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EXHIBIT 10.3
LOAN AGREEMENT
Between
CALIFORNIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
and
MERCURY AIR GROUP, INC.
relating to
$19,000,000
California Economic Development Financing Authority
Variable Rate Demand Airport Facilities Revenue Bonds, Series 1998
(Mercury Air Group, Inc. Project)
Dated as of April 1, 1998
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITION OF TERMS.................................................2
SECTION 1.2. NUMBER AND GENDER...................................................2
SECTION 1.3. ARTICLES, SECTIONS, ETC.............................................2
ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS OF THE AUTHORITY....................................2
SECTION 2.2. REPRESENTATIONS OF THE BORROWER.....................................3
ARTICLE III
ISSUANCE OF THE BONDS; APPLICATION OF
PROCEEDS/CONSTRUCTION OF PROJECT FACILITIES
SECTION 3.1. AGREEMENT TO ISSUE BONDS; APPLICATION OF BOND
PROCEEDS............................................................4
SECTION 3.2. INVESTMENT OF MONEYS IN FUNDS.......................................4
SECTION 3.3. AGREEMENT TO CONSTRUCT THE PROJECT..................................4
SECTION 3.4. DISBURSEMENTS FROM THE 1998 CONSTRUCTION FUND;
DISBURSEMENTS FROM THE 1998 COSTS OF ISSUANCE FUND..................5
SECTION 3.5. ESTABLISHMENT OF COMPLETION DATE; OBLIGATION OF
BORROWER TO COMPLETE...............................................6
ARTICLE IV
LOAN TO BORROWER; REPAYMENT PROVISIONS
SECTION 4.1. LOAN TO BORROWER....................................................7
SECTION 4.2. REPAYMENT AND PAYMENT OF OTHER AMOUNTS PAYABLE......................7
SECTION 4.3. UNCONDITIONAL OBLIGATION............................................8
SECTION 4.4. ASSIGNMENT OF AUTHORITY'S RIGHTS....................................9
SECTION 4.5. AMOUNTS REMAINING IN FUNDS..........................................9
SECTION 4.6. CREDIT FACILITY.....................................................0
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TABLE OF CONTENTS
(CONTINUED)
PAGE
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SECTION 5.1. RIGHT OF ACCESS TO THE PROJECT......................................1
SECTION 5.2. THE BORROWER'S MAINTENANCE OF ITS EXISTENCE;
ASSIGNMENTS.........................................................2
SECTION 5.3. RECORDS AND FINANCIAL STATEMENTS OF BORROWER........................3
SECTION 5.4. MAINTENANCE AND REPAIR; TAXES; UTILITY AND OTHER
CHARGES; INSURANCE..................................................3
SECTION 5.5. QUALIFICATION IN CALIFORNIA.........................................3
SECTION 5.6. TAX-EXEMPT STATUS OF INTEREST ON BONDS..............................4
SECTION 5.7. NOTICE OF RATE PERIODS..............................................5
SECTION 5.8. REMARKETING OF THE BONDS............................................5
SECTION 5.9. CONTINUING DISCLOSURE...............................................5
ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION;
CONTINUATION OF PAYMENT
SECTION 6.1. OBLIGATION TO CONTINUE PAYMENTS.....................................6
SECTION 6.2. DAMAGE TO OR CONDEMNATION OF OTHER PROPERTY.........................6
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1. EVENTS OF DEFAULT...................................................6
SECTION 7.2. REMEDIES ON DEFAULT.................................................7
SECTION 7.3. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES.......................8
SECTION 7.4. NO REMEDY EXCLUSIVE.................................................9
SECTION 7.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER..........................9
ARTICLE VIII
PREPAYMENT
SECTION 8.1. REDEMPTION OF BONDS WITH PREPAYMENT MONEYS..........................9
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TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 8.2. OPTIONS TO PREPAY INSTALLMENTS......................................9
SECTION 8.3. MANDATORY PREPAYMENT................................................9
SECTION 8.4. AMOUNT OF PREPAYMENT................................................0
SECTION 8.5. NOTICE AND DATE OF PREPAYMENT.......................................0
ARTICLE IX
NONLIABILITY OF AUTHORITY; EXPENSES; INDEMNIFICATION
SECTION 9.1. NONLIABILITY OF AUTHORITY...........................................1
SECTION 9.2. EXPENSES............................................................1
SECTION 9.3. INDEMNIFICATION.....................................................1
ARTICLE X
MISCELLANEOUS
SECTION 10.1. NOTICES.............................................................2
SECTION 10.2. SEVERABILITY........................................................2
SECTION 10.3. EXECUTION OF COUNTERPARTS...........................................3
SECTION 10.4. AMENDMENTS, CHANGES AND MODIFICATIONS...............................3
SECTION 10.5. GOVERNING LAW; VENUE................................................3
SECTION 10.6. AUTHORIZED BORROWER REPRESENTATIVE..................................3
SECTION 10.7. TERM OF THE AGREEMENT...............................................3
SECTION 10.8. BINDING EFFECT......................................................3
SECTION 10.9. CREDIT PROVIDER.....................................................3
EXHIBIT A Description of the Project Facilities
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of April 1, 1998 (this "Agreement"), by
and between the CALIFORNIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY, a public
instrumentality and political subdivision of the State of California (herein
called the "Authority"), and MERCURY AIR GROUP, INC., a corporation organized
and existing under the laws of the State of New York (the "Borrower"),
W I T N E S S E T H :
WHEREAS, the Authority was established for the purpose of promoting
and encouraging commerce and industry, and generally to ▇▇▇▇▇▇ economic
development in the State of California (the "State") and is authorized, among
other things, to issue tax-exempt revenue bonds to provide financing for private
economic development projects pursuant to Part 10.2 of Division 3 of Title 2 of
the California Government Code (commencing at Section 15710), as now in effect
and as it may from time to time hereafter be amended or supplemented (the
"Act"); and
WHEREAS, in order to further the purposes of the Act, the Authority
plans to undertake the financing of a portion of the cost of the constructing,
equipping, installing, improving and furnishing of certain airport facilities
(the "Project") located at the Burbank Glendale Pasadena Airport in Burbank,
California (the "Burbank Facility") and at the Los Angeles International Airport
in Los Angeles, California (the "Los Angeles Facility" and collectively with the
Burbank Facility, the "Project Facilities"), as described in Exhibit A hereto;
and
WHEREAS, the Project is a qualifying "project" under the Act, the
Authority intends to issue its $19,000,000 Variable Rate Demand Airport
Facilities Revenue Bonds, Series 1998 (Mercury Air Group, Inc. Project) (the
"Bonds") and to loan the proceeds of the sale of the Bonds to Mercury Air Group,
Inc. (the "Borrower") to assist in the financing of the Project pursuant to this
Agreement, as evidenced by a resolution of the Authority expressing its intent
to issue the Bonds adopted February 25, 1998; and
WHEREAS, the real property upon which the Project Facilities shall be
constructed, improved, installed and furnished shall be owned by the
governmental owner of the airport at which the Project Facility is to be
located; and
WHEREAS, the Bonds will be issued under the terms of an Indenture of
Trust (the "Indenture") of even date herewith, between the Authority and U.S.
Bank Trust National Association, a national banking association as trustee (the
"Trustee"); and
WHEREAS, the Borrower's obligations to repay the loan are evidenced by
this Agreement;
NOW, THEREFORE, in consideration of the premises and the respective
representations and covenants herein contained, the parties hereto agree as
follows:
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ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITION OF TERMS. Unless the context otherwise
requires, the terms used in this Agreement shall have the meanings specified in
Section 1.01 of the Indenture (defined above), pursuant to which the Bonds will
be issued, as originally executed or as it may from time to time be supplemented
or amended as provided therein.
SECTION 1.2. NUMBER AND GENDER. The singular form of any word used
herein, including the terms defined in Section 1.01 of the Indenture, shall
include the plural, and vice versa. The use herein of a word of any gender shall
include all genders.
SECTION 1.3. ARTICLES, SECTIONS, ETC. Unless otherwise specified,
references to Articles, Sections and other subdivisions of this Agreement are to
the designated Articles, Sections and other subdivisions of this Agreement as
originally executed. The words "hereof," "herein," "hereunder" and words of
similar import refer to this Agreement as a whole. The headings or titles of the
several articles and sections, and the table of contents appended to copies
hereof, shall be solely for convenience of reference and shall not affect the
meaning, construction or effect of the provisions hereof.
ARTICLE II
REPRESENTATIONS
SECTION 2.1. REPRESENTATIONS OF THE AUTHORITY. The Authority makes the
following representations as the basis for its undertakings herein contained:
(a) The Authority is a body public and corporate and a public
instrumentality of the State, duly created and existing under the laws of the
State. Under the provisions of the Act, the Authority has the power to enter
into the transactions contemplated by this Agreement and to carry out its
obligations hereunder. By proper action, the Authority has been duly authorized
to execute, deliver and duly perform this Agreement and the Indenture.
(b) The Authority is not in default under any of the provisions of the
laws of the State which would affect its existence or its powers referred to in
subsection (a) above.
(c) To finance the cost of the Project, the Authority will issue the
Bonds which will mature, bear interest and be subject to redemption as set forth
in the Indenture. The Bonds will be issued under and secured by the Indenture,
pursuant to which the Authority's interest in this Agreement (except certain
rights of the Authority to receive notices hereunder, to receive payment for
expenses and indemnification and certain other payments hereunder, and to give
approvals or consents hereunder) will be pledged to the Trustee as security for
payment of the principal of, premium, if any, and interest on the Bonds.
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(d) The Authority has not pledged and will not pledge its interest in
this Agreement for any purpose other than to secure the Bonds under the
Indenture.
(e) The Authority has found and determined and hereby finds and
determines that all requirements of the Act with respect to the issuance of the
Bonds and the execution of this Agreement and the Indenture have been complied
with and that financing the Project by issuing the Bonds and entering into this
Agreement and the Indenture will be in furtherance of the purposes of the Act.
(f) On February 25, 1998, the Authority adopted its resolution
authorizing the issuance of the Bonds in an aggregate principal amount not to
exceed $19,000,000.
(g) No member, officer or other official of the Authority has any
interest whatsoever in the Borrower or in the transactions contemplated by this
Agreement.
(h) No allocation of a share of the State ceiling for private activity
bonds is required in connection with the issuance of the Bonds.
SECTION 2.2. REPRESENTATIONS OF THE BORROWER. The Borrower makes the
following representations as the basis for its undertakings herein contained:
(a) The Borrower is a New York corporation duly formed under the laws
of the State of New York, is qualified to do business in the State, is in good
standing in the State, and has the power to enter into and has duly authorized,
by proper corporate action, the execution and delivery of this Agreement and all
other documents contemplated hereby to be executed by the Borrower.
(b) Neither the execution and delivery of this Agreement, the
Remarketing Agreement, the Credit Agreement, the consummation of the
transactions contemplated hereby and thereby, nor the fulfillment of or
compliance with the terms and conditions hereof and thereof, conflicts with or
results in a breach of any of the terms, conditions or provisions of the
Borrower's Articles of Incorporation or Bylaws or of any corporate actions or of
any material agreement or instrument to which the Borrower is now a party or by
which it is bound, or constitutes a default (with due notice or the passage of
time or both) under any of the foregoing, or results in the creation or
imposition of any prohibited lien, charge or encumbrance whatsoever upon any of
the property or assets of the Borrower under the terms of any material
instrument or agreement to which the Borrower is now a party or by which it is
bound.
(c) The Project consists and will consist of those facilities
described in Exhibit A hereto, and, to the extent within its control, for so
long as it leases or operates the Project, the Borrower shall make no changes to
the Project or to the operation thereof which would affect the qualification of
the Project as a "project" under the Act. The Borrower shall comply with all
requirements set forth in the Tax Certificate.
(d) To the extent necessary to preserve the security for the Bonds and
the Tax-Exempt status of interest on the Bonds, all material certificates,
approvals, permits and
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authorizations of agencies of applicable local governmental agencies, the State
and the federal government have been or will be obtained with respect to the
construction of the Project Facilities and pursuant to such certificates,
approvals, permits and authorizations the Project Facilities have been or will
be constructed and are or will be in operation.
(e) To the best knowledge of the Borrower, no member, officer or other
official of the Authority has any interest whatsoever in the Borrower or in the
transactions contemplated by this Agreement.
(f) The Costs of the Project are as set forth in the Tax Certificate
dated the Issue Date and have been determined in accordance with standard
engineering/construction and accounting principles. All the information and
representations in the Tax Certificate are true and correct as of the date
thereof.
(g) No event has occurred and no condition exists which would
constitute an Event of Default (as defined in the Indenture) or which, with the
passing of time or with the giving of notice or both would become such an Event
of Default.
ARTICLE III
ISSUANCE OF THE BONDS; APPLICATION OF PROCEEDS/
CONSTRUCTION OF PROJECT FACILITIES
SECTION 3.1. AGREEMENT TO ISSUE BONDS; APPLICATION OF BOND PROCEEDS.
To provide funds to finance the Project, the Authority agrees that it will issue
under the Indenture, sell and cause to be delivered to the purchasers thereof,
the Bonds. The Authority will thereupon apply the proceeds received from the
sale of the Bonds as provided in the Indenture.
SECTION 3.2. INVESTMENT OF MONEYS IN FUNDS. Any moneys in any fund
held by the Trustee shall, to the extent permitted under the Indenture, at the
written request of an Authorized Borrower Representative, be invested or
reinvested by the Trustee as provided in the Indenture. Such investments shall
be deemed at all times a part of the fund from which such investments were made,
and the interest accruing thereon and any profit or loss realized therefrom
shall, except as otherwise provided in the Indenture, be credited or charged to
such fund.
SECTION 3.3. AGREEMENT TO CONSTRUCT THE PROJECT. The Borrower agrees
that it will equip, construct, rehabilitate and install, or complete the
construction, equipping, rehabilitation and installation of, the Project, and
will equip, construct, rehabilitate and install all other facilities and real
and personal property deemed necessary for the operation of the Project,
substantially in accordance with the description of the Project prepared by the
Borrower and approved by the Authority, including any and all supplements,
amendments and additions or deletions thereto or therefrom, it being understood
that the approval of the Authority shall not be required for changes in such
description which do not substantially alter the purpose
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and description of the Project as set forth in Exhibit A hereto. The Borrower
further agrees to proceed with due diligence to complete the Project within
three years from the date hereof.
In the event that the Borrower desires to alter or change the Project,
and such alteration or change substantially alters the purpose and description
of the Project as described in Exhibit A hereto, the Authority will enter into,
and will instruct the Trustee to consent to, such amendment or supplement to
Exhibit A as shall be required to reflect such alteration or change to the
Project upon receipt of:
(i) a certificate of the Authorized Borrower Representative
describing in detail the proposed changes and stating that they will
not have the effect of disqualifying the Project as facilities that
may be financed pursuant to the Act;
(ii) a copy of the proposed form of amended or supplemented
Exhibit A hereto; and
(iii) an opinion of Bond Counsel that such proposed changes will
not adversely affect the Tax-Exempt status of interest on the Bonds.
SECTION 3.4. DISBURSEMENTS FROM THE 1998 CONSTRUCTION FUND;
DISBURSEMENTS FROM THE 1998 COSTS OF ISSUANCE FUND.
(a) The Borrower will authorize and direct the Trustee, upon
compliance with Section 3.03 of the Indenture, to disburse the moneys in the
Construction Fund to or on behalf of the Borrower only for the following
purposes (and not for Costs of Issuance), subject to the provisions of Section
3.5 hereof:
(i) Payment to the Borrower of such amounts, if any, as shall be
necessary to reimburse the Borrower in full for all advances and
payments made by it, at any time prior to or after the delivery of the
Bonds, in connection with (A) the preparation of plans and
specifications for the Project (including any preliminary study or
planning of the Project or any aspect thereof) and (B) subject to any
limitation imposed by subsection (vi) hereof, the equipping,
construction, rehabilitation and installation of the Project.
(ii) Payment for labor, services, materials and supplies used by
or furnished to the Borrower to improve the site and to equip,
construct and install the Project, as provided in the plans,
specifications and work orders therefor; payment of the costs of
equipping, constructing, and installing utility services or other
related facilities; payment of the costs of all personal property
deemed necessary to construct the Project; insurance during the
construction period; and payment of the miscellaneous expenses
incidental to any of the foregoing items.
(iii) Payment of the fees, if any, of architects, engineers,
legal counsel and supervisors expended in connection with the leasing,
equipping, construction, rehabilitation and installation of the
Project.
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(iv) Payment of taxes including rent, property taxes, assessments
and other charges, if any, that may become payable during the
construction period with respect to the Project, or reimbursement
thereof, if paid by the Borrower.
(v) Payment of expenses incurred in seeking to enforce any remedy
against any developer, contractor or subcontractor in respect of any
default under a contract relating to the equipping, construction,
rehabilitation or installation of the Project.
(vi) Payment of any other Costs of the Project permitted by the
Tax Certificate (including, without limitation, interest accruing on
the Bonds during the construction period of the Project and
reimbursing the Borrower for financing the Costs of the Project, but
not including any Costs of Issuance).
All moneys remaining in the Construction Fund after the Completion
Date and after payment or provision for payment of all other items provided for
in the preceding subsections (i) to (vi), inclusive, of this Section, shall be
used in accordance with Section 3.03 of the Indenture.
Each of the payments referred to in this Section 3.4(a) shall be made
upon receipt by the Trustee of a written requisition in the form prescribed by
Section 3.03 of the Indenture, signed by the Authorized Borrower Representative.
(b) The Borrower will authorize and direct the Trustee, upon
compliance with Section 3.04 of the Indenture, to disburse the moneys in the
Costs of Issuance Fund to or on behalf of the Borrower only for Costs of
Issuance, subject to the provisions of Section 3.6 hereof. Each of the payments
referred to in this Section 3.4(b) shall be made upon receipt by the Trustee of
a written requisition in the form prescribed by Section 3.04 of the Indenture,
signed by the Authorized Borrower Representative.
SECTION 3.5. ESTABLISHMENT OF COMPLETION DATE; OBLIGATION OF BORROWER
TO COMPLETE. As soon as the Project is completed, the Authorized Borrower
Representative, on behalf of the Borrower, shall evidence the Completion Date by
providing a certificate to the Trustee and the Authority stating the Costs of
the Project and further stating that (i) the equipping, rehabilitation and
construction of the Project has been completed substantially in accordance with
the plans, specifications and work orders therefor, and all labor, services,
materials and supplies used in the equipping, rehabilitation and construction
have been paid or provided for, and (ii) all other facilities necessary in
connection with the Project have been constructed and installed in accordance
with the plans and specifications and work orders therefor and all costs and
expenses incurred in connection therewith have been paid or provided for.
Notwithstanding the foregoing, such certificate may state that it is given
without prejudice to any rights of the Borrower against third parties for any
claims or for the payment of any amount not then due and payable which exists at
the date of such certificate or which may subsequently exist.
At the time such certificate is delivered to the Trustee, moneys
remaining in the Construction Fund (other than moneys relating to provisional
payments permitted by Section 3.4),
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including any earnings resulting from the investment of such moneys, shall be
used as provided in Section 3.03 of the Indenture.
In the event the moneys in the Construction Fund available for payment
of the Costs of the Project should be insufficient to pay the costs thereof in
full, the Borrower agrees to pay directly, or to deposit in the Construction
Fund moneys sufficient to pay, any costs of completing the Project in excess of
the moneys available for such purpose in the Construction Fund. The Authority
makes no express or implied warranty that the moneys deposited in the
Construction Fund and available for payment of the Costs of the Project, under
the provisions of this Agreement, will be sufficient to pay all the amounts
which may be incurred for such Cost of the Project. The Borrower agrees that if,
after exhaustion of the moneys in the Construction Fund, the Borrower should
pay, or deposit moneys in the Construction Fund for the payment of, any portion
of the Costs of the Project pursuant to the provisions of this Section, it shall
not be entitled to any reimbursement therefor from the Authority, from the
Trustee or from the holders of any of the Bonds, nor shall it be entitled to any
diminution of the amounts payable under Section 4.2 hereof.
ARTICLE IV
LOAN TO BORROWER; REPAYMENT PROVISIONS
SECTION 4.1. LOAN TO BORROWER. The Authority covenants and agrees,
upon the terms and conditions in this Agreement, to make a loan to the Borrower
for the purpose of financing the Project. Pursuant to said covenant and
agreement, the Authority will issue the Bonds upon the terms and conditions
contained in this Agreement and the Indenture. The Authority and the Borrower
agree that the application of the proceeds of sale of the Bonds to finance the
Project will be deemed to be and treated for all purposes as a loan to the
Borrower of an amount equal to the aggregate principal amount of the Bonds.
SECTION 4.2. REPAYMENT AND PAYMENT OF OTHER AMOUNTS PAYABLE.
(a) With respect to the Bonds, the Borrower covenants and agrees to
pay to the Trustee as a Repayment Installment, on or before each date provided
in or pursuant to the Indenture for the payment of principal (whether at
maturity or upon redemption or acceleration) of, premium, if any, and/or
interest on the Bonds, until the principal of, premium, if any, and interest on
the Bonds shall have been fully paid or provision for the payment thereof shall
have been made in accordance with the Indenture, in immediately available funds,
for deposit in the Bond Fund, a sum equal to the amount then payable as
principal (whether at maturity or upon redemption or acceleration), premium, if
any, and interest upon the Bonds as provided in the Indenture.
Each payment made by the Borrower pursuant to this Section 4.2(a)
shall at all times be sufficient to pay the total amount of interest and
principal (whether at maturity or upon redemption or acceleration) and premium,
if any, then payable on the Bonds; provided that any amount held by the Trustee
in the Bond Fund on any due date for a Repayment Installment hereunder shall be
credited against the Repayment Installment due on such date, to the extent
available for such purpose; and provided further that, subject to the provisions
of this paragraph, if at any time the Available
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Amounts held by the Trustee in the Bond Fund are sufficient to pay all of the
principal of and interest and premium, if any, on the Bonds as such payments
become due, the Borrower shall be relieved of any obligation to make any further
payments with respect to the Bonds under the provisions of this Section.
Notwithstanding the foregoing, if on any date the amount held by the Trustee in
the Bond Fund is insufficient to make any required payments of principal of
(whether at maturity or upon redemption or acceleration) and interest and
premium, if any, on the Bonds as such payments become due, the Borrower shall
forthwith pay such deficiency as a Repayment Installment hereunder.
The obligation of the Borrower to make any payment under this Section
4.2(a) shall be deemed to have been satisfied to the extent of any corresponding
payment made by the Credit Provider, if any, under the Credit Facility, if any.
(b) In the event that no Credit Facility is in effect or the amounts
on deposit in the Bond Purchase Fund are insufficient to pay the purchase price
of any Bonds tendered for purchase on any Purchase Date, the Borrower covenants
to pay or cause to be deposited in the Bond Purchase Fund sufficient money to
pay the purchase price of any Bonds tendered for purchase or required to be
purchased under Section 4.06 or 4.07 of the Indenture.
(c) The Borrower also agrees to pay to the Trustee until the principal
of, premium, if any, and interest on the Bonds shall have been fully paid or
provision for the payment thereof shall have been made as required by the
Indenture, (i) the annual fee of the Trustee for its ordinary services rendered
as trustee, and its ordinary expenses incurred under the Indenture, as and when
the same become due, (ii) the reasonable fees, charges and expenses of the
Registrar, Paying Agent, Remarketing Agent, if any, and Tender Agent, if any, as
and when the same become due, (iii) the reasonable fees, charges and expenses of
the Trustee for the necessary extraordinary services rendered by it and
extraordinary expenses (including reasonable attorneys' fees) incurred by it
under the Indenture, as and when the same become due, (iv) the cost of printing
any Bonds required to be furnished by the Authority, and (v) any fees required
to be paid to the Authority in connection with the issuance of the Bonds. The
Borrower agrees that the provisions of this Section 4.2(c) shall survive the
discharge of the Indenture and the retirement of the Bonds or the resignation or
removal of the Trustee.
(d) The Borrower also agrees to pay (i) to the Authority, its fee of
$______ upon delivery of the Bonds; and (ii) within twenty (20) days after
receipt of request for payment thereof, all expenses required to be paid by the
Borrower under the terms of the Purchase Contract executed by it in connection
with the sale of the Bonds, and all reasonable expenses of the Authority related
to the Project which are not otherwise required to be paid by the Borrower under
the terms of this Agreement; provided that the Authority shall have obtained the
prior written approval of an Authorized Borrower Representative for any
expenditures other than those provided for herein or in the Purchase Contract.
(e) In the event the Borrower should fail to make any of the payments
required by subsection (c) or (d) of this Section, such payments shall continue
as obligations of the Borrower until such amounts shall have been fully paid.
The Borrower agrees to pay such amounts, together with interest thereon until
paid, to the extent permitted by law, at the rate borne by the Bonds.
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SECTION 4.3. UNCONDITIONAL OBLIGATION. The obligations of the Borrower
to make the payments required by Section 4.2 hereof and to perform and observe
the other agreements on its part contained herein shall be absolute and
unconditional, irrespective of any defense or any rights of setoff, recoupment
or counterclaim it might otherwise have against the Authority, and during the
term of this Agreement, the Borrower shall pay absolutely the payments to be
made on account of the loan as prescribed in Section 4.2 and all other payments
required hereunder, free of any deductions and without abatement, diminution or
setoff. Until such time as the principal of, premium, if any, and interest on
the Bonds shall have been fully paid, or provision for the payment thereof shall
have been made as required by the Indenture, the Borrower (i) will not suspend
or discontinue any payments provided for in Section 4.2 hereof with respect to
the Bonds; (ii) will perform and observe all of its other covenants contained in
this Agreement with respect to the Bonds and the Project; and (iii) except as
provided in Article VIII hereof, will not terminate this Agreement for any
cause, including, without limitation, the occurrence of any act or circumstances
that may constitute failure of consideration, destruction of or damage to, or
taking or condemnation of, all or any part of the Project, termination of one or
both leases underlying the Project Facilities, commercial frustration of
purpose, any change in the tax or other laws of the United States of America or
of the State or any political subdivision of either of these, or any failure of
the Authority or the Trustee to perform and observe any covenant, whether
express or implied, or any duty, liability or obligation arising out of or
connected with this Agreement or the Indenture.
SECTION 4.4. ASSIGNMENT OF AUTHORITY'S RIGHTS. As security for the
payment of the Bonds, the Authority will assign to the Trustee the Authority's
rights, but not its obligations, under this Agreement, including the right to
receive payments hereunder (except (i) the rights of the Authority to receive
notices under this Agreement, (ii) the right of the Authority to receive certain
payments, if any, with respect to expenses and indemnification and certain other
purposes under Sections 4.2(d), 4.2(e), 7.3, 9.2 and 9.3 hereof, and (iii) the
right of the Authority to give approvals or consents pursuant to this
Agreement), and the Authority hereby directs the Borrower to make the payments
required hereunder (except such payments for expenses and indemnification and
certain other purposes) directly to the Trustee. The Borrower hereby assents to
such assignment and agrees to make payments directly to the Trustee without
defense or setoff by reason of any dispute between the Borrower and the
Authority or the Trustee.
The Authority hereby acknowledges that the Borrower will be obligated
to reimburse the Credit Provider, if any, for amounts provided under the Credit
Facility to purchase Bonds which are tendered for purchase and not remarketed
pursuant to the Remarketing Agreement, and acknowledges that any and all
proceeds of any subsequent remarketing of the Bonds so purchased will be paid to
the Credit Provider, if any, in order to discharge the Borrower's reimbursement
obligation (or any loan by such Credit Provider, if any, to finance such
reimbursement obligation) to the Credit Provider, if any.
SECTION 4.5. AMOUNTS REMAINING IN FUNDS. It is agreed by the parties
hereto that any amounts remaining in any fund held by the Trustee under the
Indenture after payment in full of (i) the Bonds, or after provision for such
payment shall have been made as provided in the Indenture, (ii) the fees,
charges and expenses of the Trustee, the Registrar, the Tender Agent, the
Remarketing Agent, any Paying Agent and the Credit Provider, if any, due and
owing in
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accordance with this Agreement and the Indenture and (iii) all other amounts
required to be paid under this Agreement and the Indenture, shall be applied as
provided in Section 5.06 of the Indenture.
SECTION 4.6. CREDIT FACILITY.
(a) The Borrower will deliver (or cause to be delivered) to the
Trustee the irrevocable direct-pay letter of credit of BankBoston, N.A., in the
stated amount of $19,281,096, as the initial Credit Facility for the Bonds.
(b) At least thirty-five (35) days prior to the expiration or
termination of any existing Credit Facility including any renewals or extensions
thereof (other than an expiration of such Credit Facility at the final maturity
of the Bonds) the Borrower shall provide to the Trustee (with a copy to the
Remarketing Agent) (i) a renewal or extension of the term of the existing Credit
Facility for a term of at least one (1) year (or, if shorter, the period to
maturity of the Bonds) or a substitute Credit Facility meeting the requirements
set forth in subsection (c) below or (ii) the written consent of the Authority
to the continuation of the Bonds without a Credit Facility. In the event that
the Borrower desires to obtain the consent of the Authority to the continuation
of the Bonds without a Credit Facility, the Borrower shall accordingly notify
the Authority not less than sixty-five (65) days prior to the expiration or
termination of the existing Credit Facility. The Borrower shall not permit any
Credit Facility in effect to terminate with respect to any Bond during any Rate
Period unless the Bonds are then permitted to be redeemed at the option of the
Borrower pursuant to Section 4.01(a)(2) of the Indenture.
(c) The Borrower may at any time provide a substitute Credit Facility
with respect to the Bonds in accordance with the provisions hereof and of
Section 5.07 of the Indenture and upon delivery to the Trustee of the items
specified in subsection (e) below; provided, however, that the Borrower shall
not substitute any Credit Facility with respect to any Bond during a Rate Period
if such Bonds are not then permitted to be redeemed at the option of the
Borrower pursuant to Section 4.01(a)(2) of the Indenture.
Any such substitute Credit Facility must meet the following
conditions:
(i) the substitute Credit Facility must be (A) a letter of credit
issued by a commercial bank or other financial institution
substantially in the form of the initial Credit Facility provided
hereunder or (B) approved by the Authority;
(ii) the terms and provisions of the substitute Credit Facility
must be (A) in all material respects the same as the terms and
provisions of the initial Credit Facility provided hereunder or (B)
otherwise acceptable to the Authority;
(iii) the substitute Credit Facility must take effect on or
before the Business Day immediately preceding the termination of the
existing Credit Facility and the term of the substitute Credit
Facility must be at least one (1) year (or, if shorter, the period to
maturity of the Bonds); and
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(iv) the substitute Credit Facility must be in an amount
sufficient to pay principal of, interest on, premium, if any, which
will be applicable during the then current Rate Period, and the
purchase price of the Bonds.
(d) If no Credit Facility is in effect with respect to the Bonds, the
Borrower at any time may provide a Credit Facility with respect to the Bonds
upon delivery to the Trustee of the items specified in subsection (e) below;
provided, however, that no such provision of a Credit Facility may be made with
respect to any Bond unless the Bonds would then be permitted to be redeemed at
the option of the Borrower pursuant to Section 4.01(a)(2) of the Indenture.
(e) On or prior to the date of the delivery of a substitute Credit
Facility to the Trustee pursuant to subsection (c) above or a Credit Facility
pursuant to subsection (d) above, the Borrower shall cause to be furnished to
the Trustee (i) an opinion of Bond Counsel addressed to the Trustee to the
effect that the delivery of such Credit Facility to the Trustee is authorized
under the Indenture and this Agreement and complies with the terms thereof and
hereof and will not adversely affect the Tax-Exempt status of the Bonds, (ii) an
opinion or opinions of counsel to the Credit Provider addressed to the Trustee
and the Authority, to the effect that the Credit Facility has been duly
authorized, executed and delivered by the Credit Provider and constitutes the
valid, legal and binding obligation of the Credit Provider enforceable against
the Credit Provider in accordance with its terms, and (iii) (A) written evidence
from each Rating Agency then rating the Bonds to the effect that the Bonds will
be rated in one of the three highest long-term rating categories or the highest
short-term rating category (in each case, without regard to rating
subcategories) of such Rating Agency as a result of the provision of such Credit
Facility or (B) the written consent of the Authority to the provision of such
Credit Facility.
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SECTION 5.1. RIGHT OF ACCESS TO THE PROJECT. The Borrower agrees that
during the term of this Agreement, and, to the extent within its control, for so
long as the Borrower leases or operates the Project Facilities, the Authority,
the Trustee, the Credit Provider and the duly authorized agents of any of them
shall have the right (but not the duty) at all reasonable times during normal
business hours to enter upon the site of the Project Facilities to examine and
inspect the Project Facilities; provided, however, that this right is subject to
federal and State laws and regulations applicable to the site of the Project
Facilities (including regulations, rules and practices of the respective
landlords); and provided further that the Borrower reserves the right to
restrict access to the Project Facilities in accordance with reasonably adopted
procedures relating to safety and security. The rights of access hereby reserved
to the Authority, the Trustee and the Credit Provider may be exercised only
after such agent shall have executed release of liability (which release shall
not limit any of the Borrower's obligations hereunder) and secrecy agreements if
requested by the Borrower in the form then currently used by the Borrower, and
nothing contained in this Section or in any other provision of this Agreement
shall be construed to entitle the Authority, the Trustee or the Credit Provider
to any information or inspection involving the confidential knowhow of the
Borrower.
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SECTION 5.2. THE BORROWER'S MAINTENANCE OF ITS EXISTENCE; ASSIGNMENTS.
(a) The Borrower agrees that during the term of this Agreement and so
long as any Bond is Outstanding, it will maintain its corporate existence, will
not dissolve or otherwise dispose of all or substantially all of its assets, and
will not consolidate with or merge into another corporation or permit one or
more corporations to consolidate with or merge into it; provided, that the
Borrower may, without violating the agreements contained in this Section 5.2,
consolidate with or merge into another corporation or permit one or more other
corporations to consolidate with or merge into it, or sell or otherwise transfer
to another corporation all or substantially all of its assets as an entirety and
thereafter dissolve; provided, that in the event the Borrower is not the
surviving, resulting or transferee corporation, as the case may be, that the
surviving, resulting or transferee corporation (i) is a corporation organized
under the laws of the United States or any state, district or territory thereof;
(ii) is qualified to do business in the State or consents to service of process
in the State; and (iii) assumes in writing all of the obligations of the
Borrower under this Agreement.
Notwithstanding the foregoing, in connection with any consolidation,
merger, sale or other transfer, the Trustee and the Authority shall receive an
opinion of Bond Counsel to the effect that such merger, consolidation, sale or
other transfer will not in and of itself effect the Tax-Exempt status of the
Bonds.
Notwithstanding any other provision of this Section 5.2(a), the
Borrower need not comply with any of the provisions of Section 5.2(a) above if,
at the time of such transaction, all of the Bonds will be defeased as provided
in Article X of the Indenture.
(b) The rights and obligations of the Borrower under this Agreement
may be assigned by the Borrower, in whole or in part; provided, however, that
any assignment other than pursuant to Section 5.2(a) hereof shall be subject to
each of the following conditions:
(i) No such assignment shall relieve the Borrower from primary
liability for any of its obligations hereunder, and the Borrower shall
continue to remain primarily liable for the payments specified in
Section 4.2 hereof, and for performance and observance of the other
agreements on its part herein provided to be performed and observed by
it.
(ii) Any such assignment from the Borrower shall retain for the
Borrower such rights and interests as will permit it to perform its
obligations under this Agreement, and any assignee from the Borrower
shall assume the obligations of the Borrower hereunder to the extent
of the interest assigned.
(iii) The Borrower shall, within thirty (30) days after delivery
thereof, furnish or cause to be furnished to the Authority and the
Trustee a true and complete copy of every such assignment together
with an instrument of assumption.
(iv) The Borrower shall cause to be delivered to the Authority
and the Trustee an opinion of Bond Counsel to the effect that such
assignment will not, in and of itself, adversely affect the Tax-Exempt
status of interest on the Bonds.
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(c) If a merger, consolidation, sale or other transfer is effected, as
provided in this Section, the provisions of this Section shall continue in full
force and effect and no further merger, consolidation, sale or transfer shall be
effected except in accordance with the provisions of this Section.
SECTION 5.3. RECORDS AND FINANCIAL STATEMENTS OF BORROWER. The
Borrower shall, within 120 days after the close of each fiscal year, submit to
the Authority and to the Trustee audited financial statements with respect to
the Borrower or its parent company for such fiscal year. The Trustee shall have
no duty to review such financial statements. The Trustee shall be permitted (but
shall have no duty) at all reasonable times during the term of this Agreement to
examine the books and records of the Borrower with respect to the Project
Facilities, subject to the limitations expressed in Section 5.1.
SECTION 5.4. MAINTENANCE AND REPAIR; TAXES; UTILITY AND OTHER CHARGES;
INSURANCE. For so long as the Project is in operation, the Borrower agrees to
maintain, to the extent permitted by applicable law and regulation, the Project,
or cause the Project to be so maintained, during the term of this Agreement (i)
in as reasonably safe condition as its operations shall permit and (ii) in good
repair and in good operating condition, ordinary wear and tear excepted, making
from time to time all necessary repairs thereto and renewals and replacements
thereof; provided, however, that anything in the Credit Agreement to the
contrary shall control and supersede this section of the Agreement.
For so long as the Project is in operation, the Borrower agrees
that between the Authority and the Borrower, the Borrower agrees to pay or cause
to be paid during the term of this Agreement all taxes, governmental charges of
any kind lawfully assessed or levied upon the Project or any part thereof,
including any taxes levied against the Project, all utility and other charges
incurred in the operation, maintenance, use, occupancy and upkeep of the Project
and all assessments and charges lawfully made by any governmental body for
public improvements that may be secured by a lien on the Project, provided that
with respect to special assessments or other governmental charges that may
lawfully be paid in installments over a period of years, the Borrower, to the
extent described above, shall be obligated to pay only such installments as are
required to be paid during the term of this Agreement. The Borrower may, at the
Borrower's expense and in the Borrower's name, in good faith, contest any such
taxes, assessments and other charges and, in the event of any such contest, may
permit the taxes, assessments or other charges so contested to remain unpaid
during that period of such contest and any appeal therefrom unless by such
nonpayment the Project or any part thereof will be subject to loss or
forfeiture.
SECTION 5.5. QUALIFICATION IN CALIFORNIA. The Borrower agrees that
throughout the term of this Agreement it, or any successor or assignee as
permitted by Section 5.2, will be qualified to do business in the State.
SECTION 5.6. TAX-EXEMPT STATUS OF INTEREST ON BONDS.
(a) It is the intention of the parties hereto that interest on the
Bonds shall be and remain Tax-Exempt, and to that end the covenants and
agreements of the Authority and the Borrower
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in this Section and the Tax Certificate are for the benefit of the Trustee and
each and every person who at any time will be a holder of the Bonds.
(b) Each of the Borrower and the Authority covenants and agrees that
it will not directly or indirectly use or permit the use of any proceeds of the
Bonds or other funds, or take or omit to take any action that will cause any
Bond to be an "arbitrage bond" within the meaning of Section 148 of the Code.
Each of the Borrower and the Authority further covenants and agrees that it will
not direct the Trustee to invest any funds held by it under the Indenture or
this Agreement, in such manner as would, or enter into, or allow any related
person to enter into, any arrangement, formal or informal, that would cause any
Bond to be an "arbitrage bond" within the meaning of Section 148(a) of the Code.
To such ends with respect to the Bonds, the Authority and the Borrower will
comply with all requirements of Section 148 of the Code to the extent applicable
to the Bonds. In the event that at any time the Authority or the Borrower is of
the opinion that for purposes of this Section 5.6(b) it is necessary to restrict
or limit the yield on the investment of any moneys held by the Trustee under
this Agreement or the Indenture, the Authority or the Borrower shall so notify
the Trustee in writing.
Without limiting the generality of the foregoing, the Borrower and the
Authority agree that there shall be paid from time to time all amounts required
to be rebated to the United States pursuant to Section 148(f) of the Code and
any applicable Treasury Regulations. This covenant shall survive payment in full
or defeasance of the Bonds. The Borrower specifically covenants to pay or cause
to be paid for and on behalf of the Authority to the United States at the times
and in the amounts determined under Section 6.06 of the Indenture the Rebate
Requirement as described in the Tax Certificate.
(c) The Authority certifies and represents that it has not taken, and
the Authority covenants and agrees that it will not take, any action which will
cause interest paid on the Bonds to become includable in gross income of the
holders of the Bonds for federal income tax purposes pursuant to Sections 103
and 141 through 150 of the Code; and the Borrower certifies and represents that
it has not taken or, to the extent within its control, permitted to be taken,
and the Borrower covenants and agrees that it will not take or, to the extent
within its control, permit to be taken any action which will cause the interest
on the Bonds to become includable in gross income of the holders of the Bonds
for federal income tax purposes pursuant to the provisions of Article XIII of
the Tax Reform Act of 1986; provided that neither the Borrower nor the Authority
shall have violated these covenants if the interest on any of the Bonds becomes
taxable to a person solely because such person is a "substantial user" of the
financed facilities or a "related person" within the meaning of Section
103(b)(13) of the Code; and provided, further, that none of the covenants and
agreements herein contained shall require either the Borrower or the Authority
to enter an appearance or intervene in any administrative, legislative or
judicial proceeding in connection with any changes in applicable laws, rules or
regulations or in connection with any decisions of any court or administrative
agency or other governmental body affecting the taxation of interest on the
Bonds. The Borrower acknowledges having read Section 6.06 of the Indenture and
agrees to perform all duties imposed on it by such Section, by this Section and
by the Tax Certificate. Insofar as Section 6.06 of the Indenture and the Tax
Certificate impose duties and responsibilities on the Borrower, they are
specifically incorporated herein by reference.
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(d) Notwithstanding any provision of this Section 5.6 and Section 6.06
of the Indenture, if the Borrower shall provide to the Authority and the Trustee
an opinion of Bond Counsel that any specified action required under this Section
5.6 and Section 6.06 of the Indenture is no longer required or that some further
or different action is required to maintain the Tax-Exempt status of interest on
the Bonds, the Borrower, the Trustee and the Authority may conclusively rely on
such opinion in complying with the requirements of this Section, and the
covenants hereunder shall be deemed to be modified to that extent.
SECTION 5.7. NOTICE OF RATE PERIODS. The Borrower shall designate and
give timely written notice to the Trustee as required by the Indenture prior to
any change in Rate Periods for the Bonds. In addition, if the Borrower shall
elect to change Rate Periods in accordance with the Indenture under
circumstances requiring the delivery of an opinion of Bond Counsel, the Borrower
shall deliver such opinion to the Trustee concurrently with the giving of notice
with respect thereto.
SECTION 5.8. REMARKETING OF THE BONDS. The Borrower agrees to perform
all obligations and duties required of it by the Indenture and the Remarketing
Agreement with respect to any remarketing of the Bonds.
SECTION 5.9. PURCHASE OF BONDS. The Borrower agrees that it shall not
purchase, and it shall cause any Guarantor or affiliate of the Borrower to not
purchase, Bonds from the Remarketing Agent or otherwise.
SECTION 5.10. CONTINUING DISCLOSURE. The Borrower hereby covenants and
agrees, whenever a Term Rate Period of more than nine months is in effect, to
comply with the continuing disclosure requirements for the Bonds as promulgated
under Rule 15c2-12, as it may from time to time hereafter be amended or
supplemented. Notwithstanding any other provision of this Agreement, failure of
the Borrower to comply with the requirements of Rule 15c2-12 applicable to the
Bonds, as it may from time to time hereafter be amended or supplemented, shall
not be considered an Event of Default hereunder or under the Indenture; however,
the Trustee may (and, at the written request of the Remarketing Agent or the
holders of at least 25% aggregate principal amount of Outstanding Bonds and upon
receipt of indemnity satisfactory to the Trustee, shall) or any Bondholder or
"Beneficial Owner" of any Bonds may take such actions as may be necessary and
appropriate, including seeking mandate or specific performance by court order,
to cause the Borrower to comply with its obligations pursuant to this Section
5.10. For purposes of this Section, "Beneficial Owner" means any person who has
or shares the power, directly or indirectly, to make investment decisions
concerning ownership of any Bonds (including persons holding Bonds through
nominees, depositories or other intermediaries).
ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION; CONTINUATION OF PAYMENT
SECTION 6.1. OBLIGATION TO CONTINUE PAYMENTS. If prior to full payment
of the Bonds (or provision for payment thereof in accordance with the provisions
of the Indenture) (i) the Project or any portion thereof is destroyed (in whole
or in part) or is damaged by
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fire or other casualty, or (ii) the temporary use of the Project or any portion
thereof shall be taken under the exercise of the power of eminent domain by any
governmental body or by any person, firm or corporation acting under
governmental authority, the Borrower shall nevertheless be obligated to continue
to pay the amounts specified in Article IV hereof, to the extent not prepaid in
accordance with Article VIII hereof.
SECTION 6.2. DAMAGE TO OR CONDEMNATION OF OTHER PROPERTY. As between
the Authority and the Borrower, the Borrower shall be entitled to the Net
Proceeds of any insurance or condemnation award or portion thereof made for
damages to or takings of its property not included in the Project.
ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
SECTION 7.1. EVENTS OF DEFAULT. Any one of the following which occurs
and continues shall constitute an Event of Default pursuant to this Agreement:
(a) failure by the Borrower to pay or cause to be paid any amounts
required to be paid under Section 4.2(a) or (b) hereof when due, which failure
causes an Event of Default under the Indenture; or
(b) failure of the Borrower to observe and perform any covenant,
condition or agreement on its part required to be observed or performed under
this Agreement, other than making the payments referred to in (a) above, which
continues for a period of thirty (30) days after written notice from the Trustee
or the Authority, which notice shall specify such failure and request that it be
remedied, unless the Authority and the Trustee shall agree in writing to an
extension of such time period; provided, however, that if the failure stated in
the notice cannot be corrected within such period, the Authority and the Trustee
will not unreasonably withhold their consent to an extension of such time period
if corrective action is instituted within such period and diligently pursued
until the default is corrected; or
(c) an Act of Bankruptcy of the Borrower, but solely in the event that
no Credit Facility is in effect for the Bonds;
(d) the occurrence of an Event of Default under the Indenture.
The provisions of subsection (b) of the preceding paragraph are
subject to the limitation that the Borrower shall not be deemed in default if
and so long as the Borrower is unable to carry out its agreements hereunder by
reason of strikes, lockouts or other industrial disturbances; acts of public
enemies; orders of any kind of the government of the United States or of the
State or any of their departments, agencies, or officials, or any civil or
military authority; insurrections; riots; epidemics; landslides; lightning;
earthquake; fire; hurricanes; storms; floods; washouts; droughts; arrests;
restraint of government and people; civil disturbances; explosions; breakage or
accident to machinery, transmission pipes or canals; partial or entire failure
of utilities; or any other cause or event not reasonably within the control of
the Borrower; it being agreed that the settlement of strikes,
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lockouts and other industrial disturbances shall be entirely within the
discretion of the Borrower, and the Borrower shall not be required to make
settlement of strikes, lockouts and other industrial disturbances by acceding to
the demands of the opposing party or parties when such course is, in the
judgment of the Borrower, unfavorable to the Borrower. This limitation shall not
apply to any default under subsections (a), (c) or (d) of this Section.
SECTION 7.2. REMEDIES ON DEFAULT. Whenever any Event of Default shall
have occurred and shall continue,
(a) The Trustee, by notice in writing delivered to the Borrower (with
copies of such notice being sent to the Authority and the Credit Provider, if
any) and with the prior consent of the Credit Provider, if any, may declare the
unpaid balance of the loan payable under Section 4.2(a) of this Agreement with
respect to which an Event of Default has occurred, in an amount equal to the
Outstanding principal amount of the Bonds, together with the interest accrued
thereon, to be immediately due and payable, and shall do so if the Bonds have
been accelerated as provided in the Indenture. After any such declaration of
acceleration of the Bonds, the Trustee shall immediately take such actions as
necessary to realize moneys under the Credit Facility, if any, then in effect.
(b) The Trustee may have access to and may inspect, examine and make
copies of the books and records and any and all accounts, data and federal
income tax and other tax returns of the Borrower.
(c) The Authority or the Trustee may take whatever action at law or in
equity as may be necessary or desirable to collect the payments and other
amounts then due and thereafter to become due or to enforce performance and
observance of any obligation, agreement or covenant of the Borrower under this
Agreement.
The provisions of subsection (a) of the preceding paragraph, however,
are subject to the condition that if, at any time after any portion of the loan
shall have been so declared due and payable, and before any judgment or decree
for the payment of the moneys due shall have been obtained or entered as
hereinafter provided, there shall have been deposited with the Trustee a sum
sufficient to pay all the principal of the Bonds matured prior to such
declaration and all matured installments of interest (if any) upon all such
Bonds, with interest on such overdue installments of principal as provided
herein, and the reasonable fees and expenses of the Trustee, and any and all
other defaults actually known to the Trustee (other than in the payment of
principal of and interest on such Bonds due and payable solely by reason of such
declaration) shall have been made good or cured to the satisfaction of the
Trustee or provision deemed by the Trustee to be adequate shall have been made
therefor, then, and in every such case, the holders of at least a majority in
aggregate principal amount of the Bonds then Outstanding, by written notice to
the Authority and to the Trustee accompanied by the written consent of the
Credit Provider, if any, may, on behalf of the holders of all the Bonds, rescind
and annul such declaration and its consequences and waive such default; provided
that no such rescission and annulment shall extend to or shall affect any
subsequent default, or shall impair or exhaust any right or power consequent
thereon.
In case the Trustee or the Authority shall have proceeded to enforce
its rights under this Agreement and such proceedings shall have been
discontinued or abandoned for any reason or
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shall have been determined adversely to the Trustee or the Authority, then, and
in every such case, the Borrower, the Trustee and the Authority shall be
restored respectively to their several positions and rights hereunder, and all
rights, remedies and powers of the Borrower, the Trustee and the Authority shall
continue as though no such action had been taken (provided, however, that any
settlement of such proceedings duly entered into by the Authority, the Trustee
or the Borrower shall not be disturbed by reason of this provision).
The Borrower covenants that, in case an Event of Default shall occur
with respect to the payment of any Repayment Installment payable under Section
4.2(a) hereof, then, upon demand of the Trustee, the Borrower will pay to the
Trustee the whole amount that then shall have become due and payable under said
Section.
In case the Borrower shall fail forthwith to pay such amounts upon
such demand, the Trustee shall be entitled and empowered to institute any action
or proceeding at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the Borrower
and collect in the manner provided by law the moneys adjudged or decreed to be
payable.
Upon the occurrence of an Event of Default described in Section 7.1(c)
hereof, the Trustee shall be entitled and empowered, by intervention in such
proceedings or otherwise, to file and prove a claim or claims for the whole
amount owing and unpaid pursuant to this Agreement and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee allowed in
such judicial proceedings relative to the Borrower, its creditors or its
property, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute such amounts as provided in
the Indenture after the deduction of its charges and expenses. Any receiver,
assignee or trustee in bankruptcy or reorganization is hereby authorized to make
such payments to the Trustee, and to pay to the Trustee any amount due it for
compensation and expenses, including expenses and fees of counsel incurred by it
up to the date of such distribution.
Notwithstanding anything else in this Section 7.2 to the contrary, the
failure of the Borrower to observe any covenant, agreement or representation
herein which results in a Determination of Taxability, shall not constitute an
Event of Default hereunder, if the Bonds are redeemed pursuant to Section
4.01(b)(1) of the Indenture. Payment of the redemption price for such Bonds
shall constitute the full and complete payment and satisfaction to the holders
of the Bonds for any claims, damages, costs or expenses arising out any failure
on the part of the Borrower described above in this paragraph.
SECTION 7.3. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In the
event the Borrower should default under any of the provisions of this Agreement
and the Authority or the Trustee should employ attorneys or incur other expenses
for the collection of the payments due under this Agreement or the enforcement
of performance or observance of any obligation or agreement on the part of the
Borrower herein contained, the Borrower agrees to pay to the Authority or the
Trustee the reasonable fees and expenses of such attorneys, such other
reasonable expenses so incurred by the Trustee and such other expenses so
incurred by the Authority.
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SECTION 7.4. NO REMEDY EXCLUSIVE. No remedy herein conferred upon or
reserved to the Authority or the Trustee is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may
be deemed expedient. In order to entitle the Authority or the Trustee to
exercise any remedy reserved to it in this Article, it shall not be necessary to
give any notice, other than such notice as may be herein expressly required.
Such rights and remedies as are given the Authority hereunder shall also extend
to the Trustee, and the Trustee and the holders of the Bonds shall be deemed
third party beneficiaries of all covenants and agreements herein contained. To
the extent that any covenants and agreements in this Agreement expressly grant
rights to any Credit Provider, if any, the Credit Provider, if any, shall be
deemed a third party beneficiary of such covenants and agreements.
SECTION 7.5. NO ADDITIONAL WAIVER IMPLIED BY ONE WAIVER. In the event
any agreement or covenant contained in this Agreement should be breached by the
Borrower and thereafter waived by the Authority or the Trustee, such waiver
shall be limited to the particular breach so waived and shall not be deemed to
waive any other breach hereunder.
ARTICLE VIII
PREPAYMENT
SECTION 8.1. REDEMPTION OF BONDS WITH PREPAYMENT MONEYS. By virtue of
the assignment of the rights of the Authority under this Agreement to the
Trustee as is provided in Section 4.4 hereof, the Borrower agrees to and shall
pay (or cause to be paid) directly to the Trustee any amount permitted or
required to be paid by it under this Article VIII. The Trustee shall use the
moneys so paid to it by the Borrower to effect redemption of the Bonds in
accordance with Article IV of the Indenture on the date specified for such
redemption pursuant to Section 8.5 hereof.
SECTION 8.2. OPTIONS TO PREPAY INSTALLMENTS. The Borrower shall have
the option to prepay the amounts payable under Section 4.2(a) hereof by paying
to the Trustee, for deposit in the Bond Fund, the amount set forth in Section
8.4 hereof, under the circumstances set forth in Section 4.01(a) of the
Indenture.
SECTION 8.3. MANDATORY PREPAYMENT. The Borrower shall have and hereby
accepts the obligation to prepay Repayment Installments to the extent mandatory
redemption of any of the Bonds is required pursuant to Section 4.01(b) of the
Indenture or to the extent the maturity of any of the Bonds shall have been
accelerated pursuant to Section 7.01 of the Indenture. The Borrower shall
satisfy its obligation hereunder by prepaying such Repayment Installments (a)
within one hundred eighty (180) days after the occurrence of any event set forth
in paragraph (1) of said Section 4.01(b), (b) subject to any notice requirements
contained in the Indenture with respect to the mandatory redemption of the
Bonds, immediately upon the occurrence of any event set forth in paragraphs (2)
or (3) of said Section 4.01(b) giving rise to such required prepayment, (c) on
or before
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the redemption date specified in paragraph (4) of said Section 4.01(b) as to any
mandatory partial redemption of Bonds under that paragraph, and (d) immediately
upon receipt of notice from the Trustee of any acceleration of the maturity of
the Bonds pursuant to Section 7.01 of the Indenture. The amount payable by the
Borrower in the event of a prepayment required by this Section shall be
determined as set forth in Section 8.4 hereof and shall be deposited in the Bond
Fund.
SECTION 8.4. AMOUNT OF PREPAYMENT. In the case of a prepayment of the
entire amount due hereunder pursuant to Section 8.2 or 8.3 hereof, the amount to
be paid shall be a sum sufficient, together with other funds and the yield on
any securities then on deposit with the Trustee and available for such purpose,
to pay (1) the principal of all Outstanding Bonds on the redemption date
specified in the notice of redemption, plus interest accrued and to accrue to
the payment or redemption date of the Bonds, plus premium, if any, pursuant to
the Indenture, (2) all reasonable and necessary fees and expenses of the
Authority, the Trustee, the Tender Agent, the Registrar, the Remarketing Agent
and any Paying Agent accrued and to accrue through final payment of the Bonds,
and (3) all other liabilities of the Borrower accrued and to accrue under this
Agreement with respect to the Bonds.
In the case of partial prepayment of the Repayment Installments with
respect to the Bonds, including pursuant to Section 4.01(b)(4) of the Indenture,
the amount payable shall be a sum sufficient, together with other funds
deposited with the Trustee and available for such purpose, to pay the principal
amount of and premium, if any, and accrued interest on the Bonds to be redeemed,
as provided in the Indenture, and to pay expenses of redemption of such Bonds.
SECTION 8.5. NOTICE AND DATE OF PREPAYMENT. In the event of a
prepayment pursuant to Article VIII, the Borrower shall give, at least fifteen
(15) days prior to the last day by which the Trustee is permitted to give notice
of redemption pursuant to Section 4.03 of the Indenture, written notice to the
Authority and the Trustee specifying the date upon which any prepayment will be
made, provided that the Authority and the Trustee may agree to waive their
respective rights to receive such notice or may agree to a shorter notice
period. If in the case of a mandatory prepayment pursuant to Section 8.3 hereof,
the Borrower fails to give such notice of a prepayment required by this Section
8.5, such notice may be given by the Authority, by the Trustee, by the Credit
Provider, if any, or any holder or holders of 10% or more in aggregate principal
amount of the Outstanding Bonds. The Authority and the Trustee, at the request
of the Borrower, the Credit Provider, if any, or Bondholders, shall forthwith
take all steps necessary under the Indenture (except that the Authority shall
not be required to make payment of any money required for such redemption other
than from Revenues) to effect redemption of all or part of the then Outstanding
Bonds, as the case may be, (a) in the case of redemption upon optional
prepayment, on the date specified in such notice or if no such date is specified
on the earliest practicable date thereafter on which such redemption may be made
under applicable provisions of the Indenture and (b) in the case of redemption
upon mandatory prepayment, on the earliest practicable date thereafter on which
such redemption may be made under the applicable provisions of the Indenture.
Notwithstanding anything to the contrary in this Agreement, each
notice contemplated in this Section 8.5 that is given with respect to an
optional prepayment pursuant to Section 8.2 hereof shall state that it is
subject to and conditional upon receipt by the Trustee on or prior to the
proposed prepayment date of Available Amounts in an amount sufficient to effect
such prepayment and such
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notice shall be of no force and effect and the prepayment need not be made and
the Repayment Installments will not become due and payable on the proposed
prepayment date unless such Available Amounts are so received on or prior to the
proposed prepayment date.
ARTICLE IX
NONLIABILITY OF AUTHORITY; EXPENSES; INDEMNIFICATION
SECTION 9.1. NONLIABILITY OF AUTHORITY. The Authority shall not be
obligated to pay the principal of, or premium, if any, or interest on the Bonds,
except from Revenues. The Borrower hereby acknowledges that the Authority's sole
source of moneys to repay the Bonds will be provided by the payments made by the
Borrower pursuant to this Agreement, together with other Revenues with respect
to the Bonds, including amounts received by the Trustee under the Credit
Facility and investment income on certain funds and accounts held by the Trustee
under the Indenture, and hereby agrees that if the payments to be made hereunder
shall ever prove insufficient to pay all principal of, and premium, if any, and
interest on the Bonds as the same shall become due (whether by maturity,
redemption, acceleration or otherwise), then upon notice from the Trustee, the
Borrower shall pay such amounts as are required from time to time to prevent any
deficiency or default in the payment of such principal, premium or interest,
including, but not limited to, any deficiency caused by acts, omissions,
nonfeasance or malfeasance on the part of the Trustee, the Borrower, the
Authority, the Credit Provider, if any, or any third party.
SECTION 9.2. EXPENSES. The Borrower covenants and agrees to indemnify
the Authority and the Trustee against all reasonable costs and charges,
including fees and disbursements of attorneys, accountants, consultants and
other experts, incurred in good faith in connection with this Agreement, any
Series of Bonds or the Indenture.
SECTION 9.3. INDEMNIFICATION. The Borrower releases the Authority and
the Trustee from, and covenants and agrees that neither the Authority, the
Trustee, the Tender Agent, the Paying Agent nor the Registrar shall be liable
for, and covenants and agrees, to the extent permitted by law, to indemnify and
hold harmless the Authority, the Trustee, the Tender Agent, the Paying Agent and
the Registrar and their directors, officers, employees and agents from and
against, any and all losses, claims, damages, liabilities or expenses, of every
conceivable kind, character and nature whatsoever arising out of, resulting from
or in any way connected with (1) the Project Facilities, or the conditions,
occupancy, use, possession, conduct or management of, or work done in or about,
or from the planning, design, installation or construction of the Project
Facilities or any part thereof; (2) the issuance of the Bonds or any
certifications, covenants or representations made in connection therewith and
the carrying out of any of the transactions contemplated by the Bonds and this
Agreement; (3) the Trustee's acceptance or administration of the trusts under
the Indenture, or the exercise or performance of any of its powers or duties
under the Indenture; (4) any untrue statement or alleged untrue statement of any
material fact or omission or alleged omission to state a material fact necessary
to make the statements made, in light of the circumstances under which they were
made, not misleading, in any official statement or other offering circular
utilized by the Authority or any Underwriter in connection with the sale of the
Bonds, other than information in any such official statement or offering
circular supplied by the Authority; or (5) the cleanup of any hazardous
materials or toxic wastes from the Project, or the authorization of payment of
costs thereof; provided that the
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foregoing release and indemnity in this Section 9.3 shall not be required for
damages that result from negligence or willful misconduct on the part of the
party seeking such release or indemnity. The indemnity required by this Section
shall be only to the extent that any loss sustained by the Authority or the
Trustee exceeds the net proceeds the Authority or the Trustee receives from any
insurance carried with respect to the loss sustained. The Borrower further
covenants and agrees, to the extent permitted by law, to pay or to reimburse the
Authority, the Trustee, the Tender Agent, the Paying Agent and the Registrar and
their officers, employees and agents for any and all costs, reasonable
attorneys' fees, liabilities or expenses incurred in connection with
investigating, defending against or otherwise in connection with any such
losses, claims, damages, liabilities, expenses or actions, except to the extent
that the same arise out of the negligence or willful misconduct of the party
claiming such payment or reimbursement or such cost, attorneys' fees or expenses
are paid by any carried insurance. The provisions of this Section shall survive
the discharge of the Indenture and the retirement of the Bonds.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. NOTICES. All notices, certificates or other
communications shall be deemed sufficiently given upon actual receipt thereof
when the same have been mailed by first class mail or by overnight mail, postage
prepaid, addressed to the Authority, the Borrower, the Trustee, the Registrar,
the Paying Agent, the Tender Agent, the Remarketing Agent, the Credit Provider,
if any, or the Rating Agencies, as the case may be, at the addresses set forth
in Section 11.05 of the Indenture. A duplicate copy of each notice, certificate
or other communication given hereunder by either the Authority or the Borrower
to the other shall also be given to the Trustee. Unless otherwise requested by
the Authority, the Trustee, the Borrower, the Registrar, the Paying Agent, the
Tender Agent, the Remarketing Agent or the Credit Provider, if any, any notice
required to be given hereunder in writing may be given by any form of telephonic
or electronic transmission capable of making a written record. Each such party
shall file with the Trustee information appropriate to receiving such form of
telephonic or electronic transmission. The Authority, the Borrower, the Trustee
and the Credit Provider, if any, may, by notice given hereunder, designate any
different addresses to which subsequent notices, certificates or other
communications shall be sent.
SECTION 10.2. SEVERABILITY. If any provision of this Agreement shall
be held or deemed to be, or shall in fact be, illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative, or unenforceable to
any extent whatever.
SECTION 10.3. EXECUTION OF COUNTERPARTS. This Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument;
provided, however, that for purposes of perfecting a security interest in this
Agreement under Article 9 of the California Uniform Commercial Code, only the
counterpart delivered, pledged, and assigned to the Trustee shall be deemed the
original.
SECTION 10.4. AMENDMENTS, CHANGES AND MODIFICATIONS. Except as
otherwise provided in this Agreement or the Indenture, this Agreement may not be
effectively
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amended, changed, modified, altered or terminated except in accordance with
Article IX of the Indenture.
SECTION 10.5. GOVERNING LAW; VENUE. This Agreement shall be construed
in accordance with and governed by the Constitution and laws of the State
applicable to contracts made and performed in the State. This Agreement shall be
enforceable in the State, and any action arising out of this Agreement shall be
filed and maintained in a court in Sacramento County, California, unless the
Authority waives this requirement.
SECTION 10.6. AUTHORIZED BORROWER REPRESENTATIVE. Whenever under the
provisions of this Agreement the approval of the Borrower is required or the
Authority is required to take some action under the Indenture at the request of
the Borrower, such approval or such request shall be given on behalf of the
Borrower by the Authorized Borrower Representative, and the Authority and the
Trustee shall be authorized to act on any such approval or request and neither
party hereto shall have any complaint against the other or against the Trustee
as a result of any such action taken.
SECTION 10.7. TERM OF THE AGREEMENT. This Agreement shall be in full
force and effect with respect to the Bonds from the date hereof and shall
continue in effect as long as any of the Bonds are Outstanding or the Trustee
holds any moneys under the Indenture, whichever is later. All representations
and certifications by the Borrower as to all matters affecting the Tax Exempt
status of interest on the Bonds shall survive the termination of this Agreement.
SECTION 10.8. BINDING EFFECT. This Agreement shall inure to the
benefit of and shall be binding upon the Authority, the Borrower and their
respective successors and assigns; subject, however, to the limitations
contained in Section 5.2 hereof. Borrower acknowledges and agrees to Section
12.13 of the Indenture.
SECTION 10.9. CREDIT PROVIDER. All provisions hereof regarding
consents, approvals, directions, appointments or requests by the Credit
Provider, if any, shall be deemed not to require or permit such consents,
approvals, directions, appointments or requests by such Credit Provider, during
any time in which no Credit Facility has been delivered, or the Credit Provider,
has failed to honor a draft presented to it in strict conformance with the
applicable provisions of the Credit Facility, or after the Credit Facility shall
at any time for any reason cease to be valid and binding on the Credit Provider,
if any, or while such Credit Provider, is denying further liability or
obligation under the Credit Facility (unless such Credit Facility has been fully
drawn or to the extent that the conditions to making a demand for payment
thereunder have not been strictly satisfied) or after the Credit Provider, has
rescinded, repudiated or terminated the Credit Facility.
All provisions herein relating to the Credit Provider, if any, shall
be of no force and effect with respect to the Credit Provider if the Credit
Facility and Credit Agreement are not in effect, there are no related Credit
Provider Bonds and all amounts owing to such Credit Provider under the Credit
Agreement have been paid.
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IN WITNESS WHEREOF, the Authority has caused this Loan Agreement to be
executed in its name and attested by its duly authorized officers, and the
Borrower has caused this Agreement to be executed in its name and its seal to be
hereunto affixed and attested by its duly authorized officers, all as of the
date first above written.
CALIFORNIA ECONOMIC DEVELOPMENT
FINANCING AUTHORITY
By___________________________________
Chair
Attest:
By___________________________________
Secretary
MERCURY AIR GROUP, INC.
By___________________________________
Its__________________________________
[SEAL]
__________________________________
Attest:
By_________________________________
Its________________________________
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EXHIBIT A
Description of the Project Facilities
THE LOS ANGELES INTERNATIONAL AIRPORT ("LAX")
Leasing, construction, rehabilitation, installation and conversion of
an existing aircraft hangar into an approximately 171,400 square foot warehouse,
with approximately 43,000 square feet of attached office space. This portion of
the Project will include truck ramps, loading docks, overhead doors for ramp
access to cargo planes, aircraft ramp and other site work. The facility will be
used to handle cargo for airline customers, including cargo storage, bonded
warehousing, break-down and build-up of pallets and containers, cargo inspection
and receipt and related customer service functions. On a short term basis, a
small portion of the facility may be leased to an airline or government entity
to conduct its own cargo operations. The warehouse is located at ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
THE BURBANK-GLENDALE-PASADENA AIRPORT (THE "BURBANK AIRPORT")
Leasing, development, construction, installation and completion of an
approximately 17 acre site to include an approximately 9,000 square foot
terminal building, five hangar buildings with related office space totaling
approximately 72,100 total square feet, 260,000 square feet of aircraft ramp,
parking areas and related site improvements. The facilities will be used to
conduct fixed base operations including retail fuel sales; refueling of
corporate, private and some commercial aircraft; rental of aircraft hangar,
related office and aircraft tie-down space; and flight support services for
commercial and general aviation. The terminal building will include an office
and a kitchen, restrooms, lobby, pilots lounge and conference room for use by
the Borrower's customers. The address of the Burbank Airport portion of the
Project is ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
A-1