LOAN AGREEMENT
By and Between
CALIFORNIA ECONOMIC DEVELOPMENT FINANCING AUTHORITY
and
ADVANCED AERODYNAMICS AND STRUCTURES, INC.
Dated as of August 1, 1997
All right, title and interest of the CALIFORNIA ECONOMIC DEVELOPMENT
FINANCING AUTHORITY (the "Authority") in this Loan Agreement has been assigned
(except for amounts payable under Sections 4.2(b), 7.3, 9.2 and 9.3 hereof, its
right to receive notices, opinions and other documents required to be delivered
to the Authority hereunder and its rights to consent to certain actions) to
First Trust of California, National Association, as trustee (the "Trustee")
pursuant to the Indenture of Trust, dated as of August 1, 1997, between the
Authority and the Trustee, and is subject to such assignment.
TABLE OF CONTENTS
PARTIES................................................................. 1
PREAMBLES............................................................... 1
ARTICLE I
DEFINITIONS
Section 1.1. Definition of Terms...................................2
Section 1.2. Number and Gender.....................................2
Section 1.3. Articles, Sections, Etc...............................2
ARTICLE II
REPRESENTATIONS
Section 2.1. Representations of the Authority......................2
Section 2.2. Representations of the Borrower.......................3
Section 2.3. Bondholders to Benefit................................5
ARTICLE III
CONSTRUCTION OF THE PROJECT;
ISSUANCE OF THE BONDS
Section 3.1. Construction of the Project...........................5
Section 3.2. Disbursements from the Project Fund and Costs of
Issuance Fund.....................................6
Section 3.3. Establishment of Completion Date; Obligation of
Borrower to Complete..............................6
Section 3.4. Investment of Moneys in Funds.........................7
ARTICLE IV
LOAN OF PROCEEDS; REPAYMENT PROVISIONS
Section 4.1. Loan of Bond Proceeds; Issuance of Bonds..............7
Section 4.2. Loan Repayments and Other Amounts Payable.............7
Section 4.3. Purchase of Bonds.....................................9
Section 4.4. Unconditional Obligations.............................9
Section 4.5. Assignment of Authority's Rights......................10
Section 4.6. Amounts Remaining in Funds............................10
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ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
Section 5.1. Right of Access to the Project.......................10
Section 5.2. The Borrower's Maintenance of its Existence..........10
Section 5.3. Records and Financial Statements of Borrower;
Employment Practices.............................11
Section 5.4. Insurance............................................12
Section 5.5. Maintenance and Repair; Taxes; Utility and Other
Charges.........................................12
Section 5.6. Qualification in California..........................12
Section 5.7. Alternate Credit Facility............................12
Section 5.8. Letter of Credit.....................................13
Section 5.9. Covenants of the Authority and the Borrower..........14
Section 5.10. Capital Expenditures.................................16
Section 5.11. Special Arbitrage Certifications.....................18
Section 5.12. Covenant to Enter into Agreement or Contract to
Provide Ongoing Disclosure.......................19
ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION;
USE OF PROCEEDS
Section 6.1. Obligation to Continue Payments......................19
Section 6.2. Application of Net Proceeds..........................19
Section 6.3. Insufficiency of Net Proceeds........................20
Section 6.4. Damage to or Condemnation of Other Property..........20
ARTICLE VII
LOAN DEFAULT EVENTS AND REMEDIES
Section 7.1. Loan Default Events..................................20
Section 7.2. Remedies on Default..................................21
Section 7.3. Agreement to pay Attorneys' Fees and Expenses........23
Section 7.4. No Remedy Exclusive..................................23
Section 7.5. Waivers..............................................23
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ARTICLE VIII
PREPAYMENT
Section 8.1. Redemption of Bonds with Prepayment Moneys...........23
Section 8.2. Options to Prepay Loan...............................24
Section 8.3. Mandatory Prepayment.................................24
Section 8.4. Amount of Prepayment.................................25
Section 8.5. Notice of Prepayment.................................26
ARTICLE IX
NON-LIABILITY OF AUTHORITY; EXPENSES; INDEMNIFICATION
Section 9.1. Non-Liability of Authority...........................26
Section 9.2. Expenses.............................................26
Section 9.3. Indemnification......................................27
ARTICLE X
MISCELLANEOUS
Section 10.1. Notices..............................................27
Section 10.2. Severability.........................................28
Section 10.3. Execution of Counterparts............................29
Section 10.4. Amendments, Changes and Modifications................29
Section 10.5. Governing Law........................................29
Section 10.6. Authorized Representative of the Borrower............29
Section 10.7. Term of the Agreement................................29
Section 10.8. Binding Effect.......................................29
Section 10.9. References to Bank...................................29
Section 10.10. Brokerage Confirmations..............................30
Exhibit A - The Project A-1
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of August 1, 1997, between the CALIFORNIA
ECONOMIC DEVELOPMENT FINANCING AUTHORITY, a body public and corporate, and a
public instrumentality of the State of California (the "Authority"), and
ADVANCED AERODYNAMICS AND STRUCTURES, INC., a corporation duly organized and
validly existing under the laws of the State of California (the "Borrower").
W I T N E S S E T H:
WHEREAS, the Authority was established for the purpose of promoting and
encouraging commerce and industry, and generally to ▇▇▇▇▇▇ economic development
in the State of California (the "State") and is authorized to issue tax-exempt
revenue bonds to provide financing for private activity economic development
projects pursuant to the provisions of Section 15710 et seq. of the California
Government Code (constituting Part 10.2 of Division 3 of Title 2 of the
Government Code of the State of California, as now in effect and as it may from
time to time hereafter be amended or supplemented) (the "Act"); and
WHEREAS, in furtherance of the purposes of the Authority set forth above,
the Authority proposes to finance the acquisition, construction, rehabilitation,
equipping, installation, improvement, and furnishing of the industrial
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
Authority has authorized and undertaken the issuance of its California Economic
Development Financing Authority Variable Rate Demand Industrial Development
Revenue Bonds, Series 1997 (Advanced Aerodynamics and Structures, Inc. Project)
(the "Bonds") in the aggregate principal amount of Eight Million Five Hundred
Thousand Dollars ($8,500,000) 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 Authority 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
4.2 hereof, the principal of, premium, if any, and interest on, the Bonds; and
WHEREAS, the Authority 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 1.1. 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 August
1, 1997 (the "Indenture"), by and between the Authority and First Trust of
California, 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 1.2. Number and Gender. The singular form of any word used herein,
including the terms defined in Section 1.01 of the Indenture, shall include the
plural, and vice versa. The use herein of a word of any gender shall include all
genders.
Section 1.3. Articles, Sections, Etc. Unless otherwise specified,
references to Articles, Sections and other subdivisions 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 2.1. Representations of the Authority. The Authority makes the
following representations as the basis for its undertakings herein contained:
(a) The Authority is a body public and corporate, and a public
instrumentality of the State. Under the provisions of the Act, the Authority 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
Authority 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
Authority 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 Authority's interest in this Agreement (except certain rights of
the Authority 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
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and to the Bank, on a basis subordinate thereto, as security for the payment of
the obligations of the Borrower under the Reimbursement Agreement.
(d) The Authority has not pledged and will not pledge its interest in this
Agreement for any purpose other than to secure the Bonds under the Indenture and
the obligations of the Borrower under the Reimbursement Agreement.
(e) The Authority 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 2.1.
(f) The Authority 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; (ii) said Loan is in the public interest, serves the public
purposes and meets the requirements of the Act; and (iii) the portion of such
Loan allocable to the Costs of the Project does not exceed the total cost
thereof as determined by the Borrower and approved by the Authority.
(g) No member, officer or other official of the Authority 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 Authority 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 Authority under the
terms of any instrument or agreement.
Section 2.2. Representations of the Borrower. The Borrower makes the
following representations as the basis for its undertakings herein contained:
(a) The Borrower is a Delaware corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and is in
good standing and duly qualified to transact business in the State, is not in
violation of any provision of any of the Borrower's Organization Documents, has
full power and authority to enter into this Agreement, and has duly authorized
the execution and delivery of this Agreement by proper action.
(b) The execution, delivery and performance by the Borrower of this
Agreement, the Reimbursement Agreement, the Remarketing Agreement, the Tax
3
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 action, and neither the execution and delivery of this Agreement,
the Reimbursement 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 terms,
conditions or provisions of any of the Borrower's Organization Documents, or of
any law, statute, rule, regulation, order, judgment, award, injunction, or
decree or of any 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.
(c) The estimated Costs of the Project are as set forth in the Tax
Regulatory Agreement and have been determined in accordance with sound
engineering, construction, and accounting principles. All the information and
representations in the Tax Regulatory Agreement are true and correct as of the
date thereof.
(d) The Project consists and will consist of those facilities 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 (including a
leasehold interest in the land on which the Project is located) sufficient to
carry out the purposes of this Agreement.
(f) At the time of submission of an application to the Authority 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 best knowledge of the Borrower, no member, officer or other
official of the Authority 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 Long Beach,
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.
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(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.
(j) There is no litigation or proceeding pending or, to the
knowledge of the Borrower, threatened, against the Borrower which could
adversely affect the validity of this Agreement, the Reimbursement
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 Reimbursement 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 of any thereof, is necessary for the
due execution and delivery by the Borrower of this Agreement.
Section 2.3. Bondholders 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 Bondholders
from time to time of such Bonds; provided, however, that such covenants and
agreements shall create no rights in any parties other than the Authority, the
Borrower, the Remarketing Agent, the Bank, the Trustee, the Tender Agent and
such Bondholders.
ARTICLE III
CONSTRUCTION OF THE PROJECT;
ISSUANCE OF THE BONDS
Section 3.1. Construction of the Project. The Borrower agrees that,
utilizing the proceeds of the Bonds loaned pursuant to Section 4.1 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 Authority 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
Authority 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
5
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 upon receipt by the
Authority and the Trustee of:
(i) 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
Authority for assistance in financing the Project;
(ii) 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 to not be Tax-exempt;
(iii) a copy of the proposed form of amended or
supplemented Exhibit A hereto; and
(iv) the written approval of the Bank and the
Trustee.
Section 3.2. Disbursements from the Project Fund and 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 3.3. Establishment of Completion Date; Obligation of Borrower to
Complete. As soon as the Construction of the Project is completed, an 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
Authority, stating the Costs of the Project and further stating that (i)
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 (ii) 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, less an amount representing a reasonable retainage
determined by the Borrower,
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including any earnings resulting from the investment of such moneys, shall be
used as provided in Section 3.03(D) of the Indenture.
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
Authority 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 pay, or 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 Authority, the
Trustee or the Holders of any of the Bonds, nor shall it be entitled to any
diminution of the amounts payable under Section 4.2.
Section 3.4. Investment of Moneys in Funds. Any moneys in any fund held by
the Trustee shall, at the written request of an Authorized Representative of the
Borrower, but subject to the restrictions on investments contained in the
Indenture, the Tax Regulatory Agreement and applicable law 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 4.1. Loan of Bond Proceeds; Issuance of Bonds. The Authority
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
Authority 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. Except as provided in Section 3.02 of
the Indenture, such proceeds shall be disbursed to or on behalf of the Borrower
as provided in Section 3.2 hereof. The Borrower hereby approves the Indenture,
the assignment thereunder to the Trustee of the right, title and interest of the
Authority (with certain exceptions) in this Agreement, and the issuance
thereunder by the Authority of the Bonds.
Section 4.2. 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
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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 4.1, a sum equal to the amount payable on such 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
use such Loan Repayment to reimburse the Bank for such drawing.
(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 Authority. 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 Authority under the Indenture as and when the same become due. The duties of
the Borrower under this subsection (b) shall survive the termination of this
Agreement and the termination and discharge of the Indenture.
8
(c) The Borrower also agrees to pay the fees of the Bank pursuant to the
Reimbursement Agreement.
(d) In the event the Borrower should fail to make any of the payments
required by subsections (a)-(c) of this Section, such payments shall continue as
obligations of the Borrower until such amounts shall have been fully paid.
Except as provided in the next sentence, the Borrower agrees to pay such
amounts, together with interest thereon, from the date such payments were due
until paid, to the extent permitted by law, at the rate of ten percent (10%) per
annum. With respect to amounts due the Bank, the Borrower agrees to pay such
amounts together with interest thereon at the rates and times established
pursuant to the Reimbursement Agreement. Interest on overdue payments required
under subsection (a) above shall be paid to Bondholders as provided in Section
2.02(B)(2) of the Indenture.
Section 4.3. 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 4.4. Unconditional Obligations. The obligations of the Borrower to
make the payments required by Section 4.2 hereof and to provide or cause to be
provided the Letter of Credit pursuant to Section 4.3 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 Authority, 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 4.1 hereof, as prescribed in Section 4.2 hereof, the obligation to
provide or cause to be provided the Letter of Credit pursuant to Section 4.3
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 (i) 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 4.2 and the obligation
to provide or cause to be provided the Letter of Credit pursuant to Section 4.3;
(ii) will perform and observe all of its other covenants contained in this
Agreement; and (iii) 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 Authority or the Trustee to perform and observe
any covenant, whether express or implied, or any duty, liability or obligation
arising out of or connected with this Agreement or the Indenture.
9
Section 4.5. Assignment of Authority's Rights. As security for the payment
of the Bonds, the Authority will assign to the Trustee the Authority's rights,
title and interest under this Agreement, including the right to receive payments
hereunder (except the right of the Authority to receive certain payments, if
any, with respect to expenses and indemnification under Sections 4.2(b), 7.3,
9.2 and 9.3 hereof, the Authority's right to receive notices, opinions and other
documents required to be delivered to the Authority hereunder and the
Authority's rights to consent to certain actions taken hereunder), and the
Authority 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 4.4 shall apply to its obligation to make such
payments.
Section 4.6. Amounts Remaining in Funds. It is agreed by the parties hereto
that after: (i) payment in full of the principal of, and premium, if any, and
interest on, the Bonds, or after provision for such payment shall have been made
as provided in the Indenture, (ii) 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, (iii)
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 (iv) payment to the Bank of any amounts owed to the Bank by the
Borrower under the Reimbursement Agreement, 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 5.1. Right of Access to the Project. The Borrower agrees that
during the term of this Agreement, the Authority, the Trustee and the duly
authorized agents of either 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 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 requested by the
Borrower and which are in the form required of all visitors to the Project site.
Nothing contained in this Section or in any other provision of this Agreement
shall be construed to entitle the Authority or the Trustee to any information or
inspection involving the confidential knowledge, expertise or know-how of the
Borrower.
Section 5.2. The Borrower's Maintenance of its Existence. The Borrower
covenants and agrees that it will maintain its existence and will not dissolve,
sell, or otherwise dispose of all or substantially all of its assets, nor
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 consolidate
10
with or merge into it, or sell or otherwise transfer to another entity 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;
(b) The Trustee and the Authority 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 consent of the Bank has been received by the Trustee,
together with an acknowledgment that the Letter of Credit will remain in effect.
If a merger, consolidation, sale or other transfer is effected, as provided
in this Section, the provisions of this Section shall continue in full force and
effect and no further merger, consolidation, sale or transfer shall be effected
except in accordance with the provisions of this Section.
Section 5.3. Records and Financial Statements of Borrower; 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 Authority 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 Authority or the
Trustee, the Borrower further covenants and agrees to furnish the requesting
party, within one hundred twenty (120) days after the end of each Fiscal Year,
with copies of its complete financial statements together with a Certificate of
an 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.
(c) The Borrower shall, within sixty (60) days of the receipt of a written
request from the Authority or the Trustee, furnish a written report to the
requesting party, as of
11
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 Authority shall
reasonably request regarding other matters covered in the Borrower's application
for industrial revenue bond financing.
Section 5.4. 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, by means of policies issued by reputable
insurance companies qualified to do business in the State. Upon the written
request of the Authority or the Trustee, the Borrower shall deliver to the
requesting party, within sixty (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 Authority are not
responsible for the adequacy or sufficiency of the coverage evidenced by such
policies or certificates.
Section 5.5. 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 (i) in a safe condition and (ii) in good
repair and in good operating condition, ordinary wear and tear excepted, making
from time to time all necessary repairs thereto and renewals and replacements
thereof.
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 5.6. Qualification in California. The Borrower agrees that
throughout the term of this Agreement it, or any successor permitted by Section
5.2, will be qualified to do business in the State.
Section 5.7. 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
12
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 5.8.
Such Alternate Credit Facility must meet the following conditions:
(a) the Alternate Credit Facility must be approved by the Authority or any
successors;
(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 Authority 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 opinions regarding the validity of the Alternate Credit
Facility as the Authority, 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 5.8. Letter of Credit. The Borrower shall at all times throughout
the term of this Agreement (but subject to Section 5.7) 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 (x) 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 (y) an amount equal to 45 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 an interest rate of twelve percent (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 year of twelve 30-day months while the Bonds bear interest at the
Fixed Interest Rate to pay interest on the Bonds when due.
13
On any Interest Payment Date, the Borrower may, at its option, but with the
written approval of the Authority, 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 (i) twenty-three (23) days
before the Expiration Date of the then-existing Letter of Credit while the Bonds
bear interest at the Weekly Interest Rate, or (ii) forty-five (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 thirty (30) days prior to the
Letter of Credit Substitution Date, the Borrower shall provide the Authority,
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 5.8. 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 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 Authority 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 Authority, 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".
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
Reimbursement Agreement with the Borrower and such default will cause a
mandatory redemption of Bonds pursuant to Section 4.01(7) of the Indenture.
Section 5.9. Covenants of the Authority and 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 Authority and the Borrower in
this Section and in Sections 5.10 and 5.11 are for the benefit of the Trustee
and each and every Holder of the Bonds. The Authority and the Borrower each
(unless otherwise indicated below) 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 the capital account of the Borrower, and
which were paid not earlier than 60 days before April 30, 1997.
14
(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) The Borrower shall not enter into any agreement 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, no
actions shall be taken, or omitted to be taken, by the Borrower which would have
the 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) The Borrower shall not make any use of the proceeds of the Bonds and
shall not direct or knowingly permit the Trustee to invest any proceeds from the
issuance of the Bonds or any acquired obligation in any manner which would cause
the Bonds to
15
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 from
time to time, so long as any Bonds remain Outstanding.
(k) The Borrower shall use due diligence to cause the Project to be
operated in accordance with all applicable laws, rulings, regulations and
ordinances.
(l) The Borrower shall comply with all conditions imposed by the Authority
and any State or local agency in its approval of the Project.
(m) The Borrower shall fully and faithfully perform all the duties and
obligations which the Authority has covenanted and agreed in the Indenture to
cause Borrower to perform and any duties and obligations which Borrower is
required in the Indenture to perform. The foregoing shall not apply to any duty
or undertaking of the Authority which by its nature cannot be delegated or
assigned.
(n) The Borrower acknowledges, approves and accepts the rights, duties and
obligations imposed on the Borrower pursuant to the Remarketing Agreement.
(o) The Borrower shall 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 Authority pertaining thereto, or otherwise required of the Borrower to be
observed or performed, whether express or implied.
(p) The Borrower shall comply with the covenants and obligations of the
Borrower contained in the Reimbursement Agreement.
(q) The Borrower covenants that it shall use less than twenty-five percent
(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.
(r) The Borrower and the Authority shall not become a Holder of the Bonds,
and none of the Borrower, any Related Party or the Authority shall directly or
indirectly purchase Bonds from the Remarketing Agent.
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 Authority to comply with the covenants set forth in this
Section and Section 5.10 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 the following terms shall have the following meanings:
16
"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 any principal user of the Project as defined in
Proposed Treasury Regulations Section 1.103-10(h).
"Project Location" shall mean the area within the City of Long Beach,
California.
"Regulations" shall mean those regulations, whether now or hereafter
adopted, prepared 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 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 Authority 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.
17
The Authority 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 Authority prior to the issuance and delivery of the Bonds whatever
information is necessary for the Authority 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 5.9(h) or this Section 5.10 to the
contrary, neither the Borrower nor the Authority shall have violated the
covenants contained in Section 5.9(h) or this Section 5.10 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; and none of the covenants and agreements herein
contained shall require either the Borrower or the Authority to enter an
appearance or intervene in any administrative, legislative or judicial
proceeding in connection with any changes in applicable laws, rules or
regulations or in connection with any decisions of any court or administrative
agency or other governmental body affecting the taxation of interest on the
Bonds.
Section 5.11. Special Arbitrage Certifications. (a) The Authority 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 or, 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 Authority 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.
18
Section 5.12. Covenant to Enter into Agreement or Contract to Provide
Ongoing Disclosure. The Borrower and the Authority hereby agree that the initial
offering and sale of the Bonds is exempt from the requirements of 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"). 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 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
5.12 is for the benefit of the Bondholders, 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 5.12 be assigned pursuant
to and in accordance with Section 6.09 of the Indenture to the Trustee for the
benefit of the Bondholders, any Participating Underwriter and the Beneficial
Owners and that each Bondholder, Participating Underwriter and Beneficial Owner
be a beneficiary of this Section 5.12 with the right to enforce this Section
5.12 against the Borrower. Notwithstanding any other provision of this
Agreement, failure of the Borrower to comply with the provisions of this Section
5.12 shall not be considered a Loan Default Event; provided, however, the
Trustee may (and, at the request of any Participating Underwriter or the Holders
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 5.12.
ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION;
USE OF PROCEEDS
Section 6.1. Obligation to Continue Payments. If prior to full payment of
the Bonds (or provision for payment thereof in accordance with the provisions of
the Indenture) (i) the Project or any portion thereof is destroyed (in whole or
in part) or is damaged by fire or other casualty, or (ii) 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 6.2. Application of Net Proceeds. The Borrower shall be entitled to
the Net Proceeds, if any, of any insurance or condemnation awards resulting from
the damage, destruction or condemnation of the Project or any portion thereof
for application as provided in this Section. All Net Proceeds shall be deposited
by the Borrower in an escrow account with the Trustee and shall be applied in
one or more of the following ways at the election of the Borrower, with the
consent of the Bank, by written notice to the Authority and the Trustee.
19
(a) 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 Authority and the Trustee
written notice thereof, and evidence of the Bank's consent, within 90 days of
the deposit of the Net Proceeds with the Trustee. 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.
(b) The prepayment of all or a portion of the Loan in accordance with
Article VIII hereof and redemption of Bonds. If the Borrower fails to give the
notice and evidence of the Bank's consent required by Section 6.2(a) above
within 90 days of the deposit of the Net Proceeds with the Trustee, the Borrower
shall be deemed to have elected to apply the Net Proceeds to the prepayment of
all or a portion of the Loan as provided in this subsection (b) in accordance
with Section 8.2(a) hereof, the Bank shall be deemed to have consented to such
application, and the Authority and the Trustee shall be deemed to have received
written notice thereof for purposes of this Section 6.2.
Section 6.3. Insufficiency of Net Proceeds. If the Project or a portion
thereof is to be repaired, restored, relocated, modified or improved pursuant to
Section 6.2(a) hereof, and if the Net Proceeds are insufficient to pay in full
the cost of such repair, restoration, relocation, 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 6.4. Damage to or Condemnation of Other Property. 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 7.1. 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 4.2(a);
20
(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 Authority or the Trustee, unless the Authority and the
Trustee shall agree in writing to an extension of such time;
(c) failure of the Borrower to observe and perform 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, 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 Authority or the Trustee, unless the Authority 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 Authority 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)-(D) 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 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 7.2. Remedies on Default. Subject to the last sentence of Section
7.1 above, whenever any Loan Default Event shall have occurred and shall be
continuing,
21
(a) The Trustee, by written notice to the Borrower and the Bank, shall
declare all unpaid amounts payable under Section 4.2(a) of this Agreement 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 Authority or the Trustee may take whatever action at law or in
equity as may be necessary or desirable to collect the payments and other
amounts then due and thereafter to become due or to enforce performance and
observance of any obligation, agreement or covenant of the Borrower under this
Agreement.
In case the Trustee or the Authority shall have proceeded to enforce its
rights under this Agreement and such proceedings shall have been discontinued or
abandoned for any reason or shall have been determined adversely to the Trustee
or the Authority, then, and in every such case, the Borrower, the Trustee and
the Authority shall be restored respectively to their several positions and
rights hereunder, and all rights, remedies and powers of the Borrower, the
Trustee and the Authority shall continue as though no such action had been
taken.
The Borrower covenants that, in case a Loan Default Event shall occur and
all unpaid amounts payable under Section 4.2(a) hereof shall have been declared
due and payable immediately pursuant to Section 7.2(a) hereof, then, upon demand
of the Trustee, the Borrower will pay to the Trustee the whole amount that then
shall have become due and payable under said Section, with interest on the
amount then overdue at the rate of ten percent (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
22
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 7.3. 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
Authority or the Trustee should employ attorneys or incur other expenses for the
collection of the payments due under this Agreement or the enforcement of
performance or observance of any obligation or agreement on the part of the
Borrower herein contained, the Borrower agrees to pay to the Authority or the
Trustee the reasonable fees and expenses of such attorneys and such other
reasonable expenses so incurred by the Authority or the Trustee.
Section 7.4. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Authority or the Trustee is intended to be exclusive of any
other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this
Agreement or now or hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power accruing upon any default shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to time and as often as may
be deemed expedient. To entitle the Authority or the Trustee to exercise any
remedy reserved to it in this Article, it shall not be necessary to give any
notice, other than such notice as may be herein expressly required. Such rights
and remedies as are given the Authority hereunder shall also extend to the
Trustee, and the Trustee and the Holders of the Bonds shall be deemed third
party beneficiaries of all covenants and agreements herein contained.
Section 7.5. Waivers. No delay or omission of the Authority 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 Authority 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 Authority or the Trustee, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
ARTICLE VIII
PREPAYMENT
Section 8.1. Redemption of Bonds with Prepayment Moneys. By virtue of the
assignment of the rights of the Authority under this Agreement to the Trustee as
is provided in
23
Section 4.5, 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 8.5.
Section 8.2. 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 8.4,
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(5) 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 Authority and the Trustee receive a
Certificate of the Authorized Representative of the Borrower to the effect that:
(1) 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,
(2) 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
(3) the cost of restoration of the Project would substantially exceed the Net
Proceeds of insurance carried thereon; or
(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 Authority and the Trustee receive a Certificate of the Authorized
Representative of the Borrower to the effect that: (1) the Borrower is thereby
prevented from carrying on its normal operations at the Project for a period of
at least six consecutive months or (2) the Project is unsuitable for use by the
Borrower;
(b) 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(2) or 4.01(6) of the Indenture, as
applicable, but subject to any additional requirements of the Reimbursement
Agreement.
Section 8.3. 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 8.4 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(5) of the Indenture with respect to subsection (i) below,
Section
24
4.01(3) 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 Holders thereof (other
than a Holder 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
Authority and the Trustee to the effect that the capital
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.
(iv) if mandatory redemption is required by any of
Sections 4.01(4), (7), or (8) of the Indenture.
The amount payable by the Borrower in the event of a prepayment required by this
Section shall be determined as set forth in Section 8.4 hereof and shall be
deposited in the Revenue Fund upon demand by the Authority or the Trustee.
(b) The Borrower shall prepay all or any part of the Loan from Net Proceeds
under the circumstances described in Section 6.2(b) hereof, and cause all or any
part of the Outstanding Bonds to be redeemed at the redemption price set forth
in Section 4.01(5) of the Indenture.
Section 8.4. Amount of Prepayment. In the case of a prepayment in full of
the Loan by the Borrower under this Agreement pursuant to Section 8.2 or 8.3,
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 (1) the
redemption price specified in the applicable subsections of Section 8.2 or 8.3,
for all Outstanding Bonds, plus all interest accrued and to accrue to the
25
redemption date, (2) all reasonable and necessary fees and expenses of the
Authority, 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
(3) 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 8.2 or 8.3, 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 8.2 or 8.3, 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 8.5. Notice of Prepayment. The Borrower shall give written notice
to the Authority, the Bank and the Trustee (1) while the Bonds bear interest at
the Weekly Interest Rate, not less than twenty (20) days prior to the date of
any prepayment of a Loan Repayment and (2) while the Bonds bear interest at the
Fixed Interest Rate, not less than forty (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
repayment. 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.
ARTICLE IX
NON-LIABILITY OF AUTHORITY; EXPENSES; INDEMNIFICATION
Section 9.1. Non-Liability of Authority. The Authority shall not be
obligated to pay the principal of, or premium, if any, or interest on the Bonds,
except from Revenues. The Borrower hereby acknowledges that the Authority's sole
source of moneys to repay the Bonds will be provided by the payments made by the
Borrower pursuant to this Agreement, together with other Revenues, 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
Authority or any third party.
Section 9.2. Expenses. The Borrower covenants and agrees to pay, and to
indemnify the Authority and the Trustee against, all 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.
26
Section 9.3. Indemnification. The Borrower releases the Authority, the
State, the Treasurer of the State and the Trustee from, and covenants and agrees
that none of the Authority, the State or the Trustee shall be liable for, and
covenants and agrees to indemnify and hold harmless the Authority, 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 (1) 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; (2) 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; (3) the Trustee's acceptance or
administration of the trusts under the Indenture, or the exercise or performance
of any of its powers or duties under the Indenture; or (4) any untrue statement
or alleged untrue statement of any material fact or omission or alleged omission
to state a material fact necessary to make the statements made, in light of the
circumstances under which they were made, not misleading, in 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 Authority or the Trustee
exceeds the Net Proceeds the Authority 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 Authority, the
State, the Treasurer of the State and the Trustee and their officers, employees
and agents for any and all costs, reasonable attorneys fees, liabilities or
expenses incurred in connection with investigating, defending against or
otherwise in connection with any such losses, claims, damages, liabilities,
expenses or actions, except to the extent that the same arise out of the 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 10.1. Notices. All notices, certificates, or other communications
given hereunder shall be deemed sufficiently given on (i) the day such notices,
certificates or other communications are received when sent by personal
delivery, including tested telex or facsimile communication, or (ii) the third
day following the day on which the same have been mailed by first class, postage
prepaid, addressed to the Authority, 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 Authority or the Borrower to the other shall also be
given to the Trustee, the Tender Agent, Borrower's counsel and the Bank. The
Authority, 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.
27
If to the Authority:
California Economic Development Financing Authority
c/o California Trade and Commerce Agency
▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chair
(▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Borrower:
Advanced Aerodynamics and Structures, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
(▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Trustee or Tender Agent:
First Trust of California, National Association
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Municipal Trusts and Agency
(▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Bank:
The Sumitomo Bank, Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance & Financial Institutions Group
(▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Remarketing Agent
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Refsnes, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Fixed Income Banking
(▇▇▇) ▇▇▇-▇▇▇▇ Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Section 10.2. Severability. If any provision of this Agreement shall be
held or deemed to be, or shall in fact be, illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative, or unenforceable to
any extent whatever.
28
Section 10.3. 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 10.4. 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 10.5. 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 10.6. Authorized Representative of the Borrower. Whenever under the
provisions of this Agreement the approval of the Borrower is required or the
Authority or the Trustee 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 Authority and the
Trustee shall be authorized to act on any such approval or request and neither
party hereto shall have any complaint against the other or against the Trustee
as a result of any such action taken.
Section 10.7. Term of the Agreement. This Agreement shall be in full force
and effect 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 Authority, the State or the Trustee
shall survive the termination of this Agreement.
Section 10.8. Binding Effect. This Agreement shall inure to the benefit of
and shall be binding upon the Authority, the Borrower and their respective
successors and assigns; subject, however, to the limitations contained in
Section 5.2 hereof.
Section 10.9. References to Bank. Notwithstanding any provisions contained
herein to the contrary, the Bank shall be entitled to take all actions and
exercise all rights hereunder for its own account 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 Reimbursement Agreement 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.
29
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 Economic Development Financing Authority
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 ECONOMIC DEVELOPMENT
FINANCING AUTHORITY
By:___________________________________________
Chair
ATTEST
By:__________________________________
Secretary
APPROVED AS TO FORM
By:__________________________________
Counsel
ADVANCED AERODYNAMICS AND
STRUCTURES, INC.
By:_______________________________________
Authorized Signatory
EXHIBIT A
THE PROJECT
The Project consists of the (1) construction of a 200,000 square foot
manufacturing facility on a parcel of leased land located at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the "Project Site"); and (2) acquisition and
installation of certain manufacturing equipment at the Project Site.
A-1