Exhibit 10.1
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LOAN AGREEMENT
by and between
CALIFORNIA INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK
and
ROLLER BEARING COMPANY OF AMERICA, INC.
Dated as of April 1, 1999
All right, title and interest of the CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK (the "Issuer") in this Loan Agreement has been
assigned (except for amounts payable under Sections 4.02(b), 7.03, 9.02 and 9.03
hereof, its right to receive notices, opinions and other documents required to
be delivered to the Issuer hereunder and its rights to consent to certain
actions) to U.S. Bank Trust National Association, as trustee (the "Trustee")
pursuant to the Indenture of Trust, dated as of April 1, 1999, between the
Issuer and the Trustee, and is subject to such assignment.
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TABLE OF CONTENTS
Page
Article I
DEFINITIONS
Section 1.01. Definition of Terms...........................................................2
Section 1.02. Number and Gender.............................................................2
Section 1.03. Articles, Sections, Etc.......................................................2
Article II
REPRESENTATIONS
Section 2.01. Representations of the Issuer.................................................2
Section 2.02. Representations of the Borrower...............................................3
Section 2.03. Registered Owners to Benefit..................................................5
Article III
CONSTRUCTION OF THE PROJECT; ISSUANCE OF THE BONDS
Section 3.01. Construction of the Project...................................................5
Section 3.02. Disbursements from the Project Fund and the Costs of Issuance Fund............6
Section 3.03. Establishment of Completion Date; Obligation of Borrower to Complete..........6
Section 3.04. Investment of Moneys in Funds.................................................7
Article IV
LOAN OF PROCEEDS; REPAYMENT PROVISIONS
Section 4.01. Loan of Bond Proceeds; Issuance of Bonds......................................7
Section 4.02. Loan Repayments and Other Amounts Payable.....................................7
Section 4.03. Purchase of Bonds.............................................................9
Section 4.04. Unconditional Obligations.....................................................9
Section 4.05. Assignment of Issuer's Rights................................................10
Section 4.06. Amounts Remaining in Funds...................................................10
TABLE OF CONTENTS
(continued)
Page
Article V
SPECIAL COVENANTS AND AGREEMENTS
Section 5.01. Right of Access to the Project...............................................10
Section 5.02. The Borrower's Maintenance of its Existence..................................10
Section 5.03. Records and Financial Statements of Borrower; Employment Practices...........11
Section 5.04. Insurance....................................................................12
Section 5.05. Maintenance and Repair; Taxes; Utility and Other Charges.....................12
Section 5.06. Incorporation, Formation, Organization or Qualification in California........12
Section 5.07. Alternate Credit Facility....................................................13
Section 5.08. Letter of Credit.............................................................13
Section 5.09. Covenants of the Borrower....................................................14
Section 5.10. Capital Expenditures.........................................................17
Section 5.11. Special Arbitrage Certifications.............................................19
Section 5.12. Covenant to Enter into Agreement or Contract to Provide Ongoing Disclosure...19
Section 5.13. No Purchase of Bonds.........................................................19
Article VI
DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF PROCEEDS
Section 6.01. Obligation to Continue Payments..............................................20
Section 6.02. Application of Net Proceeds..................................................20
Section 6.03. Insufficiency of Net Proceeds................................................20
Section 6.04. Damage to or Condemnation of Other Property..................................20
Article VII
LOAN DEFAULT EVENTS AND REMEDIES
Section 7.01. Loan Default Events..........................................................21
Section 7.02. Remedies on Default..........................................................22
Section 7.03. Agreement to Pay Attorneys' Fees and Expenses................................23
Section 7.04. No Remedy Exclusive..........................................................23
Section 7.05. Waivers......................................................................23
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TABLE OF CONTENTS
(continued)
Page
Article VIII
PREPAYMENT
Section 8.01. Redemption of Bonds with Prepayment Moneys...................................24
Section 8.02. Options to Prepay Loan.......................................................24
Section 8.03. Mandatory Prepayment.........................................................25
Section 8.04. Amount of Prepayment.........................................................26
Section 8.05. Notice of Prepayment.........................................................26
Article IX
NON-LIABILITY OF ISSUER; EXPENSES; INDEMNIFICATION
Section 9.01. Non-Liability of Issuer......................................................26
Section 9.02. Expenses.....................................................................27
Section 9.03. Indemnification..............................................................27
Article X
MISCELLANEOUS
Section 10.01. Notices......................................................................28
Section 10.02. Severability.................................................................29
Section 10.03. Execution of Counterparts....................................................29
Section 10.04. Amendments, Changes and Modifications........................................29
Section 10.05. Governing Law................................................................29
Section 10.06. Authorized Representative of the Borrower....................................29
Section 10.07. Term of the Agreement........................................................30
Section 10.08. Binding Effect...............................................................30
Section 10.09. References to Bank...........................................................30
Section 10.10. Brokerage Confirmations......................................................30
EXHIBIT A THE PROJECT
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of April 1, 1999, between the CALIFORNIA
INFRASTRUCTURE AND ECONOMIC DEVELOPMENT BANK, an entity within the Trade and
Commerce Agency of the State of California (the "Issuer"), and ROLLER BEARING
COMPANY OF AMERICA, INC., a corporation duly organized and validly existing
under the laws of the State of Delaware (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Issuer was established for the purpose of financing
projects needed to implement economic development and job creation and growth
management strategies within the State of California (the "State") and is
authorized to issue tax-exempt revenue bonds to provide financing for private
activity economic development projects pursuant to the provisions of Section
63000 ET SEQ. of the California Government Code (constituting Division 1 of
Title 6.7 of the Government Code of the State of California, as now in effect)
(the "Act"); and
WHEREAS, in furtherance of the purposes of the Issuer set forth above,
the Issuer proposes to finance the acquisition, construction, rehabilitation,
equipping, installation, improvement and/or furnishing of the manufacturing
facilities described in Exhibit A hereto (the "Project") to be owned and
operated by the Borrower; and
WHEREAS, pursuant to and in accordance with the provisions of the Act,
the Issuer has authorized and undertaken the issuance of its California
Infrastructure and Economic Development Bank Variable Rate Demand Industrial
Development Revenue Bonds, Series 1999 (Roller Bearing Company of America, Inc.
- Santa ▇▇▇ Project) (the "Bonds") in the aggregate principal amount of Four
Million Eight Hundred Thousand Dollars ($4,800,000) to provide funds to pay a
portion of the cost of the Project and a portion of the costs of issuance of the
Bonds; and
WHEREAS, the Issuer proposes to loan the proceeds of the Bonds to the
Borrower, and the Borrower desires to borrow the proceeds of the Bonds upon the
terms and conditions set forth herein; and
WHEREAS, for and in consideration of such loan, the Borrower agrees,
INTER ALIA, to make loan payments sufficient to pay on the dates specified in
Section 4.02 hereof, the principal of, premium, if any, and interest on, the
Bonds; and
WHEREAS, the Issuer and the Borrower each has duly authorized the
execution and delivery of this Agreement;
NOW, THEREFORE, for and in consideration of the premises and the
material covenants hereinafter contained, the parties hereto hereby formally
covenant, agree and bind themselves as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITION OF TERMS. Unless otherwise defined herein or
the context otherwise requires, the terms used in this Agreement shall have the
meanings specified in Section 1.01 of the Indenture of Trust, dated as of April
1, 1999 (the "Indenture"), by and between the Issuer and U.S. Bank Trust
National Association, as trustee (the "Trustee"), as originally executed or as
it may from time to time be supplemented or amended as provided therein.
SECTION 1.02. NUMBER AND GENDER. The singular form of any word used
herein, including the terms defined in Section 1.01 of the Indenture, shall
include the plural, and vice versa. The use herein of a word of any gender shall
include all genders.
SECTION 1.03. ARTICLES, SECTIONS, ETC. Unless otherwise specified,
references to Articles, Sections and other subdivisions in this Agreement are to
the designated Articles, Sections and other subdivisions of this Agreement as
amended from time to time. The words "hereof," "herein," "hereunder" and words
of similar import refer to this Agreement as a whole. The headings or titles of
the several Articles and Sections, and the table of contents included herein,
shall be solely for convenience of reference and shall not affect the meaning,
construction or effect of the provisions hereof.
ARTICLE II
REPRESENTATIONS
SECTION 2.01. REPRESENTATIONS OF THE ISSUER. The Issuer makes the
following representations as the basis for its undertakings herein contained:
(a) The Issuer is an entity within the Trade and Commerce
Agency of the State. Under the provisions of the Act, the Issuer has
the power to enter into the transactions contemplated by this Agreement
and the Indenture and to carry out its obligations hereunder. By proper
action, the Issuer has been duly authorized to execute, deliver and
duly perform its obligations under this Agreement and the Indenture.
(b) To finance the Costs of the Project and certain Costs of
Issuance, the Issuer will issue the Bonds, which will mature, bear
interest and be subject to redemption as set forth in the Indenture.
(c) The Bonds will be issued under and secured by the
Indenture, pursuant to which the Issuer's interest in this Agreement
(except certain rights of the Issuer to payment for expenses and
indemnification) will be pledged and assigned to the Trustee as
security for payment of the principal of, premium, if any, and interest
on the Bonds and to the Bank, on a basis subordinate thereto, as
security for the payment of the obligations of the Borrower under the
Credit Agreement.
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(d) The Issuer has not pledged and will not pledge its
interest in this Agreement for any purpose other than to secure the
Bonds under the Indenture and the obligations of the Borrower under the
Credit Agreement.
(e) The Issuer is not in default under any of the provisions
of the laws of the State which default would affect its existence or
its powers referred to in subsection (a) of this Section.
(f) The Issuer has found and determined and hereby finds and
determines that (i) the Loan to be made hereunder with the proceeds of
the Bonds will promote the purposes of the Act by providing funds to
finance the Construction of the Project; and (ii) said Loan is in the
public interest, serves the public purposes and meets the requirements
of the Act.
(g) No member, officer or other official of the Issuer has any
financial interest whatsoever in the Borrower or in the transactions
contemplated by this Agreement and the Indenture.
(h) Neither the execution and delivery of this Agreement, the
Indenture, the Purchase Contract or the Tax Regulatory Agreement, the
consummation of the transactions contemplated hereby or thereby, nor
the fulfillment of or compliance with the terms and conditions of this
Agreement, the Indenture, the Purchase Contract or the Tax Regulatory
Agreement, conflict with or result in a breach of any of the terms,
conditions or provisions of any restriction or any agreement or
instrument to which the Issuer is now a party or by which it is bound
or constitute a default under any of the foregoing or result in the
creation or imposition of any prohibited lien, charge or encumbrance of
any nature whatsoever upon any of the property or assets of the Issuer
under the terms of any instrument or agreement.
SECTION 2.02. REPRESENTATIONS OF THE BORROWER. The Borrower makes the
following representations as the basis for its undertakings herein contained:
(a) The Borrower is a corporation, duly organized, validly
existing and in good standing under the laws of the State and is duly
qualified to transact business in the State.
(b) The execution, delivery and performance by the Borrower of
this Agreement, the Credit Agreement, the Remarketing Agreement, the
Tax Regulatory Agreement and all other documents contemplated hereby to
be executed by the Borrower are within the Borrower's power and have
been duly authorized by all necessary corporate action, and neither the
execution and delivery of this Agreement, the Credit Agreement, the
Remarketing Agreement or the Tax Regulatory Agreement or the
consummation of the transactions contemplated hereby and thereby, nor
the fulfillment of or compliance with the terms and conditions hereof
and thereof, conflicts with or results in a breach of any of the
material terms, conditions or provisions of any of the
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Borrower's Organization Documents, or of any law, statute, rule,
regulation, order, judgment, award, injunction, or decree or of any
material agreement or instrument to which the Borrower is now a party
or by which it is bound or affected, or constitutes a default (or would
constitute a default with due notice or the passage of time or both)
under any of the foregoing, or results in or requires the creation or
imposition of any prohibited lien, charge or encumbrance whatsoever
upon any of the property or assets of the Borrower under the terms of
any instrument or agreement to which the Borrower is now a party or by
which it is bound, except as would not have a material adverse effect
on the operations of the Borrower, taken as a whole.
(c) The estimated Costs of the Project to be paid with the
proceeds of the Bonds are as set forth in the Tax Regulatory Agreement
and have been determined in accordance with commercially reasonable
engineering, construction, and accounting principles. All the
information and representations in the Tax Regulatory Agreement are
true and correct in all material respects as of the date thereof.
(d) The Project consists and will consist of those facilities
and equipment described in Exhibit A and the Borrower shall not make
any changes to the Project or to the operation thereof which would
affect the qualification of the Project under the Act or would cause
interest on the Bonds not to be Tax-exempt. The Borrower intends to own
and operate the Project. The Borrower covenants and agrees to operate
or cause the operation of the Project as a facility described by the
Act until the principal of, the premium, if any, and the interest on
the Bonds shall have been paid.
(e) The Borrower has and will have title to the Project
sufficient to carry out the purposes of this Agreement.
(f) At the time of submission of an application to the Issuer
for financial assistance in connection with the Project and on the
dates on which action was taken on such application, permanent
financing for the Project had not otherwise been obtained or arranged.
(g) To the knowledge of the Borrower, no member, officer or
other official of the Issuer has any financial interest whatsoever in
the Borrower or in the transactions contemplated by this Agreement.
(h) All certificates, approvals, permits and authorizations
with respect to the Construction of the Project of the State, the City
of Santa Ana, California, the federal government and other applicable
local governmental agencies have been obtained, or if not yet obtained,
are reasonably expected to be obtained in due course. The Project will
be consistent with any existing local or regional comprehensive plan.
(i) No event has occurred and no condition exists which would
constitute a Loan Default Event or which, with the passing of time or
with the giving of notice or both, would constitute a Loan Default
Event.
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(j) There is no litigation or proceeding pending or, to the
knowledge of the Borrower, threatened against the Borrower which could
materially and adversely affect the validity of this Agreement, the
Credit Agreement, the Remarketing Agreement or the Tax Regulatory
Agreement or the ability of the Borrower to comply with the terms of
its obligations under this Agreement, the Credit Agreement, the
Remarketing Agreement or the Tax Regulatory Agreement.
(k) No consent, authorization or approval, except such
consents, authorizations or approvals as have been obtained prior to
the execution and delivery of this Agreement, from any governmental,
public or quasi-public body or authority of the United States or of the
State or any department or subdivision thereof, is necessary for the
due execution and delivery by the Borrower of this Agreement.
SECTION 2.03. REGISTERED OWNERS TO BENEFIT. The Borrower agrees that
this Agreement is executed in part to induce the purchase by others of the
Bonds. Accordingly, all covenants and agreements on the part of the Borrower set
forth in this Agreement are hereby declared to be for the benefit of the
Registered Owners from time to time of such Bonds; provided, however, that such
covenants and agreements shall create no rights in any parties other than the
Issuer and such Registered Owners.
ARTICLE III
CONSTRUCTION OF THE PROJECT; ISSUANCE OF THE BONDS
SECTION 3.01. CONSTRUCTION OF THE PROJECT. The Borrower agrees that,
utilizing the proceeds of the Bonds loaned pursuant to Section 4.01 hereof and
such other funds as may be necessary, it has or will Construct, or has or will
cause the Construction of, the Project, and has or will acquire, rehabilitate,
equip, construct and install all other facilities and real and personal property
necessary for the operation of the Project as described in the Borrower's
application to the Issuer for assistance in financing the Project, substantially
in accordance with the plans and specifications prepared therefor by the
Borrower, including any and all supplements, amendments, additions or deletions
thereto or therefrom, it being understood that the approval of the Issuer shall
not be required for changes in such plans and specifications which do not alter
the purpose or description of the Project as set forth in Exhibit A hereto. The
Borrower further agrees to proceed with due diligence to complete the Project
within three years from the date hereof.
In the event that the Borrower desires to modify the Project in a
manner which alters the purpose or description of the Project as set forth in
Exhibit A hereto, such modification shall be undertaken only upon an amendment
to Exhibit A which shall accurately set forth the description and purpose of the
Project as so modified and which amendment to Exhibit A shall become effective
(without the written consent of the Registered Owners) upon receipt by the
Issuer and the Trustee of:
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(a) a certificate of the Authorized Representative of the
Borrower describing in detail the proposed changes and stating that
they will not have the effect of disqualifying the Project as a
facility that may be financed pursuant to the Act nor reduce the
employment benefits described in the Borrower's application to the
Issuer for assistance in financing the Project;
(b) an Opinion of Bond Counsel that the proposed changes to
the Project will not have the effect of disqualifying the Project as a
facility that may be financed pursuant to the Act or cause interest on
the Bonds not to be Tax-exempt;
(c) a copy of the proposed form of amended or supplemented
Exhibit A hereto; and
(d) the written approval of the Bank and the Trustee.
SECTION 3.02. DISBURSEMENTS FROM THE PROJECT FUND AND THE COSTS OF
ISSUANCE FUND. The Borrower will authorize and direct the Trustee, upon
compliance with Section 3.03 of the Indenture, to disburse the moneys in the
Project Fund to or on behalf of the Borrower only for payment of Costs of the
Project. Each of the payments from the Project Fund referred to in this Section
shall be made upon receipt by the Trustee of a written Requisition in the form
prescribed by Section 3.03 of the Indenture, signed by the Authorized
Representative of the Borrower accompanied by the written approval of the Bank.
Moneys in the Costs of Issuance Fund shall be disbursed by the Trustee
as provided in Section 3.03(e) of the Indenture to pay Costs of Issuance.
SECTION 3.03. ESTABLISHMENT OF COMPLETION DATE; OBLIGATION OF BORROWER
TO COMPLETE. Promptly upon the completion of the Construction of the Project,
the Authorized Representative of the Borrower, on behalf of the Borrower, shall
evidence the completion date by providing a certificate to the Trustee, with a
copy to the Issuer and the Bank, stating the Costs of the Project and further
stating that (a) Construction of the Project has been completed substantially in
accordance with the plans and specifications therefor, and all labor, services,
materials and supplies used in Construction have been paid for or stating the
amount required to be retained in the Project Fund to fully provide for any
disputed amounts, and (b) all other equipment and facilities for the operation
of the Project have been acquired, constructed and installed in accordance with
the plans and specifications therefor and all costs and expenses incurred in
connection therewith have been paid or provided for. Notwithstanding the
foregoing, such certificate may state that it is given without prejudice to any
rights of the Borrower against third parties.
At the time such certificate is delivered to the Trustee, moneys
remaining in the Project Fund, including any earnings resulting from the
investment of such moneys, less an amount representing a reasonable retainage
determined by the Borrower, shall be used as provided in Section 3.03(d) of the
Indenture.
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In the event the moneys in the Project Fund available for payment of
the Costs of the Project should be insufficient to pay the Costs of the Project
in full, the Borrower agrees to pay directly, or to deposit in the Project Fund
moneys sufficient to pay, any costs of completing the Construction of the
Project in excess of the moneys available for such purpose in the Project Fund,
or otherwise cause the Construction of the Project to be completed. The Issuer
makes no express or implied warranty that the moneys deposited in the Project
Fund and available for payment of the Costs of the Project under the provisions
of this Agreement will be sufficient to pay all the amounts which may be
incurred in connection with the Construction of the Project. The Borrower agrees
that if, after exhaustion of the moneys in the Project Fund, the Borrower should
elect to pay, or to deposit moneys in the Project Fund for the payment of, any
portion of the Costs of the Project pursuant to the provisions of this Section,
it shall not be entitled to any reimbursement therefor from the Issuer, the
Trustee or the Registered Owners of any of the Bonds, nor shall it be entitled
to any diminution of the amounts payable under Section 4.02 hereof.
SECTION 3.04. INVESTMENT OF MONEYS IN FUNDS. Any moneys in any fund
held by the Trustee shall, at the written request of the Authorized
Representative of the Borrower, but subject to the restrictions on investments
contained in the Indenture and the Tax Regulatory Agreement in connection with
the Tax-exempt status of interest on the Bonds, be invested or reinvested by the
Trustee as provided in the Indenture. Such investments shall be held by the
Trustee and shall be deemed at all times a part of the fund from which such
investments were made, and the interest accruing thereon, and any profit or loss
realized therefrom, shall be credited or charged as provided in Section 5.05 of
the Indenture.
ARTICLE IV
LOAN OF PROCEEDS; REPAYMENT PROVISIONS
SECTION 4.01. LOAN OF BOND PROCEEDS; ISSUANCE OF BONDS. The Issuer
covenants and agrees, upon the terms and conditions in this Agreement, to loan
the proceeds of the sale of the Bonds to the Borrower for the purpose of
financing the Costs of the Project and the Costs of Issuance to the extent
permitted by the Indenture. Pursuant to said covenant and agreement, the Issuer
will issue the Bonds upon the terms and conditions contained in this Agreement
and the Indenture and will cause the Bond proceeds to be applied as provided in
Article III of the Indenture. Subject to Section 3.02 of the Indenture, such
proceeds shall be disbursed to or on behalf of the Borrower as provided in
Section 3.02 hereof. The Borrower hereby approves the Indenture and the issuance
thereunder by the Issuer of the Bonds.
SECTION 4.02. LOAN REPAYMENTS AND OTHER AMOUNTS PAYABLE.
(a) On or before each Bond Payment Date, until the principal
of, premium, if any, and interest on the Bonds shall have been fully
paid or provision for such payment shall have been made as provided in
the Indenture, the Borrower covenants and agrees to pay to the Trustee
as a Loan Repayment on the Loan made to the Borrower from Bond proceeds
pursuant to Section 4.01 hereof, a sum equal to the amount payable on
such
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Bond Payment Date as principal of, and premium, if any, and interest on
the Bonds as provided in the Indenture.
The Loan Repayments made pursuant to this subsection (a) shall
at all times be sufficient to pay the total amount of interest and
principal (whether at maturity or upon redemption or acceleration) and
premium, if any, becoming due and payable on the Bonds on each Bond
Payment Date; provided that any amount held by the Trustee in the
Revenue Fund on the due date for a Loan Repayment pursuant to the
immediately preceding paragraph shall be credited against the Loan
Repayment due on such date to the extent available for such purpose
under the terms of the Indenture; and provided further that, subject to
the provisions of this paragraph, if at any time the amounts held by
the Trustee in the Revenue Fund are sufficient to pay all of the
principal of and interest and premium, if any, on the Bonds as such
payments become due, the Borrower shall be relieved of any obligation
to make any further Loan Repayments under the provisions of this
Section. Notwithstanding the foregoing, if on any date the amount held
by the Trustee in the Revenue Fund is insufficient to make any required
payments of principal of (whether at maturity or upon redemption or
acceleration) and interest and premium, if any, on the Bonds as such
payments become due, the Borrower, immediately upon receipt of notice
of such deficiency from the Trustee, shall forthwith pay such
deficiency as a Loan Repayment hereunder.
The obligation of the Borrower to make any payment under this
subsection (a) shall be deemed to have been satisfied to the extent of
any corresponding payment made by the Bank to the Trustee as a result
of a drawing under the Letter of Credit. To the extent the Trustee
receives a Loan Repayment from the Borrower pursuant to this subsection
(a) after any payment obligation hereunder has been satisfied by a
drawing under the Letter of Credit, the Trustee shall promptly use such
Loan Repayment to reimburse the Bank for such drawing or if the Bank
has been reimbursed directly by the Borrower such funds shall be
returned to the Borrower.
(b) The Borrower covenants and agrees to pay until the
principal of, premium, if any, and interest on the Bonds shall have
been fully paid or provision for such payment shall have been made as
provided in the Indenture, (i) the Trustee's reasonable annual fee for
its ordinary services rendered as trustee, and its reasonable ordinary
expenses incurred under the Indenture, as and when the same become due,
(ii) the Trustee's reasonable fees, charges and expenses, as Bond
Registrar, Tender Agent and Paying Agent, and the reasonable fees of
any other paying agent for the Bonds as provided in the Indenture, as
and when the same become due, (iii) the cost of providing any Bonds
required to be provided pursuant to the Indenture, (iv) the reasonable
fees of any rating agency then rating the Bonds required to maintain
the rating on the Bonds, (v) the reasonable fees of the Remarketing
Agent, and (vi) other necessary and ordinary administrative fees and
expenses of the Issuer. The Borrower covenants and agrees to make all
payments for the expenses identified in (i) through (vi) above. In
addition, the Borrower agrees to pay such extraordinary expenses
incurred by the Trustee, the Tender Agent, the Remarketing Agent and
the Issuer under the Indenture as and when the same become due. The
duties
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of the Borrower under this subsection (b) shall survive the termination
of this Agreement and the termination and discharge of the Indenture.
(c) The Borrower also agrees to pay the fees and expenses of
the Bank pursuant to the Credit Agreement.
(d) In the event the Borrower should fail to make any of the
payments required by subsections (a) through (c) of this Section, such
payments shall continue as obligations of the Borrower until such
amounts shall have been fully paid. The Borrower agrees to pay all such
amounts required by subsection (b) of this Section, together with
interest thereon, from the date such payments were due until paid, to
the extent permitted by law, at the rate of 10% per annum. Interest on
overdue payments required under subsection (a) above shall be paid to
Registered Owners as provided in Section 2.02(b)(ii) of the Indenture.
SECTION 4.03. PURCHASE OF BONDS. The Borrower hereby recognizes and
agrees that the Indenture provides for the creation of an account or accounts to
facilitate the purchase of Bonds by the Tender Agent on the Mandatory Tender
Date and upon the optional tender of Bonds in accordance with Section 4.06 of
the Indenture, and the Borrower agrees to provide or cause to be provided the
Letter of Credit for the payment of amounts necessary to purchase such Bonds.
SECTION 4.04. UNCONDITIONAL OBLIGATIONS. The obligations of the
Borrower to make the payments required by Section 4.02 hereof and to provide or
cause to be provided the Letter of Credit pursuant to Section 4.03 hereof, and
to perform and observe the other agreements on its part contained herein, shall
be absolute and unconditional, irrespective of any defense or any rights of
set-off, recoupment or counterclaim it might otherwise have against the Issuer,
and during the term of this Agreement, the Borrower shall pay absolutely all
payments to be made on account of the Loan made to the Borrower from Bond
proceeds pursuant to Section 4.01 hereof, as prescribed in Section 4.02 hereof,
the obligation to provide or cause to be provided the Letter of Credit pursuant
to Section 4.03 hereof, and all other payments required hereunder, free of any
deductions and without abatement, diminution or set-off. Until such time as the
principal of, premium, if any, and interest on the Bonds shall have been fully
paid, or provision for the payment thereof shall have been made as required by
the Indenture, the Borrower (a) will not suspend or discontinue any payments
required to be made by the Borrower pursuant to this Agreement, including,
without limitation, the payments provided for in Section 4.02 hereof and the
obligation to provide or cause to be provided the Letter of Credit pursuant to
Section 4.03 hereof; (b) will perform and observe all of its other covenants
contained in this Agreement in all material respects; and (c) except as provided
in Article VIII hereof, will not terminate this Agreement for any cause,
including, without limitation, failure to complete the Project, the occurrence
of any act or circumstances that may constitute failure of consideration,
destruction of or damage to the Project, commercial frustration of purpose, any
change in the tax or other laws of the United States of America or of the State,
or any political subdivision of either of these, or any failure of the Issuer or
the Trustee to perform and observe any covenant, whether express or implied, or
any duty, liability or obligation arising out of or connected with this
Agreement or the Indenture.
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SECTION 4.05. ASSIGNMENT OF ISSUER'S RIGHTS. As security for the
payment of the Bonds, the Issuer will assign to the Trustee the Issuer's rights,
title and interest under this Agreement, including the right to receive payments
hereunder (except the right of the Issuer to receive certain payments, if any,
with respect to expenses and indemnification under Sections 4.02(b), 7.03, 9.02
and 9.03 hereof, the Issuer's right to receive notices, opinions and other
documents required to be delivered to the Issuer hereunder and the Issuer's
rights to consent to certain actions taken hereunder), and the Issuer hereby
directs the Borrower to make the payments required hereunder (except such
payments for expenses and indemnification) directly to the Trustee as more fully
set forth in this Agreement. The Borrower hereby assents to such assignment,
agrees to make such payments directly to the Trustee and agrees that the
provisions of Section 4.04 hereof shall apply to its obligation to make such
payments.
SECTION 4.06. AMOUNTS REMAINING IN FUNDS. It is agreed by the parties
hereto that after: (a) payment in full of the principal of, premium, if any, and
interest on, the Bonds, or after provision for such payment shall have been made
as provided in the Indenture, (b) payment, or provision for payment satisfactory
to the Trustee and paying agents, of the fees, charges and expenses of the
Trustee and paying agents in accordance with the Indenture, (c) payment, or
provision for payment satisfactory to the affected parties, of all other amounts
required to be paid under this Agreement and the Indenture by the Borrower and
(d) payment to the Bank of any amounts owed to the Bank by the Borrower under
the Credit Agreement with respect to the Letter of Credit, any amounts remaining
in any fund held by the Trustee under the Indenture shall be paid in accordance
with the requirements of Section 10.04 of the Indenture.
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
SECTION 5.01. RIGHT OF ACCESS TO THE PROJECT. The Borrower agrees that
during the term of this Agreement, the Issuer, the Trustee and the duly
authorized agents of any of them shall have the right, after reasonable notice
to the Borrower, at all reasonable times during normal business hours to enter
upon the site of the Project to examine and inspect the Project. The rights of
access hereby reserved to the Issuer, the Trustee, and their respective agents,
may be exercised only after the Person seeking such access shall have executed
such confidentiality or secrecy agreements, if any, as may be reasonably
requested by the Borrower. Nothing contained in this Section or in any other
provision of this Agreement shall be construed to entitle the Issuer or the
Trustee to any information or inspection involving the confidential knowledge,
expertise or know-how of the Borrower.
SECTION 5.02. THE BORROWER'S MAINTENANCE OF ITS EXISTENCE. The Borrower
covenants and agrees that it will maintain its existence and will not dissolve,
nor will it sell or otherwise transfer the Project or all or substantially all
of its assets, nor will it consolidate with or merge into another entity or
permit one or more other entities to consolidate with or merge into it.
Notwithstanding the foregoing, the Borrower may, without violating the covenants
contained in this Section, consolidate with or merge into another entity, or
permit one or more other entities to
10
consolidate with or merge into it, or sell or otherwise transfer to another
entity the Project or all or substantially all of its assets as an entirety and
thereafter dissolve, if:
(a) The surviving, resulting or transferee entity, as the case
may be:
(i) assumes in writing, if such entity is not the
Borrower, all of the obligations of the Borrower under this
Agreement;
(ii) is not, after such transaction, otherwise in
default under any provisions of this Agreement; and
(iii) is qualified to do business in the State;
(b) The Trustee and the Issuer shall have received an Opinion
of Bond Counsel to the effect that such merger, consolidation, sale or
other transfer will not cause interest on the Bonds not to be
Tax-exempt; and
(c) The written acknowledgment of the Bank has been received
by the Trustee, together with an acknowledgment that the Letter of
Credit will remain in effect after such merger, consolidation, sale or
other transfer is effected.
If a merger, consolidation, sale or other transfer is effected, as
provided in this Section, the provisions of this Section shall continue in full
force and effect and no further merger, consolidation, sale or transfer shall be
effected except in accordance with the provisions of this Section.
SECTION 5.03. RECORDS AND FINANCIAL STATEMENTS OF BORROWER; EMPLOYMENT
PRACTICES.
(a) The Borrower covenants and agrees at all times to keep, or
cause to be kept, proper books of record and account, prepared in
accordance with generally accepted accounting principles, in which
complete and accurate entries shall be made of all transactions of or
in relation to the business, properties and operations of the Borrower.
Such books of record and account shall be available for inspection by
the Issuer or the Trustee, and the duly authorized agents of either of
them, at reasonable hours and under reasonable circumstances.
(b) Upon the receipt of the written request of the Issuer or
the Trustee, the Borrower further covenants and agrees to furnish the
requesting party, within 120 days after the end of each Fiscal Year,
with copies of its complete financial statements together with a
Certificate of the Authorized Representative of the Borrower stating
that no event which constitutes a Loan Default Event or which with the
giving of notice or the passage of time or both would constitute a Loan
Default Event has occurred and is continuing as of the end of such
Fiscal Year, or specifying the nature of such event and the actions
taken and proposed to be taken by the Borrower to cure such default.
11
(c) The Borrower shall, within 60 days of the receipt of a
written request from the Issuer or the Trustee, furnish a written
report to the requesting party, as of the end of the Borrower's prior
Fiscal Year, stating the status of the Project, the outstanding and
unpaid balance of the Bonds, the number of full-time and part-time
employees of the Borrower employed at the Project during such prior
Fiscal Year, and supplying such current information as the Issuer shall
reasonably request regarding other matters covered in the Borrower's
application for industrial revenue bond financing.
SECTION 5.04. INSURANCE. The Borrower agrees to insure the Project or cause the
Project to be insured during the term of this Agreement for such amounts and for
such occurrences as are customary for similar facilities within the State, or as
may be required by the Bank pursuant to the Credit Agreement, by means of
policies issued by reputable insurance companies qualified to do business in the
State. Upon the written request of the Issuer or the Trustee, the Borrower shall
deliver to the requesting party, within 60 days of the receipt of such request,
memorandum copies of the insurance policies or certificates of insurance which
memorandum copies of insurance policies or certificates of insurance shall
evidence that all insurance required to be in effect under this Section is then
currently in full force and effect. The Trustee and the Issuer are not
responsible for the adequacy or sufficiency of the coverage evidenced by such
policies or certificates.
SECTION 5.05. MAINTENANCE AND REPAIR; TAXES; UTILITY AND OTHER CHARGES.
The Borrower agrees to maintain the Project, or cause the Project to be
maintained, during the term of this Agreement (a) in a safe condition and (b) in
good repair and in good operating condition, ordinary wear and tear excepted,
making from time to time all necessary repairs thereto and renewals and
replacements thereof.
The Borrower agrees to pay or cause to be paid during the term of this
Agreement all taxes, governmental charges of any kind lawfully assessed or
levied upon the Project or any part thereof, including any taxes levied against
the Project which, if not paid, will become a charge on the Project, all utility
and other charges incurred in the operation, maintenance, use, occupancy and
upkeep of the Project and all assessments and charges lawfully made by any
governmental body for public improvements that may be secured by a lien on the
Project; provided that with respect to special assessments or other governmental
charges that may lawfully be paid in installments over a period of years, the
Borrower shall be obligated to pay only such installments as are required to be
paid during the term of this Agreement. The Borrower may, at the Borrower's
expense and in the Borrower's name, in good faith, contest any such taxes,
assessments and other charges and, in the event of any such contest, may permit
the taxes, assessments or other charges so contested to remain unpaid during
that period of such contest and any appeal therefrom unless by such nonpayment
the Project or any part thereof will be subject to loss or forfeiture.
SECTION 5.06. INCORPORATION, FORMATION, ORGANIZATION OR QUALIFICATION
IN CALIFORNIA. The Borrower agrees that throughout the term of this Agreement it
and any lessee of the Project, if any, will be incorporated, formed, organized
or qualified to do business in the State.
12
SECTION 5.07. ALTERNATE CREDIT FACILITY. If the Borrower exercises its
option to convert the interest rate borne by the Bonds from the Weekly Interest
Rate to the Fixed Interest Rate pursuant to the terms and provisions of the
Indenture, the Borrower may cause to be delivered to the Trustee an Alternate
Credit Facility, effective as of the Fixed Rate Date, in lieu of keeping the
Letter of Credit in place as required by Section 5.08 hereof.
Such Alternate Credit Facility must meet the following conditions:
(a) the Alternate Credit Facility must be approved by the
Issuer or its successor;
(b) the terms of the Alternate Credit Facility must provide an
unconditional obligation of the issuer of the Alternate Credit Facility
to pay all amounts with respect to the principal of, premium, if any,
and interest on the Bonds when the same shall become due; and
(c) the term of the Alternate Credit Facility must extend to
the final maturity of the Bonds.
On or prior to the date of the delivery of an Alternate Credit Facility
to the Trustee, the Borrower shall cause to be furnished to the Issuer and the
Trustee (i) an Opinion of Bond Counsel stating that the delivery of such
Alternate Credit Facility to the Trustee is authorized under this Agreement and
complies with the terms hereof and will not cause interest on the Bonds not to
be Tax-exempt, (ii) such other opinions regarding the validity of the Alternate
Credit Facility as the Issuer, the Trustee and any rating agency then rating the
Bonds may reasonably require, and (iii) written evidence from ▇▇▇▇▇'▇, if the
Bonds are then rated by ▇▇▇▇▇'▇, and S&P, if the Bonds are then rated by S&P, to
the effect that such rating agency has reviewed the proposed Alternate Credit
Facility and that the substitution of the proposed Alternate Credit Facility for
the Letter of Credit will not, by itself, result in a reduction of its long term
rating of the Bonds below "A" if the Bonds are rated by S&P or below "A2" if the
Bonds are rated by ▇▇▇▇▇'▇.
SECTION 5.08. LETTER OF CREDIT. The Borrower shall at all times
throughout the term of this Agreement (but subject to Section 5.07 hereof)
maintain or cause to be maintained the Letter of Credit with respect to the
Bonds. The Letter of Credit shall be an obligation of the Bank to pay to the
Trustee, against presentation of sight drafts and certificates required by the
Bank, up to (a) an amount equal to the aggregate principal amount of the Bonds
then Outstanding as necessary to pay the principal of such Bonds, whether at
maturity, redemption, acceleration or otherwise or upon the purchase of such
Bonds upon the optional tender of the Bonds pursuant to Section 4.06 of the
Indenture and on the Mandatory Tender Date, and (b) an amount equal to 50 days
(or such other number of days as may be required to obtain a rating on the
Bonds) of interest on the Bonds calculated at an interest rate of 12% per annum
on the basis of a 365- or 366-day year, as applicable, for the number of days
actually elapsed while the Bonds bear interest at the Weekly Interest Rate and
an amount equal to 210 days (or such other number of days as may be required to
obtain a rating on the Bonds if the Bonds are then rated) of interest on the
Bonds calculated at the actual interest rate or rates on the Bonds on the basis
of a 360-day
13
year of twelve 30-day months while the Bonds bear interest at the Fixed Interest
Rate to pay interest on the Bonds when due.
On any Business Day, the Borrower may, at its option, but with the
written approval of the Issuer, which written approval shall not be unreasonably
withheld, provide or cause to be provided to the Trustee an Alternate Letter of
Credit and the Borrower shall, in any event, cause to be delivered to the
Trustee an extension of the Expiration Date of the Letter of Credit or an
Alternate Letter of Credit at least (a) 23 days before the Expiration Date of
the then-existing Letter of Credit while the Bonds bear interest at the Weekly
Interest Rate, or (b) 45 days before the Expiration Date of the then existing
Letter of Credit while the Bonds bear interest at the Fixed Interest Rate. At
least 30 days prior to the Letter of Credit Substitution Date, the Borrower
shall provide the Issuer, the Trustee, the Bank, the Tender Agent and the
Remarketing Agent with a written notice of its intention to provide an Alternate
Letter of Credit pursuant to this Section. Such notice shall include the
proposed Letter of Credit Substitution Date, which shall be an Interest Payment
Date, and identify the provider of the Alternate Letter of Credit. An Alternate
Letter of Credit shall be an irrevocable direct-pay letter of credit or other
irrevocable credit facility delivered to the Trustee on or prior to 8:00 a.m.
(California time) on the Letter of Credit Substitution Date, issued by a
commercial bank or other financial institution, the terms of which shall in all
material respects be the same as the Letter of Credit. On or prior to the date
of the delivery of an Alternate Letter of Credit to the Trustee, the Borrower
shall cause to be furnished to the Issuer and the Trustee (i) an Opinion of Bond
Counsel stating that the delivery of such Alternate Letter of Credit to the
Trustee is authorized pursuant to this Agreement, complies with the terms hereof
and will not cause the interest on the Bonds not to be Tax-exempt, (ii) such
opinions regarding the validity of the Alternate Letter of Credit as the Issuer,
the Trustee and any rating agency then rating the Bonds may reasonably require,
and (iii) written evidence from ▇▇▇▇▇'▇, if the Bonds are then rated by ▇▇▇▇▇'▇,
and S&P, if the Bonds are then rated by S&P, to the effect that such rating
agency has reviewed the proposed Alternate Letter of Credit and that the
substitution of the proposed Alternate Letter of Credit will not, by itself,
result in a reduction of its long-term rating of the Bonds below "A" if the
Bonds are rated by S&P or below "A2" if the Bonds are rated by ▇▇▇▇▇'▇.
It is understood and agreed that with proper notification to the
Trustee and the Borrower, the Bank can declare that a default has occurred under
the Credit Agreement with the Borrower and such default will cause a mandatory
redemption of Bonds pursuant to Section 4.01(g) of the Indenture.
SECTION 5.09. COVENANTS OF THE BORROWER. It is the intention of the
parties hereto that interest on the Bonds shall be and remain Tax-exempt so long
as the Bonds are Outstanding, and to that end the representations, covenants,
and agreements of the Issuer and the Borrower in this Section and in Sections
5.10 and 5.11 hereof are for the benefit of the Trustee and each and every
Registered Owner of the Bonds. The Borrower represents, warrants and agrees as
follows:
(a) The Project consists, and at all times shall consist, of
land or property which is subject to the allowance for depreciation
provided in Section 167 of the Code, and substantially all (95% or
more) of the proceeds of the Bonds including proceeds of investment
thereof, shall be used to pay the Costs of the Project which are
chargeable to
14
the capital account of the Borrower, and which were paid not earlier
than 60 days before February 20, 1996. The Borrower shall allocate the
proceeds of the Bonds to the Costs of the Project no later than 18
months after the later of the date the original expenditure is paid or
the date the Project is placed in service or abandoned, but in no event
more than three years after the original expenditure is paid.
(b) No portion of the proceeds of the Bonds shall be used to
provide for a private or commercial golf course, country club, massage
parlor, tennis club, skating facility (including roller skating, skate
board and ice skating), racquet sports facility (including any handball
or racquetball court), hot tub facility, suntan facility, race track,
automobile sales or service facility, retail food or beverage facility,
entertainment facility, airplane, gambling establishment, health club,
liquor store, skybox or luxury box.
(c) Less than 25% of the net proceeds of the Bonds (after
Costs of Issuance) shall be used to purchase land or interests in land.
The Borrower covenants to spend sufficient sums from the Project Fund
on Costs of the Project to assure compliance with this covenant.
(d) No proceeds of the Bonds shall be used to acquire any
personal property or facilities unless the first use of such property
or facilities shall be pursuant to such acquisition, except that if the
Project consists of acquisition of a building, the Borrower shall,
within two years after the Date of Delivery or the date of acquisition
of such building, whichever is earlier, expend an amount, from proceeds
of the Bonds or otherwise, equal to 15% of the cost of acquiring such
building financed with proceeds of the Bonds on rehabilitation costs of
such building as required by Section 147(d) of the Code.
(e) During the three-year period following the date the
Project is placed in service, the Borrower shall not allow any other
Person to become a "test-period beneficiary" of the Bonds who is a
beneficiary of industrial development bonds in an amount which would
cause the issuance of the Bonds to exceed such Person's aggregate
per-taxpayer limit under Section 144(a)(10) of the Code.
(f) No agreement shall be entered into which would result in
the payment of principal or interest on the Bonds being "federally
guaranteed" within the meaning of Section 149(b) of the Code.
(g) There is no outstanding issue of industrial development
bonds which was used to finance any facilities which, in relation to
the Project, would constitute (i) a single building, (ii) an enclosed
shopping mall, or (iii) a strip of offices, stores or warehouses using
substantial common facilities.
(h) Subject to the provisions of the final paragraph of
Section 5.10 hereof, no actions shall be taken, or omitted to be taken,
by the Borrower which would have the
15
effect, directly or indirectly, of causing interest on any of the Bonds
to not be Tax-exempt.
(i) No changes shall be made in the Project or the use of the
Project which shall in any way impair the Tax-exempt status of interest
on the Bonds.
(j) No use or investment of the proceeds of the Bonds or any
acquired obligation shall be made which would cause the Bonds to become
"arbitrage bonds" within the meaning of Section 148 of the Code and any
Regulations thereunder, and the Borrower shall comply with the
requirements of said Section of the Code and said Regulations, as the
same may be amended by amendments applicable to the Bonds from time to
time, so long as any Bonds remain Outstanding.
(k) To use due diligence to cause the Project to be operated
in all material respects in accordance with all applicable laws,
rulings, regulations and ordinances.
(l) To comply in all material respects with all written
conditions imposed by the Issuer and any State or local agency in its
approval of the Project.
(m) To fully and faithfully perform all the duties and
obligations which the Issuer has covenanted and agreed in the Indenture
to cause the Borrower to perform and any duties and obligations which
the Borrower is required in the Indenture to perform. The foregoing
shall not apply to any duty or undertaking of the Issuer which by its
nature cannot be delegated or assigned.
(n) The rights, duties and obligations imposed on the Borrower
pursuant to the Remarketing Agreement are hereby acknowledged, approved
and accepted.
(o) To faithfully perform at all times any and all covenants,
undertakings, stipulations and provisions to be observed or performed
by the Borrower contained in the Indenture, in the Bonds, and in all
proceedings of the Issuer pertaining thereto, or otherwise required of
the Borrower to be observed or performed, whether express or implied.
(p) To use less than 25% of the net proceeds of the Bonds
(after deducting Costs of Issuance) to provide facilities which are
directly related and ancillary to the manufacturing facility being
financed with the proceeds of the Bonds, in accordance with Section
144(a)(12)(C) of the Code.
(q) To not become a Registered Owner of the Bonds, and to not
directly or indirectly purchase Bonds from the Remarketing Agent or
permit any Related Party to directly or indirectly purchase Bonds from
the Remarketing Agent.
(r) To the extent Bond proceeds are used for construction
purposes, the Borrower shall certify that the contractors engaged to
construct the Project are properly licensed by the Contractors' State
License Board.
16
(s) The Project shall be consistent with any existing local or
regional comprehensive plan.
Notwithstanding any other provision of this Agreement or the Indenture,
including in particular Article X of the Indenture, the obligations of the
Borrower and the Issuer to comply with the covenants set forth in this Section
and Section 5.10 hereof shall survive the defeasance or payment in full of the
Bonds.
SECTION 5.10. CAPITAL EXPENDITURES. For the purpose of this Section and
Section 5.09 hereof the following terms shall have the following meanings:
"FACILITIES" shall mean those facilities described in Section 144(a)(1)
of the Code and Regulations thereunder, including Section 1.103-10(b)(2)(ii)(e)
and Section 1.103-10(d)(2) of the Regulations, and shall include those
facilities any Principal User of which is the Borrower or a related person, as
defined in Section 144(a)(3) of the Code, located in the Project Location, and
any contiguous or integrated facility treated as being located in the Project
Location by reason of the fact that such facility is located on both sides of a
border between the Project Location and one or more other political
jurisdictions.
"PRINCIPAL USER" means a person who is a principal owner, principal
lessee, a principal output purchaser or "other" principal user and any Related
Person to a Principal User. A principal owner is a person who at any time holds
more than a 10% ownership interest (by value) in a facility or, if no person
holds more than a 10% ownership interest, then the person (or persons in the
case of multiple equal owners) who holds the largest ownership interest in the
facility. A person is treated as holding an ownership interest if such person is
an owner for federal income tax purposes generally. A principal lessee is a
person who at any time leases more than 10% of the facility (disregarding
portions used by the lessee under a short-term lease). The portion of a facility
leased to a lessee is generally determined by reference to its fair rental
value. A short-term lease is one which has a term of one year or less, taking
into account all options to renew and reasonably anticipated renewals. A
principal output purchaser is any person who purchases output of a facility,
unless the total output purchased by such person during each one-year period
beginning with the date such facility is placed in service is 10% or less of
such facility's output during each such period. An "other" principal user is a
person who enjoys a use of a facility (other than a short-term use) in a degree
comparable to the enjoyment of a principal owner or a principal lessee, taking
into account all the relevant facts and circumstances, such as the person's
participation in control over use of such facility or its remote or proximate
geographic location.
"PROJECT LOCATION" shall mean the area within the City of Santa Ana,
California.
"REGULATIONS" shall mean those regulations, whether now or hereafter
adopted, promulgated by the United States Department of the Treasury with
respect to Section 103 or Part IV of subchapter B of chapter 1 of the Code.
"SECTION 144 CAPITAL EXPENDITURES" shall mean those expenditures
required to be taken into account with respect to the Bonds pursuant to Section
144(a)(1) and (4) of the Code and
17
Regulations thereunder, including Section 1.103-10(b)(2)(ii) and (iii) of the
Regulations, including any expenditure with respect to Facilities, no matter by
whom made (regardless of how paid, whether in cash, notes or stock in a taxable
or nontaxable transaction), paid or incurred during the six-year period
beginning 3 years before the date of issuance and delivery of the Bonds, which
may, under any rule or election under the Code, be treated as a capital
expenditure (whether or not such expenditure is so treated), and which is not
paid or reimbursed out of the original principal proceeds (exclusive of
investment income) of the Bonds, but not including excluded expenditures
pursuant to Section 144(a)(4)(C) of the Code and Regulations thereunder,
including Section 1.103-10(b)(2)(iv) and (v) of the Regulations. Such term shall
also include research and development costs properly allocable to the Project no
matter where paid or incurred, unless specifically excluded by Section
144(a)(4)(C).
The Borrower represents and warrants that substantially all of the
proceeds of the Bonds are to be used with respect to the Project to be located
in the Project Location; that there are no other outstanding obligations issued
subsequent to September 30, 1968, of any state, territory or possession of the
United States of America, or any political subdivision of the foregoing or of
the District of Columbia, the proceeds of which have been or are to be used
primarily with respect to Facilities; and that the sum of the principal amount
of the Bonds plus the amount of Section 144 Capital Expenditures for the
three-year period ending on the date of issuance and delivery of the Bonds does
not exceed $10,000,000.
The Issuer covenants and agrees that it has not taken and shall not
take any action which will cause interest on the Bonds to not be Tax-exempt.
The Issuer hereby elects to have the provisions of Section 144(a)(4)(A)
of the Code apply to the Bonds. The Borrower covenants that it shall furnish to
the Issuer prior to the issuance and delivery of the Bonds whatever information
is necessary for the Issuer to make such election.
The Borrower further covenants that it shall take, and shall cause any
other Principal User to take, such further actions as are required of a
Principal User of property financed by an issue of obligations which are subject
to the $10,000,000 limitation of Section 144(a)(4)(A) of the Code, which actions
are set forth in Section 144(a)(4)(A) of the Code and in the Regulations,
including Section 1.103-10(b) of the Regulations.
The Borrower further covenants and agrees, so long as any of the Bonds
are Outstanding under the Indenture, that the aggregate principal of Bonds being
issued plus the aggregate amount of Section 144 Capital Expenditures made or to
be made with respect to Facilities during the six-year period beginning three
years before the date of issuance and delivery of the Bonds shall not exceed
$10,000,000 (or any such larger amount as may be hereafter permitted by law).
Notwithstanding anything in Section 5.09(h) hereof or in this Section
to the contrary, neither the Borrower nor the Issuer shall have violated the
covenants contained in Section 5.09(h) hereof or in this Section if the interest
on any of the Bonds becomes taxable to a Person solely because such Person is a
"substantial user" of the Project or a "related person" within the meaning of
Section 147(a) of the Code. The Issuer shall provide the Borrower with notice
and cooperate fully
18
with the Borrower in any administrative, legislative or judicial proceeding in
connection with any actions, proceedings or decisions of any court or
administrative agency or other governmental body affecting the taxation of
interest on the Bonds.
SECTION 5.11. SPECIAL ARBITRAGE CERTIFICATIONS.
(a) The Issuer hereby certifies to the Borrower (i) that it
has not been notified of any listing or proposed listing of it by the
Internal Revenue Service as a bond issuer whose arbitrage
certifications may not be relied upon and (ii) that issuance of the
Bonds will not violate any provisions of Section 103 of the Code,
Section 148 of the Code, or the Regulations issued under such Sections
of the Code, such that the interest on the Bonds is not Tax-exempt.
(b) The Borrower and the Issuer agree to comply with the Tax
Regulatory Agreement, as such Tax Regulatory Agreement shall be amended
from time to time in order that interest on the Bonds remains
Tax-exempt. The Borrower further agrees to cause any other Principal
User (as defined in Section 5.10 hereof) of the Project to comply with
the terms of this Loan Agreement and the Tax Regulatory Agreement to
the extent necessary to insure that interest on the Bonds remains
Tax-exempt.
SECTION 5.12. COVENANT TO ENTER INTO AGREEMENT OR CONTRACT TO PROVIDE
ONGOING DISCLOSURE. The Borrower hereby covenants and agrees that if as a result
of the conversion of the interest rate borne by the Bonds from the Weekly
Interest Rate to the Fixed Interest Rate or as a result of any amendment to
Paragraph (b)(5)(i) of the Securities and Exchange Commission Rule 15c2-12 under
the Securities Exchange Act of 1934, as amended (17 CFR Part 240, ss.
240.15c2-12) (the "Rule") or any amendment or supplement to the Indenture or
this Agreement, the Bonds cease to be exempt under the Rule, the Borrower will
enter into an agreement or contract, constituting an undertaking, to provide
ongoing disclosure as may be necessary to comply with the Rule as then in
effect. The covenant and agreement contained in this Section is for the benefit
of the Registered Owners, any Participating Underwriter and the Beneficial
Owners (as defined in the Indenture) as required by the Rule. It is the
Borrower's express intention that this Section be assigned pursuant to and in
accordance with Section 6.09 of the Indenture to the Trustee for the benefit of
the Registered Owners, any Participating Underwriter and the Beneficial Owners
and that each Registered Owner, Participating Underwriter and Beneficial Owner
be a beneficiary of this Section with the right to enforce this Section against
the Borrower. Notwithstanding any other provision of this Agreement, failure of
the Borrower to comply with the provisions of this Section shall not be
considered a Loan Default Event; provided, however, the Trustee may (and, at the
request of any Participating Underwriter or the Registered Owners of at least
25% aggregate principal amount in Outstanding Bonds, shall) or any Beneficial
Owner may take such actions as may be necessary and appropriate, including
seeking specific performance by court order, to cause the Borrower to comply
with its obligations under this Section.
19
SECTION 5.13. NO PURCHASE OF BONDS. The Issuer covenants and agrees
that it shall not become a Registered Owner of the Bonds and shall not directly
or indirectly purchase Bonds from the Remarketing Agent.
ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF PROCEEDS
SECTION 6.01. OBLIGATION TO CONTINUE PAYMENTS. If prior to full payment
of the Bonds (or provision for payment thereof in accordance with the provisions
of the Indenture) (a) the Project or any portion thereof is destroyed (in whole
or in part) or is damaged by fire or other casualty, or (b) title to, or the
temporary use of, the Project or any portion thereof shall be taken under the
exercise of the power of eminent domain by any governmental body or by any
Person acting under governmental authority, the Borrower shall nevertheless be
obligated to continue to pay the amounts specified in Article IV hereof, to the
extent not prepaid in accordance with Article VIII hereof.
SECTION 6.02. APPLICATION OF NET PROCEEDS. Upon any damage, destruction
or condemnation of the Project or any portion thereof resulting in Net Proceeds
in excess of $250,000, subject to the provisions of the Credit Agreement, the
Borrower may elect, in its discretion and with the written consent of the Bank,
by written notice to the Issuer and the Trustee:
(a) to apply the Net Proceeds of any insurance or condemnation
awards to the prompt repair, restoration, relocation, modification or
improvement of the damaged, destroyed or condemned portion of the
Project to enable such portion of the Project to accomplish at least
the same function as such portion of the Project was designed to
accomplish prior to such damage or destruction or exercise of such
power of eminent domain. If the Borrower elects to proceed as provided
in this subsection (a), it shall give the Issuer and the Trustee
written notice thereof, and evidence of the Bank's written consent,
within 90 days of the deposit of the Net Proceeds with the Bank. Any
balance of the Net Proceeds remaining after such work has been
completed shall be deposited in the Revenue Fund to be applied, with
the written consent of the Bank, to the payment of principal of and
premium, if any, and interest on the Bonds, or, if the Bonds have been
fully paid (or provision for payment thereof has been made in
accordance with the provisions of the Indenture), any balance remaining
in the Revenue Fund shall be paid in accordance with the requirements
of Section 10.04 of the Indenture; or
(b) to prepay all of the Loan in accordance with Article VIII
hereof by directing the Trustee to draw on the Letter of Credit to
effect a mandatory redemption of all outstanding Bonds under Section
4.01 of the Indenture.
SECTION 6.03. INSUFFICIENCY OF NET PROCEEDS. If the Project or a
portion thereof is to be repaired, restored, relocated, modified or improved
pursuant to Section 6.02(a) hereof, and if the Net Proceeds are insufficient to
pay in full the cost of such repair, restoration, relocation,
20
modification or improvement, the Borrower will nonetheless complete the work or
cause the work to be completed and will pay or cause to be paid any cost thereof
in excess of the amount of the Net Proceeds held in escrow.
SECTION 6.04. DAMAGE TO OR CONDEMNATION OF OTHER PROPERTY. Subject to
the terms and provisions of the Credit Agreement, the Borrower shall be entitled
to the Net Proceeds of any insurance or condemnation award or portion thereof
made for damages to or takings of its property not included in the Project.
ARTICLE VII
LOAN DEFAULT EVENTS AND REMEDIES
SECTION 7.01. LOAN DEFAULT EVENTS. Any one of the following which
occurs and continues shall constitute a Loan Default Event:
(a) failure of the Borrower to pay any Loan Repayment when and
as the same shall become due and payable pursuant to Section 4.02(a)
hereof;
(b) failure of the Borrower to pay any amounts payable
hereunder, other than Loan Repayments, when and as the same shall
become due, which failure continues for a period of 30 days after
written notice delivered to the Borrower and the Bank, which notice
shall specify such failure and request that it be remedied, given by
the Issuer or the Trustee, unless the Issuer and the Trustee shall
agree in writing to an extension of such time;
(c) failure of the Borrower to observe and perform in any
material respect any covenant, condition or agreement on its part
required to be observed or performed by this Agreement, other than a
covenant described in subsection (a) or subsection (b) above or the
failure of the Borrower to strictly comply with the covenants,
conditions or agreements contained in Sections 5.09(a) through (k),
5.09(p) through (s), 5.10, 5.11 and 5.12 hereof, which failure
continues for a period of 30 days after written notice delivered to the
Borrower and the Bank, which notice shall specify such failure and
request that it be remedied, given by the Issuer or the Trustee, unless
the Issuer and the Trustee, with the written approval of the Bank,
shall agree in writing to an extension of such time; provided, however,
that if the failure stated in the notice cannot be corrected within
such period, the Issuer and the Trustee will not unreasonably withhold
their consent to an extension of such time if corrective action is
instituted within such period and diligently pursued until the default
is corrected; or
(d) existence of an Event of Default under and as defined in
Sections 7.01(a) through (e) of the Indenture.
The provisions of subsection (c) of this Section are subject to the
limitation that the Borrower shall not be deemed in default if and so long as
the Borrower is unable to carry out its agreements hereunder by reason of
strikes, lockouts or other industrial disturbances; acts of public
21
enemies; orders of any kind of the government of the United States or of the
State or any of their departments, agencies, or officials, or any civil or
military authority; insurrections, riots, epidemics, landslides; lightning;
earthquake; fire; hurricanes; storms; floods; washouts; droughts; arrests;
restraint of government and people; civil disturbances; explosions; breakage or
accident to machinery, transmission pipes or canals; partial or entire failure
of utilities; or any other cause or event (whether similar or dissimilar to the
foregoing) not reasonably within the control of the Borrower; it being agreed
that the settlement of strikes, lockouts and other industrial disturbances shall
be entirely within the discretion of the Borrower, and the Borrower shall not be
required to make settlement of strikes, lockouts and other industrial
disturbances by acceding to the demands of the opposing party or parties when
such course is, in the judgment of the Borrower, unfavorable to the Borrower.
This limitation shall not apply to any default under subsections (a), (b), or
(d) of this Section. Notwithstanding any other provision of this Agreement to
the contrary, so long as the Bank is not in default under the Letter of Credit,
the Trustee shall not without the prior written consent or direction of the Bank
exercise any remedies under this Agreement in the case of any Loan Default Event
described in subsections (a), (b), or (c) above.
SECTION 7.02. REMEDIES ON DEFAULT. Subject to the last sentence of
Section 7.01 above, whenever any Loan Default Event shall have occurred and
shall be continuing,
(a) The Trustee, by written notice to the Borrower and the
Bank, shall declare all unpaid amounts payable under Section 4.02(a)
hereof to be due and payable immediately, provided that concurrently
with or prior to such notice the unpaid principal amount of the Bonds
shall have been declared to be due and payable under the Indenture.
Upon any such declaration such amount shall become and shall be
immediately due and payable in the amount set forth in Section 7.01 of
the Indenture.
(b) The Trustee shall have access to and may inspect, examine
and make copies of the books and records and any and all accounts, data
and federal income tax and other tax returns of the Borrower.
(c) The Issuer or the Trustee may take whatever action at law
or in equity as may be necessary or desirable to collect the payments
and other amounts then due and thereafter to become due or to enforce
performance and observance of any obligation, agreement or covenant of
the Borrower under this Agreement.
In case the Trustee or the Issuer shall have proceeded to enforce its
rights under this Agreement and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Trustee
or the Issuer, then, and in every such case, the Borrower, the Trustee and the
Issuer shall be restored respectively to their several positions and rights
hereunder, and all rights, remedies and powers of the Borrower, the Trustee and
the Issuer shall continue as though no such action had been taken.
The Borrower covenants that, in case a Loan Default Event shall occur
and all unpaid amounts payable under Section 4.02(a) hereof shall have been
declared due and payable immediately pursuant to Section 7.02(a) hereof, then,
upon demand of the Trustee, the Borrower
22
will pay to the Trustee the whole amount that then shall have become due and
payable under said Section, with interest on the amount then overdue at the rate
of 10% per annum until such amount has been paid or, if ten percent is greater
than the rate then permitted by law, at the greatest rate then permitted.
In case the Borrower shall fail forthwith to pay such amounts upon such
demand, the Trustee shall be entitled and empowered to institute any action or
proceeding at law or in equity for the collection of the sums so due and unpaid,
and may prosecute any such action or proceeding to judgment or final decree, and
may enforce any such judgment or final decree against the Borrower and collect
in the manner provided by law the moneys adjudged or decreed to be payable.
In case proceedings shall be pending for the bankruptcy or for the
reorganization of the Borrower under the federal bankruptcy laws or any other
applicable law, or in case a receiver or trustee shall have been appointed for
the property of the Borrower or in the case of any other similar judicial
proceedings relative to the Borrower, or the creditors or property of the
Borrower, then the Trustee shall be entitled and empowered, by intervention in
such proceedings or otherwise, to file and prove a claim or claims for the whole
amount owing and unpaid pursuant to this Agreement and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee allowed in
such judicial proceedings relative to the Borrower, its creditors or its
property, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute such amounts as provided in
the Indenture after the deduction of its reasonable charges and expenses. Any
receiver, assignee or trustee in bankruptcy or reorganization is hereby
authorized to make such payments to the Trustee, and to pay to the Trustee any
amount due it for reasonable compensation and expenses, including reasonable
expenses and fees of counsel incurred by it up to the date of such distribution.
SECTION 7.03. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES. In the
event the Borrower should default under any of the provisions of this Agreement,
whether or not such default constitutes a Loan Default Event hereunder, and the
Issuer or the Trustee should employ attorneys or incur other expenses for the
collection of the payments due under this Agreement or the enforcement of
performance or observance of any obligation or agreement on the part of the
Borrower herein contained, the Borrower agrees to pay to the Issuer or the
Trustee the reasonable fees and expenses of such attorneys and such other
reasonable expenses so incurred by the Issuer or the Trustee.
SECTION 7.04. NO REMEDY EXCLUSIVE. No remedy herein conferred upon or
reserved to the Issuer or the Trustee is intended to be exclusive of any other
available remedy or remedies, and each and every such remedy shall be cumulative
and shall be in addition to every other remedy given under this Agreement or now
or hereafter existing at law or in equity or by statute. No delay or omission to
exercise any right or power accruing upon any default shall impair any such
right or power or shall be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. To entitle the Issuer or the Trustee to exercise any remedy reserved
to it in this Article, it shall not be necessary to give any notice, other than
such notice as may be herein expressly required. Such rights and
23
remedies as are given the Issuer hereunder shall also extend to the Trustee, and
the Trustee and the Registered Owners of the Bonds shall be deemed third party
beneficiaries of all covenants and agreements herein contained.
SECTION 7.05. WAIVERS. No delay or omission of the Issuer or the
Trustee to exercise any right or power arising upon the occurrence of any
default shall impair any such right or power or shall be construed to be a
waiver of any such default or an acquiescence therein; and every power and
remedy given by this Agreement to the Issuer or the Trustee may be exercised
from time to time and as often as may be deemed expedient. In the event any
agreement or covenant contained in this Agreement should be breached by the
Borrower and thereafter waived by the Issuer or the Trustee, such waiver shall
be limited to the particular breach so waived and shall not be deemed to waive
any other breach hereunder.
ARTICLE VIII
PREPAYMENT
SECTION 8.01. REDEMPTION OF BONDS WITH PREPAYMENT MONEYS. By virtue of
the assignment of the rights of the Issuer under this Agreement to the Trustee
as is provided in Section 4.05 hereof, the Borrower agrees to and shall pay
directly to the Trustee any amount permitted or required to be paid by it under
this Article VIII. The Indenture provides that the Trustee shall use the moneys
so paid to it by the Borrower, pursuant to the written instructions of the
Borrower, to redeem the Bonds on the date set for such redemption pursuant to
Section 8.05 hereof.
SECTION 8.02. OPTIONS TO PREPAY LOAN. The Borrower shall have the
option to prepay the Loan by paying to the Trustee the amount set forth in
Section 8.04 hereof, for deposit in the Revenue Fund, to be applied to the
redemption of Bonds as set forth below on the earliest date such Bonds are
subject to redemption pursuant to the Indenture and as to which notice of
redemption can be given in accordance with the Indenture, at the redemption
prices set forth below, under the following circumstances:
(a) the Borrower may prepay such amounts in whole, and cause
all of the Outstanding Bonds to be redeemed at the redemption price set
forth in Section 4.01(e) of the Indenture, if any of the following
shall have occurred:
(i) the Project shall have been damaged or destroyed,
in whole or in part, by fire or other casualty and the Issuer
and the Trustee receive a Certificate of the Authorized
Representative of the Borrower to the effect that: (A) it is
not practicable or desirable to rebuild, repair or restore the
Project within a period of six consecutive months following
such damage or destruction, (B) the Borrower is or will be
thereby prevented from carrying on its normal operations at
the Project for a period of at least six consecutive months,
or (C) the cost of restoration of the Project would
substantially exceed the Net Proceeds of insurance carried
thereon; or
24
(ii) title to, or the temporary use of, all or
substantially all of the Project shall have been taken by any
governmental authority, or any Person acting under
governmental authority, exercising the power of eminent domain
and the Issuer and the Trustee receive a Certificate of the
Authorized Representative of the Borrower to the effect that:
(A) the Borrower is thereby prevented from carrying on its
normal operations at the Project for a period of at least six
consecutive months or (B) the Project is unsuitable for use by
the Borrower;
(b) with the prior written consent of the Bank, the Borrower
may prepay all or any part of the Loan from any available funds and
cause all or any part of the Outstanding Bonds to be redeemed at the
redemption prices set forth in Section 4.01(b) or 4.01(f) of the
Indenture, as applicable.
SECTION 8.03. MANDATORY PREPAYMENT.
(a) The Borrower shall have and hereby accepts the obligation
to prepay in full the Loan by paying to the Trustee the amount set
forth in Section 8.04 hereof for deposit to the Revenue Fund to be used
to redeem all the Outstanding Bonds on the earliest date such Bonds are
subject to redemption pursuant to the Indenture and as to which notice
of the redemption can be given in accordance with the Indenture, at the
redemption prices set forth in Section 4.01(e) of the Indenture with
respect to subsection (i) below, Section 4.01(c) of the Indenture with
respect to subsections (ii) and (iii) below, and in the Indenture
Sections noted with respect to subsection (iv) below:
(i) if and when as a result of any changes in the
Constitution of the United States of America or the California
Constitution or as a result of any legislative, judicial or
administrative action, this Agreement shall have become void
or unenforceable or impossible of performance in accordance
with the intention and purposes of the parties hereto, or
shall have been declared unlawful;
(ii) if, due to the untruth or inaccuracy of any
representation or warranty made by the Borrower herein or in
connection with the offer and sale of the Bonds, or the breach
of any covenant or warranty of the Borrower contained in this
Agreement, interest on the Bonds, or any of them, is
determined not to be Tax-exempt to the Registered Owners
thereof (other than a Registered Owner who is a "substantial
user" of the Project or a "related person" within the meaning
of Section 147(a) of the Code) by a final administrative
determination of the Internal Revenue Service or final
judicial decision of a court of competent jurisdiction in a
proceeding of which the Borrower received notice and was
afforded an opportunity to participate in to the full extent
permitted by law. A determination or decision will be
considered final for this purpose when all periods for
administrative and judicial review have expired;
(iii) if either: (A) the Borrower or any other
Principal User of the Project files a notice with the Issuer
and the Trustee to the effect that the capital
25
expenditure limitation of Section 144(a)(4) of the Code has
been exceeded, or will be exceeded, within a period of 60
days; or (B) there is a final determination (as defined in
subsection (ii) above) by the Internal Revenue Service or a
court of competent jurisdiction that such capital expenditures
limitation has been exceeded; and
(iv) if mandatory redemption is required by any of
Sections 4.01(d), (g), or (h) of the Indenture.
(b) If the Borrower elects not to apply any Net Proceeds in
excess of $250,000 under the circumstances described in Section 6.02
hereof, the Borrower shall prepay all of the Loan and cause all of the
Outstanding Bonds to be redeemed at the redemption price set forth in
Section 4.01(e) of the Indenture.
SECTION 8.04. AMOUNT OF PREPAYMENT. In the case of a prepayment in full
of the Loan by the Borrower under this Agreement pursuant to Section 8.02 or
8.03 hereof, the amount to be paid shall be a sum sufficient, together with
other funds deposited with the Trustee and available for such purpose, to pay
(a) the redemption price specified in the applicable subsections of Section 8.02
or 8.03 hereof, for all Outstanding Bonds, plus all interest accrued and to
accrue to the redemption date, (b) all reasonable and necessary fees and
expenses of the Issuer, the Trustee and any paying agent allowable pursuant to
this Agreement and the Indenture accrued and to accrue through final payment of
the Bonds and (c) all other liabilities of the Borrower accrued and to accrue
under this Agreement.
In the case of partial prepayment of the Loan by the Borrower under
this Agreement pursuant to Section 8.02 or 8.03 hereof, the amount to be paid
shall be a sum sufficient, together with other funds deposited with the Trustee
and available for such purpose, to pay the redemption price specified in the
applicable subsections of Section 8.02 or 8.03 hereof, for the Bonds to be
redeemed, plus all interest accrued and to accrue to the redemption date, and to
pay expenses of redemption of such Bonds. All partial prepayments of the Loan
made by the Borrower under this Agreement shall be applied in inverse order of
the due dates thereof, or as otherwise provided in the Indenture.
SECTION 8.05. NOTICE OF PREPAYMENT. The Borrower shall give written
notice to the Issuer, the Bank and the Trustee (a) while the Bonds bear interest
at the Weekly Interest Rate, not less than 20 days prior to the date of any
prepayment of a Loan Repayment and (b) while the Bonds bear interest at the
Fixed Interest Rate, not less than 40 days prior to the date of any prepayment
of a Loan Repayment, in each case specifying the date upon which any prepayment
will be made, the basis for such prepayment and the amount of such prepayment.
If the Borrower fails to give such notice of a prepayment of Loan Repayments,
the Indenture provides that the Trustee shall hold such prepayment in the
Redemption Fund.
26
ARTICLE IX
NON-LIABILITY OF ISSUER; EXPENSES; INDEMNIFICATION
SECTION 9.01. NON-LIABILITY OF ISSUER. The Issuer shall not be
obligated to pay the principal of, premium, if any, or interest on the Bonds,
except from Revenues. The Borrower hereby acknowledges that the Issuer's sole
source of moneys to repay the Bonds will be provided by the payments made by the
Borrower pursuant to this Agreement, together with other Revenues, including
investment income on certain funds and accounts held by the Trustee under the
Indenture, and hereby agrees that if the payments to be made hereunder shall
ever prove insufficient to pay all principal of, and premium, if any, and
interest on the Bonds as the same shall become due (whether by maturity,
redemption, acceleration or otherwise), then upon notice from the Trustee, the
Borrower shall pay such amounts as are required from time to time to prevent any
deficiency or default in the payment of such principal, premium or interest,
including, but not limited to, any deficiency caused by acts, omissions,
nonfeasance or malfeasance on the part of the Trustee, the Borrower, the Issuer
or any third party.
SECTION 9.02. EXPENSES. The Borrower covenants and agrees to pay, and
to indemnify the Issuer and the Trustee against, all reasonable costs and
charges, including reasonable fees and disbursements of attorneys, accountants,
consultants and other experts, incurred in good faith in connection with this
Agreement, the Bonds or the Indenture.
SECTION 9.03. INDEMNIFICATION. The Borrower releases the Issuer, the
State, the Treasurer of the State and the Trustee from, and covenants and agrees
that none of the Issuer, the State, the Treasurer of the State or the Trustee
shall be liable for, and covenants and agrees to indemnify and hold harmless the
Issuer, the State, the Treasurer of the State and the Trustee and their
officers, employees and agents from and against any and all losses, claims,
damages, liabilities or expenses, of every conceivable kind, character and
nature whatsoever arising out of, resulting from, or in any way connected with
(a) the Project, or the conditions, occupancy, use, possession, conduct or
management of, or work done in or about, or from the planning, design,
acquisition, installation or construction of, the Project or any part thereof;
(b) the issuance of any Bonds or any certifications or representations made in
connection therewith by the Borrower and the carrying out of any of the
transactions contemplated by the Bonds, the Indenture, or this Agreement; (c)
the Trustee's acceptance or administration of the trusts under the Indenture, or
the exercise or performance of any of its powers or duties under the Indenture;
or (d) any untrue statement or alleged untrue statement of any material fact or
omission or alleged omission to state a material fact necessary to make the
statements made, in light of the circumstances under which they were made, not
misleading, in the official statement utilized by any underwriter in connection
with the sale or offering of any Bonds; provided that in each case such
indemnity shall not be required for damages that result from the willful
misconduct or negligence on the part of the party seeking such indemnity. The
indemnity required by this Section shall be only to the extent that any loss
sustained by the Issuer or the Trustee exceeds the Net Proceeds the Issuer or
the Trustee receives from any insurance carried by the Borrower with respect to
the loss sustained. The Borrower further covenants and agrees to pay or to
reimburse the Issuer, the State, the Treasurer of the State and the Trustee and
their officers, employees and agents for any
27
and all costs, reasonable attorneys fees, liabilities or reasonable expenses
incurred in connection with investigating, defending against or otherwise in
connection with any such losses, claims, damages, liabilities, expenses or
actions, except to the extent that the same arise out of the willful misconduct
or negligence of the party claiming such payment or reimbursement. The
provisions of this Section shall survive the payment and retirement of the Bonds
and the termination of this Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. NOTICES. All notices, certificates, or other
communications given hereunder shall be deemed sufficiently given on (a) the day
such notices, certificates or other communications are received when sent by
personal delivery, including tested telex or facsimile communication, or (b) the
third day following the day on which the same have been mailed by first class,
postage prepaid, addressed to the Issuer, the Borrower, the Trustee, the Tender
Agent or the Bank, as the case may be, at the address set forth for such party
below. A duplicate copy of each notice, certificate, or other communication
given hereunder by either the Issuer or the Borrower to the other shall also be
given to the Trustee, the Tender Agent, Borrower's counsel and the Bank. The
Issuer, the Borrower, the Trustee, the Tender Agent and the Bank may, by notice
given hereunder, designate any different addresses to which subsequent notices,
certificates, or other communications shall be sent.
If to the Issuer: California Infrastructure and Economic
Development Bank
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Bond Manager
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Borrower: Roller Bearing Company of America, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Trustee U.S. Bank Trust National Association
or Tender Agent: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Department
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
28
If to the Bank: First Union National Bank
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Credit Suisse First Boston
11 Madison Avenue, 13th Floor
New York, New York 10010
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Remarketing The ▇▇▇▇▇▇▇ Company
Agent: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Director of Public Finance
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 10.02. SEVERABILITY. If any provision of this Agreement shall
be held or deemed to be, or shall in fact be, illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative, or unenforceable to
any extent whatever.
SECTION 10.03. EXECUTION OF COUNTERPARTS. This Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument; provided, however, that
for purposes of perfecting a security interest in this Agreement by the Trustee
and the Bank under Article 9 of the California Uniform Commercial Code, only the
counterpart delivered, pledged, and assigned to the Trustee shall be deemed the
original.
SECTION 10.04. AMENDMENTS, CHANGES AND MODIFICATIONS. Except as
otherwise provided in this Agreement or the Indenture, subsequent to the initial
issuance of Bonds and prior to their payment in full, or provision for such
payment having been made as provided in the Indenture, this Agreement may not be
effectively amended, changed, modified, altered or terminated without the
written consent of the Trustee and the Bank.
SECTION 10.05. GOVERNING LAW. This Agreement shall be governed
exclusively by and construed in accordance with the applicable laws of the State
as a contract executed and delivered within the State to be fully performed
within the State.
SECTION 10.06. AUTHORIZED REPRESENTATIVE OF THE BORROWER. Whenever
under the provisions of this Agreement the approval of the Borrower is required
or the Issuer or the Trustee
29
is required to take some action at the request of the Borrower, such approval or
such request shall be given on behalf of the Borrower by the Authorized
Representative of the Borrower, and the Issuer and the Trustee shall be
authorized to act on any such approval or request and neither party hereto shall
have any complaint against the other or against the Trustee as a result of any
such action taken.
SECTION 10.07. TERM OF THE AGREEMENT. This Agreement shall be in full
force and effect from the date hereof and shall continue in effect as long as
any of the Bonds remain Outstanding or the Letter of Credit remains in effect,
whichever is later. All representations and certifications by the Borrower as to
all matters affecting the Tax-exempt status of interest on the Bonds and all
indemnifications by the Borrower to the Issuer, the State, the Treasurer of the
State or the Trustee shall survive the termination of this Agreement.
SECTION 10.08. BINDING EFFECT. This Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Borrower and their
respective successors and assigns; subject, however, to the limitations
contained in Section 5.02 hereof.
SECTION 10.09. REFERENCES TO BANK. Notwithstanding any provisions
contained herein to the contrary, the Bank shall be entitled to take all actions
and exercise its rights hereunder in accordance with the Credit Agreement so
long as the Bank has not wrongfully dishonored any drawings under the Letter of
Credit and the Bank is not in liquidation, bankruptcy or receivership
proceedings. After the expiration or termination of the Letter of Credit and
after all obligations owed to the Bank pursuant to the Credit Agreement with
respect to the Letter of Credit have been paid in full or discharged, all
references to the Bank contained herein shall be null and void and of no further
force and effect.
SECTION 10.10. BROKERAGE CONFIRMATIONS. The Borrower acknowledges that
to the extent regulations of the Comptroller of the Currency or other applicable
regulatory entity grant the Borrower the right to receive brokerage
confirmations of security transactions under the Indenture, the Borrower
specifically waives receipt of such confirmations to the extent permitted by
law. The Trustee is required under the Indenture to furnish the Borrower with
periodic cash transaction statements which include detail for all securities
transactions made by the Trustee on behalf of the Borrower thereunder.
[End of the Loan Agreement]
30
IN WITNESS WHEREOF, the California Infrastructure and Economic
Development Bank has caused this Agreement to be executed in its name and the
Borrower has caused this Agreement to be executed in its name, all as of the
date first above written.
CALIFORNIA INFRASTRUCTURE AND
ECONOMIC DEVELOPMENT BANK
By
---------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chair
ATTEST
By
---------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇, Secretary
ROLLER BEARING COMPANY OF AMERICA, INC.
By
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Executive
Vice President
[Signature Page to Loan Agreement]
31
EXHIBIT A
THE PROJECT
The Project consists of (a) the acquisition of real property and
improvements located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Project Site"), (b) the rehabilitation of a manufacturing facility at the
Project Site, and (c) the acquisition and installation of manufacturing
equipment at the Project Site.