EXHIBIT 10.2
LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
by and between
TRILECTRON INDUSTRIES, INC.
and
FIRST UNION NATIONAL BANK OF FLORIDA
Dated as of March 1, 1997
INDEX
PAGE
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ARTICLE I DEFINITIONS..................................................... 3
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE BORROWER.................. 13
Section 2.1. Organization and Good Standing......................... 14
Section 2.2. Authorization and Power................................ 14
Section 2.3. No Conflicts; No Consents.............................. 14
Section 2.4. Enforceable Obligations................................ 14
Section 2.5. Liens.................................................. 14
Section 2.6. Financial Condition.................................... 14
Section 2.7. Full Disclosure........................................ 15
Section 2.8. No Default............................................. 15
Section 2.9. Material Agreements.................................... 15
Section 2.10. No Litigation.......................................... 15
Section 2.11. Burdensome Contracts................................... 15
Section 2.12. Title to Assets........................................ 15
Section 2.13. Trade Relations........................................ 16
Section 2.14. Labor Disputes......................................... 16
Section 2.15. Representations Upon Requests for Advances..............16
Section 2.16. Use of Proceeds; Margin Stock.......................... 16
Section 2.17. Taxes.................................................. 17
Section 2.18. ERISA.................................................. 17
Section 2.19. Compliance with Law; All Licenses, Approvals........... 17
Section 2.20. Insider................................................ 17
Section 2.21. Fair Labor Standards Act............................... 17
Section 2.22. Environmental.......................................... 18
Section 2.23. Investment Company Act................................. 18
Section 2.24. Solvency............................................... 18
Section 2.25. Insurance.............................................. 18
Section 2.26. Assets for Conduct of Business......................... 18
Section 2.27 No Subsidiaries........................................ 18
Section 2.28. Survival of Representations and Warranties............. 18
ARTICLE III REIMBURSEMENT AND OTHER PAYMENTS................................ 18
Section 3.1. Letter of Credit....................................... 18
Section 3.2. Reimbursement and Other Payments....................... 19
Section 3.3. Commission and Fees.................................... 19
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Section 3.4. Increased Costs Due to Change in Law................... 20
Section 3.5. Computation............................................ 20
Section 3.6. Payment Procedure...................................... 20
Section 3.7. Business Days.......................................... 21
Section 3.8. Reimbursement of Expenses.............................. 21
Section 3.9. Extension of Expiration Date........................... 21
Section 3.10. Obligations Absolute................................... 22
Section 3.11. Tender Advances........................................ 22
ARTICLE IV SECURITY; INSURANCE............................................. 24
Section 4.1. Security............................................... 24
Section 4.2. Advances by Bank....................................... 24
Section 4.3. Preservation of Security Interest...................... 24
ARTICLE V AFFIRMATIVE COVENANTS........................................... 25
Section 5.1. Financial Statements, Reports and Documents............ 25
Section 5.2. Payment of Taxes and Other Indebtedness................ 26
Section 5.3. Maintenance of Existence and Rights.................... 26
Section 5.4. Notice of Default...................................... 26
Section 5.5. Other Notices.......................................... 26
Section 5.6. Compliance with Material Agreements.................... 27
Section 5.7. Operations and Properties.............................. 27
Section 5.8. Books and Records; Access.............................. 27
Section 5.9. Compliance with Law.................................... 27
Section 5.10. Insurance.............................................. 28
Section 5.11. ERISA Compliance....................................... 28
Section 5.12. Further Assurances..................................... 28
Section 5.13. Execution and Delivery of Guaranty..................... 29
Section 5.14. Current Ratio.......................................... 29
Section 5.15. Debt Service Coverage Ratio............................ 29
ARTICLE VI NEGATIVE COVENANTS.............................................. 29
Section 6.1. Investment and Lines of Business....................... 29
Section 6.2. Change of Control or Liquidation,
Mergers, Consolidations and Dispositions
of Substantial Assets.................................. 29
Section 6.3. Limitation of Guarantees............................... 30
Section 6.4. Limitation of Encumbrances............................. 30
Section 6.5. Certain Transactions................................... 30
Section 6.6. Name, Fiscal Year and Accounting Method................ 30
Section 6.7. Location of Collateral................................. 31
Section 6.8. Consolidation Leverage Ratio........................... 31
Section 6.9. Dividends.............................................. 31
Section 6.10. No Default............................................. 31
ARTICLE VII CONDITIONS TO ISSUANCE OF LETTER OF CREDIT...................... 31
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Section 7.1. Conditions on Issuance................................. 31
Section 7.2. Additional Conditions Precedent to
Issuance of the Letter of Credit....................... 34
Section 7.3. Condition Precedent to Each Tender Advance............. 35
Section 7.4. Approval By Bank of Requisitions....................... 35
ARTICLE VII A DESIGNATED ACCOUNT
ARTICLE VIII DEFAULT....................................................... 35
Section 8.1. Events of Default...................................... 35
Section 8.2. No Remedy Exclusive.................................... 38
Section 8.3. Anti-Marshalling Provisions............................ 38
ARTICLE IX MISCELLANEOUS................................................. 39
Section 9.1. Indemnification........................................ 39
Section 9.2. Transfer of Letter of Credit........................... 40
Section 9.3. Reduction of Letter of Credit.......................... 40
Section 9.4. Liability of the Bank.................................. 40
Section 9.5. Successors and Assigns................................. 41
Section 9.6. Notices................................................ 41
Section 9.7. Amendment.............................................. 42
Section 9.8. Effect of Delay and Waivers............................ 42
Section 9.9. Counterparts........................................... 43
Section 9.10. Severability........................................... 43
Section 9.11. Cost of Collection..................................... 43
Section 9.12. Set Off................................................ 43
Section 9.13. Governing Law.......................................... 43
Section 9.14. References............................................. 43
Section 9.15. Taxes, Etc............................................. 43
Section 9.16. Assignment, Pledge of Reimbursement Agreement.......... 43
Section 9.17. Consent to Jurisdiction, Venue; Waiver of Jury Trial... 44
Signatures 51
Exhibit A - Form of Letter of Credit
Exhibit B - Form of Bond Counsel Opinion
Exhibit C - Form of Borrower Counsel Opinion
Exhibit D - Compliance Certificate
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LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
THIS LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT (the "Agreement" or
"Reimbursment Agreement"), dated as of March 1, 1997, between TRILECTRON
INDUSTRIES, INC., a New York corporation (variously, the "Borrower" or
"Company"), and FIRST UNION NATIONAL BANK OF FLORIDA , a national banking
association organized and existing under the laws of the United States
(variously, the "Bank" or "Lender");
WITNESSETH:
WHEREAS, arrangements have been made pursuant to a Trust Indenture of
even date herewith (the "Indenture") by and between Manatee County (the
"Issuer"), Branch Banking and Trust Company, as credit facility trustee (the
"Credit Facility Trustee") and to the Bank, as trustee (the "Trustee") for the
issuance and sale by the Issuer of its (i)Industrial Development Revenue Bonds,
Series 1997 A (Trilectron Industries, Inc. Project), in the original aggregate
principal amount of $3,000,000 (hereinafter, the "Original Tax-exempt Bonds"),
and (ii) Industrial Development Revenue Bonds, Series 1997 B (Taxable)
(Trilectron Industries, Inc. Project), in the original aggregate principal
amount of $1,000,000 (the "Taxable Bonds" and together with the Original
Tax-exempt Bonds, the "Bonds"); and
WHEREAS, the Borrower contemplates that the Taxable Bonds will be
redeemed at some point by the issuance of the Issuer's Industrial Development
Revenue Refunding Bonds, Series 199[7] C (Trilectron Industries, Inc. Project)
(the "New Tax-Exempt Bonds");
WHEREAS, upon issuance of the New Tax-exempt Bonds, the term "Bonds"
will mean the Initial Tax-exempt Bonds and the Subsequent Tax-exempt Bonds, but
shall no longer include any Original Taxable Bonds, provided, further, however,
that the term "Bonds" shall mean any Series B Bonds issued as a result of an
Event of Taxability pursuant to the terms and conditions of the Indenture, and
in that case, would no longer include either the Initial Tax-exempt Bonds or the
Subsequent Tax-exempt Bonds;
WHEREAS, pursuant to a Loan Agreement of even date herewith between the
Issuer and the Borrower (the "Loan Agreement"), the proceeds from the sale of
the Bonds will be used to (i) repay an outstanding loan TO the Borrower the
proceeds of which were used to acquire the Property (as defined herein); (ii)
pay for the costs of
constructing a facility on the Property to be used for the manufacture of
AVIATION GROUND SUPPORT EQUIPMENT AND ELECTRONIC COMPONENTS (the "Improved
Land"); (iii) to pay certain costs of issuance in connection with the issuance
of the Bonds; and (iv) to pay for the acquisition of certain machinery to be
located and maintained on the Property; and
WHEREAS, in order to enhance the marketability of the Bonds, the
Borrower has requested that the Bank issue an irrevocable direct pay letter of
credit in the form attached hereto as EXHIBIT A (such letter of credit or any
successor or substitute letter of credit issued by the Bank herein individually
and collectively called the "Letter of Credit") in an aggregate amount of
$4,200,000 of which (a) $4,000,000 shall support the payment of principal or
portion of the purchase price corresponding to principal of the Bonds, and (b)
$200,000 shall support the payment of up to 120 days interest or portion of the
purchase price corresponding to interest on the Bonds at an assumed interest
rate of 15% per annum;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, including the covenants, terms and conditions
hereinafter appearing, and to induce the Bank to issue the Letter of Credit, the
Borrower does hereby covenant and agree with the Bank as follows:
ARTICLE I
DEFINITIONS
All words and terms defined in Article I of the Loan Agreement shall
have the same meanings in this Agreement, unless otherwise specifically defined
herein. The terms defined in this Article I have, for all purposes of this
Agreement, the meanings specified hereinabove or in this Article, unless defined
elsewhere herein or the context clearly requires otherwise.
"Affiliate" means any other Person directly or indirectly, controlling,
controlled by, or under common control with, the first Person; or any other
Person which directly or indirectly owns or controls at least five percent (5%)
of the Voting Stock, partnership or other equity interests of, or at least five
percent (5%) of its Voting Stock, partnership or other equity interests are
owned or controlled by, directly or indirectly, the first Person.
"Agreement" means this Letter of Credit and Reimbursement Agreement, as
the same may from time to time be amended, modified or supplemented in
accordance with the terms hereof.
"Alternate Credit Facility" means any irrevocable direct pay letter of
credit, insurance policy or similar credit enhancement or support facility for
the benefit of the Trustee, the terms of which
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Alternate Credit Facility shall in all respects material to the registered
owners of the Bonds be the same (except for the term set forth in such Alternate
Credit Facility) as those of the Letter of Credit.
"Assignment" means the first Absolute Assignment of Leases, Rents and
Profits dated as of March 1, 1997, from the Borrower to the Bank, as amended
from time to time.
"Assignment of Mortgage" means that Assignment of Mortgage dated as of
even date herewith from the Issuer to the Trustee.
"Bank" means First Union National Bank of Florida, a national banking
association.
"Bankruptcy Code" means 11 U.S.C. ss. 101 ET SEQ., as amended.
"Bondholder" or "Bondholders" means the initial and any future
registered owners of the Bond or Bonds as registered on the books and records of
the Bond Registrar pursuant to the Indenture.
"Bond Documents" means, collectively, the Loan Agreement, the Security
Instruments, the Indenture, the Bonds, the Remarketing Agreement, the Tender
Agency Agreement, the Private Placement Memorandum and the Placement Letter, as
the same may be amended, modified or supplemented from time to time in
accordance with their respective terms.
"Borrower" means Trilectron Industries, Inc., a New York corporation,
and its successors and assigns.
"Capital Lease" means any lease of any property which would, in
accordance with GAAP, be required to be classified and accounted for as a
capital lease on a balance sheet of the lessee.
"Closing Date" means the date of issuance of the Bonds.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means all real and personal property with respect to which
the Bank has been or will be granted a lien, mortgage or security interest in
pursuant to the Security Instruments.
"Collateral Assignment of Construction Contracts" means that certain
collateral assignment of construction contracts, architects' contracts,
permits,licenses, warranties, plans and drawings, etc. from the Borrower to the
Lender dated of even date herewith.
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"Consistent Basis" means, in reference to the application of GAAP, 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 Bank.
"Consolidated Current Ratio" means the ratio of the consolidated
current assets of the Borrower and its Subsidiaries to the consolidated current
liabilities of the Borrower and its Subsidiaries.
"Consolidated Leverage Ratio" means the ratio computed by dividing the
Consolidated Total Liabilities by the Consolidated Tangible Net Worth.
"Consolidated Tangible Net Worth" means the subordinated debt owed by
the Borrower that has been approved by the Lender plus the consolidated total
assets of the Borrower and its Subsidiaries, after subtracting therefrom the
aggregate amount of any intangible assets of the Borrower and its Subsidiaries,
including, without limitation, goodwill, franchises, licenses, patents,
trademarks, trade names, copyrights, service marks and brand names, minus the
Consolidated Total Liabilities.
"Consolidated Total Liabilities" means all items which would be
classified in accordance with GAAP as liabilities of the Borrower and its
Subsidiaries, if any, including customer deposits, Capital Leases and all
reserves for deferred taxes and other deferred sums appearing on the liabilities
side of a balance sheet of the Borrower and its Subsidiaries, if any.
"Construction Disbursing Agreement" means that certain construction
disbursing agreement dated of even date herewith between the Trustee, the Bank
and the Borrower pursuant to which the proceeds of the Bonds will be disbursed.
"Consultant" means any third party architect or engineer satisfactory
to the Bank.
"Controlled" or "controlling" or "under common control with" means,
with respect to any Person, the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of Voting
Stock, by agreement or otherwise.
"Controlled Group" means (i) the controlled group of corporations as
defined in Section 1563 of the Code or (ii) the group of trades or businesses
under common control as defined in Section 414(c) of the Code, of which the
Borrower or any Corporate Guarantor is a part or may become a part.
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"Corporate Guarantor" or "Corporate Guarantors" means each or all, as
the case may be, of any corporation or entity controlled by the Borrower,
whether now or at any time hereafter.
"Credit Facility Trustee" means Branch Banking and Trust Company, a
North Carolina banking institution, and its successors
and assigns.
"Debtor Laws" means all applicable liquidation, bankruptcy,
conservatorship, moratorium, arrangement, receivership, insolvency,
reorganization or similar laws from time to time in effect affecting the rights
of creditors generally and general principles of equity.
"Debt Service Coverage Ratio" means the ratio of consolidated net
earnings before depreciation and amortization of the Borrower and its
Subsidiaries divided by the total annual debt service (which is the total annual
principal amounts due on current long term debts and Capital Leases).
"Default" means an event or condition the occurrence of which would,
with the lapse of time or the giving of notice, or both become an Event of
Default.
"Dividends" means (i) cash dividends or distributions or any other
distributions with respect to any class of capital stock of a corporation or any
interest in a partnership or other entity, except for distributions made solely
in shares of stock of the same class or an additional percentage of partner or
other equity interest in the same partnership or entity, and (ii) any and all
funds, cash or other payments made for the redemption, repurchase or acquisition
of capital stock, partnership or other equity interest, unless, in the case of
capital stock of a corporation, such stock is redeemed or acquired through the
exchange of such stock with stock of the same class.
"Environmental Agreement" means that certain Environmental Compliance
and Indemnity Agreement dated of even date herewith from the Borrower in favor
of the Bank.
"Environmental Claim" means any accusation, allegation, notice of
violation, claim, demand, abatement order, or other order or direction
(conditional or otherwise) by any governmental authority or any Person for any
damage, including, without limitation, personal injury (including sickness,
disease, or death), tangible or intangible property damage, contribution,
indemnity, direct or consequential damages, damage to the environment, nuisance,
pollution, contamination, or other adverse effects on the environment, or for
fines, penalties, or restrictions, in each case relating to, resulting from, or
in connection with Hazardous
5
Materials and relating to the Borrower, or any Corporate Guarantor, or any
property leased, owned, operated, or used by the Borrower or any Corporate
Guarantor.
"Environmental Laws" means any and all federal, state, local, or
municipal laws, rules, orders, regulations, statutes, ordinances, codes,
decrees, or requirements of any governmental authority regulating, relating to
or imposing liability or standards of conduct concerning, any Hazardous
Materials or environmental protection or health and safety, as now or may at any
time hereafter be in effect, including without limitation: the Clean Water Act
also known as the Federal Water Pollution Control Act ("FWPCA"), 33 U.S.C.
Section 1251 ET SEQ.; the Clean Air Act ("CAA"), 42 U.S.C. Section 7401 ET SEQ.;
the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C.
Section 136 ET SEQ.; the Surface Mining Control and Reclamation Act ("SMCRA"),
30 U.S.C. Section 1201 ET SEQ.; the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 ET SEQ.; the
Superfund Amendment and Reauthorization Act of 1986 ("▇▇▇▇"), Public Law 99-499,
100 Stat. 1613; the Emergency Planning and Community Right to Know Act
("EPCRKA"), 42 U.S.C. Section 11001 ET SEQ.; the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Section 6901 ET SEQ.; and the Occupational
Safety and Health Act as amended ("OSHA"), 29 U.S.C. Section 655 and Section
657; together, in each case, with any amendment thereto, and the regulations
adopted and publications promulgated thereunder and all substitutions thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
it may be amended from time to time, and all regulations promulgated under that
Act.
"Event of Default" has the meaning specified in Section 8.1 hereof.
"Financials" means the information required to be delivered pursuant to
Section 5.1 hereof.
"First Mortgage" means the First Mortgage and Security Agreement, dated
as of March 1, 1997, from the Borrower to the Issuer and the Bank, constituting
a valid first lien (subject only to the Permitted Encumbrances) on the Property,
together with all improvements and appurtenances presently or hereafter located
thereon.
"Fiscal Year" means the twelve-month period of the Borrower and the
Corporate Guarantors ending on October 31 of each calendar year.
"Generally Accepted Accounting Principles" or "GAAP" means those
generally accepted accounting principles and practices which are recognized as
such by the American Institute of Certified
6
Public Accountants acting through its Accounting Principles Board or the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof. After any change in GAAP that affects any covenants of this
Agreement, the Bank, the Borrower and the Corporate Guarantors will negotiate in
good faith to revise those covenants in order to make them consistent with GAAP
then in effect.
"Governmental Authority" means any government (or any political
subdivision or jurisdiction thereof), court, bureau, agency, department or other
governmental subdivision having jurisdiction over the Borrower, any Corporate
Guarantor or any Affiliate of either of them or any of their respective
businesses, operations or properties.
"Guarantor" means jointly, severally and collectively each Corporate
Guarantor, if any.
"Guaranty Agreement" means collectively the Unconditional and
Continuing Guaranty of each Corporate Guarantor, if any, required to be
delivered to the Bank hereunder, together with any renewals, extensions,
amendments or modifications.
"Guaranty" of any Person means any contract, agreement or understanding
of the Person pursuant to which the Person guarantees, or in effect guarantees,
any Indebtedness of any other Person (the "Primary Obligor") in any manner,
whether directly or indirectly, including without limitation agreements: (i) to
purchase the Indebtedness or the collateral for the Indebtedness, (ii) to
provide funds (a) for the purchase or payment of the Indebtedness, or (b) to
maintain net worth or working capital or other balance sheet conditions, (iii)
to purchase property, securities or services primarily for the purpose of
assuring the holder of the Indebtedness of the ability of the Primary Obligor to
make payment of the Indebtedness, and (iv) otherwise to assure the holder of the
Indebtedness against loss; EXCEPT THAT "Guaranty" does not include endorsement
by the Borrower in the ordinary course of business of negotiable instruments or
documents for deposit or collection.
"Hazardous Materials" means any flammable materials, explosives,
radioactive materials, hazardous materials, hazardous wastes, hazardous or toxic
substances, or similar materials.
"Improvements" means that certain manufacturing facility contemplated
to be constructed on the Property with the proceeds from the issuance of the
Bonds, as described in more detail in the Private Placement Memorandum.
7
"Indebtedness" of any Person means all indebtedness, obligations and
liabilities of the Person, including without limitation: (i) all "liabilities"
which would be reflected on a balance sheet of the Person prepared in accordance
with GAAP, (ii) all obligations of the Person under any Guaranty, (iii) all
obligations of the Person under any Capital Lease, (iv) all obligations,
indebtedness and liabilities secured by any lien or any security interest on any
property or assets of the Person, and (v) all redeemable preferred stock of the
Person valued at the greater of its voluntary or involuntary liquidation
preference plus accrued and unpaid dividends.
"Indemnities" has the meaning assigned in Section 9.1 hereof.
"Indemnified Matters" has the meaning assigned in Section 9.1 hereof.
"Indenture" means the Trust Indenture, dated as of March 1, 1997,
between the Issuer, the Credit Facility Trustee and the Trustee, as from time to
time supplemented and amended.
"Investment" means any stock, securities or evidence of indebtedness of
any Person or entity except investments in direct obligations of the United
States Government and certificates of deposit of United States commercial banks
having a tier 1 capital ratio of not less than 6% and then in an amount not
exceeding 10% of the issuing bank's unimpaired capital and surplus.
"Letter of Credit" means the irrevocable direct-pay letter of credit,
dated March 27, 1997 issued by the Bank in favor of the Credit Facility Trustee
for the account of the Borrower pursuant hereto and the Bond Documents.
"Lien" means any lien, mortgage, security interest, tax lien, pledge,
encumbrance, conditional sale or title retention arrangement, or any other
interest in property designed to secure the repayment of Indebtedness, whether
arising by agreement or under any statute or law or otherwise.
"Loan Agreement" means that Loan Agreement, dated as of March 1, 1997,
between the Issuer and the Company, as supplemented and amended from time to
time.
"Material Adverse Effect" means any (i) material adverse effect upon
the validity, performance or enforceability of this Agreement or any of the
Security Instruments or any of the transactions contemplated hereby or thereby,
(ii) material adverse effect upon the properties, business, prospects or
condition financial or otherwise of the Borrower, or the Borrower and the
Corporate Guarantors, taken as a whole. or (iii) material adverse effect upon
the ability of the Borrowers to fulfill any obligation under this Agreement or
any of the Security Instruments.
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"Maximum Rate" means, on any day, the highest non-usurious rate of
interest that may be contracted for, charged or received on the Indebtedness
under the now effective laws of the United States of America and the State of
Florida applicable to the holders of such Indebtedness, or, to the extent
permitted by law, under such applicable laws of the United States of America and
the State of Florida which may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than applicable laws now allow.
"Mortgages" means collectively the First Mortgage and the Second
Mortgage.
"Note" means the Promissory Note, dated as of March 1, 1997, from the
Company to the Bank in the stated principal amount of $4,200,000.
"Obligations" means all loans and all other advances, debts,
liabilities, obligations, covenants and duties owing, arising, due or payable
from the Borrower or any Guarantor to the Bank of any kind or nature, present or
future, whether or not evidenced by any note, guaranty or other instrument,
whether arising under this Agreement or the Note or any of the other Bond
Documents or Security Instruments or otherwise, whether direct or indirect
(including those acquired by assignment), absolute or contingent, primary or
secondary, due or to become due, now existing or hereafter arising and however
acquired. The term includes, without limitation, all interest, charges,
expenses, fees, attorney's fees and any other sums chargeable to the Borrower or
any Guarantor under any of the Bond Documents or Security Instruments.
"Officer's Certificate" means the Certificate of the Accountant, the
Chief Financial Officer or the Controller of the Borrower or any Corporate
Guarantor as approved by the Bank.
"Other Agreements" means any and all agreements, instruments and
documents (other than this Agreement, the Note and the Security Instruments),
heretofore, now or hereafter executed by the Borrower or any Guarantor and
delivered to the Bank in respect of the transactions contemplated by this
Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of the Pension Benefit Guaranty Corporation's functions
under ERISA.
"Permitted Encumbrances" means (i) Liens granted to the Bank to secure
the Obligations, (ii) pledges or deposits made to secure payment of worker's
compensation insurance (or to participate in any fund in connection with
worker's compensation insurance), unemployment insurance, pensions or social
security programs, (iii) Liens imposed by mandatory provisions of law such as
for
9
materialmen's, mechanics', warehousemen's and other like Liens arising in the
ordinary course of business, securing Indebtedness whose payment is not yet due
or is due but is being contested in good faith and as to which adequate reserves
have been provided, (iv) Liens for taxes, assessments and governmental charges
or levies imposed upon a Person or upon such Person's income or profits or
property, if the same are not yet due and payable or if the same are being
contested in good faith and as to which adequate cash reserves have been
provided, (v) the Liens in favor of the Bank or the Issuer under the Security
Instruments, and (vi) Liens granted on assets of the Borrower other than the
Collateral.
"Person" means an individual, partnership, corporation, trust,
unincorporated organization, association, joint venture or a government or
agency or political subdivision or instrumentality thereof.
"Placement Letter" means the Placement Agent Agreement, dated March 27,
1997 by and among the Company, the Issuer and the Bank, as Placement Agent for
the Bonds.
"Plan" means an employee benefit plan or other plan maintained for
employees of the Borrower and covered by Title IV of ERISA, or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code of
1986, as amended.
"Plans and Specifications" means the plans and specifications for the
Project.
"Pledge Agreement" means the Pledge Agreement dated as of even date
herewith from the Borrower to the Bank, and First Union National Bank of
Florida, in its capacity as trustee and tender agent.
"Prime Rate" means the interest rate publicly announced from time to
time by the Bank to be its prime rate, which may not necessarily be its best
lending rate. In the event the Bank shall abolish or abandon the practice of
announcing its Prime Rate or should the same be unascertainable, the Bank shall
designate a comparable reference rate which shall be deemed to be the Prime Rate
under this Agreement.
"Private Placement Memorandum" means the Private Placement Memorandum
dated March 27, 1997 relating to the Bonds.
"Project" means the Improvements and the Property.
"Project Fund" means the trust fund so designated and established under
the Indenture.
"Property" means the real property described in the Mortgages, on which
the Improvements will be constructed.
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"Regulatory Change" means any change in federal, state or local laws or
regulations or the adoption or making of any interpretations, directives or
requests of or under any federal, state or local laws or regulations (whether or
not having the force of law) by any court or Governmental Authority charged with
the interpretation or administration thereof.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching, or migration of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, the abandonment or disposal of any
barrels, containers, or other closed receptacles containing any Hazardous
Materials), or into or out of any property owned, leased, operated, or used by
the Borrower or any subsidiaries (if any), including the movement of any
Hazardous Material through the air, soil, surface water, groundwater, or
property.
"Remarketing Agreement" means the Remarketing Agreement, dated as of
March 1, 1997, by and between the Company and the Bank, as Remarketing Agent, as
supplemented and amended from time to time.
"Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA.
"Second Mortgage" means the Second Mortgage and Security Agreement,
dated as of March 1, 1997, from the Company to the Bank, constituting a valid
second lien (subject only to the First Mortgage and the Permitted Encumbrances)
on the Project, together with all improvements and appurtenances presently
located as hereafter to be construed thereof.
"Security Instruments" means, collectively, this Agreement, the Note,
the Mortgages, the Assignment, the Construction Disbursing Agreement, the
Assignment of Mortgage, the Corporate Guaranty, the Guaranty Agreement, the
Pledge Agreement, the Environmental Agreement, the Collateral Assignment of
Construction Contracts, any Swap Agreements, and any and all other agreements or
instruments now or hereafter executed and delivered by the Borrower, any
Guarantor or any other Person in connection with, or as security for the payment
or performance of, the Letter of Credit or this Agreement or the Note or any
other obligations of the Borrower to the Bank as described herein or therein, as
such agreements may be amended, modified or supplemented from time to time in
accordance with their respective terms.
"Solvent" means, as to any Person, that such Person has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage and is
11
able to pay its debts as they mature and owns property having a value, both at
fair valuation and at present fair saleable value, greater than the amount
required to pay its debts.
"State" means the State of Florida.
"Stated Termination Date" means March 27, 2004, the stated expiration
date of the Letter of Credit, or any extension thereof as reflected in an
amendment or replacement of the Letter of Credit issued by the Bank.
"Subsidiary" means any corporation, more than fifty percent (50%) of
the outstanding Voting Stock of which is at the time, directly or indirectly,
owned by the Borrower or any Corporate Guarantor and/or one or more Subsidiaries
(irrespective of whether, at the time, capital stock of any other class or
classes of such corporation shall have or might have voting power by reason of
the happening of any contingency).
"Swap Agreement" means (a) an agreement (including terms and conditions
incorporated by reference therein) which is a rate swap agreement, basis swap,
forward rate agreement, commodity swap, interest rate option, forward foreign
exchange agreement, spot foreign exchange agreement, rate cap agreement, rate
floor agreement, rate collar agreement, currency swap agreement, cross-currency
rate swap agreement, currency option, any other similar agreement (including any
option to enter into any of the foregoing); (b) any combination of the
foregoing; or (c) a master agreement for any of the forgoing together with all
supplements.
"Tender Agency Agreement" means the Tender Agency Agreement dated as of
March 1, 1997 by and between the Company, the Trustee and the Tender Agent, as
amended, from time to time thereunder.
"Tender Agent" means the Bank acting as tender agent under the
Indenture, and its successors and assigns.
"Tender Draft" has the meaning assigned to that term in the Letter of
Credit.
"Termination Date" means the last day a drawing is available under the
Letter of Credit.
"Trustee" means any Person or group of Persons at the time serving as
trustee under the Indenture.
"UCC" means the Uniform commercial Code in effect in jurisdictions
where assets of the Borrower are located at anytime during the term hereof, as
the same may be amended from time to time.
12
"Voting Stock" of any corporation means shares of any class or classes
(however designated) of capital stock of such corporation having ordinary voting
power for the election of at least a majority of the members of the Board of
Directors (or other governing bodies) of such corporation, other than shares
having such power only by reason of the happening of a contingency.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower represents and warrants to the Bank (which representations
and warranties shall survive the delivery of the documents mentioned herein and
the issuance of the Letter of Credit) that:
Section 2.1. ORGANIZATION AND GOOD STANDING. The Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of its state of organization, is duly qualified as a foreign entity and in good
standing in those jurisdictions set forth on Schedule 2.1 hereof in which it
is necessary to be so qualified in order to carry on its business as presently
conducted and where the failure to obtain such qualification could result in a
Material Adverse Effect, and has the corporate power and authority to own its
properties and assets and to transact the business in which it is presently
engaged.
Section 2.2. AUTHORIZATION AND POWER. The Borrower has the corporate
power and authority and approvals to execute, deliver and perform this
Agreement, the Note, the Security Instruments and the Bond Documents to which it
is a party and to perform the obligations contemplated thereby.
Section 2.3. NO CONFLICTS; NO CONSENTS. To the best of Borrower's
knowledge, neither the execution and delivery of this Agreement, the Note, the
Security Instruments and Bond Documents to which the Borrower is a party, nor
the consummation of the transactions contemplated in this Agreement, the Note,
the Security Instruments and Bond Documents, nor the compliance by the Borrower
with the terms of this Agreement, the Note, the Security Instruments and Bond
Documents to which the Borrower is a party, will materially violate or conflict
with any law or regulation, or any judgment, license, order or permit, or any
indenture, loan agreement, mortgage, deed of trust, or other agreement or
instrument to which the Borrower is a party or by which the Borrower or any of
its assets may be bound or to which the Borrower may be subject, or violate any
provision of the Borrower's articles of incorporation or bylaws, or create any
Lien upon any of the property of the Borrower except as contemplated in the
Security
13
Instruments and Bond Documents. To the best of Borrower's knowledge, no consent,
approval, authorization, license or order of Governmental Authority or third
party is required in connection with the execution and delivery by the Borrower,
with respect to those documents to which it is a party, of this Agreement, the
Note, the Security Instruments and Bond Documents, or for the consummation of
the contemplated transactions.
Section 2.4. ENFORCEABLE OBLIGATIONS. This Agreement, the Note, the
Bond Documents and Security Instruments to which the Borrower is a party have
been duly executed and delivered by the Borrower and are the legal, valid and
binding obligations of the Borrower, enforceable in accordance with their
respective terms, except as limited by Debtor Laws.
Section 2.5. LIENS. Except for items (i) through (v) of the definitions
of Permitted Liens, all of the Collateral is free and clear of all material
Liens and other material adverse claims of any nature, and the Borrower has good
and marketable title to the Collateral. Upon the execution and delivery of the
Bond Documents and Security Instruments to which the Borrower is a party and the
filing of properly completed UCC financing statements and other documents or
instruments in the jurisdictions set forth in Schedule 2.5 hereof, except for
Permitted Encumbrances, the Bank will have a first priority perfected security
interest in all of the Collateral.
Section 2.6. FINANCIAL CONDITION. The Borrower has delivered to the
Bank (i) audited financial statements of the Borrower for the fiscal years
ending December 31, 1994 and December 31, 1995, and (ii) unaudited interim
financial statements for the period ending November 30, 1996 prepared and
reviewed by the chief financial officer of the Borrower. The Financials so
delivered are true and correct, fairly represent the consolidated financial
condition of the Borrower as of its date. As of the Closing Date, there are no
obligations, liabilities or Indebtedness (including contingent and indirect
liabilities and obligations) of the Borrower which are material and are not
reflected in the Financials delivered as to that person, except those arising in
the ordinary course of business. No changes having a Material Adverse Effect
have occurred since the dates of the Financials.
Section 2.7. FULL DISCLOSURE. There is no material fact which is known
by the Borrower that has not been disclosed in writing to the Bank which is
likely to have a Material Adverse Effect. Neither this Agreement nor any
agreement, document, certificate or statement delivered by the Borrower or any
Affiliate contains any untrue statement of a material fact or omits to state any
material fact which is known by the Borrower necessary to keep the other
statements from being misleading.
14
Section 2.8. NO DEFAULT. No Default or Event of Default has occurred,
and the execution, delivery and performance of this Agreement will not cause a
Default or Event of Default.
Section 2.9. MATERIAL AGREEMENTS. To the best of the Borrower's
knowledge, it is not in default in any material respect under any contract,
lease, loan agreement, indenture, mortgage, security agreement or other
agreement or obligation to which it is a party or by which any of its properties
is bound.
Section 2.10. NO LITIGATION. There are no actions, suits or legal,
equitable, arbitration or administrative proceedings pending,or, to the
knowledge of the Borrower threatened or expected, against the Borrower or any
Subsidiary thereof, or any of their officers or directors in the case of the
Borrower or any Subsidiary which would, if adversely determined, have a Material
Adverse Effect.
Section 2.11. BURDENSOME CONTRACTS. The Borrower is not a party to any
agreement the effect of which is to have a material adverse effect.
Section 2.12. TITLE TO ASSETS. The Borrower has good and marketable
title to all of its material assets, subject to no Liens or adverse claims
except Permitted Encumbrances. The Borrower owns or leases all property which is
necessary to the conduct of their respective businesses as presently conducted.
Section 2.13. TRADE RELATIONS. There exists no actual or threatened
termination or limitation of, or any change in, the business relationship of the
Borrower with any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of the Borrower,
or with any material supplier, and there exists no present state of
circumstances which would materially adversely affect the Borrower or prevent
the Borrower from continuing to conduct its business as it has been conducted.
Section 2.14. LABOR DISPUTES. There is not now threatened by or against
the Borrower, any strike, picket, lockout, work stoppage, work slowdown or other
labor dispute. The Borrower has never consented to any final decree involving
any claim of unfair labor practice or been held in any judicial or
administrative proceeding to have committed any unfair labor practice. The
Borrower is not aware of any unfair labor practice which could have a Material
Adverse Effect.
Section 2.15. REPRESENTATIONS UPON REQUESTS FOR ADVANCES. Every draw
under the Letter of Credit shall constitute, without the necessity of
specifically containing a written statement, a
15
representation and warranty by the Borrower that no Default or Event of Default
exists and that all representations and warranties by the Borrower contained in
this Agreement, the Note, the Bond Documents and Security Instruments are true
and correct as of the date the advance is to be made.
Section 2.16. USE OF PROCEEDS; MARGIN STOCK. The proceeds of the Bonds
will be used by the Borrower only for the purposes set forth herein and in the
Bond Documents. The Borrower's uses of the proceeds are, and continue to be,
legal and proper corporate uses, and the uses are and will be consistent with
all applicable laws and regulations, as in effect from time to time. None of the
Loan proceeds will be used for the purpose of purchasing or carrying any "margin
stock" as defined in Regulation U, Regulation X, or Regulation G of the Code of
Federal Regulations, Parts 221, 224 and 207, respectively, or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry "margin stock," or for any other purpose which might cause this
transaction to be deemed a "purpose credit" within the meaning of Regulation U,
Regulation X or Regulation G. The Borrower is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stocks. The
Borrower, or any Person acting on behalf of the Borrower, has not taken or will
take any action which might cause any violation of Regulation U, Regulation X,
or Regulation G or any other regulations of the Board of Governors of the
Federal Reserve System or any violation of Section 8 of the Securities Exchange
Act of 1934 or any rule or regulation thereunder as now or hereafter in effect.
Section 2.17. TAXES. All tax returns required to be filed by the
Borrower in any jurisdiction have been filed and all taxes, assessments and
other governmental charges on the Borrower or on any of its respective
properties, income or franchises were paid timely, except for taxes contested in
good faith by appropriate legal proceedings for which reserves have been
established in an amount determined in accordance with GAAP. There is no
proposed tax assessment against the Borrower, and there is no basis for any such
assessment. No extension of time for assessment or payment of any tax by the
Borrower is in effect.
Section 2.18. ERISA. The Borrower has not incurred any material
accumulated unfunded deficiency within the meaning of ERISA, or incurred any
material liability to the PBGC (or any successor thereto) established under
ERISA in connection with any Plan established or maintained by the Borrower.
Section 2.19. COMPLIANCE WITH LAW; ALL LICENSES, APPROVALS. The
Borrower is in compliance in all material respects with regard to all laws,
rules, regulations, orders and decrees which are applicable to such Person or
its properties. The Borrower has, and is in good standing with respect to, all
material governmental approvals, licenses, inspections, and franchises necessary
to
16
conduct its business in the ordinary course and to own or lease and operate its
properties. None of such approvals, licenses, or franchises contains any
provision more burdensome than those generally applicable to businesses similar
to the Borrower.
Section 2.20. INSIDER. Neither the Borrower nor any Person having
"control" (as that term is defined in 12 U.S.C. ss. 375(b)(5) or in regulations
promulgated pursuant thereto) of Borrower is, an "executive officer",
"director", or "principal shareholder" (as those terms are defined in 12 U.S.C.
ss. 375(b) or in regulations promulgated pursuant thereto) of the Bank, of a
bank holding company of which the Bank is a subsidiary, or of any subsidiary of
a bank holding company of which the Bank is a subsidiary, or of any bank at
which the Bank maintains a "correspondent account" (as such term is defined in
such statute or regulations), or of any bank which maintains a correspondent
account with the Bank.
Section 2.21. FAIR LABOR STANDARDS ACT. The Borrower ,in all material
respects, has complied with, and will continue to comply with, the provisions of
the Fair Labor Standards Act of 1938, 29 U.S.C. ss. 200, ET SEQ., as amended
from time to time (the "FLSA"), including specifically, but without limitation,
29 U.S.C. ss. 215(a). This representation and warranty, and each reconfirmation
hereof, shall constitute written assurance from the Borrower, given as of the
date hereof and as of the date of each reconfirmation, that the Borrower has
complied with the requirements of the FLSA, in general, and Section 15(a)(1), 29
U.S.C. ss. 15(a)(1), thereof, in particular.
Section 2.22. ENVIRONMENTAL. Hazardous Materials are not currently
generated, used, treated or stored on, or transported to or from, released or
disposed of on, any real property owned or leased by the Borrower, unless
handled safely and in accordance with Environmental Law. The Borrower is in
compliance with all applicable Environmental Laws with respect to any such real
property and the requirements of any permits issued under such laws with respect
to any such property. There are no past, pending or threatened Environmental
Claims against the Borrower or any Affiliate thereof, which could have a
Material Adverse Effect.
Section 2.23. INVESTMENT COMPANY ACT. The Borrower is not an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended, and is not controlled by such a
company.
Section 2.24. SOLVENCY. The Borrower is Solvent, and, after
consummation of this Agreement, the Note, the Bond Documents and Security
Instruments and the contemplated transactions, the Borrower will be Solvent.
17
Section 2.25. INSURANCE. The Borrower maintains insurance coverage of
the types and in the amounts required under Section 1.4 of the Mortgages naming
the Trustee and the Bank as loss payee and additional insured as its interests
may appear.
Section 2.26. ASSETS FOR CONDUCT OF BUSINESS. The Borrower possesses
adequate assets, licenses, patents, patent applications, copyrights, trademarks
and tradenames to conduct its business as presently conducted.
Section 2.27 NO SUBSIDIARIES. The Borrower has no Subsidiaries, nor any
agreements to acquire or form a Subsidiary.
Section 2.28. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All of the
representations and warranties by the Borrower shall survive delivery of this
Agreement, the Note, the Bond Documents and the Security Instruments. Any
investigation at any time made by or on behalf of the Bank will not diminish the
Bank's right to rely on the representations and warranties.
ARTICLE III
REIMBURSEMENT AND OTHER PAYMENTS
Section 3.1. LETTER OF CREDIT. The Bank agrees, on the terms and
conditions hereinafter set forth, to issue and deliver the Letter of Credit in
favor of the Credit Facility Trustee in substantially the form of EXHIBIT A
attached hereto upon fulfillment of the applicable conditions set forth in
Article VII hereof. The Bank agrees that any and all payments under the Letter
of Credit will be made with the Bank's own funds. All Borrower reimbursement
obligations arising because of each and every draw under the Letter of Credit
shall be evidenced by the Note.
Section 3.2. REIMBURSEMENT AND OTHER PAYMENTS. Except as provided in
Section 3.11 hereof, the Borrower shall pay to the Bank:
(a) after the honoring of a draw by the Bank, but on or
before 2:00 p.m (Miami, Florida time) on the date that any amount is
drawn under the Letter of Credit, a sum together with interest on such
sum equal to such amount so drawn under the Letter of Credit plus to
the extent permitted by applicable law, any and all reasonable charges
and expenses that the Bank may pay or incur relative to the Letter of
Credit which have not been previously paid by or on behalf of the
Borrower;
(b) on demand, interest on any and all amounts remaining
unpaid by the Borrower when due hereunder from the date such amounts
become due until payment thereof in full, at a fluctuating interest
rate per annum equal at all times to the
18
Prime Rate plus three percent (3%), (unless such rate exceeds the
highest lawful rate permitted by applicable law, in which case the
applicable interest rate shall be the highest lawful rate);
(c) on demand, any and all reasonable expenses incurred by
the Bank in enforcing any rights under this Agreement and the other
Security Instruments which have not been previously paid by or on
behalf of the Borrower; and
(d) on demand all charges, commissions, costs and expenses
set forth in Sections 3.3, 3.4 and 3.8 hereof which have not been
previously paid by or on behalf of the Borrower.
Section 3.3. COMMISSION AND FEES.
(a) The Borrower shall pay to the Bank annually a commission
at the rate of (i) one percent (1.00%) per annum on the Non-funded Portion of
the stated amount of the Letter of Credit, and (ii) zero percent (0%) on the
Funded Portion of the Letter of Credit (computed on the date that such
commission is payable) from and including the date of issuance of the Letter of
Credit until the Stated Termination Date. The term Non-funded Portion shall
equal the amount determined by subtracting from the stated amount of the Letter
of Credit an amount equal to the then market value of the security and/or cash
then held by the Bank in the Designated Account described in Section 7A hereof
and the term Funded Portion of the Letter of Credit shall equal the total of the
then stated amount of the Letter of Credit minus the then Non-funded Portion.
The fee is payable in advance on the date of issuance of the Letter of Credit
and annually thereafter on each anniversary of the issuance of the Letter of
Credit, subject to adjustment upon demand by the Bank due to any event that may
increase the cost to the Bank of issuing or maintaining the Letter of Credit.
The Fair Market Value shall be determined by the Bank, and shall be deemed
correct absent manifest error.
(b) The Borrower shall pay to the Bank, upon transfer of the
Letter of Credit in accordance with its terms, a transfer fee of $1,000.
(c) The Borrower shall pay to the Bank, within two (2)
business days after each and every draw under the Letter of Credit in accordance
with its terms, a drawing fee of $100.
Section 3.4. INCREASED COSTS DUE TO CHANGE IN LAW. In the event of any
change in any existing or future law, regulation, ruling or other interpretation
having influence over the Bank which shall either (a) impose, modify or make
applicable any reserve, special deposit, capital requirement, assessment or
similar
19
requirement against the Letter of Credit or (b) impose on the Bank any other
condition regarding the Letter of Credit, and the result of any event referred
to in clause (a) or (b) above shall be to increase the cost (including a
reasonable allocation of resources) or decrease the yield to the Bank of issuing
or maintaining the Letter of Credit (which increase in cost shall be the result
of the Bank's reasonable allocation of the aggregate of such cost increases or
yield decreases resulting from such events), then, Bank shall promptly notify
Borrower of such change, and, upon demand by the Bank, the Borrower shall
immediately pay to the Bank, from time to time as specified by the Bank,
additional amounts which shall be sufficient to compensate the Bank for such
increased cost or decreased yield. A statement of charges submitted by the Bank,
shall be conclusive, absent manifest error, as to the amount owed.
Section 3.5. COMPUTATION. All payments of interest, commission and
other charges under this Agreement shall be computed on the per annum basis,
based on a 360 day year calculated for the actual number of days elapsed.
Section 3.6. PAYMENT PROCEDURE. All payments made by the Borrower under
this Agreement shall be made to the Bank in lawful currency of the United States
of America and in immediately available funds at the Bank's office in Miami,
Florida before 12:00 Noon (Miami, Florida time) on the date when due, except for
payments made pursuant to Section 3.2(a).
Section 3.7. BUSINESS DAYS. If the date for any payment hereunder falls
on a day which is not a business day, then for all purposes of this Agreement
the same shall be deemed to have fallen on the next succeeding business day, and
such extension of time shall in such case be included in the computation of
payments of interest or commission, as the case may be.
Section 3.8. REIMBURSEMENT OF EXPENSES. The Borrower will pay all
reasonable legal fees (computed without regard to any statutory presumption)
incurred by the Bank in connection with the preparation, execution and delivery
of this Agreement, the Letter of Credit, the Note, the Security Instruments, any
and all other agreements and transactions contemplated hereby and thereby and by
the Bond Documents (including any amendments hereto or thereto or consents or
waivers hereunder or thereunder) and will also pay all fees, charges or taxes
for the recording or filing of Security Instruments. The Borrower will also pay
for all reasonable expenses of the Bank paid or payable to third parties in
connection with the administration of the Letter of Credit, this Agreement, the
Note and the Security Instruments. The Borrower will, upon request, promptly
reimburse the Bank for all amounts expended, advanced or incurred by the Bank to
collect or satisfy any obligation of the Borrower under this Agreement, the Note
or any Security Instrument, or to enforce the rights of the Bank under
20
this Agreement, the Note or any Security Instrument, which amounts will include,
without limitation, all court costs, reasonable attorneys' fees, fees of
auditors and accountants and investigation expenses reasonably incurred by the
Bank in connection with any such matters.
Section 3.9. EXTENSION OF EXPIRATION DATE. Except as hereinafter
provided, the Letter of Credit will expire on the Stated Termination Date. The
Bank shall, in its sole discretion, have the option to extend the Stated
Termination Date for successive periods of one year. Should the Bank elect not
to extend the Stated Termination Date, Bank will, in its sole discretion, either
(i) provide notice of that fact to the Borrower one hundred and twenty days
before the Stated Termination Date, or (ii) extend the Stated Termination Date
to a date selected by the Bank, which date shall be for at least one (1) year,
or the maturity of the Bonds if sooner, and provide notice to the Borrower, the
Trustee and the Credit Facility Trustee that the Stated Termination Date has
been extended pursuant to the terms hereof, but will not be extended further. In
the event the Bank elects not to extend the Stated Termination Date or has not
provided the Borrower with any notice regarding extension of the Stated
Termination Date one hundred twenty days before the Stated Termination Date, the
Borrower will provide the Credit Facility Trustee with an Alternate Credit
Facility in accordance with the requirements of the Indenture and the Loan
Documents, so as to prevent the redemption of the Bonds because of the decision
of the Bank not to extend the Stated Termination Date.
Section 3.10. OBLIGATIONS ABSOLUTE. The obligations of the Borrower
under this Agreement and the obligations of any Guarantor under a Guaranty
Agreement shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement or a Guaranty Agreement,
as the case may be, under all circumstances whatsoever, including, without
limitation, the following circumstances:
(a) any lack of validity or enforceability of the Letter of Credit, the
Bonds, any of the other Bond Documents, the Note, any of the Security
Instruments or any other agreement or instrument related thereto;
(b) any amendment or waiver of or any consent to departure from the
terms of the Letter of Credit, the Bonds, any of the other Bond Documents, any
of the Security Instruments or any other agreement or instrument related
thereto;
(c) the existence of any claim, setoff, defense or other right which
either the Borrower, the Guarantors or the Issuer may have at any time against
the Credit Facility Trustee, the Trustee,
21
any beneficiary or any transferee of the Letter of Credit (or any Person for
whom the Trustee, any such beneficiary or any such transferee may be acting),
the Bank or any other Person, whether in connection with this Agreement, the
Note, the Security Instruments, the Letter of Credit, the Bond Documents, the
Project or any unrelated transaction;
(d) any statement, draft or other document presented under the Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect, or any statement therein being untrue or inaccurate in any respect
whatsoever;
(e) the surrender, exchange or impairment of any security for the
performance or observance of any of the terms of this Agreement or the Note; or
(f) any other circumstance which might otherwise constitute a defense
available to, or a discharge of the Borrower or the Guarantors, except subject
to the qualification that obligations may be reinstated upon bankruptcy,
notwithstanding payment in full of the Borrower's and Guarantors' obligations to
the Bank.
Section 3.11 TENDER ADVANCES.
If the Bank shall make any payment of that portion of the purchase
price corresponding to principal and interest of the Bonds drawn under the
Letter of Credit pursuant to a Tender Draft (as defined in the Letter of Credit)
and the conditions set forth in Section 7.3 shall have been fulfilled, such
payment shall constitute a tender advance made by the Bank to the Borrower on
the date and in the amount of such payment (a "Tender Advance"); provided that
if the conditions of said Section 7.3 have not been fulfilled, the amount so
drawn pursuant to the Tender Draft shall not be considered a Tender Advance and
shall be payable in accordance with the terms of Sections 3.2(a) and (b) above.
Notwithstanding any other provision hereof, the Borrower shall repay the unpaid
amount of each Tender Advance, together with all unpaid interest thereon, on the
earlier to occur of: (i) such date as any Bonds purchased pursuant to a Tender
Draft are resold as provided in the last paragraph of this letter 3.11 hereof;
(ii) on the date six months following the date of such Tender Advance; or (iii)
the Termination Date. The Borrower may prepay the outstanding amount of any
Tender Advance in whole or in part, together with accrued interest to the date
of such prepayment on the amount prepaid. The Borrower shall notify the Bank
prior to 11:00 A.M. Miami, Florida time on the date of such prepayment of the
amount to be prepaid.
The Borrower shall pay interest on the unpaid amount of each Tender
Advance from the date of such Tender Advance until such amount is paid in full,
payable monthly, in arrears, on the first day of each month during the term of
each Tender Advance and on the
22
date such amount is paid in full, at a fluctuating interest rate per annum in
effect from time to time equal to the Prime Rate plus one percent (1%) provided
that the unpaid amount of any Tender Advance which is not paid when due shall
bear interest at the lower of the Prime Rate plus three percent (3%) or the
highest rate permitted by applicable law, payable on demand and on the date such
amount is paid in full.
Pursuant to the Pledge Agreement the Borrower has agreed that, in
accordance with the terms of the Indenture, Bonds purchased with proceeds of any
Tender Draft shall be delivered by the Tender Agent to the Bank or its designee
to be held by the Bank or its designee in pledge as collateral securing the
Borrower's payment obligations to the Bank hereunder. Bonds so delivered to the
Bank or its designee shall be registered in the name of the Borrower, as
provided for in the Pledge Agreement.
Prior to or simultaneously with the resale of Bonds pledged pursuant to
the Pledge Agreement (the "Pledged Bonds"), the Borrower shall prepay the then
outstanding Tender Advances (in the order in which they were made) by paying to
the Bank an amount equal to the sum of (A) the amounts advanced by the Bank
pursuant to the corresponding Tender Drafts relating to such Bonds, plus (B) the
aggregate amount of accrued and unpaid interest on such Tender Advances. Such
payment shall be applied by the Bank in reimbursement of such drawings (and as
prepayment of Tender Advances resulting from such drawings in the manner
described above), and, upon receipt by the Bank of a certificate completed and
signed by the Credit Facility Trustee in substantially the form of Annex G to
the Letter of Credit, the Borrower irrevocably authorizes the Bank to rely on
such certificate and to reinstate the Letter of Credit in accordance therewith.
Funds held by the Tender Agent as a result of sales of the Pledged Bonds by the
Remarketing Agent shall be paid to the Bank by the Tender Agent to be applied to
the amounts owing by Borrower to the Bank pursuant to this Section 3.11. Upon
payment to the Bank of the amount of such Tender Advance to be prepaid, together
with accrued interest on such Tender Advance to the date of such prepayment on
the amount to be prepaid, the principal amount outstanding of Tender Advances
shall be reduced by the amount of such prepayment and interest shall cease to
accrue on the amount prepaid.
ARTICLE IV
SECURITY; INSURANCE
Section 4.1. SECURITY. As security for the full and timely payment and
performance by the Borrower of its obligations hereunder, the Borrower shall on
the date hereof deliver to the Bank the Security Instruments, conveying to the
Bank duly perfected
23
liens upon and security interests in the Collateral, subject only to Permitted
Encumbrances.
Section 4.2. ADVANCES BY BANK. In the event the Borrower shall fail to
keep the Collateral in good repair and good operating condition, the Bank may
(but shall be under no obligation to), after 10 days, written notice to the
Borrower, and the failure of the Borrower to commence (and complete with due
diligence) the making of the required repairs, renewals and replacements,
contract for any required repairs, renewals and replacements; and the Borrower
agree to reimburse the Bank upon demand by the Bank to the extent of the amounts
so advanced with interest thereon at a rate per annum equal to the Prime Rate
plus three percent (3%) (unless such rate exceeds the highest lawful rate
permitted by applicable law, in which case the applicable interest rate shall be
the highest lawful rate), from the date of advance to the date of reimbursement.
Any amounts so advanced by the Bank shall become an additional obligation of the
Borrower secured by the Security Instruments.
Section 4.3. PRESERVATION OF SECURITY INTEREST. At the request of the
Bank at any time or from time to time, including at the time of acquisition of
any items with the proceeds of the Bonds, the Borrower will cause to be executed
by its duly authorized officers any agreement, certificate, instrument,
statement or document, and to pay all connected costs, which the Bank may deem
necessary or advisable to create or preserve the security interest of the Bank
contemplated hereby and by the Security Instruments.
ARTICLE V
AFFIRMATIVE COVENANTS
Until all the Obligations to be performed and paid shall have been
performed and paid in full, and for so long as the Letter of Credit shall be
outstanding, unless the Bank shall otherwise consent in writing, the Borrower
will:
Section 5.1. FINANCIAL STATEMENTS, REPORTS AND DOCUMENTS. Deliver the
following to the Bank:
(a) ANNUAL FINANCIAL STATEMENTS. Within 120 days of the close
of each of its fiscal years, (i) the current consolidated audited financial
statements (annual balance sheets, profit/loss statements, and statements of
cash flow, of HEICO Corporation and its subsidiaries, which must be audited by a
Florida-licensed certified public accountant; and (ii) the current consolidating
financial statements and other supporting schedules of HEICO Corporation and its
Subsidiaries, with the results of the Borrower separately broken out.
24
(b) QUARTERLY FINANCIAL STATEMENTS. Within forty-five days
of the close of each fiscal quarter during the term hereof, an unaudited
financial statement (including balance sheets, profit and loss statements,
statements of cash flow and supporting schedules) for the Borrower for the
period then ending, which must be certified as to correctness and completeness
by the chief financial officer of the Borrower.
(c) SEC AND OTHER REPORTS; ORDERS, JUDGMENTS, ETC. Within
fifteen days after the filing or mailing thereof with or the receipt thereof
from the Governmental Authority referred to herein, one copy of each proxy,
regular or periodic report, registration statement, or prospectus filed or other
filing by the Borrower, HEICO Corporation or any Corporate Guarantor with any
securities exchange or the Securities and Exchange Commission or any successor
agency, any notices or information mailed to its shareholders, and any material
order, judgment, decree, decision or ruling issued by any Governmental Authority
in any proceeding to which the Borrower, HEICO Corporation or any Corporate
Guarantor is a party;
(d) COMPLIANCE CERTIFICATE. At the time of delivery of the
financial statements referred to in Section 5.1(a) and (b), a certificate of the
chief financial officer of the Borrower in the form attached hereto as Exhibit
D, properly completed.
(e) OTHER INFORMATION. Such other information as reasonably
requested by the Bank from time to time concerning the business, properties or
financial condition of the Borrower or the Guarantors.
Section 5.2. PAYMENT OF TAXES AND OTHER INDEBTEDNESS. The Borrower will
timely pay in full: (i) all taxes, assessments and other governmental charges
imposed on the Borrower or on its income or profits, or on any property of the
Borrower, (ii) all lawful claims, including claims for labor and materials
(unless such labor and materials claims are being contested by the Borrower in
good faith), which if not paid might give rise to a Lien on any of the
Borrower's properties, and (iii) all of its other Indebtedness, except as
prohibited hereunder; provided, that the Borrower will not be required to pay
any tax, assessment or governmental charge if and so long as the amount,
applicability or validity is being contested in good faith by appropriate
proceedings and reserves for the contested charges have been established in
accordance with GAAP.
Section 5.3. MAINTENANCE OF EXISTENCE, RIGHTS AND ACCOUNTS. The
Borrower will preserve and maintain its corporate existence and good standing,
rights and franchises, trade names, patents, trademarks and permits necessary to
the conduct of its business.
25
The Borrower will maintain its depository and cash management accounts with the
Bank.
Section 5.4. NOTICE OF DEFAULT. The Borrower will furnish to the Bank
within three (3) days of becoming aware of a Default or Event of Default written
notice specifying the nature and period of existence of the Default or Event of
Default and the action which the Borrower is taking or proposes to take to
remedy the Default or Event of Default.
Section 5.5. OTHER NOTICES. The Borrower will within five (5) business
days of becoming aware thereof notify the Bank of:
(i) Any Regulatory Change, the loss of any material customer
or account or any other change which may have a Material Adverse
Effect;
(ii) The cancellation or termination of, or any default
under, any material agreement or other instrument to which it is a
party or by which any of its properties are bound, or any acceleration
of the maturity of any Indebtedness of the Borrower;
(iii) Any material adverse claim against or affecting the
Borrower or any of its properties, whether by a Governmental Authority
or any other third party;
(iv) Any labor controversy which results in strike or other
work action that may have a Material Adverse Effect;
(v) Any levy of an attachment, execution or other process
against the Borrower's assets arising as a result of a judgment against
Borrower in an amount in excess of $100,000.
Section 5.6. COMPLIANCE WITH MATERIAL AGREEMENTS. The Borrower will
comply with all material agreements, indentures, mortgages and other documents
binding on it or affecting the Collateral, the Bond Documents and Security
Instruments to which the Borrower and any Subsidiary is a party. The Borrower
will cause the Improvements to be constructed on or before September 30, 1998 in
accordance with the plans and specifications delivered to the Bank pursuant to
Section 7.1 (0) hereof.
Section 5.7. OPERATIONS AND PROPERTIES. The Borrower will act prudently
and in accordance with customary industry standards in managing or operating the
assets, properties, business and investments of the Borrower. The Borrower will
keep in good working order and condition, ordinary wear and tear excepted, all
of its assets and properties which are necessary to the conduct of its business.
26
Section 5.8. BOOKS AND RECORDS; ACCESS. The Borrower will, and will
cause each of its Subsidiaries to, maintain adequate books, accounts and
records; prepare all Financials required under this Agreement in accordance with
GAAP; and permit agents of the Bank at any reasonable time and upon prior notice
to inspect the Borrower's properties and to examine the Borrower's books,
accounts, and records and make copies and memoranda of them. The Borrower will,
upon reasonable advance notice, permit any representative of the Bank to inspect
any of the properties of the Borrower, to examine all books, accounts, records,
reports and other papers, to make copies and extracts of them, and to discuss
the affairs and finances of the Borrower with its officers, all at reasonable
times and as often as may reasonably be requested, provided further that Bank
may also discuss the foregoing with the independent accountant of Borrower (a)
with the consent of Borrower which will not be unreasonably withheld, or (b) at
any time without the need for Borrower consent if there shall have occurred an
Event of Default.
Section 5.9. COMPLIANCE WITH LAW. The Borrower will comply with all
applicable constitutions, laws, rules, regulations, judgments, orders,
decisions, rulings and decrees of any Governmental Authority applicable to the
Borrower and the Subsidiaries or to any of its respective properties, business
operations or transactions, the breach of which could have a Material Adverse
Effect.
Section 5.10. INSURANCE. In addition to the insurance requirements
contained in the Security Instruments, the Borrower will maintain at all times
workers' compensation insurance, general liability insurance, casualty insurance
and other insurance on its properties, assets and businesses, now owned or
hereafter acquired, against such casualties, risks and contingencies, and in
such types and amounts, as are consistent with customary practices and standards
of companies engaged in similar businesses, unless higher limits or other types
of coverage are reasonably required by the Bank. The Borrower will cause a long
form endorsement to be added to each casualty policy pertaining to the Project,
prior to the closing date, naming the Bank as loss payee and additional insured,
as its interests may appear. Each such policy will require that no such policy
will be terminated without at least thirty (30) days' prior written notice to
the Bank.
Section 5.11. ERISA COMPLIANCE.
(c) The Borrower shall at all times (i) pay and discharge,
when due, any liability imposed upon it under ERISA (except for liabilities
reasonably, in good faith and diligently being disputed by the Borrower, and
(ii) comply in all respects and in a timely manner with all applicable funding,
reporting,
27
disclosure, tax qualification and other requirements of ERISA and the Code with
respect to all Plans. The Borrower shall not (i) engage in any prohibited
transaction, create or participate in any new plan not in existence on the
Effective Date, or terminate, reorganize, or partition any Plan, or (ii) allow
any Lien imposed under the Code or ERISA to attach to any of its assets.
(d) Borrower will deliver written notice to the Bank promptly
and in any event, within 10 business days after the Borrower knows or has reason
to know of the occurrence (and the remedial action to be taken with respect
thereto) of any of the following: (i) the occurrence of any Reportable Event (as
defined in ERISA); (ii) the existence of an unfunded current liability or an
accumulated funding deficiency with respect to any Plan; (iii) the filing of a
waiver or modification of the minimum funding standard with respect to a Plan;
or (iv) the intention to create of a new Plan or the contemplated or actual
termination, reorganization, partition or insolvency of a Plan. The Borrower
will, upon request, deliver to the Bank a complete copy of the annual report of
each Plan required to be filed with the Internal Revenue Service.
Section 5.12. FURTHER ASSURANCES. The Borrower will execute, endorse,
acknowledge, deliver or file all such vouchers, invoices, notices, certificates
and additional agreements, undertakings, conveyances, transfers, assignments,
financing statements or other assurances, and take any and all such other
action, as the Bank may, from time to time, deem reasonably necessary or proper
to carry out the intent of this Agreement, the Note, the Bond Documents or any
of the Security Instruments or any part of the security granted for any of the
Obligations.
Section 5.13. EXECUTION AND DELIVERY OF GUARANTY. The borrower will
cause each Subsidiary to execute a Guaranty in favor of the Bank, and to deliver
that executed Guaranty at the time the entity becomes a Subsidiary.
Section 5.14 CURRENT RATIO. The Borrower shall at all times maintain a
Current Ratio of at least 1.25:1.00, which shall be tested on a quarterly basis.
Section 5.15 DEBT SERVICE COVERAGE RATIO. The Borrower shall at all
times maintain a Debt Service Coverage Ratio of at least 1.75:1.00, which shall
be tested on a quarterly basis.
ARTICLE VI
NEGATIVE COVENANTS
28
Until all the Obligations to be performed and paid shall have been
performed and paid in full, and for so long as the Letter of Credit shall be
outstanding, unless the Bank shall otherwise consent in writing, the Borrower
will not, either directly or indirectly, nor permit any Subsidiary to:
Section 6.1. INVESTMENTS AND LINES OF BUSINESS. (a) Make any investment
outside of its ordinary course of business; or (b) create any Subsidiary in
which the business to be conducted is not similar to or complimentary with the
business of the Borrower conducted as of the date hereof; or (c) engage in any
business not similar to or complimentary with that conducted by the Borrower on
the date hereof.
Section 6.2. CHANGE OF CONTROL,LIQUIDATION, MERGERS, CONSOLIDATIONS AND
DISPOSITIONS OF SUBSTANTIAL ASSETS. So long as the Letter of Credit and/or any
amounts due thereunder to the Bank is outstanding, neither the Borrower nor any
of the Corporate Guarantors will, without the prior written consent of the Bank,
(a) dissolve or liquidate, or become a party to any merger or consolidation, (b)
permit the sale, assignment, pledge or other transfer of any of its stock to
parties other than to HEICO Corporation, or (c) sell or otherwise transfer its
assets except in the ordinary course of business; provided, however, that
notwithstanding the foregoing (i) the Borrower may sell shares of its stock at
the fair market value thereof so long as the majority of its stock and Control
therein remains held by HEICO Corporation; (ii) the Borrower may make sales of
assets outside its ordinary course of business so long as the value of such sale
or sales in the aggregate in any twelve month period does not exceed ten percent
of the Consolidated Tangible Net Worth calculated without reference to the
assets and liabilities of the Borrower; (iii) Borrower may ▇▇▇▇▇ ▇ ▇▇▇▇ upon its
assets other than the Collateral; and (iv) any Subsidiary or other corporation
may merge into the Borrower or Borrower may merge with another company, so long
as (A) except in the event of the proposed merger of Borrower into HEICO
Bearings Corporation ("HBC"), as specified in that certain written material
delivered to Bank by Borrower, the Borrower is the surviving party of such
merger; (B) after giving effect to such merger, there does not exist an Event of
Default; (C) the day to day and long term management of the Borrower does not
change; (D) the Borrower has provided Lender with an opinion of: (i) Bond
Counsel that such transaction does not result in the interest on the Bonds
(other than the Taxable Bonds, if any) becoming taxable; and (ii) counsel
acceptable to the Lender in form and content acceptable to Lender; (E) HBC shall
have no liabilities immediately preceeding the merger; and (F) Borrower shall
provide Lender with such other documents as Lender may require to perfect and
protect its lien upon and rights in Collateral.
29
Section 6.3. LIMITATION OF GUARANTEES. The Borrower and
its Subsidiaries shall not guarantee or otherwise become responsible for
obligations of any other person, corporation or entity, except those required by
this Agreement, the endorsement of negotiable instruments in their ordinary
course of business for collection, those required by the lenders to the HEICO
Corporation, provided that Borrower is Solvent after giving effect to such
Guaranty.
Section 6.4. LIMITATION OF ENCUMBRANCES. The Borrower and its
Subsidiaries shall not directly or indirectly create, incur, assume, or suffer
to exist any mortgage, security deed, pledge, lien, charge or other encumbrance
on any of their assets, whether now or hereafter acquired, other than: (i)
security interests required to be given in connection herewith; (ii) liens
otherwise permitted pursuant to this Agreement or the Security Instruments;
(iii) permitted encumbrances; and (iv) liens in favor of the Bank.
Section 6.5. CERTAIN TRANSACTIONS. The Borrower and its Subsidiaries
may only enter into transactions with Affiliates upon terms not less favorable
to the Borrower or its Subsidiaries than would be obtainable at the time in
comparable transactions of the Borrower or its Subsidiaries in arm's length
dealings with Persons other than Affiliates.
Section 6.6. NAME, FISCAL YEAR AND ACCOUNTING METHOD. The Borrower and
its Subsidiaries will not change its name, fiscal year or method of accounting,
without prior notice to the Bank.
Section 6.7. LOCATION OF COLLATERAL. The Borrower will not remove its
books and records or any Collateral from the address of the Borrower set herein,
except that upon prior written notice to the Bank, Borrower may move its books
and records to the site of the Property.
Section 6.8. CONSOLIDATED LEVERAGE RATIO. The Borrower and its
Subsidiaries shall not permit at any time the Consolidated Leverage Ratio to
exceed 3.00 to 1.00, which shall be tested on a quarterly basis.
Section 6.9. DIVIDENDS. The Borrower and its Subsidiaries shall not pay
or otherwise make distribution of any Dividends, except that the Subsidiaries
may pay Dividends to the Borrower, and the Borrower make pay Dividends to the
HEICO Corporation. The foregoing is not intended to prohibit the repayment of
interest on any intercompany advances to the Borrower, so long as (i) at least
ninety days prior to such distribution the Borrower has provided the Bank with
its pro forma financial analysis for the fiscal year in which such Dividend is
contemplated to be paid, and such statements demonstrate to the satisfaction of
the Lender that there will be no Event of Default after giving effect to such
Dividend; and (ii) at the time of the proposed Dividend there does not then
30
exist, nor will there exist after giving effect to such Dividend, an Event of
Default.
Section 6.10 NO DEFAULT. The Borrower and its Subsidiaries will not
take any action, or fail to take any action, if after giving effect thereto,
such action would otherwise result in a Event of Default hereunder, without
giving effect to any notice or passage of time requirements as a condition to
determining if an Event of Default had occurred.
ARTICLE VII
CONDITIONS TO ISSUANCE OF LETTER OF CREDIT
Section 7.1. CONDITIONS ON ISSUANCE. On or prior to the Closing Date,
the Borrower shall have furnished to the Bank, in form satisfactory to the Bank,
the following:
(a) two executed counterparts of this Agreement, the executed
Note, and the executed counterparts of each of the Security
Instruments, including the Mortgages;
(b) executed counterparts of each of the Bond Documents
(except for the Bonds, as to which a specimen copy may be furnished);
(c) a mortgagee's title insurance commitment dated the date
of closing (and committing to issue the mortgagee's title insurance
policy) together with evidence that all premiums in respect of such
policy have been paid, which policy shall (i) be in an amount equal to
the original aggregate amount of the Letter of Credit; (ii) insure that
the Mortgages create a valid first and second lien on the property
covered by such Mortgages free and clear of all defects and
encumbrances (except those acceptable to the Bank); (iii) name the
Bank, the Issuer and the Trustee as insured parties thereunder; (iv) be
in the form of ALTA Loan Policy 1970 (amended 10/17/94) or other form
approved by the Bank; and (v) contain such endorsements and effective
coverage as the Bank may reasonably request;
(d) a physical survey containing maps or plats of the
perimeter or boundaries of the Property, and any other property covered
by the Mortgages certified to the Bank and the title insurance company,
in a manner acceptable to each of them, dated a date satisfactory to
the Bank and the title insurance company, by an independent
professionally licensed land surveyor satisfactory to the Bank and the
title insurance company, which survey shall indicate the following: (i)
the locations on such site of all the buildings, structures and
31
other improvements and the established building setback lines insofar
as the foregoing affect the perimeter or boundary of such property;
(ii) the lines of streets abutting the site and width thereof; (iii)
all access and other easements appurtenant to the site or necessary or
desirable to use the site; (iv) all roadways, paths, driveways,
easements, encroachments and overhanging projections and similar
encumbrances affecting the site, whether recorded, apparent from a
physical inspection of the site or otherwise known to the surveyor; (v)
any encroachments on any adjoining property by the building structures
and improvements on the site; and (vi) if the site is described as
being on a filed map, a legend relating the survey to said map, all in
form satisfactory to the Bank; together with certification from an
independent professionally licensed land surveyor satisfactory to the
Bank as to the location of the Project or any property covered by the
Mortgages in any "special flood hazard" area within the meaning of the
Federal Flood Disaster Protection Act of 1973;
(e) evidence of compliance with the insurance requirements
contained in Section 1.4 of the Mortgages;
(f) opinion of Bond Counsel in form and substance acceptable
to the Bank, addressing the matters set forth in Exhibit B hereto;
(g) opinion of counsel for the Borrower dated the date hereof
addressed to the Bank, in substantially the form of Exhibit C hereto;
(h) the Certificates of the Borrower including references to
(i) Bylaws, (ii) resolutions of the Board of Directors authorizing the
execution, delivery and performance of the appropriate Bond Documents,
this Agreement, the Note and the Security Instruments,to which the
Borrower is a party, (iii) incumbency and specimen signatures of
officers, and (iv) such other matters as the Bank may require;
(i) a copy of the Articles of Incorporation of the Borrower;
(j) copies of all governmental approvals required in
connection with this transaction, including the resolution of the
Issuer authorizing the issuance of the Bonds;
(k) evidence of payment to the Bank of the initial annual
letter of credit commission pursuant to Section 3.4 of this Agreement;
(l) evidence satisfactory to the Bank that any documents
(including, without limitation, financing statements) required
32
to be recorded or filed in order to create, in favor of the Bank, a
perfected lien on and security interest in all property covered by the
Security Instruments and the Participation Pledge Agreement have been
properly executed and delivered in form acceptable to be recorded or
filed in each office in each jurisdiction required in order to create,
in favor of the Bank, a first, perfected lien on and security interest
in the respective collateral described therein subject only to the
Permitted Encumbrances, and the Bank shall have received evidence that
all necessary recordation and filing fees and all documentary taxes or
other expenses related to such filings or recordations have been paid
in full;
(m) a Phase I Environmental Report prepared by an
environmental consulting firm, and in form and substance, satisfactory
to the Bank for the Property;
(n) an appraisal of the Property prepared by an appraisal
firm, and in form and substance, satisfactory to the Bank, and
demonstrating to the satisfaction of the Bank that the Project has a
minimum value of $3,000,000;
(o) the items required under the Construction Disbursing
Agreement as a condition to funding a requisition thereunder;
(p) certificates and letters from such persons, and in such
form as the Bank may require, such persons to include, but not
necessarily be limited to, the architect, engineer, and general
contractor for the Project, the entities providing utility services to
the Project, and the applicable zoning authorities;
(q) the deposit pursuant to Section 7.1A(a) hereof of cash
and/or Eligible Securities having a Fair Market Value (as defined
herein) of $50,000; and
(r) such other documents, instruments and certifications as
the Bank may require.
Section 7.2. ADDITIONAL CONDITIONS PRECEDENT TO ISSUANCE OF THE LETTER
OF CREDIT.
(a) The obligation of the Bank to issue the Letter of Credit
shall be subject to the further conditions precedent that on the date of
issuance the following statements shall be true and the Bank shall have received
a certificate signed by an authorized officer of the Borrower, dated the date of
issuance, stating that:
(i) The representations and warranties contained in Article
II of this Agreement, Section 6 of the Pledge Agreement and
Section 2.2 of the Loan Agreement are correct on
33
and as of the date of issuance of the Letter of Credit as
though made on and as of such date; and
(ii) No event has occurred or would result from the issuance
of the Letter of Credit, which constitutes an Event of Default or
would constitute an Event of Default but for the requirement that
notice be given or time elapse or both; and
(b) there shall have been no introduction of or change in, or
in the interpretation of, any law or regulation that would make it unlawful or
unduly burdensome for the Bank to issue the Letter of Credit, no outbreak or
escalation of hostilities or other calamity or crisis affecting the Bank, no
suspension of or material limitation on trading on the New York Stock Exchange
or any other national securities exchange, no declaration of a general banking
moratorium by United States or Florida banking authorities, and no establishment
of any new restrictions on transactions in securities or on banks materially
affecting the free market for securities or the extension of credit by banks.
Section 7.3 CONDITIONS PRECEDENT TO EACH TENDER ADVANCE. Each payment
made by the Bank under the Letter of Credit pursuant to a Tender Draft shall
constitute a Tender Advance hereunder ONLY IF on the date of such payment the
following statements shall be true:
(a) the representations and warranties contained in Article
II of this Agreement, Section 2.2 of the Loan Agreement, and in the
Security Instruments are correct in all material respects on and as of
the date of such Tender Advance as though made on and as of such date;
and
(b) No event has occurred or would result from such Tender
Advance, which constitutes an Event of Default or would constitute an
Event of Default but for the requirement that notice be given or time
elapse or both.
Unless the Borrower shall have previously advised the Bank in writing or the
Bank has actual knowledge that one or more of the above statements is no longer
true, the Borrower shall be deemed to have represented and warranted, on the
date of payment by the Bank under the Letter of Credit pursuant to a Tender
Draft, that on the date of such payment the above statements are true and
correct.
Section 7.4. APPROVAL BY BANK OF REQUISITIONS.
(a) The Borrower understands and agrees that certain terms
and conditions are to be satisfied prior to the Bank's approval of any
requisition of moneys from the Project Fund, and that such terms and conditions,
as more fully described in the Construction Disbursing Agreement, must be
satisfactorily complied
34
with and satisfied prior to September 30, 1998 subject to the approval of the
Bank, in its sole discretion.
(b) Subject to the terms and conditions contained herein, the
Borrower will requisition moneys from the Project Fund pursuant to the
procedures therefor set forth in the Indenture and the Construction Disbursing
Agreement.
ARTICLE SEVEN A
DESIGNATED ACCOUNT
Section 7.1.A(a) Borrower agrees that it will make to the Lender
payments in accordance with the following schedule: (i) on the date of the
Closing, an amount of cash and/or Eligible Securities having a Fair Market Value
of $50,000; (ii) on the date of the first anniversary of this Agreement, an
amount of cash and/or Eligible Securities so that the Fair Market Value in the
Designated Account (defined herein) on that anniversary equals or exceeds
$200,000; and (iii) on each anniversary of this Agreement thereafter, an amount
of cash and/or Eligible Securities so that the Fair Market Value of the cash
and/or Eligible Securities in the Designated Account on that anniversary is
$200,000 greater than the amount required to be in the Designated Account on the
immediately preceeding anniversary.
The amounts so paid are a prepayment of the Borrower's obligations to
repay the Lender for the expected principal draw on the Letter of Credit to
redeem the Bonds. Borrower hereby confirms that Lender has established an
account with Lender or the trust department of the Lender (the "Designated
Account") under the Agreement into which Lender may deposit such payments.
Borrower shall not be entitled to make any withdrawals from the Desiganted
Account. Borrower shall have no legal or equitable interest in the Designated
Account.
(b) Borrower hereby agrees that any deposits into or withdrawals from
the Designated Account now or hereafter directed by Lender in accordance with
the terms of this Agreement are authorized by Borrower; however, Borrower
acknowledges that it has no right to direct such transfers at any time.
(c) Borrower shall deposit into the Designated Account the sums
described in Section 1 hereof.
(d) The parties acknowledge that the funds held in the Designated
Account will be invested by Lender in Eligible Securities as selected by a
capital market affiliate of the Bank, or in the Evergreen Tax-Free Municipal
Fund or similar fund selected by the Bank. Earnings on investements in the
Designated
35
Account, or amounts paid for redemption of principal portions of Eligible
Securities shall be retained in the Designated Account. It is the parties'
agreement that the return on any investments made with the funds in the
Designated Account shall not render the Bonds "arbitrage bonds" within the
meaning of the applicable sections of the Internal Revenue Code, and applicable
regulations promulgated thereunder. Borrower agrees to indemnify and hold
harmless Lender of and from any and all liability arising from a determination
that the Bonds are "arbitrage bonds" by virtue of the investment returns on the
funds deposited in the Designated Account.
(e) Upon the expiration or termination of the Letter of Credit and
payment in full of all other amounts payable hereunder, as acknowledged in
writing by and to Lender, all remaining funds held in the Designated Account,
together with all interest and earnings thereon then remaining on deposit in the
Designated Account, shall be repaid to Borrower.
7.2.A(a) Borrower hereby warrants and represents that it does not
intend, by executing and delivering this Agreement or any other document
contemplated herein, or by entering into any of the other transactions referred
to in this Agreement, does so without the intent to hinder, delay or defraud any
person or entity to whom the Borrower is indebted or shall become indebted.
(b) Borrower is solvent and the conveyances contemplated in this
Agreement shall not result in the Borrower becoming insolvent.
(c) In the event Borrower files a voluntary petition seeking relief
under Title 11 of the United States Code ("Bankruptcy Code"), as amended, or
Borrower becomes the subject of an involuntary bankruptcy proceeding in which an
order for relief is entered and not dismissed within thirty days, or otherwise
becomes the subject of any petition seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution, assignment for the benefit
of creditors, or similar relief under any present or future federal or state
laws or statutes relating to bankruptcy, insolvency, or other relief for
debtors, or Borrower seeks, consents to or acquiesces in the appointment of a
trustee, receiver, conservator or liquidator, Borrower agrees that Lender will
not be adequately protected and therefore will be entitled to immediate relief
from any automatic stay prescribed by applicable state or federal law including,
but not limited to, 11 U.S.C. 362, to enforce its rights under this Agreement.
This entitlement shall be irrespective of any of the requirements of state or
federal law including, but not limited to, 11 U.S.C. 362, and Lender shall not
be obligated to satisfy those requirements in order to obtain stay relief.
Lender shall also be entitled to automatically and immediately exercise its
rights to setoff the funds proceeds in the Designated Account against any and
all obligations Borrower may have to Lender under this Agreement.
36
(d) Borrower further agrees that to the extent Lender has received, or
will receive, by virtue of this Agreement, "transfers" or "preferences" as such
terms are defined by the Bankruptcy Code, Lender has given new value and
reasonably equivalent value contemporaneously in exchange for such transfers and
such transfers have not rendered Borrower insolvent. To the extent that Lender
has received or will received by virtue of this Agreement, "transfers" or
"preferences", it is hereby agreed that Lender will not have received more that
it would if Borrower commenced proceedings under Chapter 7 of the Bankruptcy
Code.
(e) Any and all payments made by Borrower to Lender pursuant to this
Agreement shall be construed as payments of a debt incurred by the Borrower in
the ordinary course of business or financial affairs of Borrower and Lender, in
fact made in the ordinary course of business or financial affairs of the
Borrower and Lender, and made according to ordinary business terms consistent
with this Agreement.
(f) Notwithstanding the provisions of the preceding paragraphs, in the
event any payments made by Borrower to Lender, directly or indirectly, or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside, voided, and/or required to be repaid to a trustee,
receiver or any other party appointed under the Bankruptcy Code, state or
federal law, common law or equitable cause, the obligation or part thereof
intended to be satisfied of Borrower under this Agreement shall be reinstated or
shall continue to be effective, as the case may be, and shall remain fully
enforceable pursuant to the Agreement and applicable law to the extent that such
payments or transfers are voided, set aside or required to be disgorged.
(g) Borrower acknowledges and agrees that it has neither legal nor
equitable title or interest in the Designated Account or the monies deposited
therein and further that the Designated Account and the monies deposited therein
shall not be deemed property of Borrower's Bankruptcy estate pursuant to 11
U.S.C. 541 or property of an insolvency estate pursuant to any other applicable
state or federal statutes in the event that an insolvency proceeding is
voluntarily or involuntarily commenced with respect to Borrower.
(h) The foregoing Bankruptcy provisions collectively constitute a
material inducement for Lender entering into this Agreement.
7.3.A. The Borrower represents and warrants to, and covenants with,
Lender that:
37
(a) each of the Eligible Securities transferred by it (or
will be) and will continue to be Tax Exempt Securities qualifying as Investment
Grade;
(b) the Eligible Securities transferred by it are, or upon
issuance will be, duly and validly authorized and issued and fully paid and
nonassessable, and are the legal, valid and binding obligations of the issuer
thereof enforceable in accordance with their respective terms and the
constituent documents of such issuer, and the Borrower shall defend the interest
in the Eligible Securities against the claims and demands of all Persons at any
time claiming the same or any interest therein adverse to the Bank;
(c) the Borrower has full right, power and authority to
transfer the cash and/or Eligible Securities as herein provided, and except as
provided herein, there are no and will not be any restrictions upon the pledge,
hypothecation, transfer or assignment of any of the Eligible Securities
transferred by it;
(d) each certificate or other instrument or document
evidencing any of the Eligible Securities transferred by it is issued in the
name of the Borrower, has attached thereto a duly executed, undated instrument
of transfer in blank and has been deposited with the Bank, except that if
required by the Bank, such Eligible Securities shall be registered in the name
of the Bank or its designee;
(e) the Borrower has registered the transfer of all
uncertificated Eligible Securities to the extent required by the Bank, and, as
to uncertificated Eligible Securities acquired after the date hereof, will
register, the transfer of each uncertificated Eligible Security to the extent
required by the Bank;
(f) no registration with or consent or approval of, or other
action by, any Federal, state or other governmental authority or regulatory body
or a securities exchange, and no consent, approval or authorization of any
Person, is required in connection with the execution, delivery and performance
of this Pledge Agreement or the transfer of the cash and/or Eligible Securities
hereunder;
(g) if the aggregate Fair Market Value of all cash and/or
Eligible Securities in the Designated Accounts is less than the amount required
to have been paid into the account pursuant to Section 7.1.A. hereof, for
whatever reason, as measured and determined on each anniversary hereof, the
Borrower shall provide to Lender within six (6) Business Days from its receipt
of written notice from Lender, additional cash and/or Eligible Securities to
make up its deficiency, which in the aggregate will be sufficient to bring the
Fair Market Value of all cash and/or Eligible Securities in the Designated
Account to at least the amount required to have been paid into the account
pursuant to Section
38
7.1.A. hereof; and the Borrower shall promptly take such steps required by the
Bank to transfer Borrower's interest in the cash and/or Eligible Securities.
7.4.A At any time and from time to time, the Bank may cause all or
any of the Eligible Securities to be transferred into its name or into the name
of its nominee or nominees. The Borrower shall assure that the Bank shall at all
times have the right to exchange uncertificated Eligible Securities for a
certificated Eligible Securities if permitted under contract and under law, and
to exchange certificated Eligible Securities for certificates of larger or
smaller denominations, for any purpose consistent with this Agreement.
7.5.A In case, upon the dissolution or liquidation (in whole or in
part) of the issuer of any of the Eligible Securities, any sum or property shall
be paid upon or with respect to any of the Eligible Securities, such sum or
property shall be paid or delivered over to the Bank, to be deposited into the
Designated Account, accompanied, where appropriate, by instructions of transfer
duly signed in blank by the Borrower. In case any interest payable in other than
cash shall be paid with respect to any of the Eligible Securities, or any
property shall be distributed upon or with respect to the Eligible Securities
pursuant to the recapitalization or reclassification of the capital of the
issuer thereof or the reorganization thereof, or if any payment of principal is
made in respect of any Eligible Security, the interest so distributed or the
amount of principal so paid shall be paid or delivered to the Bank to be held by
it in the Designated Account as a further prepayment of the Obligations
accompanied, where appropriate by instruments of transfer duly signed in blank
by the Borrower. Borrower shall instruct any paying agent of any Eligible
Security to make payment related thereto directly to the Bank. Until so
delivered to the Bank, all of the foregoing shall be held in trust for the Bank
and shall not be commingled with any other property of the Borrower.
(b) In addition to the rights otherwise provided herein and
under applicable law, the Bank shall be entitled to exercise the consensual
powers and rights with respect to the Eligible Securities and to continue to
receive and retain, as a further prepayment of the Obligations any and all
interest at any time and from time to time paid upon any of the Eligible
Securities. Any such interest received by the Borrower shall promptly be
delivered to the Bank in the same form as received. Until so delivered, such
interest shall be held in trust for the Bank and shall not be commingled with
any property of the Borrower.
(c) The Bank shall have the right without notice to, or
assent by, the Borrower or any other Person (except as otherwise
39
provided herein or required by applicable law), but without affecting the
Obligations, in the name of the Borrower or in the name of the Bank or
otherwise, (a) to offset any indebtedness the Bank then owes to the Borrower,
whether or not then due, against any Obligation then owed to the Bank (including
the participants, successors and assigns of the Bank) by the Borrower; [and/or
(c) to exercise or enforce any and all other rights or remedies available by law
or agreement against the cash and/or Eligible Securities, against the Borrower,
or against any other Person or property. The Borrower acknowledges and agrees
that the Bank shall have the right to immediately apply the cash and/or Eligible
Securities in satisfying any and all Obligations. If, after the exercise of any
or all of such rights and remedies, any of the Obligations shall remain unpaid,
the Borrower shall remain liable for any deficiency to the extent that the
Borrower owes payment or performance in respect of such Obligations. In
furtherance of the foregoing, Borrower agrees that in the event Bank intends to
exercise its rights under the second preceeding sentence, Bank will give
Borrower notice of the time and place of any public sale of the Eligible
Securities or of the time after which any private sale or any other intended
disposition thereof is to be made, by giving notice, as provided hereunder at
least five (5) days before the time of such sale or disposition, which provision
for notice the Bank and the Borrower agree is reasonable for all purposes. No
such notice need be given by the Bank with respect to Eligible Securities which
is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. Except as provided above, the Borrower
agrees that all of the remedies set forth herein in favor of the Bank may be
effected without demand, advertisement or other notice, all of which (to the
extent permitted by applicable law) are hereby expressly waived. After
termination of this Agreement and the payment in full of the Obligations, any
surplus proceeds of the cash and/or Eligible Securities received or held by the
Bank shall be turned over to the Borrower or as otherwise required by applicable
law and, upon the written request of the Borrower, the cash and/or Eligible
Securities shall be reassigned to the Borrower or as otherwise required by
applicable law by the Bank without recourse to Bank and without any
representation, warranty or agreement of any kind. The Borrower agrees to
reimburse the Bank for any reasonable legal fees and expenses of collection
reasonably incurred in connection with exercising its rights under this Section.
(d) The Bank shall have the right, for and in the name, place
and stead of the Borrower, to execute endorsements, assignments or other
instruments of conveyance or transfer with respect to all or any of the Eligible
Securities, to ▇▇▇ for, collect, receive and give acquittance for all moneys due
or to become due in connection with the Eligible Securities and to endorse
checks, drafts, money orders and other instruments relating thereto.
40
(e) Except as otherwise provided herein, the net proceeds
which the Bank shall receive from the sale, lease or other disposition of the
cash and/or Eligible Securities in accordance with the provisions hereof, shall
be applied in the following manner: FIRST, to the payment of all costs and
expenses incurred in connection with the administration and enforcement of, or
the preservation of any rights under, or otherwise in connection with this
Agreement (including, without limitation, the costs and expenses of retaking,
holding, preparing for sale, selling of any Eligible Securities and the fees and
disbursements of its counsel and agents); SECOND, to the payment of all other
Obligations in such order of priority as the Bank may determine in its sole
discretion; and THIRD, as otherwise provided by applicable law.
(f) As used herein the following terms shall have the
meanings herein specified and shall include in the singular number the plural
and in the plural number the singular:
"Business Day" shall mean a day of a year on which commercial banks in
Florida are neither authorized nor required by law or executive order to close
and on which the New York Stock Exchange is not closed.
"Eligible Securities" shall mean an Investment Grade Tax-exempt
Securities.
"Fair Market Value" shall mean the current market price of such
investments as determined by the Bank or its designee.
"Investment Grade" shall mean, (A) for Tax-Exempt Securities, a rating
of at least "Aa", in the case of a rating by ▇▇▇▇▇'▇ Investors Service, Inc.,
and a rating of at least "AA", in the case of a rating by Standard & Poor's
Rating Service; and (B) for shares in money market mutual funds, such shares
approved by the Bank.
"Person" shall mean any individual, firm, corporation, trust or other
unincorporated organization or association or other enterprise or any government
or political subdivision, agency, department or instrumentality thereof.
"Proceeds" shall have the meaning assigned to it under the Uniform
Commercial Code as in effect in any relevant jurisdiction and, in any event,
shall include, but not be limited to, where applicable any and all other amounts
from time to time paid or payable under or in connection with any of the
Eligible Securities.
"Tax Exempt Securities" shall mean (i) tax exempt debt securities which
are (a) Investment Grade; (b) issued as the general obligation of a municipal
government; and (c) have a scheduled maturity not in excess of two years from
the date such
41
securities are added to the Designated Account and (ii) shares in money market
mutual funds which trade wholly in tax-exempt debt securities described in
subsection (i) of this definition, the interest on which is exempt from federal
income taxes.
(g) The Borrower hereby constitutes and appoints the Bank its
attorney-in-fact for the purpose of carrying out the provisions of this
Agreement and taking any action and executing any instrument which the Bank may
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest.
ARTICLE EIGHT
EVENTS OF DEFAULT
Section 8.1. EVENTS OF DEFAULT. Each of the following shall constitute
an Event of Default under this Agreement, whereupon all Obligations of the
Borrower hereunder, whether then owing or contingently owing, will, in the case
of an Event of Default under Sections 8.1 (g) and (h), or at the option of the
Bank in the case of any other Event of Default, immediately become due and
payable by the Borrower without presentation, demand, protest or notice of any
kind, all of which are hereby expressly waived, and the Borrower will pay the
reasonable attorneys' fees incurred by the Bank, or its successors or assigns,
in connection with such Event of Default or recourse against any Collateral held
by the Bank, or its successors or assigns, as security for the Obligations:
(a) Failure of the Borrower to pay when due any payment
required to be paid under this Agreement, the Note, any Security
Documents or any other agreement with Bank; or
(b) The occurrence of an "Event of Default" under any of the
Security Instruments, or any of the Bond Documents; or
(c) Default shall occur in the performance of any of the
other covenants or agreements of the Borrower or any Guarantor
contained herein or in any of the Security Instruments, and such
Default shall continue for a period of thirty (30) days following the
Bank's written notice to the Borrower of its occurrence;
(d) Any representation or warranty made under this Agreement,
the Note, the Bond Documents, Security Instruments, or in any
certificate or statement furnished or made to the Bank pursuant hereto
or in connection herewith or with the Loans hereunder, oral or written,
shall prove to be untrue or inaccurate in any material respect as of
the date on which such representation or warranty is made;
42
(e) The filing of an action to attach or seize any Collateral
after entry of a judgment against Borrower which shall have not been
bonded;
(f) This Agreement, the Note, any of the Security Instruments
or the Bond Documents to which the Borrower or any Guarantor is a party
shall cease to be legal, valid and binding agreements enforceable
against the Person executing the same in accordance with the respective
terms thereof, except as may be limited by Debtor Laws, or shall in any
way be terminated or become or be declared ineffective or inoperative
or shall in any way whatsoever cease to give or provide the respective
liens, security interests, rights, titles, interests, remedies, powers
or privileges intended to be created thereby, except as may be limited
by Debtor Laws;
(g) The Borrower or any Guarantor shall (i) apply for or
consent to the appointment of a receiver, trustee, custodian,
intervenor or liquidator of itself or of all or a substantial part of
its assets, (ii) file a voluntary petition in bankruptcy, (iii) admit
in writing that it is unable to pay its debts as they become due or
generally not pay its debts as they become due, (iv) make a general
assignment for the benefit of creditors, (v) file a petition or answer
seeking reorganization or an arrangement with creditors or to take
advantage of any bankruptcy or insolvency laws, (vi) file an answer
admitting the material allegations of, or consent to, or default in
answering, a petition filed against it in any bankruptcy,
reorganization or insolvency proceeding, or (vii) take corporate action
for the purpose of effecting any of the foregoing;
(h) An involuntary petition or complaint shall be filed
against the Borrower or any Corporate Guarantor seeking bankruptcy
relief or reorganization or the appointment of a receiver, custodian,
trustee, intervenor or liquidator of such Person, or all or
substantially all of its assets, and such petition or complaint shall
not have been dismissed within sixty (60) days of the filing thereof;
or an order, order for relief, judgment or decree shall be entered by
any court of competent jurisdiction or other competent authority
approving or ordering any of the foregoing actions;
(i) Any final judgment(s) for the payment of money (not paid
or fully covered by insurance) in excess of the sum of $100,000 in the
aggregate shall be rendered against the Borrower or any Guarantor,
unless (i) such judgment(s) is being contested in good faith and by
appropriate proceedings and for which adequate reserves have been
established with the Bank or another person reasonably acceptable to
the Bank, or
43
(ii) within thirty (30) days after entry thereof, the judgment(s) shall
not be satisfied or discharged or the execution thereof stayed pending
appeal, or if within thirty (30) days after the expiration of any stay
of judgment shall not have been satisfied or discharged;
(j) Both the following events shall occur: (i) either (x)
proceedings shall have been instituted to terminate, or a notice of
termination shall have been filed with respect to, any Plan (other than
a Multi-Employer Pension Plan as that term is defined in Section 3(37)
of ERISA) of the Borrower, any Corporate Guarantor or a Controlled
Group of which the Borrower or any Corporate Guarantor is a member, or
the PBGC or any representative of any thereof, or any such Plan shall
be terminated, in each case under Section 4041 or 4042 of ERISA, or (y)
a Reportable Event, the occurrence of which would cause the imposition
of a lien under Section 4069 of ERISA, shall have occurred with respect
to any Plan (other than a Multi-Employer Pension Plan as that term is
defined in Section 3(37) of ERISA); AND (ii) the sum of the estimated
liability to the PBGC under Section 4062 of ERISA and the currently
payable obligations of the Borrower or any Corporate Guarantor to fund
liabilities (in excess of amounts required to be paid to satisfy the
minimum funding standard of Section 412 of the Code) under the Plan or
Plans subject to such event shall exceed ten percent (10%) of the
Borrower's or the Corporate Guarantor's (in question) net worth at such
time as determined in accordance with GAAP;
(k) Any or all of the following events shall occur with
respect to any Multi-Employer Pension Plan (as that term is defined in
Section 3(37) of ERISA) to which the Borrower or a Corporate Guarantor
contributes or contributed on behalf of its employees: (i) the Borrower
or a Corporate Guarantor incurs a withdrawal liability under Section
4201 of ERISA; or (ii) any such plan is "in reorganization" as that
term is defined in Section 4241 of ERISA; or (iii) any such Plan is
terminated under Section 4041A of ERISA and the Bank determines in good
faith that the aggregate liability likely to be incurred by the
Borrower or the Corporate Guarantor, as a result of all or any of the
events specified in subparagraphs (i), (ii) and (iii) above occurring,
shall have a Material Adverse Effect; and
(l) There occurs any abandonment or change in ownership of
the Project or the Borrower or any Corporate Guarantor without the
prior written consent of the Bank, provided that the foregoing shall
not prohibit the merger of Borrower into HEICO Bearing Corporation if
otherwise permitted pursuant to Section 6.2 hereof; then upon the
occurrence of an Event of Default and at any time thereafter, the Bank
may (a) pursuant to Section 902 of the Indenture, advise the Credit
Facility
44
Trustee that an Event of Default has occurred and instruct the Credit
Facility Trustee to direct the Trustee to declare the principal of all
Bonds then outstanding and interest thereon to be immediately due and
payable, subject to the rights of the Bank under Section 707 of the
Indenture, and (b) proceed hereunder, under any of the Security
Instruments, to the extent therein provided, under the Bond Documents,
and under the Participation Pledge Agreement in such order as it may
elect and the Bank shall have no obligation to proceed against any
Person or exhaust any other remedy or remedies which it may have and
without resorting to any other security, whether held by or available
to the Bank.
Section 8.2. NO REMEDY EXCLUSIVE. No remedy herein conferred upon or
reserved to the Bank 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 hereunder, under the Security Instruments,
under the Participation Pledge Agreement or now or hereafter existing at law or
in equity or by statute.
Section 8.3. ANTI-MARSHALLING PROVISIONS. The right is hereby given by
the Borrower and by any Guarantor pledging any portion of the Collateral to the
Bank to make releases (whether in whole or in part) of all or any part of the
Collateral under the Security Instruments agreeable to the Bank without notice
to, or the consent, approval or agreement of other parties and interests,
including junior lienors, which releases shall not impair in any manner the
validity of or priority of the liens and security interest in the remaining
Collateral conferred under such documents, nor release the Borrower from
liability for the obligations hereby secured, nor release any Guarantor from any
obligation under the Guaranty Agreement. Notwithstanding the existence of any
other security interest in the Collateral held by the Bank, the Bank shall have
the right to determine the order in which any or all of the Collateral shall be
subjected to the remedies provided herein, or in the Security Instruments. The
Borrower and the Guarantors hereby waive any and all right to require the
marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein or therein.
ARTICLE IX
MISCELLANEOUS
Section 9.1. INDEMNIFICATION.
(a) The Borrower hereby indemnifies and holds the Bank and
its Affiliates and all of their respective officers, directors,
45
employees, attorneys, consultants and agents (collectively, the "Indemnities")
harmless from and against any and all claims, damages, losses, liabilities,
costs or expenses whatsoever which the Bank may incur (or which may be claimed
against the Bank by any Person) (i) by reason of or in connection with the
execution and delivery or transfer of, or payment or failure to pay under, the
Letter of Credit, provided that the Borrower shall not be required to indemnify
the Bank for any claims, damages, losses, liabilities, costs or expenses to the
extent, but only to the extent, caused by (a) the negligence or willful
misconduct of the Bank in connection with paying drafts presented under the
Letter of Credit or (b) the Bank's wrongful failure to pay under the Letter of
Credit (other than in connection with a court order) after the presentation to
it by the Credit Facility Trustee or a successor corporate fiduciary under the
Indenture of a sight draft and certificate strictly complying with the terms and
conditions of the Letter of Credit; or (ii) by reason of or in connection with
the execution, delivery or performance of any of this Agreement, the Note, the
Bond Documents, the Security Instruments or any transaction contemplated by any
thereof.
(b) The Borrower hereby indemnifies and holds the Bank
harmless from and against any and all damages, penalties, fines, claims, liens,
suits, liabilities, costs (including cleanup costs), judgments and expenses
(including attorneys', consultants' or experts' fees and expenses) of every kind
and nature suffered by or asserted against the Bank as a direct or indirect
result of any warranty or representation made by the Borrower herein, being
false or untrue in any material respect or any requirement under any law,
regulation or ordinance, local, state, or federal, which requires the
elimination or removal of any hazardous materials, substances, wastes or other
environmentally regulated substances.
(c) The Borrower's obligations hereunder to the Bank
(collectively, the "Indemnified Matters") shall not be limited to any extent by
the term of this Agreement, and, as to any act or occurrence prior to the
termination of this Agreement which gives rise to liability hereunder, shall
continue, survive and remain in full force and effect notwithstanding the
termination of the Bank's obligations hereunder.
Anything herein to the contrary notwithstanding, nothing in
this Section 9.1 is intended or shall be construed to limit the Borrower's
reimbursement obligation contained in Article III hereof. Without prejudice to
the survival of any other obligation of the Borrower, the indemnities and
obligations of the Borrower contained in this Section 9.1 shall survive the
payment in full of amounts payable pursuant to Article III and the Termination
Date.
Section 9.2. TRANSFER OF LETTER OF CREDIT. The Letter of Credit may be
transferred and assigned in accordance with the terms of the Letter of Credit.
46
Section 9.3. REDUCTION OF LETTER OF CREDIT.
(a) The Letter of Credit is subject to reduction pursuant
to its terms.
(b) If the amount available to be drawn under the Letter of
Credit shall be permanently reduced in accordance with the terms thereof, then
the Bank shall have the right to require the Credit Facility Trustee to
surrender the Letter of Credit to the Bank and to issue on such date, in
substitution for such outstanding Letter of Credit, a substitute irrevocable
letter of credit, substantially in the form of the Letter of Credit but with
such changes therein as shall be appropriate to give effect to such reduction,
dated such date, for the amount to which the amount available to be drawn under
the Letter of Credit shall have been reduced.
Section 9.4. LIABILITY OF THE BANK. The Borrower, to the extent not
prohibited by applicable law, assumes all risks of the acts or omissions of the
Credit Facility Trustee and any beneficiary or transferee of the Letter of
Credit with respect to its use of the Letter of Credit. Neither the Bank nor any
of its officers, directors, employees, agents or consultants shall be liable or
responsible for:
(a) the use which may be made of the Letter of Credit or for
any acts or omissions of the Credit Facility Trustee or any beneficiary
or transferee in connection therewith;
(b) the validity, sufficiency or genuineness of documents, or
of any endorsement(s) thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged;
(c) payment by the Bank against presentation of documents
which do not comply with the terms of the Letter of Credit, including
failure of any documents to bear any reference or adequate reference to
the Letter of Credit; or
(d) any other circumstances whatsoever in any way related
to the making or failure to make payment under the Letter of Credit;
except only that the Borrower shall have a claim against the Bank, and the
Bank, subject in all cases to the provisions of Sections 9.16 and 9.17 hereof,
shall be liable to the Borrower, to the extent but only to the extent, of any
direct, as opposed to consequential, damages suffered by the Borrower which the
Borrower proves were caused by (i) willful misconduct or gross negligence of the
Bank in determining whether documents presented under the Letter of Credit
complied with the terms of the Letter of Credit or
47
(ii) wrongful failure of the Bank to pay under the Letter of Credit after the
presentation to it by the Credit Facility Trustee or a successor trustee under
the Indenture of a sight draft and certificate strictly complying with the terms
and conditions of the Letter of Credit. In furtherance and not in limitation of
the foregoing, the Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary.
Section 9.5. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Borrower and its successors and assigns and all rights against the
Borrower arising under this Agreement shall be for the sole benefit of the Bank,
its successors and assigns, all of whom shall be entitled to enforce performance
and observance of this Agreement to the same extent as if they were parties
hereto. This provision does not authorize the Borrower to assign its obligations
or to otherwise enter into a transaction not permitted hereunder. The Bank is
hereby authorized to assign all or any part of its rights and obligations
hereunder, and nothing herein or in any other Loan Document shall be construed
as prohibiting the assignment by the Bank of its rights under any Loan Documents
to any Federal Reserve Bank in accordance with applicable law.
Section 9.6. NOTICES. All notices, requests and demands to or upon the
respective parties hereto shall be deemed to have been given or made when hand
delivered or mailed first class, certified or registered mail, postage prepaid,
or by overnight courier service, addressed as follows or to such other address
as the parties hereto shall have been notified pursuant to this Section 9.6:
The Bank: First Union National Bank
of Florida
First Union Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ Fine
The Borrower: Trilectron Industries, Inc.
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
except in cases where it is expressly herein provided that such notice, request
or demand is not effective until received or refused by the party to whom it is
addressed, in which event said notice, request or demand shall be effective only
upon receipt by the addressee.
48
Section 9.7. AMENDMENT. This Agreement may be amended, modified or
discharged only upon an agreement in writing of the Borrower and the Bank.
Section 9.8. EFFECT OF DELAY AND WAIVERS. No delay or omission to
exercise any right or power accruing upon any default, omission or failure of
performance hereunder shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient. In order to entitle the Bank to
exercise any remedy now or hereafter existing at law or in equity or by statute,
it shall not be necessary to give any notice, other than such notice as may be
herein expressly required. In the event any provision contained in this
Agreement should be breached by any party and thereafter waived by the other
party so empowered to act, such waiver shall be limited to the particular breach
hereunder. No waiver, amendment, release or modification of this Agreement shall
be established by conduct, custom or course of dealing, but solely by an
instrument in writing duly executed by the parties thereunto duly authorized by
this Agreement.
Section 9.9. COUNTERPARTS. This Agreement may be executed
simultaneously in several counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
Section 9.10. SEVERABILITY. The invalidity or unenforceability of any
one or more phrases, sentences, clauses or Sections contained in this Agreement
shall not affect the validity or enforceability of the remaining portions of
this Agreement, or any part thereof.
Section 9.11. COST OF COLLECTION. The Borrower shall be liable for the
payment of all fees and expenses, including attorneys' fees (computed without
regard to any statutory presumption), incurred in connection with the
enforcement of this Agreement.
Section 9.12. SET OFF. Upon the occurrence of an Event of Default
hereunder, the Bank is hereby authorized, without notice to the Borrower, to set
off, appropriate and apply any and all monies, securities and other properties
of the Borrower hereafter held or received by or in transit to the Bank from or
for the Borrower, against the obligations of the Borrower irrespective of
whether the Bank shall have made any demand hereunder or under any Security
Instrument although such obligations may be contingent or unmatured.
Section 9.13. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of
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Florida. The Borrower hereby acknowledges that the Letter of Credit shall be
governed by and construed in accordance with Uniform Customs and Practice for
Documentary Credits (1994 Revisions), International Chamber of Commerce
Publication No. 500.
Section 9.14. REFERENCES. The words "herein", "hereof", "hereunder" and
other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Section 9.15. TAXES, ETC. Any taxes (excluding income taxes) payable to
or ruled payable by federal or state authority in respect of the Letter of
Credit, this Agreement, the Note or the Security Instruments shall be paid by
the Borrower upon demand by the Bank, together with interest and penalties, if
any.
Section 9.16 ASSIGNMENT, PLEDGE OF REIMBURSEMENT AGREEMENT. Nothing
herein or in any Bond Document or Security Instrument shall prohibit the Bank
from pledging or assigning the obligations hereunder or under the Security
Instruments, including the collateral therefor, to any Federal Reserve Bank in
accordance with applicable law. The Borrower consents to any such pledge in
assignment pursuant to this section.
Borrower and Lender agree that they shall not have a remedy of punitive
or exemplary damages against the other in any Dispute and hereby waive any right
or claim to punitive or exemplary damages they have now or which may arise in
the future in connection with any Dispute whether the Dispute is resolved by
arbitration or judicially.
Section 9.17 CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL. THE
BORROWER AND EACH GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE
COURT WITHIN DADE COUNTY, FLORIDA OR ANY FEDERAL COURT LOCATED WITHIN THE
SOUTHERN DISTRICT OF THE STATE OF FLORIDA, FOR ANY PROCEEDING TO WHICH THE BANK
IS A PARTY AND CONSENTS THAT ALL SERVICE OF PROCESS BE MADE BY REGISTERED OR
CERTIFIED MAIL DIRECTED TO THE BORROWER AND EACH GUARANTOR AT THE ADDRESS
INDICATED IN SECTION OR AT SUCH OTHER ADDRESS AS THE BORROWER AND EACH GUARANTOR
MAY HAVE DESIGNATED IN WRITING TO THE BANK, AND SERVICE SO MADE SHALL BE DEEMED
TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT THEREOF OR THREE (3) DAYS
AFTER DEPOSIT IN THE UNITED STATES MAILS, PROPER POSTAGE PREPAID AND PROPERLY
ADDRESSED. TO THE EXTENT PERMITTED BY LAW, THE BORROWER AND EACH GUARANTOR
VOLUNTARILY AND KNOWINGLY WAIVES TRIAL BY JURY AND WAIVES ANY OBJECTION WHICH IT
MAY HAVE BASED ON LACK OF JURISDICTION OR IMPROPER VENUE OR FORUM NON CONVENIENS
TO THE CONDUCT OF ANY PROCEEDING INSTITUTED HEREUNDER, OR ARISING OUT OF OR IN
CONNECTION WITH THIS REIMBURSEMENT AGREEMENT, OR ANY PROCEEDING TO WHICH THE
BANK IS A PARTY, INCLUDING ANY ACTIONS BASED UPON, ARISING OUT OF OR IN
CONNECTION WITH ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER
ORAL OR WRITTEN) OR ACTIONS OF THE BANK OR THE BORROWER OR
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ANY GUARANTOR. NOTHING IN THIS SECTION SHALL AFFECT THE RIGHT OF THE BANK TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF
THE BANK TO BRING ANY ACTION AND PROCEEDING AGAINST THE BORROWER OR THE
COLLATERAL IN THE COURTS OF ANY JURISDICTION THAT HAS JURISDICTION OVER THE
BORROWER OR THE PLEDGED COLLATERAL.
IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Agreement to be executed in their respective names and their respective seals to
be hereunto affixed and attested by their duly authorized representatives, all
as of the date first above written.
THE BORROWER:
TRILECTRON INDUSTRIES, INC.
By: ______________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Treasurer
THE BANK:
FIRST UNION NATIONAL BANK OF
FLORIDA
By: ______________________________
▇▇▇▇▇ Fine, Vice President
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