Exhibit 99.2
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REIMBURSEMENT AGREEMENT
Between
OXYCAL LABORATORIES, INCORPORATED,
an Arizona corporation
and
▇▇▇▇▇ FARGO BUSINESS CREDIT, INC.
Relating to
$3,900,000.00
The Industrial Development Authority of the County of Yavapai
Adjustable Rate Industrial Development Revenue Bonds
(Oxycal Laboratories, Incorporated Project), Series 1999A
Dated as of February 6, 2004
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TABLE OF CONTENTS
Page
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RECITALS..................................................................................................... 1
ARTICLE 1. DEFINITION OF TERMS........................................................................... 3
Section 1.1 Definitions..................................................................... 3
Section 1.2 Accounting Terms................................................................ 9
Section 1.3 Interpretation.................................................................. 9
Section 1.4 Relation to Other Documents..................................................... 9
ARTICLE 2 LETTER OF CREDIT, FEES AND PAYMENT PROVISIONS................................................. 10
Section 2.1 The Letter of Credit............................................................ 10
Section 2.2 Fees............................................................................ 10
Section 2.3 Reimbursement................................................................... 10
Section 2.4 Amortization Payments........................................................... 10
Section 2.5 Interest Rate; Default Rate..................................................... 11
Section 2.6 Increased Costs................................................................. 11
Section 2.7 Computations.................................................................... 12
Section 2.8 Non-Business Days............................................................... 12
Section 2.9 Payments by Borrower............................................................ 12
Section 2.10 Maintenance of Accounts........................................................ 12
Section 2.11 Application of Funds........................................................... 12
ARTICLE 3 CONDITIONS PRECEDENT.......................................................................... 13
Section 3.1 Conditions Precedent to the Issuance of the Letter of Credit: Documents......... 13
Section 3.2 Conditions Precedent to the Issuance of the Letter of Credit.................... 15
ARTICLE 4 SECURITY DOCUMENTS; GUARANTEE................................................................. 17
Section 4.1 Security........................................................................ 17
Section 4.2 Security Documents.............................................................. 20
Section 4.3 Guarantee....................................................................... 20
ARTICLE 5 REPRESENTATIONS AND WARRANTIES................................................................ 21
Section 5.1 Security........................................................................ 21
Section 5.2 Authorization and Power......................................................... 21
Section 5.3 No Conflicts or Consents........................................................ 21
Section 5.4 Enforceable Obligations......................................................... 21
Section 5.5 Accurate Information............................................................ 21
Section 5.6 Purpose of Advances............................................................. 22
Section 5.7 Legal Proceedings: Hearings; Inquiries; and Investigations...................... 22
Section 5.8 No Event of Default............................................................. 22
Section 5.9 Approvals and Permits; Assets and Property...................................... 22
Section 5.10 Taxes.......................................................................... 22
Section 5.11 ERISA.......................................................................... 22
Section 5.12 Compliance With Law............................................................ 22
Section 5.13 Recitals....................................................................... 23
Section 5.14 Security Documents............................................................. 23
Section 5.15 Survival....................................................................... 23
Section 5.16 Advances....................................................................... 23
Section 5.17 Not Subordinated............................................................... 23
Section 5.18 No Stock Purchase.............................................................. 23
Section 5.19 Solvent........................................................................ 23
Section 5.20 Representations and Warranties Upon Delivery of Financial Statements
Documents and Other Information................................................ 23
Section 5.21 Environmental Matters.......................................................... 24
Section 5.22 Investment Company Act......................................................... 24
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Section 5.23 Satisfaction of Conditions Precedent Under the Credit and Security Agreement... 24
ARTICLE 6 AFFIRMATIVE COVENANTS......................................................................... 25
Section 6.1 Maintain Existence and Management............................................... 25
Section 6.2 Books and Records; Access By WFBC............................................... 25
Section 6.3 Reporting Requirements.......................................................... 25
Section 6.4 Law; Judgments; Material Agreements; Approvals and Permits...................... 25
Section 6.5 Payment of Taxes and Other Debt................................................. 26
Section 6.6 Assets and Property............................................................. 26
Section 6.7 Insurance....................................................................... 26
Section 6.8 Notice of Default............................................................... 27
Section 6.9 ERISA........................................................................... 28
Section 6.10 Appraisals..................................................................... 28
Section 6.11 Special District............................................................... 28
Section 6.12 Miscellaneous.................................................................. 28
Section 6.13 Use of Proceeds of Advances.................................................... 28
Section 6.14 Cross-Collateralization........................................................ 28
Section 6.15 Further Assurances............................................................. 28
Section 6.16 Satisfaction of Conditions..................................................... 29
Section 6.17 Financial Covenants............................................................ 29
Section 6.18 Change in Ownership............................................................ 29
ARTICLE 7 NEGATIVE COVENANTS............................................................................ 30
Section 7.1 Corporate Restrictions.......................................................... 30
Section 7.2 Merger, Sale of Assets.......................................................... 30
Section 7.3 Liens........................................................................... 30
Section 7.4 Transfer Collateral............................................................. 30
Section 7.15 Amendments..................................................................... 30
Section 7.6 Optional Redemption............................................................. 30
Section 7.7 Conversion...................................................................... 30
Section 7.8 Dividends....................................................................... 30
Section 7.9 Maximum Commitment Amount....................................................... 30
ARTICLE 8 ADVANCES, INSPECTIONS, NET PROCEEDS........................................................... 32
ARTICLE 9 EVENTS OF DEFAULT............................................................................. 33
Section 9.1 Events of Default............................................................... 33
Section 9.2 Rights and Remedies............................................................. 34
ARTICLE 10 NATURE OF OBLIGATIONS, INDEMNIFICATION........................................................ 36
Section 10.1 Obligations Absolute........................................................... 36
Section 10.2 Continuing Obligation.......................................................... 36
Section 10.3 Liability of WFBC.............................................................. 36
Section 10.4 Indemnification................................................................ 37
Section 10.5 Telecopied or Telexed Documents................................................ 37
Section 10.6 Liability of Directors of Borrower............................................. 38
ARTICLE 11 TRANSFER, REDUCTION, REINSTATEMENT OF LETTER OF CREDIT........................................ 39
Section 11.1 Transfer, Reduction and Reinstatement.......................................... 39
ARTICLE 12 MISCELLANEOUS................................................................................. 40
Section 11.1 Control of Bank and Borrower................................................... 40
Section 12.2 Costs, Expenses and Taxes...................................................... 40
Section 12.3 Amendments and Waivers......................................................... 40
Section 12.4 No Waiver, Remedies............................................................ 41
Section 12.5 Notices........................................................................ 41
Section 12.6 Binding Effect................................................................. 41
Section 12.7 Severability................................................................... 41
Section 12.8 Governing Law.................................................................. 41
Section 12.9 Headings....................................................................... 41
Section 12.10 Participation................................................................. 42
Section 12.11 Arbitration................................................................... 42
Section 12.12 Jury Waiver................................................................... 43
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Section 12.13 Counterparts.................................................................. 43
EXHIBIT
IA Form of Series A Letter of Credit
2 Form of Deed of Trust
3 Form of Arizona UCC-1
4 Form of Environmental Indemnity Agreement
5 Security Agreement - Sinking Fund
6 Securities Control Agreement - Security
Account
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REIMBURSEMENT AGREEMENT
BY THIS REIMBURSEMENT AGREEMENT (together with any amendments or
modifications, the "Reimbursement Agreement"), entered into as of the 6th day of
February, 2004, by and between OXYCAL LABORATORIES, INCORPORATED, an Arizona
corporation (the "Borrower"), and ▇▇▇▇▇ FARGO BUSINESS CREDIT, INC. ("WFBC"), in
consideration of the mutual promises herein contained and for other valuable
consideration, the parties hereto do hereby agree as follows:
RECITALS
A. The Industrial Development Authority of the County of Yavapai
(the "Issuer") has issued its Adjustable Rate Industrial Development Revenue
Bonds (Oxycal Laboratories, Incorporated Project), Series 1999A (the "Series A
Bonds") in the aggregate principal amount of $3,900,000.00 (of which
$3,680,000.00 remains outstanding) and its Adjustable Rate Industrial
Development Revenue Bonds (Oxycal Laboratories, Incorporated Project) Taxable
Series 1999B in the aggregate principal amount of $1,100,000.00 (of which none
remains outstanding) pursuant to that Trust Indenture dated as of March 1, 1999
(the "Indenture") between the Issuer and Bank One, Arizona, NA, a national
banking association, now ▇.▇. ▇▇▇▇▇▇ Trust Company, N.A., as trustee (together
with any successors thereto, the "Trustee") and loaned the proceeds thereof to
Borrower under a Loan Agreement dated as of March 1, 1999 (together with any
amendments or modifications, the "Loan Agreement") by and between the Issuer and
Borrower, (i) to reimburse the Borrower for the purchase of approximately five
acres of land (the "Land") in Prescott, Arizona, (ii) to finance the
construction thereon of an approximately 65,000 square foot manufacturing
facility (the "Improvements" and with the Land, the "Real Property"), and (iii)
to purchase equipment therefor (the "Equipment" and with the Real Property, the
"Project"). The remaining outstanding Series A Bonds are referred to hereafter
as the "Bonds."
B. In connection with maintaining the Bonds outstanding, the
Issuer has required that Borrower cause to be delivered to the Trustee, for the
benefit of the holders of the Bonds, an irrevocable direct-pay letter of credit
to secure payment of principal, interest and purchase price with respect to each
series of the Bonds.
C. Borrower has requested WFBC to cause to be issued an
irrevocable direct-pay letter of credit, payments under which drawings are to be
made exclusively from the general funds of ▇▇▇▇▇ Fargo Bank, NA ("Letter of
Credit Bank") and not from the funds of Borrower (such letter of credit, No.
NZS510158, a form of which is attached hereto as Exhibit "IA", as it may be
amended, modified or restated from time to time, is herein called the " Letter
of Credit"), in the amount of $3,725,370.00 (the "Initial Stated Amount") of
which $3,680,000.00 (as of March 11, 2004) will be available to pay principal of
the Bonds either at maturity or upon redemption thereof or to pay the portion of
the purchase price of the Bonds representing the principal amount thereof, and
of which $45,370.00 represents forty-five (45) days of interest on the principal
amount of the Bonds calculated at the rate of ten percent (10%) per annum on the
basis of a 365-day year; the Initial Stated Amount is subject to reduction and
reinstatement in accordance with the terms of the Letter of Credit.
D. Letter of Credit Bank has agreed to issue the Letter of Credit
upon and subject to the terms and conditions hereinafter set forth.
E. Borrower hereby requests that WFBC cause Letter of Credit
Bank, as WFBC's agent in Letter of Credit Bank's name, to issue a direct pay
letter of credit (the "Letter of Credit") pursuant to the terms and conditions
of this Agreement. Borrower hereby authorizes WFBC to use Letter of Credit Bank
as WFBC's agent to issue the Letter of Credit or to perform any of WFBC's
obligations or exercise any of WFBC's rights under any Letter of Credit Document
or Loan Document, with the understanding that (1) Letter of Credit Bank will be
WFBC's agent having obligations to WFBC and not to Borrower, (2) the Letter of
Credit issued through WFBC will be deemed to be a letter of credit issued by
WFBC pursuant to this Agreement, (3) any of WFBC's obligations performed or any
of WFBC's rights acquired or exercised pursuant to, or in connection with, the
Letter of Credit Documents or Loan Documents by Letter of Credit Bank in WFBC's
name or in Letter of Credit Bank's name shall be deemed obligations performed or
rights acquired or exercised by WFBC pursuant to, or in connection with the
Letter of Credit Documents or Loan Documents, and (4) any collateral heretofore,
now or at any time hereafter granted or pledged to WFBC as security for any
credit extended to Borrower will also secure all Borrower's obligations to WFBC
under this Agreement and the other Letter of Credit Documents.
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AGREEMENT
ARTICLE 1
DEFINITION OF TERMS
Section 1.1 Definitions. For the purposes of this Reimbursement
Agreement, unless the context otherwise requires, the following terms shall have
the respective meanings assigned to them in this Article 1 or in the section
hereof referred to below:
"Advance" means each advance of the proceeds of the Bonds for any
purpose.
"Amortization Payment" means for each Payment Date, a payment of
$20,444.45 ($3,680,000 / 180 equal monthly payments).
"Appraisal" means an appraisal of the Project as it will exist upon
completion of any Improvements (i) ordered by WFBC, (ii) prepared by an
appraiser satisfactory to WFBC, (iii) in compliance with all federal and state
standards for appraisals, (iv) reviewed by WFBC, and (v) in form and substance
satisfactory to WFBC in its reasonable discretion.
"Approvals and Permits" means each and all approvals, authorizations,
bonds, consents, certificates, franchises, licenses, permits, registrations,
qualifications, and other actions and rights granted by or filings with any
Persons necessary for acquisition of the Real Property, for construction of the
Improvements, for occupancy, ownership, and use by Borrower and other Persons of
the Real Property and the Improvements.
"Available Amount" in effect at any time means the maximum aggregate
amount available to be drawn at such time under the Letter of Credit, the
determination of such maximum amount to assume compliance with all conditions
for a Drawing and no reduction for (i) any amount drawn by the Trustee to make a
regularly scheduled payment of interest on the Bonds, or (ii) any amount not
available to be drawn because Bonds are held by or for the account of Borrower
or pursuant to the Pledge Agreement. The maximum aggregate amount available to
be drawn under the Letter of Credit equals the sum of one hundred percent (100%)
of the aggregate principal amount of the Bonds then outstanding, plus the
Interest Portion.
"Bank One Letter of Credit" means that existing Letter of Credit
provided by Bank One, Arizona, N.A., under the Reimbursement Agreement dated as
of March 1, 1999, between the Borrower and Bank One, Arizona, N.A., and expiring
by its terms on March 15, 2004.
"Bond Counsel" means "Bond Counsel" as defined in the Indenture.
"Bond Documents" means the Indenture and the Loan Agreement.
"Bond Prepayment Date" means any date on which the Bonds are subject to
redemption in whole or in part at the option of the Issuer or Borrower.
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"Bond Requisition" means that form of requisition, if any, required
under the Bond Documents in order to withdraw funds from the Project Fund,
completed and executed by Borrower and consented to by WFBC.
"Bonds" means the $3,680,000.00 outstanding payment amount of the
Series 1999A Adjustable Rate Development Revenue Bonds issued by The Industrial
Development Authority of the County of Yavapai in the aggregate original
principal amount of $3,900,000.00.
"Borrower" means Oxycal Laboratories, Incorporated.
"Borrower's Funds" means funds of the Borrower used to pay Project
Costs.
"Borrower's Funds Account" means a bank controlled account established
by Borrower with the Letter of Credit Bank, to which monies shall be deposited
by Borrower to the extent there are any Net Proceeds, and from which monies
shall be disbursed as directed by WFBC.
"Business Day" means a Business Day as defined in the Letter of Credit.
"Change in Ownership" means the acquisition by any Person or group,
directly or indirectly, beneficially or of record, of a majority of the issued
and outstanding capital stock of the Borrower or of any other equity interest in
the Borrower.
"Code" means the United States Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder.
"Collateral" means any real or personal property of any Person subject
to the Security Documents.
"Control" means the power to direct or cause the direction of the
management or policies of a Person; whether through rights of ownership under
voting securities, under contract or otherwise, and "Controlling" and
"Controlled" shall have meanings correlative thereto.
"Counsel" means an attorney duly admitted to practice law before the
highest court of any state.
"Credit and Security Agreement" means that Credit and Security
Agreement dated as of February 6, 2004 entered into between ▇▇▇▇▇ Fargo Business
Credit, Inc. and Oxycal Laboratories, Zila Biotechnology, Inc., Zila
Pharmaceuticals, Inc., Zila Nutraceuticals, Inc., and ▇▇▇▇ ▇▇▇▇ Technologies,
Inc.
"Custodian" means the Trustee, as the custodian under the Pledge
Agreement.
"Date of Issuance" means the date on which the executed Letter of
Credit is delivered to the Trustee.
"Debt" means (A) obligations for borrowed money, (B) obligations
representing the deferred purchase price of property other than trade accounts
payable arising in, and on terms customary in, the ordinary course of Borrower's
business, (C) obligations under conditional sales
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agreements, (D) obligations under leases of personal property that may be
capitalized on the balance sheet of Borrower, and (E) the unpaid principal
amount of loans and other obligations guaranteed by Borrower.
"Deed of Trust" means that Deed of Trust, Assignment of Rents, Security
Agreement and Financing Statement to be recorded in the records of Yavapai
County, Arizona, as amended from time to time, from the Borrower as trustor for
the benefit of WFBC with respect to the Real Property.
"Default Rate" means a fluctuating interest rate equal at all times to
two percent (2 %) per annum above the Variable Rate in effect from time to time.
"Dollars" and the sign "$" mean lawful currency of the United States of
America.
"Drawing" means a drawing made under the Letter of Credit for any
purpose.
"Equipment": See Recital A hereof.
"ERISA" means the Employee Retirement Income Security Act of 1974 and
the regulations and published interpretations thereunder, as in effect from time
to time.
"Event of Default" means one of the events defined as such in Section
9.1 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Date": See the Letter of Credit.
"Facility Fee" means a fee equal to an annual rate of one and one-half
percent (1.5%) of the Available Amount. The Facility Fee shall be calculated on
the balances in effect on each day of a calendar quarter. The Facility Fee shall
be nonrefundable under any circumstances.
"Financial Covenants" means those covenants described in Section 6.19.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after the
date hereof so as to properly reflect the financial condition, and the results
of operations and changes in financial position, of the Borrower, including
without limitation accounting rules promulgated pursuant to Regulations S-X and
S-K, except that any accounting principle or practice required to be changed by
the said Accounting Principles Board or Financial Accounting Standards Board (or
other appropriate board or committee of the said Boards) in order to continue as
a generally accepted accounting principle or practice may be so changed.
"Governmental Authority" means any government (or any political
subdivision or jurisdiction thereof), court, bureau, agency or other
governmental authority having jurisdiction over Borrower or any of its business,
operations or properties.
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"Guarantee": See Section 4.3 hereof.
"Guarantor" means Zila, Inc., a Delaware corporation.
"Improvements" mean the 65,000 square foot manufacturing facility
constructed with the Bond proceeds.
"Indenture" means the Trust Indenture dated as of March 1, 1999 between
the Issuer and Bank One, Arizona, N.A., now ▇.▇. ▇▇▇▇▇▇ Trust Company, N.A.
"Initial Payment Date" means April 1, 2004.
"Initial Stated Amount" means $3,725,370.00.
"Interest Portion": See the Letter of Credit.
"Intermediary" means ▇▇▇▇▇ Fargo Brokerage Services, Inc. or any
successors thereto.
"Issuer" means the Industrial Development Authority of the County of
Yavapai, Arizona.
"Land" means approximately five acres of land in Prescott, Arizona on
which the Improvements have been built.
"Letter of Credit" means the Letter of Credit Number NZS510158 issued
on February 6, 2004, by the Letter of Credit Bank.
"Letter of Credit Bank" means ▇▇▇▇▇ Fargo Bank, N.A.
"Letter of Credit Document" means the Letter of Credit, annexes thereto
and any other agreements, documents or instruments relating to the Letter of
Credit.
"Lien or Encumbrance" and "Liens and Encumbrances" mean, respectively,
each and all of the following: (i) any lease or other right to use; (ii) any
assignment as security. conditional sale, grant in trust, lien, mortgage,
pledge, security interest, title retention arrangement, other encumbrance, or
other interest or right securing the payment of money or the performance of any
other liability or obligation, whether voluntarily or involuntarily created and
whether arising by agreement, document, or instrument, under any law, ordinance,
regulation, or rule (federal, state, or local), or otherwise; and (iii) any
option, right of first refusal, or other interest or right.
"Loan Agreement" means the Loan Agreement dated as of March 1, 1999
between the Issuer and Borrower loaning the proceeds of the sale of the Series A
and Series B Bonds to Borrower to purchase the Land and finance construction of
the Improvements.
"Loan Amount" means as of any day the Available Amount, less the
current balance of the Sinking Fund and the Security Account.
"Loan Documents" means this Reimbursement Agreement, the Security
Documents and any other agreements, documents or instruments evidencing,
guarantying, securing or otherwise
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relating to this Reimbursement Agreement, as such agreements, documents and
instruments may be amended, modified, extended, renewed or supplemented from
time to time.
"Loan Due Date" means the day on which the WFBC has caused to be made a
demand loan to Borrower by the payment of a Drawing.
"Material Adverse Effect" means any circumstance or event which (i) has
any material adverse effect upon the validity or enforceability of this
Reimbursement Agreement, any other Loan Document or any Related Document, or
(ii) materially impairs the ability of Borrower to fulfill its obligations under
this Reimbursement Agreement or any Related Document.
"Net Proceeds" means net proceeds of any casualty insurance payment or
condemnation award.
"Obligation" means the obligations of Borrower under the Loan
Documents.
"Participant(s)" means any bank(s) or other financial institutions
which may purchase a participation interest from the Letter of Credit Bank in
the Letter of Credit, this Reimbursement Agreement and certain of the Related
Documents pursuant to a participation agreement between the WFBC and the
Participant(s).
"Payment Date" means the first day of each month.
"Permitted Liens" means any Liens or Encumbrances permitted under any
Security Document.
"Person" means an individual, a corporation, a joint venture, a
partnership, an association, a trust, a limited liability company, an
unincorporated organization, or, a government, any agency, any department or
political subdivision thereof.
"Pledge Agreement" means that Custody, Pledge and Security Agreement
dated as of January 30, 2004, by and among Borrower, the Custodian and the WFBC.
"Pledged Bond" means "Pledged Bond" as defined in the Pledge Agreement.
"Prepayment Notice Day" means the last day by which the Trustee is to
receive notice to prepay Bonds in compliance with Section 2.4(b).
"Project" means the Land, the Improvements and the Equipment.
"Project Fund" has the meaning given it in the Indenture.
"Real Property" means the Land and Improvements purchased and
constructed by the proceeds from the Bonds.
"Regulation U" means Regulation U promulgated by the Board of Governors
of the Federal Reserve System, 12 C.F.R. Part 221, or any other regulation
hereafter promulgated by said Board to replace the prior Regulation U and having
substantially the same function.
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"Reimbursement Agreement" means this Reimbursement Agreement, dated as
of February 6, 2004, by and between Oxycal and WFBC.
"Related Documents" means the Letter of Credit, the Indenture, the
Pledge Agreement, the Loan Agreement, the Bonds, the Security Documents and any
exhibits thereto.
"Remarketing Agent" has the meaning given it in the Indenture.
"SEC" means the Securities and Exchange Commission.
"Securities Control Agreement" means the collateral security agreement
on the Security Account between the Intermediary, the Borrower, and the
Guarantor for the benefit of WFBC.
"Security Account": See Section 4.1(e).
"Security Agreement" means a Security Agreement of even date herewith
from the Borrower for the benefit of the WFBC.
"Security Documents" means all of the documents required by WFBC to
grant and perfect liens and security interests required by Article 4 of this
Agreement.
"Series B Bonds" means those taxable Series 1999B Bonds issued in an
aggregate principal amount of $1,000,000.00 under the Indenture, of which none
remain outstanding.
"Significant Debt Agreement" means all documents, instruments and
agreements executed by the Borrower evidencing, or securing any Debt (other than
trade payables incurred by Borrower in the ordinary course of its business) or
any guaranty in excess of $100,000.00 in outstanding principal (or principal
equivalent) amount.
"Sinking Fund": See Section 4.1(d).
"State" means the State of Arizona.
"Subsidiaries" means all business associations directly or indirectly
controlled by the Borrower.
"Trustee" means ▇.▇. ▇▇▇▇▇▇ Trust Company, N.A., as successor to Bank
One, Arizona, N.A.
"Variable Rate" means the rate per annum, calculated on a 360-day year,
equal to the sum of (i) one percent (1.00%) per annum, and (ii) the rate per
annum most recently publicly announced by the Letter of Credit Bank, or its
successors, in San Francisco, California, as its "prime rate," as in effect from
time to time. The Variable Rate will change on each day that the "prime rate"
changes. The "prime rate" is not necessarily the best or lowest rate offered by
the Letter of Credit Bank, and the Letter of Credit Bank may lend to its
customers at rates that are at, above, or below its "prime rate."
"WFBC" means ▇▇▇▇▇ Fargo Business Credit, Inc.
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"Work" means the work with respect to the Project.
Section 1.2 Accounting Terms. All accounting terms used herein
without definition shall be interpreted in accordance with GAAP and, except as
otherwise expressly provided herein or otherwise inconsistent with the terms of
this Reimbursement Agreement, all determinations herein required shall be made
in accordance with GAAP.
Section 1.3 Interpretation. All words used herein shall be
construed to be of such gender or number as the circumstances require. All
capitalized terms not defined herein shall have the meaning ascribed to them in
the Indenture.
Section 1.4 Relation to Other Documents. Nothing in this
Reimbursement Agreement shall be deemed to amend or relieve Borrower of its
obligations under any other Related Document. Except as otherwise provided
herein, references to any document or instrument defined in this Article 1 are
to such documents or instruments as amended or supplemented from time to time
with WFBC's consent or as otherwise permitted by this Reimbursement Agreement.
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ARTICLE 2
Letter of Credit, FEES AND PAYMENT PROVISIONS
Section 2.1 The Letter of Credit.
(a) Borrower hereby applies to WFBC for and WFBC
authorizes and instructs the Letter of Credit Bank to issue the Letter
of Credit to the Trustee.
(b) WFBC agrees, on the terms and conditions
hereinafter set forth, to have caused to be issued the Letter of Credit
by Letter of Credit Bank to the Trustee for the account of Borrower.
Section 2.2 Fees. Borrower agrees to pay to WFBC the following:
(a) The Facility Fee shall be payable on the
first Business Day of each month after the Date of Issuance.
(b) A transfer fee of $500.00 upon each transfer
of the Letter of Credit in accordance with its terms, payable on the
date of the transfer.
Section 2.3 Reimbursement.
(a) Each Drawing paid by Letter of Credit Bank
under the Letter of Credit shall constitute a demand loan made by WFBC
to Borrower on the date of such payment by Letter of Credit Bank under
the Letter of Credit. Any such demand loan shall bear interest from the
date of the making of such demand loan until payment in full, at the
Variable Rate. Borrower agrees to pay each such demand loan, together
with interest thereon, on or before the applicable Loan Due Date. No
interest shall be charged if payment is received by WFBC on or before
the date of the Drawing.
(b) After each Drawing paid by the Letter of
Credit Bank for the prepayment of Bonds in accordance with Section 2.4,
WFBC is hereby authorized to withdraw monies from the Sinking Fund
equal to the amount of such Drawing in order to reimburse itself for
such Drawing. To the extent such monies are insufficient, Borrower
agrees to pay WFBC within five (5) days after written demand for any
such shortfall.
(c) Notwithstanding the foregoing, any
outstanding demand loans or any amounts due WFBC hereunder not yet due
and payable as of the Expiration Date shall become due and payable on
such Expiration Date.
Section 2.4 Amortization Payments.
(a) On each Payment Date, beginning on the
Initial Payment Date, payments shall be due and payable by Borrower to
WFBC in amounts equal to the Amortization Payment. Each Amortization
Payment received by WFBC shall be deposited by WFBC in the Sinking
Fund.
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(b) On each anniversary of the Initial Payment
Date, Borrower shall take all actions necessary under the Bond
Documents to ensure that Bonds in the amount of the Amortization
Payment, rounded to the next lower integral of $5,000.00, are prepaid,
together with interest accrued thereon to the date of prepayment, on or
about such date or, if not so permitted under the Bond Documents, then
on the subsequent Bond Prepayment Date. Borrower shall send a copy of
the prepayment notice sent to the Trustee for each such Bond prepayment
concurrently to WFBC for its consent to such prepayment; so long as
there is no Event of Default outstanding and the amount of the proposed
Bond prepayment does not exceed the funds on deposit in the Sinking
Fund, WFBC agrees to provide such consent promptly .
(c) In the event that Borrower shall fail to
notify the Trustee to prepay Bonds in accordance with this Section 2.4
by noon (Phoenix, Arizona local time) on the Prepayment Notice Day, or
upon the occurrence of an Event of Default and the continuation
thereof, Borrower agrees that WFBC may, but is not obligated to, notify
the Trustee to prepay Bonds in accordance with this Section 2.4.
Section 2.5 Interest Rate: Default Rate.
(a) Borrower expressly agrees to an effective
rate of interest that is the rate stated in this Article 2 plus any
additional rate of interest resulting from any other charges in the
nature of interest paid or to be paid in connection with this
Reimbursement Agreement.
(b) Upon an Event of Default, including failure
to pay upon final maturity, WFBC, at its option, may also, if permitted
under applicable law, do one or both of the following: (a) increase the
applicable interest rate hereunder to the Default Rate, and (b) add any
unpaid accrued interest to principal and such sum will bear interest
therefrom until paid at the rate provided herein (including any
increased rate). The interest rate will not exceed the maximum rate
permitted by applicable law.
(c) If payment is ten (10) days or more late,
Borrower will be charged five percent (5.0%) of the regularly scheduled
payment or $25.00, whichever is greater, up to the maximum amount of
$1,500.00 per late charge.
Section 2.6 Increased Costs. If the compliance by Letter of
Credit Bank or WFBC with any guideline or request from any central bank or other
governmental authority (whether or not yet having the force of law) shall either
(A) impose, modify or deem applicable any reserve, special deposit or similar
requirement against letters of credit issued by, or assets held by, or deposits
in or for the account of, Letter of Credit Bank or WFBC or (B) impose on Letter
of Credit Bank or WFBC any other condition regarding this Reimbursement
Agreement, the Letter of Credit, any amount outstanding hereunder or any
Drawing, and the result of any event referred to in clause (A) or (B), above,
shall be to increase the cost to Letter of Credit Bank or WFBC of maintaining
the Letter of Credit or agreeing to make or making, funding or maintaining any
Drawing, then, upon demand by WFBC, Borrower shall pay to WFBC, from time to
time as specified by WFBC, additional amounts which shall be sufficient to
compensate the Letter of Credit Bank and WFBC for such increased cost. A
certificate setting forth such increased cost
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incurred by Letter of Credit Bank or WFBC as a result of any event referred to
above, submitted by WFBC to Borrower, shall constitute such demand.
Section 2.7 Computations. Computations of the Variable Rate, the
Default Rate and the fees under Section 2.2 hereof shall be made by WFBC on the
basis of a year of 360 days; for the actual number of days (including the first
day but excluding the last day) elapsed.
Section 2.8 Non-Business Days. Whenever any payment to be made
hereunder shall be stated to be due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day, and such extension of
time shall not in such case be included in the computation of interest,
commission or fee, as the case may be.
Section 2.9 Payments by Borrower. Except as provided in Section
2.11 hereof, all payments by Borrower to WFBC hereunder shall be nonrefundable
and made in lawful currency of the United States and in immediately available
funds. Amounts payable to WFBC hereunder shall be made at WFBC's address
specified in Section 12.5 hereof or at such other location as WFBC may notify
Borrower in writing, not later than 3:00 p.m. (Phoenix, Arizona local time), on
the date payment is due. Any payment received by WFBC after 3:00 p.m. (Phoenix,
Arizona local time) shall be deemed to have been received by WFBC on the next
Business Day.
Section 2.10 Maintenance of Accounts. WFBC shall maintain, in
accordance with its usual practice, an account or accounts evidencing the
indebtedness of Borrower and the amounts payable and paid from time to time
hereunder. In any legal action or proceeding in respect of this Reimbursement
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, absent manifest error. The failure to record any such amount shall
not, however, limit or otherwise affect the obligations of Borrower hereunder to
repay all amounts owed hereunder, together with all interest accrued thereon as
provided in this Article 2.
Section 2.11 Application of Funds. Except as otherwise expressly
provided herein, unless otherwise agreed to, in writing, or otherwise required
by applicable law, payments will be applied first to accrued, unpaid interest,
then to principal, and any remaining amount to any unpaid collection costs, late
charges and other charges; provided, however, upon delinquency or other default,
WFBC reserves the right to apply payments among principal, interest, late
charges; collection costs and other charges at its discretion. All prepayments
shall be applied to the indebtedness owing hereunder in such order and manner as
WFBC may from time to time determine in its sole discretion.
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ARTICLE 3
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to the Issuance of the Letter of
Credit: Documents. As a condition precedent to the issuance of the Letter of
Credit, WFBC shall have received, on or before the Date of Issuance, the
following items in form and substance satisfactory to WFBC and its Counsel:
(a) This Reimbursement Agreement, duly executed
and delivered by Borrower to WFBC.
(b) The Pledge Agreement, duly executed by
Borrower and the Custodian.
(c) The Security Agreement, duly executed by the
Borrower.
(d) Security agreements with respect to the
Sinking Fund substantially in the form of Exhibit 5, and the Security
Account substantially in the form of Exhibit 6, duly executed by the
Borrower.
(e) The Guarantee, duly executed by the
Guarantor.
(f) Copies of the Articles of Incorporation and
bylaws of Borrower and Guarantor and all amendments thereto, together
with evidence of good standing in the state of incorporation, together
with proper corporate resolutions and certificates and such other
documents as WFBC may require relating to the existence and good
standing of Borrower and of Guarantor and the authority of any person
executing documents on behalf of Borrower and of Guarantor.
(g) An opinion of counsel to Borrower and
Guarantor acceptable to WFBC.
(h) Current financial statements of Borrower and
Guarantor.
(i) Executed copies of the Bond Documents
together with copies of the written opinions of Bond Counsel as to the
tax-exempt nature of the Bonds and as to other matters as the Issuer,
the Trustee and the purchaser of the Bonds may require and a reliance
letter addressed to WFBC from Bond Counsel, allowing WFBC to rely on
such opinions.
(j) Payment of WFBC's fees and expenses and its
Counsel's fees and expenses incurred to the Date of Issuance pursuant
to this Reimbursement Agreement. Borrower agrees to pay to WFBC within
fifteen (15) days of written notice all fees, expenses and Counsel's
fees and expenses subsequently incurred by WFBC (including those of the
Letter of Credit Bank) pursuant to this Reimbursement Agreement.
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(k) Such other documents, instruments, approvals
and, if requested by WFBC, certified duplicates of executed copies
thereof, and opinions as the Bank may reasonably request.
(l) The Deed of Trust substantially in the form
of Exhibit 2, duly executed and delivered to WFBC by Borrower.
(m) The Appraisal of the Project.
(n) A current survey of the Real Property by a
licensed surveyor acceptable to WFBC describing the boundaries of the
Real Property and Showing all means of ingress and egress,
rights-of-way, easements (each of which shall be identified by docket
and page or recording number where recorded) and all other customary
and relevant information pursuant to ALTA standards and any title
company requirements. All surveys shall be certified to WFBC and the
title company issuing the Title Policy described below.
(o) An ALTA extended coverage mortgagee's title
insurance policy [ALTA Loan Policy - 1970 (Rev. 10-17-70)] or similar
policy acceptable to WFBC (the "Title Policy"), with such endorsements
as WFBC may require, issued by a title insurance company satisfactory
to WFBC in the amount of the Initial Stated Amount insuring the lien of
the Deed of Trust to be a first and prior lien upon the Real Property
and Improvements as security for all Advances pursuant to the terms of
this Agreement, subject only to such exceptions as WFBC may expressly
approve in writing.
(p) An environmental questionnaire and
disclosure statement completed and signed by Borrower covering the
current and former condition and uses of the Real Property and adjacent
property, and a current preliminary environmental assessment (Phase I
assessment) of the Real Property and adjacent property, plus any
sampling and analysis (Phase II assessment) or special limited
assessment that WFBC may require after review of the Phase I
assessment, together with any other environmental investigations and
reports that WFBC may reasonably require, all of which shall be by an
environmental consulting firm acceptable to WFBC and none of which
shall reveal any existing or potential environmental condition
materially adversely affecting the use or value of the Real Property.
(q) Evidence that the Real Property is properly
zoned for the Improvements and their intended use and that such zoning
is final and not subject to challenge.
(r) Policies of insurance as required by Section
6.7.
(s) A flood location certificate together with
evidence whether the Real Property, or any part thereof, lies within a
"special flood hazard area" as designated on maps prepared by the
Department of Housing and Urban Development.
(t) Evidence that all utilities and services to
the Real Property and Improvements, including without limitation water,
sewer, gas, electric and telephone, are
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available, and are provided in amounts that are sufficient to service
the Improvements for their intended use.
(u) To the extent applicable, evidence that each
type of offsite improvement for the Real Property has been completed
and has been certified and/or accepted by any municipality, utility,
county or other governmental entity whose certification or acceptance
thereof is required.
(v) Copies of all lease agreements, if any,
affecting the Real Property and Improvements.
(w) Copies of all other agreements between
Borrower and any architects, engineers, managers or supervisors related
to the construction, maintenance, repair, leasing, management and
operation of the Real Property and Improvements, together with written
agreements by such persons or entities that they will perform for WFBC
the services contracted to Borrower, notwithstanding the occurrence of
any Event of Default and any trustee's sale or foreclosure of the Deed
of Trust (provided that such persons or entities continue to receive
payments under their respective contracts), and the consent of such
persons or entities to the collateral assignment by Borrower to WFBC of
their respective contracts.
(x) Evidence that all taxes and assessments
levied against or affecting the Real Property have been paid current,
together with, if required by WFBC, a Type B tax service contract for
the Real Property.
(y) An Environmental Indemnity Agreement,
substantially in the form attached hereto as Exhibit 4, duly executed
by Borrower.
(z) Evidence that there exists adequate legal
ingress and egress to the Project.
(aa) An Arizona UCC-1 Financing Statement
substantially in the form of Exhibit 3.
(bb) Such other documents, instruments, approvals
and, if requested by the WFBC, certified duplicates of executed copies
thereof, and opinions as the WFBC may reasonably request.
Section 3.2 Conditions Precedent to the Issuance of the Letter of
Credit. As a condition precedent to the issuance of the Letter of Credit, the
following shall be true and correct in all respects:
(a) No Event of Default shall result from the
delivery of this Reimbursement Agreement.
(b) Since the date of the most recent financial
statements provided to the WFBC with respect to the Borrower and the
Guarantor, no material change shall have occurred in the business or
financial condition of any thereof.
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(c) The Bonds shall be outstanding in accordance
with the Bond Documents.
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ARTICLE 4
SECURITY DOCUMENTS; GUARANTEE
Section 4.1 Security. Borrower shall cause its obligations under
this Reimbursement Agreement to be secured as follows:
(a) Pledge Agreement. At all times, by the
Pledge Agreement.
(b) Deed of Trust. At all times, by the Deed of
Trust constituting:
(i) A first and prior lien on the
Project, subject only to such matters as specifically approved
by WFBC therein;
(ii) A valid and effectual assignment of
rents and leases covering the Project;
(iii) A valid and effectual security
agreement granting WFBC a first and prior security interest in
all of the property described in the Deed of Trust, subject
only to such matters as specifically approved by the WFBC
therein;
together with valid and effectual assignments of Borrower's
interest in all construction, architect, operating, management
and supervision agreements, and all other documents relating
to the ownership, development, construction, maintenance,
leasing, management and operation of the Project; and together
with any UCC financing statements for filing and/or recording
and any other items required by WFBC to fully perfect the
liens and security interests of WFBC;
Provided, that so long as the Bank One Letter of Credit is
outstanding as credit enhancement for the Bonds, WFBC's lien
on the Project shall be subordinate to the lien securing the
obligation to reimburse draws under, and pay other amounts due
with respect to, the Bank One Letter of Credit.
(c) Security Agreement. At all times, by the
Security Agreement, granting WFBC a first and prior security interest
in all of the property described in the Security Agreement, subject
only to such matters as specifically approved by WFBC therein.
(d) Sinking Fund. Borrower hereby establishes
with the Letter of Credit Bank a bank controlled account (the "Sinking
Fund") as follows:
(i) Borrower agrees to deposit in the
Sinking Fund the Amortization Payments in accordance with
Section 2.4.
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(ii) The Sinking Fund shall be in the
name of Borrower (as a bank controlled account) with all
interest, if any, earned on the Sinking Fund credited thereto,
but under the sole dominion and control of Letter of Credit
Bank and shall be invested in accordance with subparagraph
(ix) herein below, as mutually agreed to by Borrower and WFBC
in investments of at least investment grade.
(iii) Borrower hereby pledges to, and
grants to, WFBC a security interest in the Sinking Fund and
all proceeds thereof, as security for the performance of the
obligations of Borrower hereunder.
(iv) Upon the occurrence and during the
continuation of an Event of Default that remains uncured, WFBC
may apply any funds on deposit in the Sinking Fund to the
payment of any unpaid Drawings under the Letter of Credit, in
such order as the WFBC may determine in its sole discretion.
(v) Neither the Borrower nor any person
or entity claiming on behalf of or through Borrower shall have
any right to withdraw any of the funds held in the Sinking
Fund. Such funds shall be applied by WFBC in accordance with
Section 2.3 or with this Paragraph (d).
(vi) On the Expiration Date, the WFBC
shall apply funds then held in the Sinking Fund to the payment
of any amounts owed WFBC by Borrower, with the remainder to be
disbursed to Borrower.
(vii) Borrower agrees that it will not
create or permit to exist any lien, security interest or other
charge or encumbrance upon or with respect to the Sinking
Fund, except as provided in or contemplated by this
Reimbursement Agreement.
(viii) WFBC shall exercise reasonable care
in the custody and presentation of any funds held in the
Sinking Fund and shall be deemed to have exercised such care
if such funds are accorded treatment substantially similar to
that which Letter of Credit Bank accords the property of its
customers, it being understood that WFBC or Letter of Credit
Bank shall not have any responsibility for taking any
necessary steps to preserve rights against any parties with
respect to any such funds.
(ix) To the extent necessary to maintain
interest on the Series A Bonds exempt from federal income
taxation under Section 103 of the Code, investment of the
Sinking Fund may be
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restricted in yield or to certain types of investments upon
written direction of Borrower.
(x) WFBC agrees to keep adequate
records of the investment of any funds in the Sinking Fund and
to provide such records to Borrower upon request no more
frequently than monthly.
(e) Security Account. Borrower hereby
establishes with the Intermediary a security account (the "Security Account") as
follows:
(i) Borrower agrees to deposit in the
Security Account monies to the extent required by Section 7.9.
(ii) The Security Account shall be in
the name of Borrower with all interest, and earnings, if any,
earned on the Security Account credited thereto, but under the
sole dominion and control of WFBC and shall be invested in
accordance with subparagraph (ix) herein below, as mutually
agreed to by Borrower and WFBC in investments of at least
investment grade.
(iii) Borrower hereby pledges to, and
grants to, WFBC a security interest in the Security Account
and all proceeds thereof, as security for the performance of
the obligations of Borrower hereunder.
(iv) Upon the occurrence and during the
continuation of an Event of Default that remains uncured, WFBC
may apply any funds on deposit in the Security Account to the
payment of any unpaid Drawings under the Letter of Credit, in
such order as the WFBC may determine in its sole discretion.
(v) Neither the Borrower nor any person
or entity claiming on behalf of or through Borrower shall have
any right to withdraw any of the funds held in the Security
Account. Such funds shall be applied by WFBC in accordance
with Section 2.3 or with this Paragraph (e).
(vi) On the Expiration Date, WFBC shall
apply funds then held in the Security Account to the payment
of any amounts owed WFBC by Borrower, with the remainder to be
disbursed to Borrower.
(vii) Borrower agrees that it will not
create or permit to exist any lien, security interest or other
charge or encumbrance upon or with respect to the Security
Account, except as provided in or contemplated by this
Reimbursement Agreement.
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(viii) WFBC shall exercise reasonable care
in the custody and presentation of any funds held in the
Security Account and shall be deemed to have exercised such
care if such funds are accorded treatment substantially
similar to that which Letter of Credit Bank accords the
property of its customers, it being understood that Letter of
Credit Bank or WFBC shall not have any responsibility for
taking any necessary steps to preserve rights against any
parties with respect to any such funds.
(ix) To the extent necessary to maintain
interest on the Bonds exempt from federal income taxation
under Section 103 of the Code, investment of the Security
Account may be restricted in yield or to certain types of
investments upon written direction of Borrower.
(x) WFBC agrees to keep adequate
records of the investment of any funds in the Security Account
and to provide such records to Borrower upon request no more
frequently than monthly.
Section 4.2 Security Documents. All of the documents required by
WFBC to grant and perfect the liens and security interests required by this
Article 4 shall be in form satisfactory to WFBC and may be referred to herein as
the "Security Documents."
Section 4.3 Guarantee. Borrower shall cause its obligations under
this Reimbursement Agreement to be guaranteed at all times pursuant to an
Unconditional Guarantee of Payment and Performance (the "Guarantee") from the
Guarantor for the benefit of WFBC.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
To induce WFBC to cause to be issued the Letter of Credit by Letter of
Credit Bank, Borrower hereby represents and warrants to WFBC that:
Section 5.1 Organization and Good Standing. It is duly organized,
validly existing and in good standing in all states in which the nature of its
business and property makes such qualifications necessary or appropriate. It has
the legal power and authority to own its properties and assets and to transact
the business in which it is engaged and is or will be qualified in those states
wherein the nature of its proposed business and property will make such
qualifications necessary or appropriate in the future.
Section 5.2 Authorization and Power. It has the corporate power
and requisite authority to execute, deliver and perform this Reimbursement
Agreement, the Letter of Credit and the other Loan Documents to be executed by
it; it is duly authorized to, and has taken all action, corporate or otherwise,
necessary to authorize it to, execute, deliver and perform this Reimbursement
Agreement, the Letter of Credit and such other Loan Documents and is and will
continue to be duly authorized to perform this Reimbursement Agreement, the
Letter of Credit and such other Loan Documents.
Section 5.3 No Conflicts or Consents. Neither the execution and
delivery of this Reimbursement Agreement, the Letter of Credit or the other Loan
Documents to which it is a party, nor the consummation of any of the
transactions herein or therein contemplated, nor compliance with the terms and
provisions hereof or with the terms and provisions thereof, (a) will materially
contravene or conflict with: (i) any provision of law; statute or regulation to
which it is subject, (ii) any judgment, license, order or permit applicable to
it, (iii) any indenture, loan agreement, mortgage, deed of trust, or other
agreement or instrument to which it is a party or by which it may be bound, or
to which it may be subject, or (b) will violate any provision of its Articles of
Incorporation. No consent, approval, authorization or order of any court or
Governmental Authority or other Person is required in connection with the
execution and delivery by it of the Loan Documents or to consummate the
transactions contemplated hereby or thereby, or if required, such consent,
approval, authorization or order shall have been obtained.
Section 5.4 Enforceable Obligations. This Reimbursement
Agreement, the Letter of Credit and the other Loan Documents are the legal,
valid and binding obligations of Borrower, enforceable against Borrower in
accordance with their respective terms, except as limited by bankruptcy,
insolvency or other laws or equitable principles of general application relating
to the enforcement of creditors' rights.
Section 5.5 Accurate Information. All information in any loan
application, financial statement, certificate, or other document, and all other
information delivered by or on behalf of Borrower to WFBC is materially correct
and complete, and there are no omissions therefrom that result in any such
information being materially incomplete, incorrect, or misleading as of the date
thereof. There has been no Material Adverse Effect relative to Borrower since
the date of such information. All financial statements heretofore delivered to
WFBC by the Borrower were
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prepared on an accrual basis in accordance with GAAP and accurately present the
financial conditions and results of operations as at the dates thereof and for
the periods covered thereby.
Section 5.6 Purpose of Advances. The purpose of the Advances is
as set forth in Recital A. The purpose of the Advances is a business purpose and
not a personal, family, or household purpose.
Section 5.7 Legal Proceedings: Hearings; Inquiries; and
Investigations. Except as disclosed to WFBC in writing prior to the date of this
Agreement, (i) no legal proceeding is pending or, to best knowledge of Borrower,
threatened before any arbitrator, other private adjudicator, or Governmental
Authority to which Borrower is a party or by which Borrower or any assets or
property of Borrower may be bound or affected that if resolved adversely to
Borrower could result in a Material Adverse Effect, and to the best knowledge of
Borrower, there exist no facts that would form any basis for any of the
foregoing, and (ii) no hearing, inquiry, or investigation relating to Borrower
or any assets or property of Borrower is pending or, to the best knowledge of
Borrower, threatened by any Governmental Authority.
Section 5.8 No Event of Default. No Event of Default has occurred
and is continuing.
Section 5.9 Approvals and Permits; Assets and Property. Borrower
has obtained and there are in full force and effect all Approvals and Permits
necessary for the conduct of the business of the Borrower. Borrower owns or
leases all assets and property necessary for conduct of the business and
operations of Borrower (including, without limitation, the Real Property). Such
assets and property (including, without limitation, the Real Property) are not
subject to any liens and encumbrances, other than the Permitted Exceptions (as
defined in the Deed of Trust).
Section 5.10 Taxes. The Borrower has filed or caused to be filed
all returns and reports which are required to be filed by any jurisdiction, and
has paid or made provision for the payment of all taxes, assessments, fees or
other governmental charges imposed upon its properties, income or franchises, as
to which the failure to file or pay would have a Material Adverse Effect, except
such assessments or taxes, if any, which are being contested in good faith by
appropriate proceedings.
Section 5.11 ERISA. The Borrower is, in all material respects, in
compliance with ERISA. No Reportable Event or Prohibited Transaction (as defined
in ERISA) or termination of any plan has occurred and no notice of termination
has been filed with respect to any plan established or maintained by the
Borrower and subject to ERISA. The Borrower has not incurred any material
funding deficiency within the meaning of ERISA or any material liability to the
Pension Benefit Guarantee Corporation in connection with any such plan
established or maintained by the Borrower. The Borrower is not a party to any
Multiemployer Plan (as defined in ERISA).
Section 5.12 Compliance With Law. The Borrower is in substantial
compliance with all laws, rules, regulations, orders and decrees that are
applicable to it, or its properties, noncompliance with which would have a
Material Adverse Effect.
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Section 5.13 Recitals. The recitals and statements of intent with
respect to Borrower appearing in this Reimbursement Agreement are true and
correct.
Section 5.14 Security Documents. The liens, security interests and
assignments created by the Security Documents will, when granted, be valid,
effective and enforceable liens, security interests and assignments, except to
the extent (if any) otherwise agreed in writing by WFBC.
Section 5.15 Survival. All representations and warranties made
herein shall survive the execution of this Reimbursement Agreement and the
execution and delivery of all other documents and instruments in connection with
the Letter of Credit, so long as WFBC has any commitment to Borrower hereunder
and, until all indebtedness hereunder have been paid in full and all of
Borrower's obligations hereunder have been fully discharged.
Section 5.16 Advances. Each request for an Advance or a Drawing
shall constitute an affirmation that the representations and warranties
contained herein are true and correct as of the time of such request. All
representations and warranties made herein shall survive the execution of this
Reimbursement Agreement, all Advances and the execution and delivery of all
other documents and instruments in connection with the Letter of Credit and/or
this Reimbursement Agreement, so long as WFBC has any commitment to lend
hereunder and until the Obligations have been paid in full and all of Borrower's
obligations under this Reimbursement Agreement, the Letter of Credit and all
Security Documents have been fully discharged.
Section 5.17 Not Subordinated. The obligations of Borrower under
this Reimbursement Agreement are not subordinated in right of payment to any
other obligation of Borrower subject, however, to the obligation to reimburse
amounts drawn under or costs with respect to the Bank One Letter of Credit.
Section 5.18 No Stock Purchase. No part of the proceeds of any
financial accommodation made by WFBC in connection with this Reimbursement
Agreement will be used to purchase or carry "margin stock," as that term is
defined in Regulation U, or to extend credit to others for the purpose of
purchasing or carrying such margin stock.
Section 5.19 Solvent. Borrower (both before and after giving
effect to the obligations contemplated hereby) is solvent, has assets having a
fair value in excess of the amount required to pay its probable liabilities on
its existing debts as they become absolute and matured, and has, and reasonably
believes it will have, access to adequate capital for the conduct of its
business and the ability to pay its debts from time to time incurred in
connection therewith as such debts mature.
Section 5.20 Representations and Warranties Upon Delivery of
Financial Statements Documents and Other Information. Each delivery by Borrower
to WFBC of financial statements, other documents, or information after the date
of this Reimbursement Agreement (including, without limitation, documents and
information delivered in obtaining an Advance) shall be a representation and
warranty that such financial statements, other documents, or information is
materially correct and complete, that there are no omissions therefrom that
result in such financial statements, other documents, or information being
materially incomplete, incorrect, or misleading as of the date thereof, and that
such financial statements accurately
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present the financial condition and results of operations of Borrower as at the
dates thereof and for the periods covered thereby.
Section 5.21 Environmental Matters. Borrower, to the best of its
knowledge, is in compliance in all material respects with all applicable
environmental, health and safety statutes and regulations and Borrower does not
have any material contingent liability in connection with any improper
treatment, storage, disposal or release into the environment of any hazardous or
toxic waste or substance.
Section 5.22 Investment Company Act. Borrower is not, and is not
directly or indirectly controlled by, or acting on behalf of, any person which
is, an "Investment Company" within the meaning of the Investment Company Act of
1940, as amended.
Section 5.23 Satisfaction of Conditions Precedent Under the Credit
and Security Agreement. Borrower warrants and agrees that on or before August
31, 2004, all of the "Conditions Precedent" as defined in the Credit and
Security Agreement will be satisfied, or in WFBC's sole and absolute discretion,
waived in writing by WFBC.
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ARTICLE 6
AFFIRMATIVE COVENANTS
So long as the Expiration Date has not occurred or any amount is due or
owing to WFBC under this Reimbursement Agreement, Borrower will, unless WFBC
shall otherwise consent in writing in WFBC's absolute and sole discretion,
comply with each of the covenants contained in this Article 6.
Section 6.1 Maintain Existence and Management. The Borrower shall
maintain in full force and effect all material rights and licenses necessary to
carry on its business, the failure of which would have a Material Adverse
Effect. The Borrower shall maintain its present existence.
Section 6.2 Books and Records; Access By WFBC. The Borrower will
maintain a single, standard, modern system of accounting (including, without
limitation, a single, complete, and accurate set of books and records of its
assets, business, financial condition, operations, property, prospects, and
results of operations) in accordance with good accounting practices. During
business hours and upon reasonable notice, the Borrower will give
representatives of WFBC access to all assets, property, books, records and
documents of the Borrower and will permit such representatives to inspect such
assets and property and to audit, copy, examine, and make excerpts from such
books, records, and documents.
Section 6.3 Reporting Requirements.
(a) Within ninety (90) days after the close of
each fiscal year of Guarantor and within forty-five (45) days after the
close of each fiscal quarter of Guarantor, beginning with that fiscal
year and quarter that includes the Date of Issuance, Borrower shall
cause Guarantor to deliver to the WFBC consolidating and consolidated
financial statements of Guarantor, including a balance sheet, statement
of income and expenses and statement of cash flows, all in reasonable
detail and prepared according to GAAP. All quarterly statements shall
be company prepared, certified by the chief financial officer of
Guarantor, or other officer of Guarantor satisfactory to WFBC, and
accompanied by its Form 10Q filing with the SEC. Annual consolidated
statements shall be audited by an independent certified public
accountant, certified by the chief financial officer of Guarantor, or
other officer of Guarantor satisfactory to WFBC, and accompanied by its
Form 10K filing with the SEC. When requested by WFBC, Borrower shall
promptly deliver, in writing, such further information as WFBC may
reasonably request relating to any such financial statements.
(b) When requested by the WFBC, the Borrower and
Guarantor shall promptly deliver, in writing, to WFBC such additional
financial information and financial statements as WFBC may reasonably
request.
Section 6.4 Law; Judgments; Material Agreements; Approvals and
Permits. Borrower shall comply in all material respects with all laws,
ordinances, regulations, and rules (federal, state, and local) and all
judgments, orders, and decrees of any arbitrator, other private adjudicator, or
Governmental Authority relating to Borrower, the Project, or the assets,
business,
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operations, or property of Borrower. Borrower shall comply in all material
respects with all material agreements, documents, and instruments to which
Borrower is a party or by which Borrower or the Project is bound or affected.
Borrower shall comply in all material respects with all conditions and
requirements of all Approvals and Permits. Borrower shall obtain and maintain in
effect from time to time all Approvals and Permits required for the business
activities and operations then being conducted by Borrower in the Project.
Section 6.5 Payment of Taxes and Other Debt. It will pay and
discharge (i) all income taxes and payroll taxes, (ii) all taxes, assessments;
fees and other governmental charges imposed upon it or upon its income or
profits, or upon the Project, before delinquent, which become due and payable,
and (iii) all lawful claims (including claims for labor, materials and
supplies), which, if unpaid, might become a Lien upon any property subject to
the Security Documents, provided, however, that it shall not be required to pay
any such tax, assessment, charge, levy or claims if and so long as the amount,
applicability or validity thereof shall currently be contested in good faith by
appropriate actions and appropriate accruals and reserves therefor have been
established in accordance with GAAP.
Section 6.6 Assets and Property. Borrower will maintain, keep,
and preserve the Project in good working order and condition, ordinary wear and
tear excepted.
Section 6.7 Insurance. As of the Date of Issuance, the following
insurance shall be obtained and maintained thereafter and all related premiums
shall be paid as they become due:
(a) Property. Insurance of the Project against
damage or loss by fire, lightning, and other perils, on an all-risks
basis, such coverage to be in an amount not less than the full
insurable value on a replacement cost basis of the Project.
(b) Liability. Commercial general liability
insurance protecting Borrower and WFBC against loss or losses from
liability imposed by law or assumed in any agreement, document, or
instrument and arising from bodily injury, death, or property damage
with a limit of liability of not less than $1,000,000.00 per occurrence
and $1,000,000.00 general aggregate. Also, "umbrella" excess liability
insurance in an amount not less than $10,000,000.00. Such policies must
be written on an occurrence basis so as to provide blanket contractual
liability, broad form property damage coverage, and coverage for
products and completed operations. In addition, there shall be obtained
and maintained business motor vehicle liability insurance protecting
Borrower and WFBC against loss or losses from liability relating to
motor vehicles owned, non-owned, or hired used by Borrower, any
contractor, any subcontractor, or any other Person in any manner
related to the Project with a limit of liability of not less than
$1,000,000.00 (combined single limit for personal injury (including
bodily injury and death) and property damage).
(c) Flood. A policy or policies of flood
insurance in the maximum amount of flood insurance available with
respect to the Project under the Flood Disaster Protection Act of 1973,
as amended. This requirement will be waived upon presentation of
evidence satisfactory to WFBC that no portion of the Project is located
within an area
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identified by the U.S. Department of Housing and Urban Development as
having special flood hazards.
(d) ▇▇▇▇▇▇▇'▇ Compensation. ▇▇▇▇▇▇▇'▇
compensation insurance, disability benefits insurance, and such other
forms of insurance as required by law covering loss resulting from
injury, sickness, disability, or death of employees of Borrower, any
contractor, and any subcontractor located on or assigned to the
Project. Borrower shall cause each contractor and each subcontractor
having employees located on or assigned to the Project to obtain and
maintain this same coverage for all eligible employees.
(e) Additional Insurance. Borrower shall obtain
and maintain such other policies of insurance as WFBC, may reasonably
request in writing.
(f) Other. All policies for required insurance
shall be in form and substance reasonably satisfactory to WFBC.
Required insurance may be provided under any blanket insurance policy.
All required insurance shall be procured and maintained in financially
sound and generally recognized responsible insurance companies selected
by Borrower and approved by WFBC. Such companies must be authorized to
write such insurance in the State of Arizona. Each company shall be
rated "A" or better by A.M. Best Co., in Bests' Key Guide, or such
other rating acceptable to WFBC in WFBC's absolute and sole discretion.
All property policies evidencing required insurance shall name WFBC as
first mortgagee and loss payee. All liability policies evidencing
required insurance shall name WFBC as additional insured. The policies
shall not be cancelable as to the interests of the WFBC due to the acts
of Borrower. The policies shall provide for at least thirty (30) days
prior written notice of the cancellation or modification thereof to
WFBC.
(g) Evidence. The original or a certified copy
of each insurance policy or, if acceptable to WFBC in its absolute and
sole discretion, certificates of insurance evidencing that such
insurance is in full force and effect, shall be delivered to WFBC,
together with proof of the payment of the premiums thereof. At least
thirty (30) days prior to the expiration of each such policy, Borrower
shall furnish WFBC evidence that such policy has been renewed or
replaced in the form of the original or a certified copy of the renewal
or replacement policy or, if acceptable to WFBC in its absolute and
sole discretion, a certificate reciting that there is in full force and
effect, with a term covering at least the next succeeding calendar
year, insurance of the types and in the amounts required in this
Section 6.7.
Section 6.8 Notice of Default. Borrower shall promptly give
notice in writing to WFBC of (i) the occurrence of any Event of Default, (ii)
any change in the name of Borrower or the majority ownership interest in
Borrower, (iii) any uninsured or partially insured loss through fire, theft,
liability, or property damage with respect to the Project that could have a
Material Adverse Effect, or (iv) any actions, suits or proceedings involving
Borrower that could have a Material Adverse Effect.
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Section 6.9 ERISA. The Borrower will fund each Defined Benefit
Plan and Defined Contribution Plan (as such terms are defined in ERISA)
established or maintained by the Borrower so that there is never an Accumulated
Funding Deficiency (as defined in Section 412 of the Internal Revenue Code of
1986, as amended).
Section 6.10 Appraisals. In addition to an initial Appraisal to be
obtained by WFBC at Borrower's expense, WFBC shall have the right to order
Appraisals of the Project at Borrower's expense upon the occurrence of any Event
of Default. Each Appraisal is subject to review and approval by WFBC. Borrower
agrees upon demand by WFBC to pay to WFBC the cost and expense incurred by WFBC
for any such Appraisals required by WFBC as a result of the occurrence of an
Event of Default and a fee prescribed by WFBC for review of each Appraisal by
WFBC.
Section 6.11 Special District. Borrower shall immediately give
notice to WFBC of any written notification received from any municipality or
other third party of any intent or proposal to include all or any part of the
Project in a special district. WFBC shall have the right to file a written
objection to the inclusion of all or any part of the Project in a special
district, either in its own name or in the name of Borrower, and to appear at,
and participate in, any hearing with respect to the formation of any such
district.
Section 6.12 Miscellaneous. Any inspections or determinations made
by WFBC or lien waivers, receipts, or other instruments obtained by WFBC are
made or obtained solely for WFBC's own benefit and not in any way for the
benefit or protection of Borrower. WFBC may accept and rely on any information
from the architect, any other Person providing labor, materials, or services for
the Improvements, Borrower, or any other Person as to labor or materials
furnished or incorporated in the Project and the cost and payment therefor and
as to all other matters relating to construction of the Improvements and the
Project without the necessity of verifying such information. WFBC has no
obligation to Borrower to ensure compliance by the contractor, the architect, or
any other Person in carrying out construction of the Improvements.
Section 6.13 Use of Proceeds of Advances. Borrower shall use
proceeds of Advances only for the purposes described in the Recitals.
Section 6.14 Cross-Collateralization. At WFBC's request at any
time and from time to time, Borrower agrees to execute and deliver such
additional agreements, documents, and instruments as WFBC determines to be
necessary or appropriate so that all Collateral shall also secure any or all (as
determined by WFBC) other obligations of Borrower to WFBC and/or so that any or
all property, interests in property, and rights to property (as selected by
WFBC) securing other obligations of Borrower to WFBC also secure the
Obligations. Borrower agrees to pay all costs, expenses, and fees incurred by
WFBC in connection with any and all such cross-collateralization requests by
WFBC (including, without limitation, costs, expenses, and fees of WFBC's
attorneys).
Section 6.15 Further Assurances. Borrower shall promptly execute,
acknowledge, and deliver such additional agreements, documents, and instruments
and do or cause to be done such other acts as WFBC may reasonably request from
time to time to better assure, preserve, protect,
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and perfect the interest of WFBC in the Collateral and the rights and remedies
of WFBC under the Loan Documents.
Section 6.16 Satisfaction of Conditions. Borrower will perform all
of its obligations and satisfy all conditions under the Loan Documents at its
sole cost and expense.
Section 6.17 Financial Covenants. Except as otherwise noted, all
capitalized terms in this Section 6.17 not defined in this Reimbursement
Agreement shall have the meanings determined in accordance with GAAP. In
addition, except as otherwise noted, all financial computations shall be made in
accordance with GAAP. Until the Expiration Date and until the Obligations are
paid and performed in full, Borrower agrees that, unless WFBC otherwise agrees
in writing in WFBC's absolute and sole discretion, Borrower shall maintain a
minimum debt coverage ratio of 1.20 to 1.0. This ratio shall be calculated by
dividing (i) Borrower's net income after taxes and before amortization and
depreciation, by (ii) the current portion of its Debt for the prior period. This
ratio shall be complied with by Borrower at the end of any fiscal year.
Section 6.18 Change in Ownership. Should there be a Change in
Ownership as to Borrower, the Obligations shall be immediately due and payable.
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ARTICLE 7
NEGATIVE COVENANTS
So long as the Expiration Date has not occurred or any amount is due or
owing to WFBC under this Reimbursement Agreement, unless WFBC shall otherwise
consent in writing, in WFBC's absolute and sole discretion, Borrower shall
comply with each of the negative covenants contained in this Article 7:
Section 7.1 Corporate Restrictions. The Borrower shall not be
dissolved or liquidated. The Borrower shall not amend, modify, restate,
supplement, or terminate its Articles of Incorporation in any manner that would
result in a Material Adverse Effect.
Section 7.2 Merger, Sale of Assets. Borrower will not, without
WFBC's prior written reasonable consent: (i) sell, lease, transfer or dispose of
substantially all of its assets to another entity except in the ordinary course
of its business; or (ii) consolidate with or merge into another entity, permit
any other entity to merge into it or consolidate with it, or permit any transfer
of the majority ownership of, or power to control, Borrower if the surviving
entity would have a lesser net worth than prior to such action.
Section 7.3 Liens. Borrower shall not create or suffer to be
created any Lien or Encumbrance on any property encumbered by the Security
Documents except for Permitted Liens.
Section 7.4 Transfer Collateral. Except in the ordinary course of
its business, and except for Permitted Liens, it will not assign, transfer or
convey any of its right, title and interest in the Collateral (whether real or
personal) encumbered by the Security Documents.
Section 7.5 Amendments. Borrower shall not amend, modify or
supplement, or agree to any amendment or modification of, or supplement to, any
of the Bond Documents.
Section 7.6 Optional Redemption. Borrower shall not declare,
instruct the Trustee to declare or permit an optional redemption of the Bonds
pursuant to the Indenture, except for Amortization Payments, unless such
optional redemption will be funded without a Drawing.
Section 7.7 Conversion. Unless Borrower has received a commitment
satisfactory to WFBC for a substitute letter of credit or has delivered to the
Trustee a substitute letter of credit, Borrower shall not elect to have the
interest rate on the Bonds converted from the Weekly Interest Rate mode to
another Interest Rate Mode.
Section 7.8 Dividends. Borrower shall not declare or pay any cash
dividends.
Section 7.9 Maximum Commitment Amount:
(a) On and after March 11, 2004, Borrower shall
not allow the Available Amount to exceed the sum of the following (the
"Maximum Commitment Amount"):
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(i) an amount equal to seventy-five
percent (75.0%) of the appraised market value of the Real
Property;
(ii) the balance of funds on deposit in
the Sinking Fund; and
(iii) the balance of funds on deposit in
the Security Account.
(b) In the event that the Available Amount
exceeds the Maximum Commitment Amount, Borrower shall immediately upon
demand by WFBC deposit funds to the Security Account equal to such
excess amount.
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ARTICLE 8
ADVANCES, INSPECTIONS, NET PROCEEDS
[This section omitted intentionally]
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ARTICLE 9
EVENTS OF DEFAULT
Section 9.1 Events of Default. The occurrence of any of the
following events (including the expiration of any specified time) shall
constitute an "Event of Default":
(a) Borrower shall fail to pay when due any
amount specified herein when due.
(b) The failure of Borrower to observe or
perform any of its other covenants, conditions or provisions of this
Reimbursement Agreement or any of the Related Documents (other than a
failure or neglect described in one or more of the other provisions of
this Section 9.1) and such failure either (i) cannot be remedied, (ii)
can be remedied within thirty (30) days by prompt and diligent action,
but it continues unremedied for a period of thirty (30) days after
notice thereof to Borrower, or (iii) can be remedied, although not
within thirty (30) days even by prompt and diligent action, but such
remedy is not commenced within thirty (30) days after notice thereof to
Borrower or is not diligently prosecuted to completion within a total
of sixty (60) days from the date of such notice.
(c) Any material representation or warranty made
by the Borrower herein or in any certificate, financial or other
statement furnished by the Borrower pursuant to this Reimbursement
Agreement or any of the Related Documents shall prove to have been
untrue or incomplete in any material respect when made.
(d) The occurrence and continuation of an event
of default under the Bond Documents, the other Loan Documents or any of
the other Related Documents or under any document or instrument given
by Borrower in connection with any other indebtedness of Borrower to
WFBC.
(e) Borrower shall (i) fail to pay any Debt
subject to a Significant Debt Agreement when due and payable, or any
interest or premium thereon, when due (whether by scheduled maturity,
required prepayment, acceleration, demand, or otherwise) or within any
applicable grace period, or (ii) allow the occurrence of any material
event of default with respect to such Debt.
(f) Admission by Borrower or any Guarantor of
insolvency or bankruptcy or its inability or failure generally to pay
its debts as they become due, or Borrower or any Guarantor makes an
assignment for the benefit of creditors or applies for or consents to
the appointment of a trustee, custodian or receiver for Borrower or any
Guarantor, or for a major part of its property.
(g) Appointment of a trustee in bankruptcy,
custodian or receiver for Borrower or any Guarantor or for a major part
of its property and failure to obtain discharge of such within ninety
(90) days after such appointment.
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(h) Institution of bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other
proceedings for relief under any bankruptcy law or similar law for the
relief of debtors, by or against Borrower or any Guarantor (other than
bankruptcy proceedings instituted by Borrower or any Guarantor against
third parties), and, if instituted against Borrower or any Guarantor,
allowance against Borrower or any Guarantor or consent by Borrower or
any Guarantor to such proceedings or failure to obtain dismissal, stay
or other nullification within ninety (90) days after such institution.
(i) This Reimbursement Agreement or any of the
Related Documents ceases to be valid and binding on Borrower or any
Guarantor, or is declared null and void, or the validity or
enforceability thereof is contested by Borrower or any Guarantor or
Borrower or any Guarantor denies it has any or further liability under
this Reimbursement Agreement or any of the Related Documents.
(j) Any levy or execution upon, or judicial
seizure of, any portion of any collateral or security subject to the
Security Documents, that is not released or removed within thirty (30)
days of its creation.
(k) Any attachment or garnishment of, or the
existence or filing of any lien or encumbrance, other than any lien or
encumbrance permitted by the Deed of Trust, against any portion of any
collateral or security subject to the Security Documents, that is not
bonded over, removed or released within thirty (30) days after its
creation.
(l) The institution of any legal action or
proceedings to enforce any Lien or Encumbrance upon any portion of any
collateral or security subject to the Security Documents, that is not
bonded over or dismissed within thirty (30) days after its institution.
(m) The liquidation, termination or dissolution
of the Borrower or Guarantor.
(n) A change in the business or financial
condition of the Borrower that results in a Material Adverse Effect.
(o) The occurrence of any event of default,
after giving effect to any notice and cure periods, by Guarantor under
its Credit and Security agreement with WFBC with respect to its ten
million dollar ($10,000,000.00) revolving line of credit.
(p) The failure of Borrower to fulfill its
obligations under Section 5.23 of this Agreement.
Section 9.2 Rights and Remedies. If any Event of Default shall
have occurred and be continuing, WFBC:
(a) notify the Trustee of such Event of Default
and direct that the Trustee accelerate the maturity of all Bonds then
outstanding pursuant to the Bond Documents and provide a copy of such
notice to Borrower and the Issuer;
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(b) request the Trustee pursuant to the
Indenture to redeem the Bonds in whole or in part.
(c) request the Trustee pursuant to the
Indenture to cause a mandatory tender of the Bonds.
(d) declare all principal amounts outstanding
hereunder, all interest thereof and all other amounts payable hereunder
to be forthwith due and payable, whereupon all principal amounts
outstanding hereunder, all such interest and all such other amounts
shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby
expressly waived by Borrower;
(e) exercise in respect of the Pledged Bonds, in
addition to other rights and remedies provided for herein or in the
Pledge Agreement or otherwise available to it, all the rights and
remedies of a secured party on default under the Uniform Commercial
Code in effect in the State at that time;
(f) apply any monies in the Borrower's Funds
Account, the Sinking Fund and Security Account to the satisfaction of
the Borrower's obligations hereunder;
(g) proceed to protect and enforce its rights
and remedies under this Reimbursement Agreement and all Security
Documents;
(h) avail itself of any other relief to which
WFBC may be legally or equitably entitled; provided, however, that in
the event of an order for relief with respect to Borrower or any of is
subsidiaries under the Federal Bankruptcy Code, (A) all amounts
reimbursable on demand hereunder, all interest accrued and unpaid
thereon and all other amounts payable hereunder shall automatically
become due and payable, without presentment, demand, protest or any
notice of any kind, all of which are hereby expressly waived by the
Borrower.
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ARTICLE 10
NATURE OF OBLIGATIONS; INDEMNIFICATION
Section 10.1 Obligations Absolute. The obligations of Borrower
under this Reimbursement Agreement shall be absolute, unconditional and
irrevocable, and shall not be subject to any right of setoff or counterclaim
against WFBC or any Participant and shall be paid or performed strictly in
accordance with the terms of this Reimbursement Agreement, under all
circumstances whatsoever, including, without limitation, the following
circumstances:
(a) any lack of validity or enforceability of
the Letter of Credit or any of the Related Documents;
(b) any amendment or waiver of any provision of
all or any of the Related Documents;
(c) the existence of any claim, setoff, defense
or other rights which Borrower may have at any time against the
Trustee, 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), WFBC or any Participant (other than
the defense of payment to WFBC in accordance with the terms of this
Reimbursement Agreement) or any other Person, whether in connection
with this Reimbursement Agreement, the Related Documents or any
transaction contemplated thereby or any unrelated transaction;
(d) 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;
(e) payment by Letter of Credit Bank 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; or
(f) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing.
Section 10.2 Continuing Obligation. This Reimbursement Agreement
is a continuing obligation, shall survive the expiration of the Letter of Credit
and shall (a) be binding upon the Borrower, its successors and assigns, and (b)
inure to the benefit of and be enforceable by WFBC and its successors,
transferees and assigns; provided that the Borrower may not, except as otherwise
expressly provided herein, assign all or any part of this Reimbursement
Agreement without the prior written consent of WFBC.
Section 10.3 Liability of WFBC. 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 WFBC or Letter of Credit
Bank nor any of their 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 and any transferee in connection therewith; (b) the
validity, sufficiency or genuineness of documents; or of any endorsement(s)
thereon, even if such documents should,
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in fact, be in any or all respects invalid, insufficient, fraudulent or forged;
(c) payment by the Letter of Credit Bank or WFBC against presentation of
documents which do not comply with the terms of 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 WFBC or
Letter of Credit Bank, and WFBC or Letter of Credit Bank shall be liable to
Borrower, to the extent, but only to the extent, of any damages suffered by
Borrower which Borrower proves were caused by (i) WFBC's or Letter of Credit
Bank'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) the WFBC's or Letter of Credit Bank's gross negligence in not
paying or its willful failure to pay under the Letter of Credit after the
presentation to it by the Trustee (or a successor trustee under the Indenture to
whom the Letter of Credit has been transferred in accordance with its terms) of
a certificate complying with the terms and conditions of the Letter of Credit.
In furtherance and not in limitation of the foregoing, the Letter of Credit Bank
or WFBC may accept documents that appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
Section 10.4 Indemnification. In addition to any and all rights of
reimbursement, indemnification, subrogation or any other rights pursuant hereto
or under law or equity, Borrower hereby agrees to indemnify and hold harmless
the Letter of Credit Bank and WFBC and their officers, directors and agents from
and against any and all claims, damages, losses, liabilities, reasonable costs
or expenses whatsoever (including attorneys' fees) which such indemnified party
may incur (or which may be claimed against the Letter of Credit Bank and WFBC by
any person or entity whatsoever) by reason of or in connection with (a) the
execution and delivery or transfer of, or payment or failure to pay under, the
Letter of Credit; (b) the issuance, marketing, placement and sale of the Bonds;
or (c) the use of the proceeds of the Bonds; provided that Borrower shall not be
required to indemnify the Letter of Credit Bank and WFBC for any claims,
damages, losses, liabilities, costs or expenses to the extent, but only to the
extent, caused by (i) the willful misconduct or gross negligence of the Letter
of Credit Bank and WFBC in determining whether a certificate presented under the
Letter of Credit complied with the terms of the Letter of Credit, or (ii) the
Letter of Credit Bank's gross negligence in not paying or its willful failure to
pay, under the Letter of Credit after the presentation to it by the Trustee (or
a successor trustee under the Indenture to whom the Letter of Credit has been
transferred in accordance with its terms) a certificate complying with the terms
and conditions of the Letter of Credit or (iii) any information provided by WFBC
with respect to the offering and sale of the Bonds. If any proceeding shall be
brought or threatened against the Letter of Credit Bank or WFBC by reason of or
in connection with the events described in clause (a), (b) or (c), above (and
except as otherwise provided in clause (i) or (ii), above), WFBC shall promptly
notify Borrower in writing and Borrower shall assume the defense thereof,
including the employment of Counsel and the payment of all costs of litigation.
Notwithstanding the preceding sentence, WFBC and the Letter of Credit Bank shall
have the right to employ its own Counsel and to determine its own defense of
such action in any such case. Nothing under this Section 10.4 is intended to
limit Borrower's payment obligations.
Section 10.5 Telecopied or Telexed Document . Demands for payment
under the Letter of Credit may be presented to the Letter of Credit Bank by,
among other methods, telecopy or tested telex. Borrower acknowledges and assumes
all risks relating to the use of such telecopied or telexed demands for payment
and agrees that its obligations under this Reimbursement
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Agreement shall remain absolute, unconditional and irrevocable as provided in
Section 10.1, above, if the Letter of Credit Bank honors such telecopied or
telexed demands for payment.
Section 10.6 Liability of Directors and Officer of Borrower. No
recourse, however, shall be had for the enforcement of any obligation, covenant,
promise or agreement of Borrower contained in this Reimbursement Agreement or
any other Loan Document against any director or officer of Borrower, it being
expressly agreed and understood that no personal liability whatsoever shall
attach to, or be incurred by, any director or officer of Borrower by reason of
the Reimbursement Agreement or the Loan Documents.
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ARTICLE 11
TRANSFER, REDUCTION, REINSTATEMENT OF LETTER OF CREDIT
Section 11.1 Transfer, Reduction and Reinstatement. The Letter of
Credit may be transferred, reduced and reinstated only in accordance with the
provisions set forth therein.
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ARTICLE 12
MISCELLANEOUS
Section 12.1 Control of Bank and Borrower. WFBC and the Borrower
both hereby covenant to provide written notice to the Trustee, the Remarketing
Agent, and the Bondholders thirty days prior to consummation of any transaction
that would result in the Borrower controlling or being controlled by WFBC.
"Control" for this purpose has the meaning given to such term in section 2(a)(9)
of the Investment Company Act of 1940.
Section 12.2 Costs, Expenses and Taxes. Borrower agrees to pay on
demand all reasonable costs and expenses in connection with the preparation,
negotiation, execution, delivery and administration of this Reimbursement
Agreement, the Related Documents and any other documents which may be delivered
in connection with this Reimbursement Agreement, including, without limitation,
costs of the Appraisal and any reappraisals, appraisal review costs, document
review costs, title insurance policies and endorsements costs, the reasonable
fees and out-of-pocket expenses of Counsel for WFBC with respect thereto and
with respect to advising WFBC and the Letter of Credit Bank as to its rights and
responsibilities under this Reimbursement Agreement and all reasonable costs and
expenses, if any, in connection with the enforcement of this Reimbursement
Agreement and such other documents which may be delivered in connection with
this Reimbursement Agreement. In addition, Borrower shall pay any and all stamp
and other taxes and fees payable or determined to be payable in connection with
the execution, delivery, filing and recording of this Reimbursement Agreement
and such other documents and agrees to save the Letter of Credit Bank and WFBC
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 12.3 Amendments and Waivers.
(a) No amendment or waiver of any provision of
this Reimbursement Agreement or consent to any departure by Borrower
from any such provision shall in any event be effective unless the same
shall be in writing and signed by WFBC. Any such waiver or consent
shall be effective only in the specific instance and for the specific
purpose for which given. In the event any agreement contained in this
Reimbursement Agreement should be breached by Borrower and thereafter
waived by WFBC, such waiver shall be limited to the particular breach
so waived for the specific period set out in such waiver and such
waiver shall not constitute a waiver of such breach for any other
period and shall not waive any other or similar breach hereunder.
(b) So long as any of the Bonds remain
outstanding, this Reimbursement Agreement shall not be amended in any
way if as a result thereof the exemption from federal income taxes of
interest payable on the Series A Bonds would be adversely affected, as
to which Borrower and WFBC may rely upon an opinion of Bond Counsel
mutually acceptable to the Borrower and WFBC and having a favorable
reputation in the field of state and municipal finance law.
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Section 12.4 No Waiver; Remedies. No failure on the part of WFBC
to exercise, and no delay in exercising, any right under this Reimbursement
Agreement shall operate as a waiver of such right; nor shall any single or
partial exercise of such right under this Reimbursement Agreement preclude any
other further exercise of such right or the exercise of any other right. The
remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
Section 12.5 Notices. Unless specifically indicated otherwise
herein, all notices and other communications provided for hereunder shall be in
writing and, if to Borrower, addressed to:
Oxycal Laboratories, Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
or if to WFBC, addressed to it at the following address:
▇▇▇▇▇ Fargo Business Credit, Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇-▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
or as to each party at such other address as shall be designated by such party
in a written notice to the other parties.
Any notice or other communication shall be sufficiently given and shall
be deemed given when delivered to the addressee in writing or when given by
telephone immediately confirmed in writing by telecopier or other
telecommunication device.
Section 12.6 Binding Effect. This Reimbursement Agreement shall
become effective when it shall have been executed and delivered by Borrower and
WFBC and thereafter shall be binding upon and inure to the benefit of Borrower
and WFBC and their respective successors and assigns, except that Borrower shall
not have the right to assign its rights hereunder or any interest herein without
the prior written consent of WFBC.
Section 12.7 Severability. Any provision of this Reimbursement
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 nonauthorization without invalidating the
remaining provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction.
Section 12.8 Governing Law. This Reimbursement Agreement shall be
governed and construed in accordance with the laws of the State of Arizona and
applicable federal law.
Section 12.9 Headings. Section headings in this Reimbursement
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Reimbursement Agreement for any other purpose.
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Section 12.10 Participation. Borrower acknowledges and agrees that
the Letter of Credit Bank may participate portions of its obligations under the
Letter of Credit and the obligations of the Borrower under this Reimbursement
Agreement and any other Related Documents (collectively, the "Participated
Obligations") to other financial institutions and waives any notice of such
participations. Borrower further acknowledges and agrees that upon any such
participation the Participants will become owners of a pro rata portion of the
Participated Obligations and Borrower waives any right of setoff it may at any
time have against the Letter of Credit Bank or any Participant with regard to
the Participated Obligations.
Section 12.11 Arbitration. WFBC and Borrower agree that upon the
written demand of either party, whether made before or after the institution of
any legal proceedings, but prior to the rendering of any judgment in that
proceeding, all disputes, claims and controversies between them, whether
individual, joint, or class in nature, arising from this Reimbursement
Agreement, any Related Document or otherwise, including without limitation
contract disputes and tort claims, shall be resolved by binding arbitration
pursuant to the Commercial Rules of the American Arbitration Association. Any
arbitration proceeding held pursuant to this arbitration provision shall be
conducted in the city nearest the Borrower's address having an AAA regional
office, or at any other place selected by mutual agreement of the parties. No
act to take or dispose of any Collateral shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement. This
arbitration provision shall not limit the right of either party during any
dispute, claim or controversy to seek, use, and employ ancillary, or preliminary
rights and/or remedies, judicial or otherwise, for the purposes of realizing
upon, preserving, protecting, foreclosing upon or proceeding under forcible
entry and detainer for possession of, any real or personal property, and any
such action shall not be deemed an election of remedies. Such remedies include,
without limitation, obtaining injunctive relief or a temporary restraining
order, invoking a power of sale under any deed of trust or mortgage, obtaining a
writ of attachment or imposition of a receivership, or exercising any rights
relating to personal property, including exercising the right to set-off or
taking or disposing of such property with or without judicial process pursuant
to the Uniform Commercial Code. Any disputes, claims or controversies concerning
the lawfulness or reasonableness of an act, or exercise of any right or remedy
concerning any Collateral including any claim to rescind, reform or otherwise
modify any agreement relating to the Collateral, shall also be arbitrated;
provided, however that no arbitrator shall have the right or the power to enjoin
or restrain any act of either party. Judgment upon any award rendered by any
arbitrator may be entered in any court having jurisdiction. The statute of
limitations, estoppel, waiver, laches and similar doctrines which would
otherwise be applicable in an action brought by a party shall be applicable in
any arbitration proceeding, and the commencement of an arbitration proceeding
shall be deemed the commencement of any action for these purposes. The Federal
Arbitration Act (Title 9 of the United States Code) shall apply to the
construction, interpretation, and enforcement of this arbitration provision.
Section 12.12 Jury Waiver. THE UNDERSIGNED AND WFBC (BY ITS
ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THE
UNDERSIGNED AND WFBC ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT OR
ANY OTHER RELATED DOCUMENT. THIS PROVISION IS MATERIAL INDUCEMENT TO WFBC TO
CAUSE TO
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HAVE PROVIDED THE FINANCING DESCRIBED HEREIN OR IN THE OTHER RELATED DOCUMENTS.
Section 12.13 Counterparts. This Reimbursement Agreement may be
signed in any number of counterpart copies, but all such copies shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Reimbursement
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first above written.
OXYCAL LABORATORIES, INCORPORATED,
an Arizona corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Vice President
BORROWER
▇▇▇▇▇ FARGO BUSINESS CREDIT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Vice President
WFBC
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