Exhibit 10.41 Letter of Credit and Reimbursement Agreement
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LETTER OF CREDIT AND
REIMBURSEMENT AGREEMENT
Dated as of June 1, 1997
between
▇▇▇▇▇▇-▇▇▇▇▇, INC.
and
BRANCH BANKING AND TRUST COMPANY
relating to
The ▇▇▇▇▇▇ County Industrial Facilities and
Pollution Control Financing Authority
$7,000,000
Industrial Development Revenue Bonds
(▇▇▇▇▇▇-▇▇▇▇▇, Inc. Project), Series 1997
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms.........................................2
SECTION 1.02. Computation of Time Periods...................................8
SECTION 1.03. Accounting Terms..............................................8
ARTICLE II
AMOUNT AND TERMS OF THE LETTER OF CREDIT; PLEDGE OF BONDS
SECTION 2.01. The Letter of Credit..........................................8
SECTION 2.02. Issuing the Letter of Credit..................................8
SECTION 2.03. Fees and Expenses.............................................8
SECTION 2.04. Reimbursement; Amounts Paid in Advance of Date When Due.......9
SECTION 2.05. Tender Advances..............................................10
SECTION 2.06. Interest on Tender Advances..................................11
SECTION 2.07. Prepayments; Reinstatement of Letter of Credit Amounts.......11
SECTION 2.08. Increased Costs..............................................12
SECTION 2.09. Payments and Computations....................................13
SECTION 2.10. Evidence of Debt.............................................13
SECTION 2.11. Obligations Absolute.........................................13
SECTION 2.12. Delivery of Bonds Upon Purchase or Conversion................14
SECTION 2.13. Extension of the Stated Termination Date.....................14
SECTION 2.14. Pledge of Bonds..............................................14
ARTICLE III
CONDITIONS OF ISSUANCE
SECTION 3.01. Condition Precedent to Issuance of the Letter of Credit......17
SECTION 3.02. Additional Conditions Precedent to Issuance of the
Letter of Credit ............................................20
SECTION 3.03. Conditions Precedent to Each Tender Advance..................20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Company................21
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.01. Affirmative Covenants........................................25
SECTION 5.02. Negative Covenants...........................................31
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ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default............................................35
SECTION 6.02. Rights Upon an Event of Default..............................36
SECTION 6.03. No Remedy Exclusive..........................................37
SECTION 6.04. Anti-Marshalling Provisions..................................37
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc..............................................38
SECTION 7.02. Notices, Etc.................................................38
SECTION 7.03. No Waiver....................................................38
SECTION 7.04. Right of Set-off.............................................38
SECTION 7.05. Indemnification..............................................38
SECTION 7.06. Liability of the Bank........................................39
SECTION 7.07. Costs, Expenses and Taxes....................................40
SECTION 7.08. Binding Effect...............................................40
SECTION 7.09. Severability.................................................40
SECTION 7.10. Governing Law................................................40
SECTION 7.11. Headings.....................................................40
SECTION 7.12. Prior Agreements Superseded..................................40
SECTION 7.13. Counterparts.................................................41
SECTION 7.14. Removal of Remarketing Agent.................................41
SECTION 7.15. Modification to Promissory Note dated June 21, 1993
of the Company ..............................................41
EXHIBIT A - Form of Letter of Credit......................................A-1
EXHIBIT B - Form of Company Counsel Opinion...............................B-1
EXHIBIT C - Form of Opinion Letter for Bond Counsel.......................C-1
EXHIBIT D - Form of Deed of Trust.........................................D-1
EXHIBIT E - Form of Security Agreement....................................E-1
EXHIBIT F - Form of Guaranty Agreement....................................F-1
EXHIBIT G - Payment of Taxes..............................................G-1
EXHIBIT H - Agreements of Company and Subsidiaries........................H-1
EXHIBIT I - Environmental Matters.........................................I-1
EXHIBIT J - Locations of Personal Property................................J-1
EXHIBIT K - Insider Transactions..........................................K-1
EXHIBIT L - Guarantees....................................................L-1
Schedule 4.01(d) Litigation
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LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT, dated as of June 1, 1997,
between ▇▇▇▇▇▇-▇▇▇▇▇, INC., a Delaware corporation (the "Company), and BRANCH
BANKING AND TRUST COMPANY, a North Carolina banking corporation (the "Bank").
PRELIMINARY STATEMENTS:
(1) The Company has requested THE ▇▇▇▇▇▇ COUNTY INDUSTRIAL FACILITIES AND
POLLUTION CONTROL FINANCING AUTHORITY (the "Issuer") to issue, pursuant to an
Indenture of Trust of even date herewith (said Indenture of Trust and any
amendments or supplements thereto being herein referred to as the "Trust
Agreement" or "Indenture"), between Norwest Bank Minnesota, National
Association, as trustee (the "Bond Trustee"), and the Issuer, $7,000,000
aggregate principal amount of the Issuer's Industrial Development Revenue Bonds
(▇▇▇▇▇▇-▇▇▇▇▇, Inc. Project), Series 1997 (the "Bonds") to various purchasers.
(2) The Company and the Issuer have entered into a Loan Agreement of even
date herewith (said Loan Agreement and any amendments or supplements thereto
being herein referred to as the "Loan Agreement"), under the terms of which the
Issuer will loan the proceeds of the sale of the Bonds to the Company for the
purpose of financing the cost of the construction of a 156,000 square-foot
expansion to the Company's existing facility and the acquisition and
installation of equipment therein for the manufacture of building products (the
"Project") in ▇▇▇▇▇▇ County, North Carolina.
(3) In order to provide security for the payment when due of the principal
of, and interest and premium on, the Bonds, the Company has requested the Bank
to issue its irrevocable letter of credit naming the Bond Trustee as
beneficiary, in substantially the form of Exhibit A hereto (such letter of
credit and any successor letter of credit as provided for or contemplated in
such letter of credit or this Agreement being the "Letter of Credit"), in the
amount of $7,466,666 (the "Commitment"), of which (a) $7,000,000 shall support
the payment of principal or portion of the purchase price corresponding to
principal of the Bonds and (b) $256,666 shall support the payment of up to 110
days of interest or portion of the purchase price corresponding to interest on
the Bonds, at an assumed interest rate of 12% per annum and (c) $210,000 shall
support the payment of premium of up to 3% of the principal amount of the Bonds
to be redeemed upon a redemption due to the occurrence of a Determination of
Taxability pursuant to Section 301(b) of the Trust Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, including the covenants, terms and conditions
hereinafter appearing and in order to induce the Bank to issue the Letter of
Credit, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"A Drawing," or "B Drawing," "C Drawing," or "D Drawing" shall have
the meaning ascribed to such terms in the Letter of Credit.
"Advance" means any Tender Advance and "Advances" means Tender
Advances collectively.
"Affiliate" of a specified Person shall mean any Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with (by virtue of ownership of
voting securities, contract or otherwise) such specified Person. For
purposes hereof, White Metal shall not be deemed an Affiliate.
"Agreement" means this Letter of Credit and Reimbursement Agreement
and any amendments or supplements thereto.
"Base Rate" means a fluctuating rate of interest per annum equal to
the Prime Rate plus two percent (2%), each change in the Base Rate shall
take effect simultaneously with the corresponding change or changes in the
Prime Rate.
"Bond Trustee" has the meaning assigned to that term in paragraph
(1) of the Preliminary Statements hereof.
"Bonds" has the meaning assigned to that term in paragraph (1) of
the Preliminary Statements hereof.
"Business Day" means a day of the year on which state-chartered
banks are not required or authorized to close in Charlotte, North
Carolina.
"Capital Lease Obligations" means, with respect to any Person, the
obligation of such Person to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) real and/or personal
property which obligation is, or in accordance with Generally Accepted
Accounting Principles is required to be, classified and accounted for as a
capital lease on a balance sheet of such Person, and for purposes of this
Agreement the amount of such obligation shall be the capitalized amount
thereof determined in accordance with such principles.
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"Collateral" means the property covered by the Security Agreement
and the Deed of Trust.
"Commitment" has the meaning assigned to that term in paragraph (3)
of the Preliminary Statements hereof.
"Commitment Termination Date" has the meaning assigned to that term
in Section 2.01 of this Agreement.
"Completion Date" means June 30, 1997.
"Consolidated Debt Service Coverage Ratio" means, with respect to
the Company and its Subsidiaries as at the end of each of the fiscal
quarters of a fiscal year, the ratio of (i) the sum of Consolidated Net
Income plus taxes, depreciation, depletion and amortization of properties
(including intangible properties) of the Company and its Subsidiaries for
the four most recent consecutive fiscal quarters plus Consolidated
Interest Expense for the four most recent consecutive fiscal quarters, to
(ii) the sum of Consolidated Interest Expense for the four most recent
consecutive fiscal quarters plus the current portion of long-term debt as
of the end of such fiscal quarter.
"Consolidated Interest Expense" means, for any period, the gross
interest expense without offset for interest income, excluding any
interest in connection with any intercompany debt (including, without
limitation, debt to or from any past, present or future Affiliate) and
excluding imputed interest expense with respect to the White Metal
Reserve, of the Company and its Subsidiaries on a consolidated basis
during such period determined in accordance with Generally Accepted
Accounting Principles, and shall in any event include, without limitation,
(i) the amortization of debt discounts, (ii) the amortization of all fees
payable in connection with the incurrence of Indebtedness to the extent
included in interest expense and (iii) the imputed interest portion of any
Capital Lease Obligation.
"Consolidated Net Income" means, with respect to any period, the net
income of the Company and its Subsidiaries on a consolidated basis for
such period computed in accordance with Generally Accepted Accounting
Principles.
"Consolidated Net Intangible Assets" means, at any date of
determination thereof, all amounts that would, in accordance with
Generally Accepted Accounting Principles, be classified as intangible
assets on a consolidated balance sheet of the Company and its Subsidiaries
as at such date, including goodwill, patents, trademarks, copyrights,
franchises, licenses and customer lists.
"Consolidated Net Tangible Assets" means, at any date of
determination thereof, all amounts that would, in accordance with
Generally Accepted Accounting Principles, be included as assets on a
consolidated balance sheet of the Company and its Subsidiaries as at such
date, excluding Consolidated Net Intangible Assets.
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"Consolidated Tangible Net Worth" means, at any date of
determination thereof, the excess of (i) Consolidated Net Tangible Assets
over (ii) Consolidated Total Liabilities less Subordinated Indebtedness.
"Consolidated Total Liabilities" means, at any date of determination
thereof, all amounts that would, in accordance with Generally Accepted
Accounting Principles, be included as current liabilities, long-term debt,
deferred income taxes, Capital Lease Obligations or any other liability on
a consolidated balance sheet of the Company and its Subsidiaries as at
such date.
"Credit Termination Date" means the date on which the Letter of
Credit shall terminate in accordance with its terms.
"Date of Issuance" has the meaning assigned to that term in Section
2.02 of this Agreement.
"Deed of Trust" means that certain Deed of Trust of even date
herewith, made by the Company to a deed of trust trustee for the benefit
of the Bank, in substantially the form of Exhibit D hereto, and any
amendments and supplements thereto.
"Default Rate" means a fluctuating interest rate equal to 2% per
annum above the Base Rate in effect from time to time.
"Environmental Laws" means any Federal, state or local statute, law,
ordinance, code, rule, regulation, order, decree, permit or license
regulating, relating to, or imposing liability or standards of conduct
concerning, any environmental matters or conditions, environmental
protection or conservation, including without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended; the Superfund Amendments and Reauthorization Act of
1986, as amended; the Resource Conservation and Recovery Act, as amended;
the Toxic Substances Control Act, as amended; the Clean Air Act, as
amended; the Clean Water Act, as amended; together with all regulations
promulgated thereunder, and any other "Superfund" or "Superlien" law.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, including any rules and regulations
promulgated thereunder.
"Event of Default" has the meaning assigned to that term in Section
6.01 of this Agreement.
"Generally Accepted Accounting Principles" means those principles of
accounting set forth in statements of the Financial Accounting Standards
Board or which have other substantial authoritative support and are
applicable in the circumstances as of the date of a report, as such
principles are from time to time supplemented and amended.
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"Guarantor" means ▇▇▇▇▇▇-Building Products, Inc., a Delaware
corporation, its successors and assigns.
"Guaranty" means, with respect to any Person, any obligation,
contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any Indebtedness of any other Person (the
"primary obligor") in any manner, whether directly or indirectly, and
including any obligation of such Person, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or to purchase (or to advance or supply funds for
the purchase of) any security for the payment of such Indebtedness, (b) to
purchase property, securities or services for the purpose of assuring the
owner of such Indebtedness of the payment of such Indebtedness or (c) to
maintain working capital, equity capital or other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness; provided, however, that the term
Guaranty shall not include endorsements for collection or deposit, in
either case in the ordinary course of business.
"Guaranty Agreement" means that certain Guaranty Agreement of even
date herewith of the Guarantor in favor of the Bank in substantially the
form of Exhibit F attached hereto, and any amendments or supplements
thereto.
"Hazardous Material" means and includes any pollutant, contaminant,
or hazardous, toxic or dangerous waste, substance or material (including
without limitation petroleum products, asbestos-containing materials and
lead), the generation, handling, storage, transportation, disposal,
treatment, release, discharge or emission of which is subject to any
Environmental Law.
"Indebtedness" means, with respect to any Person, without
duplication, (a) all obligations of such Person for borrowed money or with
respect to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c)
all obligations of such Person upon which interest charges are customarily
paid, (d) all obligations of such Person under conditional sale or other
title retention agreements relating to property or assets purchased by
such Person, (e) all obligations of such Person incurred or assumed as the
deferred purchase price of property or services, (f) all Indebtedness of
others secured by (or for which the holder of such Indebtedness has an
existing right, contingent or otherwise, to be secured by) any Lien on
property owned or acquired by such Person, whether or not the obligations
secured thereby have been assumed, (g) all Guaranties by such Person of
Indebtedness of others, (h) all Capital Lease Obligations of such Person,
(i) all obligations of such Person in respect of interest rate protection
agreements, foreign currency exchange agreements or other interest or
exchange rate hedging arrangements and (j) all obligations of such Person
as an account party in respect of letters of credit and bankers'
acceptances. The Indebtedness of any Person shall include the Indebtedness
of any partnership in which such Person is a general partner. Indebtedness
does not include trade debt incurred by the Company in the ordinary course
of business.
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"Interest Payment Date" means each date on which interest is payable
on the Bonds pursuant to the Bonds and the Trust Agreement.
"Issuer" has the meaning assigned to that term in paragraph (1) of
the Preliminary Statements hereof.
"Letter of Credit" has the meaning assigned to that term in
paragraph (3) of the Preliminary Statements hereof.
"Letter of Credit Fee Calculation Amount" in effect at any time
means the maximum 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 drawing and no reduction for (i) any
amount drawn by any B Drawing referred to in the Letter of Credit (unless
such amount is not reinstated under the Letter of Credit), or (ii) any
amount drawn by any C Drawing or D Drawing, or (iii) any amount not
available to be drawn because Bonds are held by or for the account of the
Company.
"Lien" means any interest in property securing any obligation owed
to, or a claim by, a person other than the owner of the property,
including but not limited to the lien or security interest arising from a
mortgage, encumbrance, pledge, security agreement, conditional sale or
trust receipt or consignment or bailment for security purposes.
"Loan Agreement" has the meaning assigned to that term in paragraph
(2) of the Preliminary Statements hereof.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA.
"Official Statement" means the Offering Memorandum, relating to the
Bonds, together with any documents incorporated therein by reference.
"PBGC" means the Pension Benefit Guaranty Corporation or any
successor thereto.
"Permitted Encumbrances" means and includes (i) liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary course of
business for sums not overdue or being contested in good faith; (ii) liens
incurred in the ordinary course of business in connection with worker's
compensation, unemployment insurance or other forms of governmental
insurance or benefits, or to secure performance of tenders, statutory
obligations, leases and contracts (other than for Indebtedness) entered
into in the ordinary course of business or to secure obligations on surety
or appeal bonds; (iii) rights of lessees under leases made in the ordinary
course of business under which the Company or any Subsidiary is lessor;
(iv) liens in respect of final judgments or awards or attachments
remaining undischarged or unstayed for not longer than 60 days from the
making thereof; and (v) existing liens in favor of the Bank.
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"Person" means any individual, joint venture, corporation, company,
voluntary association, partnership, trust, joint stock company,
unincorporated organization, association, government, or any agency,
instrumentality, or political subdivision thereof, or any other form of
entity.
"Plan" means an employee benefit plan (other than a Multiemployer
Plan) maintained for employees of the Company, or any Affiliate and
covered by Title IV of ERISA.
"Plan Termination Event" means (i) a Reportable Event described in
Section 4043 of ERISA and the regulations issued thereunder (other than a
Reportable Event not subject to the provision for 30-day notice to the
PBGC under such regulations), or (ii) the withdrawal of the Company or any
of its Affiliates from a Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA, or (iii)
the filing of a notice of intent to terminate a Plan or the treatment of a
Plan amendment as a termination under Section 4041 of ERISA, or (iv) the
institution of proceedings to terminate a Plan by the PBGC, or (v) any
other event or condition which would constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.
"Prime Rate" means the rate of interest per annum announced by the
Bank from time to time to be its prime rate. The Prime Rate is one of
several rate indexes used by the Bank in calculating interest on loans to
its customers and is not necessarily the best or lowest rate of interest
offered by the Bank.
"Project" has the meaning assigned to that term in paragraph (2) of
the Preliminary Statements hereof.
"Related Documents" has the meaning assigned to that term in Section
2.11.
"Security Agreement" means that certain Security Agreement of even
date herewith between the Company and the Bank in substantially the form
of Exhibit E, and any amendments and supplements thereto.
"Stated Termination Date" means June 30, 2000.
"Subordinated Indebtedness" of a Person shall mean any indebtedness
of such Person and/or any of its Subsidiaries subordinated in a manner
approved by the Bank in writing.
"Subsidiary" means with respect to any Person, any corporation,
association, or other business entity more than fifty percent (50%) of the
shares of voting stock or other interests (excluding shares or other
interests entitled to vote only upon the failure to pay dividends thereon
or other contingencies) of which are at the time owned directly or
indirectly by such Person and/or any Subsidiary of such Person. When such
term is used without specifying the Person of which a Person is a
Subsidiary, such reference is intended to be to a Subsidiary
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of the Company. Unless otherwise indicated, White Metal shall not be
considered a Subsidiary.
"Tender Advance" has the meaning assigned to that term in Section
2.05 of this Agreement.
"Tender Agent" means Norwest Bank Minnesota, National Association,
or any successor thereto as tender agent under the Trust Agreement.
"Trust Agreement" has the meaning assigned to that term in paragraph
(1) of the Preliminary Statements hereof.
"White Metal" means White Metal Rolling and Stamping Corp., a New
York corporation.
SECTION 1.02. Computation of Time Periods. In this Agreement, in the
computation of a period of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" each
mean "to but excluding".
SECTION 1.03. Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with Generally Accepted
Accounting Principles consistently applied, except as otherwise stated herein.
ARTICLE II
AMOUNT AND TERMS OF THE LETTER OF CREDIT; PLEDGE OF BONDS
SECTION 2.01. The Letter of Credit. The Bank agrees, on the terms and
conditions hereinafter set forth, to issue and deliver the Letter of Credit in
favor of the Bond Trustee at any time during the period from the date hereof to
June 30, 1997 (the "Commitment Termination Date") in the amount of the
Commitment and expiring on or before the Stated Termination Date.
SECTION 2.02. Issuing the Letter of Credit. The Letter of Credit shall be
issued on at least five Business Days' notice from the Company to the Bank
specifying the proposed date of issuance. On the date specified by the Company
in such notice and upon fulfillment of the applicable conditions set forth in
Article III hereof, the Bank will issue and deliver the Letter of Credit to the
Bond Trustee (the date of such issuance and delivery being called the "Date of
Issuance"). The Letter of Credit shall be issued in substantially the form of
Exhibit A hereto. The Bank agrees that any and all payments made under the
Letter of Credit will be made with the Bank's own funds.
SECTION 2.03. Fees and Expenses. (a) The Company agrees to pay the Bank on
the Date of Issuance an initial Letter of Credit fee of $141,866.65. Thereafter,
the Company agrees to pay to the Bank on each one year anniversary of the Date
of Issuance a Letter of Credit fee equal to the percentage shown below of the
Letter of Credit Fee Calculation Amount, based upon the ratio of
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Indebtedness to Consolidated Tangible Net Worth as of the last day of the
immediately preceding fiscal year of the Company:
Ratio of Percentage of
Indebtedness to Consolidated Letter of Credit Fee
Tangible Net Worth Calculation Amount
---------------------------- --------------------
3.50 or more 2.25%
3.00 through 3.499 2.00
2.50 through 2.999 1.75
2.00 through 2.499 1.50
1.50 through 1.999 1.25
1.499 or less 1.00
The amount of such fee shall be calculated based on the Letter of Credit
Fee Calculation Amount as of the date such payment is due, and the fee shall be
deemed earned when paid and the Company shall be entitled to no refund or rebate
of such fee in the event the Letter of Credit terminates after such payment.
(b) The Company agrees to pay to the Bank, upon each drawing under the
Letter of Credit, a fee of $50 per drawing.
(c) The Company agrees to pay to the Bank, upon each transfer of the
Letter of Credit, a transfer commission equal to $2,500 together with all costs
and expenses of the Bank (including reasonable attorneys' fees) incurred related
thereto.
(d) The Company agrees to pay to the Bank, upon each amendment of the
Letter of Credit, a fee of $1,000 together with all costs and expenses of the
Bank (including reasonable attorneys' fees) incurred related thereto.
(e) The Company agrees to pay the Bank's normal transaction charges,
including wire charges, and service charges on any account established with the
Bank in order to perform this Agreement.
(f) Any amount of fees or expenses payable by the Company to the Bank
which is not paid within 10 days when due shall bear interest, from the date
such amount of fees was due until the date of payment in full, at the Default
Rate, payable on the first to occur of the date of payment in full of such
amount or demand by the Bank.
SECTION 2.04. Reimbursement; Amounts Paid in Advance of Date When Due. The
Company agrees to pay the Bank (i) any amount drawn under the Letter of Credit
pursuant to any
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A Drawing, B Drawing or D Drawing and, if the conditions contained in Section
3.03 hereof are not fulfilled by the Company, that portion of the purchase price
corresponding to principal and that portion of the purchase price corresponding
to interest drawn under the Letter of Credit pursuant to a C Drawing,
immediately after (and before 2:00 p.m. (Eastern Standard time) on the same
Business Day as) such drawing, plus (ii) interest at the Default Rate, payable
on demand, on any amount remaining unpaid by the Company to the Bank under
clause (i) above, from the date such amount becomes due and payable until
payment in full.
As set forth in Section 3.01 (f) of the Indenture, a principal amount of
the Bonds is scheduled to be paid to the holder thereof on an annual basis
commencing June 1, 1999 in the amounts set forth in Section 3.01(f) of the
Indenture with the final principal payment due and payable on June 1, 2010.
Interest on the Bonds shall be payable quarterly on the first day of each March,
June, September and December of each year at the rate established pursuant to
the Indenture (the "Interest Payment Dates").
As such principal and interest payments become due on the Bonds, drawings
will be made on the Letter of Credit for such amounts by the Bond Trustee. The
Company desires to set up a sinking fund account into which it will deposit
quarterly in advance with the Bank the principal amount which it will need to
reimburse the Bank hereunder for drawings under the Letter of Credit respecting
principal. Therefore, the Company agrees to deposit in cash with the Bank on
each Interest Payment Date commencing September 1, 1998, an amount in cash equal
to one-fourth of the principal payment due on the Bonds on the next following
principal payment date (being $150,000 on each Interest Payment Date from
September 1, 1997 through June 1, 2009 and $100,000 on each Interest Payment
Date from September 1, 2009 through June 1, 2010). All such funds shall be held
in an interest bearing account of the Bank (the "Sinking Fund Account") and
shall not be withdrawable by the Company except as provided herein. Provided no
Default or Event of Default has occurred hereunder, any interest which accrues
on such funds held by the Bank may be withdrawn by the Company on each interest
payment date for the Bonds or left in such account and credited against the
reimbursement obligations due hereunder. The Company hereby assigns to and
grants the Bank a security interest in such sinking fund account to secure the
Company's obligations hereunder. To the extent that the Company fails to pay
when due any amount owing hereunder, including the reimbursement payments due
under this Section 2.04, the Bank may, and is hereby authorized by the Company
to, withdraw from such account and pay to itself such amounts as are needed to
satisfy such obligations of the Company to the Bank.
THE SINKING FUND ACCOUNT SHALL BE DEPLETED AT LEAST ONCE EACH YEAR. ANY
MONEY DEPOSITED IN THE SINKING FUND ACCOUNT SHALL BE SPENT WITHIN A
THIRTEEN-MONTH PERIOD BEGINNING ON THE DATE OF DEPOSIT, AND ANY AMOUNT RECEIVED
FROM INVESTMENT OF MONEY HELD IN THE SINKING FUND ACCOUNT SHALL BE SPENT WITHIN
A ONE-YEAR PERIOD BEGINNING ON THE DATE OF RECEIPT. IN ADDITION TO THE
FOREGOING, THE COMPANY AGREES THAT THE SINKING FUND ACCOUNT SHALL BE USED AND
MAINTAINED AT ALL TIMES IN SUCH A MANNER THAT SHALL NOT CAUSE THE BONDS TO BE
TREATED AS "ARBITRAGE BONDS" WITHIN THE MEANING OF SECTION 148 OF THE CODE (AS
DEFINED IN THE INDENTURE).
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SECTION 2.05. Tender Advances. If the Bank shall make any payment of that
portion of the purchase price corresponding to principal of and interest on the
Bonds from amounts drawn under the Letter of Credit pursuant to a C Drawing and
the conditions set forth in Section 3.03 shall have been fulfilled, such payment
shall constitute a tender advance made by the Bank to the Company on the date
and in the amount of such payment, each such tender advance being a "Tender
Advance". Notwithstanding any other provision hereof, the Company shall repay
the unpaid amount of each Tender Advance, together with all unpaid interest
thereon, on the earlier to occur of (i) such date as provided in Section 2.07(b)
hereof, (ii) the date thirty (30) days following such Tender Advance or (iii)
the Credit Termination Date. The Company may prepay any such amounts on an
earlier date as provided in Section 2.07(a) hereof.
SECTION 2.06. Interest on Tender Advances. The Company shall pay interest
on the unpaid amount of each Tender Advance from the date of such Advance until
such amount is paid in full, payable monthly, in arrears, on the first day of
each month during the term of each Tender Advance and on the date such amount is
paid in full, at a fluctuating interest rate per annum in effect from time to
time equal to the Base Rate, provided that the unpaid amount of any Tender
Advance which is not paid when due pursuant to Section 2.05 hereof shall bear
interest at the Default Rate, payable on demand and on the date such amount is
paid in full.
SECTION 2.07. Prepayments; Reinstatement of Letter of Credit Amounts. (a)
The Company may prepay the outstanding amount of any Tender Advance in whole or
in part, together with accrued interest to the date of such prepayment on the
amount prepaid. The Company shall notify the Bank on the date of such prepayment
of the amount to be prepaid, which notice may be given by telephone (promptly
confirmed in writing) but which shall not be effective unless received by the
Bank prior to 11:00 A.M. Charlotte, North Carolina time on the day of the
proposed prepayment referred to above.
(b) Subject to Section 2.05, prior to or simultaneously with the resale of
Bonds acquired by the Tender Agent with the proceeds of one or more draws under
the Letter of Credit by one or more C Drawings, the Company shall repay the then
outstanding Tender Advances (in the order in which they were made) by paying to
the Bank an amount equal to the sum of (i) the portion of the purchase price
corresponding to the aggregate principal amount of the Bonds being resold or to
be resold, plus (ii) the portion of the purchase price corresponding to the
aggregate amount of accrued and unpaid interest on such Bonds, plus (iii) the
aggregate amount of accrued and unpaid interest on such Tender Advances, less
the amount paid pursuant to the immediately preceding clause (ii). Such payment
shall be applied by the Bank in reimbursement of such drawings (and as repayment
of Advances resulting from such drawings in the manner described above), and,
the Company irrevocably authorizes the Bank to reinstate the Letter of Credit in
accordance therewith.
(c) The Company agrees that, pursuant to the provisions of the Trust
Agreement, Bonds purchased with proceeds of a drawing under the Letter of Credit
shall be (i) held by the Bond Trustee as agent and bailee for the account of the
Bank or (ii) delivered by the Tender Agent to the Bank or its designee, in
either case, to be held by the Bank or its agent, bailee or designee in pledge
as collateral securing the Company's payment obligations to the Bank hereunder.
Bonds so delivered
11
to the Bank or its designee shall be registered in the name of the Bank, or its
agent, bailee or designee, as pledgee of the Company, as provided for in Section
2.14 hereof.
(d) The Company shall, forthwith, prepay or cause to be prepaid pursuant
to subsection (a) of this Section 2.07 any amount owing to the Bank as a result
of any Tender Advance for the purpose of paying the purchase price of any Bond
delivered to the Tender Agent, if the Tender Agent failed, for any reason, to
pay or tender payment of the purchase price of such Bond when due to or for the
account of the person entitled thereto and such failure is continuing or any
other person shall assert that such person has a lien on or security interest in
such Bond.
(e) Upon payment to the Bank of the amount of any Tender Advance to be
prepaid together with accrued interest on such Advance to the date of such
prepayment on the amount to be prepaid, the principal amount outstanding of
Tender Advances shall be reduced by the amount of such prepayment, interest
shall cease to accrue on the amount prepaid and, if applicable, the Bank shall
release or cause to be released to the Tender Agent, in accordance with the
terms of the Trust Agreement, a principal amount of Bonds, if any, then held
under pledge equal to the principal amount of such prepayment.
SECTION 2.08. Increased Costs. If any law, regulation or change in any law
or regulation or in the interpretation thereof, or any ruling, decree, judgment,
guideline, directive or recommendation (whether or not having the force of law)
by any regulatory body, court, central bank or any administrative or
governmental authority charged or claiming to be charged with the administration
thereof (including, without limitation, a request or requirement which affects
the manner in which the Bank allocates capital resources to its commitments
including its obligations hereunder) shall either (i) impose upon, modify,
require, make or deem applicable to the Bank or any of its affiliates,
Subsidiaries or participants any reserve requirement, special deposit
requirement, insurance assessment or similar requirement against or affecting
the Letter of Credit issued hereunder, or (ii) subject the Bank or any of its
affiliates, Subsidiaries or participants to any tax, charge, fee, deduction or
withholding of any kind whatsoever in connection with the Letter of Credit or
change the basis of taxation of the Bank or any of its affiliates, Subsidiaries
or participants (other than a change in the rate of tax based on the overall net
income of the Bank or such participant), or (iii) impose any condition upon or
cause in any manner the addition of any supplement to or increase of any kind to
the Bank's or an affiliate's, Subsidiary's or participant's capital or cost base
for issuing or owning a participation in the Letter of Credit which results in
an increase in the capital requirement supporting the Letter of Credit, or (iv)
impose upon, modify, require, make or deem applicable to the Bank or any of its
affiliates, Subsidiaries or participants any capital requirement, increased
capital requirement or similar requirement, such as the deeming of the Letter of
Credit to be an asset held by the Bank or any of its affiliates, Subsidiaries or
participants for capital adequacy calculation or other purposes (including,
without limitation, a request or requirement which affects the manner in which
the Bank or any participant allocates capital resources to its commitments
including its obligations hereunder or under the Letter of Credit), and the
result of any events referred to in (i), (ii), (iii) or (iv) above shall be to
increase the costs in any way to the Bank or any affiliate, Subsidiary or
participant of issuing, maintaining or participating in the Letter of Credit or
reduce the amounts payable by the Company hereunder or reduce the rate of return
on capital, as a consequence of the issuing, maintaining or participating in the
Letter of Credit, to a level below that
12
which the Bank, its affiliates, Subsidiaries or participants could have achieved
but for such events; then and in such event the Company shall, promptly upon
receipt of written notice to the Company by the Bank of such increased costs
and/or decreased benefits, pay within 30 days of demand therefor to the Bank all
such additional amounts which, in the Bank's or participant's sole good faith
calculation as allocated to the Letter of Credit, shall be sufficient to
compensate it for all such increased costs and/or decreased benefits, all as
certified by the Bank or such participants in said written notice to the
Company. Such certification shall be accompanied by information concerning the
calculation of such increased costs and/or decreased benefits and shall be
conclusive and binding on the parties hereto, absent manifest error. In
determining such amount, the Bank or any participant may use any reasonable
averaging or attribution methods.
SECTION 2.09. Payments and Computations. The Company shall make each
payment hereunder (a) representing reimbursement pursuant to Section 2.04 hereof
to the Bank of drawings made under the Letter of Credit not later than 2:00 p.m.
(Charlotte, North Carolina time), and (b) not later than 2:00 p.m. (Charlotte,
North Carolina time) for all other payments, on the day when due in lawful money
of the United States of America to the Bank at its address referred to in
Section 7.02 hereof in same day funds. The Company hereby authorizes the Bank,
if and to the extent payment is not made when due hereunder, to charge from time
to time against any of the Company's accounts with the Bank, including the
Sinking Fund Account established under Section 2.04 hereunder, any amount so
due. Computations of the Prime Rate, the Default Rate and of any fees or
commissions hereunder shall be made by the Bank 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. 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 in such case be
included in the computation of payment of interest, fee or commission, as the
case may be.
SECTION 2.10. Evidence of Debt. The Bank shall maintain in accordance with
its usual practice an account or accounts evidencing the indebtedness of the
Company resulting from each drawing under the Letter of Credit and each Tender
Advance made from time to time hereunder and the amounts of principal, interest
and fees payable and paid from time to time hereunder. In any legal action or
proceeding in respect of this Agreement, the entries made in such account or
accounts shall be conclusive evidence of the existence and amounts of the
obligations of the Company therein recorded, absent manifest error.
SECTION 2.11. Obligations Absolute. The payment obligations of the Company
under this Agreement shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including, without limitation, the following circumstances:
(i) any lack of validity or enforceability of the Letter of Credit,
the Bonds, the Trust Agreement, the Loan Agreement, the Deed of Trust, the
Security Agreement, the Guaranty Agreement, or any other agreement or
instrument relating thereto (collectively, the "Related Documents");
13
(ii) any amendment or waiver of or any consent to departure from all or
any of the Related Documents (unless consented to in writing by the Bank);
(iii) the existence of any claim, set-off, defense (other than the
defense of payment) or other right which the Company may have at any time
against the Bond Trustee or any other beneficiary, or any transferee, of
the Letter of Credit (or any persons or entities for whom the Bond
Trustee, any such beneficiary or any such transferee may be acting), the
Bank, or any other person or entity, whether in connection with this
Agreement, the transactions contemplated herein or in the Related
Documents, or any unrelated transaction;
(iv) any statement or any other document presented under the Letter of
Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect; provided that the Bank's reliance upon any such statement or
document shall not have constituted gross negligence or willful misconduct
of the Bank;
(v) payment by the Bank under the Letter of Credit against
presentation of a draft or certificate which does not comply with the
terms of the Letter of Credit; provided that such payment shall not have
constituted gross negligence or willful misconduct of the Bank.
SECTION 2.12. Delivery of Bonds Upon Purchase or Conversion. The Company
hereby agrees to cause the Tender Agent, in accordance with the terms of the
Trust Agreement, to deliver Bonds purchased with the proceeds of any drawing
under the Letter of Credit to the Bank or its designee (including the Bond
Trustee as agent and bailee for the Bank) to be held by the Bank in pledge as
collateral securing the Company's payment obligations hereunder. Bonds so
delivered to the Bank or its designee shall be registered by the Bond Trustee in
the name of the Bank, or its agent, bailee or designee, as pledgee of the
Company, as provided in the Trust Agreement. Upon payment to the Bank of the
amount of such drawings, together with accrued interest, if any, on such amount,
calculated at the Default Rate, to the date of payment, or upon written notice
to the Bond Trustee that the Bank has reinstated the Letter of Credit with
respect to Bonds purchased with proceeds of such drawings, the Bank shall
release to the Tender Agent, in accordance with the terms of the Trust
Agreement, a principal amount of Bonds, if any, then held under the pledge equal
to the amount of such payment corresponding to the principal portion of such
Bonds.
SECTION 2.13. Extension of the Stated Termination Date. At least one
hundred and eighty days before the Stated Termination Date, the Company may
request the Bank in writing to extend the Stated Termination Date for one year
for purposes of this Agreement and the Letter of Credit. If the Company shall
make such a request, the Bank shall, on or before the date one hundred forty
days preceding the Stated Termination Date, notify the Company in writing
whether or not the Bank will extend the Stated Termination Date and, if the Bank
does so elect, the conditions of such extension (including conditions relating
to legal documentation and pricing, such as fees for renewal and drawings). If
the Bank shall not so notify the Company, the Bank shall be deemed to have not
consented to such request. All requests and notices made pursuant to this
Section 2.13 shall also be delivered to the Bond Trustee.
14
SECTION 2.14. Pledge of Bonds. The Company hereby pledges, assigns,
hypothecates, transfers and delivers to the Bank all its right, title and
interest to, and hereby grants to the Bank a first lien on, and security
interest in, all right, title and interest of the Company in and to the
following (the "Collateral"):
(a) all Bonds which may from time to time have been purchased with
proceeds of C Drawings under the Letter of Credit (the "Pledged Bonds");
(b) all income, earnings, profits, interest, premium or other
payments in whatever form in respect of the Pledged Bonds;
(c) all proceeds (cash and non-cash) arising out of the sale,
exchange, collection, enforcement or other disposition of all or any
portion of the Pledged Bonds;
as collateral security for the prompt and complete payment when due of all
amounts due in respect of the reimbursement obligations of the Company set forth
herein with respect to such Pledged Bonds (the "Obligations").
Pledged Bonds shall be held by the Bond Trustee pursuant to the provisions
of Section 1203 of the Trust Agreement or as otherwise directed by the Bank.
In the event that the Company shall fail to pay any amount when due
hereunder with respect to the Pledged Bonds, the Bank, without demand of
performance or other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon
the Company or any other person (all and each of which demands, advertisements
and/or notices are hereby expressly waived), may forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give option or options to purchase, contract to sell or
otherwise dispose of and deliver said Collateral, or any part thereof, in one or
more parcels at public or private sale or sales, at any exchange, broker's board
or at any of the Bank's offices or elsewhere upon such terms and conditions as
it may deem advisable and at such prices as it may deem best, for cash or on
credit or for future delivery without assumption of any credit risk, with the
right of the Bank upon any such sale or sales, public or private, to purchase
the whole or any part of said Collateral so sold, free of any right or equity of
redemption in the Company, which right or equity is hereby expressly waived or
released. The Bank shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care, safekeeping or otherwise of any and all of the Collateral or in any
way relating to the rights of the Bank hereunder, including reasonable
attorney's fees and legal expenses, to the payment in whole or in part of the
Obligations in such order as the Bank may elect, the Company remaining liable
for any deficiency remaining unpaid after such application, and only after so
applying such net proceeds and after the payment by the Bank of any other amount
required by any provision of law, including, without limitation, Section
9-504(1) of the Uniform Commercial Code, need the Bank account for the surplus,
if any, to the Company. The Company agrees that the Bank need not give more than
ten days' notice of the time and place of any public sale or of the time after
which a private sale or other intended disposition is to take place and that
such notice is reasonable notification of such matters.
15
No notification need be given to the Company if it has signed after default a
statement renouncing or modifying any right to notification of sale or other
intended disposition. In addition to the rights and remedies granted to it in
this Agreement and in any other instrument or agreement securing, evidencing or
relating to any of the Obligations, the Bank shall have all the rights and
remedies of a secured party under the Uniform Commercial Code of the State of
North Carolina, except to the extent the remedial provisions of some other state
laws are applicable.
The Company covenants that the pledge, assignment and delivery of the
Collateral hereunder will create a valid, perfected, first priority security
interest in all right, title or interest of the Company in or to such
Collateral, and the proceeds thereof, subject to no prior pledge, lien,
mortgage, hypothecation, security interest, charge, option or encumbrance or to
any agreement purporting to grant to any third party a security interest in the
property or assets of the Company which would include the Collateral. The
Company covenants and agrees that it will defend the Bank's right, title and
security interest in and to the Collateral and the proceeds thereof against the
claims and demands of all persons whomsoever.
Pledged Bonds shall be released from the security interest created
hereunder upon satisfaction of the Obligations with respect to such Pledged
Bonds, and restoration of the Letter of Credit in the amount of any drawing
thereunder to satisfy the Obligations.
16
ARTICLE III
CONDITIONS OF ISSUANCE
SECTION 3.01. Condition Precedent to Issuance of the Letter of Credit. The
obligation of the Bank to issue the Letter of Credit is subject to the condition
precedent that the Bank shall have received on or before the Date of Issuance,
except as otherwise indicated below, the following, each dated such date, in
form and substance satisfactory to the Bank:
(a) Corporate Documents: (i) A copy of the Certificate of
Incorporation of the Company and the Guarantor, each certified as of a
date no earlier than 10 days prior to the Date of Issuance by the
Secretary of State of the State of Delaware; (ii) certificates dated no
earlier than 10 days prior to the Date of Issuance of the Secretary of
State of the State of Delaware as to the good standing of the Company and
of the Guarantor, (iii) a certificate dated no earlier than 10 days prior
to the Date of Issuance of the Secretary of State of the State of North
Carolina as to the qualification to do business of the Company; (iv) a
copy of the bylaws of the Company and of the Guarantor, each certified as
of the Date of Issuance by the Secretary or an Assistant Secretary of the
Company as being complete, correct and in full force and effect; and (v)
copies of the resolutions of the Board of Directors of the Company and of
the Guarantor evidencing authorization and approval of this Agreement, the
Deed of Trust, the Security Agreement, and any Related Document to which
the Company or the Guarantor is a party, as applicable, and the
transactions contemplated thereby, certified by the Secretary or an
Assistant Secretary of the Company and of the Guarantor (which certificate
shall state that such resolutions are in full force and effect on the Date
of Issuance).
(b) Governmental Approvals: Originals (or copies certified to be
true copies by the Secretary or Assistant Secretary of the Company or, in
the case of the Issuer, by an authorized officer of the Issuer) of all
governmental and regulatory approvals (including, without limitation,
approvals or orders of the Issuer, the North Carolina Local Government
Commission or the Governor of the State of North Carolina) necessary for
the Company with respect to this Agreement, the issuance of the Bonds and
the transactions contemplated hereby and thereby.
(c) Incumbency Certificates: Certificates of the Secretary or an
Assistant Secretary of the Company and of the Guarantor certifying the
names and true signatures of the officers of the Company and the
Guarantor, respectively, authorized to sign this Agreement, the Related
Documents and the other documents contemplated hereby and thereby to which
the Company or the Guarantor is a party, respectively.
(d) Company Counsel Opinions: An opinion of Berlack, Israels &
▇▇▇▇▇▇▇▇ LLP, as Counsel to the Company and the Guarantor, and/or any
counsel licensed to practice in North Carolina and in Georgia that may be
engaged by the Company, in substantially the form of Exhibit B-1 hereto in
form and substance satisfactory to the Bank and its counsel, and as to
such other matters as the Bank may reasonably request.
17
(e) Bond Counsel Opinion: An opinion of Hunton & ▇▇▇▇▇▇▇▇, Bond
Counsel, in substantially the form of Exhibit C hereto in form and
substance satisfactory to the Bank and its counsel and as to such other
matters as the Bank may reasonably request.
(f) Operative Documents: An executed copy of the Loan Agreement,
Deed of Trust, Security Agreement, Guaranty Agreement, Trust Agreement,
Official Statement, the Bond Purchase Agreement and the Remarketing
Agreement, each as defined in the Trust Agreement.
(g) Bond Transcript: As soon as practicable after the issuance of
the Letter of Credit, a copy of the Bond transcript and each closing
document relating to the issuance of the Bonds.
(h) Authentication Order: A certificate from the Issuer stating that
the Issuer has duly executed and delivered the Bonds to the Trustee for
authentication.
(i) Title Insurance: From a title insurance company acceptable to
the Bank, in respect of the Deed of Trust, a mortgagee's title insurance
policy or marked-up unconditional binder for such insurance, dated the
Date of Issuance. Such policy shall (i) be in an amount equal to
$7,000,000; (ii) insure that the Deed of Trust insured thereby creates a
valid first lien on the property covered by such Deed of Trust free and
clear of all defects and encumbrances (except those acceptable to the
Bank); (iii) name the Bank as the insured party thereunder; (iv) be in the
form of ALTA Loan Policy-1992 or other form approved by the Bank; and (v)
contain a Revolving Credit/Letter of Credit Endorsement and such other
endorsements and effective coverage as the Bank may reasonably request.
The Bank shall also have received (i) evidence that all premiums in
respect of such policy have been paid and (ii) copies of all items
appearing as exceptions on such policy or binder.
(j) Certified Survey and Flood Plain Certification: A physical
survey containing maps or plats of the perimeter or boundaries of the site
of the real property and improvements covered by the Deed of Trust
certified to the Bank and the title insurance company, in a manner
acceptable to each of them, dated a date satisfactory to the Bank and the
relevant title insurance company, by an independent professional licensed
land surveyor satisfactory to the Bank and the relevant title insurance
company, which survey shall indicate the following: (i) the locations on
such site of all the buildings, structures and other improvements and the
established building setback lines insofar as the foregoing affect the
perimeter or boundary of such property; (ii) the lines of streets abutting
the site and width thereof; (iii) all access and other easements
appurtenant to the site or necessary or desirable to use the site; (iv)
all roadways, paths, driveways, easements, encroachments and overhanging
projections and similar encumbrances affecting the site, whether recorded,
apparent from a physical inspection of the site or otherwise known to the
surveyor; (v) any encroachments on any adjoining property by the building
structures and improvements on the site; and (vi) if the site is described
as being on a filed map, a legend relating the survey to said map, all in
form satisfactory to the Bank. The Company shall also provide a
certification from an independent professional licensed land surveyor
satisfactory to the Bank as to the location of the Project
18
or any property covered by the Deed of Trust in any "special flood hazard"
area within the meaning of the Federal Flood Disaster Protection Act of
1973.
(k) Evidence of Recordation, Filings and Payments of Fees: Evidence
satisfactory to the Bank that any documents (including, without
limitation, financing statements) required to be recorded or filed in
order to create, in favor of the Bank, a perfected lien on and security
interest in all real and personal property covered by the Deed of Trust or
the Security Agreement have been properly recorded and/or filed in each
office in each jurisdiction required in order to create, in favor of the
Bank, a perfected lien on and security interest in the respective
collateral described therein. The Bank shall have received evidence of all
such recordation and acknowledgment copies of all such filings (or, in
lieu thereof, the Bank shall have received other evidence satisfactory to
the Bank that all such filings have been made or will be made), and the
Bank shall have received evidence that all necessary recordation and
filing fees and all documentary taxes or other expenses related to such
filings or recordations have been paid in full.
(l) Insurance: Copies of Certificates of Insurance and/or if
requested by Bank the insurance policies covered by such Certificates of
Insurance required under Section 2.16 of the Deed of Trust or under the
Security Agreement, from insurance companies or associations acceptable to
the Bank, listing the Bank as insured party and/or loss payee together
with evidence satisfactory to the Bank that all premiums necessary to be
paid for the effectiveness of such insurance have been paid by the
Company. If any part of the Project or property covered by the Deed of
Trust is located in a "special flood hazard" area within the meaning of
the Federal Flood Disaster Protection Act of 1973, a flood insurance
policy satisfactory to the Bank and naming the Bank as insured party
and/or loss payee shall be delivered to the Bank.
(m) Fees Payable: Payment by the Company to (i) the Bank of the fees
set forth in Section 2.03(a) hereof and such other costs and expenses
pursuant to Section 7.07 hereof, and (ii) counsel to the Bank, of their
fees incurred in connection with this transaction, plus such counsel's
out-of-pocket expenses.
(n) Current Financial Statements: Financial statements of the
Company in the form required under Section 5.01(a) hereof.
(o) Invoices. Copies of the original invoices relating to the
building addition constructed and the machinery and equipment financed
with Bond proceeds.
(p) Environmental Audit: A satisfactory phase I environmental audit
covering the "Phase II" of the Property from an engineering firm
acceptable to the Bank indicating no environmental hazards not acceptable
to the Bank, which audit shall be delivered not more than 60 days after
the Date of Issuance.
19
(q) Other Documents: Such other documents, instruments, approvals
(and, if requested by the Bank, certified duplicates of executed copies
thereof) or opinions as the Bank may reasonably request.
SECTION 3.02. Additional Conditions Precedent to Issuance of the Letter of
Credit. (a) The obligation of the Bank to issue the Letter of Credit shall be
subject to the further conditions precedent that on the Date of Issuance the
following statements shall be true and the Bank shall have received a
certificate signed by an authorized officer of the Company, dated the Date of
Issuance, stating that:
(i) The representations and warranties contained in Section 4.01 of
this Agreement, Section 2.02 of the Loan Agreement, in the Deed of Trust
and in the Security Agreement are correct on and as of the Date of
Issuance of the Letter of Credit as though made on and as of such date;
and
(ii) No event has occurred or would result from the issuance of the
Letter of Credit, which constitutes an Event of Default or would
constitute an Event of Default but for the requirement that notice be
given or lapse of time or both;
and (b) there shall have been no introduction of or change in or in the
interpretation of any law or regulation that would make it unlawful or unduly
burdensome for the Bank to issue the Letter of Credit, no outbreak or escalation
of hostilities or other calamity or crisis, no suspension of or material
limitation on trading on the New York Stock Exchange or any other national
securities exchange, no declaration of a general banking moratorium by United
States or North Carolina banking authorities, and no establishment of any new
restrictions on transactions in securities or on banks materially affecting the
free market for securities or the extension of credit by banks.
SECTION 3.03. Conditions Precedent to Each Tender Advance. Each payment
made by the Bank under the Letter of Credit pursuant to a Tender Draft shall
constitute an Advance hereunder only if on the date of such payment the
following statements shall be true:
(i) The representations and warranties contained in Section 4.01 of
this Agreement, in Section 2.02 of the Loan Agreement, in the Deed of
Trust and in the Security Agreement, are correct on and as of the date of
such Advance as though made on and as of such date; and
(ii) No event has occurred or would result from such Advance, which
constitutes an Event of Default or would constitute an Event of Default
but for the requirement that notice be given or lapse of time or both.
Unless the Company shall have previously advised the Bank otherwise in writing,
the Company shall be deemed to have represented and warranted, on the date of
payment by the Bank under the Letter of Credit pursuant to a Tender Draft, that
on the date of such payment the above statements are true and correct.
20
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Company. The Company
represents and warrants for itself and the Guarantor, as applicable, as follows
(which representations and warranties shall survive the issuance of the Letter
of Credit):
(a) The Company, the Guarantor and each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has the corporate power to own its
properties and to carry on its business as now being conducted, and is duly
qualified as a foreign corporation to do business in every jurisdiction in the
United States of America in which the nature of its business makes such
qualification necessary and the failure to be so qualified would result in a
material adverse effect on the business, properties or condition (financial or
other) of the Company, and is in good standing in such jurisdictions. The
Company does not have any Subsidiaries (as defined).
(b) Each of the Company and the Guarantor is duly authorized under all
applicable provisions of law to execute, deliver and perform this Agreement, the
Security Agreement, the Deed of Trust and the other Related Documents to which
it is a party, and all corporate action on its part (and any shareholder action)
required for the lawful execution, delivery and performance thereof has been
duly taken; and this Agreement, the Security Agreement, the Deed of Trust and
other Related Documents, upon the due execution and delivery thereof, will be
the valid and enforceable instruments and obligations of the Company, and the
Guarantor as applicable, in accordance with their terms. Neither the execution
of this Agreement, the Deed of Trust or the Security Agreement or the other
Related Documents, nor the fulfillment of or compliance with their provisions
and terms, will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a violation of or default under any law,
regulation, order, writ or decree applicable to or binding upon the Company, the
Guarantor or any Subsidiary, or any of their properties, or the Articles of
Incorporation or Bylaws of the Company, the Guarantor or any Subsidiary, or any
agreement or instrument to which the Company, the Guarantor or any Subsidiary is
now a party or by which any of them or their properties may be bound.
(c) The Company has good and marketable title to its properties and
assets, and all such properties and assets are free and clear of all Liens of
any kind except (i) as disclosed in the financial statements and notes thereto
delivered by the Guarantor under the Guaranty Agreement prior to the date hereof
and (ii) Permitted Encumbrances.
(d) Except as set forth on Schedule 4.01(d) hereof, there are no pending
or, to the Company's knowledge, threatened orders, claims, actions,
investigations or proceedings before or by any court, arbitrator or governmental
or administrative body, agency or official which may materially adversely affect
the properties, business or condition, financial or otherwise, of the Company,
the Guarantor or any Subsidiary or in any way adversely affect or call into
question the power and authority of the Company or the Guarantor to enter into
or perform this Agreement, the Security Agreement, the Deed of Trust or any
other Related Documents to which it is a party.
21
(e) The Company and its Subsidiaries have filed all income tax returns
required to be filed by them and all taxes shown thereon have been paid (except
where the failure to pay will not have a material adverse effect on the
financial condition, business or operation of the Company), and no controversy
in respect of additional income taxes, foreign, state or Federal, of the Company
or any Subsidiary is pending, or to the knowledge of the Company threatened
except such controversies which are being contested by the Company in good faith
and by proper proceedings which, if determined adversely to the Company, would
not have a material adverse affect on the business, financial condition or
operations of the Company. The Federal and state income taxes of the Company and
its Subsidiaries (excluding any state franchise taxes) have been examined and
reported on or closed by applicable statutes for all fiscal years as indicated
on Exhibit G, and adequate reserves have been established for the payment of all
such taxes for periods ended subsequent to such fiscal years.
(f) Neither the Company nor any Subsidiary is a party to or bound by any
contract or agreement or subject to any charter or other corporate restrictions
which adversely affects the business, properties, or condition, financial or
otherwise, of the Company or any Subsidiary. The Bank acknowledges that the
agreements described on Exhibit H may, under certain circumstances, have an
adverse affect on the business of the Company and its Subsidiaries.
(g) The Company owns, possesses, or has the right to use all necessary
patents, licenses, franchises, trademarks, trademark rights, trade names, trade
name rights and copyrights to conduct its business as now conducted, without
known conflict with any patent, license, franchise, trademark, trade name, or
copyright of any other Person.
(h) No written approval known by the Company to be required of any
foreign, Federal, state or local governmental authorities is necessary to enter
into and carry out the terms of this Agreement or the other Related Documents,
and no consents or approvals are required in connection with the making or
performance of this Agreement or the other Related Documents. The Company has
received the written approval or permits from all foreign, Federal, state and
local governmental authorities necessary to conduct its operations as presently
conducted.
(i) Neither this Agreement, the other Related Documents nor any other
agreements, reports, schedules, certificates or instruments heretofore or
simultaneously with the execution of this Agreement delivered to the Bank by or
on behalf of the Company or its Subsidiaries in connection with the issuance of
the Letter of Credit contains any misrepresentation or untrue statement of
material fact or omits to state any material fact necessary to make any of such
agreements, reports, schedules, certificates or instruments not misleading.
(j) The Company is now, and after giving effect to (i) the loan made by
the Issuer pursuant to the Loan Agreement and (ii) the credit to be extended by
the Bank pursuant to the Letter of Credit, will be, solvent.
(k) Except as set forth on Exhibit I, neither the Company nor to the
Company's best knowledge any previous owner or operator of any real property
currently owned or operated by the Company (collectively, the "Current
Property"), has generated, stored, or disposed of any Hazardous
22
Material on any portion of the Current Property, or transferred any Hazardous
Material from the Current Property to any other location in violation of any
applicable Environmental Laws which has not been fully remedied. Neither the
Company nor any Subsidiary has been notified of any action, suit, proceeding or
investigation which calls into question compliance by the Company or any of its
Subsidiaries with any Environmental Laws or which seeks to suspend, revoke or
terminate any license, permit or approval necessary for the generation,
handling, storage, treatment or disposal of any Hazardous Material.
(l) No part of the proceeds of the loan made by the Issuer pursuant to the
Loan Agreement will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin stock (within the meaning of Regulation U of
the Board of Governors of the Federal Reserve System) or for the purpose of
reducing or retiring any Indebtedness which was originally incurred to purchase
or carry margin stock or for any other purpose which might cause the loan made
by the Issuer pursuant to the Loan Agreement to constitute a "purpose credit"
within the meaning of said Regulation U or Regulation X (12 C.F.R. Parts 221 and
224) of the Federal Reserve Board.
(m) None of the ERISA Plans maintained at any time by the Company or any
Subsidiary or the trusts created thereunder has engaged in a prohibited
transaction (as defined in ERISA) which could subject any such ERISA Plan or
trust to a material tax or penalty on prohibited transactions imposed under the
Code or ERISA; neither the Company nor any Subsidiary has incurred any
accumulated funding deficiency within the meaning of ERISA, whether or not
waived; nor has there been any Reportable Event (as defined in ERISA), or other
event or condition, which presents a material risk of termination of any such
ERISA Plan by the Pension Benefit Guaranty Corporation.
(n) Neither the Company nor any Subsidiary is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument to which it is a party
relating to any Indebtedness, the effect of which default (i) may impair the
ability of the Company to repay the Advances or any other amounts due hereunder;
or (ii) would cause such obligation under the agreement or instrument to become
due prior to its stated maturity and would have a material adverse affect on the
financial condition, business or operations of the Company.
(o) Neither the Company nor any Subsidiary is in default with respect to
any of its existing Indebtedness where such default would have a material
adverse affect on the financial condition, business or operations of the Company
or such Subsidiary.
(p) The address of the Company's chief executive offices and principal
place of business is 4501 Circle 75 Parkway, Suite F-6300, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇. All records and other information with respect to the Collateral
(including computer programs and printouts) are maintained by the Company at
such address. Any other personal property covered by the Security Agreement will
be located at the manufacturing facilities and locations described on Exhibit J
attached hereto.
(q) The Company covenants, warrants and represents to the Bank that all
representations and warranties of the Company contained in this Agreement and
the other Related Documents shall be true at the time of the Company's execution
of this Agreement and the other Related Documents,
23
and shall survive the execution, delivery and acceptance thereof by the parties
thereto and the closing of the transactions described therein or related
thereto.
(r) The information provided by the Company about itself and the Project
in the Official Statement (the "Company Information") is accurate in all
material respects for the purposes for which its use is authorized; and the
Company Information in the Official Statement does not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made therein, in the light of the circumstances under which
they are or were made, not misleading.
(s) The Company has received the written approval of all Federal, state,
local and foreign governmental authorities, if any, necessary to acquire and
construct the Project and to carry out the terms of this Agreement, the Deed of
Trust, the Security Agreement and the other Related Documents to which it is a
party and no further governmental consents or approvals are required for the
acquisition and construction of the Project or the making or performance of this
Agreement, the Deed of Trust, the Security Agreement and such Related Documents.
24
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.01. Affirmative Covenants. So long as a drawing is available
under the Letter of Credit, or the Bank shall have any Commitment hereunder, or
the Company shall have any obliga tion to pay any amount to the Bank hereunder,
the Company will, unless the Bank shall otherwise consent in writing:
(a) Financial Reports and Other Data.
(i) As soon as practicable and in any event within twenty five (25)
days after the end of each month, deliver, or cause to be delivered, to
the Bank (i) an unaudited and unconsolidated balance sheet of the Company
and its Subsidiaries, and related statements of income and retained
earnings and cash flow for such month and for the period from the
beginning of the then current fiscal year to the end of such month, all in
reasonable detail and certified by the chief financial officer of the
Company to have been prepared in accordance with Generally Accepted
Accounting Principles, subject only to changes resulting from normal
year-end adjustments; and (ii) computations demonstrating compliance with
the provisions of subsections (a), (b), (c) and (d) of Section 5.02
hereof;
(ii) As soon as practicable and in any event within ninety (90) days
after the end of each fiscal year, deliver to the Bank (A) consolidated
and consolidating balance sheets of the Guarantor and its Subsidiaries as
at the end of such Fiscal Year, and related consolidated and consolidating
statements of income, retained earnings and cash flow for such Fiscal Year
(including comparable unaudited financial statements of the Company and
its Subsidiaries), setting forth in each case in comparative form figures
from the preceding Fiscal Year, all in reasonable detail and satisfactory
in scope to the Bank and, in the case of the consolidated financial
statements, audited by and containing (as to the consolidated statements
only) an unqualified opinion, without exception not satisfactory to the
Bank, of independent certified public accountants acceptable to the Bank,
(B) a copy of any letter or report provided by such accountants to the
Guarantor, the Company or members of the Guarantor's or the Company's
management in connection with or as a result of such audit relating to the
Guarantor's or the Company's operations or management of its financial
affairs, and (iii) a certificate of the duly authorized financial officer
of the Company containing computations in reasonable detail evidencing
compliance with subsections (a), (b), (c) and (d) of Section 5.02 hereof;
(iii) Together with each delivery of those items required by clause (i)
and (ii) above, the Company shall deliver to the Bank a certificate
setting forth (A) that to the best of its knowledge, the Company and its
Subsidiaries have kept, observed, performed and fulfilled each and every
agreement binding on them contained in this Agreement and the other
Related Documents, and is not at the time in default of the keeping,
observance, performance or fulfillment of any of the terms, provisions and
conditions hereof or thereof, and (B) that no Default or Event of Default
has occurred, or specifying all such defaults and events of which they may
have knowledge;
25
(iv) With reasonable promptness, deliver such additional financial or
other data as the Bank may reasonably request from time to time.
The Bank is hereby authorized to deliver a copy of any financial statements or
any other information relating to the business, operations or financial
condition of the Company and its Subsidiaries which may be furnished to it or
come to its attention pursuant to this Agreement or otherwise, to any regulatory
body or agency having jurisdiction over the Bank or to any person which shall,
or shall have the right or obligation to, succeed to all or any part of the
Bank's interest in this Agreement and the Related Documents.
(b) Taxes and Liens. Promptly pay, or cause to be paid, in all cases in
which the failure to pay might have a material adverse effect on the financial
condition, business or operations of the Company, (i) all taxes, assessments and
other governmental charges which may lawfully be levied or assessed upon the
income or profits of the Company, or upon any property, real, personal or mixed,
belonging to the Company, or upon any part thereof, (ii) any lawful claims for
labor, material and supplies which, if unpaid, might become a Lien or charge
against any such property and (iii) any and all amounts required to be paid to
all Federal, state, local and other taxing authorities in respect of employee
withholdings; provided, however, that the Company shall not be required to pay
or discharge any such items described on (i) and (ii) above that are being
contested in good faith and by proper proceedings, and, if requested by the
Bank, reserves with respect thereto acceptable to the Bank shall be maintained;
provided further that any such item shall be paid forthwith upon the
commencement of proceedings to foreclose any lien securing the same.
(c) Business and Existence. Do or cause to be done all things necessary to
preserve and to keep in full force and effect its corporate existence and rights
and its franchises, trade names, service marks, patents, trademarks, permits,
know-how, trade secrets and other proprietary rights which are reasonably
necessary for the continuance of its business, except where such failure would
not have a material adverse affect on its business, properties or condition,
financial or otherwise.
(d) Insurance; Payment of Premiums. Keep its businesses and properties
insured at all times by responsible insurance companies against the risks and to
the extent that provision for such insurance is usually made by other
corporations engaged in similar businesses similarly situated and consistent
with its past practices, and carry such other types and amounts of insurance as
are usually carried by corporations engaged in the same or a similar business
similarly situated and consistent with its past practices, including without
limitation:
(i) casualty insurance in an amount not less than the full replacement
cost at time of loss, on all real and personal property serving as
Collateral for Indebtedness of the Company to the Bank (except as may be
otherwise agreed to by the Bank) against loss or damage by fire and
lightning and other hazards and risks ordinarily included under uniform
standard extended coverage policies, limited only as may be provided in
the standard form of extended coverage endorsement at the time in use in
the state of location of such collateral;
(ii) general public liability insurance against claims for bodily
injury, death or property damage occurring on, in or about the real
property owned or leased by the Company in an
26
amount not less than $1,000,000 with respect to bodily injury, death or
property damage on a combined single limit basis in any one accident and
with an aggregate coverage amount of not less than $2,000,000 during any
one policy year; and
(iii) liability insurance (or self insurance arrangements meeting the
requirements of the applicable jurisdiction) under the workers'
compensation laws of the state of location of its facilities; provided,
however, that the insurance so required may be provided by blanket
policies now or hereafter maintained by the Company.
Each insurance policy obtained in satisfaction of the requirements of
subsections (i) through (iii) above shall be by such insurer (or insurers) as
shall be financially responsible, qualified to do business in the applicable
jurisdiction such insurance coverage is obtained for, and of recognized
standing, shall prohibit cancellation, non-renewal or lapse in coverage by the
insurer without at least 30 days' prior written notice to the Bank, shall
provide (with respect to insurance under (i) only) that, except as otherwise
provided in the Security Agreement or upon the occurrence of an Event of Default
hereunder, losses thereunder shall be adjusted with the insurer by the Company
at its expense, and if requested by the Bank, the Bank, on behalf of the insured
parties and the decision of such Persons as to any adjustment shall be final and
conclusive. Each such policy shall name the Bank as lienholder and loss payee
(with respect to insurance under (i) only) and additional insured thereunder, as
its interests may appear. Not later than 30 days prior to the termination or
expiration of any such policy then in effect and upon any further request, the
Company shall deliver or cause to be delivered to the Bank an Officer's
Certificate setting forth the nature of the risks covered by such insurance, the
amount carried with respect to each risk, and the name of the insurer.
(e) Maintain Property. Maintain its properties in good order and repair
and, from time to time, make all needful and proper repairs, renewals,
replacements, additions and improvements thereto, so that the business carried
on may be properly and advantageously conducted at all times in accordance with
prudent business management.
(f) Books of Record and Account. Keep, and cause each Subsidiary to keep,
proper books of record and accounts in which full, true and correct entries
shall be made of its transactions in accordance with Generally Accepted
Accounting Principles.
(g) Payment of Indebtedness. Pay when due (or within applicable grace
periods) all Indebtedness due third persons, except when the amount thereof is
being contested in good faith by appropriate proceedings and with adequate
reserves therefor being set aside on the books of the Company.
(h) Right of Inspection. After at least three days' prior notice from the
Bank, permit any person designated by the Bank to visit and inspect any of the
properties, corporate books and financial reports of the Company, and to discuss
its affairs, finances and accounts with its principal officers and independent
certified public accountants, all at such reasonable times and as often as the
Bank may reasonably request, including an annual (or more frequent if the Bank
in its sole discretion deems necessary) collateral audit of the Company by the
Bank at the expense of the Company.
27
(i) Observe All Laws. Conform to and duly observe all laws with respect to
the conduct of its business the failure of which to comply might have a material
adverse effect on the financial condition, business or operations of the
Company.
(j) Covenants Extending to Subsidiaries. Cause each of its Subsidiaries to
do with respect to itself, its business and its assets, each of the things
required of the Company in subsections (b) through (i) above, inclusive.
(k) Officer's Knowledge of Default. Upon an officer of the Company
obtaining knowledge of any Default or Event of Default hereunder or under any
other obligation of the Company or any Subsidiary, cause such officer to
promptly deliver to the Bank a certificate specifying the nature thereof, the
period of existence thereof, and what action the Company proposes to take with
respect thereto.
(l) Suits or Other Proceedings. Upon an officer of the Company obtaining
knowledge of any material litigation, dispute or proceedings being instituted or
threatened against the Company, or any attachment, levy, execution or other
process being instituted against any material portion of the assets of the
Company, promptly deliver to the Bank a certificate stating the nature and
status of such litigation, dispute, proceeding, levy, execution or other
process.
(m) Notice Regarding Hazardous Material or Environmental Complaint. Give
to the Bank immediate written notice of any complaint, order, directive, claim,
citation or notice by any governmental authority or any person with respect to
the use, generation, storage, transportation or disposal of Hazardous Material
by the Company. The Company shall promptly comply with its obligations under law
with regard to such matters and may contest any such obligations to the extent
permitted by law.
(n) Environmental Indemnification. Defend, indemnify and hold the Bank
harmless from and against any and all claims, losses, liabilities, damages and
expenses (including, without limitation, cleanup costs and reasonable attorneys'
fees including those arising by reason of any of the aforesaid or an action
against the Company under this indemnity) arising directly or indirectly from,
out of or by reason of the handling, storage, treatment, emission or disposal of
any Hazardous Material by or in respect of the Company or any Subsidiary.
(o) Further Assurances. At its cost and expense, upon request of the Bank,
duly execute and deliver or cause to be duly executed and delivered, to the Bank
such further instruments, documents, certificates, financing and continuation
statements, and do and cause to be done such further acts that may be reasonably
necessary or advisable in the opinion of the Bank to carry out more effectively
the provisions and purposes of this Agreement and the other Related Documents.
(p) ERISA Requirement. Comply with all requirements of ERISA applicable to
it and furnish to the Bank as soon as possible (i) a certificate describing in
reasonable detail any Reportable Event (as defined in ERISA) with respect to any
ERISA Plan that has occurred and any action which the Company proposes to take
with respect thereto, (ii) a copy of any notice that the Company or any
Subsidiary may receive from the Pension Benefit Guaranty Corporation relating to
the intention of
28
the Pension Benefit Guaranty Corporation to terminate any ERISA Plan or ERISA
Plans or to appoint a trustee to administer any such ERISA Plan, and (iii) a
certificate setting forth details as to any failure to make a required
installment or other payment with respect to an ERISA Plan and the action that
the Company or any Subsidiary proposes to take with respect thereto.
(q) Continued Operations. Continue at all times to conduct its business
and engage principally in the same line or lines of business substantially as
heretofore conducted.
(r) Principal Accounts. Maintain its principal banking depository accounts
with the Bank.
(s) Application of Net Proceeds of Insurance and Eminent Domain.
(i) The Net Proceeds of the liability insurance carried pursuant to
the provisions of subsections (d)(ii) and (iii) above and of the other
Related Documents shall be applied by the Company toward extinguishment of
the defect or claim or satisfaction of the liability with respect to which
such insurance proceeds may be paid.
(ii) The Net Proceeds of the insurance carried with respect to the
real and personal property serving as collateral pursuant to the
provisions of subsection (d)(i) or the other Related Documents and the Net
Proceeds resulting from Eminent Domain shall be paid to the Bank and
applied as follows:
(A) If the amount of the Net Proceeds does not exceed $25,000,
the Net Proceeds shall be paid to the Company and shall be applied
to the repair, replacement, renewal or improvement of the affected
Collateral as necessary.
(B) If the amount of the Net Proceeds exceeds $25,000, the Net
Proceeds shall be paid to and held by the Bank pending receipt of
written instructions from the Company. At the option of the Company,
to be exercised within the period of ninety (90) days from the date
of notice to the Company of receipt by the Bank of such Net
Proceeds, the Company shall advise the Bank that (I) the Company
will use the Net Proceeds for the repair, replacement, renewal or
improvement of the affected Collateral (such funds to remain with
the Bank and to be drawn down by the Company upon delivery of
evidence satisfactory to Bank that such amounts are due for such
repair, replacement, renewal or improvement), or (II) the Net
Proceeds shall be applied to the prepayment of the Bonds. If the
Company does not advise the Bank within said period of ninety (90)
days that it elects to proceed under clause (I) to use such Net
Proceeds for the repair, replacement, renewal or improvement of the
affected Collateral, such Net Proceeds shall be applied to the
prepayment of the Bonds, such prepayments to be applied by the Bank
to the Bonds, as determined by the Bank in its sole discretion.
29
The Company agrees that if Company elects to use the moneys
paid to the Bank pursuant to this Section for the repair,
replacement, renewal or improvement of the affected Collateral, it
will restore the affected Collateral, or cause the same to be done,
to a condition substantially equivalent to its condition prior to
the occurrence of the event to which the Net Proceeds were
attributable. At the request of the Bank the Company shall present
evidence satisfactory to the Bank that sufficient funds (whether
through Net Proceeds or additional funds supplied by the Company)
exist so that the affected Collateral can be so restored. To the
extent that the Net Proceeds are not sufficient to restore or
replace the affected Collateral, the Company shall use its own funds
to restore or replace the affected Collateral. Prior to the
commencement of such work, the Bank may require the Company to
furnish a completion bond, escrow deposit or other satisfactory
evidence of the Company's ability to pay or provide for the payment
of any estimated costs in excess of the amount of the Net Proceeds.
Any balance remaining after any such application of such Net
Proceeds shall be paid to the Company. The Company shall be entitled
to the Net Proceeds of any insurance or resulting from Eminent
Domain relating to property of the Company not included in the
affected Collateral and not providing security for the Letter of
Credit.
(iii) For purposes hereof, Net Proceeds, when used with respect to
any insurance proceeds or award resulting from, or other amount received
in connection with, Eminent Domain, shall mean the gross proceeds from
such proceeds, award or other amount, less all expenses (including
attorneys' fees) incurred in the realization thereof.
(iv) The proceeds of any such insurance shall be held by the Bank
subject to a lien in favor of the Bank to secure the Letter of Credit.
(t) Registration of Bonds. Cause all Bonds which it acquires, or which it
has had acquired for its account, to be registered forthwith in accordance with
the Trust Agreement in the name of the Company or, if acquired with funds drawn
under the Letter of Credit, in the name of the Bank, or its designee, as pledgee
of the Company.
(u) Project Reporting Requirements. Furnish to the Bank the following:
(i) Prior to submission for payment to the Trustee, copies of
each requisition for disbursement from the Construction Fund (as
defined in the Trust Agreement), including copies of all original
invoices on machinery and equipment, and all certifications and
attachments thereto, submitted for payment to the Trustee pursuant
to Section 602 of the Trust Agreement for approval by the Bank;
(ii) Copies of the Certificate submitted by the Company pursuant
to Section 3.4 of the Loan Agreement; and
30
(iii) Notice of the filing of any mechanic's, laborer's or
materialman's lien against the Project which has not been discharged
within 30 days after notice of the filing thereof.
(v) Post-Closing Items. To the extent the Bank has not received all items
required by Section 3.01 hereof at the date of issuance of the Letter of Credit,
to deliver all such items to the Bank within twenty (20) days of issuance of the
Letter of Credit.
SECTION 5.02. Negative Covenants. So long as a drawing is available under
the Letter of Credit, or the Bank shall have any Commitment hereunder, or the
Company shall have any obligation to pay any amount to the Bank hereunder, the
Company will not, nor will it permit any Subsidiary to, without the prior
written consent of the Bank:
(a) Consolidated Working Capital. Cause, suffer or permit the excess of
Consolidated Current Assets over Consolidated Current Liabilities to be less
than the following on the dates set forth below: (i) $8,750,000 at June 30,
1997, September 30, 1997 and December 31, 1997; (ii) $10,000,000 at March 31,
1998; and (iii) $8,750,000 at June 30, 1998 and each fiscal quarter end
thereafter.
(b) Consolidated Tangible Net Worth. Cause, suffer or permit Consolidated
Tangible Net Worth of the Company and its Subsidiaries to be less than (i)
$7,000,000 at March 31, 1997; (ii) $7,900,000 at June 30, 1997; (iii) $8,400,000
at September 30, 1997; and (iv) $8,500,000 at December 31, 1997 and at each
fiscal quarter end thereafter.
(c) Consolidated Debt to Worth Ratio. Cause, suffer or permit the ratio of
(x) Consolidated Liabilities excluding Subordinated Indebtedness of the Company
and of its Subsidiaries to (y) Consolidated Tangible Net Worth of the Company
and its Subsidiaries, to exceed (i) 5.20 to 1.00 at March 31, 1997; (ii) 4.50 to
1.00 at June 30, 1997; (iii) 3.60 to 1.00 at September 30, 1997; and (iv) 3.90
to 1.00 at December 31, 1997 and each fiscal quarter end thereafter.
(d) Consolidated Debt Service Coverage Ratio. Cause, suffer or permit the
Consolidated Debt Service Coverage Ratio to be less than the following at the
following fiscal quarter ends:
Quarter End Ratio
----------- -----
March 31, 1997 1.20 to 1.00
June 30, 1997 and September 30, 1997 1.10 to 1.00
December 31, 1997 and each fiscal
quarter end thereafter 1.4 to 1.00
In determining compliance with the provisions of (a) and (d) above, indebtedness
under the Line of Credit Loan of the Company outstanding under the $12,000,000
Amended and Restated Loan Agreement dated as of November 29, 1995 between the
Company and the Lender shall be considered long term debt.
31
(e) Mortgages, Liens, Etc. Incur, create, assume or permit to exist any
Lien on any of its properties or assets now owned or hereafter acquired of any
character, including without limitation interests under conditional sales or
other title retention agreements, except (i) Permitted Liens and the lien
described on Exhibit C to the Security Agreement; (ii) Liens existing as of the
date hereof and disclosed in the financial statements and notes thereto of the
Guarantor delivered under the Guaranty Agreement prior to the date hereof; and
(iii) Liens securing indebtedness permitted under subsection (f)(ii) below.
(f) Indebtedness. Create, assume, incur, or in any manner be or become
liable in any manner to any person or persons directly or indirectly for any
Indebtedness, other than:
(i) The indebtedness provided for herein and existing Indebtedness
of the Company held by the Bank;
(ii) Purchase Money Mortgage Indebtedness (including Capital Lease
Obligations), not in excess of $500,000 in the aggregate for the Company
and its Subsidiaries in any fiscal year, provided that no such
indebtedness shall exceed the cost of the asset securing such
indebtedness;
(iii) liabilities under operating leases of equipment not in excess
of $500,000 in the aggregate for the Company and its Subsidiaries in any
fiscal year; and
(iv) trade payables and accruals incurred in the ordinary course of
business.
(g) Name Change, Merger, Dissolution, Etc. Change its name, enter into any
transaction of merger or consolidation, or change the nature of its business, or
wind up, liquidate or dissolve, or agree to any of the foregoing, or permit any
Subsidiary to do so, except that any Subsidiary may dissolve or transfer all or
a substantial part of its properties and assets to, or may merge into, the
Company or any other Subsidiary.
(h) Compliance with ERISA; Funding of ERISA Plans. Engage in any
transaction in connection with which the Company or any related person would be
subject to either a civil penalty assessed pursuant to Section 502(i) of ERISA
or a tax imposed by Section 4975 of the Code; terminate any ERISA Plan in a
manner, or take any other action with respect to any such ERISA Plan, which
would result in any liability of the Company or any Subsidiary to the Pension
Benefit Guaranty Corporation; as of any ERISA Plan year, permit to exist any
accumulated funding deficiency (as defined in Section 412 of the Code); or
contribute or be obligated to contribute to any multi-employer ERISA Plan.
(i) Investments. Make any investments in any Person or purchase or
otherwise acquire any capital stock, properties, substantially all the assets or
obligations of, or any other equity interest in, any Person, except for:
32
(A) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America and which mature within one year from the date of acquisition
thereof;
(B) investments in commercial paper of any corporation with a
maturity not in excess of thirty days from the date of acquisition thereof
and rated P-1 or better by ▇▇▇▇▇'▇ Investors Services, Inc., or A-1 or
better by Standard & Poor's Corporation;
(C) investments in certificates of deposit with a maturity not in
excess of ninety days from the date of acquisition thereof, issued by (a)
the Bank or (b) any commercial bank organized and existing under the laws
of the United States of America or under any state of the United States of
America and having a combined capital and undivided surplus of not less
than $50,000,000, provided, however, that certificates of deposit at any
one bank shall at no time exceed ten percent (10%) of the undivided
capital and surplus of such bank;
(D) investments not in excess of, in the aggregate, $250,000 in any
Person; and
(E) investments representing loans to officers or directors to
finance the purchase of common stock of the Guarantor provided the
aggregate principal amount of such loans outstanding does not exceed, at
any time, $250,000.
(j) Sale of Assets, Dissolution, etc. (a) Sell, assign, lease, transfer or
otherwise dispose of assets or properties in any fiscal year having a book value
in excess of $250,000 or any stock or Indebtedness of any Subsidiary, except for
(i) the sale of inventory in the ordinary course of business, and (ii) the sale
of the Company's "rake and lute" division, or (b) agree to do any of the
foregoing.
(k) Dividends, Redemptions and Other Payments. (a) Declare or pay any
dividends (excluding dividends payable solely in common stock of the Company) on
any shares of stock of any class of the Company now or hereafter outstanding, or
(b) purchase, redeem or otherwise retire any such shares, or apply or set apart
any of its assets therefor or make any other distribution (by reduction of
capital or otherwise) in respect of any such shares, or (c) agree to do any of
the foregoing.
(l) Insider Transactions. Except for those transactions described on
Exhibit K, directly or indirectly purchase, acquire or lease any property or
asset from, or purchase, sell, dispose of, exchange or lease any property or
assets to, or render service to, or otherwise deal with, in the ordinary course
of business or otherwise, any Affiliate (including for purposes of this Section
White Metal), except pursuant to reasonable requirements and upon fair and
reasonable terms and conditions not less favorable to the Company than if it
were a comparable arm's length transaction and no such relationship existed.
(m) Guarantee. Guarantee, assume, endorse or otherwise become or remain
liable in connection with the obligations of any other Person (including
obligations of such Persons arising from working capital maintenance agreements)
other than:
33
(i) the endorsement of negotiable instruments in the ordinary course
of business for deposit or collection;
(ii) such guaranties and other contingent liabilities currently
existing as disclosed in the financial statements and notes thereto of the
Guarantor delivered under the Guaranty Agreement prior to the date hereof;
and
(iii) those guaranties described on Exhibit L.
(n) Sale of Accounts. Sell, pledge, encumber or discount, with or without
recourse, any of its notes or accounts.
(o) Different Business. Enter into or carry on any business not related to
the business currently conducted by the Company.
(p) Amendment of Any Related Document. Enter into or consent to any
amendment or modification of the Trust Agreement, the Loan Agreement, the Deed
of Trust, the Security Agreement or any other Related Document, as in effect on
the Date of Issuance.
(q) Change in Business or Use of Project. Enter into any business which is
materially different from and/or not connected with the business in which the
Company is engaged on the Date of Issuance or operate the Project in a manner
other than as permitted under the Loan Agreement.
(r) Tax Status. Take any action or suffer any action to be taken by others
that will impair the tax-exempt status of the Bonds.
(s) Optional Redemption of Bonds. Take any action, or permit the Trustee's
taking of any action, which would result in the optional redemption or
prepayment of all or any portion of the Bonds with funds drawn under the Letter
of Credit.
34
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. The occurrence of any of the following
events shall be an "Event of Default" hereunder:
(a) The Company shall fail to pay any amount payable hereunder or
under any of the Related Documents on the date when due (after giving
effect to applicable grace periods); or
(b) If any representation, warranty, statement, report or
certification made by the Company herein or in any other Related Document
shall be false or misleading in any material respect on the date as of
which made and which could have a material adverse affect on the business
or financial condition of the Company or any Subsidiary or, in the
reasonable opinion of the Bank, could impair the value of the Collateral
in any material respect or the liens of the Bank thereon; or
(c) The Company shall fail to perform or observe the provisions of
Sections 5.01(k), 5.01(l), 5.01(m) or Section 5.02 of this Agreement; or
(d) The Company shall default in the performance or observance of
any other agreement, covenant, term or condition binding on it contained
herein other than as set forth in (c) above or in any other of the other
Related Documents and such default shall not have been remedied within
thirty (30) days, or lesser period set forth in such agreement or
documents, after the earlier to occur of the Company becoming aware of
such default or written notice thereof specifying the default shall have
been received by the Company from the Bank; provided that if such default
cannot reasonably be cured within such 30 day period, the period for such
cure shall be extended for an additional period of up to 60 days as long
as the Company has commenced action to cure such default within the
initial 30 day period and diligently pursues such action; or
(e) The Company (i) shall default in payment of principal of or
interest on any other Indebtedness of, in the aggregate, $50,000 or more,
beyond any period of grace provided with respect thereto, or (ii) shall
default in the performance of any other agreement, covenant, term or
condition contained in any agreement under which any such Indebtedness is
created if the effect of such performance default described in this clause
(ii) is to cause, or permit the holder or holders of such obligation (or a
trustee in behalf of such holder or holders) to cause, such obligation to
become due prior to its stated maturity; or
(f) Liquidation or dissolution of the Company, or suspension of the
business of the Company or filing by the Company of a voluntary petition
in bankruptcy or a voluntary petition or an answer seeking reorganization,
arrangement, readjustment of its debts or for any other relief under the
Bankruptcy Code, as amended, or under any other insolvency act or law,
state or Federal, now or hereafter existing, or any other action of the
Company indicating its consent to, approval of, or acquiescence in any
such petition or proceeding; the
35
application by the Company for, or the appointment by or with the consent
or acquiescence of the Company of, a receiver, a trustee or a custodian
for the Company; the application by the Company for, or the consent to or
acquiescence of the Company in, an assignment for the benefit of
creditors; or the inability of the Company or the admission by the Company
in writing of its inability to pay its debts as they mature; or
(g) Filing of an involuntary petition against the Company or any
Subsidiary in bankruptcy or seeking reorganization, arrangement,
readjustment of its debts or for any other relief under the Bankruptcy
Code, as amended, or under any other insolvency act or law, state or
Federal, now or hereafter existing; or the involuntary appointment of a
receiver, a trustee or a custodian of the Company or any Subsidiary or for
all or a substantial part of its respective property; the issuance of a
warrant of attachment, execution or similar process against any
substantial part of the property of the Company or any Subsidiary and the
continuance of any of such events for sixty (60) days undismissed or
undischarged; or
(h) If (i) any order is entered in any proceedings against the
Company decreeing the dissolution or split-up of the Company, and such
order remains in effect for more than sixty (60) days; or (ii) any charges
(whether by indictment, information or other criminal process) are
instituted against the Company under any criminal statute, state or
federal, for which seizure or forfeiture of assets is a potential penalty
or remedial measure; or
(i) If a final judgment, which with other outstanding final
judgments against the Company or any Subsidiary exceeds applicable
insurance coverage by an aggregate of $50,000 shall be rendered against
the Company or any Subsidiary, and if within thirty (30) days after entry
thereof such judgment shall not have been discharged or execution thereof
stayed pending appeal, or if within thirty (30) days after the expiration
of any such stay such judgment shall not have been discharged;
(j) Any provision of this Agreement shall at any time for any reason
cease to be valid and binding on the Company, or shall be declared to be
null and void, or the validity or enforceability thereof shall be
contested by the Company, or a proceeding shall be commenced by any
governmental agency or authority having jurisdiction over the Company
seeking to establish the invalidity or unenforceability thereof, or the
Company shall deny that it has any or further liability or obligation
under this Agreement; or
(k) Any "Event of Default" under and as defined in the Loan
Agreement, the Trust Agreement, the Deed of Trust, the Guaranty Agreement,
the Security Agreement or any other Related Document shall have occurred
and not been waived; or
(l) The Bonds for any reason shall be determined to be invalid or
any Related Document shall for any reason cease to be in full force and
effect.
SECTION 6.02. Rights Upon an Event of Default. If any Event of Default
shall have occurred and not been waived, the Bank may give notice of the
occurrence and continuance of an Event of Default to the Bond Trustee pursuant
to Section 901 of the Trust Agreement, and direct the
36
Bond Trustee to declare the principal of the Bonds then outstanding and the
interest accrued thereon immediately due and payable under Section 901 of the
Trust Agreement resulting in the Trustee drawing under the Letter of Credit
pursuant to Section 902 of the Trust Agreement whereupon all amounts drawn under
the Letter of Credit, all Advances, all interest thereon and all other amounts
payable hereunder or in respect hereof shall automatically be forthwith due and
payable by the Company, without presentment, demand, protest, or further notice
of any kind, all of which are hereby expressly waived by the Company. The Bank
may also elect to cause the Bonds to be purchased with the proceeds of the
Letter of Credit pursuant to the terms of the Trust Agreement. If the Bonds are
purchased rather than redeemed with the proceeds of such a drawing under the
Letter of Credit, such Bonds shall be held as Pledged Bonds for the benefit of
the Bank in accordance with the terms hereof and of the terms of the Trust
Agreement.
Notwithstanding the foregoing, if an Event of Default specified in (f) or
(g) above shall occur, then all commitments, if any, shall automatically
terminate and all obligations owing to the Bank hereunder and all accrued
interest in respect thereof shall immediately become due and payable without the
giving of any notice or other action by the Bank.
SECTION 6.03. No Remedy Exclusive. No remedy herein conferred upon or
reserved to the Bank is intended to be exclusive of any other available remedy
or remedies, but each and every such remedy shall be cumulative and shall be in
addition to every other remedy given hereunder, under the Loan Agreement, the
Deed of Trust, the Security Agreement, the Trust Agreement or the other Related
Documents, or now or hereafter existing at law or in equity or by statute.
SECTION 6.04. Anti-Marshalling Provisions. The right is hereby given by
the Company to the Bank to make releases (whether in whole or in part) of all or
any part of the security under the Deed of Trust, the Security Agreement or the
Trust Agreement agreeable to the Bank without notice to, or the consent,
approval or agreement of other parties and interests, including junior lienors,
which releases shall not impair in any manner the validity of or priority of the
liens and security interest in the remaining collateral conferred under such
documents, nor release the Company from liability for the obligations hereby
secured. Notwithstanding the existence of any other security interest in the
collateral held by the Bank, the Bank shall have the right to determine the
order in which any or all of the collateral shall be subjected to the remedies
provided herein, or in the Deed of Trust, the Security Agreement or the Trust
Agreement. The Company hereby waives any and all right to require the
marshalling of assets in connection with the exercise of any of the remedies
permitted by applicable law or provided herein or therein.
37
ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Company therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Bank and then such amendment, waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
SECTION 7.02. Notices, Etc. All notices and other communications provided
for hereunder shall be in writing (including required copies) and sent by
receipted hand delivery (including Federal Express or other receipted courier
service), telex or regular mail, if to the Company, at its address at 4501
Circle 75 Parkway, Suite F-6300, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: President;
if to the Bank, at its address at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: City Executive; if to the Bond Trustee, at its
address at Sixth and Marquette, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention:
Corporate Trust Department; or, as to each party, at such other address as shall
be designated by such party in a written notice to other party. All such notices
and communications shall, when delivered or telexed, be effective when deposited
with the courier or telexed, respectively, addressed as aforesaid, except that
notices to the Bank pursuant to the provisions of Article II shall not be
effective until received by the Bank.
SECTION 7.03. No Waiver. No failure on the part of the Bank to exercise,
and no delay in exercising, any right hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right.
SECTION 7.04. Right of Set-off. (a) Upon the occurrence and continuation
of any Event of Default after any applicable notice, the Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by the Bank to or for the credit or the account of the Company
against any and all of the obligations of the Company now and hereafter existing
under this Agreement, irrespective of whether or not the Bank shall have made
any demand hereunder and although such obligations may be contingent or
unmatured.
(b) The Bank agrees promptly to notify the Company after any such set-off
and application referred to in subsection (a) above, provided that the failure
to give such notice shall not affect the validity of such set-off and
application. The rights of the Bank under this Section are in addition to other
rights and remedies (including, without limitation, other rights of set-off)
which the Bank may have.
SECTION 7.05. Indemnification. The Company hereby indemnifies and holds
the Bank harmless from and against any and all claims, damages, losses,
liabilities, costs or expenses which the Bank may incur or which may be claimed
against the Bank by any person or entity:
38
(a) by reason of any inaccuracy or alleged inaccuracy in any
material respect, or any untrue statement or alleged untrue statement of
any material fact, contained in the Official Statement (other than the
statements contained under the caption "The Bank" and "Tax Exemption") or
any amendment or supplement thereto, or by reason of the omission or
alleged omission to state therein a material fact necessary to make such
statements, in light of the circumstances under which they were made, not
misleading; or
(b) by reason of or in connection with the execution, delivery or
performance of this Agreement, the Bonds, the Trust Agreement, the Loan
Agreement, or any Related Document, or any transaction contemplated
thereby; or
(c) by reason of or in connection with the execution and delivery or
transfer of, or payment or failure to make payment under, the Letter of
Credit; provided, however, that the Company shall not be required to
indemnify the Bank pursuant to this Section 7.05(c) for any claims,
damages, losses, liabilities, costs or expenses to the extent caused by
the Bank's gross negligence or willful misconduct in failing to make
lawful payment under the Letter of Credit after the presentation to it by
the Bond Trustee of a draft and certificate strictly complying with the
terms and conditions of the Letter of Credit.
Nothing in this Section 7.05 is intended to limit the Company's
obligations contained in Article II. Without prejudice to the survival of any
other obligation of the Company hereunder, the indemnities and obligations of
the Company contained in this Section 7.05 shall survive the payment in full of
amounts payable pursuant to Article II and the termination of the Letter of
Credit.
SECTION 7.06. Liability of the Bank. The Company assumes all risks of the
acts or omissions of the Bond Trustee and any other beneficiary or transferee of
the Letter of Credit with respect to its use of the Letter of Credit. Neither
the Bank nor any of its officers or directors shall be liable or responsible
for: (a) the use which may be made of the Letter of Credit or any acts or
omissions of the Bond Trustee and any other beneficiary or transferee in
connection therewith; (b) the validity, sufficiency or genuineness of documents,
or of any endorsement thereon, even if such document should prove to be in any
or all respects invalid, insufficient, fraudulent or forged; (c) payment by the
Bank against presentation of documents which do not comply with the terms of the
Letter of Credit, including failure of any documents to bear any reference or
adequate reference to the Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under the Letter of Credit,
except that the Company shall have a claim against the Bank, and the Bank shall
be liable to the Company, to the extent of any direct, as opposed to
consequential, damages, suffered by the Company which the Company proves were
caused by the Bank's (i) gross negligence or willful misconduct in determining
whether documents presented under the Letter of Credit complied with the terms
of the Letter of Credit or (ii) wrongful failure to make lawful payment under
the Letter of Credit after the presentation to it by the Bond Trustee of a draft
and certificate strictly complying with the terms and conditions of the Letter
of Credit. In furtherance and not in limitation of the foregoing, the Bank may
accept documents that reasonably appear on their face to be in order, without
responsibility for further investigation, regardless of any notice or
information to the contrary.
39
SECTION 7.07. Costs, Expenses and Taxes. The Company agrees to pay
immediately when due all costs and expenses in connection with the preparation,
execution, delivery, filing, recording, and administration and enforcement of or
monitoring of compliance with this Agreement and the Related Documents and any
other documents which may be delivered in connection with this Agreement or the
transactions contemplated hereby, including, without limitation, the reasonable
fees and out-of-pocket expenses of the Bank and of counsel and any agents or
consultants for the Bank, with respect thereto and with respect to advising the
Bank as to its rights and responsibilities under this Agreement, and all
reasonable costs and expenses (including counsel fees and expenses) in
connection with (i) the preparation and enforcement of this Agreement, the
Related Documents and such other documents which may be delivered in connection
herewith or therewith or (ii) any action or proceeding relating to a court
order, injunction, or other process or decree restraining or seeking to restrain
the Bank from paying any amount under the Letter of Credit. In addition, the
Company shall pay any and all stamps and other taxes and fees payable or
determined to be payable in connection with the execution, delivery, filing and
recording of this Agreement, the Related Documents and such other documents, and
agrees to save the Bank harmless from and against any and all liabilities with
respect to or resulting from any delay in paying or omission to pay such taxes
and fees.
SECTION 7.08. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Company and the Bank and thereafter shall be
binding upon and inure to the benefit of the Company and the Bank and their
respective successors and assigns, except that the Company shall not have the
right to assign its rights hereunder or any interest herein without the prior
written consent of the Bank. The Bank may, without cost or expense to the
Company, assign or sell a participation in all or any part of, or any interest
(undivided or divided) in, the Bank's rights and benefits under this Agreement
to any financial institution. To the extent of any assignment by the Bank, the
assignee shall have the same rights and benefits against the Company hereunder
as it would have had if such assignee were the Bank issuing or paying under the
Letter of Credit hereunder.
SECTION 7.09. Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or affecting the validity, enforceability or legality of such
provision in any other jurisdiction.
SECTION 7.10. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of North Carolina.
SECTION 7.11. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
SECTION 7.12. Prior Agreements Superseded. This Agreement shall completely
and fully supersede all prior undertakings or agreements, both written and oral,
between the Company and the Bank relating to the issuance of the Letter of
Credit, including those contained in any commitment letter between the Bank and
the Company executed in anticipation of the issuance of
40
the Letter of Credit, except for any provisions in such commitment letter which
by their express terms survive issuance of the Letter of Credit.
SECTION 7.13. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 7.14. Removal of Remarketing Agent. Upon the written direction of
the Bank to remove the Remarketing Agent stating the reason therefor, and
whether due to the Bank's request or otherwise, upon the resignation of the
Remarketing Agent, the Company hereby agrees to remove the Remarketing Agent and
to appoint such successor Remarketing Agent as shall be acceptable to the Bank.
SECTION 7.15. Modification to Promissory Note dated June 21, 1993 of the
Company. The Company agrees that, effective upon the Date of Issuance, the
Promissory Note of the Company dated June 21, 1993 in favor of the Bank in the
original principal amount of $4,200,000 (the "Note") is hereby amended as
follows:
(i) Commencing with the scheduled payment due June 21, 1997, and for
each scheduled payment date thereafter, principal and interest on
the Note shall be payable as follows: on each payment date a
principal installment shall be payable in the amount of $41,857.88
and all accrued unpaid interest to such payment date shall be
payable.
(ii) On April 21, 1998, all unpaid principal and interest on the Note
shall be due and payable in full.
If requested by the Bank, the Company will execute the Bank's standard
Note Modification Agreement to reflect the foregoing modification.
41
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
ATTEST: ▇▇▇▇▇▇-▇▇▇▇▇, INC.
By:______________________ By:_________________________________________
Title:___________________ Title:______________________________________
(Seal)
BRANCH BANKING AND TRUST COMPANY
By:_________________________________________
Title:______________________________________
42
EXHIBIT A
[Form of Letter of Credit]
IRREVOCABLE LETTER OF CREDIT
CUSTOMER ACCOUNT NO. ________ AND LETTER OF CREDIT NO. ______
June __, 1997
Norwest Bank Minnesota, National Association
Corporate Trust Department
Sixth and Marquette
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Ladies and Gentlemen:
At the request of and pursuant to the instructions of ▇▇▇▇▇▇-▇▇▇▇▇, Inc.
(the "Company"), we hereby establish this Irrevocable Letter of Credit in your
favor as Trustee under an Indenture of Trust dated as of June 1, 1997, between
The ▇▇▇▇▇▇ County Industrial Facilities and Pollution Control Financing
Authority (the "Issuer") and Norwest Bank Minnesota, National Association, as
trustee (the "Indenture") pursuant to which $7,000,000 principal amount of the
Issuer's industrial development revenue bonds (the "Bonds") have been issued. We
hereby authorize you to draw on us an amount not exceeding $7,466,666 (the
"Initial Stated Amount" and, as the same may from time to time be reduced and
thereafter reinstated as hereinafter provided, the "Stated Amount") of which (i)
subject to the provisions below reducing amounts available hereunder, an
aggregate amount not exceeding $7,000,000 may be drawn on in respect of
principal or the portion of the purchase price corresponding to principal of the
Bonds (the "Principal Component"); (ii) subject to the provisions below reducing
amounts available hereunder, an aggregate amount not exceeding $256,666 may be
drawn on in respect of the payment of up to 110 days' interest or the portion of
the purchase price corresponding to interest on the Bonds at an assumed per
annum interest rate of 12% (the "Interest Component"); and (iii) subject to the
provisions below reducing amounts available hereunder, an aggregate amount not
exceeding $210,000 may be drawn upon in respect of the payment of premium on the
Bonds upon a mandatory redemption of any Bonds pursuant to Section 301(b) of the
Indenture due to an occurrence of a Determination of Taxability (the "Premium
Component") effective immediately and expiring at 3:00 P.M. (Charlotte, North
Carolina time) at our Presentation Office (as hereinafter defined) on June 30,
2000 (the "Expiration Date") or earlier as hereinafter provided.
Multiple and partial drawings may be made under this Letter of Credit, but
no single drawing under this Letter of Credit shall be honored in an amount
exceeding the Stated Amount.
A-1
Funds under this Letter of Credit are available to you against a sight
draft drawn on us, stating on its face "Drawn under Branch Banking and Trust
Company Irrevocable Letter of Credit Customer Account No. _________ and Letter
of Credit No. ______", presented for payment on a day of the year on which state
chartered banks are not required or authorized to close in Charlotte, North
Carolina (a "Business Day"), and accompanied by a written certificate:
(a) in the form of Annex A attached hereto (an "A Drawing") if the
drawing is made with respect to payment of principal of the Bonds upon the
acceleration, redemption or stated maturity thereof;
(b) in the form of Annex B attached hereto (a "B Drawing") if the
drawing is made with respect to payment of interest on the Bonds on or
prior to their stated maturity date;
(c) in the form of Annex C attached hereto (a "C Drawing") if the
drawing is made with respect to payment of the portion of the purchase
price of, and accrued and unpaid interest on, Bonds tendered for purchase
pursuant to Section 202(e) of the Indenture ("Pledged Bonds"); and
(d) in the form of Annex D attached hereto (a "D Drawing") if the
drawing is made with respect to payment of the premium due upon a
mandatory redemption of any Bonds pursuant to Section 301(b) of the
Indenture upon a Determination of Taxability.
The demand for payment hereunder shall not exceed the Stated Amount. The
Stated Amount shall be reduced by delivery to us of your certificate in the form
of Annex E in the amount specified in such certificate.
The Principal Component of the Stated Amount shall be further
automatically and permanently reduced by the amount of each A Drawing. The
Premium Component of the Stated Amount shall be automatically and permanently
reduced by the amount of each D Drawing. The Stated Amount shall also be reduced
by the amount of any drawing hereunder, except that (i) the amount of each B
Drawing in respect of interest shall forthwith be restored (except as provided
in the next following sentence) unless we shall notify you no later than 10 days
after such B Drawing that the same shall not be restored by reason of the
failure of the Company to have reimbursed such drawing; and (ii) the amount of
each C Drawing shall be restored upon receipt by you of notice from us
confirming that the Company has reimbursed us for such drawing. In the case of a
B Drawing delivered in connection with a redemption (but not purchase) of Bonds
as indicated on Annex B, there shall be a pro rata permanent reduction of the
Interest Component as provided in such Annex B.
This Letter of Credit shall expire at our close of business at the
Presentation Office on the earlier to occur of (i) the Expiration Date (or if
the same is not a Business Day, the first such Business Day following the
Expiration Date), or (ii) fifteen days following the Conversion Date (as defined
in the Indenture) or (iii) the date on which we receive from you a certificate
in the form of Annex F hereto. This Letter of Credit shall be promptly
surrendered to us by you upon such
A-2
expiration. The Expiration Date may be extended by us at our discretion at any
time or from time to time, by our giving written notice of such extension to you
specifying a new Expiration Date.
The aforesaid certificates, which form an integral part of this Letter of
Credit, shall have all blanks appropriately filled in and shall be signed by
your authorized officer, and any sight draft and the aforesaid certificates
shall be in the form of a letter on your letterhead either delivered to us at
our office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Attention: City Executive (the "Presentation Office") on a Business Day or
delivered to us by telefacsimile (at telecopier number 910/815-2799) on a
Business Day (or at such other address or telecopier number as we may designate
in a written notice delivered to you). The originals of all documents telecopied
to us pursuant to which a drawing is made hereunder shall be delivered to us
immediately following such telefacsimile. If demand for payment is made
hereunder not later than 11:00 A.M. (Charlotte, North Carolina time) on any
Business Day, and provided that such demand for payment and the documents
presented in connection therewith conform to the terms and conditions hereof,
payment of the amount demanded shall be made in immediately available funds not
later than 3:00 P.M. (Charlotte, North Carolina time) on the same Business Day.
If demand for payment is made hereunder after 11:00 A.M. (Charlotte, North
Carolina time) on any Business Day, and provided that such demand for payment
and the documents presented in connection therewith conform to the terms and
conditions hereof, payment of the amount demanded shall be made in immediately
available funds, not later than 10:00 A.M. (Charlotte, North Carolina time) on
the next succeeding Business Day.
This Letter of Credit is transferable in its entirety (but not in part) to
any transferee whom you certify to us has succeeded you as Trustee under the
Indenture. Transfer of the available balance of this Letter of Credit to a
successor transferee shall be effected by the presentation to us of this Letter
of Credit accompanied by a written certificate in the form of Annex G attached
hereto and payment of the transfer commission referred to in Annex G.
Only you (or a transferee as permitted by the terms of this Letter of
Credit) may make a drawing under this Letter of Credit. Upon payment to you or
your account of the amount demanded hereunder, we shall be fully discharged of
our obligation under this Letter of Credit with respect to the respective demand
for payment and we shall not thereafter be obligated to make any further
payments under this Letter of Credit in respect of such demand for payment. By
paying to you an amount demanded in accordance herewith we make no
representation as to the correctness of the amount demanded.
This Letter of Credit sets forth in full the terms of our undertaking and
shall not in any way be amended, amplified or limited by reference to any
document, instrument or agreement referred to herein or in which this Letter of
Credit is referred to or to which this Letter of Credit is related, except for
the certificates referred to herein; and any such reference shall not be deemed
to incorporate herein by reference any document, instrument or agreement except
for such certificates.
This Letter of Credit, except as otherwise expressly stated herein, is
subject to the Uniform Customs and Practice for Documentary Credits (1993
Revision) International Chamber of Commerce Publication No. 500, and to the
extent not inconsistent therewith, the laws of the State of North Carolina.
A-3
BRANCH BANKING AND TRUST COMPANY
By:___________________________________
Title: Vice President
A-4
Annex A
DRAWING CERTIFICATE
[Date]
Branch Banking and Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Post Office Box 1727
Wilmington, North Carolina 28402-1727
Attention: Business Services Manager
Re: Drawing Certificate
Ladies and Gentlemen:
Norwest Bank Minnesota, National Association (the "Trustee") hereby
certifies to Branch Banking and Trust Company (the "Bank") with reference to
Irrevocable Letter of Credit No. _______ (the "Letter of Credit"; the terms
"Bonds", "Stated Amount", "Principal Component" and "Indenture" as used herein
having their respective meanings set forth in the Letter of Credit) that:
1. The Trustee is the trustee under the Indenture for the holders of the
Bond.
2. The Trustee is making a demand for payment under the Letter of Credit
with respect to $________ to be used for the payment of principal of the Bonds.
3. The amount of principal of the Bonds which is due and payable is
$________ and is the amount of the sight draft accompanying this Certificate.
4. The amount of this demand for payment and the sight draft accompanying
this Certificate was computed in compliance with the terms and conditions of the
Bonds and the Indenture, is made in accordance with Section 301 of the Indenture
and does not exceed the portion of the Stated Amount available to be drawn under
the Letter of Credit with respect to the payment of principal of the Bonds.
5. Upon receipt by the undersigned of the amount demanded hereby, (a) the
undersigned will apply the same directly to the payment when due of the
appropriate amount owing on account of the Bonds pursuant to the Indenture, (b)
no portion of said amount shall be applied by the undersigned for any other
purpose, and (c) no portion of said amount shall be commingled with any other
funds held by the Trustee.
The undersigned acknowledges that upon the Bank's honoring the Draft
accompanying this Certificate, the Principal Component of the Stated Amount
under the Letter of Credit shall be permanently reduced by the aggregate amount
of such Draft.
A-5
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of _______________, 19__.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By:_____________________________
A-6
Annex B
DRAWING CERTIFICATE
[Date]
Branch Banking and Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Post Office Box 1727
Wilmington, North Carolina 28402-1727
Attention: Business Services Manager
Re: Drawing Certificate
Ladies and Gentlemen:
Norwest Bank Minnesota, National Association (the "Trustee") hereby
certifies to Branch Banking and Trust Company (the "Bank") with reference to
Irrevocable Letter of Credit No. _________ (the "Letter of Credit"; the terms
"Bonds", "Stated Amount" and "Indenture" as used herein having their respective
meanings set forth in the Letter of Credit) that:
1. The Trustee is the Trustee under the Indenture for the holders of the
Bonds.
2. The Trustee is making a demand for payment under the Letter of Credit
with respect to $________ to be used for the payment of interest on the Bonds on
or prior to their stated maturity date.
3. The amount of interest on the Bonds which is due and payable is
$________ and is the amount of the sight draft accompanying this Certificate.
4. The amount of this demand for payment and the sight draft accompanying
this Certificate was computed in compliance with the terms and conditions of the
Bonds and the Indenture, is made in accordance with Section 202(b) of the
Indenture, and does not exceed the portion of the Stated Amount available to be
drawn under the Letter of Credit with respect to interest on the Bonds.
[5. The amount drawn hereby is to be used to pay interest on Bonds
redeemed and not purchased. The undersigned acknowledges that upon the Bank's
honoring the Draft accompanying this Certificate, the Interest Component of the
stated amount under the Letter of Credit shall be permanently reduced by an
amount equal to 110 days interest on the principal amount of the Bonds being
redeemed computed at the rate of 12% per annum.]
5.[6] Upon receipt by the undersigned of the amount demanded hereby (a)
the undersigned will apply the same directly to the payment when due of the
appropriate amount owing on account of the Bonds pursuant to the Indenture, (b)
no portion of said amount shall be applied by the
A-7
undersigned for any other purpose, and (c) no portion of said amount shall be
commingled with any other funds held by the Trustee.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of _______________, 19__.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By:__________________________
A-8
Annex C
DRAWING CERTIFICATE
[Date]
Branch Banking and Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Post Office Box 1727
Wilmington, North Carolina 28402-1727
Attention: Business Services Manager
Re: Drawing Certificate
Ladies and Gentlemen:
Norwest Bank Minnesota, National Association (the "Trustee"") hereby
certifies to Branch Banking and Trust Company (the "Bank") with reference to
Irrevocable Letter of Credit No. _______ (the "Letter of Credit"; the terms
"Bonds", "Indenture", "Stated Amount" and "Pledged Bonds" as used herein having
their respective meanings set forth in the Letter of Credit) that:
1. The Trustee is the Trustee under the Indenture for the holders of the
Bonds.
2. The Trustee is making a demand for payment under the Letter of Credit
to be applied to the payment of the portion of the purchase price of Bonds
tendered for purchase pursuant to Section 202(e) of the Indenture, equal to the
principal amount thereof. The amount of such portion of the purchase price equal
to the principal amount of such Bonds is $__________.
3. The Trustee is making a demand for payment under the Letter of Credit
to be applied to the payment of the portion of the purchase price of Bonds
tendered for purchase pursuant to Section 202(e) of the Indenture, equal to the
amount of accrued and unpaid interest on such Bonds to the date of purchase
thereof. The amount of such portion of the purchase price equal to accrued and
unpaid interest on such Bonds to the date of purchase thereof is $____________.
4. The amount of this demand for payment is $__________ (the sum of the
amounts in Paragraphs 2 and 3 above) and the sight draft accompanying this
Certificate was computed in compliance with the terms and conditions of the
Bonds and the Indenture, is made in accordance with Section 202(e) of the
Indenture, and does not exceed the portion of the Stated Amount available to be
drawn under the Letter of Credit with respect to principal and interest of the
Bonds.
5. Upon receipt of the undersigned of the amount demanded hereby, (a) the
undersigned will apply the same directly to the payment when due of the
appropriate amount owing on account of the purchase price of Pledged Bonds
pursuant to the Indenture, (b) no portion of said amount shall be applied for
any other purpose and (c) no portion of said amount shall be commingled with any
other funds held by the Trustee.
A-9
6. The Trustee agrees to hold, as the designee and agent for the Bank, the
Bonds tendered for purchase and, upon request, will deliver the Bonds with
respect to which this drawing relates and the purchase price of which demand is
made hereunder to the Bank as Pledged Bonds entitled to a security interest in
favor of the Bank.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of _______________, 19__.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By:_____________________________
A-10
Annex D
DRAWING CERTIFICATE
[Date]
Branch Banking and Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Post Office Box 1727
Wilmington, North Carolina 28402-1727
Attention: Business Services Manager
Re: Drawing Certificate
Ladies and Gentlemen:
Norwest Bank Minnesota, National Association (the "Trustee") hereby
certifies to Branch Banking and Trust Company (the "Bank") with reference to
Irrevocable Letter of Credit No. ________ (the "Letter of Credit"; the terms
"Bonds", "Indenture", and "Stated Amount" as used herein having their respective
meanings set forth in the Letter of Credit) that:
1. The Trustee is the Trustee under the Indenture for the holders of the
Bonds.
2. The Trustee has given the notice of redemption required by Article III
of the Indenture upon a Determination of Taxability.
3. The Trustee is making a demand for payment under the Letter of Credit
to be applied to the payment of premium on Bonds redeemed pursuant to Section
301(b) of the Indenture, equal to 3% of the outstanding principal balance of the
Bonds so redeemed.
4. The amount of premium payable on such Bonds is $__________ and is the
amount of the sight draft accompanying this Certificate.
5. The amount of this demand for payment and the sight draft accompanying
this Certificate was computed in compliance with the terms and conditions of the
Bonds and the Indenture, is made in accordance with Section 301(b) of the
Indenture and does not exceed the portion of the Stated Amount available to be
drawn under the Letter of Credit with respect to premium on the Bonds.
6. Upon receipt of the undersigned of the amount demanded hereby, (a) the
undersigned will apply the same directly to the payment when due of the
appropriate amount owing on account of premium on the Bonds pursuant to the
Indenture, (b) no portion of said amount shall be applied by the undersigned for
any other purpose and (c) no portion of said amount shall be commingled with any
other funds held by the Trustee.
A-11
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate as of the _____ day of _______________, 19__.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By:_____________________________
A-12
Annex E
[Date]
Branch Banking and Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Post Office Box 1727
Wilmington, North Carolina 28402-1727
Attention: Business Services Manager
Ladies and Gentlemen:
Norwest Bank Minnesota, National Association (the "Trustee") hereby
certifies to Branch Banking and Trust Company (the "Bank") with reference to
Irrevocable Letter of Credit No. _________ (the "Letter of Credit"; the terms
"Bonds", the "Indenture" and "Stated Amount" as used herein having their
respective meanings set forth in the Letter of Credit) that:
1. The Trustee is the Trustee under the Indenture for the holders of the
Bonds.
2. The Trustee hereby notifies you that on or prior to the date hereof
$_________ amount of the Bonds have been paid, redeemed or defeased pursuant to
the Indenture other than with funds drawn under the Letter of Credit.
3. Following the payment, redemption or the defeasance referred to in
paragraph (2) above, the aggregate principal amount of all the Bonds outstanding
is $___________.
4. The amount of interest (computed at a rate of [________ percent (___%)]
per annum), accruing on the Bonds referred to in paragraph (3) above in any
period of ___ days is $_______.
5. The amount of premium payable on the Bonds on the principal balance
referred to in paragraph 3 above in the event of a Determination of Taxability
is $___________.
6. The amount available to be drawn under the Letter of Credit has been
reduced to $_____ (such amount being equal to the amounts specified in
paragraphs 3, 4 and 5 above).
7. The Stated Amount of the Letter of Credit is reduced to $______ (such
amount being equal to the amount specified in paragraph 6 above upon receipt by
the Bank of this certificate.
A-13
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate this _____ day of _______________. 19__.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By:_____________________________
A-14
Annex F
[Date]
Branch Banking and Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Post Office Box 1727
Wilmington, North Carolina 28402-1727
Attention: Business Services Manager
Ladies and Gentlemen:
Norwest Bank Minnesota, National Association (the "Trustee") hereby
certifies to Branch Banking and Trust Company (the "Bank") with reference to
Irrevocable Letter of Credit No. ______ (the "Letter of Credit"; the terms
"Bonds" and "Indenture" as used herein having their respective meanings set
forth in the Letter of Credit) that:
1. The Trustee is the Trustee under the Indenture for the holders of the
Bonds.
2. The Trustee hereby notifies you that all the Bonds have been paid,
redeemed or defeased pursuant to the Indenture or the Letter of Credit is no
longer required to be maintained pursuant to the Indenture.
3. The Letter of Credit is attached hereto and is being surrendered to you
herewith.
IN WITNESS WHEREOF, the Trustee has executed and delivered this
Certificate this ___ day of _____, 19__.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By: ___________________________
▇-▇▇
▇▇▇▇▇ ▇
[Date]
Branch Banking and Trust Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Post Office Box 1727
Wilmington, North Carolina 28402-1727
Attention: Business Services Manager
Ladies and Gentlemen:
We refer to Irrevocable Letter of Credit No. _______ (the "Letter of
Credit"), issued in favor of Norwest Bank Minnesota, National Association, as
Trustee under the Indenture (as defined in the Letter of Credit).
For value received we hereby irrevocably transfer to ____________________,
hereinafter referred to as the transferee, all rights of the undersigned to draw
under the above Letter of Credit in its entirety.
By this transfer, all rights of the undersigned in such Letter of Credit
are transferred to the transferee and the transferee shall have the sole rights
relating to any amendments, whether increases or extensions or other amendments
and whether now existing or hereafter made. All amendments are to be advised
direct to the transferee without necessity of any consent of or notice to the
undersigned.
The Letter of Credit is returned herewith.
Please notify the transferee of this transfer and the conditions of the
Letter of Credit.
In connection with the above transactions, we herewith hand you our check
to the order of Branch Banking and Trust Company for $2,500 representing its
transfer fee, which is to be considered earned whether or not any drafts are
drawn and whether or not payments are made under
A-16
the above Letter of Credit. We also agree to pay to you on demand any expenses
which may be incurred by you in connection with this transfer.
Very truly yours,
-----------------------------------
(Signature of Transferor)
Signature Authenticated
_______________________
(Bank)
_______________________
(Authorized Signature)
A-17
EXHIBIT B
[FORM OF COMPANY COUNSEL OPINION]
_______ __, 1997
Branch Banking and Trust Company
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
$7,000,000
The ▇▇▇▇▇▇ County Industrial Facilities and
Pollution Control Financing Authority
Industrial Development Revenue Bonds
(▇▇▇▇▇▇-▇▇▇▇▇, Inc. Project)
--------------------------------------------
Ladies and Gentlemen:
We are counsel to ▇▇▇▇▇▇-▇▇▇▇▇, Inc., a Delaware corporation (the
"Company") and ▇▇▇▇▇▇-Building Products, Inc. (the "Guarantor"). In that
capacity we are familiar with the matters relating to the preparation, execution
and delivery of a Letter of Credit and Reimbursement Agreement, dated as of June
1, 1997 (the "Reimbursement Agreement) between the Company and Branch Banking
and Trust Company (the "Bank") and a Guaranty Agreement dated as of June 1, 1997
from the Guarantor in favor of the Bank (the "Guaranty Agreement"). Terms
defined in the Reimbursement Agreement are used herein as therein defined. Among
other things, we have examined:
(1) a fully executed counterpart of the Reimbursement Agreement and
Guaranty Agreement;
(2) a fully executed counterpart of the Deed of Trust;
(3) a fully executed counterpart of the Security Agreement;
(4) the other Related Documents referred to in the Reimbursement
Agreement;
(5) financing statements naming the Company as debtor and the Bank
as the secured party, covering the security interests granted in the Deed
of Trust;
(6) financing statements naming the Company as debtor and the Bank
as secured party relating to the Security Agreement (such financing
statements in (5) and (6) herein called the "Financing Statements");
B-1
(7) the Certificate of Incorporation of each of the Company and the
Guarantor and all amendments thereto (collectively, the "Charters");
(8) the Bylaws of each of the Company and the Guarantor as now in
effect (collectively, the "Bylaws"); and
(9) the documents delivered by or on behalf of the Company pursuant
to Section 3.01 of the Reimbursement Agreement.
We have also examined the originals, or copies certified to our
satisfaction, of (i) such other corporate records of the Company and the
Guarantor, certificates of public officials and of officers of the Company and
the Guarantor, (ii) the agreements, instruments and documents identified to us
by the Company or the Guarantor which affect or purport to affect the
obligations of the Company under the Reimbursement Agreement or the Related
Documents or the Guarantor under the Guaranty Agreement, and (iii) such other
agreements, instruments and documents as we have deemed necessary as a basis for
the opinions hereinafter expressed. As to questions of fact material to such
opinions, we have, when relevant facts were not independently established by us,
relied upon certificates of the Company and the Guarantor or their respective
officers or of public officials. We have assumed the due execution and delivery
by the Bank of the Reimbursement Agreement and the Related Documents to which it
is a party.
In rendering the opinions set forth herein, all statements made herein
which are specifically subject to the qualifications "to the best of our
knowledge", "known to us", or words of like meaning, are made on the basis of
our existing knowledge, without independent investigation or inquiry. Other than
as expressly stated herein, we have conduced no independent investigation or
inquiry of any documents, agreements, instruments, information or facts. We
express no opinion with respect to any financial statements or other financial
information supplied by, or relating to, the Company or the Guarantor in the
Reimbursement Agreement, the Related Documents or otherwise.
We are members of the bar of the State of New York and not purport to be
expert in, or to render opinions or advice with respect to, the laws of any
jurisdiction other than New York and Federal laws of the United States. We have,
however, reviewed the Delaware General Corporation law to the extent required to
express the opinions set forth herein. The opinions expressed herein are limited
to matters governed by the laws of the State of New York, the Federal laws of
the United States and the Delaware General Corporation Law.
Based upon the foregoing and upon such investigation as we have deemed
necessary, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Delaware and, based
solely our review of certificates issued by the Secretary of State of
North Carolina, is duly qualified to do business in, and is in good
standing under the laws of the State of North Carolina.
B-2
2. The Guarantor is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware.
3. The execution, delivery and performance by the Company of the
Reimbursement Agreement, the Deed of Trust, the Security Agreement and the
Related Documents to which it is a party are within the Company's
corporate powers, have been duly authorized by all necessary corporate
action, do not contravene (i) the Charter or the Bylaws of the Company,
(ii) to the best of our knowledge, any judgment, writ, order or decree
issued in proceedings to which the Company is a party and which is
applicable to the Company or its properties or (iii) to the best of our
knowledge, any agreement or contractual restriction contained in any
material contract to which the Company is a party and which is binding on
or affects the Company or any of its properties other than the loan
documents executed in connection with the loans made by the Bank to the
Company on June 21, 1993, July 29, 1994, January 6, 1995, and November 29,
1995, respectively; and, to the best of our knowledge, such execution,
delivery and performance do not result in or require the creation of any
lien, security interest or other charge or encumbrance (except as provided
in or contemplated by the Reimbursement Agreement, the Deed of Trust or
the Security Agreement) upon or with respect to any of the Company's
properties.
4. The execution, delivery and performance by Guarantor of the
Guaranty Agreement and any other instruments and certificates executed in
connection therewith are within the Guarantor's corporate powers, have
duly authorized by all necessary corporate action, do not contravene, (i)
the Charter or the Bylaws of the Guarantor, (ii) to the best of our
knowledge, any judgment, writ, order or decree issued in proceedings to
which the Guarantor is a party and which is applicable to the Guarantor or
its properties or (iii) to the best of our knowledge, any agreement or
contractual restriction contained in any material contract to which the
Company is a party and which is binding on or affects the Company or any
of its properties other than the guaranty agreements dated July 29, 1994,
January 6, 1995, and November 29, 1995, by and between the Guarantor and
the Bank; and, to the best of our knowledge, such execution, delivery and
performance do not result in or require the creation of any lien, security
interest or other charge or encumbrance upon or with respect to any of its
properties.
5. No authorization or approval or other action by, and no notice to
or filing or registration with, any New York or United States governmental
authority or regulatory body is required for (i) the due execution,
delivery and performance by the Company of the Reimbursement Agreement,
the Deed of Trust, the Security Agreement or any Related Document to which
it is a party, (ii) the grant by the Company of the mortgage lien and
security interests created by the Deed of Trust or the Security Agreement,
(iii) the perfection of, or the exercise by the Bank of its rights and
remedies under the Deed of Trust or the Security Agreement, except for the
filings and recordings referred to in paragraphs 7 and 8 below or (iv) the
due execution, delivery and performance by the Guarantor of the Guaranty
Agreement.
B-3
6. The Reimbursement Agreement, the Deed of Trust, the Security
Agreement and the Related Documents to which the Company is a party have
been duly executed and delivered by the Company. Assuming the laws of the
State of North Carolina are the same as the laws of the State of New York
in all respects, each of such documents are the legal, valid and binding
obligations of the Company enforceable against the Company in accordance
with their respective terms, except as the enforceability thereof may be
limited by insolvency, moratorium, or similar laws relating to or limiting
creditors' rights generally or by equitable principles of general
application.
7. The Guaranty Agreement has been duly executed and delivered by
the Guarantor. Assuming the laws of the State of North Carolina are the
same as the laws of the State of New York in all respects, the Guaranty
Agreement constitutes a legal, valid and binding obligation of Guarantor
enforceable in accordance with its terms, except as the enforceability
thereof may be limited by insolvency, moratorium, or similar laws relating
to or limiting creditors' rights generally or by equitable principles of
general application.
8. There is no pending or threatened action, investigation or
proceeding before any court, governmental agency or arbitrator against or
affecting the Company or any of its subsidiaries or the Guarantor which
may materially adversely affect the properties, business, financial
condition or operations of the Company or Guarantor or the ability of the
Company or Guarantor to perform its obligations under the Reimbursement
Agreement or any Related Document which purports to affect the legality,
validity or enforceability of the Reimbursement Agreement or any Related
Document.
9. Assuming the laws of the states having jurisdiction over the
Collateral (as defined in the Reimbursement Agreement and used throughout
this letter with such definition) are the same as the laws of the State of
New York in all respects, the Security Agreement creates in favor of the
Bank a legal lien on and security interest in all the Collateral securing
the payment of the obligations covered thereby, assuming that financing
statements describing the Collateral are filed by the Bank in proper form
in the offices in which such filings are required by the laws of the
states having jurisdiction over the Collateral, and assuming that the laws
of the states having jurisdiction over the Collateral are the same as the
laws of the State of New York in all respects, such liens and security
interest will be perfected as to the Collateral with respect to which such
perfection can be effected by filing of financing statements in accordance
with the Uniform Commercial Code as in force and effect in such
jurisdictions; except as the enforceability of any of the foregoing may be
limited by insolvency moratorium or similar laws relating to or limited
creditors' rights generally or by equitable principles of general
applications. We express no opinion with respect to the relative priority
of any liens and security interests purported to be created under the
Security Agreement or any other Related Documents or perfected as to the
Collateral.
Very truly yours,
BERLACK, ISRAELS & ▇▇▇▇▇▇▇▇ LLP
B-4
EXHIBIT C
Form of Opinion Letter for Bond Counsel
[See Tab Number 21 of Closing Documents]
C-1
EXHIBIT D
Form of Deed of Trust
[See Tab Number 2 of Closing Documents]
D-1
EXHIBIT E
Form of Security Agreement
[See Tab Number 3 of Closing Documents]
E-1
EXHIBIT F
Form of Guaranty Agreement
[See Tab Number 5 of Closing Documents]
F-1
EXHIBIT G
Payment of Taxes
G-1
EXHIBIT H
Agreements of Company and Subsidiaries
H-1
EXHIBIT I
Environmental Matters
I-1
EXHIBIT J
Locations of Personal Property
J-1
EXHIBIT K
Insider Transactions
K-1
EXHIBIT L
Guarantees
L-1
Schedule 4.01(d)