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ELXSI
(Borrower)
and
ORANGE COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
(Issuer)
LOAN AGREEMENT
Dated as of September 24, 1997
Relating to
$2,500,000
Orange County Industrial Development Authority,
Industrial Development Revenue Bonds
(ELXSI Project), Series 1997
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ALL RIGHTS OF THE ISSUER UNDER THIS AGREEMENT (EXCEPT FOR CERTAIN RESERVED
RIGHTS) HAVE BEEN ASSIGNED TO, AND ARE SUBJECT TO A SECURITY INTEREST IN FAVOR
OF SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL ASSOCIATION, AS TRUSTEE FOR THE
HOLDERS OF THE BONDS UNDER A TRUST INDENTURE DATED AS OF SEPTEMBER 24, 1997, AS
AMENDED OR SUPPLEMENTED FROM TIME TO TIME.
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION.............................3
Section 1.1 Definitions.........................................3
Section 1.2 Rules of Construction..............................14
ARTICLE II REPRESENTATIONS..................................................16
Section 2.1 Representations by the Issuer......................16
Section 2.2 Representations, Warranties and Covenants
by the Borrower....................................17
ARTICLE III ACQUISITION OF THE PROJECT.......................................20
Section 3.1 Agreement as to Acquisition of the Project.........20
Section 3.2 Borrower to Obtain Approvals Required for
the Project and the Plant..........................20
Section 3.3 Plans and Specifications...........................20
ARTICLE IV ISSUANCE OF THE BONDS; COMPLETION DATE...........................21
Section 4.1 Agreement to Issue the Bonds.......................21
Section 4.2 Disbursements from the Project Fund................21
Section 4.3 Certificate as to Completion.......................21
Section 4.4 Reserved...........................................21
Section 4.5 Borrower Required to Pay in Event Project
Fund Insufficient..................................21
Section 4.6 No Third Party Beneficiary.........................22
Section 4.7 Rebate Provisions..................................22
Section 4.8 Arbitrage Certifications and Covenants.............22
ARTICLE V LOAN BY THE ISSUER TO THE BORROWER; REPAYMENT....................23
Section 5.1 Loan by the Issuer; Repayment......................23
Section 5.2 No Set Off.........................................23
Section 5.3 Prepayments........................................24
Section 5.4 Credits Against the Note...........................24
ARTICLE VI MAINTENANCE AND MODIFICATIONS; TAXES AND UTILITY CHARGES;
INSURANCE AND EMINENT DOMAIN.....................................25
Section 6.1 Maintenance and Modification of the Plant by
Borrower...........................................25
Section 6.2 Taxes and Utility Charges..........................25
Section 6.3 Title Insurance and Survey.........................26
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Section 6.4 Casualty and Liability Insurance Required..........26
Section 6.5 General Requirements Applicable to Insurance.......27
Section 6.6 Advances by the Bondholder or the Trustee..........28
Section 6.7 Borrower to Make up Deficiency in Insurance
Coverage...........................................28
Section 6.8 Eminent Domain.....................................28
Section 6.9 Application of Net Proceeds of Insurance and
Eminent Domain.....................................29
Section 6.10 Parties to Give Notice.............................30
ARTICLE VII SPECIAL COVENANTS................................................31
Section 7.1 Access to the Plant and Inspection.................31
Section 7.2 Further Assurances and Corrective
Instruments; Survey................................31
Section 7.3 Recording and Filing; Other Instruments............31
Section 7.4 Notice of Event of Taxability......................32
Section 7.5 Administrative Expenses. ..........................32
Section 7.6 Covenants with Respect to Tax Exemption............32
Section 7.7 Financial Covenants................................33
Section 7.8 Release and Indemnification Covenants..............34
Section 7.9 Encumbrance Covenants..............................36
Section 7.10 Financial Statements...............................37
Section 7.11 Indebtedness.......................................38
Section 7.12 Additional Information.............................38
Section 7.13 Restricted Payments ...............................38
Section 7.14 Sale of Assets.....................................39
Section 7.15 Litigation.........................................39
Section 7.16 Patents, Trademarks................................39
Section 7.17 Default Certificates...............................40
Section 7.18 Notification to Trustee............................40
Section 7.19 Books of Record and Account........................40
Section 7.20 Observe Laws.......................................40
Section 7.21 Acceptance of Indenture............................40
Section 7.22 Reserved...........................................40
Section 7.23 Merger, Purchase and Sale..........................41
Section 7.24 Changes in Control.................................41
Section 7.25 ERISA..............................................41
Section 7.26 Notice of Plan Events, Termination and Litigation..41
Section 7.27 Plan Annual Reports................................42
Section 7.28 Plan Liabilities...................................42
Section 7.29 Notice of Adoption of Plan.........................42
Section 7.30 Guaranties.........................................42
Section 7.31 Subsidiaries.......................................43
Section 7.32 Leases.............................................43
Section 7.33 Unconditional Purchase Options.....................43
Section 7.34 Use Of Proceeds....................................43
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Section 7.35 Transactions with Related Parties..................43
Section 7.36 Borrower's and Subsidiaries' Stock.................43
ARTICLE VIII ASSIGNMENT, LEASING, SELLING AND ENCUMBERING.....................44
Section 8.1 Assignment of Loan Agreement, Sale or
Encumbering of Plant by the Borrower...............44
Section 8.2 Restrictions on Transfer of Issuer's Rights. .....44
Section 8.3 Assignment by the Issuer...........................44
ARTICLE IX EVENTS OF DEFAULT AND REMEDIES...................................45
Section 9.1 Events of Default Defined..........................45
Section 9.2 Remedies on Default................................46
Section 9.3 Application of Amounts Realized in
Enforcement of Remedies............................47
Section 9.4 No Remedy Exclusive................................47
Section 9.5 Agreement to Pay Attorneys' Fees and Expenses......47
ARTICLE X PREPAYMENTS......................................................49
Section 10.1 Optional Prepayments...............................49
Section 10.2 Mandatory Prepayments..............................49
Section 10.3 Other Mandatory Prepayments........................50
ARTICLE XI MISCELLANEOUS....................................................51
Section 11.1 References to the Bonds Ineffective
After Bonds Paid...................................51
Section 11.2 No Implied Waiver..................................51
Section 11.3 Issuer Representative..............................51
Section 11.4 Borrower Representative............................51
Section 11.5 Notices............................................51
Section 11.6 If Payment or Performance Date is not a
Business Day.......................................52
Section 11.7 Binding Effect.....................................52
Section 11.8 Severability.......................................52
Section 11.9 Amendments, Changes and Modifications..............52
Section 11.10 Execution in Counterparts..........................53
Section 11.11 Applicable Law.....................................53
Section 11.12 No Charge Against Issuer Credit....................53
Section 11.13 Issuer Not Liable..................................53
Section 11.14 Expenses...........................................53
Section 11.15 Amounts Remaining with the Trustee.................53
Signatures.................................................................55-56
EXHIBIT A - FORM OF NOTE
EXHIBIT B -THE NEW FACILITY SITE
EXHIBIT C - THE EXISTING FACILITY SITE
EXHIBIT D - SCHEDULE OF INDEBTEDNESS
LOAN AGREEMENT
This LOAN AGREEMENT, dated as of September 24, 1997 between ORANGE
COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY, a public body corporate and politic and
a public instrumentality duly created and existing under and by virtue of the
laws of the State of Florida (the "Issuer"), and ELXSI, a California corporation
(the "Borrower").
W I T N E S S E T H:
RECITALS
1. The Issuer is authorized and empowered by Parts II and III of
Chapter 159, Florida Statutes, as amended from time to time (the "Enabling Act",
as defined herein) to issue industrial development revenue bonds for the purpose
of financing the cost of acquisition, construction, reconstruction, improvement,
rehabilitation, renovation, expansion and enlargement, or additions to,
furnishing and equipping of capital projects for industrial or manufacturing
plants, including land, rights in land, buildings and other structures,
machinery, equipment, appurtenances and facilities incidental thereto, and all
improvements necessary or convenient therefor, and to lend the proceeds of the
bonds for such purpose to any financially responsible party pursuant to a
financing agreement providing for the repayment of the loan.
2. The Borrower has applied to the Issuer for a loan to finance the
Cost of Acquisition of the Project (as hereinafter defined).
3. The Issuer has determined that the Project (as hereinafter defined)
complies with the provisions of the Enabling Act and serves a public purpose by,
among other things, increasing opportunities for gainful employment and
advancing the economic prosperity and general welfare of the State of Florida
and its people.
4. The Issuer intends to issue its Orange County Industrial Development
Authority, Industrial Development Revenue Bonds (ELXSI Project), Series 1997
(the "Bonds", as defined herein), pursuant to the Indenture (as hereinafter
defined) in order to obtain funds to lend to the Borrower pursuant to this Loan
Agreement. This Loan Agreement provides for the repayment by the Borrower of the
loan contemplated hereunder and further provides that the loan shall be
evidenced by the Note (as hereinafter defined) of the Borrower and that the loan
and the Note shall be secured by a mortgage and security interest and certain
other security pursuant to certain collateral documents being executed
concurrently herewith.
5. Pursuant to the Indenture, the Issuer has, inter alia, assigned and
pledged the rights of the Issuer in, to and under the Note, the Mortgage (as
hereinafter defined), the Security Agreement (as hereinafter defined), and the
Environmental Agreement (as hereinafter defined), to the Trustee (as hereinafter
defined) as security for the Bonds.
6. As further security for the Bonds, the Borrower has caused the
Guarantor (hereinafter defined) to guaranty the prompt payment of the Bonds and
certain other amounts pursuant to the Guaranty (hereinafter defined).
NOW, THEREFORE, in consideration of the promises and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereby agree, covenant, grant, pledge, assign, represent and warrant as follows
(it being understood and agreed that any obligation of the Issuer for the
payment of money shall not be a general obligation on its part and shall not
constitute or give rise to a debt, liability or obligation, or constitute a
pledge of the full faith and credit or the taxing power, of the Issuer, or of
the State of Florida or of any political subdivision thereof, but shall be a
special and limited obligation of the Issuer payable solely out of the revenues
and proceeds pledged therefor):
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ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section I.1 Definitions. In addition to words and terms elsewhere
defined in this Loan Agreement the following words and terms shall have the
following meanings:
"Acquisition" when used in connection with the Project, shall mean,
without limitation, the acquisition, construction, installation and equipping of
the Project.
"Additional Revolving Loan" means "Additional Revolving Loan" as such
term is defined in the Amended and Restated Loan and Security Agreement dated as
of December 30, 1996, between the Borrower and Bank of America Illinois as
subsequently amended, supplemented, restated and modified.
"Administrative Expenses" shall mean the amounts payable pursuant to
Section 7.5 hereof by the Borrower to or for the account of the Issuer or the
Trustee to provide for payment of the costs, expenses, including attorney's
fees, incurred by the Issuer or the Trustee.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such Person. For the purposes of this definition, "control"
when used with respect to a Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Amended and Restated Loan Agreement" shall mean the Amended and
Restated Loan and Security Agreement dated as of December 30, 1996 between the
Borrower and Bank of America Illinois, as such agreement may be supplemented,
amended, restated or modified. If the Amended and Restated Loan Agreement
expires or is terminated or, if all liabilities of Borrower thereunder have been
paid in full, references to such agreement for defined terms shall be deemed
references to such terms as defined on the date such agreement expires or is
terminated.
"Bankruptcy Code" shall mean 11 U.S.C ss.101 et seq., as amended.
"▇▇▇▇▇▇▇▇'▇ Business" shall mean "▇▇▇▇▇▇▇▇'▇ Business" as such term is
defined in the Amended and Restated Loan Agreement.
"Bond" or "Bonds" shall mean the Orange County Industrial Development
Authority, Industrial Development Revenue Bonds (ELXSI Project), Series 1997,
authorized to be issued pursuant to a resolution of the Issuer in accordance
with the Indenture in the aggregate principal amount of $2,500,000.00 including
such Bonds issued in replacement for mutilated, destroyed, lost or stolen Bonds
pursuant to Section 209 of the Indenture, and any amendments and supplements
thereto, and any renewals and extensions thereof, permitted by the Indenture.
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"Bond Documents" shall mean, collectively, the Indenture, the Bonds,
this Loan Agreement, the Note, the Mortgage, the Security Agreement, the
Environmental Agreement, and the Tax Compliance Certificate of the Borrower,
respectively.
"Bondholder" or "holder" shall mean the initial holders and any future
holders of the Bond or Bonds as registered on the books and records of the Bond
Registrar pursuant to Section 206 of the Indenture.
"Bond Fund" shall mean the fund created under Section 501 of the
Indenture.
"Bond Purchase Agreement" shall mean that certain Bond Purchase
Agreement executed as of the date of issuance and delivery of the Bonds by and
between the Issuer and the Bond Purchaser.
"Bond Purchaser" shall mean Bank of America National Trust and Savings
Association.
"Borrower" shall mean ELXSI, a California corporation, and its
successors and assigns.
"Borrower Representative" shall mean any one of the Persons at the time
designated to act on behalf of the Borrower by written certificate furnished to
the Issuer and the Trustee containing the specimen signatures of such Persons
and signed by the Borrower.
"Business Day" shall mean a day upon which banks in Chicago, Illinois
and Orlando, Florida are open for the transaction of business of the nature
required pursuant to this Loan Agreement and the Indenture.
"Capitalized Lease" means any lease which is or should be capitalized
on the balance sheet of the lessee in accordance with GAAP.
"Cessation of Operation" shall mean that the Borrower has ceased, in
the opinion of the Issuer and the Trustee, to operate the Project as a "project"
within the meaning of the Enabling Act. A Cessation of Operation shall not be
deemed to have occurred until 60 days shall have elapsed after written notice
has been given to the Borrower by the Issuer or the Trustee that operations at
the Project shall have ceased and the Borrower shall not have demonstrated to
the satisfaction of the Issuer and the Trustee that the Borrower (or an
assignee, lessee or buyer pursuant to Section 8.1 hereof) has resumed the
operations of the Project as a "project" within the meaning of the Enabling Act
or that the Borrower is, in good faith, seeking to arrange resumption of an
economically reasonable operation of the Project as such a "project"; provided
that a temporary shutdown due to a strike or other labor dispute, lack of fuel
or similar occurrence shall not be deemed a Cessation of Operation.
"Closing Date" means September 24, 1997.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
all Tax Regulations thereunder.
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"Completion Date" shall mean that date certified as provided in Section
4.3 hereof.
"Consistent Basis" shall mean, in reference to the application of
Generally Accepted Accounting Principles, that the accounting principles
observed in the period referred to are comparable in all material respects to
those applied in the preceding period, except as to any changes consented to by
the Bond Purchaser.
"Cost of Acquisition of the Project" shall mean all costs and
allowances for the Acquisition of the Project which include, but are not limited
to, all capital costs of the Project, including the following:
(1) The Acquisition of the Project at the Project Site;
(2) Preparation of the plans and specifications for the Project
(including any preliminary study or plan of the Project or any aspect thereof),
any labor, services, materials and supplies used or furnished in the Acquisition
of the Project, the acquisition and installation necessary to provide utility
services or other services and all real and tangible personal property deemed
necessary by the Borrower in connection with the Project;
(3) The fees for architectural, engineering, supervisory and
consulting services in connection with Acquisition of the Project;
(4) To the extent they shall not be paid by a contractor, the
premiums of all insurance and surety and performance bonds required to be
maintained in connection with the Acquisition of the Project;
(5) Any fees and expenses incurred in connection with acquisition,
perfection and protection of title to the Project Site and any fees and expenses
incurred in connection with the preparation, recording or filing of such
documents, instruments or financing statements as either the Borrower or the
Issuer or the Trustee may deem desirable to perfect or protect the rights of the
Issuer or the Trustee under this Loan Agreement, the Note, the Indenture, the
Mortgage, the Environmental Agreement, the Security Agreement, and the Bonds;
(6) The legal, accounting and financial advisory fees and
expenses, filing fees, and printing and engraving costs incurred in connection
with the authorization, issuance, sale and purchase of the Bonds, and the
preparation of this Loan Agreement, the Note, the Indenture, the Mortgage, the
Security Agreement, the Environmental Agreement, and the Bonds, and all other
documents prepared in connection with the authorization, issuance and sale of
the Bonds;
(7) Interest prior to and during construction of the Project; and
(8) Any administrative and processing or other fees and expenses
charged by
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the Issuer or the State in connection with the Project to the Completion Date
and any initial or acceptance fee and expenses charged by the Trustee in
connection with the acceptance of the trusts under the Indenture.
"Counsel" shall mean an attorney or a firm of attorneys acceptable to
the Trustee, and may, but need not, be counsel to the Issuer or the Borrower.
"County" shall mean Orange County, Florida.
"County Commission" shall mean the Board of County Commissioners of
Orange County, Florida.
"Cues Business" shall mean "Cues Business" as such term is defined in
the Amended and Restated Loan Agreement.
"Date of Taxability" shall mean the earliest date as of which interest
on any Bond shall be or have become includable in the gross income of any
Bondholder or former Bondholder pursuant to a Determination of Taxability.
"Depository Accounts" shall mean "Depository Accounts" as such term is
defined in the Amended and Restated Loan Agreement.
"Determination of Taxability" shall mean and shall be deemed to have
occurred on the first to occur of the following:
(a) on that date when the Borrower files any statement,
supplemental statement or other tax schedule, return or document which discloses
that an Event of Taxability, as hereinafter defined, shall have in fact
occurred;
(b) on that date when any Bondholder or former Bondholder notifies
the Borrower or the Trustee that it has received a written opinion by an
attorney or firm of attorneys of recognized standing on the subject of municipal
bonds to the effect that an Event of Taxability shall have occurred unless,
within one hundred twenty (120) days after receipt by the Borrower of such
notification from the Trustee, any Bondholder or any former Bondholder, the
Borrower shall obtain and deliver to the Trustee and each Bondholder and former
Bondholder a favorable ruling or determination letter issued to or on behalf of
the Borrower by the Commissioner or any District Director of the Internal
Revenue Service (or any other government official exercising the same or a
substantially similar function from time to time) to the effect that, after
taking into consideration such facts as form the basis for the opinion that an
Event of Taxability has occurred, an Event of Taxability shall not have
occurred;
(c) on that date when the Borrower shall be advised in writing by
the Commissioner or any District Director of the Internal Revenue Service (or
any other government official or agent exercising the same or a substantially
similar function from time to time) that,
6
based upon filings of the Borrower, or upon any review or audit of the Borrower,
or upon any other ground whatsoever, an Event of Taxability shall have occurred;
or
(d) on that date when the Borrower shall receive notice in writing
from any Bondholder or former Bondholder, or from the Trustee, that the Internal
Revenue Service (or any other government agency exercising the same or a
substantially similar function from time to time) has assessed as includable in
the gross income of any Bondholder or former Bondholder the interest on such
Bondholder's or former Bondholder's Bond due to the occurrence of an Event of
Taxability; provided, however, that no Determination of Taxability shall occur
under subparagraph (iii) or (iv) hereof unless the Borrower has been afforded
the opportunity, at its expense, to contest any such assessment or unfavorable
ruling and, further, that no Determination of Taxability shall occur until such
contest, if made, has been finally determined; provided further, however, that
upon demand from any Bondholder or former Bondholder, the Borrower shall
immediately reimburse such Bondholder or former Bondholder for any payments such
Bondholder or former Bondholder shall be obligated to make as a result of the
Determination of Taxability during any such contest.
"EBITDA" means Borrower's consolidated net earnings before interest
expense, depreciation, amortization and provision for Taxes for the fiscal
quarter of Borrower ending on the date of determination. For purposes of this
definition, (i) net earnings shall not include any gains on the sale or other
disposition of Investments (other than cash equivalents) or fixed assets and any
extraordinary or nonrecurring items of income in any fiscal quarter to the
extent that the aggregate of all such gains and extraordinary or nonrecurring
items of income exceeds the aggregate of losses on such sales or other
dispositions and extraordinary or nonrecurring charges during such quarter, and
(ii) interest expense shall include, without limitation, implicit interest
expense on Capitalized Leases.
"Eminent Domain" shall mean the taking of title to, or the temporary
use of, the Project or any part thereof pursuant to eminent domain or
condemnation proceedings, or any voluntary conveyance of any part of the Project
during the pendency of, or as a result of a threat of, such proceedings.
"Enabling Act" shall mean Parts II and III of Chapter 159, Florida
Statutes, as amended.
"Environmental Agreement" shall mean that certain Environmental
Indemnity Agreement dated as of the date hereof from the Borrower to the Issuer,
and any amendments and supplements thereto permitted by the Indenture.
"ERISA" shall mean the Employment Retirement Income Security Act of
1974, as amended.
"Event of Default" or "Default" shall have the meaning set forth in
Section 9.1 hereof.
"Event of Taxability" shall mean, with respect to Bonds bearing
interest at the Tax-
7
Exempt Rate, a change in law or fact or the interpretation thereof, or the
occurrence or existence of any fact, event or circumstance whatsoever
(including, without limitation, the issuance of obligations or the incurring of
capital expenditures in excess of those permitted by Section 144(a) of the Code,
or the taking of any action by the Borrower, or the failure to take any action
by the Borrower, or the making by the Borrower of any misrepresentation herein
or in any certificate required to be given in connection with the issuance, sale
or delivery of the Bonds) which has the effect of causing the interest paid or
payable on any Bond to become includable in the gross income of any Bondholder
or former Bondholder of any Bond other than a Bondholder or former Bondholder
who is or was a "substantial user" or "related person" as such terms are used in
Section 147(a) of the Code.
"Excess Cash Flow" shall mean "Excess Cash Flow" as such term is
defined in the Amended and Restated Loan Agreement.
"Existing Facility Site" shall mean the real property located in Orange
County, Florida, more particularly described in Exhibit "D" attached hereto and
by reference made a part hereof upon which the Borrower's existing manufacturing
facilities are located.
"Existing Loan Agreement" shall mean "Existing Loan Agreement" as such
term is defined in the Amended and Restated Loan Agreement.
"Fiscal Year" means any period of 12 consecutive calendar months ending
on the 31st day of December. References to a Fiscal Year with a number
corresponding to any calendar year (e.g., "Fiscal Year 1996) refer to the Fiscal
Year ending on the 31st day of December occurring during such calendar year.
"Funded Debt" means, as of any date of determination, the principal
amount of Borrower's Indebtedness outstanding which would be reflected as
liabilities on a balance sheet prepared in accordance with GAAP (but excluding
from the determination thereof all Indebtedness owing with respect to Additional
Revolving Loans).
"Funded Debt/EBITDA Ratio" means the ratio of Borrower's Funded Debt
determined as of the last day of any specified fiscal quarter of Borrower
divided by Borrower's EBITDA for the four (4) fiscal quarters then ended.
"Generally Accepted Accounting Principles" or "GAAP" means generally
accepted accounting principles as in effect from time to time; provided that the
financial tests set forth in Sections 7.7(a) through 7.7(d) shall at all times
be calculated in accordance with generally accepted accounting principles as in
effect on the Closing Date unless Borrower and the Bondholder shall have agreed
to modifications to such covenants to account for any changes in such principles
after the date hereof.
"Government Obligations" shall mean (i) direct obligations of the
United States of America for the payment of which the full faith and credit of
the United States of America is
8
pledged, or (ii) obligations of the Government National Mortgage Association,
Federal Intermediate Credit Banks, Federal Banks for Cooperatives, Federal Land
Banks, Federal Farm Credit Banks and Federal Home Loan Banks.
"Guarantor" shall mean ELXSI Corporation. A Delaware corporation, and
its successors and assigns.
"Guaranty" shall mean that certain Guaranty Agreement dated as of the
date hereof from ELXSI Corporation to the Bond Purchaser, and any amendments and
supplements thereto as permitted by the Indenture.
"Indebtedness" of any Person means, without duplication, (i) any
obligation of such Person for borrowed money, including, without limitation, (a)
any obligation of such Person evidenced by bonds, debentures, notes or other
similar debt instruments and (b) any obligation for borrowed money which is
non-recourse to the credit of such Person but which is secured by a Lien on any
asset of such Person, (ii) any obligation of such Person on account of deposits
or advances, (iii) any obligation of such Person for the deferred purchase price
of any property or services, except Trade Accounts Payable, (iv) any obligation
of such Person as lessee under a Capitalized Lease and (v) any Indebtedness of
another Person secured by a Lien on any asset of such first Person, whether or
not such Indebtedness is assumed by such first Person. For all purposes of this
Agreement, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general partner or joint
venturer. Notwithstanding the foregoing, for purposes of computing Borrower's
compliance with Sections 7.7(b) and 7.7(c), and for purposes of computing Funded
Debt, there shall be excluded from the determination of "Indebtedness" the
Subordinated Note and all Indebtedness of Borrower to Parent.
"Indenture" shall mean the Trust Indenture dated as of the date hereof
by and between the Issuer and the Trustee, together with any amendments or
supplements thereto permitted thereby.
"Investment" of any Person means any investment, made in cash or by
delivery of any kind of property or asset, in any other Person, whether by
acquisition of shares of stock or similar interest, Indebtedness or other
obligation or security, or by loan, advance or capital contribution, or
otherwise.
"Issuer" shall mean Orange County Industrial Development Authority, a
public body corporate and politic and a public instrumentality duly created and
existing under and by virtue of the laws of the State of Florida, and its
successors and assigns and any body resulting from or surviving any
consolidation or merger to which it or its successors may be a party.
"Issuer Representative" shall mean any one of the persons at the time
designated to act on behalf of the Issuer by written certificate furnished to
the Borrower and the Trustee containing the specimen signatures of such persons
and signed on behalf of the Issuer by its Chairman or Vice-Chairman.
9
"Liabilities" means all of the liabilities, obligations, reimbursement
obligations in connection with any letter of credit and Indebtedness of
Borrower, any Subsidiary or any other Obligor to the Bondholder of any kind or
nature, however created, arising or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing or due or to become due, and
including but not limited to (i) Borrower's obligations under any note, (ii)
Borrower's obligations under this Agreement, (iii) interest, charges, expenses,
attorneys' fees and other sums chargeable to Borrower by the Bondholder under
this Loan Agreement or any related agreement, (iv) the obligations of Borrower,
any Subsidiary or any other obligor under any related agreement, including
obligations of performance, and (v) Borrower's obligations with respect to any
letter of credit or application therefor. "Liabilities" shall also include any
and all amendments (including any amendment and restatement), extensions or
renewals of any of the foregoing.
"Lien" means any mortgage, pledge, hypothecation, judgment lien or
similar legal process, title retention lien, or other lien, encumbrance or
security interest, including, without limitation, the interest of a vendor under
any conditional sale or other title retention agreement and the interest of a
lessor under any Capitalized Lease.
"Loan Agreement" shall mean this Loan Agreement and any amendments and
supplements hereto permitted by the Indenture.
"Management Agreement" shall mean "Management Agreement" as such term
is defined in the Amended and Restated Loan Agreement.
"Maturity Date" shall mean the final date of maturity of this loan
which shall be September 1, 2012.
"Mortgage" shall mean the Mortgage and Security Agreement dated as of
the date hereof from the Borrower to the Issuer, and any amendments and
supplements thereto permitted by the Indenture.
"Mortgaged Property" shall mean the New Facility and the New Facility
Site.
"Net Proceeds" when used with respect to any insurance proceeds or
award resulting from, or other amount received in connection with, Eminent
Domain, shall mean the gross proceeds from such proceeds, award or other amount,
less all expenses (including attorneys' fees) incurred in the realization
thereof.
"Net Worth" means at any time, the sum of (a) the consolidated
shareholder's equity (including capital stock, additional paid-in capital and
retained earnings after deducting treasury stock) of Borrower calculated in
accordance with GAAP and (b) the outstanding principal amount of all
Subordinated Debt.
"New Facility" shall mean all buildings, structures and improvements
now or hereafter
10
located on the New Project Site including, but not limited to, the approximately
32,000 square foot manufacturing facility of the Borrower, now or hereafter
located at the New Project Site and the equipment installed therein, and all
other fixtures, furniture, machinery, equipment and other personal property
installed in or on, or located at, such premises, including such modifications
thereof, substitutions therefor, and repairs thereto, and excluding deletions
therefrom, as shall be made in accordance with this Loan Agreement.
"New Facility Site" shall mean the real property located in Orange
County, Florida, more particularly described in Exhibit "C" attached hereto and
by reference made a part hereof which shall be acquired with the proceeds of the
Bonds, be subject to the lien of the Mortgage, and upon which the New Facility
shall be located.
"Note" shall mean the promissory note given by the Borrower pursuant to
Section 5.1 of this Loan Agreement, substantially in the form of Exhibit "A"
attached hereto.
"Obligor" means Borrower and each other Person who is or shall become
primarily or secondarily liable on any of the Liabilities, or who grants to the
Bondholder a Lien on any property of such Person as security for any of the
Liabilities.
"Original Loan Agreement" shall mean "Original Loan Agreement" as such
term is defined in the Amended and Restated Loan Agreement.
"Overdue Rate" shall mean the Reference Rate plus two percent (2%) per
annum or the maximum rate of interest permitted by law, whichever is lower.
"Parent" means ELXSI Corporation, a Delaware corporation and the owner
of 100% of the issued and outstanding capital stock of Borrower, and any
successor thereto.
"Payment of the Bonds" shall mean payment of (i) the principal of and
interest on the Bonds in accordance with their terms whether through payment at
maturity, upon acceleration or prepayment, (ii) all amounts due as
Administrative Expenses or otherwise, and (iii) any and all other liabilities
and obligations arising under the Indenture and this Loan Agreement; in any
case, in such a manner that all such amounts due and owing with respect to the
Bonds shall have been paid.
"Permitted Encumbrances" shall mean, as of any particular time, (i)
liens for ad valorem taxes and special assessments, if any, which are not then
delinquent or which are being contested in good faith and for which the Person
liable for payment thereof has set aside adequate reserves, unless the property
subject to any such lien or any part thereof shall be in danger of being lost or
forfeited as a result of the failure to pay such taxes or assessments, (ii) the
liens created pursuant to the Indenture, the Mortgage and the Security
Agreement, and (iii) all liens and encumbrances listed as exceptions to the
title insurance policy required by Section 6.3 hereof and which liens and
exceptions are not objected to by the Trustee in writing prior to the date of
the endorsement of the Note.
11
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, or government (whether national, federal, state, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean an employee benefit plan or plans and any trust
created thereunder which has been established or maintained or hereafter is
established or maintained for employees of the Borrower or any Subsidiary,
provided such plan is covered by title I or IV of ERISA.
"Plans and Specifications" shall mean the plans and specifications used
in the Acquisition of the Project, as the same may be revised from time to time
by the Borrower in accordance with Section 3.3 hereof.
"Plant" shall mean the Project Site and the Project and all buildings,
structures and improvements now or hereafter located on the Project Site
including, but not limited to, the New Facility and the equipment installed at
the Project Site, and all other fixtures, furniture, machinery, equipment and
other personal property installed in or on, or located at, such premises,
including such modifications thereof, substitutions therefor, and repairs
thereto, and excluding deletions therefrom, as shall be made in accordance with
this Loan Agreement.
"Prohibited Transaction" shall have the meaning assigned to that term
in Section 406 of Title I of ERISA.
"Project" shall mean the New Facility and the improvements and
modifications at the existing manufacturing facilities of the Borrower located
on the Existing Site, as more particularly set forth in the Plans and
Specifications.
"Project Fund" shall mean the fund created pursuant to Section 401 of
the Indenture.
"Project Site" shall mean the Existing Facility Site and the New
Facility Site.
"Recapitalization Agreement" shall mean "Recapitalization Agreement" as
such term is defined in the Amended and Restated Loan Agreement.
"Reference Rate" shall mean, at any time and from time to time, the
rate per annum then most recently announced by the Bond Purchaser at its head
office as its reference rate. The Reference Rate is not necessarily intended to
be the lowest rate of interest determined by the Bond Purchaser in connection
with extensions of credit. Changes in the rate of interest on that portion of
any loan maintained at the Reference Rate shall take effect simultaneously with
each change in the Reference Rate.
"Related Entity" shall mean any entity if, with respect to the
Borrower, any of the entity's employees fall within any of the following
categories: (a) employees of a controlled group of
12
corporations as defined in Section 414(b) of the Internal Revenue Code; (b)
employees of partnerships, proprietorships or other entities that are under
common control as defined in Section 414(c) of the Internal Revenue Code; (c)
employees of affiliated service groups as defined in Section 414(m) of the
Internal Revenue Code; or (d) employees of entities that are deemed affiliated
with or related to the Borrower in accordance with Sections 414(n) or (o) of the
Internal Revenue Code.
"Related Party" shall mean any Person (other than a Subsidiary) (i)
which directly or indirectly through one or more intermediaries controls, or is
controlled by, or is under common control with, Borrower, (ii) which
beneficially owns or hold ten percent (10%) or more of the equity interest of
Borrower, or (iii) ten percent (10%) or more of the equity interest of which is
beneficially owned or held by Borrower or a Subsidiary. The term "control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise.
"Reportable Event" shall have the meaning assigned to that term in
Section 4043 of Title IV of ERISA.
"Revolving Loan" shall mean "Revolving Loan" as such term is defined in
the Amended and Restated Loan Agreement.
"Revolving Loan Availability" shall mean "Revolving Loan Availability"
as such term is defined in the Amended and Restated Loan Agreement.
"Second Restatement Date" shall mean "Second Restatement Date" as such
term is defined in the Amended and Restated Loan Agreement.
"Security Agreement" shall mean the Security Agreement dated as of the
date hereof from the Borrower to the Issuer covering certain pledged collateral
of the Borrower, and all amendments and supplements thereto permitted by the
Indenture.
"State" shall mean the State of Florida.
"Subordinated Debt" means (a) the Subordinated Note and (b) that
portion of any other Indebtedness of Borrower which contains terms satisfactory
to the Bondholder and is subordinated, in a manner satisfactory to the
Bondholder, as to right and time of payment of principal and interest thereon,
to all of the Liabilities.
"Subordinated Note" means that certain 15% subordinated Promissory Note
dated June 27, 1991 issued by Borrower to Parent in the original principal
amount of $4,500,000.
"Subsidiary" means any Person of which or in which Borrower and its
other Subsidiaries own directly or indirectly 50% or more of (i) the combined
voting power of all classes of stock
13
having general voting power under ordinary circumstances to elect a majority of
the board of directors of such Person, if it is a corporation, (ii) the capital
interest or profits interest of such Person, if it is a partnership, joint
venture or similar entity or (iii) the beneficial interest of such Person, if it
is a trust, association or other unincorporated organization. Unless otherwise
indicated, the term "Subsidiary", refers to a Subsidiary of Borrower.
"Supplemental Revolving Loan" shall mean "Supplemental Revolving Loan"
as such term is defined in the Amended and Restated Loan Agreement.
"Tax Regulations" shall mean the applicable regulations under the Code
whether at the time proposed, temporary, final or otherwise, and the applicable
rulings of the Internal Revenue Service under the Code (including published
revenue rulings and private letter rulings).
"Tax Compliance Certificate" shall mean the Tax Compliance Certificate
of the Borrower dated as of the date of issuance of the Bonds and any amendments
or supplements thereto permitted thereby.
"Taxes" with respect to any Person means taxes, assessments or other
governmental charges or levies imposed upon such Person, its income or any of
its properties, franchises or assets.
"Trade Accounts Payable" of any Person means trade accounts payable of
such Person with a maturity of not greater than 90 days incurred in the ordinary
course of such Person's business.
"Trustee" shall mean the banking institution at the time serving as
Trustee under the Indenture.
"Unmatured Event of Default" shall mean, collectively, "Unmatured Event
of Default" and "Event of Default" as such terms are defined in the Amended and
Restated Loan Agreement.
Section I.2 Rules of Construction.
(1) Words of the masculine gender shall be deemed and construed to
include correlative words of the feminine and neuter genders, and words of the
neuter gender shall be deemed and construed to include correlative words of the
masculine and feminine genders.
(2) The table of contents, captions and headings in this Loan
Agreement are for convenience only and in no way define, limit or describe the
scope or intent of any provisions or sections of this Loan Agreement.
(3) All references herein to particular articles or sections are
references to articles or sections of this Loan Agreement unless some other
reference is established.
14
(4) All accounting terms not specifically defined herein shall be
construed in accordance with Generally Accepted Accounting Principles applied on
a Consistent Basis.
(5) All references herein to the Borrower shall be deemed to refer
to each of the Persons if more than one are described by such term and any
agreement, obligation, duty or liability of the Borrower shall be a joint and
several agreement, obligation, duty or liability of each of the Persons so
described by such term.
(6) Any terms not defined herein but defined in any of the other
Bond Documents shall have the same meaning herein.
(7) All references herein to the Code or any particular provision
or section thereof shall be deemed to refer to any successor, or successor
provision or section, thereof, as the case may be.
15
ARTICLE II
REPRESENTATIONS
Section II.1 Representations by the Issuer. The Issuer represents and
warrants as follows:
(1) The Issuer is a public body corporate and politic and a public
instrumentality created and existing under and by virtue of the laws of the
State.
(2) Under the provisions of the Enabling Act, the Issuer is duly
authorized to enter into, execute and deliver the Bond Documents to which it is
a party, to undertake the transactions contemplated by the Bond Documents to
which it is a party and to carry out its obligations hereunder and thereunder.
(3) The Issuer has found and determined that the criteria and
requirements set forth in Section 159.29, Florida Statutes, for the acquisition,
construction and equipping of the Project, the issuance of the Bonds to provide
funds to pay all of, or part of, the Cost of Acquisition of the Project and the
financing of the Cost of Acquisition of the Project have been complied with.
(4) The Issuer has further found and determined that the financing
of the Cost of Acquisition of the Project through the issuance of the Bonds
constitutes an appropriate use of the Issuer's bonding powers and will result in
a substantial public benefit, which finding and determination has been accepted
by the County Commission, which has approved the Bond issue, including the
Bonds.
(5) The Issuer proposes to issue the Bonds in the aggregate
principal amount of $2,500,000.00 to finance all or a portion of the Cost of
Acquisition of the Project, presently estimated by the Borrower to equal or
exceed $2,500,000.00.
(6) By duly adopted resolution, the Issuer has authorized the
execution, delivery and performance of the Bond Documents to which it is a
party, including the borrowing under, and the sale, issuance and performance of,
the Bonds and as security for the Bonds, the pledge of the Note (endorsed
without recourse to the order of the Trustee), the Mortgage, the Security
Agreement, and the Environmental Agreement to the Trustee, and has approved the
form of the other Bond Documents to which the Issuer is a party.
(7) The Bonds will be issued under and pursuant to the Indenture
and will mature, bear interest, and have the other terms and provisions set
forth or provided for in the Indenture.
(8) No other consent or approval is required by any governmental
or public agency or authority as a condition to the performance by the Issuer of
its obligations under this
16
Agreement or the other Bond Documents to which the Issuer is a party or to the
issuance or sale of the Bonds.
(9) The execution delivery and performance of the Bond Documents
to which the Issuer is a party will not (i) conflict with, or constitute a
breach of or default under, the bylaws of the Issuer, any order of any court,
regulatory body or arbitral tribunal or any agreement or instrument to which the
Issuer is a party or by which it is bound, or (ii) require any consent pursuant
to any law or regulation presently applicable to the Issuer (except for such
consents and approvals as have heretofore been obtained).
(10) There are no judicial, regulatory, arbitral or other actions,
suits, proceedings, inquiries or investigations pending or, to the knowledge of
the Issuer, threatened against the Issuer which, if decided adversely to the
Issuer, would have a material adverse effect on the existence or organization of
the Issuer or the title to office of any of the members of the Board of the
Issuer or officers of the Issuer, the issuance and sale of the Bonds or any of
the transactions or proceedings of the Issuer in connection therewith.
(11) When duly executed and delivered on behalf of the Issuer, and
assuming the due authorization, execution and delivery of the Bond Documents by
the other parties thereto, each of the Bond Documents to which the Issuer is a
party shall constitute a legal, valid and binding obligation of the Issuer
enforceable in accordance with its terms.
Section II.2 Representations, Warranties and Covenants by the Borrower.
The Borrower represents, warrants and covenants as follows:
(1) The Borrower has legal authority and capacity to enter into,
and to perform the agreements and covenants on its part contained in the Bond
Documents to which it is a party.
(2) The Borrower is lawfully seized of a valid title to the
Project Site, and has a good and sufficient right to bargain, sell, grant,
convey, mortgage and assign the Mortgaged Property to the Issuer in the manner
provided herein, subject only to Permitted Encumbrances.
(3) The borrowing under the Note, the execution and delivery of
the Bond Documents to which it is a party, the consummation of the transactions
contemplated hereby and thereby, and the fulfillment of or compliance with the
terms and conditions hereof and thereof do not and will not violate, conflict
with or constitute a breach of or default under or require any consent (except
for such consents and approvals as have heretofore been obtained) pursuant to
any law or regulation presently applicable to the Borrower, any order of any
court, regulatory body or arbitral tribunal or any agreement or instrument to
which the Borrower is a party or by which it or any of its property is bound.
(4) The Borrower will cause the proceeds of the Bonds to be
applied to the payment of, or the reimbursement of the Borrower for the payment
of, the Cost of Acquisition of the Project.
17
(5) The commencement of the Acquisition of the Project, including
the letting of purchase orders for components thereof, did not occur prior to
April 18, 1997 (60 days prior to adoption by the Issuer of a resolution
declaring its intention to finance the Project).
(6) The Project being acquired, constructed and installed at the
Plant constitutes and will constitute a "project" within the meaning of the
Enabling Act, and the Borrower presently expects to operate the Plant or cause
the same to be operated by the Company as a manufacturing facility from the
Completion Date until payment of the Bonds.
(7) The Borrower presently estimates the Cost of Acquisition of
the Project to equal or exceed $2,500,000.00.
(8) The Project will be located wholly within the County.
(9) When executed and delivered, the Bond Documents to which the
Borrower is a party will be the legal, valid and binding obligations or
agreements of the Borrower enforceable in accordance with their respective
terms.
(10) There is no action, suit or proceeding at law or in equity or
by or before any governmental instrumentality or agency or arbitral body now
pending, or to the knowledge of the Borrower, threatened against or affecting
the Borrower or any properties or rights of the Borrower which, if adversely
determined, would impair the right of the Borrower to carry on its business
substantially as now conducted or would materially adversely affect the
financial condition, business or operations of the Borrower or the transactions
contemplated by, or the validity of, any of the Bond Documents.
(11) The Borrower has filed all federal, state and local tax
returns which are required to be filed by it and has paid or caused to be paid
all taxes as shown on said returns or on any assessment received by it, to the
extent that such taxes have become due, and no controversy in respect of
additional income taxes, state or federal, of the Borrower is pending or, to the
knowledge of the Borrower, threatened which has not heretofore been disclosed in
writing to the Trustee and which, if adversely determined, would materially and
adversely affect the financial condition or operations of the Borrower.
(12) Neither the Bond Documents to which the Borrower is a party
nor any other document contains any misrepresentation or untrue statement of
fact or omits to state a material fact necessary in order to make any such
representation or statement contained therein not misleading.
(13) The Borrower possesses all necessary patents, licenses,
trademarks, trademark rights, trade names, trade name rights and copyrights to
conduct its business as now conducted, without known conflict with any patent,
license, trademark, trade name or copyrights of any other Person.
18
(14) The Project Site is properly zoned, and its intended use and
the operation of the Plant comply with the uses permitted by applicable zoning
regulations.
(15) The Plant conforms or will conform with all planning,
building, land use, environmental and other regulations of governmental
authorities having jurisdiction of the Plant, all necessary utilities are
available or will be provided for the Plant, and the Borrower has obtained or
will obtain all requisite planning, building, land use, environmental and other
permits necessary for the Acquisition of the Project and the use and occupancy
of the Plant.
(16) No notice of commencement with respect to the Acquisition of
the Project has been filed or posted by the Borrower and, further, all
contractors, suppliers and materialmen who have provided services or materials
with respect to the Acquisition of the Project, if any, have been paid all
amounts due them through the date hereof.
(17) No approval, consent or authorization of, or registration,
declaration or filing with, any governmental or public body or authority not
already obtained by the Borrower is required in connection with the valid
execution, delivery and performance by the Borrower of the Bond Documents to
which it is a party.
(18) Once the Bonds bear interest at the Tax-Exempt Rate, the
Borrower will not take or fail to take any action which would impair the
exclusion of interest on the Bonds from gross income for federal income tax
purposes.
(19) All of the representations, warranties and covenants of the
Borrower contained in the Borrower's Tax Compliance Certificate are hereby
reaffirmed and incorporated herein by reference.
All of the above representations, warranties and covenants shall
survive the making of this Loan Agreement and the issuance of the Note.
19
ARTICLE III
ACQUISITION OF THE PROJECT
Section III.1 Agreement as to Acquisition of the Project. The Issuer
and the Borrower hereby agree that the Borrower shall complete the Acquisition
of the Project with all reasonable dispatch (delays incident to strikes, riots,
acts of God or the public enemy or any delay beyond its reasonable control which
do not delay the Completion Date by more than two (2) years from the date hereof
excepted), in accordance with the Plans and Specifications; provided, however,
that if completion of such Acquisition is delayed for any reason, there shall be
no diminution in or postponement of the payments to be made by the Borrower
pursuant to the Note or Section 5.1 hereof.
Section III.2 Borrower to Obtain Approvals Required for the Project and
the Plant. The Borrower shall obtain or cause to be obtained all necessary
permits and approvals for the Acquisition of the Project and the operation and
maintenance of the Plant and shall comply with all lawful requirements of any
governmental body regarding the use or condition of the Project Site and the
Plant. The Borrower may, however, contest any such requirement by an appropriate
proceeding diligently prosecuted.
Section III.3 Plans and Specifications. The Borrower shall maintain a
set of Plans and Specifications at the Project Site which shall be available to
the Issuer, the Trustee and the Bondholder for inspection and examination during
the Borrower's regular business hours, and the Issuer and the Borrower agree
that the Borrower may supplement, amend and add to the Plans and Specifications,
and that the Borrower shall be authorized to omit or make substitutions for
components of the Project, without the approval of the Issuer, provided that no
such change shall be made which shall be contrary to subsections (b), (c), (d),
(e), (f), (g) and (h) of Section 2.2 hereof, and provided further that if any
such change would render materially incorrect or incomplete the description of
the initial components of the Project or the description of the Project or
Project Site as set forth in Exhibits "B" or "C" to this Loan Agreement, the
Borrower and the Issuer shall amend such Exhibits "B" or "C" to reflect such
change, upon receipt by the Trustee of an opinion of bond counsel that such
change will not result in an Event of Taxability. No approvals of the Issuer or
the Trustee shall be required for the Acquisition of the Project or for the
solicitation, negotiation, award or execution of contracts relating thereto.
20
ARTICLE IV
ISSUANCE OF THE BONDS; COMPLETION DATE
Section IV.1 Agreement to Issue the Bonds. To provide funds for payment
of the Cost of Acquisition of the Project, the Issuer agrees that it will sell,
issue and deliver the Bonds in the aggregate maximum principal amount of
$2,500,000.00 in the manner set forth in the Indenture and cause the proceeds of
the Bonds to be applied as provided in the Indenture.
Section IV.2 Disbursements from the Project Fund. All payments from the
Project Fund to pay the Cost of Acquisition of the Project, or to reimburse the
Borrower for any Cost of Acquisition of the Project paid or incurred by the
Borrower before or after the execution and delivery of this Agreement and the
issuance and delivery of the Bonds shall be made by the Trustee pursuant to the
Indenture with monies drawn down under the Note following receipt of a
requisition and certificate substantially in the form of Exhibit "A" attached to
the Indenture.
Section IV.3 Certificate as to Completion. The completion Date shall be
promptly established and evidenced to the Trustee and shall be the date on which
the Borrower Representative delivers to the Trustee a Completion Certificate
stating that, except for amounts retained by the Trustee at the Borrower's
direction for any Cost of Acquisition of this Project not then due and payable,
the Acquisition of the Project has been completed substantially in accordance
with the Plans and Specifications and all costs and expenses incurred in
connection therewith have been paid. Notwithstanding the foregoing, such
Certificate may state that it is given without prejudice to any rights against
third parties that exist at the date of such Certificate or that may
subsequently come into being. Within twenty (20) days of the completion of the
Project, the Borrower shall deliver to the Trustee an itemized description of
all machinery, equipment and other personal property for which payment has been
made or is to be made from the Project Fund with amounts theretofore or
thereafter to be drawn down.
Section IV.4 Reserved.
Section IV.5 Borrower Required to Pay in Event Project Fund
Insufficient. In the event the moneys in the Project Fund should not be
sufficient to pay the Cost of the Acquisition of the Project in full, the
Borrower agrees to complete the Project and to pay that portion of such cost in
excess of the moneys available therefor in the Project Fund. THE ISSUER MAKES NO
WARRANTY, EITHER EXPRESS OR IMPLIED, THAT THE MONEYS PAID INTO THE PROJECT FUND
AND AVAILABLE FOR PAYMENT OF THE COST OF ACQUISITION OF THE PROJECT WILL BE
SUFFICIENT TO PAY THE TOTAL COST OF ACQUISITION OF THE PROJECT. The Borrower
agrees that if after exhaustion of the moneys in the Project Fund, the Borrower
should pay any portion of the Cost of Acquisition of the Project pursuant to the
provisions of this section, it shall not be entitled to any reimbursement
therefor from the Issuer, the Trustee, or any Bondholder and it shall not be
entitled to any abatement or diminution of the payments required to be made by
the Borrower pursuant to the Note or Section 5.1 hereof.
21
Section IV.6 No Third Party Beneficiary. It is specifically agreed
between the parties executing this Loan Agreement that it is not intended by any
of the provisions of any part of this Loan Agreement to create the public or any
member thereof, other than as may be expressly provided herein or as
contemplated in the Indenture, a third party beneficiary hereunder, or to
authorize anyone not a party to this Loan Agreement to maintain a suit for
personal injuries or property damage pursuant to the terms or provisions of this
Loan Agreement. The duties, obligations, and responsibilities of the parties to
this Loan Agreement with respect to third parties shall remain as imposed by
law.
Section IV.7 Rebate Provisions. The Issuer and the Borrower shall
comply with the provisions of the Tax Compliance Certificates providing, under
the circumstances set forth therein, for the rebate of certain amounts to the
United States.
Section IV.8 Arbitrage Certifications and Covenants.
(1) The Borrower reasonably expects, and hereby certifies and
represents to the Issuer, and the Issuer hereby certifies that it reasonably
expects, that the proceeds of the Bonds will not be used in a manner that would
cause the Bonds to be classified as "arbitrage bonds" under Section 148(a) of
the Code. To the best knowledge and belief of the Borrower, there are no facts
or circumstances that would materially change the foregoing expectations.
(2) The Borrower certifies and covenants with the purchasers and
the holders of the Bonds from time to time outstanding that so long as any of
the Bonds remain outstanding, moneys on deposit in any fund or account in
connection with the Bonds, whether or not such moneys were derived from the
proceeds of the sale of the Bonds or from any other sources, will not be used in
a manner which will cause the Bonds to be "arbitrage bonds" within the meaning
of Section 148(a) of the Code, as the same exists on the date of this Loan
Agreement or may from time to time hereafter be amended, supplemented or
revised.
22
ARTICLE V
LOAN BY THE ISSUER TO THE BORROWER; REPAYMENT
Section V.1 Loan by the Issuer; Repayment. Upon the terms and
conditions of this Loan Agreement, the Issuer shall lend to the Borrower the
proceeds of the sale of the Bonds for the purpose of providing funds to pay the
cost of the Acquisition of the Project.
As consideration for the issuance of the Bonds and the making of the
loan to the Borrower by the Issuer, the Borrower will execute and deliver this
Loan Agreement, the Note, in the form attached as Exhibit "A" hereto, the
Mortgage, the Security Agreement, and the Environmental Agreement to the Issuer
and the Issuer will endorse the Note without recourse to the order of, and
pledge and assign this Loan Agreement, the Note, the Mortgage, the Security
Agreement, and the Environmental Agreement to the Trustee, as the assignee of
the Issuer under the Indenture, contemporaneously with the issuance of the
Bonds. The Borrower shall repay the loan in accordance with the provisions of
the Note and of this Loan Agreement. In addition to the payments required to be
made by the Borrower on the loan under the Note and this Loan Agreement, the
Borrower also shall pay, at the time or times set forth herein, Administrative
Expenses pursuant to Section 7.5 hereof and all other amounts due the Issuer,
the Trustee or the Bondholder, pursuant to the Bond Documents, including,
without limitation, payments due the Bondholder for increased cost pursuant to
Sections 213, 218 and 219 of the Indenture.
Notwithstanding anything else in the Note or in this Loan Agreement to
the contrary, in no contingency or event whatsoever shall the amount paid or
agreed to be paid to the Issuer or the Trustee for the use, forbearance or
detention of the money to be advanced thereunder exceed the highest lawful rate
permitted under the law applicable thereto. If, from any circumstances
whatsoever, fulfillment of any provision of the Note or this Loan Agreement, at
the time performance of such provisions shall be due, shall involve payment of
interest at a rate which exceeds the highest lawful rate as so determined, then
ipso facto the obligation to be fulfilled shall be reduced to the highest lawful
rate. If, from any circumstances whatsoever, the Issuer or the Trustee shall
ever receive interest, the amount of which would exceed such highest lawful
rate, a portion thereof which would be excessive interest shall be applied to
the reduction of the unpaid principal balance due under the Note and to the
payment of interest, or if the Note is no longer outstanding, shall be repaid to
the Borrower. Provided, however, that nothing contained in the Note or in this
Loan Agreement shall be deemed to create a defense, contractual or otherwise, to
any sums due or to become due or coming due under the Note, this Loan Agreement
or under any other agreement existing between the Issuer and the Borrower where
no such defense exists at law, as for example, wherein no limit exists upon the
rate of interest which may be charged.
Section V.2 No Set Off. The obligation of the Borrower to make the
payments required by the Note shall be absolute and unconditional. The Borrower
will pay without abatement, diminution or deduction (whether for taxes or
otherwise) all such amounts regardless of any cause or circumstance whatsoever
including, without limitation, any defense, set off, recoupment or counterclaim
that the Borrower may have or assert against the Issuer, the Trustee,
24
any Bondholder or any other Person.
The Borrower (a) will not suspend or discontinue, or permit the
suspension or discontinuance of, any of the payments required by Section 5.1
hereof, (b) will perform and observe all of its other agreements contained in
the Note and in this Loan Agreement, the Mortgage, the Security Agreement, and
the Environmental Agreement and (c) will not suspend the performance of its
obligations under the Note or this Loan Agreement, the Mortgage, the Security
Agreement, or the Environmental Agreement for any cause whatsoever including,
without limiting the generality of the foregoing, failure to complete the
Project, any acts or circumstances that may constitute failure of consideration,
failure of or a defect of title to the Plant or Project Site or any part
thereof, eviction or constructive eviction, destruction of damage to the Plant
or Project Site, commercial frustration of purpose, any change in the tax or
other laws or administrative rulings of or administrative actions by the United
States of America or the State or any political subdivision of either, or any
failure of the Issuer or the Trustee to perform and observe any agreement,
whether expressed or implied, or any duty, liability or obligation arising out
of or connected with this Loan Agreement.
Section V.3 Prepayments. The Borrower may, at any time, prepay all or
any part of the Note as provided in, and subject to the terms and conditions of,
Section 10.1 hereof. The Borrower shall prepay all of the amounts it is required
to prepay as provided in Sections 10.2 and 10.3 hereof.
Section V.4 Credits Against the Note. To the extent that principal of,
premium, if any, or interest on the Bonds shall be paid, there shall be credited
against the unpaid principal of, premium, if any, or interest on the Note, as
the case may be, an amount equal to the principal of, premium, if any, or
interest on the Bonds so paid. If the principal of, premium, if any, and
interest on and other amounts payable under the Bonds shall have been paid
sufficiently that Payment of the Bonds shall have occurred, then the Note, ipso
facto, shall be deemed to have been paid in full, the Borrower's obligations
thereon shall be discharged (with the exception of the obligation of the
Borrower to make certain payments which may subsequently arise as a result of a
Determination of Taxability which shall survive notwithstanding Payment of the
Bonds), and the Note shall be canceled and surrendered to the Borrower.
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ARTICLE VI
MAINTENANCE AND MODIFICATIONS; TAXES AND UTILITY
CHARGES; INSURANCE AND EMINENT DOMAIN
Section VI.1 Maintenance and Modification of the Plant by Borrower. The
Borrower agrees that, until Payment of the Bonds shall be made, it will at its
own expense, (a) keep the Plant or cause the Plant to be kept in as reasonably
safe condition as the operations thereat shall permit, (b) make or cause to be
made from time to time all necessary repairs thereto and renewals and
replacements thereof and otherwise keep or cause to be kept the Plant in good
repair and in good operating condition and (c) not permit or suffer others to
commit a nuisance on or about the Plant. The Borrower shall pay or cause to be
paid all costs and expenses of operation and maintenance of the Plant. Subject
to the terms of the Mortgage and the Security Agreement, the Borrower may, at
its own expense, make from time to time any additions, modifications or
improvements to the Plant that it may deem desirable for its business purposes
and that do not materially impair the effective use, or decrease the value, of
the Plant.
Section VI.2 Taxes and Utility Charges.
(1) The Borrower shall pay as the same respectively become due,
all taxes, assessments, levies, claims and charges of any kind whatsoever that
may at any time be lawfully assessed or levied against or with respect to the
Plant (including, without limiting the generality of the foregoing, any tax upon
or with respect to the income or profits of the Issuer from the Plant and that,
if not paid, would become a charge on the payments to be made under this Loan
Agreement or the Note prior to or on a parity with the charge thereon created by
the Indenture and including ad valorem, sales and excise taxes, assessments and
charges upon the Borrower's interest in the Plant) or any of the Bond Documents
(including, without limiting the generality of the foregoing, documentary stamp
tax or intangible tax if, and to the extent, applicable), all utility and other
charges incurred in the operation, maintenance, use, occupancy and upkeep of the
Plant and all assessments and charges lawfully made by any governmental body for
public improvements that may be secured by a lien on any portion of the Plant.
(2) The Borrower may, at its expense, contest in good faith any
such levy, tax, assessment, claim or other charge, but the Borrower may permit
the items so contested to remain undischarged and unsatisfied during the period
of such contest and any appeal therefrom only if the Borrower notifies the
Bondholder and the Trustee that, in the opinion of Counsel, by nonpayment of any
such items, the liens of the Mortgage and the Security Agreement and the rights
of the Trustee with respect to the Mortgage, the Security Agreement, this Loan
Agreement and the Note created by the assignment under the Indenture, as to the
rights assigned under this Loan Agreement, the Mortgage or the Security
Agreement or any part of the payments to be made under this Loan Agreement or
the Note, will not be materially endangered nor will the Project or any part
thereof be subject to loss or forfeiture. If the Borrower is unable to deliver
such an opinion of Counsel, the Borrower shall promptly pay or bond and cause to
be satisfied or discharged all such unpaid items or furnish, at the expense of
the Borrower, indemnity satisfactory
25
to the Bondholder and the Trustee; but provided further, that any tax
assessment, charge, levy or claim shall be paid forthwith upon the commencement
of proceedings to foreclose any lien securing the same. The Bondholder and the
Trustee, at the expense of the Borrower, will cooperate fully in any such
permitted contest. If the Borrower shall fail to pay any of the foregoing items,
the Bondholder or the Trustee may, but shall be under no obligation to, pay the
same and any amounts so advanced therefor by the Issuer or the Trustee shall
become an additional obligation of the Borrower to the one making the
advancement, which amounts, together with interest thereon at the Overdue Rate
from the date of payment, the Borrower agrees to pay on demand therefor.
(3) The Borrower shall furnish the Bondholder and the Trustee,
tupon request, with proof of payment of any taxes, governmental charges, utility
charges, insurance premiums or other charges required to be paid by the Borrower
under this Loan Agreement.
Section VI.3 Title Insurance and Survey. The Borrower will deliver to
the Issuer and the Trustee as named insureds at or prior to closing a title
insurance policy issued by a financially responsible title insurance company
qualified to do business in the State and acceptable to the Bondholder in the
amount of $2,500,000 (a) insuring that the Borrower has fee simple title to the
New Facility Site (and insuring the assignment of the Mortgage under the
Indenture) and that the Mortgage (as so assigned) constitutes a valid and
existing first lien on such real property, subject only to Permitted
Encumbrances and (b) insuring the Trustee's interest in such real property. At
the request of the Bondholder, the Borrower will thereafter deliver to the
Bondholder and the Trustee such endorsements to said title insurance policy as
may be necessary or required to show that there have been no changes in the
state of title since the last preceding advance of loan proceeds.
The Borrower will also deliver to the Issuer and the Trustee at or
prior to closing a current survey showing the New Facility Site to be free from
all encroachments and encumbrances, which survey shall meet all the requirements
of the aforesaid title insurance company so as to enable such company to
eliminate any exception for survey matters from the title insurance policy, and
the survey shall locate all recorded restrictions and easements on the New
Facility Site by recording references. At the request of the Bondholder, the
Borrower will, from time to time thereafter, furnish a supplemental survey or
surveys showing all foundations of the New Facility to be in place and so as not
to be in violation of any covenant, restriction or zoning ordinance affecting
the New Facility. Upon completion of the Acquisition of the Project, the
Borrower will furnish to the Trustee an as-built survey as required by Section
7.2(b) hereof.
Section VI.4 Casualty and Liability Insurance Required. Until Payment
of the Bonds shall be made, the Borrower will keep or cause to be kept the New
Facility continuously insured against such risks as are customarily insured
against by businesses of like size and type engaged in the same or similar
manufacturing operations (including business interruption insurance) including,
without limiting the generality of the foregoing:
(1) prior to completion of the portion of the Project involving
improvements to
26
real property, builder's risk insurance on the Plant on an "all risk" basis in
an amount acceptable to the Bondholder and with such other provisions as are
required by the Bondholder;
(2) casualty insurance on the New Facility in an amount not less
than the full insurable value of all property located at, and all improvements
to, the Project Site, against loss or damage by fire and lightning and other
hazards ordinarily included under uniform broad form standard extended coverage
policies, limited only as may be provided in the standard broad form of extended
coverage endorsement at the time in use in the State;
(3) general comprehensive liability insurance, naming the Issuer
and the Trustee as loss payees, against claims for bodily injury, death or
property damage occurring on, in or about the New Facility (such coverage to
include provisions waiving subrogation against the Issuer and the Trustee) in
amounts not less than $1,000,000.00 with respect to bodily injury to any one
person, $1,000,000.00 with respect to bodily injury to two or more persons in
any one accident and $1,000,000.00, with respect to property damage resulting
from any one occurrence;
(4) liability insurance with respect to the New Facility under the
workers' compensation laws of the State; provided, however, that the insurance
so required may be provided by blanket policies now or hereafter maintained by
the Borrower; and
(5) if at any time any portion of the New Facility Site is in an
area that has been identified by the Secretary of Housing and Urban Development
as having special flood and mud-slide hazards, a policy of flood insurance
covering improvements located on such portion of the Project Site with amounts
and coverage satisfactory to the Bondholder.
Section VI.5 General Requirements Applicable to Insurance.
(1) Each insurance policy obtained in satisfaction of the
requirements of Section 6.4 hereof:
(1) shall be by such insurer (or insurers) as shall be
financially responsible, qualified to do business in the
State, and of recognized standing;
(2) shall be in such form and have such provisions
(including, without limitation, the lenders' long-form
loss payable clause, the waiver of subrogation clause,
the deductible amount, if any, and the standard
mortgagee endorsement clause), as are generally
considered standard provisions for the type of insurance
involved and are acceptable in all respects to the
Bondholder;
(3) shall prohibit cancellation or substantial modification,
termination or lapse in coverage by the insurer without
at least 30 days' prior written notice to the Trustee;
27
(4) shall provide that losses thereunder shall be adjusted
with the insurer by the Borrower at its expense on
behalf of the insured parties and the decision of the
Borrower as to any adjustment shall be final and
conclusive; and
(5) without limiting the generality of the foregoing, all
insurance policies carried on the New Facility shall
name the Borrower, the Issuer and the Trustee as parties
insured thereunder as the respective interests of each
of such parties may appear, and any loss thereunder
shall be made payable and shall be applied as provided
in Section 6.9 hereof.
(2) Prior to expiration of any such policy, the Borrower shall, at
the request of the Trustee or the Bondholder, furnish the Trustee and the
Bondholder with evidence satisfactory to the Trustee and the Bondholder that the
policy or certificate has been renewed or replaced or is no longer required by
this Loan Agreement.
Section VI.6 Advances by the Bondholder or the Trustee. In the event
the Borrower shall fail to maintain, or cause to be maintained, the full
insurance coverage required by this Loan Agreement or shall fail to keep or
cause to be kept the New Facility in good repair and good operating condition,
the Bondholder or the Trustee may (but shall be under no obligation to), after
10 days written notice to the Borrower (unless such insurance coverage shall
terminate or expire within that time period, in which case, no notice will be
required), contract for the required policies of insurance and pay the premiums
on the same or make any required repairs, renewals and replacements; and the
Borrower agrees to reimburse the Bondholder and the Trustee to the extent of the
amounts so advanced by them or any of them with interest thereon at the Overdue
Rate from the date of advance to the date of reimbursement. Any amounts so
advanced by the Bondholder or the Trustee shall become an additional obligation
of the Borrower, shall be payable on demand, and shall be deemed a part of the
obligation of the Borrower secured by the lien of the Mortgage.
Section VI.7 Borrower to Make up Deficiency in Insurance Coverage. The
Borrower agrees that to the extent that it shall not carry insurance required by
Sections 6.3 and 6.4 hereof, it shall pay promptly to the Trustee for
application in accordance with the provisions of Section 6.9 hereof, such amount
as would have been received as Net Proceeds by the Trustee under the provisions
of Section 6.9 hereof had such insurance been carried to the extent required.
Section VI.8 Eminent Domain. Unless the Borrower shall have prepaid the
Note pursuant to the provisions of Article X hereof, in the event that title to,
or the temporary use of, the Plant or any part thereof shall be taken by Eminent
Domain, the Borrower shall be obligated to continue to make the payments
required to be made pursuant to the Note and the Net Proceeds received as a
result of such Eminent Domain with respect to the Mortgaged Property shall be
applied as provided in Section 6.9(b) hereof.
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Section VI.9 Application of Net Proceeds of Insurance and Eminent
Domain.
(1) The Net Proceeds of the insurance carried pursuant to the
provisions of Sections 6.3, 6.4(c) and 6.4(d) hereof shall be applied by the
Borrower toward extinguishment of the defect or claim or satisfaction of the
liability with respect to which such insurance proceeds may be paid, provided
that if the Borrower does not cause promptly, and in any event within ninety
(90) days of receipt, the Net Proceeds of the insurance carried pursuant to the
provisions of Section 6.3 to be so applied to the full and complete
extinguishment of the applicable defect or claim, then such Net Proceeds shall
be applied to the prepayment of the Bonds as provided in Article X hereof.
(2) The Net Proceeds of the insurance carried with respect to the
New Facility pursuant to the provisions of Sections 6.4(a), 6.4(b) and 6.4(e)
hereof (excluding the Net Proceeds of any business interruption insurance, which
shall be paid to the Borrower), and the Net Proceeds resulting from Eminent
Domain shall be paid to the Trustee and applied as follows:
(1) If the amount of the Net Proceeds does not exceed
$50,000.00, the Net Proceeds shall be paid to the
Borrower and shall be applied to the repair,
replacement, renewal or improvement of the New Facility
as necessary.
(2) If the amount of the Net Proceeds exceeds $50,000.00,
the Net Proceeds shall be paid to and held by the
Trustee as a special account in the Project Fund and
invested in accordance with Section 602 of the Indenture
pending receipt of written instructions from the
Borrower. At the option of the Borrower, to be exercised
within the period of ninety (90) days from the receipt
by the Trustee of such Net Proceeds, the Borrower shall
advise the Trustee that (A) the Borrower will use the
Net Proceeds for the repair, replacement, renewal or
improvement of the New Facility (such funds to remain
with the Trustee and to be drawn down by the Borrower as
provided in the Indenture in the case of withdrawals
from the Project Fund), or (B) the Net Proceeds shall be
applied to the prepayment of the Bonds as provided in
Article X hereof. If the Borrower does not advise the
Trustee within said period of ninety (90) days that it
elects to proceed under clause (A) to use such Net
Proceeds for the repair, replacement, renewal or
improvement of the New Facility, such Net Proceeds shall
be applied to the prepayment of the Bonds pursuant to
Article X hereof. Any prepayment pursuant to the
preceding sentence shall be effected on the next
interest payment date not less than thirty (30) days
after the expiration of said period of ninety (90) days
without an election by the Borrower.
29
The Borrower agrees that if it shall elect to use the moneys paid to
the Trustee pursuant to subsection (b)(ii) of this Section 6.9 for the repair,
replacement, renewal or improvement of the New Facility, it will restore the New
Facility, or cause the same to be done, to a condition substantially equivalent
to its condition prior to the occurrence of the event to which the Net Proceeds
were attributable. To the extent that the Net Proceeds are not sufficient to
restore or replace the New Facility, the Borrower shall use its own funds to
restore or replace the New Facility. Prior to the commencement of such work, the
Trustee may require the Borrower to furnish a completion bond, escrow deposit or
other satisfactory evidence of the Borrower's ability to pay or provide for the
payment of any estimated costs in excess of the amount of the Net Proceeds. Any
balance remaining after any such application of such Net Proceeds shall be paid
to the Borrower. The Borrower shall be entitled to the Net Proceeds of any
insurance or proceeds resulting from Eminent Domain relating to property of the
Borrower not included in the Mortgaged Property and not providing security for
the Note or this Loan Agreement.
Section VI.10 Parties to Give Notice. In case of any material damage to
or destruction of all or any part of the Mortgaged Property, the Borrower shall
give prompt notice thereof to the Issuer and the Trustee. In case of a taking or
proposed taking of all or any part of the Mortgaged Property or any right
therein by Eminent Domain, the Borrower shall give prompt notice thereof to the
Issuer and the Trustee. Each such notice shall describe generally the nature and
extent of such damage, destruction, taking, loss, proceeding or negotiations.
30
ARTICLE VII
SPECIAL COVENANTS
Section VII.1 Access to the Plant and Inspection. The Issuer
Representative, the Bondholder and the Trustee shall have the right, at all
reasonable times upon the furnishing of reasonable notice to the Borrower under
the circumstances, to enter upon the Project Site and to examine and inspect the
Plant. The Issuer Representative, the Bondholder and the Trustee and their duly
authorized agents shall also have such right of access to the Plant as may be
reasonably necessary to cause to be completed the, Acquisition of the Project,
and thereafter for the proper maintenance of the Plant, in the event of failure
by the Borrower to perform its obligations relating to maintenance under this
Loan Agreement, the Mortgage or the Security Agreement. The Borrower hereby
covenants to execute, acknowledge and deliver all such further documents, and do
all such other acts and things as may be necessary to grant to the Issuer
Representative, the Bondholder and the Trustee such right of entry. The Issuer
Representative, the Bondholder and the Trustee shall also be permitted, at all
reasonable times, to examine the books and records of the Borrower with respect
to the Acquisition of the Project and the obligations of the Borrower hereunder,
but neither shall be entitled to access to trade secrets or other proprietary
information (other than financial information) of the Borrower.
Section VII.2 Further Assurances and Corrective Instruments; Survey.
(1) Subject to the provisions of the Indenture, the Issuer and the
Borrower agree that they will, from time to time, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such supplements
and amendments hereto and such further instruments as may reasonably be required
for correcting any inadequate or incorrect description of the Plant and for
carrying out the intention or facilitating the performance of this Loan
Agreement.
(2) No later than the Completion Date, the Borrower shall deliver
to the Trustee an "as built" survey (complying with the requirements of Section
6.3 hereof) showing the location of the completed New Facility and all other
improvements on the New Facility Site.
Section VII.3 Recording and Filing; Other Instruments.
(1) The Borrower covenants that it will, at its expense, cause
Counsel to take all steps as are reasonably necessary to render an opinion to
the Bondholder and the Trustee not earlier than sixty (60) nor later than thirty
(30) days prior to each anniversary date occurring at five-year intervals after
the issuance of the Bonds, and upon completion of any application of the Net
Proceeds of insurance or Eminent Domain pursuant to Section 6.9(b)(ii) hereof,
to the effect that all financing statements, continuation statements, notices
and other instruments required by applicable law have been recorded or filed or
re-recorded or refiled in such manner and in such places required by law in
order fully to preserve and protect the rights of the Trustee (i) in the lien
granted pursuant to the Mortgage in the Mortgaged Property, (ii) in the security
interest granted
31
pursuant to the Security Agreement, and (iii) in the granting by the Issuer of
certain rights of the Issuer, pursuant to the Indenture, under this Loan
Agreement, the Note, the Mortgage and the Security Agreement, as against
creditors of or purchasers for value from, the Issuer or the Borrower.
(2) The Borrower and the Issuer shall execute and deliver all
instruments and shall furnish all information and evidence deemed necessary or
advisable by such Counsel to enable it to render the opinion referred to in
subsection (a) of this Section. The Borrower shall file and refile and record
and re-record or cause to be filed and refiled and recorded and re-recorded all
instruments required to be filed and refiled and recorded or re-recorded
pursuant to the opinion of such Counsel and shall continue or cause to be
continued the liens of such instruments for so long as the Bonds shall be
outstanding, except as otherwise required by this Loan Agreement.
Section VII.4 Notice of Event of Taxability. The Borrower shall give
prompt written notice to the Issuer, the Bondholder and the Trustee of the
filing by the Borrower of any statement, tax schedule, return or document with
the Internal Revenue Service which discloses that an Event of Taxability shall
have occurred and its receipt of any oral or written advice from the Internal
Revenue Service that an Event of Taxability shall have occurred.
Section VII.5 Administrative Expenses. The Borrower shall pay to or for
the account of the Issuer , the Bondholder or the Trustee, as applicable, within
thirty (30) days after notice thereof all reasonable costs and expenses incurred
by such person in connection with the financing, construction and administration
of the Project, except such as may be paid out of the proceeds of the Bonds,
including, without limitation, the costs of administering and enforcing this
Loan Agreement and the other Bond Documents, the fees and expenses of the
Issuer, the Bondholder and Trustee and the fees and expenses of attorneys,
consultants and others retained by or on behalf of such person. To the extent
permitted by law, all elements of Administrative Expenses shall bear interest at
the Overdue Rate from and after the date upon which payment of the same becomes
due and payable and the term "Administrative Expenses" shall automatically be
deemed to include such interest at the Overdue Rate.
Section VII.6 Covenants with Respect to Tax Exemption. While the Bonds
bear interest at the Tax-Exempt Rate, the Borrower represents, warrants and
covenants to the Issuer, for the benefit of any Person who shall at any time be
or become a holder of the Bonds that it has taken no action and will take no
action or fail to take any required action the consequence of which would be to
forego, jeopardize or terminate the exemption of interest on the Bonds from
Federal income tax; provided, however, that failure to comply with this covenant
shall result in a Determination of Taxability and shall not constitute an Event
of Default under Section 9.1 of this Loan Agreement.
The Borrower covenants that it will comply with all requirements of the
Enabling Act (and the Code while the Bonds bear interest at the Tax-Exempt Rate)
with respect to the use of the proceeds of the Bonds and that it will file,
deliver or execute, or cause to be filed, all statements
32
or notices required thereby.
Whenever the Issuer shall be required to file, deliver or execute, or
produce any reports, notices or other documents while the Bonds are Outstanding,
the Borrower shall furnish or cause the proper Person to furnish in due time to
the Issuer, through Counsel for the Issuer, the completed form of such report,
notice or other required document, together with (a) a certification by the
Borrower or other proper Person required to provide information that such
document is accurate and (b) an opinion of bond counsel addressed to the Issuer
that the report or other document is not in violation of any provision of law or
of the documents constituting the complete transcript of proceedings relating to
the issuance of the Bonds and that such report, notice or other required
document meets the legal requirements for such filing, delivery or execution. In
the event of the failure or refusal of the Borrower or other proper Person to
comply with this provision, the Borrower agrees to pay the statement for
attorney's fees and administrative time presented by the Issuer for filing,
delivering or executing such report or document, such statement to be paid
within thirty (30) days after presentation by the Issuer.
Section VII.7 Financial Covenants. Until all of Borrower's obligations
under the Bond Documents are paid in full, Borrower agrees that, unless the
Bondholder otherwise consents in writing, it will:
(1) Net Worth. Not permit at any time during any fiscal quarter,
measured as of the last day of the most recently completed fiscal quarter set
forth below, Net Worth to be less than the amount set forth below across from
such fiscal quarter:
Fiscal Quarter Ending Net Worth
09/30/97 $28,000,000
12/31/97 $28,000,000
03/31/98 $28,000,000
06/30/98 $28,000,000
09/30/98 $28,000,000
12/31/98 and thereafter $32,000,000
(2) Capital Expenditures. Not, and not permit any Subsidiary to,
purchase or otherwise acquire (including, without limitation, acquisition by way
of Capitalized Lease), or commit to purchase or otherwise acquire, any fixed
asset if, after giving effect to such purchase or other acquisition, (A) the
aggregate capitalized cost of all fixed assets purchased or otherwise acquired
(other than by means of a Capitalized Lease) by Borrower and its Subsidiaries on
a consolidated basis plus (B) the aggregate annual payments under Capitalized
Leases (excluding the portion thereof representing imputed interest) of Borrower
and its Subsidiaries on a consolidated basis (excluding, in each of (A) and (B),
(a) any fixed asset which constitutes a replacement for an asset which was the
subject of a casualty or governmental taking to the extent the purchase or other
acquisition thereof is funded by insurance proceeds or other payments received
as a result of such casualty or taking; (b) the first $675,000 of capital
expenditures
33
related solely to removal of underground storage tanks or other environmental
problems at Borrower's restaurant locations; and (c) any capital expenditures
(excluding the capital expenditures financed with the proceeds from the Bonds))
would exceed $3,500,000 in Fiscal Year 1997 and in any Fiscal Year thereafter.
(3) Interest Coverage Ratio. Not permit, on the last day of any
fiscal quarter set forth below, the ratio of (a) Borrower's EBITDA for the four
(4) fiscal quarters then ended to (b) Borrower's consolidated interest expense
(but excluding from the calculation thereof all interest expense with respect to
Additional Revolving Loan) for the four (4) fiscal quarters then ended to be
less than the ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ending Ratio
09/30/97 3.00:1
12/31/97 3.00:1
03/31/98 and thereafter 4.00:1
(4) Funded Debt/EBITDA Ratio. Not permit, on the last day of any
fiscal quarter set forth below, the Funded Debt/EBITDA Ratio to be more than the
ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ending Ratio
09/30/97 2.50:1
12/31/97 2.25:1
03/31/98 2.25:1
06/30/98 2.25:1
09/30/98 2.25:1
12/31/98 2.25:1
03/31/99 and thereafter 2.00:1
Section VII.8 Release and Indemnification Covenants.
(1) The Borrower shall and hereby agrees to indemnify, defend and
hold harmless the Issuer, the Trustee, and the Bondholder and their respective
members, officers, employees, and agents and officials from and against any and
all losses, claims, damages, taxes (including interest and penalties), costs and
expenses (including reasonable attorneys' fees, whether prior to, during or
after trial or in the event of any appeal) and liabilities arising from, in
connection with, or as a result of the issuance of the Bonds, the execution and
delivery of this Loan Agreement, the Mortgage, the Security Agreement, the
Environmental Agreement, the Indenture, and other documents executed in
connection with the foregoing, the performance and observance by or on behalf of
the Issuer and the Trustee of those things on the part of the Issuer and the
Trustee agreed to be performed or observed hereunder and thereunder, or the
Acquisition of the Project or the use and operation of the Plant, or the costs
of enforcement (including reasonable attorneys' fees) of any obligations of the
Borrower hereunder or under the Bonds, the
34
Mortgage, the Security Agreement or any related documents, including any and all
liability or loss, costs or expense, including reasonable attorneys' fees
incurred in connection with, or pertaining to the issuance, sale or delivery of
the Bonds, and arising under the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, or any applicable state securities
laws; provided, however, that such indemnity for liabilities under securities
law shall be subject to the limitation that such indemnity shall not have been
determined by a binding legal precedent to be void as contrary to public policy.
The Borrower shall indemnify and hold the Issuer and the Trustee harmless as
aforesaid, and upon notice from the Issuer or the Trustee, the Borrower shall,
at its own expense, defend them or any of them in any such action or proceeding.
(2) Notwithstanding the fact that it is the intention of the
parties hereto that the Issuer shall not incur any pecuniary liability by reason
of the terms of this Loan Agreement or the undertakings required of the Issuer
hereunder, by reason of the issuance of the Bonds, by reason of the execution of
the Indenture or by reason of the performance of any act requested of the Issuer
by the Borrower, including all claims, liabilities or losses arising in
connection with the violation of any statutes or regulation pertaining to the
foregoing; nevertheless, if the Issuer should incur any such pecuniary
liability, then in such event the Borrower shall indemnify and hold the Issuer
harmless against all claims, demands or causes of action whatsoever, by or on
behalf of any Person arising out of the same or out of any offering statement or
lack of offering statement in connection with the sale or resale of the Bonds
and all costs and expenses incurred in connection with any such claim or in
connection with any action or proceeding brought thereon, and upon notice form
the Issuer, the Borrower shall defend the Issuer in any such action or
proceeding. All references to the Issuer in this Section 7.8 shall be deemed to
include its commissioners, members, directors, officers, employees, attorneys,
and agents.
(3) Notwithstanding anything to the contrary contained herein or
in any of the Bonds or the Indenture, or in any other instrument of document
executed by or on behalf of the Issuer in connection herewith, no stipulation,
covenant, agreement or obligation contained herein or therein shall be deemed or
construed to be a stipulation covenant, agreement or obligation of any present
or future member, commissioner, director, trustee, officer, employee or agent of
the Issuer, or of any incorporator, member, commissioner, director, trustee,
officer, employee or agent of any successor to the Issuer, in any such person's
individual capacity, and no such person, in his individual capacity, shall be
liable personally for any breach or non-observance of or for any failure to
perform, fulfill or comply with any such stipulations, covenants, agreements or
obligations, nor shall any recourse be had for the payment of the principal of,
premium, if any, or interest on any of the Bonds or for any claim based thereon
or on any such stipulation, covenant, agreement or obligation, against any such
person, in his individual capacity, either directly or through the Issuer or any
successor to the Issuer, under any rule of law or equity, statute or
constitution or by the enforcement of any assessment or penalty or otherwise,
and all such liability of any such person, in his individual capacity, is hereby
expressly waived and released.
(4) Notwithstanding anything to the contrary contained herein or
in any of the Bonds or the Indenture, or in any other instrument or document
executed by or on behalf of the Issuer in connection herewith, (i) the Issuer
shall have no obligation to take action under this
35
Loan Agreement, the Indenture, the Bonds or such other instruments or documents,
unless the Issuer is requested in writing by an appropriate Person to take such
action and is provided with indemnity and assurances satisfactory to it or
payment of or reimbursement for any expenses (including attorneys' fees) to be
incurred in such action, (ii) no member of the Issuer or any officer, attorney,
employee or agent of the Issuer shall be personally liable to the Borrower, the
Trustee or any other person for any action taken by the Issuer or by its
officers, attorneys, agents or employees, or for any failure to take action,
under this Loan Agreement, the Indenture, the Bonds or such other instruments or
documents, except that the Issuer agrees to take or refrain from taking any
action required by an injunction or required to comply with any final judgment
for specific performance; and (iii) any judgment rendered against the Issuer for
breach of its obligations under this Loan Agreement, the Indenture, the Bonds or
such other instruments or documents, shall be payable solely from the Project
Fund, and no personal liability or charge payable directly or indirectly from
the general funds of the Issuer shall arise therefrom.
The foregoing provisions of this Section 7.8 shall survive the payment,
prepayment or redemption of the Bonds and the termination of this Loan Agreement
and the Indenture.
Notwithstanding anything to the contrary contained herein, the Borrower
shall have no liability to indemnify the Issuer against claims or damages
resulting from the Issuer's own gross negligence or willful misconduct.
Section VII.9 Encumbrance Covenants. Until Payment of the Bonds shall
have occurred, the Mortgaged Property shall remain free and clear of any lien,
encumbrance, mortgage, security interest, and secondary financing whatsoever,
and shall not be sold, conveyed, transferred, or leased with the exception of
any Permitted Encumbrances.
The Borrower shall not, and shall not permit any Subsidiary to, create
or permit to exist any Lien with respect to any of its property, revenue or
assets now owned or hereafter acquired, except: (a) Liens for Taxes which are
not delinquent or which are being contested in good faith and by appropriate
proceedings and as to which such reserves or other appropriate provisions as may
be required by GAAP are being maintained; (b) carriers', warehousemen's,
mechanics', materialmen's, repairmen's, and other like statutory Liens arising
in the ordinary course of business securing obligations which are not overdue or
which are being contested in good faith and by appropriate proceedings and as to
which such reserves or other appropriate provisions as may be required by GAAP
are being maintained; (c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other similar legislation or
regulations; (d) Liens in connection with the acquisition of property after the
date of this Loan Agreement by way of purchase money mortgage, conditional sale
or other title retention agreement, Capitalized Lease or other deferred payment
contract, and attaching only to the property being acquired (and proceeds
thereof and accessions thereto), if (i) except in the case of a Capitalized
Lease, the Indebtedness secured thereby does not exceed 75% of the fair market
value of such property at the time of the acquisition thereof and (ii) the
aggregate principal and interest payments of the Indebtedness of Borrower and
its Subsidiaries secured by such Liens does not exceed (w) $450,000 in Fiscal
Year 1996, (x) $900,000 in Fiscal Year 1997, (y) $1,350,000 in Fiscal
36
Year 1998, and (z) $1,500,000 in any Fiscal Year thereafter; (e) liens on real
property and any related fixtures (and proceeds thereof and accessions thereto)
securing loans to Borrower obtained after the date of this Loan Agreement,
provided the initial amount of the loan secured by any such Lien is not more
than 75% of the appraised value of the real property securing such loan; (f)
Liens in favor of Bond Purchaser; (g) Liens listed on Schedule 5.16 of the
Amended and Restated Loan Agreement (and in the case of Capitalized Leases
listed or referred to thereon, Capitalized Leases entered into after the date of
this Loan Agreement for the same property or assets, provided that any increase
in the Indebtedness payable under such new Capitalized Leases shall be
permitted, and count against the limitations set forth, under clause (d)(ii)
above); (h) lessor's Liens and reasonable deposits pursuant to operating leases
permitted hereunder under which Borrower or a Subsidiary is the lessee; (i)
Liens disclosed in the ALTA Title Loan Insurance Policies and ALTA Class A
Surveys delivered pursuant to Section 8.1.10(c) of the Original Loan Agreement,
or otherwise under the Original Loan Agreement or the Existing Loan Agreement,
or disclosed in the title insurance policies delivered pursuant to Section 6.3
hereof, and not objected to by Bond Purchaser on or prior to the Second
Restatement Date; (j) zoning or building restrictions and other minor
encumbrances on and defects in title to real property which do not materially
impair the use or value thereof; (k) Liens incurred or deposits made to secure
the performance of surety or appeal bonds and attaching to property not
exceeding $200,000; (l) attachment or judgment Liens not exceeding $200,000; (m)
bankers' liens arising by operation of law in connection with the Depositary
Accounts; and (n) Liens consented to in writing by Bond Purchaser.
Section VII.10 Financial Statements. The Borrower shall furnish to Bond
Purchaser in form reasonably satisfactory to Bond Purchaser:
(1) Annual Audit Report. Within ninety (90) days after each Fiscal
Year of Borrower, a copy of the annual audit report of Borrower and its
consolidated Subsidiaries prepared on a consolidated (and, if requested by Bond
Purchaser, consolidating) basis in conformity with GAAP and certified by an
independent certified public accountant who shall be of recognized national
standing or otherwise reasonably satisfactory to Bond Purchaser, together with
(i) a letter from such accountant in the form acceptable to the Bond Purchaser,
(ii) a certificate from such accountant containing a computation of, and showing
compliance with, each of the financial covenants contained herein, and (iii) a
certificate from such accountant to the effect that, in making the examination
necessary for the signing of such annual audit report, such accountant has not
become aware of any Event of Default or Unmatured Event of Default that has
occurred and is continuing, or, if such accountant has become aware of any such
event, describing it;
(2) Quarterly Financial Statement. Within forty-five (45) days
after the end of each calendar quarter of each Fiscal Year, a copy of the
unaudited financial statement of (x) Parent and its consolidated Subsidiaries,
(y) the ▇▇▇▇▇▇▇▇'▇ Business, and (z) the Cues Business prepared on a
consolidated basis in conformity with GAAP (subject to normal year-end
adjustments and except that such statements need not include notes), signed by
Borrower's chief financial officer and consisting of at lest a balance sheet as
at the close of such quarter and
37
statements of earnings and cash flows for such quarter and for the period from
the beginning of such Fiscal Year to the close of such quarter;
(3) Officer's Certificate. Together with the financial statements
furnished by Borrower under the preceding clauses (a) and (b) (but only for the
calendar quarters ended on March, June and September), a certificate of
Borrower's chief financial officer or treasurer, dated the date of such annual
audit report or such monthly financial statements, as the case may be,
containing a statement that no Event of Default or Unmatured Event of Default
has occurred and is continuing, or, if there is any such event, describing it
and the steps, if any, being taken to cure it, and containing a computation of,
and showing compliance with, each of the financial covenants contained herein;
and
(4) Management Letters. Promptly upon receipt thereof, a copy of
any "management letter" or other material communication from Borrower's auditors
(including a copy of any such letter which accompanies the audit report referred
to in clause (a)).
(5) Same Store Sales Reports. Not later than July 31 and January
31 of each year, a report for each of Borrower's restaurants and stores of sales
for the preceding six months and year-to-date, with a comparison of such sales
figures to the corresponding period in the prior Fiscal Year, all in form
reasonably satisfactory to Bond Purchaser.
(6) SEC and Other Reports. Copies of each filing and report made
by Parent with or to any securities exchange or the Securities and Exchange
Commission and of each communication from Parent to shareholders generally,
promptly upon the filing or making thereof;
(7) Other Reports. Promptly from time to time, such other reports
and information as Bond Purchaser may reasonably request.
Section VII.11 Indebtedness. The Borrower shall not, and shall not
permit any Subsidiary to, incur or permit to exist any Indebtedness (including,
but not limited to, Indebtedness as lessee under Capitalized Leases), except:
(a) Indebtedness under the terms of this Loan Agreement; (b) Subordinated Debt;
(c) other Indebtedness outstanding on the date hereof and listed on Schedule
5.15 to the Amended and Restated Loan Agreement; (d) Indebtedness hereafter
incurred in connection with Liens permitted under Section 7.9; and (e) other
Indebtedness approved in writing by Bond Purchaser.
Section VII.12 Additional Information. Until Payment of the Bonds shall
have occurred, the Borrower shall promptly, from time to time, deliver or cause
to be delivered to the Bondholder, the Trustee and the Issuer such information
regarding the operations, business affairs and financial condition of the
Borrower and the Guarantor as the Bondholder, the Trustee and the Issuer may
reasonably request in writing.
Section VII.13 Restricted Payments . The Borrower shall not purchase or
redeem any shares of its stock (other than for stock of Borrower), declare or
pay any dividends thereon (other
38
than stock dividends), make any distribution to stockholders as such (other than
distributions of stock of Borrower) or set aside any funds for any such purpose,
not prepay, purchase or redeem, and not permit any Subsidiary to purchase, any
Subordinated Debt, not make any advances to Parent and, if an Event of Default
or Unmatured Event of Default exists or would result therefrom, not, and not
permit any Subsidiary to, pay any management or similar fees to Parent or any of
its affiliates pursuant to the terms of the Management Agreement (except that
any such fees may be paid whether or not an Event of Default or Unmatured Event
of Default exists or would result therefrom, solely to the extent such fees are
to pay regular salaries (and not bonuses) of any employees or officers of
Parent); provided, however, that: (a) Borrower may pay dividends and advances to
Parent in an aggregate amount not exceeding 50% of Borrower's Excess Cash Flow
for the immediately preceding Fiscal Year so long as (i) Bond Purchaser shall
have received Borrower's annual audit report pursuant to Section 7.10 for such
preceding Fiscal Year, (ii) after giving effect to any such proposed dividend or
advance, the amount of the Revolving Loan Availability will exceed the
outstanding principal amount of the Revolving Loans by at least $500,000, (iii)
no Event of Default or Unmatured Event of Default shall then exist or will
result from any such dividend payment or advance, and (iv) Borrower shall have
given Bond Purchaser prior written notice of any such proposed dividend or
advance and certified its compliance with this Section 7.13; (b) Borrower may,
within 60 days after obtaining the proceeds of any loan permitted pursuant to
Section 5.15(e) of the Amended and Restated Loan Agreement, pay a dividend or
advance to Parent in an amount not exceeding 25% of the proceeds of such loan so
long as the conditions specified in sub-clauses (ii), (iii) and (iv) of clause
(a) above have been met; (c) Borrower may make scheduled payments of principal
of and interest on the Subordinated Note, so long as the conditions specified in
sub-clauses (ii), (iii) and (iv) of clause (a) above have been met (it being
understood that each reference to a "dividend" in such sub-clauses shall be
deemed, for purposes of this clause (c), to be a reference to the relevant
payment on the Subordinated Note); and (d) Borrower may, within ten (10) days
after obtaining the proceeds of any Supplemental Revolving Loan, pay a dividend
or advance in the amount of such proceeds of such Loan to Parent to be used by
Parent as specified by Section 5.25 of the Amended and Restated Loan Agreement
so long as the conditions specified in sub-clauses (iii) and (iv) of clause (a)
above have been met. Dividends and advances permitted and paid under clause (a),
(b) or (d) of the foregoing sentence shall not reduce the amount of dividends or
advances payable under any other such sub-clause.
Section VII.14 Sale of Assets. The Borrower covenants that, unless the
Bondholder otherwise consents in writing, it will not sell, assign, transfer,
convey, ▇▇▇▇▇ ▇ ▇▇▇▇ on or security interest in or otherwise dispose of all or
substantially all of its assets (including, but not limited to, the Plant).
Section VII.15 Litigation. The Borrower shall notify the Trustee and
the Bondholder of any pending litigation or claims against it wherein another
party seeks damages against it where the aggregate of such litigation or claims
(or portions thereof) is in excess of $50,000.00, which is not fully covered by
insurance, or any litigation or claims seeking damages or equitable relief
which, if granted, would materially interfere with the Acquisition of the
Project or the operation of the Plant as hereby contemplated.
39
Section VII.16 Patents, Trademarks. The Borrower shall take all
reasonable steps to preserve and protect its patents, licenses, permits,
trademarks, trademark rights, trade names, trade name rights, copyrights, trade
secrets and other proprietary information used or useful in connection with its
operation at the Plant and shall maintain all of its other properties and assets
used or useful in the conduct of its business at the Plant in good repair,
working order and condition and from time to time cause to be made all proper
replacements, betterments and improvements thereto.
Section VII.17 Default Certificates. The Borrower shall deliver to the
Trustee and the Bondholder forthwith, upon obtaining knowledge of an Event of
Default hereunder or under the Note, the Indenture, the Mortgage, the Security
Agreement, the Guaranty, the Environmental Agreement, or an event which would
constitute such an Event of Default but for the requirement that notice be given
or time elapse or both, a certificate of the Borrower specifying the nature and
period of existence thereof and what action the Borrower proposes to take with
respect thereto.
Section VII.18 Notification to Trustee. The Borrower shall notify the
Trustee and the Bondholder in writing promptly, but in any event within five (5)
Business Days, of the occurrence of any of the following with respect to the
Borrower:
(1) any event or condition which shall constitute an event of
default under any other agreement for borrowed money;
(2) any levy of an attachment, execution or other process against
its assets, which may materially adversely affect the financial condition or
operation of the Borrower;
(3) any change in any existing agreement or contract which may
materially adversely affect its business or affairs, financial or otherwise; and
(4) any change in the ownership or control of the Borrower
(provided, however, any such change in ownership or control shall be subject to
the limitations of Section 7.23 hereof).
Section VII.19 Books of Record and Account.
(1) The Borrower shall keep proper books of record and accounts in
which full, true and correct entries shall be made of its transactions in
accordance with Generally Accepted Accounting Principles applied on a Consistent
Basis.
(2) The Borrower shall set aside on its books from its earnings
for each Fiscal Year all such proper reserves, including reserves for
depreciation, depletion, obsolescence and amortization of its properties during
such Fiscal Year, as shall be required in accordance with Generally Accepted
Accounting Principles applied on a Consistent Basis.
40
Section VII.20 Observe Laws. The Borrower shall observe or cause to be
observed all laws, regulations and other valid requirements of any regulatory
authority with respect to the operations at the Plant.
Section VII.21 Acceptance of Indenture. The Borrower accepts the terms
and provisions of the Indenture and agrees to perform or cause to be performed
all duties and obligations, expressed or implied, of the Borrower thereunder.
Section VII.22 Reserved.
Section VII.23 Merger, Purchase and Sale. The Borrower shall not, and
shall not permit any Subsidiary to: (a) be a party to any merger, liquidation or
consolidation, provided that any Subsidiary may merge with and into, or
liquidate into, Borrower or another Subsidiary; (b) except in the normal course
of its business or as otherwise permitted herein, sell, transfer, convey, lease
or otherwise dispose of any of the Project; or (c) purchase or otherwise acquire
all or substantially all the assets of any Person (unless and to the extent that
such assets constitute no more than two (2) restaurant locations in any Fiscal
Year; it being understood and agreed that the addition of new restaurant
locations solely through the assumption or incurrence of lease obligations shall
not be deemed to be a purchase for purposes of this clause (c)).
Section VII.24 Changes in Control. Until Payment of the Bonds shall
have occurred, unless the Bondholder has otherwise given its prior written
consent, the Parent shall own all of the Borrower's issued and outstanding
voting stock and shall control the Borrower. For purposes of this Loan
Agreement, a Person shall be deemed to control a corporation if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such corporation, whether through the ownership
of voting securities, by contract, or otherwise.
Section VII.25 ERISA. No material employee benefit plan established or
maintained by the Borrower or any Subsidiary or Affiliate of the Borrower
(including any multiemployer plan to which the Borrower or any Affiliate of the
Borrower contributes) which is subject to Part 3 of Subtitle B of Title I of
ERISA had a material accumulated funding deficiency (as such term is defined in
Section 302 of ERISA) as of the last day of the most recent fiscal year of such
plan ended prior to the date hereof, or would have had an accumulated funding
deficiency (as so defined) on such day if such year were the first year of such
plan to which Part 3 of Subtitle B of Title I of ERISA applied, and no material
liability to the Pension Benefit Guaranty Corporation, has been, or is expected
by the Borrower or any Affiliate of the Borrower to be, incurred with respect to
any such plan by the Borrower or any Affiliate of the Borrower.
Neither the Borrower nor any Subsidiary is required to contribute to or
is contributing to a "Multiemployer Pension Plan" (as such term is defined in
the Multiemployer Pension Plan Amendments Act of 1980). Neither the Borrower nor
any Subsidiary has any "withdrawal liability" (as also defined in such Act) to
any multiemployer pension plan.
Section VII.26 Notice of Plan Events, Termination and Litigation. As
soon as possible
41
and in any event within 30 Days after the Borrower knows or has reason to know
that any Reportable Event or a Prohibited Transaction with respect to any plan
has occurred or that the Pension Benefit Guaranty Corporation or the Borrower or
any Related Entity has instituted or will institute proceedings under ERISA to
terminate a Plan, or a partial termination of a Plan has or is alleged to have
occurred, or more than twenty percent (20%) of the total number of employees who
are participants in a Plan will sever, or have severed, their employment due to
a decision to cease operations at a facility or facilities or to reduce the work
force, or any litigation regarding a Plan or naming the trustee of a Plan or the
Borrower or any Related Entity with respect to a Plan is threatened or
instituted, or the purchase, acceptance, holding or sale of customer notes by a
Plan fails to comply with Prohibited Transactions Exemption 85-68 published on
April 3, 1985, the Borrower will provide the Bondholder and the Trustee copies
of the written statement of the chief financial officer of the Borrower setting
forth details of such Reportable Event, Prohibited Transaction, termination
proceeding, partial termination, litigation or prohibited transaction and the
action being or proposed to be taken with respect thereto, together with copies
of the notice of such Reportable Event or any other notices, applications or
forms submitted to the Pension Benefit Guaranty Corporation, Internal Revenue
Service or the United States Department of Labor, and copies of any notices or
correspondence received from the Pension Benefit Guaranty Corporation, Internal
Revenue Service or the United States Department of Labor, and copies of any
pleadings, notices or other documents relating to such litigation.
Section VII.27 Plan Annual Reports. Promptly after the filing thereof
with the Internal Revenue Service or the Pension Benefit Guaranty Corporation,
the Borrower will provide to the Bondholder copies of each annual report and
annual premium filing form which is filed with respect to each Plan for each
plan year, including (i) a statement of assets and liabilities of such Plan as
of the end of such plan year and statements of changes in fund balance and in
financial position, or a statement of changes in net assets available for plan
benefits, for such plan year, certified by the trustee of the Plan or the
independent certified public accountants for such and (ii) if required by law or
applicable regulations, an actuarial statement of such Plan applicable to such
plan year, certified by the actuary for the Plan.
Section VII.28 Plan Liabilities. Neither the Borrower nor any Related
Entity will permit the aggregate present value of accrued benefits of any Plan,
computed in accordance with actuarial principles and assumptions applied on a
uniform and consistent basis by an enrolled actuary of recognized standing
acceptable to the Bondholder, to exceed the aggregate value of asserts of the
Plans, computed on a fair market value basis, or permit the aggregate present
value of vested benefits of the Plans, computed in accordance with actuarial
principles and assumptions applied on a uniform and consistent basis by an
enrolled actuary of recognized standing acceptable to the Bondholder and the
Trustee, to exceed the aggregate value of assets of the Plans, computed on a
fair market value basis.
Section VII.29 Notice of Adoption of Plan. As soon as possible and in
any event within 30 Days after the Borrower or any Related Entity adopts a new
Plan, the Borrower or such
42
Related Entity shall notify the Bondholder and the Trustee of the adoption of
the new Plan. Adoption of a new Plan shall include the adoption of the new Plan
by the Borrower or such Related Entity as well as inclusion of employees of the
Borrower or such Related Entity under the Plan of another corporation.
Section VII.30 Guaranties. The Borrower shall not, and shall not permit
any Subsidiary to, become or be a guarantor or surety of, or otherwise become or
be responsible in any manner (whether by agreement to purchase any obligations,
stock, assets, goods or services, or to supply or advance any funds, assets,
goods or services, or otherwise) with respect to, any undertaking of any other
Person, except for the endorsement, in the ordinary course of collection , of
instruments payable to it or its order.
Section VII.31 Subsidiaries. The Borrower shall not, and shall not
permit any Subsidiary to, acquire any stock or similar interest in any Person,
and not create, establish or acquire any Subsidiaries other than those existing
on the Second Restatement Date.
Section VII.32 Leases. The Borrower shall not enter into or permit to
exist, or permit any Subsidiary to enter into or permit to exist, any
arrangements for the leasing by Borrower or such Subsidiary, as lessee under a
lease which is not a Capitalized Lease, of any real or personal property (or any
interest therein) other than under (a) leases in existence on the Second
Restatement Date and listed on Schedule 4.15 to the Amended and Restated Loan
Agreement and extensions and renewals thereof (provided that any increase in the
rental payments thereunder will count against the permitted lease rentals in
clause (b) below) and (b) leases entered into after the Second Restatement Date
having base rentals not exceeding (in the aggregate for all such leases) (i)
$400,000 in Fiscal Year 1996, (ii) $800,000 in Fiscal Year 1997, and (iii)
$1,200,000 in Fiscal Year 1998.
Section VII.33 Unconditional Purchase Options. The Borrower shall not
enter into or be a party to, or permit any Subsidiary to enter into or be a
party to, any contract for the purchase of materials, supplies or other property
or services, if such contract requires that payment be made by it regardless of
whether or not delivery is ever made of such materials, supplies or other
property or services.
Section VII.34 Use Of Proceeds. The Borrower shall not use or permit
any proceeds of the Bonds to be used, either directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of (i) "purchasing or
carrying" any Margin Stock, and shall furnish to Bond Purchaser, upon request, a
statement in conformity with the requirements of Federal Reserve Form U-1
referred to in Regulation U of the Federal Reserve Board or (ii) funding all or
any part of any hostile take-over or tender offer.
Section VII.35 Transactions with Related Parties. The Borrower shall
not, and shall not permit any Subsidiary to, enter into or be a party to any
transaction or arrangement, including, without limitation, the purchase, sale,
lease or exchange of property or the rendering of any service, with any Related
Party, except in the ordinary course of and pursuant to the reasonable
requirements of Borrower's or such Subsidiary's business and upon fair and
reasonable terms no less favorable to Borrower or such Subsidiary than would
obtain in a comparable arm's-length
43
transaction with a Person not a Related Party; provided, however, that the
foregoing shall not prohibit (a) the existence or performance of the Management
Agreement; (b) the transactions contemplated under the Recapitalization
Agreement; or (c) any other transaction or arrangement permitted by any other
provision of this Agreement.
Section VII.36 Borrower's and Subsidiaries' Stock. The Borrower shall
not permit any Subsidiary to purchase or otherwise acquire any shares of the
stock of Borrower, and not take any action, or permit any Subsidiary to take any
action, which will result in a decrease in Borrower's ultimate ownership
interest in any Subsidiary.
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ARTICLE VIII
ASSIGNMENT, LEASING, SELLING AND ENCUMBERING
Section VIII.1 Assignment of Loan Agreement, Sale or Encumbering of
Plant by the Borrower. Except as expressly permitted under the terms of the
Mortgage and the Security Agreement, or otherwise with the prior written consent
of the Issuer and the Bondholder (which consent may be withheld for any reason),
the rights of the Borrower under this Loan Agreement may not be assigned, and
the Mortgaged Property may not be leased, sold, encumbered or otherwise disposed
of as a whole or in part.
Section VIII.2 Restrictions on Transfer of Issuer's Rights. The Issuer
agrees that, except for the assignment made pursuant to the Indenture of certain
of its rights under this Loan Agreement, the Mortgage, the Security Agreement,
the Environmental Agreement, and its pledge of the Note, endorsed without
recourse to the order of the Trustee, to the Trustee as security pursuant to the
Indenture, it will not during the term of this Loan Agreement sell, assign,
transfer or convey any of its interests in this Loan Agreement, the Mortgage,
the Security Agreement, the Environmental Agreement, or the Note except as
hereinafter provided in Section 8.3.
Section VIII.3 Assignment by the Issuer. It is understood, agreed and
acknowledged that the Issuer, as security for payment of the principal of,
premium, if any, and interest on the Bonds, will grant to the Trustee pursuant
to the Indenture, inter alia, certain of its rights, title and interest in and
to this Loan Agreement, the Mortgage, the Security Agreement, the Environmental
Agreement, and pledge the Note, endorsed as aforesaid, to the Trustee as
security, and the Borrower hereby assents to such assignment and pledge.
45
ARTICLE IX
EVENTS OF DEFAULT AND REMEDIES
Section IX.1 Events of Default Defined. The term "Event of Default"
shall mean any one or more of the following events:
(1) The failure by the Borrower to pay when due any payment of
principal of, or interest on or other amount payable under the Note or this Loan
Agreement.
(2) The failure of the Borrower to perform any of its obligations
under or otherwise comply with the provisions of Section 6.4, 7.4, 7.7, 7.8, or
7.23 hereof.
(3) The occurrence of an "Event of Default" or a default or event
of default under any of the Indenture, the Mortgage, the Security Agreement, the
Guaranty, or the Environmental Agreement.
(4) Any representation or warranty of the Borrower contained in
Section 2.2 hereof, or in any document, instrument or certificate delivered
pursuant hereto or to the Indenture or in connection with the issuance and sale
of the Bonds shall be false, misleading or incomplete in any material respect on
the date as of which made.
(5) Failure by the Borrower to observe and perform any covenant,
condition or agreement on the part of the Borrower under the Note or this Loan
Agreement, other than as referred to in the preceding paragraphs of this Section
9.1, for a period of thirty (30) days after written notice, specifying such
failure and requesting that it be remedied, is given to the Borrower by the
Issuer or the Trustee.
(6) The commencement against the Borrower of an involuntary case
under the Bankruptcy Code, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or of any action or proceeding for the
appointment of a receiver, liquidator, assignee, custodian, trustee,
sequestrator (or similar official) of the Borrower or for any substantial part
of its property, or for the winding up or liquidation of its affairs and the
continuance of any such case, action, or proceeding unstayed and in effect for a
period of thirty (30) consecutive days.
(7) The commencement by the Borrower of a voluntary case under the
Bankruptcy Code, or any other applicable federal or state bankruptcy, insolvency
or other similar law, or the consent by it to, or its acquiescence in the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, sequestrator (or other similar official) of the Borrower or
of any substantial part of its property, or the making by it of or the consent
by it to any assignment for the benefit of creditors, or the failure of the
Borrower generally to pay its debts as such debts become due, or the taking of
any action by the Borrower in furtherance of any of the foregoing.
46
(8) Failure by the Borrower to pay, when due or within any
applicable grace period, any amount owing on account of any Indebtedness, or the
failure by the Borrower to observe or perform any covenant or undertaking on its
part to be observed or performed in any agreement evidencing, securing or
relating to such Indebtedness, if the effect of such default is to cause, or
permit the holder or holders of such obligation (or a trustee for such holder or
holders) to cause such obligation to become due prior to its stated maturity.
(9) The entry of a final judgment, which with other outstanding
final judgments against the Borrower exceeds an aggregate of $250,000.00 and not
covered by insurance shall be rendered against the Borrower, and if within sixty
(60) days after entry thereof such judgment shall not have been discharged or
execution thereof stayed pending appeal, or if within thirty (30) days after the
expiration of any such stay such judgment shall not have been discharged.
(10) If a Reportable Event, which the Bondholder determines, in
its sole discretion, has created or is likely to create a material adverse
effect on the Borrower's or any Subsidiary's overall business operation, shall
have occurred in connection with any Plan maintained by the Borrower or any
Related Entity.
(11) Default in the payment, when due or declared due, of any of
the Liabilities.
(12) Non-Payment of or Default under Other Indebtedness. Default
in the payment when due, whether by acceleration or otherwise (subject to any
applicable grace period), of any Indebtedness of, or guaranteed by, Borrower,
any other Obligor or any Subsidiary (other than (i) any Indebtedness under this
Agreement and the Note, or (ii) any Indebtedness of any Subsidiary to Borrower
or to any other Subsidiary), or any event or condition shall occur which results
in the acceleration of the maturity of any such Indebtedness or enables the
holder or holders of any such Indebtedness or any trustee or agent for such
holders (any required notice of default having been given and any applicable
grace period having expired) to accelerate the maturity of such other
Indebtedness; provided that the aggregate amount of all such Indebtedness which
is so affected shall equal or exceed $200,000.
Section IX.2 Remedies on Default. If Payment of the Bonds shall not
have been made, whenever any Event of Default referred to in Section 9.1 hereof
shall have happened and shall not have been waived:
(1) The Issuer or the Trustee may, by written notice declare all
installments of principal payable pursuant to the Note for the remainder of the
term thereof and all Administrative Expenses to be immediately due and payable,
whereupon the same, together with accrued interest thereon as provided for in
the Note and this Loan Agreement, shall become immediately due and payable
without presentment, demand, protest or any other notice whatsoever, all of
which are hereby expressly waived by the Borrower; provided, however, all such
amounts shall automatically be and become immediately due and payable without
notice upon the occurrence of any event described in Section 9.1(g) or 9.1(h)
hereof, which notice the Borrower hereby expressly waives.
47
(2) The Issuer or the Trustee may take whatever other action at
law or in equity may appear necessary or desirable to collect the amounts
payable pursuant to the Note and this Loan Agreement then due and thereafter to
become due, or to enforce the performance and observance of any obligation,
agreement or covenant of the Borrower under this Loan Agreement or under any of
the other Bond Documents.
(3) The Issuer or the Trustee may exercise any and all remedies
available to it under this Loan Agreement, the Note, the Mortgage, the Security
Agreement, the Guaranty, or the Environmental Agreement.
(4) The Trustee shall have all remedies available to a "secured
party" under the Uniform Commercial Code of the State and shall have all
remedies provided for in the Indenture and may foreclose its security interest
against any one or more (or all) items of machinery, equipment or other personal
property comprising a part of the Mortgaged Property.
In the enforcement of the remedies provided in this Section 9.2, the Issuer may
treat all reasonable expenses of enforcement, including, without limitation,
legal (whether or not suit is instituted and whether incurred in connection with
trial or any appellate proceeding), accounting and advertising fees and
expenses, as additional Administrative Expenses payable by the Borrower then due
and owing and the Borrower agrees to pay such additional amounts upon demand,
the amount of such legal fees to be without regard to any statutory presumption.
Section IX.3 Application of Amounts Realized in Enforcement of
Remedies. Any amounts collected pursuant to action taken under Section 9.2
hereof shall be paid to the Trustee and applied to the payment of, first, any
costs, expenses and fees incurred by the Issuer and the Trustee as a result of
taking such action; second, any interest which shall have accrued on any overdue
interest and any accrued interest on any overdue principal of the Bonds at the
rate set forth in the Bonds; third, any overdue interest on the Bonds; fourth,
any overdue principal of the Bonds; fifth, the outstanding principal balance of
the Bonds; and sixth, if Payment of the Bonds shall have been made, all
remaining moneys as required by law.
Section IX.4 No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Issuer 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 Loan Agreement
or any of the other Bond Documents 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 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.
Section IX.5 Agreement to Pay Attorneys' Fees and Expenses. In any
Event of Default, if the Issuer or the Trustee employs attorneys or incurs other
expenses for the collection of amounts payable hereunder or for the enforcement
of the performance or observance of any
48
covenants or agreements on the part of the Borrower herein contained, the
Borrower agrees that it will on demand therefor pay to the Issuer or the Trustee
the reasonable fees of such attorneys (whether or not suit is instituted and
whether incurred in connection with trial, rehearing or retrial or any appellate
or bankruptcy proceeding) and such other reasonable expenses so incurred by the
Issuer or the Trustee the amount of such fees of attorneys to be without regard
to any statutory presumption.
49
ARTICLE X
PREPAYMENTS
Section X.1 Optional Prepayments.
(1) The Borrower may, at any time, prepay all or any part of the
principal of the Note; provided, all prepayments shall be made in immediately
available funds and with accrued interest to the date of prepayment and that any
prepayment of the Note in part shall be applied to unpaid installments of
principal in inverse order of maturity. Any prepayment pursuant to this
subsection (a) shall be made by the Borrower taking, or causing the Issuer to
take, the actions required (i) for Payment of the Bonds, in the case of
prepayment of the Note in whole, or (ii) to effect prepayment of less than all
of the Bonds according to their terms in the case of a partial prepayment of the
Note.
(2) To exercise the option granted in subsection (a) of this
Section 10.1, the Borrower shall give written notice to the Issuer and the
Trustee which shall specify therein (i) the date of the intended prepayment of
the Note, which shall not be less than 5 nor more than 30 days from the date the
notice is mailed and (ii) the principal amount of the Note to be prepaid. When
given, such notice shall be irrevocable by the Borrower.
Section X.2 Mandatory Prepayments.
(1) In the event of a Determination of Taxability, the Borrower
shall (i) on a date selected by the Borrower not more than 60 days following the
date of the Determination of Taxability, pay to or for the account of the
Bondholder and former Bondholder those amounts required to be paid pursuant to
Section 301(c)(i) and 301(c)(ii) of the Indenture and (ii) pay within 10 days of
receipt of written demand therefor from any Bondholder or former Bondholder the
amounts required to be paid pursuant to Section 301(c)(iii) and 301(c)(iv) of
the Indenture. Immediately upon the occurrence of a Determination of Taxability,
the Borrower shall notify the Issuer and the Trustee of the date selected for
payment pursuant to this Section 10.2. The obligation of the Borrower contained
herein with respect to the payment of amounts required to be paid in the event
of a Determination of Taxability shall survive the termination of this Loan
Agreement and the payment in full of the Note or the Bonds.
(2) In the event of a Cessation of Operation of the Plant by the
Borrower, the Borrower shall, on a date selected by the Borrower within 45 days
after the date of Cessation of Operation, pay to or for the account of the then
Bondholder the entire unpaid principal balance of the Note, if any, outstanding
at the date of payment hereunder, plus accrued interest thereon to the date of
such payment plus all other amounts otherwise due under the Note, this Loan
Agreement and the Bonds.
(3) Bondholder shall be entitled to tender the Bonds on the
earlier of (i) any date on or after June 30, 2002, provided that Borrower shall
have received not less than ninety
50
(90) days' prior written notice thereof from Bondholder, or (ii) the date on
which the Amended and Restated Loan Agreement expires or is terminated for any
reason, and the Borrower shall, on a date selected by the Bondholder, pay to or
for the account of the then Bondholder the entire unpaid principal balance of
the Note, if any, outstanding at the date of payment hereunder, plus accrued
interest thereon to the date of such payment plus all other amounts otherwise
due under the Note, this Loan Agreement and the Bonds.
Section X.3 Other Mandatory Prepayments. The amounts required to be
applied to the prepayment of the Note by Sections 4.3, 5.3 and 6.9 hereof shall
be applied by the Borrower to prepay, together with accrued interest, all or a
portion of the unpaid principal of the Note. Such prepayment shall be made by
the Borrower taking, or causing the Issuer to take, the actions required (a) for
payment of the Bonds, whether by redemption prior to the maturity or by payment
at maturity, or (b) to effect the purchase, redemption or payment at maturity of
less than all of the installments of principal on the Bonds in inverse order of
their maturities.
51
ARTICLE XI
MISCELLANEOUS
Section XI.1 References to the Bonds Ineffective After Bonds Paid. Upon
Payment of the Bonds, all references in this Loan Agreement to the Bonds shall
be ineffective and the Issuer and any holder of the Bonds shall not thereafter
have any rights hereunder, excepting those that shall have theretofore vested
and the right to receive certain payments pursuant to Section 10.2 (a) hereof as
a result of a Determination of Taxability and the rights to the computation,
reporting and payment of Rebate Amounts pursuant to the Tax Compliance
Certificates.
Section XI.2 No Implied Waiver. In the event any agreement contained in
the Note or this Loan Agreement should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
thereunder or hereunder. Neither any failure nor any delay on the part of the
Issuer or the Trustee to exercise any right, power or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or privilege preclude any other or further exercise thereof,
or the exercise of any other right, power or privilege.
Section XI.3 Issuer Representative. Whenever under the provisions of
this Loan Agreement the approval of the Issuer is required or the Issuer is
required to take some action at the request of the Borrower, such approval shall
be made or such action shall be taken by the Issuer Representative; and the
Borrower, the Trustee and the Bondholder shall be authorized to rely on any such
approval or action.
Section XI.4 Borrower Representative. Whenever under the provisions of
this Loan Agreement the approval of the Borrower is required or the Borrower is
required to take some action at the request of the Issuer, such approval shall
be made or such action shall be taken by the Borrower Representative; and the
Issuer, the Trustee and the Bondholder shall be authorized to act on any such
approval or action.
Section XI.5 Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered
by hand delivery or mailed by first class, postage prepaid, registered or
certified mail, addressed as follows:
If to the Issuer, to
Orange County Industrial Development Authority
c/o Economic Development Commission of Mid-Florida, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary
If to the Borrower, to
52
ELXSI
▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Controller
If to the Trustee, to
SunTrust Bank, Central Florida, National Association
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
If to the initial Bondholder, to
Bank of America National Trust
and Savings Association
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
The Issuer, the Borrower, the Trustee or the Bondholder may, by notice
given hereunder, designate from time to time any further or different addresses
to which subsequent notices, certificates or other communications shall be sent.
Section XI.6 If Payment or Performance Date is not a Business Day. If
the specified or last date for the making of any payment, the performance of any
act or the exercising of any right, as provided in this Loan Agreement, shall be
a day which is not a Business Day, such payment may be made or act performed or
right exercised on the next succeeding Business Day; provided that interest
shall accrue during any such period during which payment shall not occur.
Section XI.7 Binding Effect. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Borrower and their
respective successors and assigns, subject to the provisions of Section 8.3
hereof.
Section XI.8 Severability. In the event any provision of this Loan
Agreement or the other Bond Documents shall be held invalid or unenforceable by
any court of competent jurisdiction, such holding shall not invalidate or render
unenforceable any other provision hereof or thereof.
Section XI.9 Amendments, Changes and Modifications. Subsequent to the
issuance of the Bonds and prior to Payment of the Bonds, this Loan Agreement and
the other Bond Documents, may not be effectively amended, changed, modified,
altered or terminated except in accordance with the Indenture.
53
Section XI.10 Execution in Counterparts. This Loan Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument, and no one counterpart
of which need be executed by all parties.
Section XI.11 Applicable Law. This Loan Agreement shall be governed by
and construed in accordance with the laws of the State.
Section XI.12 No Charge Against Issuer Credit. No provision hereof
shall be construed to impose a charge against the general credit of the Issuer
or any personal or pecuniary liability upon any member of the governing board,
official, employee or agent of the Issuer.
Section XI.13 Issuer Not Liable. Notwithstanding any other provision of
this Loan Agreement, (a) the Issuer shall not be liable to the Borrower, the
Trustee, any Bondholder or any other Person for any failure of the Issuer to
take action under this Loan Agreement unless the Issuer (i) is requested in
writing by an appropriate Person to take such action, (ii) is assured of payment
of or reimbursement for any expenses in such action, and (iii) is afforded,
under the existing circumstances, a reasonable period to take such action, and
(b) except with respect to any action for specific performance or any action in
the nature of a prohibitory or mandatory injunction, neither the Issuer nor any
member of the Issuer nor any other official, employee or agent of the Issuer
shall be liable to the Borrower, the Trustee, any Bondholder or any other Person
for any action taken by the Issuer or by its officers, servants, agents or
employees, or for any failure to take action under this Loan Agreement or the
other Bond Documents to which the Issuer is a party. In acting under this Loan
Agreement, or in refraining from acting under this Loan Agreement, the Issuer
may conclusively rely on the advice of its counsel.
Section XI.14 Expenses. The Borrower agrees to pay all reasonable fees
and expenses incurred in connection with the preparation, execution, delivery,
modification, waiver and amendment of this Loan Agreement, the other Bond
Documents and related documents, and the fees and expenses of bond counsel,
counsel for the Issuer and any counsel for the Trustee. The Borrower also agrees
to pay all expenses incurred by the Trustee or the Issuer in the protection of
or enforcement of any of its rights in the collateral described in the Mortgage
or the Security Agreement, or in collection of any indebtedness incurred
hereunder in the event of default by the Borrower, provided that the amount of
any legal fees so incurred shall be without regard to any statutory presumption.
Section XI.15 Amounts Remaining with the Trustee. Any amounts remaining
in the Project Fund, the Bond Fund or otherwise in trust with the Trustee under
the Indenture or this Loan Agreement shall, after Payment of the Bonds and all
Administrative Expenses in accordance with this Loan Agreement, be disbursed by
the Trustee in accordance with the provisions of the Indenture or otherwise as
may be required by law.
Section XI.16 WAIVER OF JURY TRIAL. THE UNDERSIGNED HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT THEY
54
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS LOAN
AGREEMENT OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS LOAN AGREEMENT OR
ANY DOCUMENT OR INSTRUMENT CONTEMPLATED TO BE EXECUTED IN CONNECTION WITH THIS
LOAN AGREEMENT, INCLUDING WITHOUT LIMITATION, THE BOND DOCUMENTS, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF ANY PARTY WITH RESPECT HERETO OR THERETO. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE ISSUER'S ISSUANCE OF THE BONDS AND LOAN OF THE PROCEEDS
THEREOF TO THE BORROWER AND FOR ISSUER'S ACCEPTANCE OF AND/OR ENTRY INTO ALL
DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION WITH THIS LOAN AGREEMENT,
INCLUDING WITHOUT LIMITATION, THE OTHER BOND DOCUMENTS FROM, OR WITH, THE
BORROWER AND/OR THE GUARANTOR.
55
IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Loan
Agreement to be executed in their respective legal names by their duly
authorized representatives, all as of the date first above written.
ELXSI
By:
----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Attest:
-------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
(CORPORATE SEAL)
"BORROWER"
ORANGE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
By:
----------------------------------------
Name: ▇▇▇▇▇ ▇. Winteres
Title: Vice Chairman of the Orange County
Industrial Development Authority
Attest:
56
-------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary of the Orange County
Industrial Development Authority
(SEAL)
"ISSUER"
57
EXHIBIT "A"
Form of Note
AFTER THE ENDORSEMENT OF THIS NOTE AS HEREON PROVIDED, THIS NOTE MAY NOT BE
ASSIGNED, PLEDGED, ENDORSED OR OTHERWISE TRANSFERRED EXCEPT TO A SUCCESSOR OR
ASSIGN OF THE TRUSTEE UNDER THE TRUST INDENTURE REFERRED TO IN THE LOAN
AGREEMENT REFERRED TO HEREIN.
PROMISSORY NOTE
$2,500,000.00 September 24, 1997
FOR VALUE RECEIVED, ELXSI, a California corporation (the "Borrower"),
by this promissory note promises to pay to the order of Orange County Industrial
Development Authority (the "Issuer") or holder hereof, the principal sum of Two
Million Five Hundred Thousand Dollars ($2,500,000.00), or so much thereof as has
been advanced under the Loan Agreement (as hereinafter defined) and remains
unpaid, in one hundred eighty (180) equal consecutive monthly installments each
in the amount of $13,888.69, commencing October 1, 1997, with a final
installment in the amount of the remaining unpaid principal balance hereof due
and payable on September 1, 2012, together with interest on the unpaid principal
amount hereof, from the date hereof until the principal amount hereof and
accrued and unpaid interest hereon is paid in full, payable at such times and at
such rates as interest is payable on the Issuer's Industrial Development Revenue
Bonds (ELXSI Project) Series 1997 (the "Bonds"), as set forth in the Bonds and
the Trust Indenture dated September 24, 1997 between the Issuer and SunTrust
Bank, Central Florida, National Association, as trustee, and subject to
adjustment as provided therein.
This Promissory Note is the "Note" referred to in the Loan Agreement
dated as of the date hereof (the "Loan Agreement"), between the Borrower and the
Issuer and is entitled to the benefits thereof (including the security therefor)
and is subject to the conditions thereof. Terms not otherwise defined herein
shall have the definitions set forth in the Loan Agreement. This Note is
secured, inter alia, by the collateral described in the Mortgage and the
Security Agreement. Neither the Issuer nor any other holder of this Note shall
be required to enforce payment hereof out of any collateral at any time securing
this Note.
Each payment of principal of and interest on this Note will be
sufficient to enable the Issuer to pay when due the total amount of principal of
(whether at maturity, upon acceleration or otherwise) and interest on the Bonds.
To the extent that principal of or interest on the Bonds shall be paid, there
shall be credited against the unpaid principal of or interest on this Note, as
the case may be, an amount equal to the principal of or interest on such Bonds
so paid. The principal of and interest on this Note are payable in immediately
available funds of any coin or currency of the United States of America which on
the respective dates of payment thereof shall be legal tender for the payment of
public and private debts.
Exhibit "A" Page 1 of 3
In addition, the Borrower agrees to pay in immediately available funds
all other amounts at the time the Issuer may be required to pay the same
pursuant to the Bonds or the Indenture.
The obligation of the Borrower to make the payments required hereunder
shall be absolute and unconditional without any defense, recoupment or right of
setoff by reason of any default by the Issuer under the Loan Agreement or for
any other reason.
Upon the occurrence of an Event of Default specified in the Loan
Agreement, the unpaid principal hereof and accrued interest and additional
interest hereon may become forthwith due and payable as provided in the Loan
Agreement, and in the event the Borrower shall fail to pay any amount required
to be paid under this Note when due, the Borrower shall pay interest on such
amount at the Overdue Rate.
The Borrower may at its option at certain times and may under certain
circumstances be required to prepay all or any part of the unpaid principal of
this Note upon the terms provided in the Loan Agreement and with a prepayment
premium as set forth therein. Upon a Determination of Taxability (during a
period when this Note would otherwise bear interest at the Tax-Exempt Rate), the
Borrower shall be required to make payments on this Note in the amounts provided
in the Loan Agreement, including those required by Section 10.2 thereof, and
from and after the Date of Taxability this Note shall bear interest at a rate
per annum equal to the Taxable Rate.
The Borrower hereby promises to pay all costs of collection, including
reasonable attorneys' fees and disbursements, without regard to any statutory
presumption, in the case of a default under this Note or the Loan Agreement. The
Borrower hereby waives presentment, protest and notice of protest or dishonor.
This Note shall be construed in accordance with the laws of the State
of Florida.
Exhibit "A" Page 2 of 3
IN WITNESS WHEREOF, the Borrower has executed this instrument as of the
date first above written.
ELXSI
By:
----------------------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
Attest:
-------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
(CORPORATE SEAL)
ENDORSEMENT
Pay to the order of SUNTRUST BANK, CENTRAL FLORIDA, NATIONAL
ASSOCIATION, as Trustee for the benefit of the Bondholder under the Trust
Indenture dated as of September 24, 1997, between the Issuer and the Trustee,
without recourse. This endorsement is given and made without any warranty as to
the authority and genuineness of the signature of the maker of the foregoing
Promissory Note.
This 24th day of September, 1997.
ORANGE COUNTY INDUSTRIAL
DEVELOPMENT AUTHORITY
[SEAL] By:
---------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice Chairman of the Orange County
Industrial Development Authority
ATTEST:
----------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Secretary of the Orange County
Industrial Development Authority
Exhibit "A" Page 3 of 3
EXHIBIT "B"
The New Facility Site
Lots 1 through 12, Block M and all of Block N lying North and West of
Interstate 4, PLAT OF WOODHAVEN, as recorded in Plat Book J, Page 127, Public
Records of Orange County, Florida.
Exhibit "A" Page 4 of 3
EXHIBIT "C"
The Existing Facility Site