CONFIDENTIAL
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LOAN AGREEMENT
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between
SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT AUTHORITY
and
ROLLER BEARING COMPANY OF AMERICA, INC.
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Relating to
$7,700,000
Variable Rate Demand
Industrial Development Revenue Bonds
(Roller Bearing Company of America, Inc. Project)
Series 1994A
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DATED AS OF SEPTEMBER 1, 1994
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TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and is not intended
to define, limit or describe the scope or intent of any provisions of this Loan
Agreement).
Page
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ARTICLE I DEFINITIONS, CONSTRUCTION AND CERTAIN GENERAL
PROVISIONS ................................................... 3
Section 1.1. Definitions ........................................... 3
Section 1.2. Rules of Interpretation ............................... 4
ARTICLE II REPRESENTATIONS .............................................. 5
Section 2.1. Representations by the Issuer ......................... 5
Section 2.2. Representations and Warranties by the Borrower ........ 5
Section 2.3. General Tax Representations, Warranties and
Covenants of Borrower ................................. 7
Section 2.4. Manufacturing Facilities .............................. 9
Section 2.5. Actions Under Section 144(a)(4) of the Code ........... 9
Section 2.6. Tax Exemption ......................................... 10
ARTICLE III THE LOAN; ISSUANCE OF THE BONDS ............................. 12
Section 3.1. Amount and Source of the Loan ......................... 12
Section 3.2. Possession and Use of the Project ..................... 12
Section 3.3. Termination of Prior Liens ............................ 12
Section 3.4. Disbursements from the Project Fund and the
Cost of Issuance Fund ................................. 12
Section 3.5. Investment of Fund Moneys ............................. 14
Section 3.6. Loan Payments ......................................... 14
Section 3.7. Additional Payments ................................... 15
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Section 3.8. Obligations Unconditional ............................. 16
Section 3.9. Credit Facility ....................................... 16
Section 3.10. Alternate Credit Facility ............................. 16
Section 3.11. Issuance of Bonds ..................................... 16
Section 3.12. Borrower Required to Pay Costs in Event Project
Fund Insufficient ..................................... 16
Section 3.13. Completion Date ....................................... 17
ARTICLE IV OPERATION OF THE PROJECT ..................................... 18
Section 4.1. Operation of the Project ............................. 18
Section 4.2. Environmental Compliance ............................. 18
Section 4.3. Payment of Project Costs ............................. 18
Section 4.4. Deficiency of Project Fund ........................... 18
ARTICLE V MAINTENANCE; MODIFICATIONS; INSURANCE;
LEASE OR ASSIGNMENT OF PROJECT;
LOSS OR DAMAGE TO PROJECT ..................................... 19
Section 5.1. Maintenance of Project by Borrower ................... 19
Section 5.2. Sale or Lease of Project; Assignment of Loan
Agreement by Borrower ................................ 19
Section 5.3. Taxes, Assessments and Other Charges ................. 19
Section 5.4. Use of Project ....................................... 19
Section 5.5. Insurance Required ................................... 19
Section 5.6. Damage, Destruction, Condemnation or Loss of Title ... 19
Section 5.7. Remodeling and Improvements .......................... 22
Section 5.8. Equipment ............................................ 22
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ARTICLE VI PARTICULAR COVENANTS ......................................... 23
Section 6.1. Access to the Project and Inspection; Operation
of the Project ....................................... 23
Section 6.2. Financial Statements ................................. 23
Section 6.3. Indemnification ...................................... 23
Section 6.4. Further Assurances and Corrective
Instruments .......................................... 24
Section 6.5. Litigation Notice .................................... 24
Section 6.6. Annual Certificate ................................... 24
ARTICLE VII ASSIGNMENT OF ISSUER'S RIGHTS UNDER LOAN
AGREEMENT ................................................... 26
Section 7.1. Assignment by the Issuer .............................. 26
Section 7.2. Restriction on Transfer of Issuer's Rights ............ 26
Section 7.3. Credit Enhancer's Remedial Rights ..................... 26
ARTICLE VIII EVENTS OF DEFAULT AND REMEDIES ............................ 27
Section 8.1. Events of Default Defined ............................. 27
Section 8.2. Remedies on Default ................................... 27
Section 8.3. No Remedy Exclusive ................................... 28
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses ......... 29
Section 8.5. Issuer and Borrower to Give Notice of Default ......... 29
Section 8.6. Performance Of Borrower's Obligations ................. 29
Section 8.7. Remedial Rights Assigned to the Trustee ............... 29
Section 8.8. Credit Enhancer to Direct Trustee ..................... 29
ARTICLE IX PREPAYMENT AND ACCELERATION OF LOAN PAYMENTS ................. 31
Section 9.1. Prepayment at the Option of the Borrower .............. 31
Section 9.2. Optional Prepayment Upon Certain Events ............... 31
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Section 9.3. Mandatory Prepayment Upon Determination
of Taxability ........................................ 31
Section 9.4. Mandatory Prepayment Upon Certain Defaults ........... 31
Section 9.5. Mandatory Prepayment From Amounts Remaining in Project
Fund ................................................. 31
Section 9.6. Right to Prepay at Any Time .......................... 31
Section 9.7. Notice of Prepayment ................................. 31
Section 9.8. Precedence of this Article ........................... 32
ARTICLE X MISCELLANEOUS ................................................. 33
Section 10.1. Authorized Representatives ........................... 33
Section 10.2. Term of Loan Agreement ............................... 33
Section 10.3. Notices .............................................. 33
Section 10.4. Performance Date Not a Business Day .................. 34
Section 10.5. Binding Effect ....................................... 34
Section 10.6. Amendments, Changes and Modifications ................ 34
Section 10.7. Execution in Counterparts ............................ 34
Section 10.8. No Pecuniary Liability ............................... 34
Section 10.9. Extent of Covenants of the Issuer; No Personal or
Pecuniary Liability .................................. 34
Section 10.10. Net Loan ............................................. 35
Section 10.11. Security Interests ................................... 35
Section 10.12. Complete Agreement ................................... 35
Section 10.13. Severability ......................................... 35
Section 10.14. Governing Law ........................................ 36
Section 10.15. Not a Limitation ..................................... 36
Section 10.16. Consent to Jurisdiction; Service of Process .......... 36
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EXHIBIT A ................................................................ A-1
EXHIBIT B ................................................................ B-1
EXHIBIT C ................................................................ C-1
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LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of September 1, 1994 (this "Agreement" or
"Loan Agreement"), between the SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT
AUTHORITY, a body corporate and politic and an agency of the State of South
Carolina (the "Issuer"), and ROLLER BEARING COMPANY OF AMERICA, INC., a Delaware
corporation (the "Borrower");
WITNESSETH:
WHEREAS, the Issuer, acting by and through its Board of Directors, is
authorized and empowered under and pursuant to the provisions of Title 41,
Chapter 43, Code of Laws of South Carolina 1976, as amended (the "Act"), to
acquire and cause to be acquired properties that are projects under the Act
through which the industrial, commercial, agricultural and recreational
development of the State of South Carolina (the "State") will be promoted and
trade developed by inducing business enterprises to locate in and remain in the
State and thus provide maximum opportunities for the creation and retention of
jobs and improvement of the standard of living of the citizens of the State; and
WHEREAS, the Issuer is further authorized by Section ▇▇-▇▇-▇▇▇ of the Act
to issue revenue bonds payable by the Issuer solely from revenues and receipts
from any financing agreement between the Issuer and any business enterprise with
respect to such project and secured by a pledge of said revenues and receipts
and by an assignment of such financing agreement; and
WHEREAS, pursuant to the Act, the Issuer is authorized to issue its
Variable Rate Demand Industrial Development Revenue Bonds (Roller Bearing
Company of America, Inc. Project) Series 1994A in the principal amount of
$7,700,000 (the "Bonds") for the purpose of providing funds to construct or
purchase certain buildings, fixtures, machinery and equipment (the "Project") to
constitute an approximately 60,000 square foot expansion of an existing facility
for the manufacture of roller bearings in Darlington County, South Carolina
which is owned and operated by the Borrower; and
WHEREAS, the proceeds from the sale of the Bonds will be loaned to the
Borrower pursuant to the provisions of this Loan Agreement to enable the
Borrower to construct and purchase the Project; and
WHEREAS, the amount necessary to finance the costs of such construct and
purchase will require the issuance, sale and delivery of the Bonds, as
hereinafter provided; and
WHEREAS, to secure the payment of the principal of and interest on the
Bonds and the purchase price of Bonds tendered by the Owners thereof as provided
in the Trust Indenture of even date herewith (the "Indenture") between the
Issuer and ▇▇▇▇ ▇▇▇▇▇ Bank, as Trustee (the "Trustee"), the Borrower has caused
the Credit Enhancer (as defined in the Indenture) to issue its Credit Facility
(as defined in the Indenture) to the Trustee; and
WHEREAS, pursuant to the foregoing, the Issuer desires to loan the
proceeds of the Bonds to the Borrower and the Borrower desires to borrow the
proceeds of the Bonds from the Issuer, to be repaid by the Borrower and upon the
terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, covenants and agreements herein contained, the Issuer and the
Borrower do hereby represent, covenant and agree as follows:
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ARTICLE I
DEFINITIONS, CONSTRUCTION AND CERTAIN GENERAL PROVISIONS
Section 1.1. Definitions. All words and terms defined in Section 101 of
the Indenture shall have the same meaning in this Loan Agreement unless
otherwise defined herein. In addition to words and terms defined in the
Indenture or defined elsewhere in this Loan Agreement, the following words and
terms shall have the following meanings, unless some other meaning is plainly
intended:
"Additional Payments" means the Additional Payments described in Section
3.7 hereof.
"Borrower Documents" means this Loan Agreement, the Tax Agreement and the
Collateral Documents.
"Completion Date" means the date of completion of the Project and any
additions or improvements to the Project.
"Default" means any event or condition which constitutes, or with the
giving of any requisite notice or upon the passage of any requisite time period
or upon the occurrence of both would constitute, an Event of Default under this
Agreement or the Indenture.
"Event of Default" means any Event of Default as defined in Section 8.1
hereof.
"Full Insurable Value" means the actual replacement cost of the Project
without deduction for physical depreciation and exclusive of land, excavations,
footings, foundations and parking lots.
"Loan Payment Date" means an Interest Payment Date, Principal Payment Date
or any other date on which the principal of and interest on the Bonds is
payable.
"Loan Payments" means the Loan Payments described in Section 3.6 hereof.
"Loan Term" means the period from the effective date of this Loan
Agreement until the expiration hereof pursuant to Section 10.2 of this Loan
Agreement.
"Net Proceeds" means, when used with respect to any insurance or
condemnation award with respect to the Project, the title insurance or
condemnation award with respect to which that term is used remaining after the
payment of all expenses (including attorneys' fees and any expenses of the
Issuer or the Trustee) incurred in the collection of such gross proceeds. As
used in this definition the word "condemnation" shall have the meaning given to
it in Section 5.6 hereof.
"Permitted Encumbrances" shall have the meaning assigned to such term in
the Credit Agreement (as defined in the Letter of Credit Agreement).
"Project" means the manufacturing facilities generally described in
Exhibit A hereto, as provided for in this Loan Agreement.
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"Series 1994B Bonds" means the Issuer's $3,000,000 original principal
amount Variable Rate Demand Industrial Development Revenue Bonds (Roller Bearing
Company of America, Inc. Project) Series 1994B.
"Series 1994B Loan Agreement" means the Loan Agreement dated of even date
herewith between the Issuer and the Borrower, delivered with respect to the
Series 1994B Bonds, as amended, restated or supplemented.
"Unassigned Issuer's Rights" means the Issuer's rights to reimbursement
and payment of its costs and expenses and rebatable arbitrage under Sections
3.7(c) and (e), 8.4 and 8.6 hereof, its rights of access under Section 6.1
hereof, its rights to indemnification under Sections 4.5 and (6.3) hereof, its
rights to exemption from liability under Sections 10.8 and 10.9 hereof, its
rights to receive notices, reports and other statements and its rights to
consent to certain matters.
Section 1.2. Rules of Interpretation. (a) Words of the masculine gender
shall be deemed and construed to include correlative words of the feminine and
neuter genders.
(b) Unless the context shall otherwise indicate words importing the
singular number shall include the plural and vice versa, and words importing
person shall include firms, partnerships, associations, joint stock companies,
joint ventures, trusts, unincorporated organizations, limited liability
companies and corporations, including governmental entities, as well as natural
persons.
(c) The words "herein", "hereby", "hereunder", "hereof", "hereto",
"hereinbefore", "hereinafter" and other equivalent words refer to this Loan
Agreement and not solely to the particular article, section, paragraph or
subparagraph hereof in which such word is used.
(d) Reference herein to a particular article or a particular section shall
be construed to be a reference to the specified article or section hereof unless
the context or use clearly indicates another or different meaning or intent.
Reference herein to a schedule or an exhibit shall be construed to be a
reference to the specified schedule or exhibit hereto unless the context or use
clearly indicates another or different meaning or intent.
(e) Wherever an item or items are listed after the word "including", such
listing is not intended to be a listing that excludes items not listed.
(f) The table of contents, captions and headings in this Loan Agreement
are for convenience only and in no way define, limit or describe the scope or
intent of any provisions or sections of this Loan Agreement.
[End of Article I}
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ARTICLE II
REPRESENTATIONS
Section 2.1. Representations by the Issuer. The Issuer makes the following
representations as the basis for the undertakings on its part herein contained:
(a) The Issuer is a body politic and corporate and an agency of the State.
(b) The Issuer has lawful power and authority under the Act, acting
through its Board of Directors, to enter into the transactions contemplated by
this Loan Agreement and to carry out its obligations hereunder. By proper action
of the Board of Directors, the Issuer has been duly authorized to execute and
deliver this Loan Agreement, acting by and through its duly authorized officers.
(c) The issuance of the Bonds will further the public purposes of the Act.
(d) To finance the costs of constructing and purchasing the Project, the
Issuer proposes to issue the Bonds in the aggregate principal amount of
$7,700,000. The Bonds will bear interest at the rates and be scheduled to mature
as set forth in Article II of the Indenture and will be subject to purchase from
the Owners thereof in accordance with the provisions of Article III of the
Indenture and redemption prior to maturity in accordance with the provisions of
Article IV of the Indenture. The Bonds are to be issued under and secured by the
Indenture, pursuant to which the payments, revenues and receipts derived by the
Issuer pursuant to this Loan Agreement, other than Unassigned Issuer's Rights,
will be pledged and assigned to the Trustee as security for payment of the
principal of, premium, if any, and interest on the Bonds.
(e) To the best of its knowledge, no member of the governing body of the
Issuer or any other officer of the Issuer has any significant or conflicting
interest, financial, employment or otherwise, in the Borrower, the Project or in
the transactions contemplated hereby.
Section 2.2. Representations and Warranties by the Borrower. The Borrower
represents and warrants as follows:
(a) The Borrower is a corporation, duly organized, validly existing and in
good standing under the laws of the State of Delaware, has the power and
authority to own its properties and carry on its business as now being
conducted, and is duly qualified to do such business, and is in good standing,
wherever such qualification is required, including the State.
(b) The Borrower has the power and authority to execute and deliver the
Borrower Documents, and to carry out the transactions contemplated hereby and
thereby, and has duly authorized the execution, delivery and performance of each
of the foregoing.
(c) Neither the execution nor delivery of the Borrower Documents, nor the
consummation of the transactions contemplated hereby or thereby, nor the
fulfillment of or compliance with the terms and conditions hereof or thereof,
conflicts with or results in a breach of or will constitute a default under any
of the terms, conditions or provisions or any legal restriction of any agreement
or instrument to which the Borrower is now a party or by which it is bound, or
constitutes a default under any of the
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foregoing or violates any judgment, order, writ, injunction, decree, law, rule
or regulation to which it is subject.
(d) The Borrower is knowledgeable in the operation of manufacturing
facilities of the magnitude and nature of the Project.
(e) The Borrower is not presently under any cease or desist order or other
orders of a similar nature, temporary or permanent, of any federal or state
authority which would have the effect of preventing or hindering performance of
its duties hereunder, nor are there any proceedings presently in progress or to
its knowledge contemplated which would, if successful, lead to the issuance of
any such order.
(f) To the best of its knowledge, the Borrower has made, and will during
the term of this Agreement make, all filings which it is obligated to make with,
and has obtained, and will during the term of this Agreement obtain, all
approvals and consents which it is obligated to obtain from all federal, state
and local regulatory agencies having jurisdiction to the extent, if any,
required by applicable laws and regulations to be made or to be obtained in
connection with the Project, the execution and delivery by the Borrower of the
Borrower Documents, the transaction contemplated thereunder, and the performance
by the Borrower of its obligations thereunder.
(g) To the best of the Borrower's knowledge, except to the extent
disclosed to the Credit Enhancer, the operation and maintenance of the Project
does not conflict with any zoning, building, safety, health or environmental
quality or other law, ordinance, order, rule or regulation applicable thereto.
(h) The Borrower will keep and perform faithfully all of its duties,
obligations, covenants and undertakings contained herein and in the Borrower
Documents.
(i) The Borrower will execute and deliver such additional instruments and
perform such additional acts as may be necessary, in the opinion of the Issuer,
to carry out the intent hereof and of the Borrower Documents or to perfect or
give further assurances of any of the rights granted or provided for herein or
in the Borrower Documents.
(j) The Borrower agrees that during the Loan Term it will maintain its
existence, will not dissolve (other than a technical dissolution under State law
so long as the Borrower is immediately reconstituted) or otherwise dispose of
all or substantially all of its assets; provided that the Borrower may, without
violating the agreement contained in this paragraph, merge or consolidate with
another legal entity or sell or otherwise transfer to another legal entity all
or substantially all of its assets as an entirety and thereafter dissolve,
provided (i) that such merger, consolidation or transfer will not affect the
excludability of the interest on the Bonds from gross income for federal income
tax purposes; (ii) that if the successor or transferee legal entity is not the
Borrower, then such legal entity shall be a legal entity organized and existing
under the laws of one of the States of the United States of America and shall be
qualified to do business in the State; (iii) such successor or transferee entity
shall assume all of the obligations of the Borrower under the Borrower Documents
in which event the Borrower shall be released from its obligations under the
Borrower Documents; and (iv) the Credit Enhancer consents thereto in writing.
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(k) The Borrower will advise the Issuer, the Credit Enhancer and the
Trustee promptly in writing of the occurrence of any Default hereunder or any
event which, with the passage of time or service of notice, or both, would
constitute an Event of Default hereunder, specifying the nature and period of
existence of such event and the actions being taken or proposed to be taken with
respect thereto.
(l) Any certificate signed by an Authorized Borrower Representative and
delivered pursuant to this Loan Agreement or the Indenture shall be deemed a
representation and warranty of the Borrower as to the statement made therein.
(m) Concurrently with the execution of this Loan Agreement, the Borrower
will cause to be delivered to the Trustee, on behalf of the Issuer, the Credit
Facility and the Credit Facility shall be in full force and effect and shall
secure the payment of the principal and purchase price of, and interest on, the
Bonds.
(n) The Project is located wholly within Darlington County, South
Carolina.
(o) There is not now pending or, to the knowledge of the Borrower,
threatened, any suit, action or proceeding against or affecting the Borrower by
or before any court, arbitrator, administrator, administrative agency or other
governmental authority which, if decided adversely to the Borrower, would
materially and adversely affect the validity of any of the transactions
contemplated by this Loan Agreement or the Indenture, or impair the ability of
the Borrower to perform its obligations under this Loan Agreement or the
Indenture, or as contemplated hereby or thereby, nor, to the knowledge of the
Borrower, is there any basis therefor.
Section 2.3. General Tax Representations, Warranties and Covenants of
Borrower. The Borrower further represents, warrants and covenants as follows:
(a) No proceeds of the Bonds will be used, directly or indirectly, for the
acquisition of land (or an interest therein) to be used for farming purposes and
less than 25% of the proceeds of the Bonds will be used (directly or indirectly)
for the acquisition of land (or an interest therein) within the meaning of
Section 147(c) of the Code.
(b) Ninety-five percent (95%) or more of the expenditures for costs of the
Project made from proceeds of the Bonds are, for federal income tax purposes,
for land or depreciable property chargeable to the capital account of the
Project or would be so chargeable either with a proper election by the Borrower
under the Code or but for a proper election to deduct any such costs.
(c) Acquisition and construction of the Project, and each of the
components thereof, occurred subsequent to April 28, 1994, and no obligation
relating to the acquisition and construction of the Project (to be financed with
proceeds of the sale of the Bonds) was paid or incurred prior to such date. The
Project is expected to be placed in service on or about August 1, 1997.
(d) The Project is of the type authorized and permitted by the Act, and
the Project is substantially the same in all material respects to that described
in the notice of public hearing published in The Darlington News and Post on
June 1, 1994.
(e) During the period commencing 15 days before the date of sale of the
Bonds, neither the Borrower or any other "principal user" of the Project or any
"related person" (or group of "related
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persons" which includes the Borrower) has guaranteed, arranged, participated in,
assisted with, borrowed the proceeds of, or leased facilities financed by,
obligations issued under Section 144(a) of the Code by any state or local
governmental unit or any constituted authority empowered to issue obligations by
or on behalf of any state or local governmental unit other than the Issuer
("principal user" and "related person" as those terms are used in Section 144(a)
of the Code).
(f) During the period commencing on the date of sale of the Bonds and
ending 15 days thereafter, there will be no obligations issued under Section
144(a) of the Code which are guaranteed by the Borrower or any other "principal
user" of the Project or any "related person" (or group of "related persons"
which includes the Borrower) or which are issued with the assistance or
participation of, or by arrangement with, the Borrower or any other "principal
user" of the Project or any "related person" (or group of "related persons"
which includes the Borrower) without the written opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇,
P.A., to the effect that the issuance of such obligations will not adversely
affect the exclusion from gross income of the interest paid on the Bonds for
purposes of federal income taxation; other than the Borrower or any other
"principal user" of the Project or any "related person" (or group of "related
persons" including the Borrower), no person has (i) guaranteed, arranged,
participated in, assisted with the issuance of, or paid any portion of the cost
of the issuance of, any of the Bonds, and (ii) provided any property or any
franchise, trademark or trade name (within the meaning of Section 1253 of the
Code) which is to be used in connection with the Project ("principal user" and
"related person" as those terms are used in Section 144(a) of the Code).
(g) The Bonds are not being issued as part of an issue the interest of
which is excludable from gross income for purposes of federal income taxation
under any other provision of law other than Section 144(a) of the Code.
(h) The issuance of the Bonds is not part of an issuance of tax-exempt
bonds which (1) will be sold (A) at substantially the same time or (B) pursuant
to the same plan of financing, and (2) are reasonably expected to be paid from
substantially the same source of funds, determined without regard to guarantees
from unrelated parties.
(i) For each "test-period beneficiary" (as defined in Section
144(a)(10)(D) of the Code) of the Project, the sum of (i) the aggregate
authorized face amount of the Bonds allocated in accordance with Section
144(a)(10)(C) of the Code to such beneficiary and (ii) the aggregate outstanding
principal amount of any other tax-exempt obligation described in Section
144(a)(10)(B)(ii) of the Code, wherever and whenever issued, allocated to such
beneficiary does not and will not exceed $40,000,000.
(j) There are no other issues of private activity bonds, as defined in
Section 141 of the Code, the proceeds of which have been or will be used with
respect to the "facilities," as defined in Section 144(a)(4)(B) of the Code,
located within the jurisdiction of the Issuer, the "principal user" of which is
the Borrower or a "related person" thereto ("principal user" and "related
person" being used in this Agreement as those terms are used in Section 144(a)
of the Code).
(k) The Borrower will assist the Issuer in filing all appropriate returns,
reports and attachments to income tax returns as of now or hereafter required by
the provisions of the Code, including without limitation the Information Return
for Private Activity Bond Issues (Form 8038) required under the Code.
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(l) The weighted average maturity of the Bonds, calculated in accordance
with the requirements of Section 147(b) of the Code, is not more than 23 years,
which is less than one hundred twenty percent (120%) of the remaining average
reasonably expected economic life of the Project, calculated in accordance with
the requirements of Section 147(b) of the Code.
(m) No proceeds of the Bonds shall be invested in federally insured
deposits or accounts except as part of a bona fide debt service fund or a
reasonably required reserve fund.
(n) The Borrower has not and will not sell, transfer or otherwise dispose
of the Project except as provided in this Loan Agreement.
(o) During the term of this Agreement, the operation and maintenance of
the Project will not conflict in any material respect with any zoning, building,
safety, health or environmental quality or other law, ordinance, rule, or
regulation applicable thereto. To the extent of any conflict, the Borrower will
use its best efforts to bring the zoning of the Project into compliance with the
intended uses of the Project.
(p) The Borrower hereby represents and warrants that (i) the
representations and warranties of the Borrower set forth in the Tax Agreement
are true and correct as of the of delivery of this Loan Agreement and (ii) the
Borrower expects to comply with the covenants and agreements set forth in the
Tax Agreement.
Section 2.4. Manufacturing Facilities. The Borrower represents, warrants
and covenants that the Project will be operated as a "manufacturing facility"
within the definition of Section 144(a)(12)(C) of the Code, which shall include
facilities which are directly related and ancillary thereto within the meaning
of the Code (the "Related and Ancillary Facilities"), provided that (i) such
Related and Ancillary Facilities shall be located on the same site as the
manufacturing facility, and (ii) not more than 25% of the net proceeds of the
Bonds may be used to provide the Related and Ancillary Facilities. In addition,
no more than a de minimis amount (within the meaning of the Code) of the
functions to be performed at any office space comprising the Project is not
directly related to the day-to-day operations at the manufacturing facility.
Section 2.5 Actions Under Section 144(a)(4) of the Code. The Issuer is
issuing the Bonds pursuant to an election made by it, at the Borrower's request,
under Section 144(a)(4) of the Code. In connection with that election, the
Borrower represents and covenants that:
(a) The sum of (i) the principal amount of the Bonds, (ii) the outstanding
face amount of prior issues, if any, described in Section 144(a)(2) of the Code
and (iii) the aggregate amount of capital expenditures with respect to
"facilities" as defined in Section 144(a)(4)(B) of the Code, other than those
financed or to be financed out of proceeds of the Bonds or any such prior issues
or those mentioned in Section 144(a)(4)(C) of the Code ("Capital Expenditures"),
made during the three-year period preceding the Issue Date, does not exceed
$10,000,000.
(b) During the three-year period following the Issue Date, the Borrower
does not intend to make or cause or permit to be made any capital expenditures
in an amount which would cause the interest on the Bonds to be included in the
gross income of the Owners for federal income tax purposes.
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(c) It will maintain records, listing by month, day, year and amount each
capital expenditure made since the Issue Date through and including the third
anniversary of the date of original delivery of the Bonds and upon any
Determination of Taxability will furnish those records to the Trustee.
(d) In the event, on account of a lease, sublease, management contract or
other agreement relating to the Project, or any portion thereof, permitted by
the terms hereof, any person other than the Borrower becomes a "principal user"
of the Project (within the meaning of Section 144(a) of the Code), the Borrower
shall promptly advise the Trustee of the identity of such person and furnish to
the Trustee a copy of such lease, sublease, management contract or other
agreement. In connection with any such lease, sublease, management contract or
other agreement, the Borrower will require by covenant that any lessee,
sublessee, manager or user who is a "principal user" of the Project and any
"related person" (within the meaning of Section 144(a) of the Code) thereto
shall comply with the covenants set forth in subsections (b) and (c) of this
Section as if those covenants were made herein by such lessee, sublessee,
manager, user or "related person" thereto.
Section 2.6. Tax Exemption. The Borrower hereby covenants, represents and
agrees as follows:
(a) that it will not direct the Trustee to make any investment or use of
the proceeds of any of the Bonds, which would cause any of the Bonds to be
"arbitrage bonds" within the meaning of Section 148 of the Code and the Tax
Regulations thereunder as the same may be applicable to the Bonds at the time of
such action, investment or use and that it shall take and cause the Issuer and
Trustee to take all actions required to comply with the provisions of Section
148 of the Code;
(b) that it will at all times do and perform all acts and things necessary
or desirable and within its reasonable control in order to assure that interest
paid on the Bonds shall, for the purposes of federal income taxation, not be
includable in the gross income of the Bondowners, except in the event that the
Bondowner is a "substantial user" of the Project or a "related person" (such
terms within the meaning of Section 147(a) of the Code);
(c) that it shall not take or omit to take, or permit to be taken on its
behalf, any actions which, if taken or omitted, would adversely affect the
excludability from the gross income of the Bondowners of interest paid on the
Bonds for federal income tax purposes, whether currently in effect or enacted
subsequent to the date of original delivery of the Bonds;
(d) in the event that, in accordance with Section 148(f) of the Code, any
rebate of earnings or profits on investment of any amounts constituting gross
proceeds of the Bonds shall be required to be made to the United States of
America in order to preserve the tax-exempt status of interest on the Bonds, it
shall make all rebatable arbitrage payments or cause them to be made in
installments at least once every five years as required by Section 148(f)(3) of
the Code and the provisions of the Tax Agreement; it being understood that in no
event shall the Issuer or the Trustee have any responsibility or liability for
the payment of any rebatable arbitrage, except as specifically provided in the
Tax Agreement and the Indenture, and that all responsibility and liability
therefor shall be vested in the Borrower; and
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(e) to take such action or actions as may be necessary in the opinion of
Bond Counsel to preserve or perfect the exclusion of interest on the Bond from
gross income for federal income tax purposes.
[End of Article II]
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ARTICLE III
THE LOAN; ISSUANCE OF THE BONDS
Section 3.1. Amount and Source of the Loan. The Issuer agrees to lend to
the Borrower, upon the terms and conditions herein and in the Indenture
specified, the net proceeds received by the Issuer from the sale of the Bonds
(the "Loan"), and to cause such proceeds to be deposited in accordance with the
Indenture.
Section 3.2. Possession and Use of the Project. The Issuer acknowledges
that as between the Issuer and the Borrower the Borrower shall be the sole legal
owner of the Project, and shall be entitled to sole and exclusive possession of
the Project.
Section 3.3. Termination of Prior Liens. Concurrently with the execution
of this Loan Agreement the Borrower shall make provisions for termination of all
liens and security interests incurred with respect to the Project except for
Permitted Encumbrances.
Section 3.4. Disbursements from the Project Fund and the Cost of Issuance
Fund.
(a) The Issuer has, in the Indenture, authorized and directed the Trustee,
provided no Event of Default has occurred and is continuing, to make
disbursements from the Project Fund and the Cost of Issuance Fund, to reimburse
the Borrower or any person designated by the Borrower for the following:
(i) Costs incurred directly or indirectly for or in connection with
the acquisition, construction, improvement, installation or equipping of
the Project including, but not limited to, those for preliminary planning
and studies, architectural, legal, engineering and supervisory services,
labor, services, materials, fixtures, and equipment;
(ii) Premiums attributable to all insurance required to be taken out
with respect to the Project, the premium on each surety bond, if any,
required with respect to work on the Project, and taxes, assessments and
other charges in respect of the Project, that may become due and payable;
(iii) Costs incurred directly or indirectly in seeking to enforce
any remedy against any contractor, subcontractor, materialman or other
agent in respect of any default under any contract relating to the
Project;
(iv) Financing, legal, accounting, printing and engraving fees,
charges and expenses, and all other such fees, charges and expenses
incurred in connection with the authorization, sale, issuance and delivery
of the Bonds and the preparation and delivery of this Loan Agreement and
related documents as long as such disbursements do not exceed two percent
(2%) of the proceeds of the Bonds pursuant to Section 147(g) of the Code;
(v) Any other incidental and necessary costs, expenses, fees and
charges relating to the acquisition, construction, improvement,
installation or equipping of the Project; title charges, surveys,
commitment fees, appraisal fees and recording fees; and
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(vi) The fees and expenses of the Trustee, Registrar, Tender Agent
and Paying Agent properly incurred in connection with the execution and
delivery of the Indenture and of the Credit Enhancer properly incurred in
connection with the issuance of the Credit Facility and the execution and
delivery of the Letter of Credit Agreement.
(b) Nothing contained herein permits or shall be construed to permit the
expenditure of any moneys in the Project Fund or the Cost of Issuance Fund for,
or in reimbursement of payments made for, the acquisition of motor vehicles,
costs of issuance of the Bonds to the extent such costs of issuance exceed 2% of
the net proceeds of the Bonds allocable to the Project within the meaning of
Section 147(g) of the Code, raw materials, small tools, supplies, inventory or
accounts receivable, or for provision of working capital, and no such
expenditure shall be made from the Project Fund or the Cost of Issuance Fund.
(c) All moneys in the Project Fund (including moneys earned thereon by
investment thereof) remaining after the completion of the acquisition,
construction, installation, equipment and improvement of the Project and
payment, or provision for payment, in full of the costs provided for in the
preceding subsections of this Section, then due and payable, shall as soon as
practicable be paid into the Revenue Fund to be used (i) for the redemption of
the Bonds, or a portion thereof, at the earliest possible date; provided that
amounts approved by the Borrower shall be retained by the Trustee in the Project
Fund for payment of such costs not then due and payable, or (ii) to acquire,
construct, install, improve and equip such additional real and personal property
in connection with the Project as are designated by an Authorized Borrower
Representative, the acquisition, construction, installation, improvement and
equipping of which will be such as is permitted under both the Act and the Code,
or (iii) for a combination of any or all of the foregoing as is provided in such
direction.
(d) Disbursements from the Project Fund for the items described in this
Section shall be in the amount of such items, but, for the purpose of
determining the amount of any such item which involves any contract providing
for the retention of a portion of the contract price, there shall initially be
deducted from such item the amount of any such retention, and, when such
retention becomes due and payable, such retention shall be added to the item.
All disbursements from the Project Fund for the items described in this Section
shall be made only upon the written order of an Authorized Borrower
Representative and the following conditions shall have been satisfied with
respect to such disbursement:
(A) There shall have been delivered to the Trustee and the
Credit Enhancer a certificate of an Authorized Borrower
Representative in the form of Exhibit B attached hereto certifying,
with respect to such disbursement, to the Credit Enhancer and the
Trustee (1) the specific items, amounts and payees thereof, (2) that
none of the items for which the disbursement is proposed to be made
formed the basis for any disbursement theretofore made from the
Project Fund, (3) that each item for which the disbursement is
proposed to be made is or was properly chargeable as a capital
expenditure in connection with the Project, (4) that the Borrower
has received from each payee appropriate waivers of any mechanics or
other liens (or thereby provided indemnification in lieu thereof)
and, upon the written request of the Trustee or the Credit Enhancer,
copies of such waivers and evidence of any such indemnification will
be included with the certificate, (5) that the items requested
qualify for such disbursement under the provisions of subsections
(i) through (iii) of Section 3.4(c), (6) that all construction on
the Project thereto performed is substantially in accordance with
any plans and specifications for such construction and all
applicable laws, rules, codes and regulations
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and (7) that payment of such disbursement will not result in less
than substantially all (at least ninety-five percent (95%)) of the
net proceeds of the Bonds (taking into account investment income
with respect thereto) being used to provide land or property subject
to the allowance for depreciation under Section 167 of the Code,
constituting the Project;
(B) There shall be in existence no Event of Default or
situation which, upon the giving of notice or the passage of time or
both would become an Event of Default; and
(C) The Credit Enhancer shall have approved the requested
disbursement from the Project Fund.
(e) The final disbursement from the Project Fund for the items described
in this Section shall include all amounts theretofore withheld as retainages as
hereinbefore set forth in this Section. The Credit Enhancer shall have no
obligation to cause its approval to be given to the written order of an
Authorized Borrower Representative for such final disbursement until the
conditions described in subsections (A) and (B) of Section 3.4(d) shall have
been satisfied with respect to such final disbursement.
(f) Should the Borrower be unable to request final disbursement from the
Project Fund as described above prior to a date which is three (3) years from
the Bond Issuance Date, such funds remaining in the Project Fund shall be
considered to be moneys remaining in the Project Fund after completion of the
Project and shall be paid into the Revenue Fund and expended as described in
Section 3.4(c) unless the Borrower delivers to the Trustee an opinion of Bond
Counsel that such treatment is not necessary to retain the tax-exempt status of
the Bonds.
(g) All disbursements from the Cost of Issuance Fund for the items
described above shall be made only upon the written order of an Authorized
Borrower Representative in substantially the form attached hereto as Exhibit B.
Section 3.5. Investment of Fund Moneys. Any moneys held as part of the
Funds under the Indenture shall be invested or reinvested by the Trustee as
provided in the Indenture. The Issuer and the Borrower each hereby covenants
that it shall cause that investment and reinvestment and the use of the proceeds
of the Bonds to be restricted in such manner and to such extent, if any, as may
be necessary, after taking into account reasonable expectations at the time of
delivery of and payment for the Bonds, so that the Bonds will not constitute
arbitrage bonds under Section 148 of the Code.
Section 3.6. Loan Payments. The Borrower shall pay the following amounts
to the Trustee, all as "Loan Payments" under this Loan Agreement:
(a) The Borrower covenants and agrees during the Loan Term to make Loan
Payments to the Trustee at its Principal Office, for the account of the Issuer,
for deposit in the Revenue Fund, in federal or other immediately available
funds, during normal business hours on or before 10:00 A.M., Trustee's local
time, on each Loan Payment Date, the amount of such payment being as follows:
(i) the amount of the principal, if any, of the Bonds due and
payable on such Loan Payment Date, whether at stated maturity, by
redemption prior to maturity or acceleration or otherwise;
(ii) the amount of interest on the Bonds due and payable on such
Loan Payment Date;
-14-
(iii) the amount of redemption premium, if any, on the Bonds due and
payable on such Loan Payment Date; and
(iv) the purchase price of any Bonds required to be purchased on
such Loan Payment Date pursuant to Article III of the Indenture.
(b) The amounts received by the Trustee under the Credit Facility shall be
credited against the Loan Payment due on the applicable Loan Payment Date. Any
Loan Payment made by the Borrower and held by the Trustee in such event shall be
delivered to the Credit Enhancer in reimbursement of the amounts so received by
the Trustee under the Credit Facility, and any excess shall be returned to the
Borrower as an overpayment.
(c) Except for such interest of the Borrower as may hereafter arise
pursuant to Section 510 of the Indenture, the Borrower and the Issuer each
acknowledge that neither the Borrower nor the Issuer has any interest in the
Revenue Fund or the Debt Service Fund and any moneys deposited therein shall be
in the custody of and held by the Trustee in trust for the benefit of the
Bondowners and the Credit Enhancer.
Section 3.7. Additional Payments. The Borrower shall pay the following
amounts to the following persons, all as "Additional Payments" under this Loan
Agreement:
(a) To the Trustee, when due, all reasonable fees and charges for its
services rendered under the Indenture, this Loan Agreement and the Borrower
Documents, and all reasonable expenses (including without limitation reasonable
fees and charges of the Paying Agent, the Bond Registrar, counsel, accountant,
engineer or other person) incurred in the performance of the duties of the
Trustee under the Indenture, this Loan Agreement and the other Borrower
Documents, for which the Trustee and other persons are entitled to repayment or
reimbursement;
(b) To the Trustee, upon demand, an amount necessary to pay rebatable
arbitrage in accordance with the Tax Agreement and the Indenture.
(c) To the Issuer, upon demand, its regular administrative and issuance
fees and charges, if any, and all expenses (including without limitation
attorney's fees) incurred by the Issuer in relation to the transactions
contemplated by this Loan Agreement and the Indenture, which are not otherwise
to be paid by the Borrower under this Loan Agreement or the Indenture;
(d) To the appropriate Person, all taxes, assessments and charges required
to be paid pursuant to Section 5.3 hereof;
(e) To the appropriate Person, such payments as are required (i) as
payment for or reimbursement of any and all reasonable costs, expenses and
liabilities incurred by the Issuer, the Credit Enhancer or the Trustee or any of
them in satisfaction of any obligations of the Borrower hereunder and under the
other Borrower Documents that the Borrower does not perform, or incurred in the
defense of any action or proceeding with respect to the Project, this Loan
Agreement, the Indenture or the other Borrower Documents, or (ii) as
reimbursement for expenses paid, or as prepayment of expenses to be paid, by the
Issuer or the Trustee that are incurred as a result of a request by the Borrower
or for which the Borrower is liable under this Loan Agreement;
-15-
(f) To the appropriate Person, any other amounts required to be paid by
the Borrower under this Loan Agreement; and
(g) All Costs of Issuance and fees, charges and expenses, including agent
and counsel fees, incurred in connection with the issuance of the Bonds, as and
when the same become due.
Any past due Additional Payments shall continue as an obligation of the
Borrower until they are paid and shall bear interest (except as may be otherwise
provided in the Collateral Documents with respect to obligations owed to the
Credit Enhancer) at the base rate of interest announced from time to time by the
Trustee for variable rate commercial loans plus two percent (2%) during the
period such Additional Payments remain unpaid.
Section 3.8. Obligations Unconditional. The obligations of the Borrower to
make Loan Payments and Additional Payments on or before the date the same become
due, and to perform all of its other obligations, covenants and agreements
hereunder shall be absolute and unconditional, and the Borrower shall make such
payments and perform such obligations without abatement, diminution or deduction
regardless of any cause or circumstances whatsoever including, without
limitation, any defense, set-off, recoupment or counterclaim which the Borrower
may have or assert against the Issuer, the Trustee or any other Person.
Section 3.9. Credit Facility. Concurrently with the issuance of the Bonds,
the Borrower shall cause the Credit Facility to be delivered to the Trustee to
induce the purchase of the Bonds by the original purchasers thereof. The
Borrower shall cause the Credit Facility or an Alternate Credit Facility to be
continuously maintained until all of the Bonds have been fully paid or their
payment provided for in accordance with Article XII of the Indenture.
Section 3.10. Alternate Credit Facility. The Borrower may (without penalty
or premium) provide and the Trustee shall accept any Alternate Credit Facility,
provided that any Alternate Credit Facility shall meet the requirements of
Section 706 of the Indenture and an opinion of counsel acceptable to the Trustee
has been delivered to the Trustee to substantially the same effect as the
opinion of counsel to the Credit Enhancer delivered in connection with the
issuance of the initial Credit Facility and, in addition, to the effect that the
exemption of the Bonds (or any securities evidenced thereby) from the
registration requirements of the Securities Act of 1933, as amended, shall not
be impaired by the substitution of such Alternate Letter of Credit or that the
applicable registration or qualification requirements of such Act have been
satisfied.
Section 3.11. Issuance of Bonds. In order to provide funds for the
construction and purchase of the Project, the Issuer agrees that it will issue,
sell and deliver the Bonds to the original purchasers thereof. The proceeds of
the sale of the Bonds shall be paid over to the Trustee for the account of the
Issuer in accordance with the Indenture.
Section 3.12. Borrower Required to Pay Costs in Event Project Fund
Insufficient. In the event that money in the Project Fund is not sufficient to
pay all costs of providing the Project, or providing improvements or additions
to the Project as contemplated in connection with the Bonds, the Borrower shall,
nonetheless, complete such improvements or additions and shall pay all costs of
such completion in full from its own funds. The Borrower shall not be entitled
to any reimbursement for such completion costs from the Issuer, the Credit
Enhancer or any Trustee, Registrar or Paying Agent, nor shall it be entitled to
any abatement, diminution or postponement of Loan Payments.
-16-
Section 3.13. Completion Date. The Completion Date of the Project and all
additions or improvements to the Project shall be evidenced to the Issuer, the
Credit Enhancer and the Trustee by a certificate signed by an Authorized
Borrower Representative substantially in the form attached hereto as Exhibit C,
stating:
(a) the date on which the Project and the final additions or improvements
to the Project were substantially complete,
(b) that all other facilities necessary in connection with such additions
or improvements have been acquired, constructed, improved, installed and
equipped,
(c) that the Project and any such additions and improvements have been
completed in such a manner as to conform in all material respects with all
applicable zoning, planning, building, environmental and other similar
governmental regulations,
(d) that all costs of the Project or any such additions or improvements
then due and payable have been paid, and
(e) the amounts which the Trustee should retain in the Project Fund for
the payment of costs not yet due or the liability for which the Borrower is
contesting or which otherwise should be retained and the reasons such amounts
should be retained.
An Authorized Borrower Representative shall include with such certificate
a statement specifically describing all items of real property, personal
property and fixtures acquired and installed as part of the Project.
[End of Article III]
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ARTICLE IV
OPERATION OF THE PROJECT
Section 4.1. Operation of the Project. The Borrower represents, warrants,
covenants and agrees that it has obtained or shall obtain all necessary or
required permits, licenses, consents and approvals that are material for the
operation and maintenance of the Project and shall comply in all material
respects with all lawful requirements of any governmental body regarding the use
or condition of the Project, whether existing or later enacted, foreseen or
unforeseen or whether involving any change in governmental policy or requiring
structural or other changes to the Project and irrespective of the cost of so
complying.
Neither the Issuer, the Trustee or the Credit Enhancer, nor their
respective successors or assigns are the agents or representatives of the
Borrower, and the Borrower is not the agent of the Issuer, the Trustee or the
Credit Enhancer, and this Loan Agreement shall not be construed to make any of
the Issuer, the Trustee or the Credit Enhancer liable to materialmen,
contractors, subcontractors, craftsmen, laborers or others for goods or services
delivered by them in connection with the Project, or for debts or claims
accruing to the aforesaid parties against the Borrower. This Loan Agreement
shall not create any contractual relation either expressed or implied between
the Issuer, the Trustee or the Credit Enhancer and any materialmen, contractors,
subcontractors, craftsmen, laborers or any other person supplying any work,
labor or materials in connection with the Project.
Section 4.2. Environmental Compliance. The Borrower will comply in all
material respects with the environmental provisions of the Credit Documents, the
provisions of which (including relevant definitions) are incorporated herein by
this reference and constitute a part of this Agreement.
Section 4.3. Payment of Project Costs. The proceeds from the sale of the
Bonds shall be paid by the Trustee from the Project Fund in accordance with
Section 3.4 of this Agreement to provide for the payment of the Project costs.
Section 4.4. Deficiency of Project Fund. The Issuer makes no warranty,
either express or implied, that the amounts in the Project Fund shall be
sufficient to fully provide for the costs of the Project. The Borrower shall not
be entitled to any reimbursement for the payment of any such deficiency by the
Issuer, the Trustee, the Credit Enhancer or any Bondowner, nor shall it be
entitled to any diminution of any amounts otherwise payable under this Loan
Agreement.
[End of Article IV]
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ARTICLE V
MAINTENANCE; MODIFICATIONS; INSURANCE;
LEASE OR ASSIGNMENT OF PROJECT;
LOSS OR DAMAGE TO PROJECT
Section 5.1. Maintenance of Project by Borrower. The Borrower agrees that,
subject to the provisions of Sections 5.7 and 5.8 hereof, during the term of
this Agreement it will keep and maintain the Project in good condition, repair
and working order, ordinary wear and tear excepted, at its own cost, and will
make or cause to be made from time to time all necessary repairs thereto
(including external and structural repairs) and renewals and replacements
thereto.
Section 5.2. Sale or Lease of Project; Assignment of Loan Agreement by
Borrower. Subject to Section 2.2(j) hereof, and upon the written consent of the
Credit Enhancer and the delivery of an Opinion of Bond Counsel to the Trustee
and the Credit Enhancer that such action is permitted by the Borrower Documents
and the Act, and shall not adversely affect the exclusion from gross income for
federal income tax purposes of the interest on the Bonds, the Borrower may
assign, mortgage, pledge, sell, lease, grant a security interest in, or in any
other manner transfer, convey or dispose of the Project or any interest therein
or part thereof or assign any of its right, title and interest in, to and under
this Loan Agreement in accordance with the Borrower Documents; provided that no
such assignment with respect to this Loan Agreement shall be made unless a
corresponding assignment is made with respect to the Series 1994B Loan
Agreement.
Section 5.3. Taxes, Assessments and Other Charges. The Borrower shall pay
all taxes, assessments and charges of any kind whatsoever that may at any time
be lawfully assessed or levied against or with respect to the Project (including
any tax upon or with respect to the income or profits of the Issuer from the
Project that, if not paid, would become a charge on the payments to be made
under this Loan Agreement prior to or on a parity with the charge thereon
created by the Indenture and including ad valorem, sales and excise taxes,
assessments and charges upon the Borrower's interest in the Project), all
utility and other charges incurred in the operation, maintenance, use, occupancy
and upkeep of the Project and all assessments and charges lawfully made by any
governmental body for public improvements that may be secured by lien on the
Project.
Section 5.4. Use of Project. The Issuer will not take or cause the Trustee
to take any action (other than as provided herein or in the Indenture) to
interfere with the Borrower's interest in the Project or to interfere with
possession, custody, use and enjoyment of the Project.
Section 5.5. Insurance Required. The Borrower shall cause the Project to
be kept continuously insured against such risks as are customarily insured
against by companies conducting activities similar to those of the Borrower in
connection with the Project, and shall pay as the same become due all premiums
in respect thereof, all as provided in the Credit Documents.
Section 5.6. Damage, Destruction, Condemnation or Loss of Title. For as
long as ▇▇▇▇▇▇ Financial, Inc. is the Credit Enhancer, all Net Proceeds shall be
applied in accordance with the terms and provisions of the Credit Agreement and
other Credit Documents; provided (i) in addition to the
-19-
requirements set forth in the Credit Agreement and other Credit Documents, as a
condition to the use of such Net Proceeds for repair, reconstruction,
restoration, replacement and re-equipping of the Project, there shall be
delivered to the Trustee and the Credit Enhancer an Opinion of Bond Counsel that
such action shall not adversely affect the exclusion from gross income for
federal income tax purposes of the interest on the Bonds and, upon completion of
such action, any remaining balance not required for such repair, reconstruction,
restoration, replacement and re-equipping shall be deposited in the Revenue Fund
and applied in accordance with the provisions of the Indenture and (ii) in the
event the Net Proceeds are not used for such repair, reconstruction,
restoration, replacement and re-equipping, such Net Proceeds shall be used for
redemption of Bonds as set forth in Section 5.6(b) below.
The Borrower hereby agrees to apply the Net Proceeds of any award,
compensation, settlement, damages, compromise, voluntary conveyance or insurance
proceeds payable in connection with the pending or threatened condemnation or
taking, or sale under threat of condemnation or taking, of the Project or a
portion thereof for any public or quasipublic use (hereinafter referred to as a
"condemnation") or in connection with a deficiency or nonexistence of the
Borrower's title thereto or the lien or priority of the documents securing the
Borrower's obligations under the Letter of Credit Agreement to the Credit
Enhancer (hereinafter referred to as a "loss of title"). The Issuer and the
Trustee shall cooperate with the Borrower in the handling and conduct of any
prospective or pending condemnation proceedings with respect to the Project or
any portion thereof.
The Borrower shall notify the Issuer, the Credit Enhancer and the Trustee
immediately in the case of damage to or destruction of the Project or any
portion thereof resulting from fire or other casualty (hereinafter referred to
as a "casualty loss") or of a condemnation or loss of title.
In the event of a casualty loss, a condemnation or a loss of title for
which the Net Proceeds do not exceed $1,000,000, the Borrower shall, but only
with the prior written consent of the Credit Enhancer, which consent may not be
unreasonably withheld, forthwith repair, reconstruct, restore, replace and
improve the Project to substantially the same or an improved condition or
utility value as existed prior to such casualty loss or forthwith make such
replacements of or repairs or improvements to the Project or portions thereof
made necessary by such condemnation or loss of title. Such Net Proceeds shall be
paid directly to the Borrower and applied to the extent necessary to the payment
of the costs of such repair, reconstruction, restoration, replacement and
improvement. Any remaining balance not required for such purpose shall be paid
to the Trustee for deposit in the Revenue Fund to be used to redeem Bonds on the
earliest date for which notice of redemption can be given in accordance with
Article IV of the Indenture.
If such Net Proceeds exceed $1,000,000, or if such Net Proceeds do not
exceed such amount and the Credit Enhancer does not consent in writing to the
action described in the immediately preceding paragraph, such Net Proceeds shall
be paid to the Trustee for disbursement as hereinafter described and the
Borrower shall, with the prior written consent of the Credit Enhancer, elect one
of the following options by written notice delivered to the Trustee, the Credit
Enhancer and the Issuer within 30 days after the determination of the amount of
such Net Proceeds or 90 days after the occurrence of such casualty loss,
condemnation or loss of title, whichever occurs first:
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(a) Option A - Repairs and Improvements. Upon delivery of an Opinion of
Bond Counsel to the Trustee and the Credit Enhancer that such action shall not
adversely affect the exclusion from gross income for federal income tax purposes
of the interest on the Bonds, the Borrower may elect to use such Net Proceeds to
repair, reconstruct, restore, replace and re-equip the Project and, in such
event, such Net Proceeds shall be deposited in a separate account to be
established by the Trustee and, so long as no Event of Default exists, shall be
disbursed from time to time by the Trustee upon the request of the Borrower in
such manner as may be agreed to by the Credit Enhancer and the Trustee. Upon the
completion of such use, any remaining balance not required for such repair,
reconstruction, restoration, replacement and re-equipping shall be deposited in
the Revenue Fund and applied in accordance with the provisions of the Indenture.
(b) Option B - Redemption of Bonds. The Borrower may elect to have such
Net Proceeds deposited in the Revenue Fund; provided either (i) the Borrower
elects to prepay all Loan Payments pursuant to Section 9.2 hereof and cause all
the Bonds to be redeemed (without premium or penalty) in accordance with Section
402(d) of the Indenture at the earliest practical date, or (ii) the Borrower
elects to prepay Loan Payments pursuant to Section 9.2 hereof and cause part of
the Bonds to be redeemed (without premium or penalty) pursuant to Section 402(d)
of the Indenture and the property suffering such casualty loss, condemnation or
loss of title was not essential to the use of the Project in a manner that will
result in any of the representations or warranties respecting the Project and
the use of the proceeds of the Bonds being false, untrue, misleading or breached
and provided further that an expert appraiser retained by the Borrower and
reasonably acceptable to the Trustee delivers to the Trustee its written
opinion, appraisal or certificate showing that the ratio of the fair market
value at a foreclosure sale of the Project immediately prior to the occurrence
or discovery of such casualty loss, condemnation or loss of title to the
principal amount of the Bonds then Outstanding is no greater than the ratio of
the then current market value at a foreclosure sale of the Project to the
principal amount of the Bonds to be Outstanding after the application of such
Net Proceeds and any other moneys deposited in the Revenue Fund by the Borrower
for the redemption of Bonds.
In the event such Net Proceeds do not exceed $1,000,000 and the Credit
Enhancer consents in writing to the action described in the third paragraph of
this Section or the Borrower shall elect Option A, (i) the Borrower shall
complete the repair, reconstruction, restoration, replacement and re-equipping
of the Project free from all liens other than Permitted Encumbrances, whether or
not such Net Proceeds are sufficient to pay for the same; (ii) the Borrower
shall not be entitled to any reimbursement from the Issuer, the Trustee, the
Credit Enhancer or the Bondowners or any abatement or diminution of its
obligations hereunder by reason of any payments made by the Borrower for such
purpose in excess of the Net Proceeds; and (iii) all such repairs,
reconstructions, restorations, replacements and re-equipping shall be a part of
the Project and shall be subjected to the lien and security interest of the
Credit Documents and the Borrower shall take any actions which the Credit
Enhancer reasonably deems necessary or appropriate to so subject them to the
Credit Documents.
Notwithstanding anything herein to the contrary, if ▇▇▇▇▇▇ Financial, Inc.
is no longer the Credit Enhancer, the Borrower shall have no obligation to
repair, reconstruct, restore, replace or re-equip the Project (unless such Net
Proceeds are made available to the Borrower for such purpose).
-21-
Section 5.7. Remodeling and Improvements. The Borrower may remodel the
Project or make substitutions, additions, modifications or improvements thereto
from time to time as it, in its discretion, deems desirable, provided that (i)
any such remodeling, substitutions, additions, modifications or improvements do
not materially alter the character of the Project as an enterprise permitted by
the Act and (ii) the same will not adversely affect the exclusion from gross
income for federal taxation purposes of interest on the Bonds, as provided in an
Opinion of Bond Counsel addressed to the Issuer, the Trustee and the Credit
Enhancer. The cost of such remodeling, substitutions, additions, modifications
or improvements shall be paid by the Borrower.
Section 5.8. Equipment. The Borrower may from time to time substitute
machinery and equipment for any part of the Project, provided that (i) any such
substitutions do not materially alter the character of the Project as an
enterprise permitted by the Act and (ii) the same will not adversely affect the
exclusion from gross income for federal taxation purposes of interest on the
Bonds, as provided in an Opinion of Bond Counsel addressed to the Issuer, the
Trustee and the Credit Enhancer. Any such substituted machinery and equipment
shall become a part of the Project and be included under the terms of this
Agreement.
Provided that the same will not adversely affect the exclusion from gross
income for federal taxation purposes of interest on the Bonds, as provided in an
Opinion of Bond Counsel addressed to the Issuer, the Trustee and the Credit
Enhancer, the Borrower may also sell, scrap, trade-in or otherwise dispose of,
any machinery or equipment which is a part of the Project, without substitution
therefor so long as the removal of the machinery or equipment to be purchased or
otherwise disposed of will not materially alter the character of the Project as
an enterprise permitted by the Act.
[End of Article V]
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ARTICLE VI
PARTICULAR COVENANTS
Section 6.1. Access to the Project and Inspection; Operation of the
Project. The duly authorized agents of the Issuer, the Credit Enhancer and the
Trustee shall have the right, at all reasonable times upon the furnishing of
reasonable notice under the circumstances, to enter upon the Project and to
examine and inspect the Project, subject to any secrecy regulation or agreement
or national security law or regulation of the government of the United States of
America. The Borrower will execute, acknowledge and deliver all such further
documents and do all such other acts and things as may be necessary to grant to
the Issuer, the Credit Enhancer and the Trustee such right of entry. The duly
authorized agents of the Issuer, the Credit Enhancer and the Trustee shall also
be permitted, at all reasonable times upon reasonable notice under the
circumstances, to examine the books and records of the Borrower with respect to
the Project and the obligations of the Borrower hereunder.
Section 6.2. Financial Statements. The Borrower shall furnish the Credit
Enhancer and the Trustee with copies of its audited financial statements for
each of its fiscal years within 120 days after the end of the preceding fiscal
year accompanied by a certificate of the Authorized Borrower Representative
stating (i) that the information contained in such statements is materially true
and correct, and (ii) that, to the best of his knowledge after reasonable
investigation, no Default exists, and if there is such a Default, specifying the
nature and period of existence thereof and what action, if any, the Borrower is
taking or proposes to take with respect thereto.
Section 6.3. Indemnification. (a) The Borrower releases the Issuer and the
Trustee from, agrees that the Issuer and the Trustee shall not be liable for,
and indemnifies the Issuer and the Trustee against, all liabilities, losses,
damages (including reasonable attorneys' fees), causes of action, suits, claims,
costs and expenses, demands and judgments of any nature imposed upon or asserted
against the Issuer or the Trustee, on account of: (i) any loss or damage to
property or injury to or death of or loss by any Person that may he occasioned
by any cause whatsoever pertaining to the construction, maintenance, operation
and use of the Project; (ii) any breach or default on the part of the Borrower
in the performance of any covenant or agreement of the Borrower under this Loan
Agreement, the Borrower Documents or any related document, or arising from any
act or failure to act by the Borrower, or any of its agents, contractors,
servants, employees or licensees; (iii) violation by the Borrower or any
Affiliate of any law, ordinance or regulation affecting the ownership, occupancy
or use of the Project; (iv) the authorization, issuance and sale of the Bonds,
and the provision of any information furnished by the Borrower in connection
therewith concerning the Project or the Borrower or arising from (1) any errors
or omissions of any nature whatsoever such that the Bonds, when delivered to the
Bondowners, are not validly issued and binding obligations of the Issuer, or (2)
any fraud or misrepresentations or omissions contained in the proceedings of the
Issuer or the Trustee with respect to, or as a result of, materials furnished in
writing by the Borrower relating to the issuance of the Bonds which, if known to
the original purchaser of the Bonds, would reasonably be a material factor in
its decision to purchase the Bonds; (v) failure to pay rebatable arbitrage
pursuant to Section 3.7(b) hereof; and (vi) any claim or action or proceeding
with respect to the matters set forth in subsections (i), (ii), (iii), (iv) and
(v) above brought thereon; provided, however, that the Borrower does not hereby
release the Issuer or the Trustee from, or agree that either of them shall not
be liable for, or indemnify either of them against any liabilities, losses,
damages
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(including attorneys' fees), causes of action, suits, claims, costs and
expenses, demands and judgments of any nature imposed upon or asserted against
either of them on account of, with respect to the Issuer, its willful
misconduct, or, with respect to the Trustee, its negligence or willful
misconduct.
(b) The Borrower agrees to indemnify the Trustee for and to hold it
harmless against all liabilities, claims, costs and expenses incurred without
negligence or willful misconduct on the part of the Trustee, on account of any
action taken or omitted to be taken by the Trustee in accordance with the terms
of this Loan Agreement, the Bonds or the Indenture or any action taken at the
request of or with the consent of the Borrower, including the costs and expenses
of the Trustee in defending itself against any such claim, action or proceeding
brought in connection with the exercise or performance of any of its powers or
duties under this Loan Agreement, the Bonds or the Indenture.
(c) In case any action or proceeding is brought against the Issuer or the
Trustee in respect of which indemnity may be sought hereunder, the party seeking
indemnity promptly shall give notice of that action or proceeding to the
Borrower, and the Borrower upon receipt of that notice shall have the obligation
and the right to assume the defense of the action or proceeding; provided, that
failure of a party to give that notice shall not relieve the Borrower from any
of its obligations under this Section unless that failure prejudices the defense
of the action or proceeding by the Borrower. At its own expense, an indemnified
party may employ separate legal counsel and participate in (but not control) the
defense. The Borrower shall not be liable for any settlement without its
consent.
(d) The indemnification set forth above is intended to and shall include
the indemnification of all affected officials, directors, officers, staff and
employees of the Issuer, and the Trustee, respectively. That indemnification is
intended to and shall be enforceable by the Issuer to the full extent permitted
by law.
Section 6.4. Further Assurances and Corrective Instruments. Subject to the
Indenture, the Issuer and the Borrower from time to time will execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
Supplemental Loan Agreements and such further instruments as may reasonably be
required for correcting any inadequate or incorrect description of the Project
and for carrying out the intention or facilitating the performance of this Loan
Agreement.
Section 6.5. Litigation Notice. The Borrower shall give the Trustee and
the Credit Enhancer prompt notice of any action, suit or proceeding by it or
against it at law or in equity, or before any governmental instrumentality or
agency, or of any of the same which may be threatened, which, if adversely
determined, would materially impair the right of the Borrower to carry on the
business which is contemplated in connection with the Project, or would
materially and adversely affect its business, operations, properties, assets or
condition. Within five Business Days after the filing against the Borrower, and
prior to the filing by the Borrower, of a petition in bankruptcy, the Borrower
shall notify the Trustee and the Credit Enhancer in writing as to such
occurrence.
Section 6.6. Annual Certificate. The Borrower will furnish to the Issuer,
the Trustee and the Credit Enhancer, on or before September 1 of each year, a
certificate, signed by an Authorized Borrower Representative, stating that the
Borrower has made a review of its activities with respect to the Project during
the preceding calendar year for the purpose of determining whether or not the
Borrower has
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complied with all of the terms, provisions and conditions of the Borrower
Documents and that the Borrower has, to the best of its knowledge, kept,
observed, performed and fulfilled each and every covenant, provision and
condition of the Borrower Documents on its part to be performed and is not in
default, in the performance or observance of any of the terms, covenants,
provisions or conditions hereof. If the Borrower shall be in default such
certificate shall specify all such defaults and the nature thereof.
[End of Article VI]
-25-
ARTICLE VII
ASSIGNMENT OF ISSUER'S RIGHTS UNDER LOAN AGREEMENT
Section 7.1. Assignment by the Issuer. The Issuer, by means of the
Indenture and as security for the payment of the principal of, purchase price
of, and redemption premium, if any, and interest on the Bonds, and the
obligations payable to the Credit Enhancer under the Letter of Credit Agreement,
will assign, pledge and grant a security interest in certain of its rights,
title and interests in, to and under this Loan Agreement, including Loan
Payments and Additional Payments and other revenues, moneys and receipts
received by it pursuant to this Loan Agreement, to the Trustee (reserving its
Unassigned Issuer's Rights).
Section 7.2. Restriction on Transfer of Issuer's Rights. The Issuer will
not sell, assign, transfer or convey its interests in this Loan Agreement except
pursuant to the Indenture.
Section 7.3. Credit Enhancer's Remedial Rights. The Issuer and the
Borrower hereby acknowledge and agree that should the Credit Enhancer exercise
certain of its remedial rights under the Credit Documents, the Credit Enhancer
(or an affiliate or designee thereof) may become successor in interest to the
Borrower hereunder. No such exercise of the Credit Enhancer's rights under the
Credit Documents, or succession of the Credit Enhancer (or an affiliate or
designee thereof) to the interest of the Borrower hereunder, shall require, as a
condition precedent, either (i) the further consent of the Issuer, the Trustee
or the Bondowners, or (ii) the acceleration of the Bonds (unless the Credit
Enhancer elects such in its sole discretion).
[End of Article VII]
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ARTICLE VIII
EVENTS OF DEFAULT AND REMEDIES
Section 8.1. Events of Default Defined. The term "Event of Default" shall
mean any one or more of the following events:
(a) Failure by the Borrower to make timely payment of any Loan Payment or
any Additional Payment when due.
(b) Failure by the Borrower to observe and perform any covenant, condition
or agreement on the part of the Borrower under this Loan Agreement or the
Indenture, other than as referred to in the preceding subparagraph (a) of this
Section, for a period of 60 days after written notice of such default has been
given to the Borrower and the Credit Enhancer by the Trustee during which time
such default is neither cured by the Borrower or the Credit Enhancer nor waived
in writing by the Credit Enhancer and the Trustee, provided that, if the failure
stated in the notice cannot be corrected within said 60-day period, the Credit
Enhancer and the Trustee may consent in writing to an extension of such time
prior to its expiration and the Credit Enhancer and the Trustee will not
unreasonably withhold their consent to such an extension if corrective action is
instituted by the Borrower or the Credit Enhancer within the 60-day period and
diligently pursued to completion and if such consent, in their judgment, does
not materially adversely affect the interests of the Bondowners.
(c) Any representation or warranty by the Borrower herein or in any
certificate or other instrument delivered under or pursuant to this Loan
Agreement or the Indenture or in connection with the financing of the Project
shall prove to have been false, incorrect, misleading or breached in any
material respect on the date when made, unless waived in writing by the Issuer,
the Credit Enhancer and the Trustee or cured by the Borrower or the Credit
Enhancer within 30 days after the discovery thereof and notice has been given to
the Borrower and the Credit Enhancer.
(d) The occurrence of an Act of Bankruptcy with respect to the Borrower.
(e) The occurrence of an Event of Default as defined in the Indenture.
(f) The occurrence of an Event of Default as defined in the Series 1994B
Loan Agreement.
Section 8.2. Remedies on Default. Subject to the provisions of Section 8.8
hereof, whenever any Event of Default shall have occurred and be continuing, the
Trustee, as the assignee of the Issuer, may take any one or more of the
following remedial steps; provided that if the principal of all Bonds then
Outstanding and the interest accrued thereon shall have been declared
immediately due and payable pursuant to the provisions of Section 802 of the
Indenture, all Loan Payments for the remainder of the Loan Term shall become
immediately due and payable without any further act or action on the part of the
Issuer or the Trustee and the Trustee may immediately proceed (subject to the
provisions of Section 8.8 hereof) to take any one or more of the remedial steps
set forth in subparagraph (b) of this Section:
-27-
(a) By written notice to the Borrower (with a copy to the Credit Enhancer)
declare all Loan Payments to be immediately due and payable, together with
interest on overdue payments of principal and redemption premium, if any, and,
to the extent permitted by law, interest, at the rate or rates of interest
specified in the respective Bonds, without presentment, demand or protest, all
of which are expressly waived.
(b) Take whatever other action at law or in equity, including causing the
appointment of a receiver or receivers for the Borrower and/or its assets,
taking all actions necessary and appropriate to exercise or to cause the
exercise the rights and powers set forth herein or in the Indenture, as may
appear necessary or desirable to collect the amounts payable pursuant to this
Loan Agreement then due and thereafter to become due or to enforce the
performance and observance of any obligation, agreement or covenant of the
Borrower under this Loan Agreement or the Indenture.
In the enforcement of the remedies provided in this Section, the Trustee
may treat all expenses of enforcement, including reasonable legal, accounting
and advertising fees and expenses, as Additional Payments then due and payable
by the Borrower.
Any amount collected pursuant to action taken under this Section (other
than payments on the Credit Facility) shall be paid to the Trustee and applied,
first, to the payment of any costs, expenses and fees incurred by the Issuer or
the Trustee as a result of taking such action and, next, any balance shall be
used to satisfy any Loan Payments then due by payment into the Revenue Fund and
applied in accordance with the Indenture and, then, to satisfy any other
Additional Payments then due or to cure any other Event of Default.
Notwithstanding the foregoing, the Trustee shall not be obligated to take
any remedial action described in (b) above that in its opinion will or might
cause it to expend time or money or otherwise incur liability, unless and until
indemnity satisfactory to it has been furnished to the Trustee at no cost or
expense to the Trustee.
The provisions of this Section are subject to the limitation that the
annulment of a declaration that the Bonds are immediately due and payable shall
automatically constitute an annulment of any corresponding declaration made
pursuant to subparagraph (a) of this Section and a waiver and rescission of the
consequences of such declaration and of the Event of Default with respect to
which such declaration has been made, provided that no such waiver or rescission
shall extend to or affect any other or subsequent Default or impair any right
consequent thereon. In the event any covenant, condition or agreement contained
in this Loan Agreement shall be breached or any Event of Default shall have
occurred and such breach or Event of Default shall thereafter be waived by the
Trustee, such waiver shall be limited to such particular breach or Event of
Default.
Section 8.3. No Remedy Exclusive. Subject to the provisions of Section 8.8
hereof, no remedy herein conferred or reserved is intended to be exclusive of
any other available remedy or remedies, but each and every such remedy shall be
cumulative and shall be in addition to every other remedy given under this Loan
Agreement or now or hereafter existing at law or in equity or by statute. No
delay or omission to exercise any right or power accruing upon Default shall
impair any such right or power or shall be construed to be a waiver thereof, but
any such right and power may be exercised from time to
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time and as often as may be deemed expedient. In order to entitle the Trustee to
exercise any remedy reserved to it in this Article, it shall not be necessary to
give any notice, other than such notice as may be herein expressly required.
Section 8.4. Agreement to Pay Attorneys' Fees and Expenses. Subject to the
provisions of Section 3.7 hereof, in connection with any Event of Default by the
Borrower, if the Issuer or the Trustee employs attorneys or incurs other
expenses for the collection of amounts payable hereunder or the enforcement of
the performance or observance of any covenants or agreements on the part of the
Borrower herein contained, the Borrower agrees that it will, on demand therefor,
pay to the Issuer and the Trustee the reasonable fees of such attorneys and such
other reasonable expenses so incurred by the Issuer and the Trustee.
Section 8.5. Issuer and Borrower to Give Notice of Default. The Issuer,
the Trustee and the Borrower shall each, at the expense of the Borrower,
promptly give to the Credit Enhancer and the other listed parties written notice
of any Default of which the Issuer, the Trustee or the Borrower, as the case may
be, shall have actual knowledge or written notice, but the Issuer shall not be
liable for failing to give such notice.
Section 8.6. Performance Of Borrower's Obligations. If the Borrower shall
fail to keep or perform any of its obligations as provided in this Loan
Agreement in respect of (a) maintenance of insurance, (b) payments of taxes,
assessments and other charges, (c) repairs and maintenance of the Project, (d)
compliance with legal or insurance requirements, and (e) keeping the Project
free of all liens other than Permitted Encumbrances, or in the making of any
other payment or performance of any other obligation, then the Issuer, the
Credit Enhancer or the Trustee, may (but shall not be obligated so to do) upon
the continuance of such failure on the Borrower's part for 5 days after notice
of such failure is given to the Borrower and the other listed parties by the
Issuer, the Credit Enhancer or the Trustee, and without waiving or releasing the
Borrower from any obligation hereunder, as an additional but not exclusive
remedy, make any such payment or perform any such obligation, and all sums so
paid by the Issuer, the Credit Enhancer or the Trustee and all necessary
incidental costs and expenses incurred by the Issuer, the Credit Enhancer or the
Trustee in performing such obligations shall be deemed to be Additional Payments
or payments due under the Collateral Documents, as applicable, and shall be paid
to the Issuer, the Credit Enhancer or the Trustee on demand.
Section 8.7. Remedial Rights Assigned to the Trustee. Upon the execution
and delivery of the Indenture, the Issuer will thereby have assigned to the
Trustee all rights and remedies conferred upon or reserved to the Issuer by this
Loan Agreement, reserving only the Unassigned Issuer's Rights. Subject to the
provisions of Section 8.8 hereof, the Trustee shall have the exclusive right to
exercise such rights and remedies conferred upon or reserved to the Issuer by
this Loan Agreement in the same manner and to the same extent, but under the
limitations and conditions imposed thereby and hereby. The Trustee, the Credit
Enhancer and the Bondowners shall be deemed third party creditor beneficiaries
of all representations, warranties, covenants and agreements contained herein.
Section 8.8. Credit Enhancer to Direct Trustee. Any provision herein to
the contrary notwithstanding, unless an Event of Default described in
subparagraph (a), (b), (c) or (e)(i) of Section 801 of the Indenture, or an
Event of Default described in subparagraph (g) of said Section 801 as the
-29-
same relates to a default described in subparagraphs (a), (b), (c) or (e)(i) of
Section 801 of the Series 1994B Indenture, shall have occurred and be
continuing, the Issuer shall (subject to the requirements of Section 901(1) of
the Indenture) exercise the remedies provided for hereunder only if and as
directed in writing by the Credit Enhancer and shall not waive any Event of
Default without the prior written consent of the Credit Enhancer; provided that
such direction shall not be otherwise than in accordance with the provisions of
law and of the Indenture.
[End of Article VIII]
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ARTICLE IX
PREPAYMENT AND ACCELERATION OF LOAN PAYMENTS
Section 9.l. Prepayment at the Option of the Borrower. Upon the exercise
by the Borrower, with the prior written consent of the Credit Enhancer, of its
option to cause the Bonds or any portion thereof to be redeemed pursuant to
Section 401 of the Indenture, the Borrower shall prepay Loan Payments in whole
or in part at the times and at the prepayment prices sufficient to redeem all or
a corresponding portion of the Bonds then Outstanding in accordance with said
Section. At the written direction of the Borrower such prepayments shall be
applied to the redemption of the Bonds in whole or in part in accordance with
said Section.
Section 9.2. Optional Prepayment Upon Certain Events. Upon the occurrence
of any of the conditions or events set forth in Section 402(d) of the Indenture,
the Borrower shall have the option, with the prior written consent of the Credit
Enhancer, to prepay Loan Payments, in whole or in part at any time, at the time
and at the prepayment price sufficient to redeem all or a corresponding portion
of the Bonds then Outstanding in accordance with said Section.
Section 9.3. Mandatory Prepayment Upon Determination of Taxability. Upon
the occurrence of a Determination of Taxability, the Borrower shall prepay Loan
Payments in whole at the time and at the prepayment price sufficient to redeem
all of the Bonds then Outstanding in accordance with Section 402(a) of the
Indenture. The Borrower will promptly notify the Issuer, the Credit Enhancer and
the Trustee in writing of the occurrence and existence of any event or condition
which could result in mandatory prepayment under this Section.
Section 9.4. Mandatory Prepayment Upon Certain Defaults. Upon the
occurrence of any event set forth in Section 402(c) of the Indenture, the
Borrower shall prepay Loan Payments in whole at the time and at the prepayment
price sufficient to redeem all of the Bonds then Outstanding in accordance with
said Section.
Section 9.5. Mandatory Prepayment From Amounts Remaining in Project Fund.
Redemption of Bonds with proceeds derived under Section 3.4(c) hereof shall be
deemed a prepayment of the Loan Payments in the same amount as the amount of
Bonds redeemed. The Borrower shall pay or cause to be paid to the Trustee from
Available Moneys, at the time of a transfer from the Project Fund to the Revenue
Fund, such amount as is necessary to cause the transferred amount to equal an
Authorized Denomination.
Section 9.6. Right to Prepay at Any Time. The Borrower shall have the
option at any time to prepay all of the Loan Payments, Additional Payments and
other amounts it is required to pay hereunder by paying to the Trustee all such
sums as are sufficient to satisfy and discharge the Indenture and paying or
making provision for the payment of all other sums payable hereunder.
Section 9.7. Notice of Prepayment. To exercise an option granted by
Section 9.1, Section 9.2 or Section 9.6, the Borrower shall give written notice
to the Issuer, the Credit Enhancer and the Trustee which shall specify therein
the date upon which a prepayment of Loan Payments will be made, which date
-31-
shall be not less than 45 days from the date the notice is received by the
Trustee, and which shall contain the written consent of the Credit Enhancer. In
the Indenture, the Issuer has directed the Trustee to forthwith take all steps
(other than the payment of the money required to redeem the Bonds) necessary
under the applicable provisions of the Indenture to effect any redemption of the
then Outstanding Bonds, in whole, or inpart, pursuant to Section 402 of the
Indenture.
Section 9.8. Precedence of this Article. The rights, options and
obligations of the Borrower set forth in this Article may be exercised or shall
be fulfilled, as the case may be, whether or not a Default exists hereunder,
provided that such Default will not result in nonfulfillment of any condition to
the exercise of any such right or option and provided further that no amounts
payable pursuant to this Loan Agreement shall be prepaid in part during the
continuance of an Event of Default described in subparagraph (a) of Section 8.1
hereof.
[End of Article IX]
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ARTICLE X
MISCELLANEOUS
Section 10.1. Authorized Representatives. Whenever under this Loan
Agreement the approval of the Issuer is required or the Issuer is required or
permitted to take some action, such approval shall be given or such action shall
be taken by an Authorized Issuer Representative, and the Borrower, the Credit
Enhancer and the Trustee shall be authorized to act on any such approval or
action. Any approval shall not be unreasonably withheld or delayed.
Whenever under this Loan Agreement the approval of the Borrower is
required or the Borrower is required or permitted to take some action, such
approval shall be given or such action shall be taken by an Authorized Borrower
Representative, and the Issuer, the Credit Enhancer and the Trustee shall be
authorized to act on any such approval or action.
Whenever under this Loan Agreement the approval of the Credit Enhancer is
required or the Credit Enhancer is required or permitted to take some action,
such approval shall be given or such action shall be taken by an authorized
Credit Enhancer representative, and the Issuer, the Borrower and the Trustee
shall be authorized to act on any such approval or action.
Section 10.2. Term of Loan Agreement. This Loan Agreement shall be
effective from and after its execution and delivery and shall continue in full
force and effect until the Bonds are deemed to be paid within the meaning of
Article XII of the Indenture and provision has been made for paying all other
sums payable by the Borrower to the Issuer, the Trustee, the Credit Enhancer and
the Paying Agent to the date of the retirement of the Bonds. All agreements,
covenants, representations and certifications by the Borrower as to all matters
affecting the status of the interest on the Bonds and the indemnifications
provided by Section 6.3 hereof shall survive the termination of this Loan
Agreement for 12 months unless a claim has been made and then such
indemnification shall continue with regard to that claim only.
Section 10.3. Notices. Except as otherwise provided herein, it shall be
sufficient service of any notice, request, complaint, demand or other paper
required by this Agreement to be given to or filed if the same shall be duly
mailed by first-class mail, postage pre-paid, certified or registered mail, or
sent by telegram, telecopy or telex or other similar communication, confirmed in
writing by first-class mail, postage pre-paid, certified or registered mail, or
sent by telegram, telecopy or telex or other similar communication, on the same
day, addressed as specified in Section 1302 of the Indenture. All notices given
by first-class mail, certified or registered mail, postage prepaid, as aforesaid
shall be deemed duly given as of the third day after they are so mailed; all
notices given by telegram, telecopy or telex or other similar communication
shall be deemed duly given as of the date the same are transmitted by such means
to the recipient thereof; provided, however, that any notice deemed to be given
on a date that is not a Business Day in the jurisdiction in which such notice is
delivered to the addressee thereof, shall not be deemed duly given until the
next succeeding Business Day; provided, further, that notices to the Trustee
shall be deemed given as of the date they are received by the Trustee. A
duplicate copy of each notice, certificate or other communication given
hereunder by either the Issuer or the Trustee to the other shall also be given
to the Borrower, the Remarketing Agent and the Credit Enhancer. In the event of
notice to any party other than the Issuer or the Trustee, a copy of the notice
shall be provided to the Borrower,
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the Remarketing Agent and the Credit Enhancer. In addition, the Trustee shall
send to the Credit Enhancer, the Borrower, the Tender Agent and the Remarketing
Agent a copy of each notice sent to the Bondowners. The Issuer, the Trustee, the
Tender Agent, the Borrower, the Credit Enhancer and the Remarketing Agent may
from time to time designate, by notice given under the terms of the Indenture to
the others of such parties, such other address to which subsequent notices,
certificates or other communications shall be sent.
Section 10.4. Performance Date Not a Business Day. If the last day for
performance of any act or the exercising of any right, as provided in this Loan
Agreement, shall not be a Business Day, such payment may be made or act
performed or right exercised on the next succeeding Business Day.
Section 10.5. Binding Effect. This Loan Agreement shall inure to the
benefit of and shall be binding upon the Issuer, the Borrower and their
respective successors and assigns, subject to the provisions contained in
Section 5.2 hereof. The Issuer and the Borrower acknowledge that the Credit
Enhancer is a third-party beneficiary of those provisions herein which relate to
the making of payments or giving of notice to or consents by or following the
directions of or the performance of other acts to benefit it and all such
provisions shall be enforceable by the Credit Enhancer.
Section 10.6. Amendments, Changes and Modifications. Except as otherwise
provided in this Loan Agreement or in the Indenture, subsequent to the issuance
of Bonds and prior to all of the Bonds being deemed to be paid in accordance
with Article XII of the Indenture and provision being made for the payment of
all sums payable under the Indenture in accordance with Article XII thereof,
this Loan Agreement may not be effectively amended, changed, modified, altered
or terminated without the prior concurring written consent of the Trustee and
the Credit Enhancer, given in accordance with the Indenture.
Section 10.7. Execution in Counterparts. This Loan Agreement may be
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 10.8. No Pecuniary Liability. No provision, representation,
covenant or agreement contained in this Loan Agreement or in the Indenture, the
Bonds, or any obligation herein or therein imposed upon the Issuer, or the
breach thereof, shall constitute or give rise to or impose upon the Issuer a
pecuniary liability (except to the extent of any loan repayments, revenues and
receipts derived by the Issuer pursuant to this Loan Agreement). No provision
hereof shall be construed to impose a charge against the general credit of the
Issuer or the State or the taxing powers of the State within the meaning of any
constitutional provision or statutory limitation, or any personal or pecuniary
liability upon any director, official or employee of the Issuer.
Section 10.9. Extent of Covenants of the Issuer; No Personal or Pecuniary
Liability. All covenants, obligations and agreements of the Issuer contained in
this Loan Agreement and the Indenture shall be effective to the extent
authorized and permitted by applicable law. No such covenant, obligation or
agreement shall be deemed to be a covenant, obligation or agreement of any
present or future member, officer, agent or employee of the Issuer in other than
his official capacity, and no official executing the Bonds shall be liable
personally on the Bonds or be subject to any personal liability or
accountability by
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reason of the issuance thereof or by reason of the covenants, obligations or
agreements of the Issuer contained in this Loan Agreement or in the Indenture.
No provision, covenant or agreement contained in this Loan Agreement, the
Indenture or the Bonds, or any obligation herein or therein imposed upon the
Issuer, or the breach thereof, shall constitute or give rise to or impose upon
the Issuer a pecuniary liability or a charge.
Section 10.10. Net Loan. The parties hereto agree (a) that the payments of
Loan Payments are designed to provide the Issuer and the Trustee with moneys
adequate in amount to pay all principal of, purchase price of, and redemption
premium, if any, and interest accruing on the Bonds as the same become due and
payable, (b) that to the extent that the payments of Loan Payments are not
sufficient to provide the Issuer and the Trustee with funds sufficient for the
purposes aforesaid, subject to the provisions of Section 3.8 hereof, the
Borrower shall be obligated to pay, and it does hereby covenant and agree to
pay, upon demand therefor, as Additional Payments, such further moneys, in cash,
as may from time to time be required for such purposes, and (c) that if after
the principal of, and redemption premium, if any, and interest on the Bonds and
all costs incident to the payment of the Bonds have been paid in full the
Trustee or the Issuer holds unexpended funds received in accordance with the
terms hereof, such unexpended funds shall, after payment therefrom of all sums
then due and owing by the Borrower under the terms of this Loan Agreement, be
distributed in accordance with the Indenture.
Section 10.11. Security Interests. The Issuer and the Borrower agree to
enter into all instruments (including financing statements and statements of
continuation) necessary for perfection of and continuance of the perfection of
the security interests of the Issuer and the Trustee in the Project. The Trustee
shall file or cause to be filed all such instruments required to be so filed and
shall continue or cause to be continued the liens of such instruments for so
long as the Bonds shall be Outstanding.
Section 10.12. Complete Agreement. The Issuer and the Borrower understand
that oral agreements or commitments to loan money, extend credit or to forbear
from enforcing repayment of a debt including promises to extend or renew such
debt are not enforceable. To protect the Issuer and the Borrower from
misunderstanding or disappointment, any agreements the Issuer and the Borrower
reach covering such matters are contained in this Loan Agreement, which is the
complete and exclusive statement of the agreement between the Issuer and the
Borrower, except as the Issuer and the Borrower may later agree in writing
(subject to the provisions of Article XI of the Indenture) to modify this
Agreement.
Section 10.13. Severability. If any provision of this Loan Agreement, or
any covenant, stipulation, obligation, agreement, act or action, or part thereof
made, assumed, entered into or taken thereunder, or any application of such
provision, is for any reason held to be illegal or invalid, such illegality or
invalidity shall not affect any other provision of this Loan Agreement or any
other covenant, stipulation, obligation, agreement, act or action, or part
thereof, made, assumed, entered into, or taken, each of which shall be construed
and enforced as if such illegal or invalid portion were not contained herein.
Such illegality or invalidity of any application thereof shall not affect any
legal and valid application thereof, and each such provision, covenant,
stipulation, obligation, agreement, act or action, or part thereof, shall be
deemed to be effective, operative, made, entered into or taken in the manner and
to the full extent permitted by law.
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Section 10.14. Governing Law. This Loan Agreement shall be governed by and
construed in accordance with the laws of the State of South Carolina.
Section 10.15. Not a Limitation. Nothing in this Loan Agreement contained
is intended to be (and nothing herein shall be construed to be) a limitation on
the obligations of the Borrower to the Credit Enhancer under the Credit
Documents.
Section 10.16. Consent to Jurisdiction: Service of Process.
(a) The Borrower hereby agrees and consents that any action or proceeding
arising out of or brought to enforce the provisions of this Loan Agreement or
any of the other Borrower Documents may be brought in any appropriate court in
the State or in any other court having jurisdiction over the subject matter, all
at the sole election of the Issuer or the Trustee, and by the execution of this
Loan Agreement, the Borrower irrevocably consents to the jurisdiction of each
such court.
(b) If for any reason the Borrower should become not qualified to do
business in the State, the Borrower hereby agrees to designate and appoint,
without power of revocation, an agent for service of process within the State,
as the agent for the Borrower upon whom may be served all process, pleadings,
notice, or other papers, which may be served upon the Borrower as a result of
any of the Borrower's obligations hereunder.
(c) The Borrower covenants that throughout the period during which any of
the Bonds remain outstanding, if a new agent for service or process within the
State is designated pursuant to the terms of subsection (b) of this section, the
Borrower will immediately file with the Issuer, the name and address of such new
agent and the date on which its appointment is to become effective.
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IN WITNESS WHEREOF, the Issuer and the Borrower have caused this Loan
Agreement to be executed in their respective names.
SOUTH CAROLINA JOBS-ECONOMIC
DEVELOPMENT AUTHORITY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
Chairman, Board of Directors
[SEAL]
ATTEST:
By: /s/ [ILLEGIBLE]
----------------------------
Executive Director
ROLLER BEARING COMPANY OF AMERICA,
INC.
By: /s/ [ILLEGIBLE]
-------------------------------------
Its CFO and Treasurer
[SEAL]
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EXHIBIT A
DESCRIPTION OF PROJECT
Buildings, fixtures, machinery and equipment to constitute an
approximately 60,000 square foot expansion of an existing facility for the
manufacture of roller bearings in Darlington County, South Carolina.
A-1
EXHIBIT B
Request No.__________ Date: ___________
WRITTEN REQUEST FOR DISBURSEMENT FROM
SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT AUTHORITY
___________
________FUND
(ROLLER BEARING OF AMERICA, INC. PROJECT)
Series 1994A
To: ▇▇▇▇ ▇▇▇▇▇ Bank
Attention: Corporate Trust Department
as Trustee under the Trust Indenture, dated as of September 1, 1994,
between the South Carolina Jobs-Economic Development Authority, and said
Trustee
Pursuant to Section 3.4 of the Loan Agreement, dated as of September 1,
1994 (the "Loan Agreement"), between the South Carolina Jobs-Economic
Development Authority and Roller Bearing Company of America, Inc. (the
"Borrower"), the Borrower hereby requests payment from the ____ Fund in
accordance with this request and said Section 3.4 and hereby states and
certifies as follows:
1. The date and number of this request are as set forth above.
2. All terms in this request shall have and are used with the meanings
specified in the Loan Agreement.
3. The names of the persons, firms or corporations to whom the payments
requested hereby are due, the amounts to be paid and the description
of the obligation requested to be paid hereby are as set forth on
Attachment I hereto.
4. The conditions to disbursement set forth in Section 3.4(d) of the
Loan Agreement have been met and satisfied with respect to this
request.
5. With respect to this request, the Borrower hereby certifies as to
those items set forth in (2) through (7), inclusive, of Section
3.4(d)(A) of the Loan Agreement.
ROLLER BEARING COMPANY OF
AMERICA, INC.
By:
--------------------------------------
Authorized Borrower Representative
Consented to this ___ day of ____, 199__.
▇▇▇▇▇▇ FINANCIAL, INC.
By:
------------------------------------
Authorized Signatory
ATTACHMENT I
TO WRITTEN REQUEST FOR DISBURSEMENT FROM
SOUTH CAROLINA JOBS-ECONOMIC DEVELOPMENT AUTHORITY
___________
________FUND
(ROLLER BEARING COMPANY OF AMERICA, INC. PROJECT)
Series 1994A
REQUEST NO. ______ DATED __________ __, 19__.
_____________________________________
SCHEDULE OF PAYMENTS REQUESTED
General classification
and description of the
Payee Amount obligation to be paid
----- ------ ---------------------
EXHIBIT C
COMPLETION CERTIFICATE
To: ▇▇▇▇ ▇▇▇▇▇ Bank, Trustee
and
South Carolina Jobs-Economic Development Authority, Issuer
and
▇▇▇▇▇▇ Financial Inc., Credit Enhancer
From: Authorized Borrower Representative
Subject: $7,700,000 South Carolina Jobs-Economic Development Authority Variable
Rate Demand Industrial Development Revenue Bonds Roller Bearing
Company of America, Inc. Project) Series 1994A
The undersigned hereby certifies in connection with the Project, financed
with the proceeds of the above-described Bonds issued by the South Carolina
Jobs-Economic Development Authority (the "Issuer") pursuant to the Trust
Indenture dated as of September 1, 1994 (the "Indenture") between the Issuer and
_________________________ (the "Trustee"), the proceeds of which have been
loaned to Roller Bearing Company of America, Inc. (the "Borrower") pursuant to
the Loan Agreement between the Borrower and the Issuer dated as of September 1,
1994 (the "Loan Agreement") (words capitalized herein have the meaning ascribed
to them in the Loan Agreement):
1. The acquisition, improvement, construction, installation and equipping
of the Project was substantially completed as of _________________,19__ the
"Completion Date").
2. All other facilities necessary in connection with the Project have been
acquired, constructed, improved, installed and equipped.
3. The Project has been completed in such manner as to conform with all
applicable zoning, planning, building, environmental, food handling and other
similar governmental regulations.
4. All costs of the Project have been paid in full except for those not
yet due and payable or being contested, which are described below and for which
money for payment thereof is being held and should be retained in the Project
Fund:
(a) Costs of the Project not yet due and payable:
Description Amount
----------- ------
C-1
(b) Payments being contested:
Description Amount
----------- ------
5. The money in the Project Fund in excess of the total set forth in 4(a)
and (b) above represents the surplus proceeds of the Bonds and the Trustee under
the Indenture is hereby authorized and directed to deposit such money to the
Revenue Fund to be used to redeem the principal amount of outstanding Revenue
Bonds at the earliest possible time. Accompanying this Certificate (or otherwise
to be made available to the Trustee as follows:________________________________)
are Available Moneys sufficient to cause the amount to be deposited to equal an
Authorized Denomination.
6. Attached hereto is a statement of the Authorized Borrower
Representative listing and specifically describing all items of personal
property and fixtures acquired and installed as part of the Project.
This certificate is given without prejudice to any rights against third
parties which exist at the date hereof or which may subsequently come into
being.
ROLLER BEARING COMPANY OF
AMERICA, INC.
By:______________________________________
Authorized Borrower Representative
Date: _________________, 19__
C-2