EXHIBIT 10.4
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LOAN AGREEMENT
By and Between
CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY
and
PEET'S COFFEE & TEA, INC.
Dated as of December 1, 1995
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The interest of the CALIFORNIA STATEWIDE COMMUNITIES DEVELOPMENT 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 and its right to receive
notices) pursuant to the Indenture of Trust dated as of the date hereof, from
the Authority to First Trust of California, National Association, as trustee
thereunder, and is subject to such assignment.
TABLE OF CONTENTS
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Section Page
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PARTIES .............................................................................................. 1
PREAMBLES............................................................................................. 1
ARTICLE I
DEFINITIONS
1.1. DEFINITION OF TERMS.......................................................................... 2
1.2. NUMBER AND GENDER............................................................................ 2
1.3. ARTICLES, SECTIONS, ETC...................................................................... 2
ARTICLE II
REPRESENTATIONS
2.1. REPRESENTATIONS OF THE AUTHORITY............................................................. 2
2.2. REPRESENTATIONS OF THE BORROWER.............................................................. 3
2.3. BONDHOLDERS TO BENEFIT....................................................................... 4
ARTICLE III
CONSTRUCTION OF THE PROJECT
3.1. CONSTRUCTION OF THE PROJECT; MODIFICATION OF PROJECT......................................... 4
3.2. DISBURSEMENTS FROM THE PROJECT FUND AND COSTS OF ISSUANCE FUND............................... 5
3.3. ESTABLISHMENT OF COMPLETION DATE; OBLIGATION OF BORROWER TO COMPLETE......................... 5
3.4. INVESTMENT OF MONEYS IN FUNDS................................................................ 6
ARTICLE IV
LOAN OF PROCEEDS; REPAYMENT PROVISIONS
4.1. LOAN OF BOND PROCEEDS; ISSUANCE OF BONDS..................................................... 6
4.2. LOAN REPAYMENTS AND, OTHER AMOUNTS PAYABLE................................................... 6
4.3. RIGHT OF PURCHASE............................................................................ 8
4.4. UNCONDITIONAL OBLIGATIONS.................................................................... 8
4.5. ASSIGNMENT OF AUTHORITY'S RIGHTS............................................................. 8
4.6. AMOUNTS REMAINING IN FUNDS................................................................... 8
ARTICLE V
SPECIAL COVENANTS AND AGREEMENTS
5.1. RIGHT OF ACCESS TO THE PROJECT............................................................... 9
5.2. THE BORROWER'S MAINTENANCE OF ITS EXISTENCE.................................................. 9
5.3. RECORDS AND FINANCIAL STATEMENTS OF BORROWER; EMPLOYMENT PRACTICES........................... 10
5.4. INSURANCE.................................................................................... 10
5.5. MAINTENANCE AND REPAIR; TAXES; UTILITY AND OTHER CHARGES..................................... 10
5.6. QUALIFICATION IN CALIFORNIA.................................................................. 11
5.7. ALTERNATE CREDIT FACILITY.................................................................... 11
i.
TABLE OF CONTENTS
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(Continued)
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5.8. LETTERS OF CREDIT........................................................................... 11
5.9. COVENANTS OF THE BORROWER................................................................... 12
5.10. CAPITAL EXPENDITURES........................................................................ 15
5.11. SPECIAL ARBITRAGE CERTIFICATIONS............................................................ 16
5.12. CONTINUING DISCLOSURE....................................................................... 16
5.13. LIMITATIONS ON DISPOSITION OF ASSETS; ASSIGNMENT, SALE OR LEASE OF PROJECT.................. 16
ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION; USE OF PROCEEDS
6.1. OBLIGATION TO CONTINUE PAYMENTS............................................................. 17
6.2. APPLICATION OF NET PROCEEDS................................................................. 17
6.3. INSUFFICIENCY OF NET PROCEEDS............................................................... 18
6.4. DAMAGE TO OR CONDEMNATION OF OTHER PROPERTY................................................. 18
ARTICLE VII
LOAN DEFAULT EVENTS AND REMEDIES
7.1. LOAN DEFAULT EVENTS......................................................................... 18
7.2. REMEDIES ON DEFAULT......................................................................... 19
7.3. AGREEMENT TO PAY ATTORNEYS' FEES AND EXPENSES............................................... 20
7.4. NO REMEDY EXCLUSIVE......................................................................... 20
7.5. WAIVERS..................................................................................... 20
ARTICLE VIII
PREPAYMENT
8.1. REDEMPTION OF BONDS WITH PREPAYMENT MONEYS.................................................. 20
8.2. OPTIONS TO PREPAY INSTALLMENTS.............................................................. 21
8.3. MANDATORY PREPAYMIENT....................................................................... 21
8.4. AMOUNT OF PREPAYMENT........................................................................ 22
8.5. NOTICE OF PREPAYMENT........................................................................ 23
ARTICLE IX
NON-LIABILITY OF AUTHORITY; EXPENSES; INDEMNIFICATION
9.1. NON-LIABILITY OF AUTHORITY.................................................................. 23
9.2. EXPENSES.................................................................................... 23
9.3. INDEMNIFICATION............................................................................. 23
ARTICLE X
MISCELLANEOUS
10.1. NOTICES..................................................................................... 24
10.2. SEVERABILITY................................................................................ 24
10.3. EXECUTION OF COUNTERPARTS................................................................... 24
10.4. AMENDMENTS, CHANGES AND MODIFICATIONS....................................................... 24
10.5. GOVERNING LAW............................................................................... 24
ii.
TABLE OF CONTENTS
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Continued
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10.6. AUTHORIZED REPRESENTATIVE OF THE BORROWER................................................... 24
10.7. TERM OF THE AGREEMENT....................................................................... 25
10.8. BINDING EFFECT.............................................................................. 25
10.9. BROKERAGE CONFIRMATIONS..................................................................... 25
ANNEX A Details of Issue....................................................................... A-1
EXHIBIT A The Project
EXHIBIT B Tax Certificate and Agreement
iii.
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of December 1, 1995, between CALIFORNIA
STATEWIDE COMMUNITIES DEVELOPMENT AUTHORITY, a public entity of the State of
California (the "Authority"), and the Borrower named and more particularly
described in Item 1 of Annex A hereto, including, any general partner thereof,
if any, any affiliate or guarantor thereof, or any entity which is the
surviving, resulting or transferee entity in any merger, consolidation or
transfer of assets permitted under Section 5.2 hereof (the "Borrower")
W I T N E S S E T H:
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WHEREAS, the Authority is a public entity of the State of California,
created pursuant to the provisions relating to the joint exercise of powers
found in Chapter 5 of Division 7 of Title I (commencing with Section 6500) of
the Government Code of the State of California; and
WHEREAS, the Authority is authorized to finance certain capital
projects consisting of industrial facilities pursuant to the provisions of the
California Industrial Development Financing Act (constituting Title 10 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, the Authority is further authorized to issue its bonds for
the purpose of paying all or any part of the costs of a project, and for any
other authorized purpose; to acquire and hold property, including funds, project
agreements and other obligations of any kind, and pledge, encumber or assign the
same, or the revenues therefrom or any portion of such revenues, or other
rights, whether then owned or possessed, or thereafter acquired, for the benefit
of the owners, and as security or additional security for any bonds or the
performance of obligations under an indenture; to provide for the advance of
bond proceeds and other funds pursuant to project agreements as necessary to pay
or reimburse for project costs; and to enter into loan agreements; and
WHEREAS, in furtherance of the purposes of the Act and in order to
protect the health, welfare and safety of the citizens of the State of
California (the "State"), 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 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 industrial
development revenue bonds more particularly described in Item 2 of Annex A (the
"Bonds") in the aggregate principal amount set forth in Item 3 of Annex A to
provide funds to pay the cost of the Project and 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, 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:
1.
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
December 1, 1995 (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 public entity 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. The Project constitutes and will constitute a
"project" as that term is defined in the Act. 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 Cost 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 to the Trustee as security for payment of the principal of, premium, if
any, and interest on the Bonds and to the Bank and the Standby Letter of Credit
Bank as security for the payment of the obligations of the Borrower under the
Master Reimbursement Agreement and the Standby Reimbursement Agreement,
respectively.
(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 Master Reimbursement
Agreement and the Standby Reimbursement Agreement.
2.
(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 Borrower is a "Company" as such term is defined in the
Act; (ii) 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; (iii) said loan is in the public interest, serves the public
purposes and meets the requirements of the Act; and (iv) the portion of such
loan allocable to the Cost of the Project does not exceed the total cost thereof
as determined by the Borrower and approved by the Authority; and (v) the Project
proposed by the Borrower qualifies under the Authority's financial eligibility
standards.
(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.
SECTION 2.2. REPRESENTATIONS OF THE BORROWER. The Borrower makes the
following representations as the basis for its undertakings herein contained:
(a) As set forth in Item 1 of Annex A, the Borrower is a corporation,
partnership, limited liability company, one or more individuals or other legal
entity, as applicable, duly incorporated or established under the laws of, and
validly existing and in good standing in, the jurisdiction specified in said
Item 1 of Annex A, and is 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 Master Reimbursement 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, or the Master Reimbursement Agreement,
the consummation of the transactions contemplated hereby and thereby, nor the
fulfillment of or compliance with the terms and conditions hereof and thereof,
conflicts with or results in a breach of any of the terms, conditions or
provisions of 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 Cost of the Project is as set forth in the Tax
Certificate and Agreement and has been determined in accordance with sound
engineering, construction, and accounting principles. All the information and
representations in the Tax Certificate and 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 Project will not be changed or operated in a
manner 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 will cause the Project to be operated or leased 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.
3.
(e) The Borrower has and will have title to the Project sufficient to
carry out the purposes of this Agreement.
(f) At the time of submission of an application to the State and 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) 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 applicable local governmental
agencies, the State, and the federal government have been obtained, or if not
yet obtained, are expected to be obtained in due course.
(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.
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 Standby Letter of Credit 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; MODIFICATION OF PROJECT. The
Borrower agrees that, utilizing the proceeds of the Bonds loaned pursuant to
Section 4.1 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 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
4.
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 Standby Letter of Credit Bank.
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 Cost 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
Standby Letter of Credit 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 stating
the Cost 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, 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 Cost of the Project should be insufficient to pay the Cost 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 Cost 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 Cost of the Project pursuant to the provisions of this Section,
it shall not be
5.
entitled to any reimbursement therefor from the Authority, from the Trustee or
from the Holders of any of the Bonds, nor shall it be entitled to any diminution
of the amounts payable under Section 4.2.
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 Certificate and 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 Cost 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 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.
Without limiting the generality of the foregoing provisions of this
Section, scheduled Loan Repayments shall be paid by the Borrower as follows: (i)
with respect to interest on the Bonds (a) before the Fixed Rate Date, on or
before the 15th day of the month preceding each Interest Payment Date, the sum
which, together with other moneys available therefor in the Interest Account,
will equal the Interest Requirement, and (b) after the Fixed Rate Date, on or
before the 15th day of the month preceding each Interest Payment Date, the sum
which, together with other moneys available therefor in the Interest Account,
will equal the interest accrued and unpaid and to accrue to the end of the
current month; (ii) with respect to principal of the Bonds, on or before the
15th day of each February, May, August and November, commencing February 15,
1996, the Borrower shall pay amounts equal to one quarter (1/4) of the amount of
principal of the Bonds maturing on the next succeeding Bond maturity date or the
amount of the Sinking Fund Installment due on the next succeeding Sinking Fund
Installment due date in accordance with the Sinking Fund Installment payment
schedule specified in Item 9 of Annex A.
6.
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 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 under the Master Letter of
Credit.
(b) On or before the fifteenth day of each month, commencing January
1, 1996 until the principal of, premium, if any, and interest on the Bonds shall
have been fully paid or provision for such payment shall have been made as
provided in the Indenture, the Borrower covenants and agrees to pay to the
Trustee for deposit in the Administrative Fee Fund one twelfth (1/12) of the
amount equal to 40 basis points (40/100 of 1 %) of the weighted average daily
principal amount of Bonds Outstanding during the immediately preceding calendar
month. The Administrative Fee Fund will be used to pay to (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 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 by the Authority
at the expense of the Authority 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 including the
Administrator's management fees. To the extent that amounts on deposit in the
Administrative Fee Fund are insufficient to pay the expenses identified in (i)
through (v) above, the Borrower agrees to pay an additional amount sufficient to
cover such expenses immediately upon demand by the Trustee. 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.
(c) The Borrower also agrees to pay the periodic fees and expenses of
the Bank pursuant to the Master Reimbursement Agreement and the Standby Letter
of Credit Bank pursuant to the Standby 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 until paid, to the extent permitted by
law, at the rate of ten percent (10%) per annum. With respect to amounts due the
Bank and the Standby Letter of Credit Bank, the Borrower agrees to pay such
amounts together with interest thereon pursuant to the Master
7.
Reimbursement Agreement and the Standby Reimbursement Agreement, respectively.
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. RIGHT OF PURCHASE. The Borrower hereby recognizes and
agrees that the Indenture provides for the creation of an account or accounts to
facilitate the purchase of Bonds that have been tendered for purchase in
accordance with Section 4.06 of the Indenture by the Tender Agent, and the
Borrower agrees to provide the Master 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 and to provide the Master
Letter of Credit pursuant to Section 4.3, 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 net the 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 the
Master 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 the Master 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 or
either of these, or any failure of the Authority or the Trustee to perform and
observe any covenant, whether express or implied, or any duty, liability or
obligation arising out of or connected with this Agreement or the Indenture.
SECTION 4.5. ASSIGNMENT OF AUTHORITY'S RIGHTS. As security for the
payment of the Bonds, the Authority will assign to the Trustee the Authority's
rights 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), 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 maker 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, (iv) payment to the Bank of any amounts owed to the Bank by the
Borrower under the Master Reimbursement Agreement, and (v) payment to the
Standby Letter of Credit Bank of
8.
any amounts owed to the Standby Letter of Credit Bank under the Standby
Reimbursement Agreement or any other applicable 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 Authority, the Trustee, and their
respective agents, may be exercised only after the Person seeking such access
shall have executed such 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 shall maintain the existence of the
Borrower and shall 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 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) certifies in writing that it 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 Standby Letter of Credit Bank has been
received by the Trustee, together with an acknowledgment that the Standby 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.
9.
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, the
Borrower further covenants and agrees to furnish the Authority, within one
hundred twenty (120) days after the end of each Fiscal Year, with copies of its
complete financial statements in such form as are required to be provided to the
Standby Letter of Credit Bank 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) Within thirty (30) days following the end of the Borrower's
Fiscal Year, the Borrower shall furnish a written report to the Authority
stating the number of full-time and part-time employees of the Borrower employed
at the Project during such Fiscal Year, and supplying such current information
as the Authority shall reasonably request regarding other matters covered in its
application for financing for the Project.
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 Standby Letter of Credit Bank, by means
of policies issued by reputable insurance companies qualified to do business in
the State. The Borrower agrees to deliver annually prior to the last day of each
Fiscal Year, upon request and upon the renewal of any such policy, to the
Authority and the Trustee 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 is 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.
10.
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 to a Fixed Interest Rate pursuant to the terms and provisions
of the Indenture, the Borrower may deposit with the Trustee an Alternate Credit
Facility, effective as of the Fixed Rate Date, in lieu of keeping the Master
Letter of Credit and the Standby Letter of Credit in place as required by
Section 5.8.
The Alternate Credit Facility must meet the following conditions:
(a) the Alternate Credit Facility must be approved by the Authority
and by the California Industrial Development Financing Advisory Commission 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 Trustee
(i) an opinion of Bond Counsel stating that the delivery of such Alternate
Credit Facility to the Trustee is authorized under the Indenture 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 or the Trustee may 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 Master Letter of Credit and the Standby Letter
of Credit will not, by itself, result in withdrawal of its rating of the Bonds
or a reduction from the rating which then exists as to the Bonds below the third
highest rating of such rating agency.
SECTION 5.8. LETTERS OF CREDIT .
(a) 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
Master Letter of Credit with respect to the Bonds. At any time the Borrower may,
at its option, provide for the delivery to the Trustee of an Alternate Master
Letter of Credit and the Borrower shall, in any event, cause to be delivered an
Alternate Master Letter of Credit at least 23 days before the Expiration Date of
the then existing Master Letter of Credit. An Alternate Master Letter of Credit
shall be an irrevocable letter of credit or other irrevocable credit facility,
issued by a commercial bank or other financial institution, the terms of which
shall in all material respects be the same as the Master Letter of Credit;
provided, that the Expiration Date of such Alternate
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11.
Master Letter of Credit shall be a date not earlier than one year from its date
of issuance, subject to earlier termination upon payment of all Bonds in full or
provision for such payment in accordance with the Indenture. On or prior to the
date of the delivery of an Alternate Master Letter of Credit to the Trustee, the
Borrower shall cause to be furnished to the Trustee (i) an opinion of Bond
Counsel stating that the delivery of such Alternate Master Letter of Credit to
the Trustee is authorized under the Indenture and complies with the terms
hereof, (ii) such opinions regarding the validity of the Alternate Master Letter
of Credit as the Authority or the Trustee may 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 Master Letter of Credit and that the substitution of the
proposed Alternate Master Letter of Credit for the then existing Master Letter
of Credit will not, by itself, result in a reduction or withdrawal of its rating
of the Bonds from the rating which then exists as to the Bonds.
(b) The Borrower shall at all times throughout the term of this
Agreement (but subject to Section 5.7 hereof) maintain in effect a Standby
Letter of Credit acceptable to the Bank. Prior to any conversion of the Bonds to
a Fixed Interest Rate, the Borrower shall deposit with the Trustee an
irrevocable commitment of a Standby Letter of Credit Bank acceptable to the Bank
in a form required by the Master Reimbursement Agreement and otherwise having at
least the following features:
(i) a term at least equal to the period until 120 days after the
first date on which the Outstanding Bonds would be subject to optional
redemption pursuant to the Indenture; and
(ii) coverage of the principal amount of the Outstanding Bonds,
plus interest for a period as required by the Bank, plus the call premium
at the first call date.
(c) It is understood that with proper notification to the Trustee,
the Borrower and the Bank, the Standby Letter of Credit Bank can declare that a
default has occurred under the Standby Reimbursement Agreement and such default
shall cause a mandatory redemption of Bonds pursuant to Section 4.01 of the
Indenture.
SECTION 5.9. COVENANTS OF THE BORROWER. It is the intention of the
parties hereto that interest on the Bonds shall be and remain Tax-exempt, 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 (97% or more) of the proceeds of the
Bonds including proceeds of investment thereof, shall be used to pay the Cost of
the Project which are chargeable to the capital account of the Borrower, and
which were paid or incurred after the date identified in Item 7 of Annex A
hereto. None of the proceeds of the Bonds shall be used to finance any portion
of the Project which was utilized by the Borrower one year or more prior to the
date of issuance of such Bonds.
(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
12.
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 and the initial deposit in the Revenue Fund specified in Item 5 of
Annex A hereto) 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
value of such building 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,
the Borrower shall not take or permit to be taken any action which would have
the effect, directly or indirectly, of making interest on any of the Bonds to
not be Tax-exempt.
(i) No changes shall be made in the Project and no actions shall be
taken, or omitted to be taken, 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 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 comply with Section 91533(l) of the Act
relating to payment of prevailing wages for construction or rehabilitation work
done on the Project.
(l) The Borrower shall use due diligence to cause the Project to be
operated in accordance with all applicable laws, rulings, regulations and
ordinances.
13.
(m) The Borrower shall comply with all conditions imposed by the
Authority and any State agency in its approval of the Project.
(n) 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.
(o) The Borrower shall provide for the payment of relocation
assistance as provided by Chapter 16 of Division 7 of Title 1 of the California
Government Code, and shall reimburse the Authority or others, as the case may
be, for relocation assistance services, to the extent required by law.
(p) Within thirty (30) days following the end of the Borrower's
Fiscal Year, the Borrower shall furnish a written report to the Authority, and
upon request, to the California Industrial Development Financing Advisory
Commission, stating the number of full-time and part-time employees employed at
the Project during such 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 except financial
information confidential in nature.
(q) The Borrower shall comply with the covenants in the Borrower's
letter of representation delivered to the Remarketing Agent in connection with
the issuance of the Bonds and acknowledges, approves and accepts the rights,
duties and obligations imposed on the Borrower pursuant to the Remarketing
Agreement.
(r) 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.
(s) The Borrower shall comply with the covenants of the Borrower
contained in the Master Reimbursement Agreement and the Standby Reimbursement
Agreement and to pay the Bank and the Standby Letter of Credit Bank, fees in
accordance with the Master Reimbursement Agreement and the Standby Reimbursement
Agreement and any other applicable agreement.
(t) 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.
(u) Neither the Borrower nor the Authority shall become a Holder of
the Bonds, and the Borrower and the Authority shall not, 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, if applicable, shall survive the defeasance or payment
in full of the Bonds.
14.
SECTION 5.10. CAPITAL EXPENDITURES. The following covenants shall
apply only if the principal amount of the Bonds exceeds $1,000,000. For the
purpose of this Section and Section 5.09 the following terms shall have the
following meanings:
"Facilities" shall mean those facilities described in Section
144(a)(1) of the Code and Regulations thereunder, including Section 1.103-
10(b)(2)(ii)(e) and Section 1.103-10(d)(2) of the Regulations, and shall
include those facilities any Principal User of which is the Borrower or a
related person, as defined in Section 144(a)(3) of the Code, located in the
Project Location, and any contiguous or integrated facility treated as being
located in the Project Location by reason of the fact that such facility is
located on both sides of a border between the Project Location and one or
more other political jurisdictions.
"Principal User" means 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 incorporated area of
the City or County identified on Exhibit A attached hereto.
"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.
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.
15.
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 that the 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 Bonds are not Tax-
exempt.
(b) The Borrower and the Authority covenant and agree to comply with
the Tax Certificate and Agreement (attached hereto as Exhibit B) provided to the
Borrower at the time of issuance and delivery of the Bonds, as such Tax
Certificate and Agreement shall be amended from time to time in order that
interest on the Bonds remain Tax-exempt.
SECTION 5.12. CONTINUING DISCLOSURE. The Borrower hereby covenants
and agrees, upon the conversion of the Weekly Interest Rate borne on the Bonds
to a Fixed Interest Rate pursuant to Section 2.03 of the Indenture and the
remarketing of the Bonds pursuant to Section 8.09 of the Indenture, to comply
with the continuing disclosure requirements promulgated under S.E.C. Rule 15c2-
12, as it may from time to time hereafter be amended or supplemented.
Notwithstanding any other provision of this Loan Agreement, failure of the
Borrower to comply with the requirements of S.E.C. Rule 15c2-12, as it may from
time to time hereafter be amended or supplemented, shall not be considered a
Loan Default Event under this Loan Agreement; however, the Trustee may (and, at
the request of the Remarketing Agent or Holders of at least 25% aggregate
principal amount in Outstanding Bonds, shall) or any Bondholders or beneficial
owner of the Bonds may take such actions as may be necessary and appropriate,
including seeking mandate or specific performance by court order, to cause the
Borrower to comply with its obligations pursuant to this Section 5.12.
SECTION 5.13. LIMITATIONS ON DISPOSITION OF ASSETS; ASSIGNMENT, SALE
OR LEASE OF PROJECT. Except as provided in Section 5.2 of this Agreement, the
Borrower's rights hereunder, the proceeds of the Bonds and the use thereof may
not be assigned by the Borrower without the prior written consent of Authority
or the Bank. In addition, any assignee or transferee shall assume the
obligations of the Borrower hereunder to the extent of the interest assignee or
transferee shall assume the obligations of the Borrower hereunder to the extent
of the interest
16.
assigned or transferred, and the Borrower shall forthwith furnish or cause to be
furnished to the Authority and the Trustee a true and complete copy of all
documents evidencing such assignment or transfer and assumption of obligations.
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
the Borrower shall have delivered notice of such deposit to the Standby Letter
of Credit Bank, with a copy of such notice to the Trustee, the Authority and the
Bank, all such Net Proceeds shall be applied in one or more of the following
ways at the election of the Borrower, with the consent of the Standby Letter of
Credit Bank, by written notice to Authority, the Trustee and the Bank:
(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, the
Trustee, and the Bank written notice thereof, and evidence of the Standby Letter
of Credit 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 Standby Letter of Credit 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 Repayments payable
pursuant to Section 4.2(a) hereof, in accordance with Article VIII hereof, and
redemption of Bonds. If the Borrower fails to give the notice and evidence of
the Standby Letter of Credit 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 Repayments as provided in this subsection (b) in
accordance with Section 8.2(a) hereof, the Standby Letter of Credit Bank shall
be deemed to have consented to such application (unless the Borrower shall have
failed to notify the Standby Letter of Credit Bank of such deposit), and the
Authority, the Trustee and the Bank shall be deemed to have received written
notice thereof for purposes of this Section 6.2.
17.
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), which failure
continues for a period of 10 days after written notice delivered to the
Borrower, the Bank, and the Standby Letter of Credit Bank, which notice shall
specify such failure and request that it be remedied, given by the Authority or
the Trustee; or
(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, the Bank and the Standby Letter of Credit 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; or
(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, the Bank and the Standby Letter of Credit Bank, which
notice shall specify such failure and request that it be remedied, given to the
Borrower by the Authority or the Trustee, unless the Authority and the Trustee
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 Section
7.01 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
not reasonably within the control of the Borrower; it being
18.
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
Master Letter of Credit, the Trustee shall not without the prior written consent
or direction of the Bank exercise any remedies under the 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,
(a) The Trustee, by written notice to the Borrower, the Standby
Letter of Credit Bank, 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 may have access to and may inspect, examine and make
copies of the books and records and any and all accounts, data and federal
income tax and other tax returns of the Borrower.
(c) The Authority or the Trustee may take whatever action at law or
in equity as may be necessary or desirable to collect the payments and other
amounts then due and thereafter to become due or to enforce performance and
observance of any obligation, agreement or covenant of the Borrower under this
Agreement.
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
19.
proceedings relative to the Borrower, or the creditors or property of the
Borrower, then the Trustee shall be entitled and empowered, by intervention in
such proceedings or otherwise, to file and prove a claim or claims for the whole
amount owing and unpaid pursuant to this Agreement and, in case of any judicial
proceedings, to file such proofs of claim and other papers or documents as may
be necessary or advisable in order to have the claims of the Trustee allowed in
such judicial proceedings relative to the Borrower, its creditors or its
property, and to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute such amounts as provided in
the Indenture after the deduction, to the extent not prohibited by the
Indenture, 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 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
20.
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 INSTALLMENTS. The Borrower shall have
the option to prepay the Loan Repayments payable under Section 4.2(a) hereof 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 following shall have occurred and
written consent shall have been received from the Standby Letter of Credit Bank:
(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 an 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 an
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 Repayments
payable under Section 4.2(a) hereof 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 Master Reimbursement Agreement or the
Standby Reimbursement Agreement.
SECTION 8.3. MANDATORY PREPAYMIENT. (a) The Borrower shall have and
hereby accepts the obligation to prepay in full the Loan Repayments payable
under Section 4.2(a) hereof, 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 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
21.
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 the amount set forth in Item 3 of Annex A exceeds
$1,000,000 and if either: (i) 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 (ii)
there is a final determination (as defined in subsection (b) 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), (8), (9) or (10) 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 Repayments
payable under Section 4.2(a) 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 Repayments payable under Section 4.2(a) 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
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 Repayments payable under
Section 4.2(a) 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 Repayments
shall be applied in inverse order of the due dates thereof, or as otherwise
provided in the Indenture.
22.
SECTION 8.5. NOTICE OF PREPAYMENT. To exercise an option to prepay
Loan Repayments granted by this Article VIII, the Borrower shall give written
notice to the Authority, the Bank, the Standby Letter of Credit Bank and the
Trustee not less than ten (10) days prior to such prepayment specifying the date
upon which any prepayment will be made and the amount of such prepayment. If the
Borrower fails to give such notice of a prepayment of Loan Repayments, the
Indenture provides that the Trustee shall hold such prepayment in the Redemption
Fund.
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.
SECTION 9.3. INDEMNIFICATION. The Borrower releases the Authority and
the Trustee from, and covenants and agrees that neither the Authority nor the
Trustee shall be liable for, and covenants and agrees to indemnify and hold
harmless the Authority 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 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 any official statement or other offering circular
utilized by any underwriter or placement agent in connection with the sale of
any Bonds; provided that in each case such indemnity. shall not be required for
damages that result from the willful misconduct 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
23.
Borrower with respect to the loss sustained. The Borrower further covenants and
agrees to pay or to reimburse the Authority 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 of the party claiming such payment or reimbursement.
The provisions of this Section shall survive the 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, the Bank or the Standby Letter of Credit Bank, as the case may
be, at the address set forth for such party in Item 8 of Annex A hereto. 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, the Standby Letter
of Credit Bank and the Bank. The Authority, the Borrower, the Trustee, the
Tender Agent, the Standby Letter of Credit Bank, and the Bank may, by notice
given hereunder, designate any different addresses to which subsequent notices,
certificates, or other communications shall be sent.
SECTION 10.2. SEVERABILITY. If any provision of this Agreement shall
be held or deemed to be, or shall in fact be, illegal, inoperative or
unenforceable, the same shall not affect any other provision or provisions
herein contained or render the same invalid, inoperative, or unenforceable to
any extent whatever.
SECTION 10.3. EXECUTION OF COUNTERPARTS. This Agreement may be
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 Division 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, the Bank, and the Standby Letter of Credit 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 and 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,
24.
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 Master 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 the Bonds and all
indemnifications by the Borrower to the Authority 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. BROKERAGE CONFIRMATIONS. To the extent regulations of
the Comptroller of Currency or other applicable regulatory entity require the
Trustee to deliver to the Borrower brokerage confirmations of investment
transactions as they occur, the receipt of such confirmations is specifically
waived to the extent permitted by law. The Trustee shall provide to the Borrower
monthly transaction statements which shall include details with respect to all
investment transactions made, pursuant to Section 5.05 of the Indenture, by the
Trustee, on behalf of and at the written direction of the Borrower.
25.
IN WITNESS WHEREOF, the California Statewide Communities Development
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 STATEWIDE COMMUNITIES
DEVELOPMENT AUTHORITY
By: /s/ (Member of Commission)
--------------------------
Member of Commission
of the Authority
PEET'S COFFEE & TEA, INC.
By: /s/ ▇▇▇ ▇. Donogan
-------------------------------
Authorized Representative
EXHIBIT A
THE PROJECT
-----------
The rehabilitation and equipping of an approximately 60,000 square
foot manufacturing facility to be used for the roasting and processing of coffee
beans.
PROJECT LOCATION
----------------
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
EXHIBIT B
---------
A copy of the Tax Certificate and Agreement is included in this
transcript under Tab No. 13.
ANNEX A
-------
Item 1 - Peet's Coffee & Tea, Inc., a corporation duly organized and
existing under and pursuant to the laws of the State of
Washington.
Item 2 - California Statewide Communities Development Authority Weekly
Adjustable/Fixed Rate Industrial Development Revenue Bonds,
Series 1995E (Peet's Coffee & Tea, Inc. Project)
Item 3 - $3,500,000 (aggregate principal amount).
Item 4 - Date of Delivery: December 6, 1995.
Item 5 - $40,274 (Deposit to Revenue Fund from proceeds).
Item 6 - A. $70,000 (Deposit to Costs of Issuance Fund from proceeds).
B. $77,200 (Deposit to Costs of Issuance Fund from Borrower
Funds).
C. $3,389,726 (Deposit to Project Fund).
Item 7 - Inducement Resolution Date: September 6, 1995.
Item 8 - If to the Authority -
California Statewide Communities
Development Authority
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If to the Trustee -
First Trust of California,
National Association
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Attn: Municipal Trusts and Agency
If to the Bank -
State Teachers' Retirement System
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A-1.
If to the Borrower -
Peet's Coffee & Tea, Inc.
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If to the Standby Letter of Credit Bank -
Union Bank
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If to the Tender Agent -
First Trust of California, National Association
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Attn: Municipal Trusts and Agency
If to the Administrator -
HB Capital Resources, Ltd.
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A-2.
Item 9 - Sinking Fund Installments:
Principal
December 1 Amount
------------ -----------
1997 $440,000
1998 440,000
1999 440,000
2000 440,000
2001 440,000
2002 440,000
2003 440,000
2004 140,000
2005 140,000
2006 140,000
Item 10 - Maturity Date - December 1, 2006.
Item 11 - Date Bonds Are Eligible To Be Tendered - January 3, 1996.
A-3.