EXHIBIT 10.9
REIMBURSEMENT, CREDIT AND SECURITY AGREEMENT
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THIS AGREEMENT, made as of August 1, 2000 between INNOVATIVE SOLUTIONS
AND SUPPORT, LLC, a Pennsylvania limited liability company (the "Borrower"), and
PNC BANK, NATIONAL ASSOCIATION (the "Bank"), a national banking association.
W I T N E S S E T H :
A. The ▇▇▇▇▇▇▇ County Industrial Development Authority (the
"Issuer") has issued its Industrial Development Revenue Bonds, 2000 Series A
(Innovative Solutions and Support, LLC Project), in the aggregate principal
amount of $4,335,000 (the "Bonds") under a Trust Indenture dated as of August 1,
2000 (the "Indenture") between the Issuer and Chase Manhattan Trust Company,
National Association, as Trustee (including any successor trustee, the
"Trustee").
B. Pursuant to a Loan Agreement dated as of August 1, 2000 between
the Issuer and the Borrower (the "Loan Agreement"), the proceeds of the Bonds
are being applied to finance the costs of a project (the "Project") consisting
of (i) financing the costs associated with the issuance of the Bonds; (ii)
financing the acquisition of certain real property located in the Eagleview
Corporate Center in Upper Uwchlan Township, ▇▇▇▇▇▇▇ County, Pennsylvania (the
"Property") and the construction thereon of a new manufacturing, warehouse and
office facility (collectively with the Property and as more fully described on
Exhibit B hereto, the "Project Facilities"). Under the Loan Agreement, the
Borrower is obligated to make loan payments to the Trustee in amounts and at the
times corresponding to the debt service and other payments required in respect
of the Bonds.
C. In order to facilitate the issuance and sale of the Bonds and to
enhance the marketability of the Bonds and thereby achieve interest cost savings
and other savings to the Borrower, the Borrower has asked the Bank to issue its
Irrevocable Letter of Credit (together with any substitute letter of credit
issued pursuant to the terms hereof, the "Letter of Credit") to the Trustee, for
the account of the Borrower authorizing the Trustee to make one or more draws on
the Bank up to an aggregate of $4,406,261 as reduced and reinstated from time to
time in accordance with the provisions of the Letter of Credit, the "Letter of
Credit Amount"), of which originally (i) $4,335,000 shall be in respect of
principal of the Bonds and (ii) $71,261 shall be in respect of accrued interest
on the Bonds. The purpose of the Letter of Credit is to provide funds for the
payment of principal of and interest on the Bonds and purchase price of Bonds
which have been tendered pursuant to the tender option provisions thereof and of
the Indenture to the extent remarketing proceeds or other funds are not
available therefor in accordance with the provisions of the Indenture.
D. The obligations of the Borrower under this Agreement are secured
by, among other things, a Guaranty and Surety Agreement of even date herewith of
Innovative Solutions and Support, Incorporated ("IS&S, Inc.") and IS&S Delaware,
Inc. (together with IS&S, Inc., the "Guarantors"").
E. The Bank is willing to issue the Letter of Credit upon the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and the undertakings
herein set forth and intending to be legally bound, the Borrower and the Bank
hereby agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions. In this Agreement (except as otherwise
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expressly provided for or unless the context otherwise requires), the following
terms have the meanings specified in the foregoing recitals:
Bank Letter of Credit
Bonds Letter of Credit Amount
Borrower Loan Agreement
Guarantors Project
Indenture Project Facilities
IS&S, Inc. Trustee
Issuer
In addition, the following terms shall have the meanings specified in this
Article, unless the context otherwise requires:
"Affiliate" means a Person who directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, the Borrower or the board of directors of the Borrower. The term "control"
(including the terms "controlling", "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of the Borrower or the board
of directors of the Borrower, or of the Person or the board of directors of the
Person, whether through stock ownership, partnership interests, membership,
voting rights, governing boards, committees, divisions or other bodies with one
or more common members, directors, trustees or other managers, or otherwise.
"Architect" means the architect engaged for the design and
construction supervision of the Improvements, as may be approved by the Bank.
"Architect Agreement" means that certain agreement, to be entered into
between the Borrower and the Architect, and all exhibits and attachments
thereto, as the same may be amended with the consent of the Bank.
"Assignment of Construction Documents" shall have the meaning ascribed
to such term in Section 3.04.
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"Bond Documents" means the Bonds, the Indenture, the Loan Agreement,
the Remarketing Agreement and any other agreements or instruments relating
thereto.
"Business Day" means any day other than (i) a Saturday or Sunday, (ii)
a day on which banking institutions in New York, New York, Philadelphia,
Pennsylvania, Pittsburgh, Pennsylvania or in any other city where the principal
corporate trust office of the Trustee or the office of the Bank at which drafts
are to be presented under the Letter of Credit is located are required or
authorized by law (including executive order) to close or on which either such
office is closed for a reason not related to financial condition, or (iii) a day
on which the New York Stock Exchange is closed.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder, including any amendments and successor
provisions thereto.
"Collateral Documents" means the Mortgage, the Security Agreement, the
Environmental Indemnity Agreement, the Assignment of Construction Documents, the
Guaranty, and all other documents delivered by the Borrower or the Guarantors to
the Bank as collateral to secure the Obligations.
"Completion Date" means September 30, 2001.
"Construction and Development Documents" means the Construction
Contract, the Architect Agreement, the Plans and Specifications, all consents,
licenses, permits, authorizations and approvals relating to the construction,
completion, use and occupancy of the Improvements and all other instruments,
documents and rights relating to the design, construction and development of the
Improvements.
"Construction Contract" means the construction contract to be entered
into, and all exhibits and attachments thereto, between the Borrower and the
Contractor for the construction of the Improvements.
"Contamination" means the uncontained presence of Hazardous Substances
at the Project Facilities, or arising from the Project Facilities, which may
require remediation under any applicable law.
"Contractor" means the general contractor hired by the Borrower for
the construction of the Improvements.
"Date of Issuance" shall have the meaning ascribed to such term in
Section 2.01.
"EBITDA" means on the date of determination the sum of (i) net income
(or loss) plus (ii) all interest expense plus (iii) all charges against income
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for federal, state and local taxes actually paid plus depreciation expenses plus
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amortization expenses, in each case determined on a consolidated basis for IS&S,
Inc. and its subsidiaries for the previous four consecutive fiscal quarters.
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"Environmental Indemnity Agreement" shall have the meaning ascribed to
such term in Section 3.04.
"Environmental Laws" means all applicable environmental statutes,
ordinances, regulations, orders and requirements of common law concerning (i)
activities at the Project Facilities, (ii) repairs or construction of any
improvements at the Project Facilities, (iii) handling of any materials at the
Project Facilities, (iv) discharges to the air, soil, surface water or ground
water from the Project Facilities, and (v) storage, treatment or disposal of any
waste at or connected with any activity at the Project Facilities.
"Environmentally Sensitive Area" means (i) a wetland or other "water
of the United States" for purposes of Section 404 of the federal Clean Water Act
or any similar area regulated under any state law, (ii) a floodplain or other
flood hazard area as defined pursuant to applicable state law, (iii) a portion
of the coastal zone for purposes of the federal Coastal Zone Management Act, or
(iv) any other area development of which is specifically restricted under
applicable law by reason of its physical characteristics or prior use.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means (i) any corporation included with the Borrower
in a controlled group of corporations within the meaning of Section 414(b) of
the Code, (ii) any trade or business (whether or not incorporated or for-profit)
which is under common control with the Borrower within the meaning of Section
414(c) of the Code, (iii) any member of an affiliated service group of which the
Borrower is a member within the meaning of Section 414(m) of the Code, and (iv)
any other entity treated as being under common control with the Borrower under
Section 414(o) of the Code.
"Event of Default" shall have the meaning ascribed to such term in
Section 8.01.
"Fiscal Year" means the annual accounting year of IS&S, Inc., which
currently begins on October 1 in each calendar year.
"Fixed Charge Ratio" means on the date of determination the ratio of
(i) EBITDA to (ii) the sum of interest expense plus prior year current
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maturities of long term debt plus unfunded capital expenditures plus dividends
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plus cash taxes, in each case determined for IS&S, Inc. on a consolidated basis
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for the previous four consecutive fiscal quarters.
"GAAP" means generally accepted accounting principles consistently
applied.
"Guaranty" shall have the meaning ascribed to such term in Section
3.06.
"Hazardous Substances" means "hazardous substances" or "contaminants"
as defined pursuant to the Clean Air Act, 42 U.S.C. (S) 7401 et seq.; The
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Comprehensive Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. (S) 9601 et seq. ("CERCLA"); The Federal Water Pollution Control
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Act, 33 U.S.C. (S) 1251 et seq.; The
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Hazardous Material Transportation Act, 49 U.S.C. (S) 1801 et seq.; The Federal
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Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. (S) 136; The Resource
Conservation and Recovery Act of 1976, 42 U.S.C. (S) 6901 et seq. (including the
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Hazardous and Solid Waste Amendments of 1984); The Toxic Substances Control Act,
15 U.S.C. (S) 2601 et seq.; The Federal Occupational Safety & Health Act of
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1970, 29 U.S.C. (S) 651 et seq. (including (S).3101 of the Omnibus
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Reconciliation Act of 1990); The Oil Pollution Act of 1990, Pub. L. No. 101-380,
104 Stat. 484 (1990); and the state analogues to any of the foregoing, all as
amended from time to time and the regulations promulgated pursuant thereto; and
any requirements of the common law which may impose obligations or liabilities
as a result of the presence of or exposure to hazardous substances.
"Improvements" means the manufacturing, warehouse and office facility
to be constructed on the Property and included in the Project Facilities.
"Inspecting Architect" means such person or entity as the Bank may
designate, from time to time, to inspect the construction of the Improvements
and to perform other services with respect thereto on behalf of the Bank.
"Interest Component" shall have the meaning ascribed to such term in
the Letter of Credit.
"Interest Draft" shall have the meaning ascribed to such term in the
Letter of Credit.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or otherwise), or preference, priority
or other security agreement or preferential arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other title
retention agreement, any capitalized lease having substantially the same
economic effect as any of the foregoing, and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction.
"Liquidity Period" means the period beginning on the date hereof and
terminating on the first to occur of (i) the date the Letter of Credit
terminates, (ii) the first date on which there are no longer any Bonds
Outstanding other than Bonds bearing interest at a Term Rate or Bonds secured by
a Replacement Credit Facility, and (iii) the date the Liquidity Period is
terminated pursuant to Section 8.02.
"Material Contract" means each indenture, mortgage, agreement or other
instrument or contract (written or oral) to which the Borrower or either
Guarantor is a party or by which any of its assets are bound (including, without
limitation, any employment or executive compensation agreement, collective
bargaining agreement, agreement relating to an Obligation, agreement for the
construction, acquisition or disposition of real or personal property, agreement
for the purchasing or furnishing of services, operating lease, joint venture
agreement, agreement relating to the acquisition or disposition of an Affiliate
or agreement of merger or consolidation) which (i) evidences, secures or governs
any outstanding Obligation of either of $100,000 or more, (ii) is an operating
lease (not evidencing the acquisition of a capital asset under GAAP)
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under which the Borrower or either Guarantor is a lessee providing for aggregate
annual rentals or similar payments of $100,000 or more, or (iii) if canceled,
breached or not renewed by any party thereto, would have a material adverse
effect on the assets or condition (financial or otherwise) of the Borrower or
either Guarantor.
"Mortgage" shall have the meaning ascribed to such term in Section
3.04.
"Multiemployer Plan" shall have the meaning ascribed to such term in
Section 3(37) of ERISA.
"Obligations" means any and all obligations for the payment of money,
including without limitation any and all (i) obligations for money borrowed,
(ii) obligations evidenced by bonds, debentures, notes, guaranties or other
similar instruments, (iii) construction contracts, installment sale agreements
and other purchase money obligations in connection with the performance of work,
sale of property or rendering of services, (iv) leases evidencing the
acquisition of capital assets, (v) reimbursement obligations in connection with
letters of credit and other credit enhancement facilities, (vi) obligations for
unfunded pension liabilities, (vii) guaranties of any such obligation of a third
party, (viii) obligations under any interest or currency swaps future, option or
other similar agreement and (ix) any such obligations of third parties secured
by assets of the Borrower or either Guarantor.
"Outstanding" when applied to the Bonds shall have the meaning
ascribed to such term in the Indenture.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Liens" means (i) Liens for taxes or assessments which are
not yet due, Liens for taxes or assessments or Liens of judgments which are
being contested, appealed or reviewed in good faith by appropriate proceedings
which prevent foreclosure of any such Lien or levy of execution thereunder and
against which Liens, if any, adequate insurance or reserves have been provided;
(ii) pledges or deposits to secure payment of workers' compensation obligations,
unemployment insurance, deposits or indemnities to secure public or statutory
obligations or for similar purposes; (iii) those minor defects which in the
opinion of the Bank's counsel do not materially affect title to the collateral
for the Borrower's obligations hereunder; (vi) Liens in favor of the Bank; (v)
the lessor's retained title to personal property which is the subject matter of
a true operating lease to the Borrower; and (vi) those further encumbrances, if
any, shown on Exhibit F attached hereto.
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"Person" means any individual, for-profit or not-for-profit
corporation, limited liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Phase One Report" shall have the meaning ascribed to such term in
Section 4.01(k).
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"Plans" means all employee pension plans maintained by the Borrower or
any ERISA Affiliate which are subject to Part 3 of Title I of ERISA.
"Plans and Specifications" means the final plans and specifications
for the construction and equipping of the Improvements, including all schematic
and working drawings, and designations of all manufacturers and model numbers of
all equipment, if any, as the same may be amended from time to time in
accordance with the terms hereof.
"Pledged Bonds" shall have the meaning ascribed to such term in
Section 3.03(a).
"Prime Rate" means the rate of interest publicly announced by the Bank
from time to time as the prime rate of the Bank effective in Philadelphia,
Pennsylvania, adjusted as of the date of an announcement of any change in such
prime rate. The prime rate is determined from time to time by the Bank as a
means of pricing some loans to its borrowers and neither is tied to any external
rate of interest or index, nor necessarily reflects the lowest rate of interest
actually charged by the Bank to any particular class or category of customers.
"Principal Component" shall have the meaning ascribed to such term in
the Letter of Credit.
"Prohibited Transaction" shall have the meaning ascribed to such term
in Section 4975 of the Code or in Section 406 of ERISA.
"Project Cost Schedule" shall have the meaning assigned to such term
in Section 7.01.
"Project Fund" shall have the meaning assigned to such term in the
Indenture.
"Redemption Draft" shall have the meaning ascribed to such term in the
Letter of Credit.
"Remarketing Agreement" means the Remarketing Agent's agreement with
the Borrower to perform its duties as Remarketing Agent under the Indenture.
"Remarketing Agent" means PNC Capital Markets, Inc., and its successor
for the time being in such capacity pursuant to the Indenture.
"Replacement Credit Facility" shall mean any Alternate Letter of
Credit, as defined in the Indenture, delivered to the Trustee in replacement for
the Letter of Credit as security for the Bonds pursuant to Section 5.09 of the
Indenture.
"Reportable Event" shall have the meaning ascribed to such term in
Title IV of ERISA.
"Security Agreement" shall have the meaning ascribed to such term in
Section 3.04.
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"State" means the Commonwealth of Pennsylvania.
"Subcontract" means any contract for labor or material entered into
between the Contractor and any Subcontractor, and all exhibits and attachments
thereto.
"Subcontractor" means any person or entity entering into a Subcontract
with the Contractor.
"Tangible Net Worth" means stockholder's equity in IS&S, Inc. less any
advances to third parties, except those advances which the Bank deems have been
satisfactorily subordinated and all items properly classified as intangibles, as
all determined on a consolidated basis for IS&S, Inc. and its subsidiaries, in
accordance with GAAP.
"Tender Draft" shall have the meaning ascribed to such term in the
Letter of Credit.
"Term Rate" shall have the meaning ascribed to such term in the
Indenture.
"Unfunded Benefit Liability" shall have the meaning given in and be
determined in accordance with Section 4001(a)(18) of ERISA.
"Unremarketed Tendered Bonds" means Bonds which (a) have been tendered
for purchase pursuant to tender option provisions of the Bonds and the Indenture
and (b) have not been successfully remarketed by the Remarketing Agent prior to
10:00 a.m. on the date of purchase thereof pursuant to such tender.
Section 1.02 Rules of Construction; Time of Day. In this Agreement,
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unless otherwise indicated, (i) defined terms may be used in the singular or the
plural and the use of any gender includes all genders, (ii) the words "hereof",
"herein", "hereto", "hereby" and "hereunder" refer to this entire Agreement, and
(iii) all references to particular Articles, Sections or Exhibits are references
to the Articles, Sections or Exhibits of this Agreement. References to any time
of the day in this Agreement shall refer to Eastern standard time or Eastern
daylight saving time, as in effect in Philadelphia, Pennsylvania on such day.
ARTICLE II.
LETTER OF CREDIT AND REIMBURSEMENT
Section 2.01 Issuance of Letter of Credit. The Borrower hereby
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requests the Bank to issue the Letter of Credit to the Trustee. Subject to the
conditions precedent hereinafter set forth, the Bank will issue to the Trustee
pursuant to the request of the Borrower, on the date of issuance of the Bonds
(the "Date of Issuance"), the Letter of Credit in the Letter of Credit Amount
and substantially in the form of Exhibit A. The Interest Component of the Letter
of Credit Amount has been established on the basis of 50 days interest on the
Bonds and a 365-day
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year, at an assumed maximum interest rate of 12% per annum and will initially
equal Seventy One Thousand Two Hundred Sixty One Dollars ($71,261) (as from time
to time reduced and reinstated as provided in the Letter of Credit). The Letter
of Credit shall expire at 5:00 p.m. on August 7, 2003 or, if such day is not a
Business Day, on the next succeeding Business Day, except that such expiration
date shall automatically be extended for one additional year effective on each
anniversary of the date of issuance of the Letter of Credit, unless the Bank, at
its option, gives the Borrower and the Trustee notice at least ninety (90) days
prior to such anniversary that such expiration date will not be so extended. The
Letter of Credit is subject to prior automatic termination as provided in
paragraph 8 thereof. All drawings under the Letter of Credit will be paid with
the Bank's own funds.
Section 2.02 Reimbursement and Other Payments.
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(a) Reimbursement Payments and Interest. The Borrower hereby
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agrees to pay or cause to be paid to the Bank:
(1) a sum equal to each amount drawn under the Letter
of Credit by an Interest Draft, on the same Business Day that such drawing
is honored (but not before such drawing is honored);
(2) a sum equal to each amount drawn against the
Interest Component of the Letter of Credit Amount by a Tender Draft (A) in
the case of any such amount drawn on an Interest Payment Date (as defined
in the Indenture) of the Bonds being purchased with the proceeds of such
Tender Draft, the same Business Day that such drawing is honored (but not
before such drawing is honored), and (B) in all other cases, on the first
to occur of (i) the first Business Day of the first calendar month
following the calendar month in which such drawing is honored, (ii) the
date on which the Bonds purchased with the proceeds of such Tender Draft
are remarketed by the Remarketing Agent and the proceeds thereof delivered
to the Trustee, (iii) the date on which the Bonds purchased with the
proceeds of such Tender Draft are redeemed or otherwise paid in full, or
(iv) the date the Liquidity Period terminates;
(3) a sum equal to each amount drawn against the
Principal Component of the Letter of Credit Amount by a Tender Draft, on
the first to occur of (i) the date on which the Bonds purchased with the
proceeds of such Tender Draft are remarketed by the Remarketing Agent and
the proceeds thereof are delivered to the Trustee, (ii) the date on which
the Bonds purchased with the proceeds of such Tender Draft are redeemed or
otherwise paid in full, or (iii) the date the Liquidity Period terminates;
and
(4) a sum equal to each amount drawn under the Letter
of Credit by a Redemption Draft, on the same Business Day that such drawing
is honored (but not before such drawing is honored).
All sums payable to the Bank under this Section 2.02(a) shall bear interest,
from the date the Borrower receives notice from the Trustee that the
corresponding drawing was honored under
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the Letter of Credit until such sums are paid in full (it being understood and
agreed that any sum paid after 3:00 p.m. on a Business Day shall bear interest
as if it was paid at 9:00 a.m. on the next following Business Day), at a
fluctuating rate per annum (computed for the actual number of days elapsed,
based on a 360-day year) equal to the Prime Rate; provided that any amount that
is not paid within 10 days of the date such amount is due and payable to the
Bank under this Agreement shall thereafter bear interest at a fluctuating rate
per annum (computed for the actual number of days elapsed, based on a 360-day
year) equal to two percent (2%) per annum above the Prime Rate. Interest
accruing pursuant to this Section 2.02(a) shall be due and payable on the first
Business Day of each calendar month after the date the corresponding drawing is
honored under the Letter of Credit and on the date the respective sum is paid.
All payments under this Section 2.02(a) shall be applied first to the payment of
interest due and payable under this Section 2.02(a) and then to the reduction of
the principal balance of sums due and payable under this Section 2.02(a).
(b) Fees. On the Date of Issuance, the Borrower shall pay to the
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Bank a commitment fee for the period from the Date of Issuance to September 30,
2000, computed at the rate of one and one-half percent (1.5%) per annum on the
Letter of Credit Amount. On October 1, 2000, and quarterly on each January 1,
April 1, July 1 and October 1 thereafter so long as any credit remains available
to the Trustee under the Letter of Credit, the Borrower shall pay to the Bank a
commitment fee computed in advance for the succeeding quarter at the rate of one
and one-half percent (1.5%) per annum on the Letter of Credit Amount as of the
date such commitment fee is due and payable. Computations of the commitment fees
under this Section shall be for the actual number of days in the applicable
period, based on a 360-day year. There shall be no reduction or refund of any
portion of any such commitment fee in the event the Letter of Credit expires or
is drawn upon, reduced (automatically or otherwise), terminated or otherwise
modified after the date such commitment fee is due and payable. In the event any
commitment fee payable under the terms hereof is not paid on or before the date
it is due and payable, the payment of such commitment fee shall be accompanied
by interest thereon, from the date such payment becomes due until it is paid in
full, at a fluctuating rate per annum (computed for the actual number of days
elapsed, based on a 360-day year) equal to two percent (2%) per annum above the
Prime Rate.
(c) Transaction and Transfer Charges and Expenses. The Borrower
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shall pay to the Bank all reasonable transaction charges that the Bank may make
for drawings under the Letter of Credit. Such transaction charges shall be
payable upon submission to the Borrower by the Bank of the Bank's ▇▇▇▇ therefor.
In addition, the Borrower shall pay to the Bank on demand any and all reasonable
charges and expenses which the Bank may pay or incur relative to the Letter of
Credit. The Borrower shall pay to the Bank upon each transfer of the Letter of
Credit in accordance with its terms a transfer fee equal to $1,000.00, together
with any and all costs and expenses of the Bank incurred in connection with such
transfer.
(d) Increased Costs.
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(1) If after the date of this Agreement any enactment,
promulgation or adoption of or change in any applicable law, treaty, regulation
or rule or in the interpretation or administration thereof by any court,
administrative or governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or
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compliance by the Bank with any guideline, request or directive issued after the
date hereof (whether or not having the force of law compliance with which is not
optional on the part of the Bank) of any such authority, central bank or
comparable agency, shall either (i) impose, modify or deem applicable any
reserve, special deposit, capital, insurance assessment or similar requirement
(including without limitation a guideline, request or directive which affects
the manner in which the Bank allocates capital resources to its commitments,
including its obligations under this Agreement and the Letter of Credit), (ii)
subject the Bank to any tax, deduction or withholding or change the basis of
taxation of the Bank (other than a change in a rate of tax based on overall net
income of the Bank), (iii) cause or deem letters of credit to be assets held by
the Bank and/or deposits on its books, or (iv) impose on the Bank any other
condition regarding this Agreement or the Letter of Credit, and the result of
any event referred to in clause (i), (ii), (iii) or (iv) of this sentence shall
be to increase the direct or indirect cost to the Bank of issuing or maintaining
the Letter of Credit or the Bank's obligations under this Agreement or to reduce
the amounts receivable by the Bank hereunder or to reduce the rate of return on
the capital of the Bank in connection with this Agreement (which increase in
cost, reduction in amounts receivable or reduction in rate of return shall be
determined by the Bank's reasonable allocation of such cost increase or
reduction in amounts receivable resulting from such event), then within 30
Business Days after demand by the Bank, the Borrower shall pay to the Bank, from
time to time as specified by the Bank, additional amounts that in the aggregate
shall be sufficient to compensate the Bank for such increased cost, reduction in
amounts receivable or reduction in rate of return or take such other action that
shall be acceptable to the Trustee as shall cause the Bank's Letter of Credit
obligations hereunder to be terminated. A certificate as to such increased cost,
reduction in amounts receivable or reduction in rate of return by the Bank
together with evidence of the same showing calculations therefor, submitted by
the Bank to the Borrower shall, in absence of manifest error, be conclusive and
binding for all purposes.
(2) If after the date of this Agreement the Bank shall have
determined that any enactment, promulgation or adoption of or change in any
applicable law, treaty, regulation, rule or guideline regarding capital
adequacy, or in the interpretation or administration thereof, by any
administrative or governmental authority, central bank or comparable agency
charged with the interpretation or administration thereof, or compliance by the
Bank (or any controlling affiliate) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law and whether
or not failure to comply thereunder would be unlawful) of any such authority,
central bank or comparable agency, affects or would affect the amount of capital
required or expected to be maintained by the Bank (or any controlling affiliate)
and the Bank determines, on the basis of reasonable allocations, that the amount
of such capital is increased by or is based on its issuance or maintenance of
the Letter of Credit or the Bank's obligations under this Agreement, then,
within 30 Business Days after demand by the Bank, the Borrower shall pay to the
Bank, from time to time as specified by the Bank, additional amounts sufficient
to compensate the Bank therefor or take such other action that shall be
acceptable to the Trustee or shall cause the Bank's Letter of Credit obligations
hereunder to be terminated. A certificate as to such additional amounts,
together with evidence of the same showing calculations therefor, submitted to
the Borrower by the Bank shall, in the absence of manifest error, be conclusive
and binding for all purposes.
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(e) General Interest Accrual; Place of Payment. Except as otherwise
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provided in Section 2.02(a), all payments to the Bank under this Agreement
(including without limitation all payments becoming due under Sections 2.02(b)
and 2.02(c)) shall be accompanied by interest thereon, from the date such
payments become due until they are paid in full, at a fluctuating rate per annum
(computed for the actual number of days elapsed, based on a 360-day year) equal
to the Prime Rate; provided that any amount that is not paid within 10 days of
the date such amount is due and payable to the Bank under this Agreement shall
thereafter bear interest at a fluctuating rate per annum (computed for the
actual number of days elapsed, based on a 360-day year) equal to two percent
(2%) per annum above the Prime Rate. All payments by the Borrower to the Bank
under this Agreement shall be made in lawful currency of the United States at
the Bank's office at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Corporate Banking, or at such other address and to the attention of
such other person as the Bank may stipulate by written notice to the Borrower,
upon at least 30 days prior written notice, or by a wire transfer in immediately
available funds from the Borrower to the Bank in accordance with written wire
instructions given to the Borrower by the Bank; provided that (i) all
reimbursement and transaction charge payments under Sections 2.02(a) and 2.02(c)
shall be made at the Bank's letter of credit office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Letter of Credit
Department, or such other address as the Bank may stipulate by written notice to
the Borrower, and (ii) all reimbursement payments under Section 2.02(a) shall be
made in immediately available funds.
Section 2.03 Transfer; Reduction; Reinstatement.
----------------------------------
(a) Transfer. The Letter of Credit may be transferred in accordance
--------
with paragraph 9 of the Letter of Credit.
(b) Reduction. The Letter of Credit Amount and the respective
---------
Principal Component and Interest Component thereof shall be automatically
reduced as specified in paragraph 5 of the Letter of Credit. With respect to any
reductions of the Letter of Credit Amount pursuant to the terms of the Letter of
Credit as a result of Bonds ceasing to be Outstanding, the Bank shall have the
right, at its option, to require the Trustee to promptly surrender the
outstanding Letter of Credit to the Bank and to accept in substitution therefor
a letter of credit in the form of Exhibit A attached hereto, dated the date of
such substitution, for an amount equal to the Letter of Credit Amount as so
reduced, but otherwise having terms identical to the then outstanding Letter of
Credit.
(c) Reinstatement. In the event of a drawing under the Letter of
-------------
Credit with an Interest Draft, the Interest Component of the Letter of Credit
Amount shall, as provided in paragraph 6 of the Letter of Credit and subject to
the conditions therein set forth, be automatically reinstated by an amount equal
to the amount of such drawing. In the event of a drawing under the Letter of
Credit with a Tender Draft, the Principal Component and Interest Component of
the Letter of Credit Amount shall, as provided in paragraph 7 of the Letter of
Credit, be reinstated with respect to such drawing (1) when and to the extent
that (i) the Bank has received reimbursement for such drawing in immediately
available funds (or the Trustee has received immediately available funds which,
pursuant to the Indenture, the Trustee will immediately remit to the Bank as
reimbursement for such drawing) and (ii) the Trustee has delivered a certificate
to the Bank in respect of such reinstatement in the form required by
12
paragraph 7 of the Letter of Credit, or (2) when and to the extent the Bank, at
its option, upon the Borrower's request, advises the Trustee in writing that
such reinstatement shall occur, it being understood that the Bank shall have no
obligation to grant any such reinstatement except as set forth in clause (1) of
this sentence.
Section 2.04 Obligations Absolute. The obligations of the Borrower under
--------------------
this Article shall be absolute, unconditional and irrevocable and shall be
performed strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including without limitation the following
circumstances: (i) any lack of validity or enforceability of the Letter of
Credit, the Bond Documents or any other agreement or document relating thereto;
(ii) any amendment or waiver of or any consent to or departure from the Letter
of Credit, the Bond Documents or any document relating thereto; (iii) the
existence of any claim, set-off, defense or other right which the Borrower may
have at any time against the Trustee (or any persons or entities for whom the
Trustee may be acting), the Remarketing Agent, the Bank or any other person or
entity, whether in connection with this Agreement, the transactions described
herein or any unrelated transaction; or (iv) any of the circumstances
contemplated in clauses (1) through (7), inclusive, of Section 2.06(a), except
to the extent provided for therein. The Borrower understands and agrees that no
payment by it under any other agreement (whether voluntary or otherwise) shall
constitute a defense to its obligations hereunder, except to the extent that the
Bank has been indefeasibly paid in full.
Section 2.05 Indemnification. To the extent permitted by applicable law,
---------------
the Borrower hereby indemnifies and holds harmless the Bank (and its directors,
officers, employees and agents) from and against any and all claims, damages,
losses, liabilities, costs or expenses (including reasonable attorneys' fees for
counsel of the Bank's choice) whatsoever which the Bank may incur (or which may
be claimed against the Bank by any person or entity whatsoever) by reason of or
in connection with (a) the issuance or a transfer of, or payment or failure to
pay under, the Letter of Credit, (b) any material breach by the Borrower of any
representation, warranty, covenant, term or condition in, or the occurrence of
any default under, this Agreement, the Collateral Documents or the Bond
Documents, including all fees or expenses resulting from the settlement or
defense of any claims or liabilities arising as a result of any such breach or
default, and (c) involvement of the Bank in any legal suit, investigation,
proceeding, inquiry or action as a consequence, direct or indirect, of the
Bank's issuance of the Letter of Credit, its entering into this Agreement or any
other event or transaction contemplated by any of the foregoing; provided the
Borrower shall not be required to indemnify the Bank for any claims, damages,
losses, liabilities, costs or expenses to the extent, but only to the extent,
caused by (i) Bank's failure to observe general banking practices, (ii) the
gross negligence or willful misconduct of the Bank or (iii) the Bank's failure
to pay under the Letter of Credit after the presentation to it by the Trustee of
a draft and certificate strictly complying with the terms and conditions of the
Letter of Credit, unless the Bank in good faith believes that it is prohibited
by law or other legal authority from making such payment. Nothing in this
Section is intended to limit the Borrower's reimbursement obligations contained
in Section 2.02(a). The obligations of the Borrower under this Section shall
survive the termination of this Agreement.
13
Section 2.06 Liability of Bank.
-----------------
(a) As between the Borrower and the Bank, the Borrower assumes all
risks of the acts or omissions of the Trustee with respect to the Trustee's use
of the Letter of Credit. Neither the Bank nor any of its officers or directors
shall be liable or responsible for: (1) the use which may be made of the Letter
of Credit or for any acts or omissions of the Trustee in connection therewith;
(2) except as set forth in subsection 2.06(a)(3) hereof, the form, validity,
sufficiency, accuracy or genuineness of any documents (including without
limitation any documents presented under the Letter of Credit), or of any
statement therein or endorsement thereon, even if any such documents, statements
or endorsements should in fact prove to be in any or all respects invalid,
insufficient, fraudulent, forged, inaccurate or untrue; (3) the payment by the
Bank against presentation of documents which do not comply with the terms of the
Letter of Credit unless the documents on their face appear not to comply with
the terms of the Letter of Credit, including failure of any documents to bear
any reference or adequate reference to the Letter of Credit, or any other
failure by the Trustee to comply fully with conditions required in order to
effect a drawing under the Letter of Credit; (4) the validity or sufficiency of
any instrument transferring or assigning or purporting to transfer or assign the
Letter of Credit or the rights or benefit thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason
unless the documents on their face appear not to comply with the terms of the
Letter of Credit; (5) errors, omissions, interruptions, losses or delays in
transmission or delivery of any messages by mail, cable, telegraph, telex,
telephone or otherwise; (6) any loss or delay in the transmission or otherwise
of any document or draft required in order to make a drawing under the Letter of
Credit; or (7) any other circumstances whatsoever in making or failing to make
payment under the Letter of Credit; except only that the Borrower shall have a
claim against the Bank, and the Bank shall be liable to the Borrower, to the
extent, but only to the extent, of any direct, as opposed to consequential,
damages suffered by the Borrower which the Borrower proves were caused solely by
(i) the Bank's gross negligence or willful misconduct, (ii) or Bank's failure to
observe general banking practices or (iii) the Bank's willful failure to pay
under the Letter of Credit after the presentation to it by the Trustee of a
draft and certificate strictly complying with the terms and conditions of the
Letter of Credit, unless the Bank in good faith believes that it is prohibited
by law or other legal authority from making such payment. In furtherance and not
in limitation of the foregoing, the Bank may accept documents that appear on
their face to be in order, without responsibility for further investigation,
regardless of any notice or information to the contrary; provided that if the
Bank shall receive written notification from both the Trustee and the Borrower
that documents conforming to the terms of the Letter of Credit to be presented
to the Bank are not to be honored, the Bank agrees that it will not honor such
documents.
(b) Except for the Bank's obligations under the Letter of Credit,
the Bank shall have no liability to the Borrower or any other person as a result
of any reduction of the credit rating of the Bank or any deterioration in the
Bank's financial condition, and the Borrower hereby indemnifies and holds
harmless the Bank from any and all claims, damages, losses, liabilities, costs
or expenses relating to the Letter of Credit asserted by or on behalf of the
Borrower, the Guarantors, or any affiliate or agent thereof, which the Bank may
incur in connection therewith. No reduction of the credit rating of the Bank or
deterioration in the Bank's financial condition shall reduce or in any way
diminish the obligations of the Borrower to the
14
Bank under this Agreement, including without limitation the Borrower's
obligation to pay Letter of Credit commitment fees to the Bank and to reimburse
the Bank for any drawing under the Letter of Credit.
ARTICLE III.
SECURITY
Section 3.01 Security and Subrogation under Indenture. The Borrower and the
----------------------------------------
Bank intend that (i) the Bank will have the security and benefit of the Bond
Documents as provided in the Indenture and (ii) in the event of one or more
draws under the Letter of Credit and the application thereof to the payment of
Bonds, the Bank will be subrogated pro tanto to the rights of the Trustee and
the holders of such Bonds under the Bond Documents and in and to all funds and
security held by the Trustee under the Indenture for the payment of the
principal of and interest on such Bonds, including without limitation all loan
funds, construction funds, escrow funds, revenue funds, operation funds, debt
service funds, reserve funds, redemption funds and other funds and securities
and other instruments comprising investments thereof. In addition, the Bank
shall have any and all other subrogation rights available to the Bank at law or
in equity.
Section 3.02 Pledge of Rights to Certain Funds and Investments. To secure
-------------------------------------------------
the Borrower's obligations to the Bank under this Agreement, the Borrower hereby
pledges to the Bank, and grants to the Bank a security interest in, all of the
Borrower's right, title and interest in and to all funds and investments thereof
now or hereafter held by the Trustee under the Indenture as security for the
payment of the Bonds, including without limitation any and all loan funds,
escrow funds, revenue funds, operations funds, debt service funds, reserve
funds, redemption funds and other funds and securities and other instruments
comprising investments thereof and interest and other income derived therefrom
held as security for the payment of the Bonds, such pledge, assignment and grant
being under and subject only to the rights of the Trustee under the Indenture.
The Borrower covenants and agrees that it will defend the Bank's rights and
security interests created by this Section against the claims and demands of all
persons except the Trustee. In addition to its other rights and remedies under
this Agreement and the Bond Documents, the Bank shall have all the rights and
remedies of a secured party under the Uniform Commercial Code of the State or
other applicable law with respect to the security interests created by this
Section. The Bank's rights under this Section are in addition to, and not in
lieu of, its rights described in Section 3.01.
Section 3.03 Pledged Bonds.
-------------
(a) Pledge. To secure the Borrower's obligations to the Bank under
------
this Agreement, the Borrower hereby pledges and assigns to the Bank, and grants
to the Bank a security interest in, all of the Borrower's right, title and
interest, now owned or hereafter acquired, in and to any and all Unremarketed
Tendered Bonds (together with all income therefrom and proceeds thereof)
purchased pursuant to the Indenture with the proceeds of a Tender Draft
presented under the Letter of Credit for which neither (i) full reimbursement
has
15
been made to the Bank nor (ii) the Trustee holds sufficient funds which,
pursuant to the Indenture, the Trustee is required to apply on behalf of the
Borrower to reimburse the Bank in full for such Tender Draft on the date such
Tender Draft is paid by the Bank. Such Unremarketed Tendered Bonds shall be
pledged to the Bank, registered in its name as pledgee of the Borrower and
delivered to and held by the Trustee as agent for the Bank under this Section
3.03 or, at the option of the Bank by written notice to the Borrower and the
Trustee, the pledged Unremarketed Tendered Bonds specified in such notice shall
be delivered to and held by the Bank. Unremarketed Tendered Bonds which are so
pledged and held by the Trustee as agent for the Bank or by the Bank are herein
referred to as "Pledged Bonds".
(b) Pledged Bond Payments. Any principal of, premium on and interest
---------------------
on Pledged Bonds which becomes due and payable (including any due-bills received
upon purchase thereof pursuant to the record date provisions of the Indenture or
the Bonds) shall be paid to the Bank. All sums of money so paid to the Bank in
respect of Pledged Bonds shall be credited against the obligation of the
Borrower to reimburse the Bank, with interest, under Section 2.02(a) for the
amount drawn with a Tender Draft to fund the purchase of such Pledged Bonds
pursuant to the Indenture.
(c) Release of Pledged Bonds. If the Borrower pays or causes to be
------------------------
paid in full its obligation under Section 2.02(a) for the reimbursement of the
amount (or allocable portion thereof) drawn with a Tender Draft to fund the
purchase of Pledged Bonds pursuant to Article IV of the Indenture (or if the
Trustee has received immediately available funds which, pursuant to Section 4.05
of the Indenture, the Trustee is required to pay over promptly to the Bank in an
amount sufficient to pay the Borrower's reimbursement obligation under Section
2.02(a) with respect to the amount drawn with such Tender Draft to fund the
purchase of such Pledged Bonds), and provided no Event of Default has occurred
and is continuing, the Bank will release from the pledge of this Agreement and
will deliver, or cause its agent to deliver, such Pledged Bonds to such person
or persons as the Trustee or the Borrower may direct. An amount equal to the
principal of, plus accrued interest on, such Pledged Bonds shall be presumed
(absent notice to the contrary) to be an "amount sufficient" for purposes of
this Section 3.03(c) and, upon receipt of such amount by the Trustee for payment
to the Bank as aforesaid, the Trustee shall be automatically authorized to
deliver such Pledged Bonds as aforesaid free from the pledge of this Agreement,
unless the Trustee has received from the Bank written notice or telephonic
notice (which shall thereafter be confirmed in writing) that such release shall
not occur.
(d) Liability of Bank. The Bank shall not be liable for failure to
-----------------
collect or realize upon the obligations secured by the Pledged Bonds or any
collateral security or guarantee therefor, or any part thereof, or for any delay
in so doing, and the Bank shall not be under any obligation to take any action
whatsoever with regard thereto.
(e) Representations; Rights and Remedies. The Borrower represents and
------------------------------------
warrants to the Bank that the pledge, assignment and delivery of Pledged Bonds
pursuant to this Section 3.03 will create a valid first lien on and a first
perfected security interest in, all right, title and interest of the Borrower in
and to the Pledged Bonds, and the proceeds thereof. The Borrower covenants and
agrees that it will defend the Bank's right, title and security interest in and
to the Pledged Bonds and the proceeds thereof against the claims and demands of
all persons. In addition to its other rights and remedies under this Agreement
and the Bond
16
Documents, the Bank shall have all the rights and remedies of a secured party
under the Uniform Commercial Code of the State or other applicable law with
respect to the security interests created by this Section.
Section 3.04 Mortgage; Additional Security. To further secure the
-----------------------------
Borrower's obligations to the Bank under this Agreement, the Borrower shall
execute (and with respect to subsection (iv) below, shall cause each Guarantor
to execute) (i) a mortgage and security agreement granting the Bank a first
priority mortgage on the Project Facilities (the "Mortgage"); (ii) an
Environmental Indemnity Agreement relating to the Project Facilities (the
"Environmental Indemnity Agreement"); (iii) an Assignment of Construction and
Development Documents collaterally assigning the Borrower's interest in all
Construction Documents (the "Assignment of Construction Documents") and (iv) a
Security Agreement granting the Bank a security interest in all of the
Borrower's and each Guarantors's accounts, general intangibles, instruments,
chattel paper, inventory, machinery and equipment (the "Security Agreement").
Section 3.05 Financing Statements. The Borrower will execute and deliver,
--------------------
and cause to be executed and delivered, such financing statements and
continuation statements under the Uniform Commercial Code of the State or other
applicable law as the Bank may specify in order to perfect and maintain
perfection of the Bank's security interests under this Agreement, and the
Collateral Documents, and will pay the costs of filing the same in such public
offices as the Bank may designate.
Section 3.06 Guaranty. The Borrower shall cause the Guarantors to execute
--------
and deliver to the Bank a Guaranty and Surety Agreement dated as of the date
hereof (the "Guaranty") under which the Guarantors shall guarantee and become a
surety for the Borrower's obligations under this Agreement.
ARTICLE IV.
CONDITIONS PRECEDENT
Section 4.01 Documentation. As conditions precedent to the Bank's issuance
-------------
of the Letter of Credit, the Bank shall have received each of the following in
form and substance satisfactory to the Bank:
(a) Executed copies of this Agreement and the Collateral Documents
(other than the Mortgage, the Environmental Indemnity Agreement and the
Assignment of Construction Documents), and true and correct copies of executed
copies of the Bond Documents and all documentation delivered in connection
therewith;
(b) Such financing statements as the Bank may require pursuant to
Section 3.05;
(c) Certified copies of the certificate or articles of formation
or incorporation, operating agreement or bylaws and authorizing resolutions of
the Borrower and each of the Guarantors, as applicable, and a good standing
certificate for the Borrower and each
17
of the Guarantors issued by the state of formation or incorporation of the
Borrower and each of the Guarantors;
(d) A certificate of the Borrower as of the date of execution and
delivery hereof stating that (i) the representations and warranties contained in
Article V are true and correct and (ii) no Event of Default has occurred and is
continuing, and no event has occurred and is continuing which, with the giving
of notice or lapse of time or both, would constitute an Event of Default;
(e) An opinion of counsel to the Borrower and the Guarantors
(which opinions may be issued, where indicated, in reasonable reliance upon
certifications, opinions and other documentation derived from governmental
agencies and others having particular access to materials and information
necessary to reach the conclusions expressed in such opinions) in form and
substance acceptable to the Bank and its counsel;
(f) A certificate or certificates of the officers of the Issuer
covering such matters as to the Issuer and the Bond Documents as the Bank may
reasonably request;
(g) Opinions of ▇▇▇▇▇▇▇ & ▇▇▇, bond counsel, and ▇▇▇▇▇▇ ▇'▇▇▇▇▇
▇▇▇▇▇▇▇ & ▇▇▇▇, P.C., counsel to the Issuer, covering such matters as to the
Issuer and the Bond Documents as the Bank may reasonably request;
(h) A certificate or certificates of the Guarantors as of the date
of execution and delivery hereof (i) stating that the representations and
warranties contained in the Guaranty are true and correct and (ii) no Event of
Default as defined in the Guaranty has occurred and is continuing, and no event
has occurred and is continuing, which with the giving of notice or lapse of time
or both, would constitute such an Event of Default;
(i) Consolidated financial statements of IS&S, Inc. and its
subsidiaries as of March 31, 2000 for the six-month period then ending;
(j) Evidence of the insurance required under Section 6.05 and that
the Project Facilities are not located in a Special Flood Hazard area as defined
by the United States Department of Housing and Urban Development;
(k) The "Phase One" environmental reports concerning the Project
Facilities dated October 4, 1999 prepared by Tri State Environmental Management
Services (the "Phase One Report") and satisfactory to the Bank; and
(l) Such other documents, certificates, approvals, assurances and
opinions as are listed in the closing memorandum filed with the Trustee in
connection with the issuance of the Bonds or as the Bank may reasonably request.
Section 4.02 Issuance of Bonds. On the date of execution and delivery
-----------------
hereof, all conditions precedent to the issuance and original placement of the
Bonds shall have been satisfied, and the Bonds shall have been duly issued and
delivered.
18
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants as follows:
Section 5.01 Existence. The Borrower is a limited liability company, duly
---------
formed, validly existing and in good standing under the laws of Pennsylvania.
The Borrower has furnished to the Bank true and complete copies of its articles
of formation and operating agreement. The Borrower has all necessary permits,
licenses, certifications and qualifications to conduct its business as it is
presently being conducted, and has complied in all material respects with all
applicable requirements of the United States and the State, and their respective
agencies and instrumentalities, to own and operate the Project Facilities as it
is intended to be owned and operated pursuant to this Agreement.
Section 5.02 Power, Authorization and No Conflicts. The Borrower has all
-------------------------------------
requisite power to own and operate its properties and to conduct its business
and operations as it is currently being conducted. The execution, delivery and
performance by the Borrower of this Agreement, the Collateral Documents and the
Bond Documents to which the Borrower is a party (i) are within the Borrower's
powers, and (ii) do not contravene the certificate of incorporation or the
bylaws of the Borrower or any law, rule, regulation, decree, order or judgment
applicable to the Borrower or any indenture, mortgage, instrument, contract,
agreement or restriction binding on or affecting the Borrower or any of its
assets, or result in the creation of any mortgage, pledge, lien or encumbrance
upon any of its assets other than as provided by the terms thereof.
Section 5.03 Governmental Authorizations and Other Approvals. The Borrower
-----------------------------------------------
has all necessary governmental and other authorizations, approvals, consents,
permits, licenses, certifications and qualifications, and has complied in all
material respects with all applicable requirements of the United States and the
State and other jurisdictions where the Borrower conducts business or owns
property and of their respective agencies and instrumentalities, to conduct its
business as it is presently conducted and to own and operate the Project
Facilities as it is presently intended to be owned and operated pursuant to this
Agreement. No authorization, approval or other action by, and no notice to or
filing with, any governmental authority, regulatory body or court is required
for the due execution, delivery and performance by the Borrower of this
Agreement, the Collateral Documents and the Bond Documents to which the Borrower
is a party, except such as have been obtained or are not issuable on or before
the Date of Issuance.
Section 5.04 Validity and Binding Effect. This Agreement, the Collateral
---------------------------
Documents and the Bond Documents to which the Borrower is a party are, or in the
case of the Mortgage, the Environmental Indemnity Agreement and the Assignment
of Construction Documents, upon their due execution will be, the legal, valid
and binding obligations of the Borrower, enforceable against the Borrower in
accordance with their terms, subject to the application by a court of general
principles of equity and to the effect of any applicable bankruptcy, insolvency,
reorganization, moratorium or similar law affecting creditors' rights generally.
19
Section 5.05 No Litigation. There is no pending action or proceeding before
-------------
any court, governmental agency or arbitrator against or involving the Borrower
and, to the best of the Borrower's knowledge, there is no threatened action or
proceeding affecting the Borrower before any court, governmental agency or
arbitrator which, in any case, might materially and adversely affect the
business, operations, assets, condition (financial or otherwise) or prospects of
the Borrower, or the validity or enforceability of this Agreement, the
Collateral Documents or the Bond Documents to which the Borrower is a party, or
the acquisition, construction, renovation and operation of the Project
Facilities.
Section 5.06 No Violations. The Borrower is not, and no event has occurred
-------------
which with the passage of time or the giving of notice or both would result, in
noncompliance with, breach of or in default under (a) any applicable law or
administrative regulation of the United States, the State or any other
governmental body or agency or instrumentality thereof or any applicable
judgment, order or decree or (b) the Bond Documents or any other credit
agreement, indenture, mortgage, agreement or other instrument to which it is a
party or otherwise subject, where the result of such noncompliance, breach or
default would have a material adverse effect on the Borrower. The Borrower has
no knowledge of any violation, nor is there any notice or other record of any
violation, of any zoning, subdivision, environmental, building or other statute,
ordinance, regulation, restrictive covenant or other restriction applicable to
the Project Facilities.
Section 5.07 Compliance. To the best of the Borrower's knowledge, the
----------
acquisition and renovation of the Project Facilities as contemplated by this
Agreement and the use and operation of the Project Facilities do and shall, in
all material respects, comply with, and are lawful, permitted and conforming
uses under, all applicable building, fire, safety, zoning, subdivision, sewer,
environmental, health, insurance and other laws, ordinances, rules, regulations
and plan approval conditions of any governmental or public body or authority,
and the Borrower has obtained, or will obtain prior to commencement of the
renovation of the Project Facilities, all permits, licenses or approvals from
such governmental or public bodies or authorities which are a necessary
precondition to the acquisition, construction and renovation of the Project
Facilities.
Section 5.08 Title to Properties; Liens and Encumbrances. The Borrower has
-------------------------------------------
good and marketable title in fee simple to all of its real property and valid
and indefeasible ownership of all of its fixtures, equipment and other assets.
All such real property, fixtures and equipment necessary to the conduct of the
business of the Borrower are in reasonable working order and free of any
material defects, and are suitable for the purposes for which they are presently
being used, and repair or replacement thereof has not knowingly been deferred.
There exist no Liens against any of the real or personal, tangible or
intangible, assets of the Borrower (including without limitation statutory and
other liens of mechanics, workers, contractors, subcontractors, suppliers,
taxing authorities and others), except Permitted Liens; and the Borrower has not
made a contract or arrangement of any kind, the performance of which by the
other party thereto could give rise to a Lien on the Project Facilities by
operation of law or otherwise except such as are adequately and fully covered by
the Bank's title insurance insuring the lien of the Mortgage.
20
Section 5.09 Utilities and Access. All utility services necessary for
--------------------
operation of the Project Facilities, including water supply, storm and sanitary
sewer facilities, gas, electricity and telephone facilities are available within
the boundaries of the Project Facilities; and all roads necessary for the full
utilization of the Project Facilities for their intended purposes have been
completed and the necessary rights-of-way therefor have been acquired by the
appropriate governmental authority or others or have been dedicated to public
use and accepted by such governmental authority.
Section 5.10 Financial Information. The audited consolidated balance
---------------------
sheets of IS&S, Inc. and its subsidiaries as of September 30, 1999, and the
related consolidated statements of income and of cash flows for the fiscal year
ended on September 30, 1999, present fairly the consolidated financial condition
of IS&S, Inc. and its subsidiaries as at such date, and the consolidated results
of their operations and their consolidated cash flows for the Fiscal Year then
ended. All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved. Neither the Borrower nor any of the Guarantors
had, at the date of the balance sheet referred to above, any material contingent
obligation, liability for taxes, or any long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is required by GAAP to be
but is not reflected in the foregoing statements or in the notes thereto. Since
the date of the balance sheet referred to above there has been no material
adverse change in the financial condition of IS&S, Inc. on a consolidated basis.
Section 5.11 ERISA. The Borrower, the ERISA Affiliates and the Plans
-----
are in compliance in all material respects with those provisions of ERISA and of
the Code which are applicable with respect to any Plan. No Prohibited
Transaction and no Reportable Event has occurred with respect to any Plan.
Neither the Borrower nor any of the ERISA Affiliates is an employer with respect
to any Multiemployer Plan. The Borrower and the ERISA Affiliates have met the
minimum funding requirements under ERISA and the Code with respect to each of
their respective Plans, if any, and have not incurred any liability to the PBGC
or any Plan. The execution, delivery and performance of this Agreement does not
constitute a Prohibited Transaction. There is no material Unfunded Benefit
Liability with respect to any Plan.
Section 5.12 Environmental Representations. The Borrower has obtained
-----------------------------
the Phase One Report and, except as set forth in Exhibit C attached hereto, (a)
the Borrower does not know nor has reason to know of any activity at the Project
Facilities or any storage, treatment or disposal of any waste connected with any
activity at the Project Facilities, which has been conducted, or is being
conducted, in violation of any Environmental Law; (b) the Borrower does not know
nor has any reason to know of any of the following which could give rise to
material liabilities, material costs for remediation or a material adverse
change in the business, operations, assets, condition (financial or otherwise)
or prospects of the Borrower: (i) Contamination present at the Project
Facilities; (ii) polychlorinated biphenyls present at the Project Facilities,
(iii) asbestos or materials containing asbestos present at the Project
Facilities, or (iv) urea formaldehyde foam insulation present at the Project
Facilities; (c) no portion of the Project Facilities constitutes an
Environmentally Sensitive Area; (d) the Borrower does not know nor has
21
reason to know of any investigation of the Project Facilities for the presence
of radon gas or radioactive decay products of radon; and (e) no tanks presently
or formerly used for the storage of any liquid or gas above or below ground are
present at the Project Facilities or any property owned, leased or otherwise
used by the Borrower. No lien has been imposed upon the Borrower's or the
Guarantors' revenues or real or personal property pursuant to 42 U.S.C. (S)
9607(e) as that section may be amended from time to time, or pursuant to any
other applicable legal authority relating to contamination arising on or from
such entities' operations or property, and there exist no circumstances which
might lead to the imposition of such lien.
Section 5.13 Outstanding Obligations. Attached hereto as Exhibit D is
-----------------------
a complete list of all Obligations of the Borrower as of the date of execution
and delivery hereof having an outstanding principal balance of $100,000 or more,
together with a description of the instruments evidencing, governing or securing
such Obligations. There exists no material default under any such instrument.
Section 5.14 Other Material Contracts. Attached hereto as Exhibit E
------------------------
is a complete list of all Material Contracts currently in effect which are not
described in Exhibit D. The Borrower has complied with all material provisions
of such Material Contracts and there exists no material default under any such
Material Contract by the Borrower or by any other party thereto.
Section 5.15 Solvency. Each of the Borrower and the Guarantors is
--------
and, after giving effect to this Agreement and all other agreements of the
Borrower and the Guarantors being entered into on the date of execution and
delivery of this Agreement, will be solvent (which for this purpose shall mean
that the fair market value of its property is in excess of the total amounts of
its debts and that it is able to pay its debts as they mature).
Section 5.16 Disclosure. This Agreement, the exhibits hereto and the
----------
other documents, certificates, schedules and statements furnished to the Bank by
or on behalf of the Borrower or the Guarantors in connection with the
transactions contemplated hereby, do not contain any untrue statement of a
material fact and do not omit to state a material fact necessary in order to
make the statements contained therein not misleading in light of the
circumstances under which they were made. There is no fact known to the Borrower
which materially adversely affects or in the future may (so far as the Borrower
can now foresee) materially adversely affect the business, operations,
properties, assets or financial condition of the Borrower or the Guarantors
which has not been set forth in this Agreement or in the other documents,
certificates and statements furnished to the Bank by or on behalf of the
Borrower or the Guarantors prior to the date of execution and delivery of this
Agreement in connection with the transactions contemplated hereby.
Section 5.17 Representations in Other Documents. The Borrower hereby
----------------------------------
makes to and for the benefit of the Bank each of the representations and
warranties of the Borrower contained in the Bond Documents and the other
documents delivered by the Borrower in connection therewith.
22
ARTICLE VI.
GENERAL COVENANTS
So long as any amount is available under the Letter of Credit,
the Liquidity Period has not been terminated or any amount is due and owing to
the Bank hereunder, the Borrower covenants that, except to the extent the Bank
shall otherwise consent in writing, each of the following covenants shall be
performed and complied with by the Borrower, or the Guarantors, as indicated:
Section 6.01 Maintenance of Existence. The Borrower will maintain its
------------------------
existence, rights and privileges and its qualification to do business in the
State, will not dissolve or otherwise dispose of all or substantially all of its
assets.
Section 6.02 Disposition of Assets. The Borrower shall not sell,
---------------------
convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily
or involuntarily, any of its tangible properties or assets, except: (i)
transactions involving the sale of inventory in the ordinary course of business;
(ii) any sale, transfer or lease of assets in the ordinary course of business
which are no longer necessary or required in the conduct of the Borrower's
business; (iii) any sale, transfer or lease of assets in the ordinary course of
business which are replaced by substitute assets acquired or leased provided
such substitute assets are subject to the Bank's security interest; or (iv) any
sale, transfer or lease of assets, other than those specifically excepted
pursuant to clauses (i) through (iii) above, which is approved by the Bank.
Section 6.03 Compliance with Laws. The Borrower will comply in all
--------------------
material respects with all applicable laws, rules, regulations and orders of any
governmental authority the noncompliance with which could materially and
adversely affect its business, operations, assets, condition (financial or
otherwise) or prospects or the Project Facilities, except for any such laws,
rules, regulations and orders which the Borrower is contesting in good faith by
appropriate proceedings and the noncompliance with which during such contest
would not materially and adversely affect the Borrower's business, operations,
assets, condition (financial or otherwise) or prospects or the Project
Facilities if the result of such contest were adverse to the Borrower.
Section 6.04 Maintenance of Governmental Authorizations. The Borrower
------------------------------------------
will maintain in full force and effect all of its governmental and other
authorizations, approvals, consents, permits, licenses, certifications and
qualifications necessary for the conduct of its business as it is presently
being conducted and the ownership and operation of its facilities as they are
presently being operated. The Borrower will promptly furnish copies of all
reports and correspondence relating to a loss or proposed revocation of any such
qualification to the Bank.
Section 6.05 Maintenance of Insurance. The Borrower will maintain or
------------------------
cause to be maintained (i) hazard insurance (including builder's risk insurance
with respect to any construction), with fire and extended coverage, vandalism
and malicious mischief coverage and boiler, pressure vessel, auxiliary piping,
pumps and compressors, refrigeration system, transformer and electrical
apparatus coverage, on all properties of the Borrower and the Guarantors, (ii)
business interruption (or, if appropriate, rental curtailment) insurance, (iii)
23
comprehensive general liability insurance and motor vehicle and rolling stock
insurance for bodily injury and property damage, and (iv) worker's compensation
insurance. Each of the policies in the preceding sentence shall be in form,
amounts and substance and with insurance companies reasonably satisfactory to
the Bank, containing 30-day notification of cancellation or change in coverage
clauses in favor of the Trustee and the Bank; and maintain such other insurance
with responsible and reputable insurance companies in such amounts and covering
such risks as are customarily maintained by persons similar to the Borrower and
the Guarantors or as the Bank may reasonably require by written notice to the
Borrower. All policies of insurance of the types described in clauses (i) and
(ii) of the first sentence of this Section with respect to the Project
Facilities shall name the Bank as a mortgagee/lender loss payee as its interests
may appear. The Borrower shall furnish to the Bank, upon written request, full
information as to all insurance carried by them.
Section 6.06 Compliance with Bond Documents and Other Contracts. The
--------------------------------------------------
Borrower will comply in all material respects with all of its covenants and
agreements under the Bond Documents, as the same may hereafter be amended or
supplemented from time to time, and comply with, or cause to be complied with,
all material requirements and conditions of all contracts and insurance policies
which relate to the Project Facilities.
Section 6.07 Maintenance of Properties. The Borrower will maintain
-------------------------
and preserve all of its properties in good working order and condition, ordinary
wear and tear and damage by insured casualty excepted; not permit, commit or
suffer any waste of any of its properties; not use or permit the use of any of
its properties for any unlawful purpose or permit any nuisance to exist thereon;
and make such repairs or replacements as are required or convenient for the
proper operation, repair and maintenance of the Borrower's properties in an
economical and efficient manner and consistent with customary standards
applicable to properties of like size and type.
Section 6.08 Visitation Rights. The Borrower will permit the Bank or
-----------------
its agents or representatives following prior written notice to the Borrower to
examine and make copies of and abstracts from the records and books of account
of, and visit the properties of, the Borrower, and to discuss the affairs,
finances and accounts of the Borrower with the officers and accounts of the
Borrower.
Section 6.09 Keeping of Books. The Borrower will keep proper books of
----------------
record and account, in which full and correct entries shall be made of financial
transactions and the assets and operations of the Borrower in accordance with
GAAP, and have, a review of such books of record and account made by certified
public accountants reasonably acceptable to the Bank for each Fiscal Year.
Section 6.10 Reporting Requirements. The Borrower will furnish or
----------------------
cause to be furnished to the Bank the following in form satisfactory to the
Bank:
(a) Within 120 days after the close of each Fiscal Year of
IS&S, Inc.;
24
(1) consolidated and consolidating financial statements for
IS&S, Inc. and its subsidiaries, including a consolidated balance sheet and
related consolidated statements of income, retained earnings, cash flows,
and changes in financial position as of the end of such Fiscal Year and for
such Fiscal Year, reviewed by independent certified public accountants
acceptable to the Bank and prepared in accordance with GAAP, which shall
fairly present the consolidated financial condition of IS&S, Inc. and its
subsidiaries as at the end of such Fiscal Year; and
(2) certificate signed by an officer of the Borrower
stating that (i) during such Fiscal Year the Borrower has observed and performed
in all material respects all of its covenants and agreements set forth in this
Agreement, except as disclosed in such certificate, and (ii) neither any Event
of Default nor any event which, with the giving of notice or lapse of time or
both, would constitute an Event of Default has occurred or is continuing, except
as disclosed in such certificate;
(b) Within 45 days after the end of each quarter of each Fiscal
Year of IS&S, Inc.;
(1) unaudited consolidated and consolidating financial
statements for IS&S, Inc. and its subsidiaries, including a consolidated
balance sheet of IS&S, Inc. and its subsidiaries and related consolidated
statement of income, retained earnings and cash flows as of the end of such
fiscal quarter and for such fiscal quarter and the current fiscal year to
the end of such fiscal quarter, which shall be internally prepared and
presented on a consistent basis; and
(2) certificate signed by an officer of the Borrower
stating that (i) during such fiscal quarter the Borrower has observed and
performed in all material respects all of its covenants and agreements set
forth in this Agreement, except as disclosed in such certificate, and (ii)
neither any Event of Default nor any event which, with the giving of notice
or lapse of time or both, would constitute an Event of Default has occurred
or is continuing, except as disclosed in such certificate;
(c) Promptly following the filing thereof, and in any event no
later than April 30 of each year, the annual Federal tax returns of IS&S, Inc.;
(d) Upon receipt thereof, copies of any letter or report with
respect to the management, operations or properties of the Borrower or either
Guarantor submitted to the Borrower or such Guarantor by its accountants in
connection with any annual or interim audit of the Borrower or either
Guarantor's accounts, and a copy of any written response of the Borrower or
either Guarantor to any such letter or report;
(e) As soon as possible and in any event within 3 days after
receipt of notice thereof, notice of any pending or threatened litigation,
investigation or other proceeding involving the Borrower or either Guarantor (i)
which could have a material adverse effect on the operations or financial
condition of the Borrower or such Guarantor or (ii) wherein the potential
damages, in the reasonable judgment of the Borrower or such Guarantor based upon
the advice of counsel experienced in such matters, are not fully covered by the
insurance policies
25
maintained by the Borrower or such Guarantor (except for the deductible amounts
applicable to such policies) or (iii) any material change in the condition of
the Project Facilities;
(f) As soon as possible, notice of any material adverse change
in the operations, financial condition or prospects of the Borrower or either
Guarantor;
(g) As soon as possible and in any event within 3 days after the
occurrence of each Event of Default or each event which, with the giving of
notice or lapse of time or both, would constitute an Event of Default, a
statement of an officer of the Borrower or either Guarantor setting forth the
details of such Event of Default or event and the action which the Borrower or
such Guarantor proposes to take with respect thereto;
(h) As soon as possible, notice of any proposed or agreed-upon
amendment or wavier of any provisions in any other credit documents to which the
Borrower or either Guarantor is a party; and
(i) Such other information respecting the operations and
properties, financial or otherwise, of the Borrower or either Guarantor as the
Bank may from time to time reasonably request.
Section 6.11 Consents Under Bond Documents. The Borrower will obtain
-----------------------------
the consent of the Bank whenever the Borrower must obtain the consent of the
Trustee under the Bond Documents.
Section 6.12 Amendments to Bond Documents. The Borrower will not
----------------------------
consent to or enter into any amendment of or supplement to the Bond Documents.
Section 6.13 Limitation on Optional Calls and Conversions. Except
--------------------------------------------
pursuant to Section 6.20, the Borrower will not exercise its rights under the
Bond Documents to direct the Issuer to call the Bonds for any optional
redemption thereof, unless the Borrower first demonstrates to the reasonable
satisfaction of the Bank that at the time of such redemption the Bank will be
fully reimbursed for all drawings on the Letter of Credit in connection with
such redemption. The Borrower will not direct or permit the conversion or
establishment of the interest rate on the Bonds to an interest rate other than
the Weekly Rate (as defined in the Indenture), unless either (i) the Letter of
Credit is being terminated in connection therewith and the Borrower demonstrates
to the reasonable satisfaction of the Bank that at the time of such conversion
the Bank will be fully reimbursed for all drawings on the Letter of Credit at or
before such conversion or (ii) the Bank consents in writing to such conversion
or establishment.
Section 6.14 Liens; Negative Pledge. The Borrower will not enter into
----------------------
any agreement with any Person other than the Bank which prohibits or limits the
ability of the Borrower to create, incur, assume or suffer to exist any
mortgage, pledge, security interest, encumbrance or other lien upon the Project
Facilities, except for the Credit Agreement. The Borrower will not create,
incur, assume or suffer to exist any mortgage, pledge, security interest,
encumbrance or other Lien upon the Project Facilities, other than:
26
(i) Permitted Liens existing on the date of this Agreement,
provided that the amounts secured by such liens are not greater than the amounts
secured thereby on the date of this Agreement;
(ii) liens for taxes, assessments or governmental charges or
levies not yet due and payable or being contested in good faith and by
appropriate proceedings promptly initiated and diligently conducted, provided
that a reserve or other appropriate provision, if any, as shall be required by
GAAP, shall have been made therefor and no foreclosure, distraint, sale or other
similar proceedings shall have been commenced and not stayed;
(iii) statutory liens of landlords and liens of carriers,
warehouseman, mechanics and materialmen incurred in the ordinary course of
business for sums not yet due or being contested by appropriate proceedings
promptly initiated and diligently conducted, provided that such liens shall have
been bonded and a reserve or other appropriate provision, if any, as shall be
required by GAAP, shall have been made therefor;
(iv) liens incurred or deposits made in the ordinary course of
business in connection with worker's compensation, unemployment insurance and
other types of social security; and
(v) purchase money liens securing Obligations, provided that
each such lien is limited exclusively to the property purchased with the
proceeds of the Obligation secured by such lien.
Section 6.15 Payment of Debt. The Borrower will make full and timely
---------------
payment of the principal of and interest on all Obligations of the Borrower
whether now existing or hereafter arising, and comply in all material respects
with all covenants and agreements set forth in agreements evidencing Obligations
of the Borrower, except to the extent any such payment is being contested in
good faith, in appropriate proceedings which are being diligently pursued by the
Borrower and where adequate and appropriate reserves therefor have been set
aside by the Borrower and such non-payment has not given rise to any Lien on the
assets of the Borrower.
Section 6.16 Environmental Covenants.
-----------------------
(a) The Borrower will cause all activities at the Project
Facilities during the term of this Agreement to be conducted in material
compliance with all Environmental Laws. The Borrower will cause all applicable
permits, licenses or approvals to be obtained and will cause all notifications
to be made, as required by Environmental Laws, and will, at all times, cause
compliance with the terms and conditions of any such approvals or notifications.
During the term of this Agreement, if reasonably requested by the Bank, the
Borrower will provide to the Bank copies of (i) applications or other materials
submitted to any governmental agency in compliance with Environmental Laws, (ii)
any notifications submitted to any person pursuant to Environmental Laws, (iii)
any permit, license, approval, amendment or modification thereto granted
pursuant to Environmental Laws, (iv) any record or manifest required to be
maintained pursuant to Environmental Laws, and (v) any correspondence, notice
27
of violation, summons, order, complaint or other document received by the
Borrower, its lessees, sublessees or assigns, pertaining to compliance with any
Environmental Laws.
(b) The Borrower will not cause or permit any Contamination
during the term of this Agreement. The Borrower will, at all times during the
term of this Agreement, cause Hazardous Substances created or used at the
Project Facilities to be handled in a manner which will not cause an undue risk
of Contamination.
(c) The Borrower will cause all construction of new structures
at the Project Facilities during the term of this Agreement to use design
features which safeguard against or mitigate the accumulation of radon or radon
products in concentrations exceeding an acceptable level in any such new
structure.
(d) Upon the occurrence and during the continuation of an Event
of Default, the Bank may, if it in good faith believes there is a violation of
or failure by the Borrower in compliance with the following, but no more
frequently than annually at its discretion, commission an investigation at the
Borrower's expense of (i) compliance at the Project Facilities with
Environmental Laws, (ii) the presence of Hazardous Substances or Contamination
at the Project Facilities, (iii) the presence at the Project Facilities of
materials which are described in clause (b) of Section 5.12, (iv) the presence
at the Project Facilities of Environmentally Sensitive Areas, (v) the presence
at the Project Facilities of radon products, or (vi) the presence at the Project
Facilities of tanks of the type described in paragraph (e) of Section 5.12. In
connection with any investigation pursuant to this paragraph, the Borrower, the
Guarantors and their lessees, sublessees and assigns, will comply with any
reasonable request for information made by the Bank or its agents in connection
with any such investigation. Any response to any such request for information
will be full and complete. The Borrower will assist the Bank and its agents to
obtain any records pertaining to the Project Facilities or to the Borrower and
the lessees, sublessees or assigns of the Borrower in connection with an
investigation pursuant to this paragraph. The Borrower will accord the Bank and
its agents access to all areas of the Project Facilities during regular business
hours and in reasonable manners in connection with any investigation pursuant to
this paragraph without unreasonable interference with the operation of business
at the Project Facilities. No investigation commissioned pursuant to this
paragraph shall relieve the Borrower from any responsibility for their
representations and warranties under Section 5.12.
(e) The Borrower hereby agrees to indemnify and to hold harmless
the Bank of, from and against any and all expense, loss or liability suffered by
the Bank by reason of the Borrower's breach of any of the provisions of Section
5.12 or this Section including, but not limited to, and whether or not
constituting such a breach (i) any and all expense that the Bank may reasonably
incur in complying with any Environmental Laws related to the Project
Facilities; (ii) any and all costs that the Bank may reasonably incur in
investigating or remedying any Contamination to the extent required by
Environmental Laws; (iii) any and all fines, penalties or other sanctions
(including a voiding of any transfer of the Project Facilities) assessed upon
the Bank by reason of a failure of the Borrower to have complied with
Environmental Laws; and (iv) any and all reasonable legal and professional fees
and costs incurred by the Bank in connection with the foregoing, provided that
the Borrower shall not be
28
responsible for any such expense, loss or liability resulting from the gross
negligence or willful misconduct of the Bank.
Section 6.17 ERISA. The Borrower will comply in all material respects
-----
with all applicable provisions of ERISA and the Code as they relate to any Plan.
Promptly and in any event within 10 Business Days after receiving or becoming
aware thereof, the Borrower shall furnish to the Bank (i) a copy of any notice
of intent to terminate any Plan filed with the PBGC, (ii) a statement of the
chief financial officer of the Borrower setting forth the details of the
occurrence of any Reportable Event with respect to any Plan, (iii) a copy of any
notice that the Borrower or any ERISA Affiliate may receive from the PBGC
relating to the intention of the PBGC to terminate any Plan or to appoint a
trustee to administer any Plan, or (iv) a copy of any notice of failure to make
a required installment or other payment within the meaning of Section 412(n) of
the Code or Section 302(f) of ERISA with respect to a Plan.
Section 6.18 Tax Returns. The Borrower will file all required tax
-----------
returns, pay when due all taxes imposed on their operations, assets, income or
properties, and, upon request, provide to the Bank copies of such returns and
receipts for payment of such taxes provided the Borrower may contest and in
certain cases refuse to pay any taxes that in the reasonable judgment of its
accountants and/or legal counsel the Borrower is not required to pay.
Section 6.19 Leases. The Borrower hereby represents that there are no
------
leases or agreements to lease all or any part of the Project Facilities now in
effect. The Borrower agrees not to enter into any lease or agreement to lease
all or any part of the Project Facilities without the prior written approval
thereof and of the respective tenant by the Bank
Section 6.20 Optional Redemptions of Bonds.
-----------------------------
(a) The Borrower and the Bank intend to obtain shortly after the
Date of Issuance an appraisal of the Project Facilities on a completed value
basis from an MAI appraiser selected by the Bank and in form and substance
satisfactory to the Bank (the "Appraisal"). If the Appraisal establishes a value
of the Project Facilities (the "Project Appraised Value") such that the Letter
of Credit Amount is greater than 85% of the Project Appraised Value, then, upon
written request of the Bank, the Borrower agrees to direct the Trustee in
accordance with the terms and provisions of the Indenture to call the Bonds for
optional redemption as soon as practicable in an amount (rounded upwards to the
minimum increment permitted for such redemption) such that, after giving effect
to such redemption and the corresponding reduction in the Letter of Credit
Amount after such redemption, the Letter of Credit Amount is no greater than 85%
of the Project Appraised Value.
(b) In the event the Property is not acquired by the Borrower
within 180 days following the Date of Issuance, then, upon written request of
the Bank, the Borrower agrees to direct the Trustee in accordance with the terms
and provisions of the Indenture to call all of the Bonds for optional redemption
as soon as practicable.
(c) The Borrower agrees to direct the Trustee, in accordance
with the terms and provisions of the Indenture to call the Bonds for optional
redemption beginning on the Interest Payment Date occurring in August of 2001
and the Interest Payment Date occurring in
29
August of each year thereafter, in the amount as determined in accordance with
Exhibit H (with the amount of any optional redemption made pursuant to
subsection (a) above subtracted from the amount of the final redemption set
forth on Exhibit H). On the first day of [September, 2000] and the first day of
each calendar month thereafter so long as any Bonds are outstanding under the
Indenture, the Borrower shall pay to the Bank, for deposit by the Bank into the
"Bond Prepayment Fund" (which is hereby created) an amount equal to 1/12 of the
amount of the Bonds to be optionally redeemed on the following August 1. Funds
held in the Bond Prepayment Fund shall be immediately and automatically
transferred to the Bank to reimburse the Bank for draws made by the Trustee in
accordance with the Letter of Credit to optionally redeem the principal of the
Bonds on such dates.
(d) The Borrower agrees to take all steps necessary and required
by the Indenture to direct the Trustee to make the optional redemptions of the
Bonds at the times and on the dates required by subsections (a), (b) and (c)
above, in accordance with the terms and provisions of the Indenture.
Section 6.21 Financial Covenants. The Borrower shall cause IS&S, Inc.
-------------------
to observe the following covenants:
(a) IS&S, Inc., on a consolidated basis, shall maintain at all
times, a ratio of total liabilities to EBITDA of not greater than 2.50:1.00
during the period from the Date of Issuance through September 29, 2000, and not
greater than 2.25:1.00 thereafter, calculated at the end of each fiscal quarter
of IS & S, Inc.
(b) IS&S, Inc., on a consolidated basis, shall maintain at all
times a Fixed Charge Ratio equal to or greater than 2.00:1.00, calculated at
the end of each fiscal quarter of IS&S, Inc.
(c) IS&S, Inc., on a consolidated basis, shall maintain at all
times a minimum Tangible Net Worth of $9,054,000, to be increased on each
September 30, commencing on September 30, 2000, by an amount equal to the sum of
(i) 75% of IS&S, Inc.'s net income (if a positive number) for the fiscal year
then ending, and (ii) 90% of the proceeds (net of customary and reasonable costs
of issuance) from the issuance of capital stock of IS&S, Inc.
Section 6.22 Further Assurances. The Borrower will execute and
------------------
deliver from time to time such further instruments and take such further actions
as may be reasonably required to carry out the purposes and provisions of this
Agreement and to assure the Bank of the subrogation and security rights in favor
of the Bank contemplated by Article IV and by the Indenture.
30
ARTICLE VII.
CONSTRUCTION COVENANTS
Section 7.01 Application of Project Fund. The Borrower shall not
---------------------------
submit any requisition to the Trustee for disbursement of funds from the Project
Fund for Project costs which are inconsistent with the description of the
Project or the schedule of Project costs (the "Project Cost Schedule") to be
delivered to and approved by the Bank prior to the submission of the initial
requisition referred to in Section 7.01(b), and the Borrower shall not apply any
Bond proceeds in a manner inconsistent with the requisition therefor submitted
to the Trustee. Any costs of the Project incurred in excess of the budgeted
amounts set forth in the Project Cost Schedule will be paid for by the Borrower
upon demand of the Bank. Should it appear at any time that the balance of the
Project Fund is insufficient, in the Bank's reasonable judgment, to complete the
Improvements, the Bank may require that the Borrower pay, and the Borrower will
pay to the Trustee within 30 days of receipt of notice from the Bank, for
deposit in the Project Fund and disbursement pursuant to the Indenture, an
amount equal to the deficiency, as determined by the Bank, and the Bank shall
not be obligated to approve any further requisitions for disbursement from the
Project Fund until such amount is paid to the Trustee. Notwithstanding the
foregoing provisions, if the whole amount allocated to any component of Project
cost as set forth in the Project Cost Schedule is not, or in the Bank's
judgment, will not be expended to complete the work covered by such component,
then, with the Bank's approval, the Borrower may cause such excess to be
reallocated and used for any other component of Project cost as set forth on the
Project Cost Schedule prior to making any deposit required by the previous
sentence.
(a) Requisitions Regarding the Acquisition of the Property. The
------------------------------------------------------
Borrower shall not submit to the Trustee under the Indenture a requisition for
the acquisition costs with respect to the Property, if any, unless and until all
of the conditions precedent set forth in Article IV shall have been satisfied
and the Bank shall have first received each of the following, in form and
substance satisfactory to the Bank:
(i) Transaction Documents. The Mortgage and the
---------------------
Environmental Indemnity Agreement.
(ii) Title Insurance Commitment. A prepaid title insurance
--------------------------
commitment or commitments issued by a reputable carrier reasonably satisfactory
to the Bank, committing to insure the Mortgage in the original Letter of Credit
Amount, subject only to such liens and encumbrances as the Bank may approve,
under a title insurance policy on the most current American Land Title
Association Standard Loan Policy - Revised Coverage, Form, without a pending
disbursements clause, containing (i) no exception for unrecorded easements,
discrepancies or conflicts in boundary lines, shortage in area and encroachments
which an accurate and complete survey would disclose or for loss or damage by
reason of encroachment other than by party walls, (ii) copies of any
restrictions or easements affecting the Project Facilities and, with respect to
any restrictions, affirmative coverage that they have not been violated and that
future violation would not work a forfeiture or reversion of title to the
Project Facilities, (iii) an endorsement against the invalidity or
unenforceability and loss of priority of the lien of the Mortgage resulting from
changes in the rates of interest payable on the obligations
31
secured by the Mortgage and (iv) such other endorsements and affirmative
insurance as may be reasonably required by the Bank, including but not limited
to, a contiguity endorsement, survey endorsement, zoning endorsement, revolving
credit endorsement, future advance endorsement and endorsement as to
nonviolation of any restrictions or easements, and the Borrower shall supply the
title company with such affidavits as may be necessary in connection therewith
and such policy or policies shall also obligate the title company to
affirmatively issue all advances pursuant to this Agreement, without exception
for mechanics' or materialmen's liens, and that access to the Property is by a
dedicated and accepted public right-of-way.
(b) Requisitions Regarding the Improvements on the Property. The
-------------------------------------------------------
Borrower shall not submit to the Trustee under the Indenture the first
requisition for hard construction costs with respect to the Improvements unless
the conditions of subsection (a) have been satisfied in full and the Bank shall
have first received each of the following in form and substance satisfactory to
the Bank:
(i) Transaction Documents. The Construction and
---------------------
Development Documents and the Assignment of Construction Documents.
(ii) No-Lien Agreements. Duly filed and effective no-lien
------------------
agreements from the Contractor and all general contractors performing any work
on the Project Facilities or Improvements effectively waiving all present and
future lien rights with respect to the Construction Contract and other contracts
thereunder.
(iii) Inspection Report. A favorable report from the
-----------------
Inspecting Architect as to the detail set forth in the Plans and Specifications,
the quality of construction called for by the Plans and Specifications and the
adequacy of the Construction Contract to provide for completion of the
Improvements in accordance with the Plans and Specifications and as to such
other matters as the Bank may request. The Bank's obligation to authorize any
advances after the Date of Issuance for direct costs of construction may be
conditioned upon its continued receipt of similar reports from the Inspecting
Architect.
(iv) Payment of Charges. Evidence satisfactory to the Bank
------------------
that all installments of general or special taxes or assessments, service
charges, water and sewer charges, private maintenance charges, and other charges
by whatever name, to the extent due on or before the Date of Issuance and
relating to the Project Facilities have been paid on or before said date.
(v) Compliance with Laws. Evidence satisfactory to the
--------------------
Bank that the Improvements, when constructed, and the Project Facilities, and
the proposed and actual use thereof, comply with all applicable laws, statutes,
codes, ordinances, rules and regulations, including but not limited to zoning
and environmental laws, of all governmental authorities having jurisdiction over
the same, and that there is no action or proceeding pending (or any time for an
appeal of any decision rendered) before any court, quasi-judicial body or
administrative agency at the time of any authorized disbursement by the Bank of
all or any part from the Project Fund relating to the validity of the
transactions contemplated hereby or the proposed or actual use or operation of
the Project Facilities or which would adversely affect the status of the zoning
with respect thereto.
32
(vi) Permits and Approvals. Building, zoning and other
---------------------
required permits covering construction of Improvements, together with evidence
satisfactory to the Bank that all approvals required with respect to the Project
Facilities from third parties or any governmental or quasi-governmental
authorities have been obtained or, in the case of approvals relating to the
operation of the Improvements which cannot be obtained until completion of
construction, evidence satisfactory to the Bank that such approvals are
obtainable. Such evidence shall include copies of all letters of grant or
approval of all zoning changes and other site plan approvals and subdivision
approvals, all variances of zoning regulations affecting the height, bulk,
location or configuration of the Project Facilities (or a satisfactory opinion
or counsel that the same are not required), and all approvals or variances
relating to parking or loading areas (both on-street and off-street) and all
appurtenant easements required by governmental authorities with respect to the
Project Facilities. Upon completion of the construction of the Improvements, the
Borrower shall furnish the Bank evidence satisfactory to the Bank that the
Project Facilities complies with the foregoing requirements.
(vii) Utilities. Evidence satisfactory to the Bank that
---------
(A) the Project Facilities have available to them adequate water, gas and
electric supply, storm and sanitary sewerage facilities, telephone facilities
and other required public utilities, and means of access between the Project
Facilities and public highways; and (B) all such facilities comply with all
applicable laws, rules and regulations, and all necessary easements to provide
such utility service to the Project Facilities have been obtained.
(viii) Project Cost Schedule. The Project Cost Schedule in
---------------------
form and substance satisfactory to the Bank approved by the Bank and the
Inspecting Architect, and certified by the Borrower as of the Date of Issuance
to be true, correct and complete.
(ix) Plans and Specifications. The Plans and
------------------------
Specifications in form and substance satisfactory to the Bank, approved and
signed for identification purposes by the Borrower, the Contractor, the
Architect and the Inspecting Architect.
(x) No Damage or Taking. No portion of the Improvements
-------------------
shall have been damaged by fire or other casualty and no condemnation or taking
of the Project Facilities or the Improvements or any portion thereof shall be
pending or threatened.
(xi) Subcontractor List. A list of all Subcontractors
------------------
employed in connection with the construction of the Improvements and true and
correct copies of all executed Subcontracts.
(xii) Lien Waivers. To the extent and at the time or times
------------
permitted by applicable law, general waivers or stipulations against mechanic's
and materialman's liens by the Contractor and its Subcontractors and materialmen
for the Project.
(xiii) Miscellaneous Documents, Etc. Such other documents,
----------------------------
certificates, approvals and assurances that the Bank or its counsel may
reasonably request.
Section 7.02 Requisitions Approval. The Borrower shall submit to the
---------------------
Bank, no more than once per month and no later than 10 Business Days prior to
the date of the requested
33
disbursement, for its approval prior to disbursement thereon, each requisition
and related supporting materials required by the Indenture, together with: (a)
an itemization of the funds requisitioned against the Project Cost Schedule; (b)
in the case of hard construction costs, an Application and Certificate for
Payment (AIA Document G702) from the appropriate entity and approved by the
Inspecting Architect, together with all necessary Continuation Sheets (AIA
Document G703); (c) a certification of Borrower and the Contractor (or
construction manager, as appropriate) identifying all contractors,
subcontractors and suppliers who have performed work or furnished materials; (d)
satisfactory lien waivers from such contractors, subcontractors, and suppliers
current through the period covered by such request for funds (or through the
period covered by the previous request if permitted by the Bank); (e) a
certification of the Borrower that the Borrower has paid or actually incurred
the soft costs included in the AIA Document G702; (f) supporting invoices; (g)
if requested by the Bank, a title bring down search showing no additional liens;
(h) request to the Bank for approval of such requisition certifying, among other
things, that (i) the amounts requisitioned are due and unpaid and have not been
included in any previous requisition, (ii) the funds to be advanced against the
requisition will be fully applied in accordance with the Project Cost Schedule,
(iii) the construction of the Improvements to date has been performed in a good
and workmanlike manner, (iv) no Event of Default or event which, with the giving
of notice or lapse of time or both, would constitute an Event of Default has
occurred and is continuing, (v) the undisbursed balance of the Bond proceeds is
sufficient to complete the Project, and (vi) reaffirming the representations and
warranties of the Borrower in Article V. The Borrower will withdraw any
requisition which the Bank declines to approve. The Bank's review and approval
of the requisitions and the construction and equipping of the Project is solely
for the protection of the Bank's interests under this Agreement, and the Bank
shall not be deemed, by virtue of its inspection of the Project or approval of
any requisition, to have made any representation to any person with respect to
the construction and equipping of the Project, the validity of any costs
thereof, or the satisfaction of any conditions under the Indenture with respect
to the funding of requisitions (other than the Bank's consent thereto). All
conditions to the obligation of the Bank to approve requisitions hereunder are
imposed solely and exclusively for the benefit of the Bank and its assigns, and
no other person shall have standing to require satisfaction of such conditions
in accordance with their terms or be entitled to assume that the Bank will
approve or not approve advances in the absence of strict compliance with any or
all thereof, and no other person shall, under any circumstances, be deemed to be
a beneficiary of such conditions, any or all of which may be freely waived in
whole or in part by the Bank at any time if, in its sole discretion, it deems it
advisable to do so. The Bank shall not in any way or for any purpose be deemed
to be or to become a partner of or a joint venturer or a member of a joint
enterprise with the Borrower in connection with the construction, acquisition,
installation, ownership, development or operation of the Project.
Section 7.03 Construction; Completion Date. The Borrower will proceed
-----------------------------
diligently to construct and equip the Project, in accordance with the Project
Cost Schedule and the Plans and Specifications, without delay. The Project shall
be completed on or before the Completion Date and at completion the Project
shall be free of any and all private or governmental charges or claims (filed or
not) of any nature, except for the Permitted Liens. The Borrower will deliver to
the Bank certified copies of all use, occupancy or completion certificates in
connection with the Project, immediately upon issuance. As used in this
Agreement the terms "complete", "completed", and "completion" mean, with respect
to the
34
Project, that (a) the Improvements are substantially physically complete in
accordance with the Plans and Specifications and equipped; (b) the Borrower has
received all permits, approvals and certificates required by law prior to the
use and occupancy thereof and has furnished true copies of such permits,
approvals and certificates to the Bank; (c) the Project is free of any and all
private or governmental charges, claims or liens (filed or not) of any nature
except the Permitted Liens; and (d) the Borrower has obtained all general
releases of mechanic's and materialman's liens required by Section 7.06 and
delivered true copies thereof to the Bank, and "Completion Date" means the date
upon which the requirements of (a), (b), (c) and (d) have been satisfied.
Section 7.04 Certain Contracts Prohibited. The Borrower will not,
----------------------------
without first obtaining written approval of the Bank, (a) execute any contract
or purchase order or permit any Subcontract or purchase order to be executed by
any person or persons with whom it has contracted in connection with the
Improvements (except for such contracts, Subcontracts or purchase orders that
have been executed prior to the date hereof and that have been approved by the
Bank), unless the amounts thereof are within the amounts budgeted therefor in
the Project Cost Schedule and are Costs of the Project (as defined in the
Indenture); (b) execute any amendment or modification to any of the Plans and
Specifications, the Contract or any other contract the effect of which would be
either to increase or decrease the amount to be paid by or on behalf of the
Borrower under any contract except as permitted by Section 7.07; or (c) contract
for any services, work or materials for the Project if such are not required by
the Plans and Specifications or if payment therefor is required to be made
regardless of the nondelivery or nonfurnishing of such materials, services or
work.
Section 7.05 Certain Notices. The Borrower will forward to the Bank
---------------
promptly after receipt, copies of all notices, permits or other documents
(excepting only notices for nondelinquent taxes due) received by the Borrower
from any governmental authority relating to the Improvements or from any person
claiming a mechanic's or materialman's lien against the Improvements or any
other property of the Borrower.
Section 7.06 Releases. Prior to making final payment under any
--------
contract relating to construction of the Improvements, the Borrower will require
the contractor thereon to deliver to the Borrower, from such contractor and all
of such contractor's subcontractors or materialmen, a general release of
mechanic's and materialman's liens, and the Borrower will promptly deliver or
cause to be delivered to the Bank true and correct copies of all such releases
so obtained.
Section 7.07 Change Orders. The Borrower will not permit, without the
-------------
prior written consent of the Bank, the performance of any work pursuant to any
amendment or modification of any of the Plans and Specifications, the Contract
or any Subcontract or purchase order (any such amendment or modification being
herein called a "Change Order") which would result in an increase or decrease in
excess of $20,000 of the contract prices for the construction of the
Improvements as shown in the Project Cost Schedule.
Section 7.08 Subcontracts. (a) The Subcontracts shall be in form and
------------
substance satisfactory to the Bank in all respects, and shall contain, among
other conditions, the following provisions: (i) all labor, supervision,
materials, supplies and equipment necessary to complete
35
the Improvements in accordance with the Plans and Specifications shall be
furnished by the Completion Date; (ii) no change in the Improvements or in the
Plans and Specifications shall be effective unless approved in writing by the
Bank; and (iii) a release and wavier to the extent permitted by law, by all
Subcontractors of the right to file mechanic's liens.
(b) The Borrower will furnish to the Bank from time to time on
request by the Bank, in a form acceptable to the Bank, correct lists of all
Subcontractors employed in connection with construction of the Improvements and
true and correct copies of all executed Subcontracts. The Bank may contact any
Subcontractor to verify any facts disclosed in the lists, and all Subcontracts
relating to construction of the Improvements must require the disclosure of
their contents to the Bank.
ARTICLE VIII.
DEFAULTS AND REMEDIES
Section 8.01 Defaults. Each of the following shall constitute an
--------
event of default hereunder ("Event of Default"):
(a) Failure by the Borrower to make or cause to be made within
two (2) days of the date when due any payment under this Agreement as (i)
reimbursement for a drawing under the Letter of Credit, (ii) a Letter of Credit
commitment fee, or (iii) interest on any such drawing or commitment or early
cancellation fee;
(b) Failure by the Borrower to make any other payment within 10
days of the date when it is due under this Agreement or the Mortgage;
(c) Failure by the Borrower to perform or comply within ten (10)
days after receipt of written notice of such failure with any of the terms or
conditions contained in Section 6.01, 6.12 or 6.13, or the Borrower shall grant
or otherwise create a lien in violation of Section 6.14;
(d) Failure by the Borrower or either Guarantor to perform or
comply with any of the other terms or conditions contained in this Agreement,
any Collateral Document or any other document delivered by them to the Bank
pursuant to this Agreement as the case may be and continuance of such failure
for thirty (30) days after the earlier of receipt of written notice from the
Bank to the Borrower or such Guarantor or the Borrower or such Guarantor has
knowledge that such failure has occurred, or such longer period to which Bank
may agree in the case of a default not curable by the exercise of due diligence
within such 30 day period, provided that the Borrower or such Guarantor shall
have commenced to cure, or cause the cure of, such default within such 30 day
period and shall complete such cure as quickly as reasonably possible with the
exercise of due diligence;
(e) Any of the representations or warranties of the Borrower or
either Guarantor set forth in this Agreement, any of the Collateral Documents,
any of the Bond Documents or any other document furnished to the Bank by or on
behalf of the Borrower or
36
either Guarantor pursuant to the terms hereof proves to have been false or
misleading in any material respect;
(f) Any material provision of this Agreement or any of the
Collateral Documents, for any reason ceases to be valid and binding on the
Borrower or any material provision of the Guaranty ceases to be valid or binding
on the Guarantors, or is declared to be null and void, or is violative of any
applicable law relating to a maximum amount of interest permitted to be
contracted for, charged or received, or the validity or enforceability thereof
is contested by the Borrower, either Guarantor or any governmental agency, court
or authority, or the Borrower denies that it has any or further liability or
obligation under this Agreement or any of the Collateral Documents, or either
Guarantor denies that it has any or further liability under the Guaranty;
(g) The occurrence of an Event of Default as defined in the
Indenture or the Loan Agreement;
(h) The Borrower or either Guarantor (i) applies for or consents
to the appointment of a receiver, trustee, liquidator or custodian or the like
of either of the Borrower or such Guarantor or of property of the Borrower or
either Guarantor or (ii) admits in writing the inability of the Borrower or
either Guarantor to pay its debts generally as they become due, or (iii) makes a
general assignment for the benefit of creditors, or (iv) is adjudicated a
bankrupt or insolvent, or (v) commences a voluntary case under the United States
Bankruptcy Code or files a voluntary petition or answer seeking reorganization,
an arrangement with creditors or an order for relief or seeking to take
advantage of any insolvency law or files an answer admitting the material
allegations of a petition filed against the Borrower or either Guarantor in any
bankruptcy, reorganization or insolvency proceeding, or action of the Borrower
or either Guarantor is taken for the purpose of effecting any of the foregoing,
or (vi) has instituted against it, without the application, approval or consent
of the Borrower or of either Guarantor, a proceeding in any court of competent
jurisdiction, under any law relating to bankruptcy, insolvency, reorganization
or relief of debtors, seeking in respect of the Borrower or either Guarantor an
order for relief or an adjudication in bankruptcy, reorganization, dissolution,
winding up or liquidation, a composition or arrangement with creditors, a
readjustment of debts, the appointment of a trustee, receiver, liquidator or
custodian or the like of the Borrower or either Guarantor or of all or any
substantial part of the assets of the Borrower or either Guarantor or other like
relief in respect thereof under any bankruptcy or insolvency law, and, if such
proceeding is being contested by the Borrower or either Guarantor in good faith,
the same (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed and undischarged for a
period of 90 days;
(i) The Borrower fails to maintain in full force and effect the
hazard or other insurance required pursuant to this Agreement;
(j) The Project Facilities suffer a loss by fire or other
casualty and such loss is not fully insured and any deficiency in the amount of
insurance proceeds paid with respect to such loss is not posted with the Trustee
or the Bank within 10 days of the determination of such deficiency;
37
(k) The Project Facilities or any material portion thereof are
subjected to a material condemnation proceeding which if adjudicated adversely
to the Borrower or either Guarantor would render the Project Facilities unusable
for their intended use or materially reduce the collateral value thereof;
(l) Any litigation or administrative proceeding ensues, and is
not dismissed within 30 days, involving the Borrower or either Guarantor or any
instrument, contract or document delivered to the Bank in compliance with this
Agreement, and in the Bank's reasonable judgment (a) such litigation or
proceeding is likely to be formally adjudicated adversely to the Borrower or
such Guarantor and (b) the adverse result of such litigation or proceeding would
have in the Bank's reasonable opinion, a materially adverse effect on the
Borrower of either Guarantor's ability to pay its obligations and comply with
the covenants under this Agreement, the Collateral Documents or the Bond
Documents or on either Guarantor's ability to pay its obligations and comply
with the covenants under the Guaranty.
(m) Any one or more judgments or orders are entered against the
Borrower or either Guarantor, where such judgments or orders aggregate $100,000
or more and either (1) continue unsatisfied and unstayed for 30 days or (2) a
judgment lien on any property of either of the Borrower or either Guarantor is
recorded in respect thereof and is not stayed pending appeal by a bond or other
arrangement given or obtained by the Borrower or such Guarantor on terms which
do not violate the Borrower's or such Guarantor's covenants under the Guaranty;
(n) Failure by the Borrower or either Guarantor to make any
payment or payments in respect of any Obligation or Obligations, in an aggregate
principal amount of $100,000 or more, when such payment or payments are due and
payable (after the lapse of any applicable grace period) that results in the
acceleration of such Obligation or Obligations or enables the holder or holders
of such Obligation or Obligations or any person acting on behalf of such holder
or holders to accelerate the maturity of such Obligation or Obligations;
(o) The occurrence of any default or event of default with
respect to any other credit arrangement under which the Borrower or either
Guarantor is indebted to the Bank which is not cured within any applicable
notice or cure period;
(p) The occurrence of any payment default or any other default
or event of default with respect to any loan or other credit arrangement under
which either of the Borrower or either Guarantor is currently or hereafter
indebted in a principal amount aggregating $100,000 or more, whether to the Bank
or any other lender, which is not cured within any applicable notice or cure
period and the effect of such default or event of default is to cause or permit
the holder of such indebtedness to cause such indebtedness to become due and
payable prior to its stated maturity; or
(q) The occurrence of a Reportable Event that results in or
could result in any material liability of the Borrower or any ERISA Affiliate to
the PBGC or to any Plan and such Reportable Event is not corrected within thirty
(30) days after the occurrence thereof; or the occurrence of any Reportable
Event which could constitute grounds for termination of any Plan by the PBGC or
for the appointment by the appropriate United States District Court of a trustee
38
to administer any Plan and such Reportable Event is not corrected within thirty
(30) days after the occurrence thereof; or the filing by the Borrower or any
ERISA Affiliate of a notice of intent to terminate a Plan or the institution of
other proceedings to terminate a Plan which could result in any material
liability of the Borrower or any ERISA Affiliate to the PBGC or to any Plan; or
the Borrower or any ERISA Affiliate shall fail to pay when due any liability to
the PBGC or to a Plan; or the PBGC shall have instituted proceedings to
terminate, or to cause a trustee to be appointed to administer any Plan; or any
person engages in a Prohibited Transaction with respect to any Plan which
results in or could result in material liability of the Borrower, any ERISA
Affiliate, any Plan of the Borrower or any ERISA Affiliate or any fiduciary of
any such Plan; or failure by the Borrower or any ERISA Affiliate to make a
required installment or other payment to any Plan within the meaning of Section
302(f) of ERISA or Section 412(n) of the Code that results in or could result in
material liability of the Borrower or any ERISA Affiliate to the PBGC or any
Plan; or the withdrawal of the Borrower or any ERISA Affiliate from a Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(9a)(2) of ERISA; or the Borrower or any ERISA Affiliate becomes an
employer with respect to any Multiemployer Plan without the prior written
consent of the Bank.
Section 8.02 Remedies. If an Event of Default has occurred and is
--------
continuing uncured, the Bank may:
(a) Notify the Trustee of such Event of Default, direct the
Trustee to declare an Event of Default, as defined in the Indenture, to
accelerate the Bonds and to direct the Trustee to draw on the Letter of Credit,
and direct the Trustee to exercise remedies under the Bond Documents;
(b) By written notice to the Borrower, the Trustee and the
Remarketing Agent terminate the Liquidity Period;
(c) Declare the Borrower's obligations hereunder to be,
whereupon the same shall become, immediately due and payable;
(d) Commission the investigation described in Section 6.16(d)
hereof.
(e) Exercise, or cause to be exercised, any and all such
remedies as it may have under this Agreement, any of the Collateral Documents or
any other document or at law or in equity.
Section 8.03 Waivers; Consents. No waiver of, or consent with respect
-----------------
to, any provision of this Agreement shall in any event be effective unless the
same shall be in writing and signed by the Bank, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given.
Section 8.04 No Waiver; Remedies Cumulative. No failure on the part
------------------------------
of the Bank to exercise, and no delay in exercising, any right hereunder shall
operate as a waiver thereof; and no single or partial exercise of any right
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are
39
cumulative and not exclusive of any remedies available under any other document
or at law or in equity.
Section 8.05 Set-Off. Upon the occurrence and during the continuance
-------
of any Event of Default, the Bank is hereby authorized at any time and from time
to time without notice to the Borrower (any such notice being expressly waived
by the Borrower) and, to the fullest extent permitted by law, to set off and to
apply any and all balances, credits, deposits (general or special, time or
demand, provisional or final), accounts or moneys at any time held and other
indebtedness at any time owing by the Bank to or for the account of the Borrower
against any and all of the obligations of the Borrower now or hereafter existing
under this Agreement or any other agreement or instrument delivered by the
Borrower to the Bank in connection therewith, whether or not the Bank shall have
made any demand hereunder or thereunder and although such obligations may be
contingent or unmatured. The rights of the Bank under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which the Bank may have.
ARTICLE IX.
MISCELLANEOUS
Section 9.01 Notices. All notices and other communications provided
-------
for hereunder shall, unless otherwise specified, be in writing and sent by
United States certified or registered mail, postage prepaid return receipt
requested, or by telegraph, telex, telecopier (confirmed by certified or
registered mail or private delivery service), addressed as follows:
If to the Bank:
PNC Bank, National Association
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Borrower or either Guarantor :
c/o Innovative Solutions and Support, LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
40
If to the Trustee:
Chase Manhattan Trust Company,
National Association
One ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇/▇▇/ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Capital Markets Fiduciary Services
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Remarketing Agent:
PNC Capital Markets, Inc.,
Remarketing Agent
One PNC Plaza, 26/th/ Floor
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Manager - Remarketing Desk
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice to the Bank shall refer to this Agreement and PNC Bank, National
Association Irrevocable Letter of Credit No. S231762NWP. Either party hereto and
the Trustee, and the Remarketing Agent may change the address to which notices
to it are to be sent by written notice given to the other persons listed in this
Section. All notices shall, when mailed as aforesaid, be effective on the date
indicated on the return receipt, and all notices given by other means shall be
effective when received.
Section 9.02 Successors and Assigns. This Agreement shall inure to
----------------------
the benefit of and shall be binding upon the parties hereto and their respective
successors and assigns. The Borrower may not assign its rights under this
Agreement without the prior written consent of the Bank. The Borrower and the
Bank intend that no other person shall have any claim or interest under this
Agreement or right of action hereon or hereunder.
Section 9.03 Survival of Covenants. All covenants made by the
---------------------
Borrower herein and in any document delivered pursuant hereto shall survive the
delivery of this Agreement and the Letter of Credit and any advances under the
Letter of Credit.
Section 9.04 Counterparts. The execution hereof by each party hereto
------------
shall constitute a contract between them for the uses and purposes herein set
forth, and this Agreement may be executed in any number of counterparts, with
each executed counterpart constituting an original and all counterparts together
constituting one agreement.
Section 9.05 Costs, Expenses and Taxes. The Borrower agrees to pay
-------------------------
promptly following Bank's request therefor all costs and expenses of the Bank in
connection with the
41
preparation, execution, delivery and administration of this Agreement, the
Letter of Credit, the Collateral Documents, and any other documents that may be
delivered in connection with this Agreement, the Letter of Credit, the
Collateral Documents or the Bond Documents or any amendments or supplements
thereto, including without limitation the reasonable fees and expenses of
counsel for the Bank with respect thereto and with respect to advising the Bank
as to its rights and responsibilities under this Agreement, the Letter of
Credit, the Collateral Documents and such other documents, and all costs and
expenses, if any, including without limitation reasonable counsel fees and
expenses of the Bank, in connection with the enforcement of this Agreement, the
Letter of Credit, the Collateral Documents, and such other documents. In
addition, the Borrower shall pay any and all stamp and other taxes and
governmental fees payable or determined to be payable in connection with the
execution and delivery of this Agreement, the Letter of Credit, the Collateral
Documents, and such other documents and agrees to indemnify and to hold the Bank
harmless from and against any and all liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes and fees; provided the
Bank promptly notifies the Borrower of any such taxes and fees.
Section 9.06 Amendments. This Agreement may be amended by an
----------
instrument in writing executed and delivered by the Borrower and the Bank.
Section 9.07 Severability; Interest Limitation. If any provision
---------------------------------
hereof is found by a court of competent jurisdiction to be prohibited or
unenforceable in any jurisdiction, it shall be ineffective as to such
jurisdiction only to the extent of such prohibition or unenforceability, and
such prohibition or unenforceability shall not invalidate the balance of such
provision as to such jurisdiction to the extent it is not prohibited or
unenforceable, nor invalidate such provision in any other jurisdiction, nor
invalidate the other provisions hereof, all of which shall be liberally
construed in favor of the Bank in order to effect the provisions of this
Agreement. Notwithstanding anything to the contrary herein contained, the total
liability of the Borrower for payment of interest pursuant hereto shall not
exceed the maximum amount, if any, of such interest permitted by applicable law
to be contracted for, charged or received, and if any payments by the Borrower
to the Bank include interest in excess of such a maximum amount, the Bank shall
apply such excess to the reduction of the unpaid principal amount due pursuant
hereto, or if none is due, such excess shall be refunded to the Borrower;
provided that, to the extent permitted by applicable law, in the event the
interest is not collected, is applied to principal or is refunded pursuant to
this sentence and interest thereafter payable pursuant hereto shall be less than
such maximum amount, then such interest thereafter so payable shall be increased
up to such maximum amount to the extent necessary to recover the amount of
interest, if any, theretofore uncollected, applied to principal or refunded
pursuant to this sentence. Any such application or refund shall not cure or
waive any Event of Default. In determining whether or not any interest payable
under this Agreement exceeds the highest rate permitted by law, any nonprincipal
payment (except payments specifically stated in this Agreement to be "interest")
shall be deemed, to the extent permitted by applicable law, to be an expense,
fee, premium or penalty rather than interest.
Section 9.08 Conflicts. Insofar as possible the provisions of this
---------
Agreement shall be deemed complementary to the terms of the Collateral
Documents, but in the event of conflict the terms hereof shall control to the
extent such are enforceable under applicable law.
42
Section 9.09 Complete Agreement. Taken together with the Collateral
------------------
Documents and the other instruments and documents delivered in compliance
herewith, this Agreement is a complete memorandum of the agreement of the
Borrower and the Bank. Waivers or modifications of any provision hereof must be
in writing signed by the party to be charged with the effect thereof.
Section 9.10 Consent to Jurisdiction; Venue; Waiver of Jury Trial.
----------------------------------------------------
The Borrower hereby irrevocably (i) agrees that any suit, action or other legal
proceeding arising out of or relating to this Agreement, the Collateral
Documents or the Letter of Credit may be brought in any federal or state court
located in the Commonwealth of Pennsylvania and consents to the jurisdiction of
such court in any such suit, action or proceeding, (ii) agrees that any suit,
action or other legal proceeding by the Borrower against the Bank shall be
brought solely in a federal or state court located in the Commonwealth of
Pennsylvania and (iii) waives any objection which it may have to the laying of
venue of any such suit, action or proceeding in any such court and any claim
that any such suit, action or proceeding has been brought in an inconvenient
forum. The Borrower agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Section shall affect the right of the Bank to bring any suit, action or
proceeding against the Borrower or its property in the courts of any other
jurisdiction. The Borrower and the Bank hereby waive the right to trial by jury
in any action arising hereunder or under any of the Collateral Documents or
otherwise in connection herewith.
Section 9.11 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the laws of the Commonwealth of Pennsylvania
without reference to its principles of conflicts of law. The Letter of Credit
shall be governed and construed as set forth in paragraph 12 thereof.
Section 9.12 Headings. Section headings in this Agreement are
--------
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
43
IN WITNESS WHEREOF, the Borrower and the Bank have caused this
Agreement to be duly executed and delivered as of the date first above.
INNOVATIVE SOLUTIONS AND SUPPORT, LLC,
by its sole Member and Manager INNOVATIVE
SOLUTIONS AND SUPPORT, INCORPORATED
By:________________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Chief Financial Officer
PNC BANK, NATIONAL ASSOCIATION
By:________________________________
Name:
Title:
This execution page is part of the Reimbursement, Credit and Security Agreement
dated as of August 1, 2000 between Innovative Solutions and Support, LLC and PNC
Bank, National Association.
44
EXHIBIT A
[Letterhead of Bank]
IRREVOCABLE LETTER OF CREDIT NO. S231762NWP
August 8, 2000
Chase Manhattan Trust Company,
National Association, as Trustee
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Global Trust Services
Dear Sirs:
1. At the request and for the account of Innovative Solutions and
Support, LLC (the "Borrower"), we hereby establish in your favor, as Trustee
under the Trust Indenture dated as of August 1, 2000 (the "Indenture") between
Chase Manhattan Trust Company, National Association, as Trustee (the "Trustee"),
and ▇▇▇▇▇▇▇ County Industrial Development Authority (the "Issuer"), pursuant to
which $4,335,000.00 aggregate principal amount of Industrial Development Revenue
Bonds, 2000 Series A (Innovative Solutions and Support, LLC Project) (the
"Bonds") have been issued by the Issuer, our Irrevocable Letter of Credit No.
S231762NWP (the "Letter of Credit") in the amount of $4,406,261.00 (as more
fully described below), effective immediately and expiring at 5:00 p.m. on
August 7, 2003 or, if such day is not a Business Day, on the next succeeding
Business Day (the "Stated Expiration Date"), provided that the Stated Expiration
Date shall automatically be extended for one additional year effective on each
anniversary of the date of this Letter of Credit, unless we shall have given you
notice at least ninety (90) days prior to such anniversary that the Stated
Expiration Date will not be so extended. This Letter of Credit is subject to
automatic termination as provided in paragraph 8 hereof.
2. We hereby irrevocably authorize you to draw on us in accordance
with the terms and conditions hereinafter set forth, by one or more drafts on
us, an aggregate amount not exceeding Four Million Four Hundred Six Thousand Two
Hundred Sixty One Dollars $4,406,261.00 (as reduced and reinstated from time to
time in accordance with the provisions hereof, the "Letter of Credit Amount"),
of which (i) an aggregate amount not exceeding $4,335,000.00 (as reduced and
reinstated from time to time in accordance with the provisions hereof, the
"Principal Component") may be drawn upon with respect to principal of the Bonds
and (ii) an aggregate amount not exceeding $71,261.00 (as reduced and reinstated
from time to time in accordance with the provisions hereof, the "Interest
Component") may be drawn upon with respect to interest accrued on the Bonds. The
Principal Component shall not be available to
A-1
pay amounts corresponding to the interest on the Bonds, and the Interest
Component shall not be available to pay amounts corresponding to principal of
the Bonds.
3. Funds under this Letter of Credit are available to you at the
time specified below, (a) in one or more drawings by one or more of your drafts,
each dated the date of its presentation and stating on its face: "Drawn under
PNC Bank, National Association Irrevocable Letter of Credit ▇▇. ▇▇▇▇▇▇▇▇▇▇",
accompanied by one or more of your certificates in the form of Annex 1 attached
hereto appropriately completed and executed (any such draft accompanied by such
certificate being herein called an "Interest Draft"); (b) in one or more
drawings by one or more of your drafts, each dated the date of its presentation
and stating on its face: "Drawn under PNC Bank, National Association Irrevocable
Letter of Credit ▇▇. ▇▇▇▇▇▇▇▇▇▇", accompanied by one or more of your
certificates in the form of Annex 2 attached hereto appropriately completed and
executed (any such draft accompanied by such certificate being herein called a
"Tender Draft"); and (c) in one or more drawings by one or more of your drafts,
each dated the date of its presentation and stating on its face: "Drawn under
PNC Bank, National Association Irrevocable Letter of Credit ▇▇. ▇▇▇▇▇▇▇▇▇▇",
accompanied by one or more of your certificates in the form of Annex 3 attached
hereto appropriately completed and executed (any such draft accompanied by such
certificate being herein called a "Redemption Draft"). Each such draft and
certificate shall be presented, at our office at PNC Bank, National Association,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
Letter of Credit Department or such other office of ours in Pittsburgh,
Pennsylvania that we hereafter designate by written notice to you, and shall be
made either (i) in the form of a letter on your letterhead manually signed by
one of your officers and addressed to us at PNC Bank, National Association, ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
Letter of Credit Department or at any other office in Pennsylvania that we
hereafter designate by written notice delivered to you, or (ii) in the form of a
telecopy transmission of the documents described in clause (i) of this sentence
to Telecopier No. ▇▇▇-▇▇▇-▇▇▇▇ (with transmission confirmed by call to Telephone
No. ▇▇▇-▇▇▇-▇▇▇▇) or such other telecopier and telephone numbers that we
hereafter designate by written notice delivered to you. If drawing is made by
telecopier, it must contain a certification by you that originals of the draft
and certificate on your letterhead manually signed by one of your officers will
be mailed to us concurrently by first class United States mail. If we receive
your Interest Draft or Redemption Draft at such office, all in strict conformity
with the terms and conditions of this Letter of Credit, at or prior to 12:00
noon, on a Business Day, we will honor the same in accordance with your payment
instructions by 12:00 noon on the later of (a) the Business Day immediately
following the Business Day on which you present to us your draft and certificate
or (b) the "Value Date" set forth in such certificate; and if we receive your
Interest Draft or Redemption Draft at such office, all in strict conformity with
the terms and conditions of this Letter of Credit, after 12:00 noon, on a
Business Day, we will honor the same in accordance with your payment
instructions by 12:00 noon on the later of (1) the second Business Day
immediately following the Business Day on which you present to us your draft and
certificate or (2) the "Value Date" set forth in such certificate. If we receive
your Tender Draft at such office, all in strict conformity with the terms and
conditions of this Letter of Credit, at or prior to 11:00 a.m., on a Business
Day, we will honor the same in accordance with your payment instructions by 3:00
p.m. on the later of (x) the Business Day on which you present to us your draft
and certificate or (y) the "Value Date" set forth in such certificate; and if we
receive your Tender Draft at such office, all in strict conformity with the
A-2
terms and conditions of this Letter of Credit, after 11:00 a.m., on a Business
Day, we will honor the same in accordance with your payment instructions by 3:00
p.m. on the later of (i) the Business Day immediately following the Business Day
on which you present to us your draft and certificate or (ii) the "Value Date"
set forth in such certificate. For purposes of this Letter of Credit, we shall
be deemed to have "honored" a draft at the time at which we commence and confirm
by a federal reference number a wire transfer of immediately available funds in
accordance with your instructions. All payments made by us under this Letter of
Credit will be made with our own funds.
4. As used herein the term "Business Day" means any day other than
(i) a Saturday or Sunday, (ii) a day on which commercial banking institutions in
New York, New York, Pittsburgh, Pennsylvania or Philadelphia, Pennsylvania or in
any other city where your principal corporate trust office or our office at
which drafts are to be presented under this Letter of Credit is located are
required or authorized by law (including executive order) to close or on which
either such office is closed for a reason not related to financial condition, or
(iii) a day on which the New York Stock Exchange is closed. References to any
time of day in this Letter of Credit shall refer to Eastern standard time or
Eastern daylight saving time, as in effect in Philadelphia, Pennsylvania on such
day.
5. Each drawing honored by us hereunder shall reduce the Letter of
Credit Amount and the respective Principal and Interest Components thereof by
the respective amounts of such drawing and the corresponding components of such
drawing. In addition, the Letter of Credit Amount and the respective Principal
and Interest Components thereof shall be reduced automatically, without notice
to you, upon our receipt from you of a certificate in the form of Annex 4
attached hereto appropriately completed and executed, each such reduction to be
(i) in the amounts necessary to reduce the Letter of Credit Amount and the
Principal and Interest Components thereof to the respective amounts specified by
you in such certificate and (ii) effective on the Business Day on which we
receive such certificate from you. No drawing hereunder honored by us shall
exceed the Letter of Credit Amount at the time of such drawing, as the Letter of
Credit Amount has been reduced and reinstated in accordance with the terms
hereof, and no component of any such drawing corresponding to principal of or
interest on the Bonds shall exceed the corresponding Principal and Interest
Component of the Letter of Credit Amount as such Component has been reduced and
reinstated in accordance with the terms hereof.
6. On the tenth calendar day following the date of each drawing
under this Letter of Credit by your Interest Draft, the Letter of Credit Amount
and the Interest Component shall be automatically reinstated by an amount equal
to the amount of such drawing, unless before said tenth day, we give written
notice specifically referring to "PNC Bank, National Association Irrevocable
Letter of Credit No. S231762NWP" signed by our authorized officer and received
by you and the Trustee, to the effect that an Event of Default has occurred
under the Reimbursement, Credit and Security Agreement dated as of August 1,
2000 between the Borrower, and us and such reinstatement shall not occur, in
which case such reinstatement shall not occur.
A-3
7. Following any drawing under this Letter of Credit by your Tender
Draft, the Letter of Credit Amount and the Principal and Interest Components
thereof shall be reinstated with respect to such drawing (a) automatically when
and to the extent that both (i) we have received reimbursement for such drawing
in immediately available funds (or you have received immediately available funds
which, pursuant to Section 4.05 of the Indenture, you will immediately remit to
us as reimbursement for such drawing, such funds to be remitted to the attention
of our Letter of Credit Department stating that they are repayments for Tender
Drafts drawn under PNC Bank, National Association Letter of Credit No.
S231762NWP) and (ii) you have delivered to us a certificate in respect of such
reinstatement in the form of Annex 5 attached hereto appropriately completed and
executed, which may be sent by tested telex or telecopier in the manner, to the
numbers and with the confirmations and follow-up mailings described in paragraph
3 of this Letter of Credit, or (b) when and to the extent that we, at our
option, upon the Borrower's request, otherwise advise you in writing that such
reinstatement shall occur, it being understood that we shall have no obligation
to grant any such reinstatement except as provided in clause (a) of this
sentence.
8. This Letter of Credit shall automatically terminate upon the
first to occur of: (a) the Stated Expiration Date (as such date may have been
extended), (b) the date on which we receive a certificate from you in the form
of Annex 6 attached hereto, appropriately completed and executed, to the effect
that there are no Bonds Outstanding (as defined in the Indenture) other than
Bonds bearing interest at a Term Rate or secured by an Alternate Letter of
Credit (as defined in the Indenture) or (c) the date on which the final drawing
available hereunder is honored. This Letter of Credit shall be promptly
surrendered to us by you upon such termination.
9. This Letter of Credit is transferable in its entirety (but not in
part) to any transferee who you certify to us has succeeded you as Trustee under
the Indenture, and may be successively transferred. Transfer of this Letter of
Credit to such transferee shall be effected by the presentation to us of this
Letter of Credit accompanied by a certificate substantially in the form of Annex
7 attached hereto appropriately completed and executed.
10. Only you (or a transferee permitted by the terms of this Letter
of Credit) may make drawings under this Letter of Credit. Upon the payment to
you or your account of the amount specified in a draft drawn hereunder, we shall
be fully discharged of our obligation under this Letter of Credit with respect
to such draft, and we shall not thereafter be obligated to make any further
payments under this Letter of Credit with respect to such draft.
11. This Letter of Credit sets forth in full the terms of our
undertaking, and this undertaking shall not in any way be modified, amended,
amplified or limited by reference to any document, instrument or agreement
referred to herein or in which this Letter of Credit is referred to or to which
this Letter of Credit relates, except only the drafts and certificates referred
to herein; and any such reference shall not be deemed to incorporate herein by
reference any document, instrument or agreement, except such drafts and
certificates. Payment of all drawings honored under this Letter of Credit will
be made with our own funds.
A-4
12. This Letter of Credit is subject to the provisions of the Uniform
Customs and Practice for Documentary Credits, 1993 Revision, International
Chamber of Commerce Publication Number 500 (the "UCP") other than Article 48(g)
thereof. This Letter of Credit shall be deemed to be issued under the laws of
the Commonwealth of Pennsylvania and shall, as to matters not governed by the
UCP, be governed and construed in accordance with the laws of said state,
without regard to principles of conflicts of law.
Very truly yours,
PNC BANK, NATIONAL ASSOCIATION
By __________________________
Title _______________________
A-5
ANNEX 1 to PNC Bank, National Association
Irrevocable Letter of Credit No. S231762NWP
-------------------------------------------
To: PNC Bank, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Letter of Credit Department
CERTIFICATE FOR INTEREST DRAWING OF ACCRUED INTEREST ON
INDUSTRIAL DEVELOPMENT REVENUE BONDS, 2000 SERIES A
(INNOVATIVE SOLUTIONS AND SUPPORT, LLC PROJECT), ISSUED BY
THE ▇▇▇▇▇▇▇ COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
----------------------------------------------------------
The undersigned, a duly authorized officer of [Name of Trustee],
---------------
TRUSTEE (the "Trustee") under the Trust Indenture dated as of August 1, 2000
between the Issuer and the Trustee (the "Indenture") under which the Bonds have
been issued, hereby certifies, with reference to Irrevocable Letter of Credit
No. S231762NWP (the "Letter of Credit") issued by PNC Bank, National Association
(the "Bank") in favor of the Trustee (the capitalized terms used herein and not
defined herein shall have the meanings ascribed to them in the Letter of
Credit), that:
1. The Trustee is the Trustee under the Indenture for the holders of
the Bonds.
2. This Certificate accompanies a draft in the amount of $_________
by which the Trustee is making a drawing under the Letter of Credit in respect
of the payment of accrued interest on Bonds, which payment is due on or before
_____________________ (the "Value Date"). None of such Bonds is a Borrower Bond
or a Pledged Bond as defined in the Indenture.
3. The Trustee has not received a notice from the Bank that
reinstatement of the Letter of Credit in respect of any Interest Draft shall not
occur.
4. The amount of the draft accompanying this Certificate (i) is
being drawn against the Interest Component of the Letter of Credit Amount and
does not exceed the Letter of Credit Amount, as reduced and reinstated in
accordance with the terms of the Letter of Credit, or the Interest Component, as
reduced and reinstated in accordance with the terms of the Letter of Credit,
(ii) was computed in accordance with the terms and conditions of the Bonds and
the Indenture, (iii) does not include any amount in respect of interest on Bonds
which was included in any Interest Draft, Tender Draft or Redemption Draft
presented and not dishonored on or prior to the date of this Certificate, and
(iv) shall be applied pursuant to the provisions of the Bonds
Page 1 of Annex 1
A-6
and the Indenture to the payment of accrued interest on Bonds which are not
Borrower Bonds or Pledged Bonds.
5. If this Certificate and the accompanying draft are initially
presented by telex or telecopier, the originals of such draft and this
Certificate on the Trustee's letterhead manually signed by one of its officers
are being mailed to you concurrently by first class United States mail.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the ____ day of _____________.
[TRUSTEE NAME],
TRUSTEE
By __________________________
Name ________________________
Title _______________________
Page 2 of Annex 1
A-7
ANNEX 2 to PNC Bank, National Association
Irrevocable Letter of Credit No. S231762NWP
-------------------------------------------
To: PNC Bank, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇,
Attention: Letter of Credit Department
CERTIFICATE FOR TENDER DRAWING IN RESPECT OF
PRINCIPAL AND ACCRUED INTEREST ON INDUSTRIAL
DEVELOPMENT REVENUE BONDS, 2000 SERIES A (INNOVATIVE
SOLUTIONS AND SUPPORT, LLC PROJECT), ISSUED BY THE
▇▇▇▇▇▇▇ COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
----------------------------------------------------
The undersigned, a duly authorized officer of [Name of
-------
Trustee], TRUSTEE (the "Trustee") under the Trust Indenture dated as of August
-------
1, 2000 between the Issuer and the Trustee (the "Indenture") under which the
Bonds have been issued, hereby certifies, with reference to Irrevocable Letter
of Credit No. S231762NWP (the "Letter of Credit") issued by PNC Bank, National
Association (the "Bank") in favor of the Trustee (the capitalized terms used
herein and not defined herein shall have the meanings ascribed to them in the
Letter of Credit), that:
1. The Trustee is the Trustee under the Indenture for the
holders of the Bonds.
2. This Certificate accompanies a draft in the amount of
$___________ by which the Trustee is making a drawing under the Letter of Credit
in respect of the payment of the purchase price of Bonds, corresponding to the
principal thereof and accrued interest thereon, tendered for purchase pursuant
to the provisions of the Indenture and, in the case of Bonds tendered pursuant
to Section 4.01 of the Indenture, not successfully remarketed by the Remarketing
Agent (as defined in the Indenture) with the purchase price therefor received
prior to 10:00 a.m. on the date of this Certificate. Such Bonds are herein
called "Tendered Bonds". The purchase price payment for the Tendered Bonds is
due on or before _________________________ (the "Value Date"). None of the
Tendered Bonds is presently a Borrower Bond or a Pledged Bond as defined in the
Indenture.
3. The amount of the draft accompanying this Certificate is
equal to the sum of (i) $___________ being drawn against the Principal Component
of the Letter of Credit Amount in respect of the payment of the portion of the
purchase price of the Tendered Bonds corresponding to the principal thereof and
(ii) $___________ being drawn against the Interest
Page 1 of Annex 2
A-8
Component of the Letter of Credit Amount in respect of the portion of the
purchase price of the Tendered Bonds corresponding to accrued interest thereon.
4. The amount of the draft accompanying this Certificate does
not exceed the Letter of Credit Amount, as reduced and reinstated in accordance
with the terms of the Letter of Credit. Neither of the components of the amount
of the draft set forth in paragraph 3 of this Certificate exceeds the
corresponding component of the Letter of Credit Amount as reduced and reinstated
in accordance with the terms of the Letter of Credit. The amount of the draft
accompanying this Certificate (i) was computed in accordance with the terms and
conditions of the Bonds and the Indenture, (ii) does not include any amount in
respect of principal of or interest on the Bonds which was included in any
Interest Draft, Tender Draft or Redemption Draft presented and not dishonored on
or prior to the date of this Certificate and (iii) shall be applied pursuant to
the provisions of the Bonds and the Indenture, to the payment of purchase price
of the Tendered Bonds.
5. If this Certificate and the accompanying sight draft are
initially presented by telex or telecopier, the originals of such draft and this
Certificate on the Trustee's letterhead manually signed by one of its officers
are being mailed to you concurrently by first class United States mail.
IN WITNESS WHEREOF, the Trustee has executed and delivered
this certificate this ____ day of __________.
[TRUSTEE NAME],
TRUSTEE
By ___________________________
Name _________________________
Title ________________________
Page 2 of Annex 2
A-9
ANNEX 3 to PNC Bank, National Association
Irrevocable Letter of Credit No. S231762NWP
-------------------------------------------
To: PNC Bank, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Letter of Credit Department
CERTIFICATE FOR REDEMPTION OR FINAL PAYMENT DRAWING IN
RESPECT OF PRINCIPAL AND ACCRUED INTEREST ON INDUSTRIAL
DEVELOPMENT REVENUE BONDS, 2000 SERIES A (INNOVATIVE
SOLUTIONS AND SUPPORT, LLC PROJECT), ISSUED BY THE
▇▇▇▇▇▇▇ COUNTY INDUSTRIAL DEVELOPMENT AUTHORITY
------------------------------------------------------
The undersigned, a duly authorized officer of [Name of Trustee],
---------------
TRUSTEE (the "Trustee") under the Trust Indenture dated as of August 1, 2000
between the Issuer and the Trustee (the "Indenture") under which the Bonds have
been issued, hereby certifies, with reference to Irrevocable Letter of Credit
No. S231762NWP (the "Letter of Credit") issued by PNC Bank, National Association
(the "Bank") in favor of the Trustee (the capitalized terms used herein and not
defined herein shall have the meanings ascribed to them in the Letter of
Credit), that:
1. The Trustee is the Trustee under the Indenture for the holders
of the Bonds.
2. This Certificate accompanies a draft in the amount of
$___________ by which the Trustee is making a drawing under the Letter of Credit
in respect of the payment of principal of and accrued interest on Bonds (other
than Borrower Bonds or Pledged Bonds as defined in the Indenture) upon the
applicable event indicated in paragraph 3 of this Certificate, which payment is
due on or before _______________________ (the "Value Date").
3. The Trustee is presenting this Certificate and the
accompanying draft in connection with (check and complete one):
[ ] A mandatory redemption of the Bonds in whole pursuant to
Sections 3.01(e) or 3.01(f) of the Indenture.
Page 1 of Annex 3
A-10
[ ] An optional redemption of the Bonds in the principal amount of
$_____________ pursuant to Section 3.01(b) or 3.01(c) of the
Indenture. After such redemption, $____________ principal
amount of the Bonds will remain Outstanding and will not
presently be Borrower Bonds or Pledged Bonds.
[ ] The payment of the Bonds upon acceleration of the maturity
thereof pursuant to Section 7.03 of the Indenture
[ ] The payment of the Bonds at final maturity thereof pursuant to
Section 5.04 of the Indenture.
4. The amount of the draft accompanying this Certificate is equal
to the sum of (i) $__________ being drawn against the Principal Component of the
Letter of Credit Amount in respect of the principal of Bonds (other than Bonds
which are presently Borrower Bonds or Pledged Bonds) and (ii) $___________ being
drawn against the Interest Component of the Letter of Credit Amount in respect
of interest accrued on such Bonds.
5. The amount of the draft accompanying this Certificate does not
exceed the Letter of Credit Amount, as reduced and reinstated in accordance with
the terms of the Letter of Credit. Neither of the components of the amount of
the draft set forth in paragraph 4 of this Certificate exceeds the corresponding
component of the Letter of Credit Amount, as reduced and reinstated in
accordance with the terms of the Letter of Credit. The amount of the draft
accompanying this Certificate (i) was computed in accordance with the terms and
conditions of the Bonds and the Indenture, (ii) does not include any amount in
respect of principal of or interest on the Bonds which was included in any
Interest Draft, Tender Draft or Redemption Draft presented and not dishonored on
or prior to the date of this Certificate, and (iii) shall be applied pursuant to
the provisions of the Bonds and the Indenture to the payment of the principal of
and accrued interest on Bonds which are not Borrower Bonds or Pledged Bonds.
6. If this Certificate and the accompanying draft are initially
presented by telex or telecopier, the originals of such draft and this
Certificate on the Trustee's letterhead manually signed by one of its officers
are being mailed to you concurrently by first class United States mail.
Page 2 of Annex 3
A-11
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate this ____ day of _____________.
[TRUSTEE NAME],
TRUSTEE
By _________________________
Name _______________________
Title ______________________
Page 3 of Annex 3
A-12
ANNEX 4 to PNC Bank, National Association
Irrevocable Letter of Credit No. S231762NWP
-------------------------------------------
To: PNC Bank, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Letter of Credit Department
CERTIFICATE FOR REDUCING PNC BANK, NATIONAL ASSOCIATION
(THE "BANK") IRREVOCABLE LETTER OF CREDIT NO. S231762NWP
(THE "LETTER OF CREDIT") SUPPORTING INDUSTRIAL DEVELOPMENT
REVENUE BONDS, 2000 SERIES A (INNOVATIVE SOLUTIONS AND
SUPPORT, LLC PROJECT), ISSUED BY THE ▇▇▇▇▇▇▇ COUNTY
INDUSTRIAL DEVELOPMENT AUTHORITY
-----------------------------------------------------------
The undersigned, a duly authorized officer of [Name of Trustee],
---------------
TRUSTEE (the "Trustee") under the Trust Indenture dated as of August 1, 2000
between the Issuer and the Trustee (the "Indenture") under which the Bonds have
been issued, hereby certifies that (the capitalized terms used herein and not
defined herein shall have the meanings ascribed to them in the Letter of
Credit):
1. The Trustee is the Trustee under the Indenture for the holders of
the Bonds.
2. Pursuant to the provisions of the Bonds and the Indenture
$___________ principal amount of the Bonds have been redeemed or are deemed to
have been paid pursuant to
Page 1 of Annex 4
A-13
Article X of the Indenture, and the remaining aggregate principal amount of the
Bonds Outstanding is $___________.
3. Pursuant to the terms of the Letter of Credit, the Bank is hereby
directed to reduce the Letter of Credit Amount and the Principal and Interest
Components thereof, effective on the Business Day on which you receive this
Certificate, so that after such reduction the Letter of Credit Amount shall be
$__________, of which $__________ shall be the Principal Component and
$__________ shall be the Interest Component (calculated on the basis of 50 days
interest on the Outstanding Bonds and a 365-day year, at an assumed maximum
interest rate of 12% per annum).
4. If this Certificate is initially presented by telex or
telecopier, the originals of this Certificate on the Trustee's letterhead
manually signed by one of its officers are being mailed to you concurrently by
first class United States mail.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate this _____ day of ------------.
[TRUSTEE NAME],
TRUSTEE
By _________________________
Name _______________________
Title ______________________
Page 2 of Annex 4
A-14
ANNEX 5 to PNC Bank, National Association
Irrevocable Letter of Credit No. S231762NWP
-------------------------------------------
To: PNC Bank, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Letter of Credit Department
CERTIFICATE FOR REINSTATING PNC BANK, NATIONAL ASSOCIATION
(THE "BANK") IRREVOCABLE LETTER OF CREDIT NO. S231762NWP
(THE "LETTER OF CREDIT") SUPPORTING INDUSTRIAL DEVELOPMENT
REVENUE BONDS, 2000 SERIES A (INNOVATIVE SOLUTIONS AND
SUPPORT, LLC PROJECT), ISSUED BY THE ▇▇▇▇▇▇▇ COUNTY
INDUSTRIAL DEVELOPMENT AUTHORITY
-----------------------------------------------------------
The undersigned, a duly authorized officer of [Name of Trustee],
---------------
TRUSTEE (the "Trustee") under the Trust Indenture dated as of August 1, 2000
between the Issuer and the Trustee (the "Indenture") under which the Bonds have
been issued, hereby certifies that (the capitalized terms used herein and not
defined herein shall have the meanings ascribed to them in the Letter of
Credit):
1. The Trustee is the Trustee under the Indenture for the holders of
the Bonds.
2. On the date of this Certificate $_________ aggregate principal
amount of Bonds are being purchased upon a remarketing thereof by the
Remarketing Agent (as defined in the Indenture). All of such Bonds were
heretofore purchased (or anticipated to be purchased) with the proceeds of one
or more Tender Drafts in the total drawing amount of $__________, of which
proceeds $__________ was drawn in respect of principal of such Bonds and
$__________ was drawn in respect of accrued interest on such Bonds. Prior to the
date of this Certificate there has been no reinstatement of the Letter of Credit
Amount with respect to amounts drawn by such Tender Drafts to purchase such
Bonds.
3. The Trustee has received for immediate payment (or repayment) to
the Bank in respect of the Bonds described in paragraph 2 of this Certificate
the total amount of $__________, consisting of $__________ from the Remarketing
Agent, $__________ from the Borrower and $__________ from the Bank. Such total
amount is being paid to the Bank at the above address with reference to Letter
of Credit No. S231762NWP, pursuant to Section 4.05 of the Indenture, as
reimbursement for amounts drawn under the Letter of Credit by the Tender Drafts
described in paragraph 2 of this Certificate; provided that, unless such
reimbursement is
Page 1 of Annex 5
A-15
being made on the same day that payment of such Tender Drafts was received by
the Trustee from the Bank, the Trustee will release the Bonds described in
paragraph 2 of this Certificate for remarketing and will make such payment to
the Bank only upon receipt by the Trustee of telephonic confirmation from the
Bank of the reinstatement described in paragraph 6 below. Such confirmation
shall be made to the Trustee at (___) __________, Attention:
_____________________ (which confirmation shall thereafter be sent in writing to
the Trustee at its address on file with you).
4. Of the total amount referred to in paragraph 3 of this Certificate,
$__________ represents the aggregate principal amount of Bonds described in
paragraph 2 of this Certificate and $__________ represents accrued interest on
such Bonds.
5. Payment of the total amount referred to in paragraph 3 of this
Certificate, together with other amounts heretofore paid to the Bank by or on
behalf of the Borrower, represents reimbursement for the entire outstanding
balance of all amounts drawn in respect of the Bonds described in paragraph 2 of
this Certificate. The foregoing certification is made in reliance upon
representations by the Borrower and/or the Bank to the Trustee that, upon
payment of such amounts, the Bank will be fully reimbursed for all Tender Drafts
(or allocable portions thereof) presented to the Bank to purchase such Bonds. No
Certification is made by the Trustee as to the payment of interest accrued
pursuant to the Reimbursement, Credit and Security Agreement described in the
Letter of Credit on the amounts drawn by such Tender Drafts.
6. Pursuant to paragraph 7 of the Letter of Credit, the Letter of
Credit Amount shall be automatically reinstated by an amount equal to
$__________ (which does not exceed the aggregate amount of the Tender Drafts, or
allocable portions thereof, paid by the Bank to purchase such Bonds), of which
$__________ (which does not exceed the aggregate amount of such Tender Drafts,
or allocable portions thereof, drawn against the Principal Component) shall be
applied to the Principal Component and $__________ (which does not exceed the
aggregate amount of such Tender Drafts, or allocable portions thereof, drawn
against the Interest Component) shall be applied to the Interest Component.
7. If this Certificate is initially presented by telex or telecopier,
the original of this Certificate on the Trustee's letterhead manually signed by
one of its officers is being mailed to you concurrently by first class United
States mail.
Page 2 of Annex 5
A-16
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate this __________day of ___________.
[TRUSTEE NAME],
TRUSTEE
By______________________
Name____________________
Title___________________
Page 3 of Annex 5
A-17
ANNEX 6 to PNC Bank, National Association
Irrevocable Letter of Credit No. S231762NWP
-------------------------------------------
To: PNC Bank, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Letter of Credit Department
CERTIFICATE FOR TERMINATING PNC BANK,
NATIONAL ASSOCIATION (THE "BANK") IRREVOCABLE
LETTER OF CREDIT NO. S231762NWP (THE "LETTER
OF CREDIT") SUPPORTING INDUSTRIAL DEVELOPMENT
REVENUE BONDS, 2000 SERIES A (INNOVATIVE
SOLUTIONS AND SUPPORT, LLC PROJECT), ISSUED
BY THE ▇▇▇▇▇▇▇ COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY
--------------------------------------------
The undersigned, a duly authorized officer of [Name of Trustee],
---------------
TRUSTEE (the "Trustee") under the Trust Indenture dated as of August 1, 2000
between the Issuer and the Trustee (the "Indenture") under which the Bonds have
been issued, hereby certifies that (the capitalized terms used herein and not
defined herein shall have the meanings ascribed to them in the Letter of
Credit):
1. The Trustee is the Trustee under the Indenture for the
holders of the Bonds.
2. Pursuant to the Indenture and the Letter of Credit, the
Letter of Credit shall be terminated on the date the Bank receives this
Certificate, and the Trustee is herewith surrendering the Letter of Credit for
cancellation, because no Bonds remain Outstanding other than Bonds bearing
interest at a Term Rate or secured by an Alternate Letter of Credit.
Page 1 of Annex 6
A-18
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate this _____ day of _____________.
[TRUSTEE NAME],
TRUSTEE
By _________________________
Name _______________________
Title ______________________
Page 2 of Annex 6
A-19
ANNEX 7 to PNC Bank, National Association
Irrevocable Letter of Credit No. S231762NWP
-------------------------------------------
--------------,
To: PNC Bank, National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Letter of Credit Department
Re: PNC Bank, National Association
Irrevocable Letter of Credit
No. S231762NWP
------------------------------
Gentlemen:
For value received, the undersigned beneficiary hereby
irrevocably transfers to:
(Name of Transferee)
(Address)
all rights of the undersigned beneficiary to draw under the above Letter of
Credit in its entirety. Said transferee has succeeded to the undersigned as
Trustee under the Trust Indenture dated as of August 1, 2000 between the ▇▇▇▇▇▇▇
County Industrial Development Authority and Chase Manhattan Trust Company,
National Association, as Trustee.
By this transfer, all rights of the undersigned beneficiary in
such Letter of Credit are transferred to the transferee and the transferee shall
have the sole rights as beneficiary thereof, including sole rights relating to
any amendments whether increases or extensions or other amendments and whether
now existing or hereafter made. All amendments are to be advised direct to the
transferee without necessity of any consent of or notice to the undersigned
beneficiary.
Page 1 of Annex 7
A-20
The original of such Letter of Credit is returned herewith, and in
accordance therewith we ask you to transfer the Letter of Credit to the
transferee in the Letter of Credit Amount (as defined in the Letter of Credit)
with provision for reinstating or increasing the Letter of Credit Amount with
respect to all drawings by Interest Drafts and Tender Drafts (as defined in the
Letter of Credit) with respect to which the Letter of Credit Amount may be
reinstated, and forward it directly to the transferee with your customary notice
of transfer.
Very truly yours,
SIGNATURE AUTHENTICATED CHASE MANHATTAN TRUST COMPANY,
NATIONAL ASSOCIATION, TRUSTEE
----------------------------
____________________________ By _________________________________
(Authorized Signature)
Title ______________________________
Page 2 of Annex 7
A-21
EXHIBIT B
---------
PROJECT FACILITIES DESCRIPTION
The Project Facilities consist of the construction and equipping of an
approximately 44,800 square foot building, to be owned and operated by the
Borrower as a facility for the manufacturing of avionics instrumentation.
B-1
EXHIBIT C
---------
ENVIRONMENTAL MATTERS
None
▇-▇
▇▇▇▇▇▇▇ ▇
---------
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇
▇-▇
EXHIBIT E
---------
OUTSTANDING MATERIAL CONTRACTS
Agreement of Lease between ▇▇▇▇▇ & Associates - ▇▇▇ ▇▇▇▇ ▇▇▇▇ Limited
Partnership and Innovative Solutions & Support for ▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, signed September 24, 1997, as amended.
E-1
EXHIBIT F
---------
PERMITTED LIENS
1. Unrecorded easements, discrepancies or conflicts in boundary lines,
shortages in area and encroachments which an accurate and complete survey
would disclose.
2. Rights granted to Keystone Pipeline in Misc. Deed Book 56 page 280, 56 page
281, 57 page 317, and 68 page 247.
3. Rights granted to ▇▇ ▇▇▇▇▇▇ in Misc. Deed Book 19 page 313.
4. Water Rights as in Misc. Deed Book 3 page 70.
5. Rights granted to Philadelphia Electric Company and ▇▇▇▇ Telephone Company
in Misc. Deed Book 69 page 516.
6. Rights granted to ▇▇▇▇ Atlantic-Pennsylvania, Inc. in Record Book 4639 page
424.
7. The Declaration of General Conditions for Covenants under Act 515 in
▇▇▇▇▇▇▇ County in Misc. Deed Book 240 page 335, and Contract and Covenant
pursuant thereto in ▇▇▇▇▇▇▇ County in Misc. Deed Book 265 page 341, 264
page 348 and Record Book 2674 page 164.
8. Easement Agreement in Misc. Deed Book 655 page 536.
9. Agreement to Release Easement in Misc. Deed Book 655 page 541.
10. Rights granted to Philadelphia Electric Company in Misc. Deed Book 541 page
108, and 92 page 211 and Record Book 1158 page 230.
11. Rights granted to Uwchlan Township Municipal Authority in Record Book 1154
page 168 and 1154 page 174.
12. Declaration of Easements and Protective Covenants and Restrictions for
Eagleview Corporate Center in Record Book 1070 page 185. Amendment thereto
in Record Book 1678 page 217, Second Amendment thereto in Record Book 1851
page 313, Third Amendment thereto in Record Book 1885 page 55.
13. Amended and Restated Declaration of Easements and Protective Covenants and
Restrictions for Eagleview Corporate Center in Record Book 2074 page 240,
First Amendment thereto in Record Book 2074 page 240, Second Amendment
thereto in Record Book 3590 page 1986, Third Amendment thereto in Record
Book 3672 page ▇▇▇,
▇-▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ thereto in Record Book 4177 page 2306, Fifth Amendment
thereto in Record Book 4206 page 1534, Sixth Amendment thereto in Record
Book 4365 page 649, Seventh Amendment thereto in Record Book 4744 page 278.
14. Rights of First Refusal as in Record Book 1397 page 66.
15. Unsettled taxes due the Commonwealth of Pennsylvania by mortgagor
corporation, not presently a lien, all of which taxes when assessed or
settled, if not paid will constitute a prior lien against any fund created
at a judicial sale.
F-2
EXHIBIT H
---------
OPTIONAL REDEMPTION OF BONDS
Redemption Date Principal Amount of Bonds
(August 1) To be Redeemed
--------------- -------------------------
2001 $100,000
2002 150,000
2003 200,000
2004 250,000
2005 250,000
2006 340,000
2007 340,000
2008 340,000
2009 340,000
2010 340,000
2011 340,000
2012 340,000
2013 340,000
2014 340,000
2015 325,000
------------------------------
H-1
================================================================================
REIMBURSEMENT, CREDIT AND SECURITY AGREEMENT
Dated as of August 1, 2000
Between
INNOVATIVE SOLUTIONS AND SUPPORT, LLC
and
PNC BANK, NATIONAL ASSOCIATION
================================================================================
TABLE OF CONTENTS
Page
Recitals................................................................ 1
ARTICLE I.
DEFINITIONS 2
Section 1.01 Definitions .............................................. 2
Section 1.02 Rules of Construction; Time of Day ....................... 8
ARTICLE II.
LETTER OF CREDIT AND REIMBURSEMENT
Section 2.01 Issuance of Letter of Credit ............................. 8
Section 2.02 Reimbursement and Other Payments ......................... 9
Section 2.03 Transfer; Reduction; Reinstatement ....................... 12
Section 2.04 Obligations Absolute ..................................... 13
Section 2.05 Indemnification .......................................... 13
Section 2.06 Liability of Bank ........................................ 14
ARTICLE III.
SECURITY
Section 3.01 Security and Subrogation under Indenture ................. 15
Section 3.02 Pledge of Rights to Certain Funds and Investments......... 15
Section 3.03 Pledged Bonds ............................................ 15
Section 3.04 Mortgage; Additional Security............................. 17
Section 3.05 Financing Statements ..................................... 17
Section 3.06 Guaranty ................................................. 17
ARTICLE IV.
CONDITIONS PRECEDENT
Section 4.01 Documentation ............................................ 17
Section 4.02 Issuance of Bonds ........................................ 18
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
Section 5.01 Existence ................................................ 19
Section 5.02 Power, Authorization and No Conflicts .................... 19
Section 5.03 Governmental Authorizations and Other Approvals .......... 19
Section 5.04 Validity and Binding Effect .............................. 19
Section 5.05 No Litigation ............................................ 20
i
Section 5.06 No Violations ............................................ 20
Section 5.07 Compliance ............................................... 20
Section 5.08 Title to Properties; Liens and Encumbrances .............. 20
Section 5.09 Utilities and Access ..................................... 21
Section 5.10 Financial Information .................................... 21
Section 5.11 ERISA .................................................... 21
Section 5.12 Environmental Representations ............................ 21
Section 5.13 Outstanding Obligations .................................. 22
Section 5.14 Other Material Contracts ................................. 22
Section 5.15 Solvency ................................................. 22
Section 5.16 Disclosure ............................................... 22
Section 5.17 Representations in Other Documents ....................... 22
ARTICLE VI.
GENERAL COVENANTS
Section 6.01 Maintenance of Existence ................................. 23
Section 6.02 Disposition of Assets .................................... 23
Section 6.03 Compliance with Laws ..................................... 23
Section 6.04 Maintenance of Governmental Authorizations ............... 23
Section 6.05 Maintenance of Insurance ................................. 23
Section 6.06 Compliance with Bond Documents and Other Contracts ....... 24
Section 6.07 Maintenance of Properties ................................ 24
Section 6.08 Visitation Rights ........................................ 24
Section 6.09 Keeping of Books ......................................... 24
Section 6.10 Reporting Requirements ................................... 24
Section 6.11 Consents Under Bond Documents ............................ 26
Section 6.12 Amendments to Bond Documents ............................. 26
Section 6.13 Limitation on Optional Calls and Conversions ............. 26
Section 6.14 Liens; Negative Pledge ................................... 26
Section 6.15 Payment of Debt .......................................... 27
Section 6.16 Environmental Covenants .................................. 27
Section 6.17 ERISA .................................................... 29
Section 6.18 Tax Returns .............................................. 29
Section 6.19 Leases ................................................... 29
Section 6.20 Optional Redemptions of Bonds ............................ 29
Section 6.21 Financial Covenants ...................................... 30
Section 6.22 Further Assurances ....................................... 30
ARTICLE VII.
CONSTRUCTION COVENANTS
Section 7.01 Application of Project Fund............................... 31
Section 7.02 Requisitions Approval..................................... 33
Section 7.03 Construction; Completion Date............................. 34
Section 7.04 Certain Contracts Prohibited.............................. 35
F-ii
Section 7.05 Certain Notices........................................... 35
Section 7.06 Releases.................................................. 35
Section 7.07 Change Orders............................................. 35
Section 7.08 Subcontracts.............................................. 35
ARTICLE VIII.
DEFAULTS AND REMEDIES
Section 8.01 Defaults.................................................. 36
Section 8.02 Remedies.................................................. 39
Section 8.03 Waivers; Consents......................................... 39
Section 8.04 No Waiver; Remedies Cumulative............................ 39
Section 8.05 Set-Off................................................... 40
ARTICLE IX.
MISCELLANEOUS
Section 9.01 Notices................................................... 40
Section 9.02 Successors and Assigns.................................... 41
Section 9.03 Survival of Covenants..................................... 41
Section 9.04 Counterparts.............................................. 41
Section 9.05 Costs, Expenses and Taxes................................. 41
Section 9.06 Amendments................................................ 42
Section 9.07 Severability; Interest Limitation......................... 42
Section 9.08 Conflicts................................................. 42
Section 9.09 Complete Agreement........................................ 43
Section 9.10 Consent to Jurisdiction; Venue; Waiver of Jury Trial...... 43
Section 9.11 Governing Law............................................. 43
Section 9.12 Headings.................................................. 43
EXECUTION............................................................... 44
F-iii
EXHIBIT A - Form of Letter of Credit.................................... A-1
EXHIBIT B - Project Facilities Description.............................. B-1
EXHIBIT C - Environmental Matters....................................... C-1
EXHIBIT D - Outstanding Obligations..................................... D-1
EXHIBIT E - Outstanding Material Contracts.............................. E-1
EXHIBIT F - Permitted Liens ............................................ F-1
EXHIBIT G - [Intentionally Omitted]..................................... ▇-▇
▇▇▇▇▇▇▇ ▇ - ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ of Bonds ............................... H-1
F-iv