms.
4. The Agreements have been duly authorized, approved, executed
and delivered by and on behalf of Issuer and are legal, valid and
binding contracts of Issuer enforceable in accordance with their terms,
except to the extent limited by state and federal laws affecting
remedies and by bankruptcy, reorganization or other laws of general
application relating to or affecting the enforcement of creditors'
rights.
5. The issuance of the Bond and the authorization, approval and
execution of the Agreements and all other proceedings of Issuer
relating to the transactions contemplated thereby have been performed
in accordance with all open meeting, public bidding and other laws,
rules and regulations of the State.
6. There is no litigation, action, suit or proceeding pending or
before any court, administrative agency, arbitrator or governmental
body that challenges the organization or existence of Issuer; the
authority of Issuer or its officers or its employees to issue the Bond
or to enter into the Agreements; the proper authorization, approval
and/or execution of the Bond, the Agreements and the other documents
contemplated thereby; or the ability of Issuer otherwise to perform its
obligations under the Bond, the Agreements and the transactions
contemplated thereby.
This opinion may be relied upon the addressees hereto and any of their
successors and assigns.
Very truly yours,
C-2
EXHIBIT D TO TAX-EXEMPT LOAN AGREEMENT
FORM OF OPINION OF BOND COUNSEL
[Closing Date]
GE Capital Public Finance, Inc.
Suite 470
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
$2,355,000.00
Washington Economic Development Finance Authority
Tax-Exempt Economic Development Revenue Bond,
Series 2003B (Absorption Corp. Project)
Ladies and Gentlemen:
We have acted as special counsel to Washington Economic Development
Finance Authority ("Issuer") in connection with the issuance and delivery of the
bond described above (the "Bond") and in connection with the Tax-Exempt Loan
Agreement dated as of March 1, 2003 (the "Loan Agreement") among GE Capital
Public Finance, Inc. ("Lender"), Issuer and Absorption Corp. ("Borrower"), the
Escrow Agreement of even date therewith (the "Escrow Agreement") among Lender,
Issuer, Borrower and Xxxxxxxx & Xxxxxx Trust Company N.A., as escrow agent, and
the Tax Regulatory Agreement of even date therewith (the "Tax Regulatory
Agreement"; the Loan Agreement, the Escrow Agreement and the Tax Regulatory
Agreement may be referred to herein collectively as the "Agreements"). In such
capacity, we have examined a certified copy of a resolution adopted by Issuer
(the "Resolution") authorizing the execution and delivery of the Agreements and
the issuance and delivery of the Bond.
Based upon an examination of the aforementioned documents and such
other documents and opinions as we have deemed relevant and necessary as a basis
for the opinions set forth herein, and in reliance thereon, it is our opinion as
special tax counsel that assuming compliance with certain covenants contained in
the Agreements, under the statutes, regulations, rulings and judicial decisions
existing on the date of the original delivery of the Bond, the interest on the
Bond, being that portion of the payments that is paid by Issuer to Lender and
which is designated as and comprising interest, as provided in the Loan
Agreement and the Bond, is not includable in gross income for purposes of
federal income taxation; however such interest portion is a specific preference
item for purposes of the alternative minimum tax provisions imposed on
individuals and corporations set forth in the Internal Revenue Code of 1986, as
amended.
This opinion may be relied upon the addressee hereto and any of its
successors and assigns.
Very truly yours,
EXHIBIT E TO TAX-EXEMPT LOAN AGREEMENT
FORM OF BOND
THIS BOND IS NOT TRANSFERABLE, EXCEPT BY DELIVERY TO THE WASHINGTON
ECONOMIC DEVELOPMENT FINANCE AUTHORITY, AS REGISTRAR, FOR REISSUANCE TO A NEW
REGISTERED OWNER.
R-1 $2,355,000.00
UNITED STATES OF AMERICA
STATE OF WASHINGTON
WASHINGTON ECONOMIC DEVELOPMENT FINANCE AUTHORITY
TAX-EXEMPT ECONOMIC DEVELOPMENT REVENUE BOND,
SERIES 2003B (ABSORPTION CORP. PROJECT)
MATURITY DATE: February 1, 2019
DATED: March 19, 2003
PRINCIPAL AMOUNT: $2,355,000.00
INTEREST RATE: 5.63% until October 1, 2003; 5.38% thereafter
REGISTERED OWNER: GE Capital Public Finance, Inc.
The Washington Economic Development Finance Authority, a public body
and instrumentality of the State of Washington (the "Authority"), for value
received, hereby promises to pay (but only out of the Loan Payments pledged
therefor as hereinafter mentioned) to the Registered Owner identified above, or
registered assigns, the Principal Amount identified above in lawful money of the
United States of America; and to pay interest on the Principal Amount hereof in
like lawful money from the date of initial authentication and delivery hereof,
such interest to be at the rates, and all such payments of interest, principal
or interest and principal to be payable at the time and place, in the amounts
and in accordance with the terms set forth in that certain Tax-Exempt Loan
Agreement dated as of March 1, 2003 (the "Loan Agreement") among the Authority,
the Registered Owner and Absorption Corp. (the "Borrower").
This Bond is payable as to principal and prepayment premium, if any,
solely from Loan Payments to be made by Borrower and is secured by, among other
things, a deed of trust on the Property financed pursuant to the Loan Agreement.
THIS BOND SHALL NOT BE DEEMED TO CONSTITUTE A DEBT, LIABILITY OR
GENERAL OBLIGATION OF THE AUTHORITY OR THE STATE OF WASHINGTON OR ANY POLITICAL
SUBDIVISION THEREOF, OR A PLEDGE OF THE FAITH AND
CREDIT OF THE AUTHORITY OR THE STATE OF WASHINGTON OR ANY SUCH POLITICAL
SUBDIVISION, BUT SHALL BE PAYABLE SOLELY FROM THE LOAN PAYMENTS AND PROCEEDS
PROVIDED THEREFOR. THE AUTHORITY SHALL NOT BE OBLIGATED TO PAY THE SAME NOR
INTEREST OR PREMIUM, IF ANY, THEREON EXCEPT FROM THE LOAN PAYMENTS AND PROCEEDS
PLEDGED THEREFOR, AND NEITHER THE FAITH AND CREDIT NOR THE TAXING POWER OF THE
STATE OF WASHINGTON OR ANY POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE
PAYMENT OF THE PRINCIPAL OF OR THE INTEREST OR PREMIUM, IF ANY, ON THIS BOND.
THE AUTHORITY HAS NO TAXING POWER.
This Bond is a duly authorized bond of the Authority and is designated
as "Washington Economic Development Finance Authority Tax-Exempt Economic
Development Revenue Bond, Series 2003B (Absorption Corp. Project)" (the "Bond"),
issued in the aggregate principal amount of $2,355,000.00 pursuant to Resolution
No. W-2003-001 adopted by the Authority on March 5, 2003 (the "Resolution"), and
pursuant to the Loan Agreement. The Bond is issued for the purpose of making
loans for economic development activities to the Borrower pursuant to the Loan
Agreement for the purposes and on the terms and conditions set forth therein.
Reference is hereby made to the Escrow Agreement (copies of which are
on file at the corporate trust office of the Escrow Agent in Minneapolis,
Minnesota) and all agreements supplemental thereto and to the Resolution for a
description of the rights thereunder of the Registered Owner of the Bond, of the
nature and extent of the security, of the rights, duties and immunities of the
Escrow Agent and of the rights and obligations of the Authority thereunder, to
all the provisions of which Escrow Agreement the Registered Owner of this Bond,
by acceptance hereof, assents and agrees.
The Bond is subject to optional and mandatory redemption as provided in
the Loan Agreement.
The Bond is a private activity bond. The Bond has not been designated
as a "qualified tax-exempt obligation" under Section 265(b) of the Internal
Revenue Code of 1986, as amended.
The Escrow Agreement and the rights and obligations of the Authority
and of the Registered Owner and the Escrow Agent may be modified or amended from
time to time and at any time in the manner, to the extent, and upon the terms
provided in the Escrow Agreement.
It is hereby certified, recited and declared that all acts, conditions
and things required to exist to happen and to be performed precedent to and in
the issuance of this Bond exist, have happened and have been performed in
regular and due form and time as required by the Constitution and laws of the
State applicable thereto and that the issuance of this Bond is in full
compliance with all Constitutional and statutory limitations, provisions and
restrictions. This Bond shall not be entitled to any benefit under the Loan
Agreement, or become valid or obligatory for any purpose, until the certificate
of authentication and registration hereon endorsed shall have been signed by the
Registrar.
E-2
IN WITNESS WHEREOF, the Washington Economic Development Finance
Authority has caused this Bond to be executed in its name and in its behalf by
the manual or facsimile signature of its Chair, attested by the manual or
facsimile signature of its Secretary, initially all as of the date of original
issuance and thereafter as provided in the Loan Agreement.
WASHINGTON ECONOMIC DEVELOPMENT
FINANCE AUTHORITY
By: _______________________________
Chair
Attest:
______________________________
Secretary
E-3
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned ________________________ (the
"Transferor") hereby sells, assigns and transfers unto
_____________________________ (the "Transferee")
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF TRANSFEREE
______________________________________________
the within Bond and all rights thereunder, and hereby irrevocably constitutes
and appoints _________ as attorney to register the transfer of the within Bond
on the books kept for registration of transfer thereof, with full power of
substitution in the premises.
Date:
Signature Guaranteed:
___________________________________
NOTICE: Signature(s) must be guaranteed by an eligible guarantor institution
which is a member of a recognized signature guarantee program, i.e., Securities
Transfer Agents Medallion Program (STAMP), Stock Exchanges Medallion Program
(SEMP) or New York Stock Exchange Medallion Signature Program.
NOTICE: No transfer will be registered and no new Bond will be issue in the name
of the Transferee, unless the signature(s) to this assignment correspond(s) with
the name as it appears on the face of the within Bond in every particular,
without alteration or enlargement or any change whatever and the Social Security
or Federal Employer Identification Number of the Transferee is supplied.
E-4
EXHIBIT F TO TAX-EXEMPT LOAN AGREEMENT
SCHEDULE OF
ACQUISITION COST OF PROPERTY
Proceeds of the Bond may be allocated to expenditures made for all or a
portion of the following Acquisition Costs, subject to any limitations set forth
in the Tax Regulatory Agreement and Arbitrage Certificate:
Acquisition, construction and improvement of a building located on the
Property providing approximately 106,000 square feet of space for manufacturing;
provided, however, that no more than $541,650 of Bond proceeds may be allocated
to expenditures for costs of such space used for functions ancillary and related
to manufacturing.
Not to exceed $47,100 of Bond proceeds may be allocated to expenditures
for costs of issuance of the Bond.
EXHIBIT G TO TAX-EXEMPT LOAN AGREEMENT
LEGAL DESCRIPTION OF REAL PROPERTY
Real property in the County of Whatcom, State of Washington, described as
follows:
Parcel A
Lots 5 and 6, Grandview Light Industrial Park, General and Specific Binding Site
Plan as per the map thereof, recorded January 10, 1992, under Whatcom County
Auditor's file No. 920110138, records of Whatcom County, Washington, being a
portion of Section 6, Township 39 North, Range 2 East of X.X.
Parcel A-1
An easement for ingress, egress and utilities as delineated on the face of
Grandview Light Industrial Park Binding Site Plan.
Parcel B
Xxx 0, Xxxxxxxxx Xxxxx Xxxxxxxxxx Xxxx General Binding Site Plan Modification
and Specific Binding Site Plan No. 4, as per the map thereof, recorded August 8,
1996, under Whatcom County Auditor's file No. 960808016, records of Whatcom
County, Washington, being a portion of Section 6, Township 39 North, Range 2
East of X.X.
Parcel B-1
An easement for ingress, egress and utilities as delineated on the face of
Grandview Light Industrial Park General Binding Site Plan Modification and
Specific Binding Site Plan No. 4.
APN: 390206 122168 0000
APN: 390206 092195 0000
APN: 390206 063216 0000
EXHIBIT H TO TAX-EXEMPT LOAN AGREEMENT
LIST OF PERMITTED EXCEPTIONS
1. General Taxes for the year 2003, none now due and payable. The first
half becomes delinquent after April 30th. The second half becomes
delinquent after October 31st.
Tax Account No.: 390206 122168 0000
2. General Taxes for the year 2003, none now due and payable. The first
half becomes delinquent after April 30th. The second half becomes
delinquent after October 31st.
Tax Account No.: 390206 092195 0000
3. General Taxes for the year 2003, none now due and payable. The first
half becomes delinquent after April 30th. The second half becomes
delinquent after October 31st.
Tax Account No.: 390206 063216 0000
4. Any tax, fee, assessments or charges as may be levied by Lot Owner's
Association and/or for Road Maintenance, none now due and payable.
5. Covenant to Bind Properties and the Terms and Conditions contained
therein:
Recorded: January 17, 2003
Recording Information: 2030103673
6. Easement, including terms and provisions contained therein:
Recording Information: 1573884
In Favor of: Cascade Natural Gas Corporation
For: Pipeline(s)
7. Easement, including terms and provisions contained therein:
Recording Information: 1591808
In Favor of: Continental Telephone of the Northwest
For: Telephone, telegraph and communication
structures
8. Covenants, conditions, restrictions and/or easements; but deleting any
covenant, condition or restriction indicating a preference, limitation
or discrimination based on
race, color, religion, sex, handicap, family status, or national origin
to the extent such covenants, conditions or restrictions violate Title
00, Xxxxxxx 0000(x), xx xxx Xxxxxx Xxxxxx Codes:
Recording Information: 920110139
Modification and/or amendment by instrument:
Recording Information: 920731205 & 960808017
9. Real Property Owners Agreement and the terms and conditions thereof:
Between: Coast Pacific Trading, Inc.
And: Xxxxxx Xxxxxx and Xxxxxxxx X. Xxxxxx,
husband and wife & Xxxxxx, Inc.
Recording Information: 931208159
H-2
EXHIBIT I TO TAX-EXEMPT LOAN AGREEMENT
LIST OF TRADE NAMES
None.
EXHIBIT J TO TAX-EXEMPT LOAN AGREEMENT
PERMANENT LOAN INSURANCE REQUIREMENTS
NAME OF INSURED:
INSURED MAILING ADDRESS:
PROPERTY ADDRESS(s):
MORTGAGEE/LOSS PAYEE:
GE Capital Public Finance, Inc., a Delaware Corporation, its successors
and assigns, _______________________________.
INSURANCE REQUIREMENTS:
HAZARD INSURANCE:
Evidenced on Form Xxxxx 27 - Evidence of Property Insurance, naming GE
Capital Public Finance, Inc., its successors and/or assigns, as Loss
Payee and Mortgagee as respects the subject property.
Perils: Fire and Extended coverage, vandalism and malicious mischief,
Boiler and Machinery, and if applicable, Flood and Earthquake
Insurance.
Values: 100% Replacement cost value of property/Limit of $5,000
deductible
Endorsements Required: Inflation Guard, and Agreed Amount and
Replacement Cost endorsements; List of locations and schedule of values, if
blanket policy; 438BFU (Loss Payee Endorsement (see copy attached) with
enlargement of same for easier reading), in favor of GE Capital Public Finance,
Inc. amended to 30 days notice of change, cancellation or non-renewal; 30 days
notice of cancellation; waiver of subrogation endorsement is required unless
property is owner occupied; co-insurance should not be a condition of any
insurance provided.
Loss of Rents/Business Interruption for 12 months (or in an amount
equivalent to at least 12 mos. rent) is required.
Boiler and Machinery coverage is required. If the insurance carrier for
the Boiler & Machinery coverage is different from that of the Property
Coverage, a Joint Loss Agreement endorsement must be reflected on the
evidences of insurance for both Property coverage and Boiler &
Machinery coverage.
If the 438BFU Lender's Loss Payable Endorsement is not available,
please submit another Loss Payable endorsement for review by GE Capital
Public Finance, Inc.
LIABILITY:
Evidenced on Form Xxxxx 25 -- Certificate of Liability Insurance
Coverage to be on occurrence basis only.
Evidence of insurance, showing comprehensive general liability on an
occurrence basis, in an amount not less than $2,000,000 (per
occurrence) to include: (i) bodily injury and property damage liability
(primary and excess umbrella acceptable to satisfy limits); and (ii) GE
Capital Public Finance, Inc. is to be named additional insured as
respects this property only and the additional insured endorsement
should be attached to the certificate.
SPECIAL INSTRUCTIONS
GE Capital Public Finance, Inc. is to be provided with an Evidence of Property
Insurance and a Certificate of Liability Insurance from an insurance company
having a Best's Rating of A/X or better for both hazard and liability coverage
and must be executed by the insurance company or its authorized agent. The
evidence and certificate must itemize all the above endorsements and the
evidence must include a copy of the completed and signed 438BFU endorsement (a
copy of which is attached). WITHIN 90 DAYS OF ISSUANCE OF THE EVIDENCE OF
INSURANCE, THE INSURANCE COMPANY IS TO PROVIDE A CERTIFIED COPY OF THE INSURANCE
POLICY INCLUDING ALL ENDORSEMENTS AND AMENDMENTS.
J-2
EXHIBIT K TO TAX-EXEMPT LOAN AGREEMENT
ENVIRONMENTAL PHASE I REPORT REQUIREMENTS
The report is to be addressed to GE CAPITAL PUBLIC FINANCE, INC.
("GECPF") and BORROWER, and must be signed by the preparing engineer. The
introductory paragraphs of the report should include (a) the name of the
property or transaction; (b) a brief description of the property; (c) the date
of initial contact with GECPF; (d) a statement acknowledging GECPF as Lender;
(e) a description of the assignment (Phase I or Phase II Reporting format); (f)
Why the assessment is being conducted; and (g) how the information will be used.
The following sections must be addressed and included in all reports:
1. Property Description -- The property description should include site
specific physical and demographic conditions and include a site diagram
and area location map. In addition, a description of the hydrogeology
as well as a statement as to the inferred direction of groundwater flow
must be included. The type of soil, density, absorptive qualities,
etc., distance to water table, and any other pertinent information
useful in analyzing the movement of materials in and through the soil
at the subject property must be addressed. Also to be included is the
presence and quality of potable water and how said source may be
impacted by on-site contamination.
2. Historical Study -- A review of the historical uses of the property is
to be included in the report. Review of real estate records such as
title documentation (see below), appraisal reports, certificates of
occupancy, building permits, etc., available deeds and other ownership
records, tax maps/records, aerial photographs, topographical or
township planning maps, Xxxxxxx maps, and interviews may be utilized.
With regard to title documentation, the report must include a chain of
title search (through a title company) listing past owners of the
property. The search should go back a minimum of 50 years.
An affirmative statement must be given, as to whether or not there are
any expected environmental concerns as a result of any prior ownership
or use. If the property was previously used for agricultural purposes,
the engineer must include statements as to what types of pesticides
would have been used as well as their probable and existing impact to
the subject property.
3. On-Site Inspection -- The inspector is to make a physical inspection of
the site to evaluate for visual signs of hazardous materials. The
report should include the results of this inspection and must
incorporate the following areas of concern:
(a) Asbestos:
(i) Suspect/potential asbestos containing materials (PACM)
which are readily accessible, such as ceiling tiles, mastic
in flooring, boiler pipe wrapping, etc., are to be tested
to determine the presence of asbestos. Other potential
sources of asbestos containing materials which are not
readily accessible,
such as wallboards, roof flashings, etc., need not be
tested, but should be identified, and the quantity (i.e.,
sq. ft.) of suspected PACMs estimated. In both cases, the
cost to remove it should be included in the report.
(ii) The report must state whether the asbestos is in a friable
or non-friable state and include an estimate of the cost to
remove the asbestos containing materials.
(iii) Asbestos containing materials, if they are not to be
removed, are to be addressed in an Operations and
Maintenance Agreement/Plan, a copy of which is to be
included with the report.
(b) PCB's:
The report should identify any PCB containing transformers. If a
"no PCB content" sticker is not present on the transformer, the
inspector is to verify ownership and responsibility for its
maintenance. GE Capital Public Finance, Inc. may require the
Borrower have the transformer tested (by the responsible party)
for PCB presence or leakage. Any PCB containing transformers or
fixtures, for which a utility is not responsible, will have to be
removed. Estimated costs for doing that removal are to be
included in the report.
(c) Above and Underground Storage Tanks:
The inspection must include identification of any aboveground and
underground storage tanks at the subject property. Any such tanks
must be checked for the following: (i) condition, with the latest
testing data included if it exists; (ii) whether or not
registration with a Federal, State, or local agency is required;
(iii) recommendations should be included for any testing or
remediation indicated by the inspection and the latest testing
data included with the report, and (iv) in the case of
aboveground storage tanks, the report should indicate whether or
not the ASTs need to be placed within secondary containment, i.e.
bermed concrete containment.
(d) Radon:
Either a test should be made for radon gas or a radon survey map
of the area should be consulted to determine the radon rating of
the subject property. If radon is not an issue in the area of the
subject property, an affirmative statement to that effect must be
made.
(e) Wetlands:
Wetland issues must be addressed. If wetlands are not an issue,
an affirmative statement to that effect should be included in the
report.
K-2
(f) Hazardous Materials:
General housekeeping practices are to be outlined if hazardous
materials are stored on site. This section should include an
outline of materials utilized/stored on site, their purpose,
methods of disposal, potential for discharge into municipal storm
drains or on-site drainage facilities (including septic systems),
and regulatory reporting requirements.
If a septic system is located on site, the report must address
the following: (i) the age of the system, (ii) its location
parameters, maintenance records and condition, (iii) its
potential as a source of hazardous materials, and (iv) the need
for testing of organic or inorganic substances must be addressed.
4. Activity Review -- The inspector is to contact all federal (CERCLIS),
state (EPA), and local regulatory agencies to determine whether the
site or the surrounding properties within a one mile radius (regardless
of the ASTM guidelines) are currently or have been involved in any
cleanup activities. Any reference to such cleanup activity is to
include the following: (a) location and distance of the site from the
subject property including notation as to whether the site is up or
down gradient to the subject property; (b) based on that information,
an affirmative statement must be given as to whether or not each such
site represents a potential environmental hazard to the subject
property; (c) database records to be searched should include NPL,
CERCLIS, RCRIS-Violators, HMIRS, PADS, ERNS, FINDS, TRIS, TSCA, UST/
AST, LUST, and any other applicable state or federal databases; and (d)
the Activity Review must be less than 6 month old.
5. The report must be less than 6 months old.
6. The report must be updated if it was completed prior to any
construction or substantial remodel. The update should include the use
of construction materials as well as an update of all RCRA, CERCLIS &
EPA lists.
7. Any other noted site specific environmental issues must be identified
and recommendations for their removal/remediation should be offered.
K-3
EXHIBIT L TO TAX-EXEMPT LOAN AGREEMENT
FORM OF CERTIFICATE OF CHIEF FINANCIAL OFFICER
I, the undersigned, hereby certify that I am the duly qualified and
acting chief financial officer of Absorption Corp. ("Borrower") and, with
respect to Section [7.01(a)/7.01(b)] of the Tax-Exempt Loan Agreement dated as
of March 1, 2003 (the "Agreement") by and among Borrower, GE Capital Public
Finance, Inc. ("Lender") and Washington Economic Development Finance Authority
("Issuer"), that:
1. The attached financial statements have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis.
2. I have no knowledge of any Default or Event of Default under the
Agreement.
3. Section 7.11 of the Agreement requires Borrower to maintain its
ratio of Debt to Tangible Net Worth at not more than 1.50 to 1.00. The
calculation of such ratio is set forth below:
4. Section 7.12 of the Agreement requires Borrower to maintain its Debt
Service Coverage Ratio at not less than 1.75 to 1.00. The calculation of such
ratio is set forth below:
5. Section 7.13 of the Agreement requires Borrower to maintain its
Tangible Net Worth at not less than $7,000,000. Borrower's Tangible Net Worth is
$___________.
Dated: _________ __, 20__.
Borrower: ABSORPTION CORP.
By: _______________________________
Title: Chief Financial Officer
Date: ______________________________
EXHIBIT M TO TAX-EXEMPT LOAN AGREEMENT
FORM OF LETTER OF CREDIT
(Letterhead of Bank)
GE Capital Public Finance, Inc.
Suite 470
0000 Xxxxxxxxxx Xxxx Xxxxxxxxx
Xxxxxxxxxxx, XX 00000
Re: Irrevocable Letter of Credit No. __________ for
U.S.$_________, Dated _______ __, 20__.
Ladies and Gentlemen:
We hereby issue our irrevocable Letter of Credit No. _______ in the
amount of $_________ in favor of GE Capital Public Finance, Inc., a Delaware
corporation ("Beneficiary"), for the account of Absorption Corp. ("Customer").
We undertake to honor from time to time Beneficiary's sight draft or
drafts on us not exceeding in the aggregate U.S.$_________ when accompanied by a
signed statement on behalf of Beneficiary stating either (i) that the amount of
the accompanying draft is due and owing by Customer to Beneficiary or (ii) that
a petition has been filed by or against Customer under Title 11 of the United
States Code or any successor law or similar law.
We agree that we shall have no duty or right to inquire as to the basis
upon which Beneficiary has determined to present to us any draft under this
Letter of Credit, and presentation of such draft shall automatically result in
payment to Beneficiary.
This Letter of Credit is valid until _______ __, 20__, and drafts drawn
hereunder, when accompanied by the statement referred to above, will be honored
if presented to us at our office at ________________________________ on or
before that date by 11:59 P.M.
All drafts must be marked "Drawn under irrevocable Letter of Credit No.
_____, dated _______ __, 20__." All drawings shall be made in person or by
telecopy (or other facsimile telecommunication) without further need of
documentation, it being understood that Beneficiary's signed drafts and the
statement referred to above submitted via such telecopy (or other facsimile
telecommunication) are to be the sole operative instruments of drawing. Such
documents shall be presented to _____________________________________________,
telecopy number ___________.
This Letter of Credit is subject to the Uniform Customs and Practice
for Documentary Credits (1993 Revision) (the "UCP") and, to the extent not
inconsistent therewith, the Uniform Commercial Code of the State of Washington.
If the expiration date stated above occurs on a
date that we are closed for reasons referred to in Article 17 of the UCP, then
such expiration date shall be extended to the tenth Business Day (defined below)
on which we are open following written notice to Beneficiary from us that we
have reopened. "Business Day" shall mean a day on which we are is not required
or authorized by law to be closed and on which the New York Stock Exchange is
open.
This Letter of Credit is transferable in its entirety to any transferee
that has succeeded to Beneficiary's rights under the Tax-Exempt Loan Agreement
dated as of March 1, 2003 among Beneficiary, Customer and Washington Economic
Development Finance Authority. Transfer of this Letter of Credit to such
transferee shall be effected by the presentation to us of this Letter of Credit
accompanied by a signed notice of transfer. Upon such presentation we shall
endorse the transfer on this Letter of Credit and such transfer shall become
effective upon delivery of this Letter of Credit by us to such transferee.
We agree that drawings under this Letter of Credit will be paid from
our own funds and not directly or indirectly from funds or collateral on deposit
with us or pledged for our account and that we will seek reimbursement for
payments made pursuant to this Letter of Credit only after such payments have
been made.
All of the terms and conditions of this Letter of Credit are contained
herein and shall not be altered except by reduction in the amount due to
corresponding payments in like amount in compliance with the aforementioned
terms. There are no other conditions to this Letter of Credit.
We hereby waive any defense based upon any allegation of fraud.
Very truly yours,
____________________________________
By ________________________________
Title ______________________________
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