REIMBURSEMENT AGREEMENT
among
PIERCING PAGODA, INC.
and
CORESTATES BANK, N.A., as Administrative Agent, Co-Agent and a
Lender
and
SUMMIT BANK, as Co-Agent and a Lender
and
FIRST UNION NATIONAL BANK, as a Lender
Dated as of April 29, 1998
Piercing Pagoda, Inc.
Taxable Variable Rate Demand/Fixed Rate Bonds
Series of 1998
REIMBURSEMENT AGREEMENT
This Reimbursement Agreement (as amended, modified, extended,
supplemented, restated and/or replaced from time to time, the "Agreement"),
dated as of April 29, 1998, is by and among Piercing Pagoda, Inc. ("Borrower"),
a Delaware corporation having its chief executive office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the financial institutions now or hereafter
parties to this Agreement and their respective successors and assigns (each a
"Lender" and collectively, the "Lenders"), CoreStates Bank, N.A. ("CoreStates"),
a national bank having offices at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Summit Bank ("Summit"), a New Jersey bank having offices at ▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and First Union National Bank ("FUNB"), a
national bank having offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇.
BACKGROUND
A. Pursuant to the terms and subject to the conditions set forth in that certain
Syndicated Loan Agreement dated March 27, 1997 among the parties to this
Agreement (as amended, modified, extended, supplemented, restated and/or
replaced from time to time, the "Syndicated Loan Agreement"), CoreStates and
Summit are co-agents for the Lenders (in such capacity, each an "Agent" and
collectively, the "Agents"), and CoreStates is administrative agent and letter
of credit issuing agent for the Lenders (in such capacity, the "Administrative
Agent").
B. Borrower has authorized and directed the issuance of its $2,565,000.00
aggregate principal amount Taxable Variable Rate Demand/Fixed Rate Bonds, Series
of 1998 (the "Bonds") to finance a project (the "Project") consisting of the
construction of a 70,655 square foot building on 5.3 acres of land in Hanover
Township, Northampton County, Pennsylvania. The Project shall be constructed in
accordance with certain plans and specifications (together with all
modifications thereto approved by Administrative Agent, the "Plans and
Specifications"), copies of which, when prepared, shall be signed by both
Borrower and Administrative Agent for identification purposes and deposited with
Administrative Agent. The Bonds shall issue pursuant to the Trust Indenture,
dated as of April 29, 1998 (the "Indenture"), among Borrower, Dauphin Deposit
Bank and Trust Company, as trustee under the Indenture (with its successors and
assigns, the "Trustee") and Dauphin Deposit Bank and Trust Company, as tender
agent.
C. Under the terms and subject to the conditions set forth in the Syndicated
Loan Agreement, Borrower has requested Administrative Agent, on behalf of each
Lender (according to such Lender's Pro Rata Shares), to issue an irrevocable
letter of credit in the form of Exhibit "A", attached hereto, incorporated
herein by this reference and hereby made a part hereof (as amended, modified,
extended, supplemented, restated and/or replaced from time to time, the "Letter
of Credit") in an amount equal to $2,619,954.25, of which the sum of
$2,565,000.00 shall be in respect of the payment of principal of the Bonds (the
"Principal Component") and $54,954.25 shall be in respect of the payment of a
certain portion of interest accrued on the Bonds on or prior to the stated
maturity of the Bonds (the "Interest Component").
D. The proceeds from the sale of Bonds shall, in accordance with the terms and
subject to the conditions of the Indenture, be deposited with the Trustee from
the Project Fund (as defined in the Indenture), with advances of such proceeds
being made by the Trustee, with the consent of Administrative Agent, which
consent shall not be unreasonably withheld or delayed if the conditions to such
consent as set forth in this Agreement are satisfied.
NOW, THEREFORE, with the foregoing Background deemed incorporated
hereinafter by this reference and hereby made a part hereof, the parties hereto,
intending to be legally bound, hereby covenant and agree as follows:
SECTION 1 - DEFINITIONS: ACCOUNTING TERMS. For the purpose of
this Agreement, in addition to terms defined elsewhere herein,
the following terms shall have the following meanings:
"Advance" shall have the meaning assigned to such term in
Section 2(d).
"Affiliate" shall mean any corporation or other business enterprise
directly or indirectly controlled by, or under direct or indirect common control
with the Company.
"Authorized Officer" means the President or the Chief
Financial Officer of Borrower.
"Basic Documents" means, collectively, the Bond Documents
and the Letter of Credit Documents, and "Basic Document" shall
mean any one of them.
"Bond Documents" means two or more, including all, of the Bonds, the
Indenture, and the Placement Agreement, all as the same may be amended,
modified, supplemented or restated from time to time, and "Bond Document" shall
mean any one of the foregoing.
"Bond Placement Agreement" shall have the meaning assigned to such term in
the Indenture.
"Business Day" shall have the meaning assigned to such term
in the Indenture.
"Certifying Officer" shall mean the Secretary or an
Assistant Secretary of the specified corporation.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.
"Completion Date" means June 30, 1998.
"Date of Issuance" shall mean the date of issuance and
delivery of the Letter of Credit.
"Debt" means:
i. All items (except items of capital stock or capital surplus or of contingency
reserves, reserves or allowances for deferred income taxes or reserves or
allowances for unearned revenues) which in accordance with GAAP applied on a
consistent basis would be included in determining total liabilities as shown on
the liability side of a balance sheet of any such Person as of the date on which
Debt is to be determined, regardless whether the Debt secured thereby shall be
recourse Debt or otherwise; and
ii. All Debt of others within the meaning of (i) above which any such Person has
directly or indirectly made a Guarantee, endorsed (otherwise than for collection
or deposit in the ordinary course of business), discounted with recourse or
agreed (contingently or otherwise) to purchase or repurchase or otherwise
acquire or become liable for, or in respect of which such purchase or other
acquisition of any product, materials, or supplies, or for the making of
shipments, or for the payment for services, if in any such case payment therefor
is to be made regardless of the nondelivery of the product, materials, or
supplies or the nonfurnishing of the transportation or services.
"Default" shall mean any event which, with notice or lapse of time, or
both, would become an Event of Default.
"Dollars" and "$" shall mean United States dollars or such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts in the United States.
"Drawing" shall mean a drawing under the Letter of Credit pursuant to the
terms thereof.
"Environmental Laws" shall mean all provisions of law, statutes,
ordinances, rules, regulations, permits, licenses, judgments, writs,
injunctions, decrees, orders, awards and standards promulgated by the government
of the United States of America or by any state or municipality thereof or by
any court, agency, instrumentality, regulatory authority or commission of any of
the foregoing concerning health, safety and protection of, or regulation of the
discharge of substances into, the environment.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time. Section references to ERISA are to ERISA as in effect
at the date of this Agreement and any subsequent provisions of ERISA, amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" means, as applied to any Person, any trade or business
(whether or not incorporated) that would be aggregated with Borrower for any
purpose relevant to ERISA or the Code relating to any Plan.
"Event of Default" shall have the meaning assigned to such term in Section
8 hereof.
"Expiration Date" shall have the meaning assigned to the term the "Letter
of Credit Termination Date" in the Indenture, as said date may be extended
pursuant to Section 16 hereof.
"GAAP" means generally accepted accounting principles as in effect in the
United States for Persons in the United States applied on a basis consistent
with Borrower's present accounting standards.
"Guarantee" means, as to any Person, any obligation of such Person
guaranteeing or in effect guaranteeing any Debt, leases, dividends or other
obligations ("primary obligations") of any other Person (the "primary obligor")
in any manner, whether directly or indirectly, including, without limitation,
any obligation of such Person, whether or not contingent, (a) to purchase any
such primary obligation or any property constituting direct or indirect security
therefor, (b) to advance or supply funds (i) for the purchase or payment or any
such primary obligation or (ii) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof, provided, however, that the term "Guarantee"
shall not include endorsements of instruments for deposit or collection in the
ordinary course of business. The amount of any Guarantee shall be deemed to be
an amount equal to the stated or determinable amount of the primary obligation
in respect of which such Guarantee is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof as determined by
Administrative Agent in good faith.
"Hazardous Substances" shall have the meaning ascribed to such term or
similar terms such as "hazardous waste" in any applicable state or federal law
or regulation.
"Investment" means any advance, extension of credit (excluding current
accounts receivable arising in the ordinary course of business and endorsements
of negotiable instruments for collection in the ordinary course of business) or
contribution of capital to any Person or purchase or other acquisition of the
stock or any notes, debentures or other securities of, or any equity interest
in, any other Person.
"Letter of Credit Amount" shall have the meaning assigned to such term in
the Letter of Credit.
"Letter of Credit Documents" means this Agreement, the Note, that certain
Continuing Letter of Credit Agreement, that certain Open-End Mortgage and
Security Agreement, that certain Assignment of Lessor's Interest in Leases and
all related instruments, agreements and documents, each to be executed and
delivered by Borrower in connection with the issuance of the Letter of Credit,
all as the same may be amended, modified, supplemented or restated from time to
time.
"Material Adverse Effect" is defined in Section 6(a).
"Net Income" means, at any time, the net income after taxes of Borrower,
as such would appear on a statement of operations of Borrower prepared in
accordance with GAAP.
"Note(s)" means the Revolving Loan Note(s) as defined in the
Syndicated Loan Agreement.
"Obligations" shall mean all indebtedness, liabilities, responsibilities
and obligations, whether now existing or hereafter arising, primary or
contingent, owing to Administrative Agent by Borrower, pursuant to this
Agreement or the Basic Documents and all covenants, agreements and obligations,
whether now existing or hereafter arising, to be performed or observed in favor
of Administrative Agent by Borrower, pursuant to this Agreement or any Basic
Document.
"Outstanding" shall have the meaning assigned to such term
in the Indenture.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established
pursuant to Section 4002 of ERISA, or any successor thereto.
"Person" shall mean a corporation, a limited liability company, an
association, a partnership, an organization, a trust or business trust, an
individual, a government or political subdivision thereof or a governmental
agency.
"Plan" means any pension plan which is covered by Title IV of ERISA in
respect of which Borrower or any ERISA Affiliate would have any liability
pursuant to ERISA.
"Prime Rate" shall mean a fluctuating interest rate per annum equal at all
times to the rate of interest determined by Administrative Agent, from time to
time, as its Prime Rate, with each change in such rate to automatically and
immediately change the Prime Rate.
"Project Facilities" shall have the meaning assigned to such
term in the Indenture.
"Property" means, collectively, the real property and improvements situate
in Hanover Township, Northampton County, Pennsylvania, upon which the Project
Facilities are being constructed, all as more fully described in the Letter of
Credit Documents.
"Pro Rata Share" shall have the meaning ascribed to such term in the Loan
Agreement.
"Rating Agency" shall have the meaning assigned to such term
in the Indenture.
"Reportable Event" shall have the meaning assigned to such term under
Section 4043 of ERISA.
"SEC" shall mean the Securities and Exchange Commission and
its successors.
"Subordinated Indebtedness" means all Indebtedness incurred at any time by
Borrower, the repayment of which is subordinated to the Loans in form and manner
satisfactory to Administrative Agent.
"Subsidiary" of a Person shall mean any entity organized under the laws of
any state, province or country, or political subdivision thereof, a majority of
the voting stock of which shall, at the time as of which any determination is
being made, be owned by such Person either directly or indirectly through any
other Person.
"Substitute Letter of Credit" shall have the meaning assigned to such term
in the Indenture.
"Tangible Capital Funds" means, at any time, the amount by which all
Assets, excluding deferred costs and intangible Assets, exceed all Liabilities,
as would be shown on a balance sheet of Borrower prepared as of the date of
determination in accordance with GAAP, plus Subordinated Indebtedness.
"Taxes" shall mean all federal, state and local or foreign income,
payroll, withholding, excise, sales, use, real and personal property, use and
occupancy, business and occupation, mercantile, real estate, capital stock and
franchise or other taxes, including interest and penalties thereon, and
including estimated taxes thereof.
"10-K and 10-Q Reports" shall have the meaning assigned to such term in
Section 6(f).
"Unfunded Liability" shall mean, with regard to any Plan, the excess of
the actuarial present value of benefit liabilities under the Plan over the
current value of the Plan's assets. The term "benefit liabilities" shall have
the meaning assigned to such term in Section 4001 of ERISA. Whenever this
Agreement requires the amount of any Unfunded Liability to be determined, it
shall be determined as of the end of the most recent Plan year based on the
final actuarial valuation prepared for the Plan for funding purposes.
Whenever any agreement, pledge, or other agreement, instrument or document
is defined in this Agreement, such definition shall be deemed to mean and
include, from and after the date of an amendment, restatement, or modification
thereof, such agreement, pledge, or other instrument or document as so amended,
restated or modified. All terms defined in this Agreement in the singular shall
have comparable meanings when used in the plural and vice versa. The words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.
All accounting terms used in this Agreement which are not expressly
defined in this Agreement shall have the respective meanings given to them in
accordance with GAAP consistently applied. All computations made pursuant to
this Agreement shall be made in accordance with GAAP consistently applied. In
the event that a change in GAAP occurs or is first adopted by Borrower after the
date of this Reimbursement Agreement and, in the view of Borrower or
Administrative Agent, such change would have a significant effect on the
calculation of or the compliance by Borrower with any of the financial
requirements of Section 6 hereof, then Company and Administrative Agent agree to
make such adjustments to the financial requirements contained herein as are
reasonable under the circumstances and which, as near as is practicable, reflect
the impact of the change in GAAP.
All capitalized terms not otherwise defined herein shall have the meanings
assigned to such terms in the Syndicated Loan Agreement. To the extent of any
inconsistency between the terms of this Agreement and the terms of the
Syndicated Loan Agreement, this Agreement shall govern and control.
SECTION 2 REIMBURSEMENT AND OTHER PAYMENTS; COLLATERAL SECURITY.
a) Reimbursement and Interest. Borrower hereby agrees to
pay to Administrative Agent:
i) on the same Business Day of any Drawing, but after payment by Administrative
Agent of such Drawing to the Trustee, a sum (and interest on such sum as
provided in clause (ii) below) equal to such amount so drawn under the Letter of
Credit;
ii) notwithstanding the rate(s) of interest set forth in the Syndicated Loan
Agreement and the Notes, interest on any and all amounts not paid by Borrower
hereunder from the earlier of the date of a Drawing under the Letter of Credit
or the date such amounts become payable until payment in full, payable on
demand, at a fluctuating interest rate per annum equal to the Prime Rate plus
two percent (2%); and
iii) any and all charges and expenses which Administrative Agent may pay or
incur relative to the Letter of Credit and any and all expenses incurred by
Administrative Agent in enforcing any rights under this Agreement and the other
Basic Documents.
b) Issuance and Other Fees.
i) Borrower hereby agrees to pay to Administrative Agent an issuance fee with
respect to the Letter of Credit from the Date of Issuance to the Expiration Date
computed at the rate of one percent (1%) per annum on the Letter of Credit
Amount. This fee shall be payable annually on or before the date sixty (60) days
prior to any Expiration Date. The first payment of the issuance fee is due
concurrently herewith.
ii) Upon each Drawing, amendment, transfer of the Letter of Credit in accordance
with its terms and any amendment of the Letter of Credit or this Reimbursement
Agreement requested by Borrower or the Trustee, Borrower agrees to pay to
Administrative Agent its then existing standard charges for such letter of
credit activity plus Administrative Agent's actual costs and expenses associated
with such transfer or amendment (and interest on such costs and expenses from
the date expended by Administrative Agent to the date reimbursed by Borrower at
the interest rate specified in Section 2(a)(ii)), payable on the date of such
transfer or amendment.
c) Computation of Interest and Commission. Interest and commission payable
hereunder shall be computed on the basis of a year of 360 days, for the actual
number of days elapsed. Whenever any payment under this Agreement shall be due
on any day that is not a Business Day, the date for payment thereof shall be
extended to the next succeeding Business Day. If the due date for any such
payment is so extended or extended for any other reason, including operation of
law, interest shall accrue and be payable for such extended time.
d) Change in Law: Compensation.
i) If any change in any law, regulation, guideline or directive (whether or not
having the force of law) or in the interpretation thereof by any court or
administrative or governmental authority charged with the administration thereof
shall either (1) impose, modify or deem applicable any reserve, special deposit
or similar requirement against letters of credit issued by Administrative Agent
or any advance or forbearance in respect of the reimbursement obligations of
Borrower under this Agreement (an "Advance") (2) reduce the amount of any
payment to be received by Administrative Agent under this Agreement or, (3)
impose on Administrative Agent any other condition regarding this Agreement, the
Letter of Credit or an Advance, and the result of any event referred to in
clauses (1), (2) or (3) above shall be to increase the cost to Administrative
Agent of issuing or maintaining the Letter of Credit or any Advance (which
increase in cost shall be the result of Administrative Agent's reasonable
allocation of the aggregate of such cost increases resulting from such events)
or reduce the amount to be received by Administrative Agent under this
Agreement, then, from time to time as specified by Administrative Agent, upon
demand by Administrative Agent, Borrower shall pay to Administrative Agent
within five Business Days after receipt of written demand for payment such
additional amounts which shall be sufficient to compensate Administrative Agent
for such increased cost or reduction of amount received from the date of such
change, together with interest on each such amount from the due date until
payment in full thereof at the rate provided in clause (ii) of paragraph (a)
above. Administrative Agent shall submit to Borrower, at or prior to the making
of each such demand, a certificate setting forth in reasonable detail such
increased cost incurred or reduction of amount received by Administrative Agent
as a result of any event mentioned in clauses (1), (2) or (3) above and the
basis therefor, which certificate shall be presumed to be correct as to the
amount and the basis thereof.
ii) Without limiting the foregoing clause (i), in the event that the
application, enactment or adoption of, or any change in, any law, rule,
regulation, treaty, guideline or directive, (including, without limitation,
pursuant to the "risk-based capital guidelines" published at 54 F.R. 4168 or 54
F.R. 4186 and any successor guidelines or regulations) or the occurrence of the
effective date of any law, rule, regulation, treaty, guideline or directive or
any provision thereof enacted or adopted on the date of the execution hereof but
which has not yet become effective, or the application, interpretation or
enforcement of any of the foregoing by any court, central bank, administrative
or governmental authority charged with the administration thereof (whether or
not having the force of law) affects or would affect the amount of capital
required, expected or advisable to be maintained by Administrative Agent in
connection with the Letter of Credit or any Advances, and the result of any of
the foregoing shall be to increase the cost to Administrative Agent of
extending, issuing or maintaining the Letter of Credit or any Advances or to
reduce any amount (or the effective return on any amount) received or receivable
by Administrative Agent or reduce the rate of return on Administrative Agent's
capital as a consequence of its obligations in respect of the Letter of Credit
or any Advances to a level below that which Administrative Agent could have
achieved but for such adoption, change or compliance (taking into consideration
Administrative Agent's policies with respect to capital adequacy) by any amount
deemed by Administrative Agent to be material, in connection with the Letter of
Credit or any Advances (which increase in cost or reduction in yield shall be
the result of Administrative Agent's reasonable allocation of the aggregate of
such cost increases or yield reductions resulting from such event), then, from
time to time as specified by Administrative Agent, within five (5) Business Days
after written demand by Administrative Agent, Borrower shall pay to
Administrative Agent such additional amounts which shall be sufficient to
compensate Administrative Agent for all such increased costs or reductions in
yield incurred since the date of any such imposition, modification or
application. Administrative Agent shall submit to Borrower, at or prior to the
making of each such demand, a certificate setting forth in reasonable detail the
amount of and the basis for such increased costs or yield reductions incurred by
Administrative Agent as a result of any of the foregoing which certificate shall
be presumed to be correct as to the amount thereof and basis therefor.
iii) If any change in any law, regulation, guideline or directive (whether or
not having the force of law) or in the interpretation thereof by any court or
administrative or governmental authority charged with the administration thereof
shall prohibit or restrict the making of any drawing under the Letter of Credit,
maintaining as outstanding any Advance or the charging of interest on such
Advance, Borrower agrees that Administrative Agent shall have the right to
comply with such prohibition or restriction and require repayment in full of
each Advance together with accrued interest thereon. Administrative Agent shall
submit to Borrower, at or prior to the making of each such request, a
certificate setting forth the details concerning the foregoing, which
certificate shall be presumed to be correct as to such matters.
e) Time and Place of Payment. All payments by Borrower to Administrative Agent
hereunder shall be made by 1:00 p.m. Reading, Pennsylvania time on the date due
in lawful currency of the United States in immediately available funds to
Administrative Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, or at such other
place as Administrative Agent shall have designated to Borrower in writing. Any
payment made after such time shall be deemed to be made on the next following
Business Day.
f) Maintenance of Accounts. Administrative Agent shall maintain in accordance
with its usual practice an account or accounts evidencing the Obligations of
Borrower and the amounts payable and paid from time to time hereunder. In any
legal action or proceeding in respect of this Agreement, the entries made in
such account or accounts shall be presumptive evidence of the existence and
amounts of the Obligations of Borrower therein recorded. The failure to record
any such amount shall not, however, limit or otherwise affect the Obligations of
Borrower hereunder, together with all interest accrued thereon as provided in
this Section 2.
g) Cure. Borrower agrees to pay to Administrative Agent on demand any amounts
advanced by or on behalf of Administrative Agent to the extent required to cure
any Default or Event of Default under this Agreement or any Basic Document. This
provision shall give Administrative Agent the right to cure any such default,
event of default or event of nonperformance but shall not be construed as
obligating, and shall not in any way obligate, Administrative Agent to do so.
SECTION 3 - SECURITY.
a) Security and Subrogation Under Indenture. Borrower and Administrative Agent
intend that (i) Administrative Agent will have the security and benefit of the
Bond Documents as provided in the Indenture and (ii) in the event that one or
more Draws are not reimbursed under the Letter of Credit and applied to the
payment of Bonds, Administrative Agent will be subrogated pro tanto to the
rights of the Trustee and the holders of such Bonds under the Bond Documents and
in and to all funds and security held by the Trustee under the Indenture for the
payment of the principal of and interest on such Bonds including, without
limitation, the Bond Fund, the Project Fund, all other funds and Investment
Securities and other instruments comprising investments thereof (each as defined
in the Indenture). In addition, Administrative Agent shall have any and all
other subrogation rights available to Administrative Agent at law and in equity.
b) Pledge of Rights to Certain Funds and Investments. To secure Borrower's
obligations to Administrative Agent under this Agreement, Borrower hereby
pledges to Administrative Agent, and grants to Administrative Agent a security
interest in, all of Borrower's right, title and interest in and to all funds and
investments thereof now or hereafter held by the Trustee under the Indenture as
security for the payment of the Bonds including, without limitation, the funds
and Investment Securities described above, investments thereof and interest and
other income derived therefrom held as security for the payment of the Bonds;
such pledge, assignment and grant being under and subject only to the rights of
the Trustee under the Indenture. Borrower covenants and agrees that it will
defend Administrative Agent's rights and security interests created by this
Section against the claims and demands of all persons. In addition to its other
rights and remedies under this Agreement and the Basic Documents, Administrative
Agent shall have all the rights and remedies of a secured party under the
Uniform Commercial Code or other applicable law with respect to the security
interests created by this Section. Administrative Agent's rights under this
Section are in addition to, and not in lieu of, its rights described in Section
(a).
c) Letter of Credit Documents. To further secure Borrower's obligations to
Administrative Agent under this Agreement, on or prior to the Date of Issuance,
Borrower shall execute and deliver to Administrative Agent the Letter of Credit
Documents.
d) Financing Statements. Borrower will execute and deliver such financing
statements and continuation statements ("Financing Statements") under the
Uniform Commercial Code or other applicable law as Administrative Agent may
reasonably specify in order to perfect and maintain perfection of Administrative
Agent's security interests under this Agreement and the other Letter of Credit
Documents and will pay the costs of filing the same in such public offices as
Administrative Agent may designate.
SECTION 4 - AGREEMENT OF BANK; CONDITIONS PRECEDENT TO ISSUANCE OF THE LETTER OF
CREDIT.
a) Agreement of Administrative Agent. Subject to the
terms and conditions of this Agreement, Administrative Agent
agrees to issue the Letter of Credit.
b) Conditions Precedent to Issuance of the Letter of
Credit.
i) Administrative Agent shall have received on or before the Date of Issuance
the following, each dated the Date of Issuance or the date hereof, as
Administrative Agent may require, in form and substance reasonably satisfactory
to Administrative Agent:
A) Articles or Certificate of Incorporation of Borrower
certified as of a recent date by the Secretary of the
Commonwealth of Pennsylvania;
B) Certificate of good standing for Borrower issued as of
a recent date by the Secretary of the Commonwealth of
Pennsylvania;
C) copies of each of the following:
1) Bylaws of Borrower; and
2) resolutions of the Board of Directors of Borrower
authorizing the execution, delivery and performance of this
Agreement and the Basic Documents to which it is a party;
in each case certified by a respective Certifying Officer which certificate
shall state that such bylaws and resolutions are in full force and effect on the
Date of Issuance;
D) a certificate of a Certifying Officer of Borrower certifying the name and
true signatures of the officers of Borrower authorized to sign this Agreement
and the Basic Documents to be executed and delivered by it; E) each of the
Letter of Credit Documents and Financing Statements fully executed by Borrower
and accompanied by (i) UCC, tax and judgment lien records search results in the
name of Borrower in the Commonwealth of Pennsylvania (including the counties in
which Borrower does business in each such state), (ii) a loan policy of title
insurance insuring Administrative Agent's lien on the Property and the other
Project Facilities as a first lien subject only to such standard exceptions as
may be approved by Administrative Agent and (iii) policies (and related
endorsements) of casualty insurance required by the Basic Documents;
F) an opinion of Duane, Morris and Heckscher LLP, counsel
to Borrower, as to such matters as Administrative Agent may
reasonably request, which opinion shall be satisfactory to
Administrative Agent in form and substance;
G) an opinion of King, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇, as Bond Counsel, as to
such matters as Administrative Agent may reasonably request, which opinion shall
be satisfactory to Administrative Agent in form and substance;
H) a fully executed copy (or a duplicate thereof) of each
of the other Basic Documents not listed above;
I) a survey prepared by a licensed surveyor or civil engineer dated not more
than thirty (30) days prior to the Date of Issuance showing the boundary lines
of the Property, the rights-of-way of the nearest streets, the location of all
utility and other easements and rights-of-way affecting the Property, the
proposed location(s) of the Project Facilities and such other details as
Administrative Agent may reasonably require;
J) a cost budget for construction of the Project Facilities, copies of the Plans
and Specifications and certified copies of all appropriate certificates
including, without limitation, approvals, documents, writings and drawings
issued by the governmental departments or agencies authorized to issue such
writings or drawings, evidencing that the Project Facilities when constructed,
will be in compliance with all applicable statutes, laws, ordinances, rules,
regulations and requirements including, without limitation, all zoning and
environmental requirements; and
K) evidence that Borrower has obtained a commitment for financing for the
construction of a portion of the Project Facilities through the Pennsylvania
Industrial Development Authority ("PIDA") in an amount not less than One Million
($1,000,000.00) Dollars to be secured by liens and security interests in and to
the Project Facilities which liens and security interests shall be subject and
subordinate to the liens and security interests of Administrative Agent in and
to the Project Facilities, up to the sum of One Million Nine Hundred Eighty
Thousand ($1,980,000.00) Dollars, the Bond Fund, all other funds and Investment
Securities and other instruments comprising investments thereof;
L) payment of a nonrefundable commitment fee equal to 1/2%
of the face amount of the Letter of Credit;
M) such other documents, instruments, approvals (and, if requested by
Administrative Agent, certified duplicates of executed copies thereof) or
opinions as Administrative Agent may otherwise reasonably request.
ii) The following statements shall be true and correct on the Date of Issuance
and Administrative Agent shall have received a certificate of Borrower signed on
its behalf by an Authorized Officer, dated the Date of Issuance, stating that:
A) the representations and warranties of Borrower
contained in any of the Basic Documents and in Section 6 of this
Agreement, are correct on and as of the Date of Issuance as
though made on and as of such date; and
B) no Event of Default or Default has occurred and is
continuing, or would result from the issuance of the Letter of
Credit and/or the consummation of the transactions contemplated
by the Basic Documents.
iii) On or before the Date of Issuance:
A) the Issuer and the Trustee shall have duly authorized
and executed the Indenture and the Indenture shall be in full
force and effect; and
B) the Bonds shall be validly issued and outstanding.
c) Conditions Precedent to Administrative Agent's Consent
to Requisitions for Disbursements from the Project Fund.
i) No Event of Default or Default shall have occurred
and be continuing;
ii) The Project Facilities shall be in compliance with all applicable laws,
statutes, ordinances, rules, regulations and requirements, including, without
limitation, all zoning and environmental requirements;
iii) The construction of the Project Facilities shall be and have been performed
substantially in accordance with the Plans and Specifications and strictly in
accordance with all applicable statutes, laws and ordinances, and any and all
requirements of governmental authorities having jurisdiction in and for the
locality in which the Project is located;
iv) Each requisition for disbursements from the Project Fund shall be in the
form of Exhibit C to the Indenture, and shall be accompanied by, among other
things, a certification by Borrower, any general contractor and any architect
for the Project and, if required by Administrative Agent, Administrative Agent's
inspecting architect or engineer (at Borrower's expense) that upon review of the
Plans and Specifications and the progress of the construction of Project
Facilities, the construction is in accordance with the Plans and Specifications,
the Project Facilities will be completed by the Completion Date and in
accordance with Borrower's budget for construction of the Project Facilities
approved by Administrative Agent, it being understood, acknowledged and agreed
that any approval of a requisition and any payment made by the Trustee from the
Project Fund with the consent of Administrative Agent shall not constitute a
waiver of Administrative Agent's rights as to any work or material which may be
defective or which may fail to comply with the Plans and Specifications or with
any terms of this Agreement;
v) Unless waived by Administrative Agent, each requisition shall be submitted at
least fifteen (15) days in advance of the date requested for proceeds from the
Project Fund;
vi) Advances may be made (directly or through a title insurer) to Borrower
and/or any general contractor or any prime contractor(s), subcontractor(s),
materialmen or others who have furnished goods or services in connection with
the Project, or some of them, in accordance with Administrative Agent's
direction to the Trustee from time to time; and
vii) Notwithstanding anything to the contrary set forth herein or in the
Indenture, Administrative Agent shall have the right to request the Trustee to
advance proceeds from the Project Fund, without any request therefor being
submitted by Borrower, for the purposes of paying real estate taxes, insurance
premiums, fees and expenses of Administrative Agent's counsel or to cure any
Event of Default which Administrative Agent may (without obligation) elect to
cure. Administrative Agent shall furnish to Borrower a copy of any request given
to the Trustee for an advance of proceeds from the Project Fund.
SECTION 5 - OBLIGATIONS ABSOLUTE. The Obligations of Borrower under this
Agreement shall be absolute, unconditional and irrevocable, and shall be paid
and performed strictly in accordance with the respective terms thereof, under
all circumstances whatsoever, including, without limitation, the following
circumstances:
i) any lack of validity or enforceability of the Letter of
Credit or any of the Basic Documents;
ii) any amendment or waiver of or any consent to departure
from all or any of the Basic Documents;
iii) the existence of any claim, setoff, defense or other rights which Borrower
may have at any time against the Trustee, the Issuer, any beneficiary or any
transferee of the Letter of Credit (or any persons or entities for whom the
Trustee, any such beneficiary or any such transferee may be acting),
Administrative Agent (other than the defense of payment to Administrative Agent
in accordance with the terms of this Agreement) or any other person or entity,
whether in connection with this Agreement, the Basic Documents or any unrelated
transaction;
iv) any statement or any other document presented under the Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect whatsoever;
v) payment by Administrative Agent under the Letter of
Credit against presentation of a sight draft or certificate which
does not comply with the terms of the Letter of Credit;
vi) payment by Administrative Agent under the Letter of
Credit notwithstanding:
A) any instructions of Borrower given after the Letter of
Credit is issued not to make payment thereunder;
B) the occurrence of any event including,
without limitation, the commencement of legal proceedings to
prohibit payment under the Letter of Credit; or
C) the issuance of any order by any government agency,
governing body or court whether or not having jurisdiction in the
premises prohibiting payment under the Letter of Credit; and
vii) any other circumstance or happening whatsoever, whether
or not similar to any of the foregoing.
SECTION 6 - REPRESENTATIONS AND WARRANTIES. Borrower
represents and warrants as follows:
a) Syndicated Loan Agreement Representations and Warranties. The representations
and warranties set forth in the Syndicated Loan Agreement are hereby reasserted
and restated by Borrower as of the date of this Reimbursement Agreement as if
set forth at length herein.
b) Execution, Delivery and Performance. The execution, delivery and performance
by Borrower of this Agreement and the other Basic Documents to which it is a
party are within Borrower's powers as a corporation, have been duly authorized
by all necessary corporate action, do not contravene (i) its Articles or
Certificate of Incorporation and bylaws, (ii) any law, regulations, order,
judgment, decree or contractual restriction binding on or affecting Borrower or
(iii) the Syndicated Loan Agreement, and do not allow for, result in or require
(A) the creation of any lien, security interest or other charge or encumbrance
upon or with respect to any of its properties except in favor of Administrative
Agent or (B) the acceleration of any payment of, or maturity of, any Debt. c)
Regulatory Authority. Borrower is duly authorized and licensed to operate the
Project under the laws, rulings, regulations and ordinances of the Commonwealth
of Pennsylvania and the departments, agencies and political subdivisions thereof
and Borrower has obtained all requisite approvals of the Commonwealth of
Pennsylvania and of federal, regional and local governmental bodies required to
be obtained prior to the date of delivery of the Bonds and this Agreement and
the failure to obtain would have a Material Adverse Effect. The Project is in
compliance with all applicable federal, state and local zoning, subdivision,
environmental, pollution control and other laws, rules, regulations, codes and
ordinances.
d) No Consent, etc. No consent, authorization or approval or other action by,
and no notice to or filing with (that has not already been obtained, taken or
made), any Person is required for the due execution, delivery and performance by
Borrower of this Agreement and any other Basic Documents to which it is a party.
e) Legal, Valid and Binding. This Agreement and the Basic Documents to which it
is a party are the legally valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective terms.
f) No Misrepresentation. Except as otherwise specifically set forth in writing
to Administrative Agent, taken as a whole, all factual information heretofore or
contemporaneously furnished in writing to Administrative Agent by Borrower was,
when furnished and is as of the Date of Issuance, true and accurate in all
material respects and did and does not omit to state any material fact necessary
to make such information not misleading at such time in light of the
circumstances under which such information was provided.
g) Regulation U, etc. Borrower does not own or have any present intention of
acquiring, any "margin stock" within the meaning of Regulation U (12 CFR Part
221) of the Board of Governors of the Federal Reserve System (herein called
"margin stock"). None of the proceeds of the Bonds will be used directly or
indirectly, by Borrower for the purpose of purchasing or carrying, or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry, any margin stock or for any other purpose which would
cause the transactions contemplated hereby to be considered a "purpose credit"
within the meaning of said Regulation U, or which would cause this Agreement to
violate Regulation G, Regulation U, Regulation T, Regulation X or any other
regulation of the Board of Governors of the Federal Reserve System or the
Securities Exchange Act of 1934. Borrower is not an "Investment Company" within
the meaning of the Investment Company Act of 1940, as amended.
h) Compliance with Laws. Borrower is in compliance with all material laws,
rules, regulations, court orders and decrees, and orders of any governmental
agency which are applicable to Borrower, or to its properties, including, but
not limited to, laws, rules, regulations, court orders and decrees and orders of
any governmental agency with respect to employee benefits and Environmental
Matters except to the extent that Borrower is contesting in good faith and by
appropriate proceedings in accordance with applicable laws the compliance with
such laws, rules, regulations, court orders and decrees and there has been set
aside on its books such reserves with respect thereto as are required by GAAP or
the failure of Borrower to be in compliance with would have a Material Adverse
Effect. As of the Date of Issuance, there are no instances where Borrower is
contesting its obligation to comply with any material law, rule, regulation,
court order, or decree.
i) Public Utility Holding Company Act. Borrower is not subject to any state law
or regulation regulating public utilities or similar entities, and is not,
within the meaning of the Public Utility Holding Company Act of 1935, as
amended, (a) a holding company, (b) a subsidiary or affiliate of a holding
company or (c) a public utility.
j) Title to Properties: Patents, Trademarks, etc. Borrower has good and
marketable title to all its properties and assets, including, without
limitation, the Project Facilities. Except as permitted by the Syndicated Loan
Agreement and the other Letter of Credit Documents, there are no mortgages,
liens, charges, or encumbrances of any nature whatsoever on any of the
properties or assets of Borrower. Borrower owns or possesses all the patents,
trademarks, service marks, trade names, copyrights and licenses and rights with
respect to the foregoing necessary for the conduct of its businesses, without
any known conflict with the valid rights of others which would be inconsistent
with the conduct of its business substantially as now conducted and as currently
proposed to be conducted.
k) Environmental Matters. Borrower is conducting its business in compliance in
all material respects with all applicable federal, state and local Environmental
Laws including but not limited to the Resource Conservation and Recovery Act,
the Clean Air Act, the Federal Water Pollution Control Act, the Toxic Substances
Control Act and the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA") and, except as set forth in the 10-K, there is not
pending or, to the best knowledge of Borrower after diligent investigation,
threatened, civil or criminal litigation, notice of violation or lien, or
administrative proceeding relating to Environmental Laws involving Borrower
which, either individually or in the aggregate, under current interpretation of
current law could reasonably be expected to result in a Material Adverse Effect.
To the best of Borrower's knowledge after diligent investigation, there is no
condition or situation, including, without limitation, any lien or encumbrance,
with respect to Environmental Laws which, either individually or in the
aggregate, under current interpretation of current law could reasonably be
expected to result in a Material Adverse Effect. Borrower has obtained from
every governmental body including, but not limited to, the United States
Environmental Protection Agency and the similar agency of Pennsylvania, all
material approvals, consents, licenses, permits, and orders necessary to carry
on its business as currently conducted. Except as set forth in the 10-K, to the
best of its knowledge after diligent investigation, Borrower has not transported
Hazardous Substances or arranged for the transportation of such Hazardous
Substances to any location which is the subject of federal, state or local
enforcement actions or other investigations which may lead to claims against
Borrower for clean-up costs, remedial work, damages to natural resources or for
personal injury claims which, either individually or in the aggregate, under
current interpretation of current law could reasonably be expected to result in
a Material Adverse Effect. Borrower has not treated, stored for more than 90
days, recycled or disposed of any Hazardous Substances on any property now or
previously owned or leased by Borrower which under current interpretation of
current law could reasonably be expected to result in a Material Adverse Effect.
For purposes of this subsection (q) the term "diligent investigation" shall mean
inquiry of employees who should have knowledge as to the matters involved and
review of records of Borrower but does not require the engagement of third
parties to conduct independent reviews and examinations.
SECTION 7 - AFFIRMATIVE COVENANTS OF BORROWER. So long as the Expiration Date
has not occurred or any Obligation has not been completely performed or
otherwise satisfied unless Administrative Agent shall otherwise consent in
writing:
a) Existence, Business, etc. Borrower will cause to be done all things necessary
to preserve and to keep in full force and effect its existence and rights and
will conduct its business in a prudent manner. Borrower will comply in all
material respects with all valid laws and regulations now in effect or hereafter
promulgated by any properly constituted governmental authority having
jurisdiction including, without limitation, Environmental Laws; provided,
however, Borrower shall not be required to comply with any law or regulation
which it is contesting in good faith by appropriate proceedings so long as
either the effect of such law or regulation is stayed pending the resolution of
such proceedings or the effect of not complying with such law or regulation does
not materially and adversely affect the business, properties, operation or
condition (financial or otherwise) of Borrower.
b) Accounts and Reports. Borrower will maintain a standard system of accounting
in accordance with GAAP and furnish to Administrative Agent the following
reports:
i) As soon as available, and in any event within ninety (90) calendar days after
the end of each fiscal year of Borrower, for such fiscal year, (x) balance
sheets of Borrower, (y) statements of income and expenses of Borrower and (z)
statements of changes in financial position of Borrower, certified by
independent certified public accountants and accompanied by a statement of such
Person certifying the financial statements comprising such report have not
disclosed the existence of any condition or event which constitutes a Default or
an Event of Default or, if such a condition or event exists, specifying the
nature thereof,
ii) As soon as available, and in any event within forty-five (45) calendar days
after the end of each fiscal quarter, for such fiscal quarter, unaudited
statements of income and expense and balance sheets of Borrower certified by an
Authorized Officer of Borrower and a statement of such officer that the
examination made in preparing and certifying such unaudited financial statements
has not disclosed the existence of any condition or event which constitutes a
Default or an Event of Default or, if such a condition or event exists,
specifying the nature thereof,
iii) With each report required to be provided pursuant to clause (ii) above, a
certificate signed by an Authorized Officer setting forth in detail the
calculations used in determining Borrower's compliance with the covenants set
forth in the Syndicated Loan Agreement;
iv) As soon as possible, but in any event not more than ten (10) calendar days
after the occurrence of any condition or event which constitutes a Default or an
Event of Default, notice of such condition or event and the action which
Borrower proposes to take with respect thereto;
v) As soon as possible, and in any event within ten (10) calendar days after
Borrower knows or has reason to know that any Reportable Event has occurred with
respect to any Plan, a statement from an Authorized Officer setting forth
details as to such Reportable Event and the action which Borrower proposes to
take with respect thereto, together with a copy of the notice of such reportable
event, if any, given to the PBGC if a copy of such notice is available to
Borrower.
vi) Promptly after receipt thereof, a copy of any notice which Borrower or any
ERISA Affiliate receives from the PBGC, the Department of Labor, or the Internal
Revenue Service with respect to any Plan; provided, however, that this clause
(vi) shall not apply to (i) notices of general application promulgated by the
Department of Labor or (ii) notices that do not relate to a tax that may be
assessed, or a liability that may be asserted, against Borrower or any ERISA
Affiliate, unless it relates to an investigation or inquiry, or a fact,
situation, or state of affairs that may lead to the assessment of any such tax
or the assertion of any such liability;
vii) Promptly upon receipt thereof, a copy of any notice, compliance inquiry,
administrative complaint or any complaint received by Borrower on any material
matter from any governmental authority or agency concerning Environmental Laws
excluding notices of general application from any such agency or authority;
viii) Borrower will promptly notify Administrative Agent in writing of any
litigation, legal proceeding or, when known by any Company, threat of legal
proceeding affecting Borrower in accordance with the provisions of the
Syndicated Loan Agreement; and
ix) Copies of all notices, definitive proxy statements and other similar
documents sent by Borrower to the holders of any of its debentures or bonds or
the trustee of any indenture securing the same or pursuant to which they have
been issued or, to the extent applicable, to any securities exchange or the SEC
or state agency regarding securities of Borrower.
c) Inspection. Borrower will furnish to Administrative Agent, upon reasonable
request of Administrative Agent, full information pertinent to any covenant,
provision, or condition of this Agreement or of any other Basic Document at all
reasonable times and as often as Administrative Agent may reasonably request,
will permit any authorized representative designated by Administrative Agent,
prior to occurrence of a Default upon reasonable prior notice, but after the
occurrence of a Default or Event of Default without any notice required, to
visit and inspect, at the expense of Administrative Agent (but after the
occurrence and during the continuance of, an Event of Default, at Borrower's
expense), during normal business hours any of its properties, including its
books (and to take extracts therefrom) and to discuss affairs, finances, and
accounts with its officers and employees.
d) Incorporation of Loan Agreement and Syndicated Loan Agreement Covenants.
Borrower will observe, perform and comply with each and every covenant, term and
provision contained in the Syndicated Loan Agreement (the "Incorporated
Provisions"), each of which is incorporated herein by this reference as if fully
rewritten at length herein, such covenants, terms and provisions to continue in
full force and effect with respect to this Agreement so long as it is in effect
and until all of the Obligations are paid in full. In the event of any
replacement of the Syndicated Loan Agreement with a similar credit facility to
which Administrative Agent is a party (the "New Facility"), the representations,
warranties, covenants and additional terms contained in such New Facility which
correspond to the representations, warranties and covenants set forth in this
Agreement, and such additional terms, shall be deemed incorporated provisions to
the extent the same are consented to in writing by Administrative Agent and, if
such consent is not granted or if the Syndicated Loan Agreement is terminated
(and Administrative Agent and the Lenders waive any Event of Default arising by
virtue of such termination) and not replaced, then the representations,
warranties and covenants set forth in this Agreement shall continue to be the
Incorporated Provisions. Nothing contained in this Subparagraph shall be deemed
to impair the rights of the Lenders upon the termination of or the occurrence of
an Event of Default under the Syndicated Loan Agreement.
SECTION 8 - NEGATIVE COVENANTS OF BORROWER. So long as the Expiration Date has
not occurred or any Obligation has not been completely performed or otherwise
satisfied:
a) Amendment of Agreements. Borrower will not enter into
or consent to any amendments of any of the Basic Documents.
b) No Drawings on Letter of Credit, No Optional Redemptions. Borrower will not,
and will not permit any Affiliate to, have any Bond (including the principal
amount thereof and interest accrued thereon) legally or beneficially owned by
any of them to be purchased, or redeemed or otherwise paid, directly or
indirectly, by any drawing on the Letter of Credit. Borrower also agrees not to
cause any optional redemption of the Bond pursuant to Section 6 of the
Indenture, without the prior written consent of Administrative Agent which shall
not be unreasonably withheld so long as no Default or Event of Default then
exists or would result from or arise after such optional redemption. Borrower
will give Administrative Agent notice of any proposed redemption not later than
twenty (20) days prior to the date that Borrower plans to give notice to the
Trustee but in no event later than thirty (30) days prior to the date of such
proposed conversion or redemption. Any notice of a proposed conversion or
redemption shall include reasonable detail as to how Borrower will immediately
reimburse Administrative Agent for the Drawings that will be made in connection
with such conversion or redemption.
c) Bond Status. Borrower shall not take any action that will cause the Rating
Agency to reduce the rating on Bonds from that in effect on the Date of
Issuance; provided that in no event shall Borrower be responsible for any change
in such rating resulting from Administrative Agent's action or a change in the
credit ratings of Administrative Agent.
SECTION 9 - EVENTS OF DEFAULT. Upon the occurrence of any of the following
events (herein referred to as an "Event of Default"), unless waived by
Administrative Agent pursuant to Section 9 hereof:
a) Untrue Representation. Any material representation or warranty made by
Borrower herein or in any Basic Document or in any certificate, financial or
other statement furnished to Administrative Agent by Borrower pursuant to this
Agreement or any Basic Document shall prove to have been untrue or incomplete in
any material respect when made; or
b) Failure to Pay. Borrower shall fail to pay when due any amount including,
without limitation, payment pursuant to Section 2 hereof, specified in this
Agreement or any of the other Basic Documents and such failure shall continue
for five (5) consecutive days; or
c) Certain Section 7 Defaults. Default shall be made in the due observance or
performance of any covenant, agreement, or provision contained in subsections
(a), (b) and (c) of Section 7 and such default shall continue for thirty (30)
consecutive calendar days (or if such default cannot be cured within thirty (30)
consecutive calendar days, Borrower shall have commenced within thirty (30)
consecutive calendar days and shall be diligently taking action to cure such
default and, if such default is material, so long as such default shall have
been cured in any event within sixty (60) consecutive calendar days), or
d) Other Section 7 and Section 8 Defaults. Default shall
be made in the due observance or performance of any covenant,
agreement or provision contained in Section 7(f) or in Section 8
hereof; or
e) Other Provision Default. Default (not otherwise specified in this Section 9
shall be made in the due observance or performance of any other covenant,
agreement, or provision of this Agreement or of any other Letter of Credit
Document to be performed or observed by Borrower and such default shall not be
corrected or cured within thirty (30) consecutive calendar days (or if such
default cannot be cured within thirty (30) consecutive calendar days, Borrower
shall have commenced within thirty (30) consecutive calendar days and shall be
diligently taking action to cure such default and, if such default is material,
so long as such default shall have been cured in any event within sixty (60)
consecutive calendar days); or
f) Lack of Validity. Any provision of this Agreement or any Letter of Credit
shall at any time for any reason cease to be valid and binding on Borrower or
the validity or enforceability thereof shall be contested by Borrower or any
other party thereto (excluding Administrative Agent) or any governmental agency
or authority (other than the Issuer), or Borrower shall deny that it has any or
further liability or obligation under this Agreement or any Letter of Credit
Document; or
g) Basic Document Default. An "Event of Default" shall have occurred under and
as defined in (i) Section 6.1 of the Loan Agreement or (ii) Section 8.01 of the
Indenture, or an "Event of Default" shall occurred under and as defined in
Section 7 of the Syndicated Loan Agreement; or
h) Material Adverse Change. A material adverse change in the business,
operations, management, properties or financial condition of Borrower, as
determined by Administrative Agent in good faith, shall have occurred and shall
be continuing without amelioration by Borrower for such period as Administrative
Agent in its reasonable exercise of discretion deems appropriate in light of all
circumstances Borrower shall have failed to provide to Administrative Agent its
written explanation thereof; or
i) The Syndicated Loan Agreement shall have terminated or Administrative Agent
shall no longer be a participant in or otherwise a party to the financing
arrangements described therein.
Then, and in any such event, Administrative Agent may, in its sole discretion,
declare the Obligations whether or not otherwise contingent or not then due or
payable to be forthwith due and payable, and the same shall thereupon become due
and payable without demand, presentment, protest or further notice of any kind,
all of which are hereby expressly waived. Administrative Agent, in its sole
discretion, may notify the Trustee of the occurrence of an Event of Default
hereunder and thereby require the Trustee to declare the principal of the Bonds
and the interest accrued thereon to be due and payable immediately (or, at the
discretion of Administrative Agent, subject to mandatory purchase), all in
accordance with the terms of the Indenture, and, upon said declaration, such
principal and interest shall become and be immediately, due and payable. Upon
any Event of Default, Administrative Agent may make the declaration or give the
notice provided for above, but it shall not be obligated to do so, and
Administrative Agent may, but shall not be obligated to, cure any default, event
of default or event of nonperformance under any Basic Document, in which event
Borrower shall reimburse Administrative Agent therefor pursuant to Section 17
hereof. In addition to the foregoing, Administrative Agent may exercise any
other rights or remedies available under any Basic Document, any other agreement
or at law or in equity. If the Event of Default is the failure by Borrower to
reimburse Administrative Agent on a timely basis for an "Interest Drawing" (as
defined in the Letter of Credit), Administrative Agent may, no later than the
tenth (10th) Business Day following such drawing, deliver to the Trustee notice
that the Letter of Credit will not be reinstated.
j) The rights and remedies of Administrative Agent specified herein are for the
sole and exclusive benefit, use and protection of Administrative Agent, and
Administrative Agent is entitled, but shall have no duty or obligation to
Borrower, the Trustee, the Bondholders (as defined in the Indenture) or
otherwise, (i) to exercise or to refrain from exercising any right or remedy
reserved to Administrative Agent hereunder, or (ii) to cause the Trustee or any
other party to exercise or to refrain from exercising any right or remedy
available to it under any of the Basic Documents. Administrative Agent may, in
its sole discretion, also require the Trustee to cause the holders of the Bonds
to surrender the Bonds for mandatory purchase pursuant to the provisions of the
Indenture. Any amounts drawn on the Letter of Credit after declaration by
Administrative Agent that the Obligations are due and payable shall
automatically be immediately due and payable by Borrower.
SECTION 10 - AMENDMENTS, ETC. No amendment or waiver of any provision of this
Agreement or consent to any departure by Borrower therefrom shall in any event
be effective unless the same shall be in writing and signed by Administrative
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 11 - ADDRESSES FOR NOTICES. All notices and other communications
provided for hereunder shall be in writing and, if to Borrower, mailed or
delivered to it, addressed to it at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. Penske, Chief Financial Officer; with a copy to
Duane, Morris & Heckscher LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇; or if to Administrative Agent, mailed or delivered to
it, addressed to it at CoreStates Administrative Agent, N.A., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
P. O. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Vice
President; with a copy to Klehr, Harrison, ▇▇▇▇▇▇, Branzburg & ▇▇▇▇▇▇ LLP, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
Esquire, or as to each party at such other address as shall be designated by
such party in a written notice to the other party. All such notices and other
communications shall be effective when delivered to the aforesaid addresses or,
if mailed, be effective three (3) days after the date of deposit in the mails,
addressed as aforesaid.
SECTION 12 - NO WAIVER: REMEDIES. No failure on the part of Administrative Agent
to exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other further exercise thereof or the exercise of any other right.
The remedies herein provided are cumulative and not exclusive of any remedies
provided in any Basic Document now or hereafter existing at law or in equity.
SECTION 13 - RIGHT OF SET-OFF. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
during the continuance of any Event of Default hereunder, Administrative Agent
is hereby authorized at any time and from time to time, without notice to
Borrower or to any other person or entity, any such notice being hereby
expressly waived by Borrower, to setoff and to appropriate and apply any and all
deposits (general or special) and any other indebtedness at any time held or
owing by Administrative Agent to or for the credit or the account of Borrower
against and on account of the Obligations of Borrower, irrespective of whether
or not Administrative Agent shall have made any demand hereunder and although
said obligations, liabilities or claims, or any of them, shall be contingent or
unmatured.
SECTION 14 - INDEMNIFICATION. Borrower hereby indemnifies and holds harmless
Administrative Agent from and against any and all claims, damages, losses,
liabilities, reasonable costs or expenses whatsoever which Administrative Agent
may incur (or which may be claimed against Administrative Agent by any person or
entity whatsoever) by reason of or in connection with (i) the execution and
delivery or transfer of, or payment or failure to pay under, the Letter of
Credit, (ii) the issuance and sale of the Bonds or (iii) disputes between
Borrower and any general contractor for the Project, or between any contractor
and any subcontractor, materialman or supplier, or between Borrower or any
contractor or any subcontractor and any municipal or public authority, or
between Borrower and any broker pertaining to the transaction, including,
without limitation, any of the foregoing resulting from the making of any
Advance; provided that Borrower shall not be required to indemnify
Administrative Agent for any claims, damages, losses, liabilities, costs or
expenses to the extent, but only to the extent, caused by (a) the willful
misconduct or gross negligence of Administrative Agent in determining whether a
sight draft or certificate presented under the Letter of Credit complied with
the terms of the Letter of Credit or (b) Administrative Agent's willful failure
to pay under the Letter of Credit after the presentation to it by the Trustee of
a sight draft and certificate strictly complying with the terms and conditions
of the Letter of Credit. Nothing in this Section 14 is intended to limit the
reimbursement obligation of Borrower contained in Section 2(a) hereof. In case
any action or proceeding is brought against Administrative Agent in respect of
which indemnity may be sought under this Agreement Administrative Agent shall
give notice of any such action or proceeding to Borrower and may require
Borrower, upon such notice, to assume the defense of the action or proceeding;
provided that failure of Administrative Agent to give such notice shall not
relieve Borrower from any of its obligations under this Section 14. Upon receipt
of notice from Administrative Agent, Borrower shall resist and defend such
action or proceeding at Borrower's expense. The obligations of Borrower under
this Section 14 shall survive the payment of the Bonds and/or any Obligations
and the termination of this Agreement for such period which is equal to the last
statute of limitations governing when a claim may be brought against
Administrative Agent for which it is entitled to indemnification pursuant to
this Section 14 plus six (6) months.
SECTION 15 - CONTINUING OBLIGATION. This Agreement is a continuing obligation
and shall (i) be binding upon Borrower, its successors and assigns, and (ii)
inure to the benefit of and be enforceable by Administrative Agent and its
successors, transferees and assigns; provided that Borrower may not assign all
or any part of this Agreement without the prior written consent of
Administrative Agent. Administrative Agent may assign, negotiate, pledge or
otherwise hypothecate all or any portion of this Agreement, or grant
participations herein, in the Letter of Credit or in any of its rights
hereunder. No such assignment or participation by Administrative Agent, however,
will relieve Administrative Agent of its obligation under the Letter of Credit.
In connection with any assignment or participation, Administrative Agent may
disclose to the proposed assignee or participant any information that Borrower
is required to deliver to Administrative Agent pursuant to this Agreement.
SECTION 16 - LIMITED LIABILITY OF BANK. Borrower assumes all risks of the acts
or omissions of the Trustee and any transferee of the Letter of Credit with
respect to its use of the Letter of Credit. Neither Administrative Agent nor any
of its officers or directors shall be liable or responsible for: (a) the use
which may be made of the Letter of Credit or for any acts or omissions of the
Trustee; (b) the validity, sufficiency or genuineness of documents, or of any
endorsement(s) thereon, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (c) payment by
Administrative Agent against presentation of documents which do not comply with
the terms of the Letter of Credit, including failure of any documents to bear
any reference or adequate reference to the Letter of Credit; or (d) any other
circumstances whatsoever in making or failing to make payment under the Letter
of Credit, except only that Borrower shall have a claim against Administrative
Agent, and Administrative Agent shall be liable to Borrower, to the extent, but
only to the extent, of any direct, as opposed to consequential, damages suffered
by Borrower which Borrower proves were caused by (i) Administrative Agent's
willful misconduct or gross negligence in determining whether documents
presented under the Letter of Credit comply with the terms of the Letter of
Credit or (ii) Administrative Agent's willful failure to pay under the Letter of
Credit after the presentation to it by the Trustee of a sight draft and
certificate strictly complying with the terms and conditions of the Letter of
Credit. In furtherance and not in limitation of the foregoing, Administrative
Agent may accept documents and certificates that appear on their face to be in
order, without responsibility for further investigation, regardless of any
knowledge or notice to Administrative Agent that the information contained
therein is or may be inaccurate or false.
SECTION 17 - COSTS, EXPENSES AND TAXES. Borrower agrees to pay on demand all
costs and expenses of Lenders in connection with the preparation, execution,
delivery and administration of this Agreement and any other documents which may
be delivered in connection with this Agreement and all costs and expenses, if
any, in connection with (i) the change in terms, maintenance, renewal or
cancellation of the Letter of Credit, (ii) any and all amounts which
Administrative Agent has paid relative to Administrative Agent's curing of any
Event of Default resulting from the acts or omissions of Borrower under this
Agreement or any Basic Document, (iii) the enforcement of this Agreement or any
other Basic Document, or (iv) any action or proceeding relating to a court
order, injunction, or other process or decree restraining or seeking to restrain
Administrative Agent from paying any amount under the Letter of Credit. In
addition, Borrower shall pay any and all stamp and other similar taxes and fees
payable or determined to be payable in connection with the execution, delivery,
filing and recording of the Letter of Credit, this Agreement, any other Basic
Document, or any other document which may be delivered in connection with this
Agreement, and agrees to save Administrative Agent harmless from and against any
and all liabilities with respect to or resulting from any delay in paying or
omission to pay such taxes and fees.
SECTION 18 - SEVERABILITY. Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or non-authorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
SECTION 19 - SATISFACTION REQUIREMENT. If any agreement, certificate or other
writing, or any action taken or to be taken, is by the term of this Agreement
required to be satisfactory to Administrative Agent, the determination of such
satisfaction shall be made by Administrative Agent in its sole and exclusive
judgment.
SECTION 20 - GOVERNING LAW. This Agreement is being intended to be performed in
the Commonwealth of Pennsylvania, and shall be construed and enforced in
accordance with, and the rights of the parties shall be governed by, the laws of
such Commonwealth. Borrower AGREES AND CONSENTS TO THE EXERCISE OF JURISDICTION
OVER IT BY ANY STATE OR FEDERAL COURT IN THE COMMONWEALTH OF PENNSYLVANIA AND
THAT ANY ACTION OR PROCEEDING BROUGHT BY THE COMPANY UNDER THIS AGREEMENT OR ANY
BASIC DOCUMENT AGAINST BANK SHALL BE BROUGHT IN SUCH COURTS.
SECTION 21 - COUNTERPARTS. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, and it shall
not be necessary in making proof of this Agreement to produce or account for
more than one such counterpart.
SECTION 22 - HEADINGS. Section headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
SECTION 23 - WAIVER OF JURY TRIAL. BORROWER AND BANK WAIVE ANY RIGHT TO HAVE A
JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN CONTRACT, TORT,
OR OTHERWISE, BETWEEN OR AMONG, AS THE CASE MAY BE, BANK, OR BORROWER ARISING
OUT OF, IN CONNECTION WITH, RELATED TO, OR INCIDENTAL TO THE PREPARATION,
EXECUTION, ADMINISTRATION OR ENFORCEMENT OF THIS AGREEMENT, THE LETTER OF
CREDIT, THE BASIC DOCUMENTS OR ANY AGREEMENT OR DOCUMENT EXECUTED IN CONNECTION
WITH ANY OF THE FOREGOING.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
(CORPORATE SEAL) PIERCING PAGODA, INC.
ATTEST:_______________________
By:__________________________________
Name: Name:
Title: Title:
CORESTATES BANK, N.A., for itself and as
Agent and Administrative Agent for the Lenders
By:_______________________________________
Name:
Title:
SUMMIT BANK, for itself and as Agent for the Lenders
By:_______________________________________
Name:
Title:
FIRST UNION NATIONAL BANK
By:_______________________________________
Name:
Title:
PHIL1\106185-5